There is a simple and guaranteed way to grow the economy in such a way that it truly lifts all boats, providing increased wealth for rich and poor alike.
1) Increase the size and purchasing power of the middle class: Our economy 70% driven by consumer spending. As the middle class sees an increase in purchasing power they end up buying new tires, refrigerators, and clothing. They are more apt to go out to dinner, a movie, or to take a vacation. This puts more money in circulation and creates increased economic activity. Henry Ford knew that he needed to pay his workers enough so that they could buy the cars that they build.
2) Expand the size of the working class: This means more people with money to spend. This comes from an increase in minimum wage, making food stamps more available. The economic impact of an extra dollar in food stamps issued creates an additional $1.50 in economic activity. By contrast, an extra dollar spent on giving tax breaks to the already wealthy generates only $0.30 in increased economic activity.
3) Spend money on infrastructure projects: In the 1950’s President Eisenhower brought the concept of the German autobahns to America. This boom in construction spending and infrastructure enhancement launched a tremendous growth spurt that lasted for decades. Imaging where we would be without our Interstate highway system. Now our roads, bridges, levies, public buildings, harbors and airports are becoming more and more outdated and run down. Countries like South Korea are way ahead of us in such measures as high speed Internet, ship building facilities, and much more. Can we really afford to become a third-rate economic power?
4) Invest in basic research. The Large Hadron Collider in Europe is the “moon shot” of the 21st Century. Why did we not do this? The reason is simply that Congress refused to provide the funding. The US lead space race in the 1960’s lead to the birth of the computer-cell phone-GPS-Internet culture that has transformed our world. This technological revolution is perhaps even more profound in human history than the creation of writing or the invention of the printing press.
5) Educate our people: One of the great advances of the US was our free public education system. Now we are cutting funds for education at all levels, and strangling college students with unbearable debt loads. It is tragic that we now have more prisons than colleges. Education is not an extravagance but an investment in our nation’s future. What is education except our investment in our human capital? Education is more than just schools and colleges. It is also early childhood education, adult classes, PBS and NPR, libraries, and museums. It is observatories and planetariums (or planetaria for Latin scholars). It is symphonies and ballet companies and live theater. Education is a life-long endeavor without bounds.