The good news about reduced official unemployment – down to around 5 percent in the August report – contrasts with the broader U-6 unemployment figure, still hovering in the 10 percent range. Nor is it inconsequential that U.S. growth continues to bend lower from a high in the 1960s and 1970s of just over 5 percent annually to our current rate of just about 2 percent annually.
Two weeks after the presidential conventions, it is especially distressing that there are still no substantial and detailed proposals from either of the campaigns on a serious 21st century economic growth plan. Might it be time for those of us in the private sector to take the lead and propose a deal that would be good for all Americans? One that would put the country in the position to continue to drive economic growth and prosperity, as we did in earlier post-World War II decades?
An organizing principle for such a growth plan is the reality of 21st century age demography. It is this demographic shift, as our society moves from young to old, which helps explain the gap between our pretty decent official unemployment rate and the broader U-6 measure. The latter includes those who have stopped looking because they’re older, and those who are considered to be retired by last century’s norms. Yet, economic growth simply cannot be sustained if 30-40 percent of the adult population is dependent. Just ask Japan, an “old society” that will soon have 40 percent of its population over 60. Because they have not adequately shifted public policy or cultural norms, they have been experiencing three decades of economic malaise.
Today, when candidates think of “aging” or “old,” they think of Medicare and Social Security, the 20th century public policies that were designed to support us as we grew old and stopped working. But this is no longer fiscally viable, as there are so many more of us living far past 60 than ever contemplated by the creators of such plans. We need an economic plan that creates more investment for new jobs at all ages, supports infrastructure, includes education across our life course and drives healthcare to enable active aging. So, how about this?
- Finding the money for investments in American infrastructure: American-headquartered global companies have well over $2 trillion parked in countries with attractive tax rates, relative to the very high U.S. corporate tax rates. This is precisely how companies should behave to meet their fiduciary responsibilities to their shareholders, investors, employees and customers. But the American government could compete with these countries and stimulate infrastructure investment at the same time. By offering these very same corporations tax forgiveness, the government could bring the dollars back to America in exchange for a percentage commitment to infrastructure needs, while also making real reductions in the corporate tax rates going forward.
- Investing in growth: Once we get access to the trillions currently in low tax jurisdictions, we can use it to address our broad American needs and help prepare for a world where our children live to 100. First, update the bridges, roads, and other public transport systems that have always been the basis of American commerce. Second, invest in our education system to accommodate all Americans -- those in traditional educational ages and those who are older but need ongoing skills training during a 60+ year working life. We should give specific attention to technical and vocational training, including new 21st century jobs such as elder caregiving. Third, enable the technology literacy education that we all know is essential for our time. Fourth, set aside a few billion dollars to wipe out student debt. And, finally, put some of that money to investment in cures for the diseases of aging, including the current embarrassingly low amount dedicated to Alzheimer’s. Spending on health innovation is as much an investment in 21st century society as spending on education for children. Smart tax policy leading to economic growth will make it all possible.
- Re-framing the workplace: Part of the new investment and tax deal will be for corporate employers to make changes in how they operate. Employers would get rid of retirement, an artifact of an earlier industrial development period, when physically burdensome jobs largely in manufacturing made it challenging to work past 65. But that was then. Today, when most of us will live 30 years past traditional retirement, and many of those years will be healthy and high quality, it’s not surprising that people want to work longer, if differently. As we work longer, employers will also want to rethink and restructure benefits, helping employees support their own wellness and meet the caregiving needs of their parents and grandparents. No doubt an important part of the deal will also be an increase in the minimum wage, taking that one off our political table, and low-paid workers as well. But if it’s married to a broad-based proposal that builds in lower corporate tax rates, we will be able to manage it through growth.
American economic growth in the 21st century can surpass that of the previous eras. However, profound adjustment for our age demographic shift is an essential part of achieving this potential. Japan missed it, and much of Europe is playing catch-up as each of their societies struggle with last century’s policies not being able to meet this century’s age demographic realities. But it will only work here if we trust each other and fix an agreement for public and private sectors working together.
Is anyone in D.C., or who wants to get there listening?