The U.S. Should Invest in the Jobs of the Future - Bloomberg

The U.S. Should Invest in the Jobs of the Future - Bloomberg

The U.S. Should Invest in the Jobs of the Future

The economy is failing too many people.

 

By Editorial Board

January 12, 2021, 8:00 AM EST

 

After President-elect Joe Biden takes office this month, he’ll have to grapple with a big issue that helped bring his predecessor, Donald Trump, to power: For far too many Americans, the U.S. economy isn’t working. An educated, largely coastal elite is pulling ever farther ahead, but millions of others across the nation are struggling and deeply concerned about the future.

 

The challenge is to unlock the potential of the people and places left behind. This will require a level and quality of investment that the nation hasn’t seen for many years.

 

Even before the pandemic hit, the U.S. economy was in much worse shape than the low unemployment rate suggested. Almost all the income gains of the past several decades had gone to the wealthiest tenth of the population, leaving the bottom half hardly better off. Even as people in coastal growth centers such as New York and San Francisco lamented congestion and sky-high rents, deindustrialization had turned large swaths of the country’s heartland into no-opportunity zones. The productivity boom of the 1990s had long since petered out. People of color and women had made great progress, but still faced obstacles in achieving all they could. The coronavirus crisis deepened the malaise, taking a disproportionate toll on minorities and the poor.

 

How can America come back? Fairer taxes and a stronger social safety net are certainly part of the answer, but by themselves won’t be enough. What’s needed is the kind of growth that raises living standards more broadly. This can’t come from rejecting international trade or trying to revive obsolete industries. Rather, the country needs to make an ambitious investment in its future — renewing its global technological leadership, creating well-paid jobs and tapping the talents of all its people.

 

This will require more public spending, but with interest rates on government borrowing at multi-decade lows, the financial conditions are as conducive as they’ll ever be. Done right, the investment will more than pay for itself. Here are some priorities:

 

► Revive the heartland. Fundamental scientific research is among the best investments a government can make. It produced Silicon Valley and the biotech industry. But public investment in basic science is running far below the levels that laid the foundation for those successes. So one priority should be a major R&D program with the goal of creating new hubs of growth in parts of the country that need it most. It should aim for breakthroughs in green energy, public health and agriculture, with support for early-stage financing and the advanced manufacturing capacity needed to turn discoveries into new industries.

 

Programs of this kind do face pitfalls, and the record of governments in pressing such initiatives is mixed. It will be important to learn from past mistakes and spend public money wisely. But economists have identified dozens of potential candidates with a promising mix of characteristics, such as high-quality universities, low housing costs and easy commutes.

 

As always, competition will help: Preference should go to cities that offer the best development plans, with the technical education, transportation, amenities and other services required to ensure benefits are widely shared. Over 10 years a plausible outlay might be between $100 billion to $200 billion. There’d be failures — but with careful execution, the gains should greatly outweigh the losses. 

 

► Upgrade infrastructure. To succeed, growth centers need to be connected to the rest of the country, both physically and virtually. Yet America’s roads, bridges, airports and broadband internet service are notoriously inadequate, undermining living standards and productivity nationwide. Fixing this will be expensive — say about $1 trillion over 10 years.

 

Spending the money wisely requires collecting data to understand how transportation routes are used, what mix of modes would best serve people’s needs, and where investments in greener public-transit options such as high-speed rail would make the most sense. New projects are only part of what’s required. In many cases, spending on adequate maintenance of existing infrastructure would be at least as productive.

 

One key goal should be extending high-speed broadband to the more than 150 million people who, by one estimate, still lack it — a task that can be accomplished quickly by auctioning federal subsidies to private companies. Access is particularly important for rural communities, which could become attractive bases for remote work.

 

► Break down barriers to prosperity. Too many Americans face obstacles to full participation in the economy. Some can’t physically move to seek opportunity, because of zoning rules designed to keep them out, and because benefits such as housing subsidies frequently aren’t portable. Some can’t find work because of needlessly burdensome licensing requirements or non-compete clauses in their contracts. Some, particularly women, lack access to the affordable child care that would help them build their careers. Others are trapped in neighborhoods where it’s hard to be healthy, get educated, and stay out of trouble. 

 

Real progress in any of these areas won’t be easy, but the effort should be made. Biden has supported parts of this agenda, and doubtless agrees with its ambition. Shortly he’ll be in a position to build support for such polices and put them into effect. The country as a whole stands to gain.

 

To contact the senior editor responsible for Bloomberg Opinion’s editorials: David Shipley at davidshipley@bloomberg.net .