I've stopped obsessing about state and local revenues since June because Congress and the Executive branch did finally act and the pandemic-related state and local shortfalls turned out to be way less severe than were predicted by virtually all sources I had come to trust. So I went radio-silent as I could think of nothing useful to contribute via this platform during the whole summer.
Now you might think I'd find lot's to say about the bi-partisan $1 Trillion "Infrastructure Investment and Jobs Act" bill HR-3684 (which at this moment I write this is still hung up by a small group of Dem. House Members playing a to-my mind ultra-dangerous game of chicken and by yet another act in the silly but not funny debt ceiling drama). But everybody else I respect has already said better than I possibly can everything there is to say about both the infrastructure bill and the giant $ multi-trillion reconciliation measure as well as about the the debt ceiling issues.
What's got me back in the blogging saddle again is listening to a September 17 Ezra Klein Show podcast with Columbia University economic historian Adam Tooze, Thanks to a tip from Brown University's brilliant international sub-sovereign public finance expert Anthony Levitas. Not only did this single podcast resurrect for me the Keynes WWII-era quote "Anything we can actually do, we can afford", it ties that wonderful statement in with the Modern Monetary Policy Theory ideas, the Fed's and now the Congress' seemingly amazing ability to pump trillions into economic stabilization and social policy investment programs through monetary and fiscal policy actions without triggering run-away inflation. And it clarified for me the vital importance of ensuring that we have the productive resources to be able to actually do what we we collectively decide to do. We are currently seeing supply shortages in all kinds of areas where progress is badly needed. A few examples that spring immediately to my mind;
- Re: The needed transition away from fossil fueled energy production: Off-shore wind turbines can't be installed without the highly specialized ships and well-skilled mariners who can use them and electric cars can't be sold in large quantities without the concomitant capacity to invent, manufacture and deploy a pervasive network of rapid charging infrastructure;
- Re: Preparing us and the world for the inevitable next pandemic: A national public health system cannot anticipate and deal successfully with disease pandemics without the production and stock-piling and pre-positioning of the equipment, information reporting/sharing networks and well-skilled manpower necessary to detect, trace and report on emerging bio-threats or the human and equipment to invent, manufacture and quickly distribute vaccines and treatments;
- Re: Providing Equitable Access to Childcare: Widely available, affordable childcare will not spring magically into being without the capacity to produce the right kinds of spaces, equipment and materials. And the necessary thousands of additional skilled early childhood care-givers and educators must also be .
In the US, WWII-era the War Production Board was an early public supply-side initiative that proved remarkably successful in meeting a gigantic sudden demand for the public goods - everything from the uniforms to the weapons and ammunition - needed to defeat fascist Germany, Japan and Italy. It took the suddenly emerging Korean War to build sectorally-targeted supply-side economics into permanent public policy with the enactment in 1950 of the Defense Production Act. But since then the military industrial complex has been well enough developed (many would argue over-developed)that the DPA has not been used much by the military for war-fighting. But in the fight against COVID we've recently seen it used a bit by two Presidents to help with equipment supply shortages and vaccine development and deployment.
The Build Back Better Act (and presumably the $3.5 Trillion Budget Reconciliation measure, if/when it ever emerges into the light of day) seeks to make many investments in areas that increase the supply of public resources (early childhood and post-secondary education, workforce development, healthcare, etc. ) that we need to produce the supply of public goods (healthier and better fed and educated children and young adults, more highly skilled labor pool, etc.) that will contribute to more robust economic and equitable recovery in the short run and more resilient economic strength in the longer run. So much of the Build Back Better Act can be seen expressions of what some economic and social policy hipsters are calling "Supply Side Progressivism." And the afore-mentioned NY Times guru Ezra Klein has published a particularly well-reasoned column about the need to extend the scope of the Supply Side Progressivism concept to embrace the development and production of technologies and programs which "...shouldn’t just fix the problems of the present; it should hasten the advances of the future."
But in the US, there is a serious problem with the execution of many federal social program spending initiatives like those within the Supply-Side Progressivism concept: much of that spending must be pushed through a complex intergovernmental fiscal system to state and local governments who struggle to ensure that the funds are spent effectively and efficiently by recipient pubic, non-profit and for profit entities operating often with great de jure or de facto independence and little expert real-time oversight. Examples of this problem were getting plenty of front page exposure as various forms of fiscal stimulus came pour out of the federal pipeline trying to mitigate the impact of the partial economic shutdown during the Covid 19pandemic: State employment agencies unable to by reason of reduced manpower and antiquated IT systems overwhelmed with benefit applications; public health agencies ill-equipped with materials and people able to provide testing and do contract tracing; elder-care providers un-prepared for climate disasters and three examples that I can most quickly recall.
Past efforts to make government more effective and efficient have to public financial administrative accounting trick: outsourcing by somewhat accountable public agencies like school districts, human services agencies etc. to non-profit or for profit-contractors which are far less accountable to the public due to being at the end of a long and twisting distributive pipeline. So elected officials at all levels can claim savings by reducing the size of their public servant class and distance themselves from accountability for the effectiveness and efficiency and fairness of "their" programs.
I conclude that we need to build back better our pool nation's pool of competent public servants who can skillfully administer programs directly and, where there is no viable public alternative, work with contractors effectively. And we need to review our entire system of fiscal federalism to understand ways in which perpetuates economic and social inequality.
Comments