By Jonah Goldberg
Wednesday, February 06, 2013
Not long after President Obama proclaimed in his second
inaugural that "an economic recovery has begun," we learned that the
U.S. economy actually shrank in the last quarter. Many economists believe this
is a temporary setback. This recovery may be the weakest in American history,
but the economy isn't cratering either.
Still, you can bet that if the economy continues to
contract, Obama will propose the same remedy he always has: more
"investments" in education, infrastructure and various industries of
the future. It seems that whatever the ailment, Dr. Obama always writes the
same prescription.
This is hardly shocking: Building roads and schools is a
big reason why God created Democrats in the first place. And identifying the
Next Big Thing -- and taking credit for it -- is something of a vocation for
many liberal policymakers.
But are these really the drivers of economic growth?
Higher education in particular is almost universally
championed as the key to "winning the future" -- a buzz phrase the
president borrowed from Newt Gingrich a while back. New York Times economics
columnist David Leonhardt calls education the "lifeblood of economic
growth."
Often channeling such writers as Thomas Friedman, whose
fondness for the Chinese economic model borders on the perverse, Obama
routinely elevates education to a national security issue. "There's an
educational arms race taking place around the world right now -- from China to
Germany, to India to South Korea," Obama said in 2010. "Cutting back
on education would amount to unilateral disarmament. We can't afford to do
that."
Now, obviously, education is important and necessary for
a host of reasons (and nobody is calling for "disarmament," whatever
that means). But there's little evidence it drives growth.
British scholar Alison Wolf writes in "Does
Education Matter?": "The simple one-way relationship ... -- education
spending in, economic growth out -- simply does not exist. Moreover, the larger
and more complex the education sector, the less obvious any links to
productivity."
Nassim Nicholas Taleb, author of "Antifragile:
Things That Gain From Disorder," argues that education pays real benefits
at a micro level because it allows families to lock in their economic status.
An entrepreneurial father can ensure his kids will do OK by paying for them to
become doctors and lawyers. But what is true at the micro level is not always
true at the macro level.
Think about it this way: Growing economies spend a lot on
education, but that doesn't necessarily mean that spending makes them grow.
During the so-called Gilded Age, the U.S. economy roared faster and longer than
ever before or since, while the illiteracy rate went down. But the rising
literacy didn't cause the growth. Similarly, in the 20th century, in places
like China, South Korea and India, the economic boom -- and the policies that
create it -- always come first while the investments in education come later.
There are similar problems with claims that
infrastructure spending will pay off. When I was in college, prominent experts
and journalists -- Lester Thurow, Robert Reich, James Fallows, Kevin Phillips
et al. -- were insisting Japan would be the next world economic superpower. In
the late 1980s, Jacques Attali, the first head of the European Bank for
Reconstruction and Development, claimed that "America has become Japan's
granary, like Poland was for Flanders in the 17th century." Attali did
allow for the possibility that the U.S. West Coast might do OK, but only
because it was "in the gravitational pull of Japanese financial power and
geographic proximity."
Japan is now well into its third "lost decade."
Over the years, it has poured money into "stimulative" infrastructure
projects that have yet to stimulate and protected industries that have steadily
lost their competitive edge. Economic growth has averaged less than 1 percent
since 2000, while government debt is now more than twice its GDP. If a highly
educated workforce, support for allegedly cutting-edge industries and lavish
spending on infrastructure was the recipe for economic growth (and if debt
didn't matter), Japan would be doing great.
Obama surely wants to see some real economic growth.
Perhaps the problem is that he thinks investing in a much bigger cart to put
before the horse will get him where he wants to go.
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