How many economists does it take to change a light bulb? None. The market will take care of it.
The Connecticut gubernatorial campaign is gearing up with candidates offering “big ideas.” Sadly, these seem more like the old cereal commercial, “taste Frosted Flakes again, for the very first time.”
Some claim that we need to cut taxes and eliminate burdensome regulations to free up business innovation. We need to outsource government services to gain the efficiencies of free markets. Yet Connecticut, one of the wealthiest states, claims it cannot afford to educate its children, maintain public parks and highways, address the challenges of drug addiction and so on.
We are offered simplistic choices — either efficient businesses or inept and burdensome government services; either economic growth and jobs, or a clean and healthy environment. The reality is we live in a both/and world. A vibrant community depends on both efficient markets and a robust public sector. A healthy economy cannot succeed long term without a healthy environment.
What is missing from the current political debates is an honest discussion of the values we want to shape our future. Our current problems are not an indication of the failure of an open and free market economy, but rather its runaway success. We have the ability to create more stuff than we can responsibly manage, requiring fewer workers than in need of meaningful employment. We have the wealth and technology to create virtually any future we want. But deciding what we want is not a question for the markets. It is a question for the citizenry in value-based deliberations.
Political candidates campaign on their ability to create jobs by eliminating government. But jobs and economic growth have historically been created by public investments. The search algorithm that launched Google to fame and riches was developed under a National Science Foundation grant. The iPhone builds on cutting edge technologies — the Internet, GPS, touch-screen displays, etc. — that were originally developed with publicly funded research. Much basic research in the pharmaceutical industry is funded by the National Institutes of Health.
This essay is not an argument against corporations profiting from commercializing public research. It is an argument that corporations should provide a financial return to the public, just as any private investor would demand.
There is also no argument that every public investment is productive. The International Monetary Fund has revealed the fossil fuel industry received over $5 trillion of subsidies in 2015. Yet politicians argue we need to relax regulations on air pollution to encourage job creation.
There is no dispute that providing incentives that encourage increased use of fossil fuel and then fighting to implement regulations to mitigate the health and environmental damage caused by fossil fuels is economically inefficient. The public trust doctrine imposes a fiduciary responsibility on governments to protect public assets and hold accountable those who damage them.
There is little doubt the atmosphere is a public asset, and granting rent-free property rights to corporations to pollute it violates their responsibility for protecting it. Even if you choose to ignore the scientific consensus regarding the looming threat of climate change, the respiratory ailments caused by burning fossil fuels is a public health crisis. Twenty children killed at Sandy Hook traumatized Connecticut, but 50 children a year killed by asthma go largely unnoticed. Having companies pay for their use of public natural resources provides incentives for clean production and a more rational method for funding government agencies tasked with protecting those resources.
Our free market economy has provided a standard of material wealth for more people than any other system humanity has tried. Yet the benefits of this economy are not fairly shared, and the environmental damages threaten the health and well-being of future generations.
Cutting taxes and choking the public sector is a recipe for disaster. A vibrant market depends on a healthy public sector for critical infrastructure, healthy workers, and educated and engaged citizens. Paying a return on public investments in basic research or rents for use of public natural assets is a more effective means of funding the public sector than our current arcane tax system.
We have the capability to create the future we want with our choices both in the market place and in the voting booth. Will we choose wisely?
Frank Kirkpatrick is Professor of Religion Emeritus, Trinity College, with a specialty in social ethics. Thomas Swarr is a lecturer at Yale University School of Forestry and Environmental Studies specializing in development of green products and manufacturing processes.