Judd Gregg: The productivity conundrum

Prosperity, a robust economy, jobs being created and standards of living going up — that is what everyone wants.

Is there one common denominator that drives these outcomes? If there is, that factor is growing productivity.

{mosads}When a nation’s productivity increases, good things follow.

The elements that increase productivity, whether of a workforce, an economy or a country, are multiple and complex. They involve the character, laws, culture and resources of a nation and its people. How they all come together is often difficult to predict — but the outcome when they do is fairly evident: economic growth.

The questions America now faces are stark. Why, eight years after the recession caused by the financial meltdown, are we having such anemic economic gains? Why is our productivity so depressed?

Some contributory factors are obvious.   

Over the last eight years, we have moved from a culture that rewards risk to a culture that penalizes risk-takers.    

We are moving from an economy built on the concept of a competitive market to an economy based on government directive.   

Excessive taxes, excessive regulation and excessive political correctness all naturally stifle the entrepreneur in the name of the greater good. 

The people behind these policies fail to see that productivity is a force for good. Rather, ‘good,’ as they see it, is simply synonymous with the social, economic, political or environmental cause du jour. 

But if these were the only factors sapping our productive energy, the American culture of competitiveness would be strong enough to overcome such a muffling blanket. There are other, much deeper causes that are stifling our nation.

First among these is the failure of our educational system. One of the things that Alexis de Tocqueville noticed in his seminal treatise “Democracy In America” was that we had set up a system of public education that included everyone. This fact, at the time, truly set us apart as a nation.

Today, that system is shredded. We may claim we educate everyone or that public education is required at least through high school, but for many it is a meaningless experience. It is not preparing young people to compete or succeed —or even survive — in today’s global economy. 

There is no single way — no magic wand — to fix this failure. But many of its causes are obvious.  

Elementary and secondary education has no competitive options for most people, especially the poor and the near-poor. Thus, schools and the teachers within them have no incentive to improve other than good intentions, which rarely produce lasting improvements.  

No-one who looks at our public education system can honestly say that it works. 

Anyone looking at it with a scintilla of objectivity has to conclude that public teachers’ unions have crushed the chances of success for more students than any other force within the school universe. We have allowed our great experiment in public education to be massively damaged by labor politics. Competition, ascertainable standards, higher expectations — all of them core elements of a prosperous economy — are not countenanced by the teachers’ unions.  

Protecting jobs, and thus teaching to the lowest common denominator, has become the primary motivating purpose of the educational establishment.

A second cause that is less noticed but equally debilitating is the abject failure and misapplication of the so-called “social safety net.” We have relegated large segments of our nation’s people to a life of circular failure with a de facto insistence that they not be productive.

Pick a government program that is aimed at improving the situation of people with lower incomes, or even moderate incomes, and you will find a lack of accountability, a lack of positive outcomes, massive patronage masquerading as constructive bureaucracy, waste and often fraud.  

Food stamps, Head Start, agriculture subsidies, urban housing programs — the list goes on and on. These programs have been documented to have been consistently mismanaged with outcomes that do not remotely match up with their good intentions or stated goals. Rather then making their participants stronger and better, they consign them, for the most part, to permanent-victim status.

Another cause of our productivity malaise is our tax structure. The “progressive” movement led by President Obama — but picked up with a vengeance by the socialist Sen. Bernie Sanders (I-Vt.) and now former secretary of State Hillary Clinton — has at its core the desire to punish the productive.

Tax rates that disincentivizes people from going out and earning more, because they essentially confiscate the higher earnings, dramatically weaken the engine of productivity. Deductions that reward the few who have the ability to get special treatment and force up the tax rate on the many distort the chances of effective use of capital in a market economy.

All of this can be at least improved upon if we are honest with people.  

We need leadership that is not afraid to confront the forces in education and in our social services system who are narrowing Americans’ opportunities.

We need leadership that will point out the absurdity of a tax code that is weighing down individual and small businesses’ efforts to be more productive. 

We need leadership that does not pander to political correctness and the institutional elites but explains to the American people that their dream is being usurped by these forces.   

We need, above all, to get back to being a nation that makes our people’s lives better by giving them more tools to be more productive.

Judd Gregg (R) is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee, and as ranking member of the Senate Appropriations Foreign Operations subcommittee.