How America can become a job creator

Unless you have been hibernating, you understand that the debate over the proper role of government is a central issue in America’s current troubled political environment.

The contretemps over this question are exacerbated by high unemployment, which exerts a severe economic drag on the country. We should approach the question of government’s role with job creation as our top priority.

Nearly 11 million Americans are unemployed and another 9.8 million either involuntarily work only part-time or are too discouraged to keep looking for a job. Families struggling to make ends meet on unemployment benefits are no longer able to participate fully in the nation’s consumer economy. And since consumer spending accounts for some two-thirds of the nation’s gross domestic product, their reduced spending poses an obstacle to economic recovery.

People’s views on the role of government are heavily influenced by their political philosophies. Some care most about individual freedom, seeing wealth creation mainly as the product of individual effort; others prioritize promoting the well-being of the community as a whole. These two philosophical conceptions lead to disagreements about government’s proper role in the economy. Those on the right believe less government leads to more robust economic growth and those on the left argue for more government intervention.

The real problem is that what both groups really want is to find a political strategy that will tip a few red states blue and vice versa. That makes the philosophical clash toxic because bad politics trumps smart public policies.

There are, however, some basic areas of agreement about the role of government. For example, government should protect us from violence. To do so, government must have a monopoly on coercive power. Otherwise anarchy develops, and as the 17th-century philosopher Thomas Hobbes noted, “the life of man (becomes) solitary, poor, nasty, brutish, and short.”

Similarly, Adam Smith, the intellectual messiah of capitalism, argued that government should protect “society from the violence and invasion of other independent societies” and protect “as far as possible every member of the society from the injustice of or oppression of every other member of it.” The most limited government, then, is one whose sole function is to prevent its members from being subjected to physical coercion.

But even Smith argued that government should create and maintain “certain public works and certain public institutions, which it can never be for the interest of any individual or small number of individuals, to erect and maintain.” Think roads, bridges and sewers -the infrastructure required for society to function and grow.

Consider the Erie Canal, the transcontinental railroad, the great dams and water systems of the west, airports, seaports, transit, and the highways and bridges that are part of America’s great public works inheritance. They were the envy of the world and supported the growth of the greatest economic power the world has even known.

One way to pay for infrastructure upgrades is to recruit private firms as active partners to help fund and operate these projects. If properly structured, public-private partnerships could tap into billions of dollars in private capital that are looking for a home.

This kind of ambitious infrastructure investment plan could give the nation’s economic growth a vital shot in the arm by creating new jobs and reversing the negative-multiplier effect caused by high unemployment and reduced consumer spending.

originally published: December 14, 2013