Recent economic news has been bleak. Check out a few headlines from the last few days.
- US manufacturing contracts by most in 6 years as factories cut jobs amid global slowdown.
- US construction spending falls 0.4 percent in November.
- Factory slumps in US and China heighten global economy fears.
- The U.S. Economy’s Latest Growth Is Looking Increasingly Frail
- Could the Economy Tank in 2016?
The last link on that list is to a Politico article with commentary from 23 prominent economists. Don’t look for a consensus; it’s not there. But the various perspectives are helpful. We particularly appreciate this from Stanford economist Caroline M. Hoxby:
The biggest risk we face is being so consistently distracted by transitory economic and other events that we neglect to improve the fundamentals that matter most for growth…
The biggest drag on any economy are people who are insufficiently productive to be employable. Not only do they need to be supported by taxes paid by others, they often feel excluded from those growing parts of the economy that offer the promise of a better future. Sadly, our K-12 system is such that many people do not acquire enough skill to be productive, especially in this era in which technology displaces humans from many routine tasks. We are in a “race” between education and technology, and education appears to be losing the race. Again, economists have realized for years that American education, which is very costly per student by world or historical standards, needs to be more productive if the economy is grow faster. Yet, education reform is never the emergency that we need to tackle now. Like other fundamentals, it is always on the back burner.
Our appreciation of Hoxby’s perspective, we readily concede, stems from our agreement with her on the importance of giving everyone a chance to succeed in a dynamic economy. It’s at the heart of our Opportunity Washington: Priorities for Shared Prosperity agenda, detailed in our Achieve priority.
As the economic news attests, the economy is fragile and volatile. But a closer read of the economic perspectives confirms that how we handle public policy makes a critical difference. We remain optimistic that the Opportunity Washington roadmap provides the best guide to state policymakers working to expand opportunity and prosperity.