Political economy

Matching the supply of knowledge to the demands of government

click to enlarge Sen. Dave Syverson, R-Rockford - PHOTO BY TIM WARD VIA WIKIPEDIA.ORG
Sen. Dave Syverson, R-Rockford
Sen. Dave Syverson, R-Rockford
“Because economic decisions are made by elected officials every day,” said Rockford state senator Dave Syverson to the Register Star recently, “we need to have officials who understand the economic impact of what they do.” Illinois lawmakers who do not understand such things, in the view of the Rockford Republican, have devastated the state’s economy, catering as they have to “narrow interest groups” who’ve never met a payroll.

I guess so. Maybe. There’s no disputing that decisions by Illinois lawmakers have had a devastating effect on the state of Illinois’ economy. However, it is by no means clear that state and local governments in Illinois have made it impossible for firms to do business here, except for those firms that sell to state agencies. In March, Site Selection Magazine reported that Illinois ranked No. 3 among U.S. states in the number of announced new plant openings. Also, the 385 companies that either expanded operations or located in Chicago in 2014 led the magazine to name the city the top U.S. metropolitan area for the second straight year.

Perhaps some of our businesspeople don’t understand economics either.

It used to be different, said Syverson. During the long Republican ascendancy that lasted from roughly the end of the Civil War to the Great Depression, when Democratic Chicago was gerrymandered out of its fair share of seats in Springfield, businesspeople from Main Street to the railroads – Republican to a man – controlled the legislature, most city halls and the courts. It was the era of the part-time legislator, and business owners (including farmers) were among the few classes who could afford to spend time in Springfield tending to the public’s business. Such people, Syverson told the Rockford paper, understood the impact of government fees, taxes and regulations on the wider economy.

That those members understood the impact of government fees, taxes and regulations on their businesses is clear from many policies they adopted to reduce them. However, such policies also were indifferent if not hostile to the needs of the wider economy – that is, the economy that includes workers and their families. The unhappy results explain the adoption of market reforms and worker protection programs whose fees, taxes and regulations vex Syverson and his colleagues.

 Syverson’s ambition, he explained, is to make sure all lawmakers “understand the economics of the people creating jobs.” Good idea. Let’s do that. Let’s make sure that lawmakers understand that state taxes are only a minor factor in location decisions, that giving tax subsidies to retailers is a mug’s game, that all that “wasted” government spending ultimately ends up in the hands of businesses, that forward-looking firms want good schools and roads and public transit – things that too many Illinois Republicans misconceive as wasteful government spending rather than needful public investments.

Let’s also make sure that elected officials understand the economics of the people who have jobs. For example, careful study might also clear up a confusion, common among the Randian right, between makers and takers. “Today, the majority of our local officials are social workers, teachers and other government employees. They don’t understand the overall impact their decisions have on society as a whole,” Syverson said. I would say that social workers and teachers in particular know more about society as a whole than do most of the business people I’ve known. Conservatives tend to lump such government employees as public health nurses or schoolteachers as unproductive, insofar as they live on other people’s money. But healthier workers means more productive and dependable workers; schoolteachers do with raw brains what mills do with raw steel. The result is the same – more economic output. Yes, creating jobs is important, but so is creating lives.

All of which actually strengthens Syverson’s point that people in official positions ought to know more about economics. But how might they learn it? The senator’s proposed remedy is to require newly elected legislators, aldermen and county board members to take an eight-hour community college-level economics course every two years that would cover “basic economic theories and the interaction between economic theory and governmental policy.” The  proposal calls for the program to be established by the Econ-Illinois Council on Economic Education at Northern Illinois University, which specializes in introducing grateful eighth-graders to such concepts as opportunity costs.

Syverson insisted to the Register Star that his introduction to the dismal science would not be developed by “a university economist who’s never worked in a real job.” Of course, university professorships were never meant to be real jobs, which suggests that some of our lawmakers also could use a refresher course in the history of higher education. Syverson himself was a business major at a Rockford community college. (He owns an insurance firm.) One hopes that one of the lessons to be imparted by his scheme is that running a business – which demands energy and management and sales expertise – no more makes one an economist than growing corn makes a farmer a climatologist.

Contact James Krohe Jr. at KroJnr@gmail.com.

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