I was bothered by Russ Fulcher’s April 27 column in the Statesman claiming that control of natural resources is the key to Idaho’s economic future. True wealth doesn’t come from resource exploitation; it comes from worker specialization and the use of capital equipment. Relying on resource extraction for growth is fool’s gold.
To begin with, having more jobs doesn’t necessarily ensure adequate pay. As Fulcher pointed out, Idaho’s unemployment rate is low, but many people are still paid so poorly that they rely on government services. Just because resource extraction has paid well in the past doesn’t guarantee it will pay well in the future. And there’s no reason why service sector jobs, that we presently have, can’t pay better than they presently do.
Our real economic problem is that extreme income disparity has left most Americans without the income necessary to create the demand our economy needs to grow and remain robust. Many of our CEOs are taking more of the national income than they deserve — leaving crumbs for the rest of us. Note that CEO pay is often based upon profitability, so there’s an incentive for CEOs to hold down workers’ wages in order to boost their own. Our economy has simply been tilted to the advantage of a few, instead of being fair for everyone.
There are solutions. We could raise the minimum wage to guarantee that full-time workers can afford their necessities and aren’t reliant on government benefits. We could increase the marginal tax rate on income over a million dollars a year — money that isn’t really earned anyway. This would provide a disincentive to CEOs from taking more than they deserve. The additional revenue could be used to flatten and cut rates for millions of Americans who are underpaid for the value they provide. This type of tax relief would also help small businesses pay the higher minimum wage until the economy becomes more robust and improves their revenue. We could stop illegal immigration and the continual increase in labor supply that it brings. Finally, we could develop trade policies that are fair to American workers, instead of passing free trade agreements with poorer nations that encourage off-shoring of American jobs. Unfortunately, Fulcher’s political party opposes most of these initiatives.
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Natural resource extraction as the basis for economic growth simply isn’t sustainable. Many of these resources are finite. When they run out, what do we rely on to grow the economy? Look at North Dakota’s reliance on oil extraction as the base of their economy. It worked great, for a while.
What we need is a better atmosphere for economic growth. Creating ground rules for the economy that ensure that workers are paid fairly will reduce income disparity and provide the demand needed to drive our economy. Then decisions regarding natural resource extraction can be based on improving our strategic position in the world, rather than being a crutch for politicians who apparently don’t know how to create economic activity and growth without it.
Aaron Swisher is an economist and the author of “Resuscitating America — An Independent Voter’s Guide to Restoring the American Dream.” He lives in Boise.