As we have written previously Thomas Friedman and Michael Mandelbaum in their terrific new book That Used To Be Us lay out the right goal for economic policy: “the purpose of the exercise: It is not simply to reduce the deficit but to insure prosperity. Solvency is vital, but it is not enough.”
Their recipe for meeting that goal are what they call the five pillars of prosperity. Which they argue the country has pursued on a bi-partisan basis for most of its history. And now are the pillars that countries across the globe are pursuing to compete with us. But we now – inexplicably – have abandoned to our detriment Their pillars are:
- Providing public education for more and more Americans.
- Building and continual modernization of our infrastructure
- Keeping America’s door open to immigrants
- Government support for basic research and development
- Implementation of necessary regulations on private economic activity
They write: “Taken together, the five make up a uniquely American formula for prosperity, one in which government creates the foundations for risk-taking and innovation delivered by the private sector. This formula has made possible America’s two centuries of increases in living standards. It is what has made America the world’s greatest magnet for dreamers everywhere.” They continue: “if we do not invest in upgrading our formula, we will forfeit the indispensable condition for sustaining the American dream and maintaining American power in the world: economic growth. Anyone who says we can forgo spending of this kind does not understand either American history or the world in which we are now living.”
The goal, formula and actions that Friedman and Mandelbaum propose for national economic policy should also be the goal, formula and actions of state and local economic policy here in Michigan. We too need to focused on prosperity as the goal, not just balancing budgets. We need to understand that the five pillars are the formula for rising standards of living here now more than ever in a flattening world. And then need the courage, as I laid out in a post called A budget to grow the Michigan economy, to adopt a combination of spending cuts in low priority areas, reductions in current and future public employees and retirees compensation and tax increases. Those are the actions that will free up the resources to make the necessary investments in the five pillars of prosperity.