Joel Kotkin
A Report by the Economic Growth Program, New America Foundation Supported by the Bernard and Irene Schwartz Foundation
Back to Basics: A Pro-Growth Public Investment Strategy
Joel Kotkin November 2007
Washington, DC
Back to Basics: A Pro-Growth Public Investment Strategy
F
or more than a decade, rising asset prices have driven the economy, benefiting the wealthy but doing relatively little to improve either the economic status of the majority of Americans or the country’s overall competitiveness. Rising stock and housing prices created staggering short-term increases in wealth for some, but did little to bolster the nation’s preeminence in technology, industry, or agriculture. In order to retool the economy and generate balanced, robust job growth, the government should focus on rebuilding and enhancing the nation’s energy, transportation, and communications infrastructure.1 Judicious investment in renewing and creating critical public goods will provide opportunities to all income classes and help ensure that employment keeps pace with population growth. We refer to this approach as “back to basics,” a return to the sort of sensible public agenda that strengthened the economy and promoted societal well-being in the past. In contrast, over the past 20 years, while returns to capital and the incomes of those in certain elite occupations grew rapidly, wages for lower-income and middle-class workers stagnated.2 To be sure, most families spend much less on food than they did in 1960, and the number of people earning over $100,000 a year has risen by over 13 percent since 1979.3 Yet, it has become increasingly difficult for families with two incomes to maintain a “middle-class lifestyle,” and single-earner households find it hard to keep pace with the rising costs of education, housing, and health insurance.4 Almost all of the recent gains in wealth have been achieved by the...
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