As a former member of Maine’s Consensus Economic Forecasting Commission, I have learned to remain humbly silent about any prognostications I may have made. Nonetheless, I find it gratifying that just a week after saying that we would do well to pay more attention to principles than to partisanship, the headlines proclaim that we are – at least so far– still a nation with an independent judiciary based on the principle of a constitutional separation of powers. However the issues of executive power and immigration reform may ultimately be resolved in the case of temporary bans, it is clear that we all need to be involved in formulation of whatever new social contract emerges from the constitutional turmoil in which we are now embroiled.

To my mind, the most important element such a “contract” must include is an expanded version of economic adjustment assistance. It is often forgotten that many of the central elements of the implicit social contract that emerged nationally in the New Deal of President Franklin Roosevelt in the 1930s – Social Security, unemployment insurance, wage, hour and worker organization regulations – were not created by our federal government, but borrowed from the most successful experiments conducted in a variety of state governments. And these programs were, in turn, the product of collaborations among social activists, labor unions, academic researchers and philanthropists.

Ultimately, these elements of the New Deal social contract were based on an evolving understanding of certain of our foundational goals. Individual liberty and equality before the law could, in the industrialized world of the 1930s, have practical meaning only within a community that created programs that at least tried to ensure some degree of equality of opportunity to all citizens. Hence, a tax on wages that went into a fund to ensure that those who had worked for years could enjoy some level of financial support for their last, non-working, years. Hence, another tax on those working today to go into a fund to help those who may lose their jobs tomorrow.

The traditional New Deal economic adjustment assistance programs worked well into the 1980s, but they are clearly inadequate to the demands of the post-1980s globalized economy. And just as the programs of the 1930s emerged to address the socio-economic changes from the agriculture-based economy of the 19th century, so programs today must recognize and adapt to the globalized and digitized economy of the 21st.

Through the better part of the 20th century, unemployment insurance was relatively effective in buffering the worst of the business cycles. When business declined and workers were laid off, funds collected when they were working could be used to tide them over until business improved and they were called back. Since the 1980s, fewer and fewer workers were ever called back. Each recession served as motivation for businesses to become more productive – to produce more with fewer workers.

What the unemployed need today – in addition to pure wage replacement – is the three R’s: re-engagement, retraining and relocation assistance. To anyone following the labor market closely, it is obvious that skilled and motivated human beings are increasingly the scarcest and most valuable resource on earth. Designing and implementing the programs to meet this need will be the battleground from which some political party will become the majority party for the next generation. Will it be the Democrats? The Republicans? The Greens? The nationalists? Who knows, but if someone doesn’t, the United States’ experiment in democracy will certainly fail.

In the interests of focusing discussion, here’s a proposal: Reduce the federal corporate income tax rate from 35 percent to 20 percent. Create a federal-state worker learning assistance program modeled after the federal-state unemployment assistance program. Dedicate all federal and, where applicable, state corporate income tax revenue collected to this newly created worker learning assistance program. Include in this dedication all corporate income tax collected on repatriation of any of the estimated $2.4 trillion of corporate income held abroad by U.S. corporations on earnings they made outside the U.S. Include an additional 5 percent credit on earnings repatriated within six months of enactment of this program. Establish a board comparable to the National Science Foundation to solicit, evaluate and allocate money to proposals for use of these funds from schools (public and private), universities, labor unions and any other entity with ideas for helping workers displaced by business disruptions caused by international trade or abrupt technological change.

Such a program would, I believe, do more to make real for the 21st century the fundamental American principle of equality of opportunity than any other public program we could design. It would simultaneously productively disrupt our glacially slow educational institutions, more fully exploit the opportunities presented by the digital communications revolution and begin to stem the alienation and hopelessness that feed the anger and addictions that so threaten our social fabric.

Charles Lawton, Ph.D., is a consulting economist. He can be contacted at:

[email protected]

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