By Marc Jampole
The expression “eating the seed corn” is often used as a
metaphor for not investing in the future. The expression means that a society
or company is spending all its money instead of using some of it to make
investments in the future or, in the case of a family or individual, saving
some of it. For a society, those investments include public education; programs
that insure that children—our citizens and workers of the future—are well-fed
and healthy; new roads, bridges, sewers and mass transit systems; and research
into basic and applied science.
There are many instances of companies and societies eating
their seed corn. For example, the decline and fall of the Polynesian culture on
the South Pacific island of Rapa Nui is now blamed on humans in this advanced
civilization cutting down the forests, leaving them with no raw materials to
build fishing vessels. On the business
level, anytime a company decides to stick with an old technology that puts it
at a competitive disadvantage or gives a bigger payout to investors while
cutting maintenance and training budgets is eating its seed corn.
In the case of the United States in the 21st century, we
aren’t eating our seed corn, we’re giving it to the wealthy for their private
use and storage.
We see proof that our seed corn is not being planted for
future crops virtually every day in stories about food stamp cuts, collapsing
roads and college students going into debt. One recent example is an article I first saw in the Pittsburgh Business Times titled “Beaker is Half Full” about the decline in government
support for science research. Between
10 years of flat federal science research budgets, the effects of inflation and
the across-the board sequester cut of 5.5%, the article calculates that the
purchasing power of National Institute of Health (NIH) grants has declined by
about 25% over the past decade. Whereas in 2001, 32.1% of NIH grant
applications received funding; the percentage is now down to less than 17%.
Only a right-wing fool would claim that NIH is doing a better job at weeding
out badly formulated research proposals. No, what’s happened is we’re doing
less research. The numbers for the National Science Foundation (NSF) are
similar.
As should be expected for a business journal, the article
looks at the business aspect of the news, which in this case means the business
of university research, one of the most important economic sectors in contemporary
Pittsburgh. The article cites facts
showing the recruitment of graduate students is down, as is interest in careers
in science research. The article quotes professors who confess that they think
it’s unethical to encourage students to go into a research field. A survey by
the Chronicle of Higher Education
found that economic pressures have forced more than half of the 11,000
scientists surveyed to recruit fewer graduate students or abandon an important
area of research. The article focuses
much more on the loss of direct and indirect jobs from the cutbacks and less on
what’s going to mean to our future: fewer diseases cured or prevented; fewer
advances in manufacturing efficiencies, alternative energy sources and new
materials; fewer new products to enhance our quality of life; a slower response
to climate change, environmental degradation and emerging diseases: in short, a
static society that slowly succumbs to its own inadequacies instead of
overcoming them through knowledge.
As a business publication, the Pittsburgh Business Times would never suggest what is the only way
to stem the decline in American scientific research. It’s the same solution for
the problems plaguing public education, our infrastructure and our commitment
to growing healthy children: spend more money. But spending more money means
raising taxes and no magazine for and by business would ever make that
recommendation.
Our current tax structure requires the wealthy and ultra-wealthy
to contribute historically low amounts to advance the public good.
Right-wingers constantly make the pipe-dream claim that when we lower taxes on
the wealthy, we give them more money to create jobs. In the real world, however, the rich mostly
hoard their additional income. Their wealth builds while our roads and bridges
crumble, our advances in science decline and more of our children receive
inadequate educations. In a real sense,
instead of planting our seed corn, we let the happy few hoard it for
themselves.
Nicholas Kristoff has a wonderful article in the New York Times that lists five
enormous sources of public revenues that could be used to increase the budget
for science research, funding for public education and/or rebuilding our
infrastructure. All five involve removing a tax break that only the wealthy
enjoy: tax breaks for private planes and yachts; the “carried interest” loophole
for hedge funds; the U.S. commitment—estimated at $84 billion—to our “too-big-to-fail”
banks and the large tax abatements that cities, counties and states give the
corporations, estimated at $80 billion a year.
To Kristoff’s list I would add the capital gains tax break for
any investment income not produced by a direct investment into a company. A
direct investment into a company would be buying stock at the initial public
offering. Examples of other investments for which Americans—primarily rich
folk—get a capital gains tax break include when selling stocks or bonds bought on
secondary markets or artwork and real estate.
I would also raise the highest incremental tax rates to at least 50% of
income over $500,000 a year; make it impossible for companies to avoid taxes by
creating offshore shelters; and impose an annual wealth tax on people with more
than $5 million in assets, not including their primary residence. These ideas
sound radical, but in fact all of them except the tax on wealth used to be the
norm in the United States.
If we don’t do something, American society will experience a
rapid decline. It won’t matter to the wealthy, who will be able to transfer
their residence and assets to whatever country is most stable. But the rest of
the country will see living standards and the quality of life decline to the
standards of undeveloped countries. And the ironic part of it is that the 99%
will not even have had the chance to enjoy the short-term pleasures of eating
the seed corn, as they will have let the wealthy steal it from them.
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