We’re giving American society’s seed corn to the wealthy

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.