Bernie Sanders as Winnie the Pooh? In my weekly column at Forbes.com, I said so. And I proved it!
I, passionately, disagree with most of the prescriptions of Bernie Sanders.
Yet his empathy and passion are great things.
In Winnie the Pooh, A.A Milne wrote:
Winnie-the-Pooh lived in a forest all by himself under the name of Sanders.
“What does ‘under the name’ mean?” asked Christopher Robin.
“It means he had the name over the door in gold letters, and lived under it….”
Milne made Pooh famous as the “Bear of Very Little Brain.” Yet also, Pooh earned the status as marquee hero of two of the most cherished classics in children’s literature. He earned that, in large measure, by his kindness and decency. I nominate, without implied irony or insult, Sen. Sanders as the Pooh Bear of the 2016 presidential election.
Sen. Sanders uniquely is speaking right into the economic distress that workers and working families are feeling after 15 years of economic stagnation: unemployment, underemployment, wage stagnation, paralyzed income mobility, and the shriveling of the American Dream. All these are very real and very distressing to us voters.
Sanders speaks directly, and with great empathy, into this predicament. Unfortunately, in my view, most of his prescriptions have, when tried, proved toxic rather than tonic. I gave Sen. Sanders an A+ for diagnosis, and A+ for bedside manner, and an F for prescribing a cure worse than the disease.
I also wrote that “Bernie Sanders sings from a hymnal that brings music to our ears. His description of the problems caused by almost a generation of less than 2% annual growth clearly is a vote bonanza for him. Republicans can steal a page from his hymnal plus come up with real solutions.”
How can we do that without sounding like (or, let’s face it, some of us being) shills for business over workers or capital over labor? The late Nobel Economics Laureate Gary Baker wrote eloquently about what he called “human capital.” He won a Nobel Prize for observing that human capital is as valuable, and should be treated with as much TLC, as fixed capital. Becker:
To most people, capital means a bank account, a hundred shares of IBM stock, assembly lines, or steel plants in the Chicago area. These are all forms of capital in the sense that they are assets that yield income and other useful outputs over long periods of time.
But such tangible forms of capital are not the only type of capital. Schooling, a computer training course, expenditures on medical care, and lectures on the virtues of punctuality and honesty are also capital. That is because they raise earnings, improve health, or add to a person’s good habits over much of his lifetime. Therefore, economists regard expenditures on education, training, medical care, and so on as investments in human capital. They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets.
Education, training, and health are the most important investments in human capital. Many studies have shown that high school and college education in the United States greatly raise a person’s income, even after netting out direct and indirect costs of schooling, and even after adjusting for the fact that people with more education tend to have higher IQs and better-educated, richer parents. Similar evidence covering many years is now available from more than a hundred countries with different cultures and economic systems. The earnings of more-educated people are almost always well above average, although the gains are generally larger in less-developed countries.
Bernie is on to something. Right now, fixed capital receives preferential treatment to human capital. That is neither right nor politically smart for the GOP to champion.
There is a lot of room for a 21st century supply side economics focusing on equalizing the treatment between fixed and human capital. This does not imply that the “rich” ought to be “soaked,” that tax rates on the wealthy should be raised, or that capital ought to be subjected to punitive tax rates or regulations. Far from it!
Capital is simply a shorthand way of saying “tools to increase productivity,” and I am an unrepentant capitalist. That said, capital needs labor as much as labor needs capital. Good policy best treats both neutrally. (And candidates need voters even more than they need campaign contributions.)
Many supply side prescriptions have turned into a thin caricature of Reaganomics. Reducing the corporate tax rate, while a good idea, is a far cry from President Reagan’s promise, a promise kept, to reduce marginal tax rates across-the-board. Across-the-board meant for everyone, not just the highest brackets. Reagan won. He implemented this (and more). This, and the Good Money climate created by the Fed with his support, created millions of good, new jobs. Reagan won reelection, by a landslide. With Human Capitalism, a GOP contender can take this success up to the next level.
In my Forbes.com column, I praised Senators (and presidential candidates) Marco Rubio and Rand Paul for leaning meaningfully in the direction of Human Capital. If a presidential contender wishes to draw the same kind of love as Bernie Sanders now is, he or she will provide some real solutions to the economic distress of workers. He or she will do this by creating an updated supply side economics, one based in Human Capitalism. This is an extension to, not an erosion of, supply side doctrine.
While corporations and the wealthy contribute money opulently, we voters outnumber them by an estimated 99 to 1! How to galvanize and mobilize those voters?
Bernie Sanders is raking in votes and money as the Pooh Bear of the 2016 presidential race. Human Capitalism, as laid out by the late Gary Becker, offers a way for a candidate to offer the kindness of Pooh enhanced with the brains of … Owl. Human capitalism easily could be a vote bonanza for whoever chooses to use it.
Ralph Benko, internationally published weekly columnist, co-author of The 21st Century Gold Standard, lead co-editor of the Gerald Malsbary translation from Latin to English of Copernicus’s Essay on Money, is American Principles in Action’s Senior Advisor, Economics.