Here are the issues the Republican debate should address (but probably won’t)
At Wednesday evening’s Republican debate, you should expect a lot of talk about immigration (Trump’s favorite issue) and taxes (the perennial Republican issue). But there are a lot of important business issues that will not even get so much of a mention. Here’s a rundown of the most important economic topics that the candidates should be discussing in the Republican debate, but likely won’t:
The government released new statistics on poverty on Wednesday, and the numbers highlighted something that we all know is true about the modern U.S. economy: It no longer lifts all boats. One of the greatest Wall Street bull markets in history, an unemployment rate near 5%, and continued improvement in the U.S. economy hasn’t put a dent in the poverty rate, which the Census Department reported stood at 14.8% of the population, basically unchanged from the year before. Also concerning is the fact that average workers’ wages have remained stagnant.
Everyone knows that inequality is a major problem, and some economists say it’s the reason the U.S. economy isn’t doing better than it is. Despite that, there was little talk of the matter at the first Republican debate. The only one who came close to addressing the issue was Ohio Governor John Kasich, who said economic prosperity needed to be felt by all. Ben Carson is the only Republican candidate who supports increasing the minimum wage. Donald Trump would like to increase taxes on the rich.
U.S. infrastructure, our bridges and highways and rail system, is badly in need of an upgrade. Don’t expect the topic to come up during Wednesday’s Republican debate. Trump has said very little about infrastructure spending. When Jeb Bush was governor of Florida, he opposed a high speed rail service in the state. New Jersey Governor Chris Christie canceled the construction of a tunnel that would have eased train traffic into and out of New York City.
Despite the rapid rise of a number of tech startups, and the well-covered proliferation of robotics, productivity overall in the U.S. has been plunging. Economists aren’t sure why. Some think we may just be measuring productivity incorrectly. But if that’s not the case, a drop in productivity could be a major sore spot for the economy. Jeb Bush has said that U.S. workers need to work longer hours. But such a comment avoids the real question, which is why isn’t the hours that U.S. workers do put in as valuable as they once were?
Some argue that there’s a mismatch between workers’ skills and the roles companies are trying to fill. So promoting more education or job training programs could help. Another problem could be low wages in general. If wages remain low, then companies have no need to think about ways to boost productivity. So raising the minimum wage could be an answer, again not something you are likely to hear much support for at the Republican debate.
Stock buybacks are at all-time highs. Some people think this is a misuse of corporate cash. But there is nothing inherently bad about buybacks. The theory is that as some companies give back money (presumably older, slower ones), investors can put that money to use by investing in younger, fast-growing ones. But with more tech companies staying private, it’s not clear the stock market is as good as it used to be at distributing capital. Unlike dividends, buybacks are not a very efficient way to distribute cash to shareholders. Shareholders can profit only when they sell their stock. But since there isn’t an immediate tax bill, unlike for dividends, shareholders generally prefer buybacks. And they don’t pay taxes until they sell either.
It could be that this is the best use of companies’ cash, but investment in fixed assets is at its lowest level in 60 years. So you have to wonder if the incentives are backwards. Some people have proposed taxing buybacks, like dividends. It’s not a simple issue, which could be why Republicans have largely avoided it. But Hillary Clinton has discussed the problem of much short-term thinking in corporate America.
Education and the skills gap
The U.S. is falling behind in math and science. And many technology companies would like politicians to reform immigration policy in order to make it easier to bring in skilled workers. Trump, who wants to keep immigrants out of the U.S. at seemingly all costs, has performed really well in recent polls, so you are unlikely to hear much support for making immigration easier for anyone.
Economists are increasingly concerned about the rising number of professions where you need to have a license to get a job. They say that such barriers to work could be harmful to the job market in the long run. In the 1950s, just 5% of workers had some sort of licenses. Now it is up to 25%, according to the White House. Licensing can protect workers and improve safety for some professionals, but it can also make getting getting a job more difficult for those who don’t have the money to get training. Republicans love to talk about free markets, so this should be a core issue. Unfortunately, it’s just one of a number that you are likely to hear little about at the Republican debate.