Can We Bend the Arc of Global Capital toward Justice by Investment in Human Capital?
Arnold Packer
The Johns Hopkins University, retired
Please cite the paper as:
Arnold Packer, (2016), Can We Bend the Arc of Global Capital toward Justice by Investment in Human Capital?, World Economics Association (WEA) Conferences, No. 1 2016, Capital Accumulation, Production and Employment:, 15th May to 15th July 2016
Abstract
Can We Bend the Arc of Global Capital toward Justice? Yes, provided “idle” capital is wisely invested in human resources. The world economy is suffering from a shortage of investment opportunities. The signs are slow economic growth in the face of very low, even negative, interest rates. Prominent economists (Gordon, Krugman, Summers, Stiglitz) forecast that these conditions will persist for many years.
At the same time, a million children are born in poverty each year in the U.S. Careful evaluations show decent (seven to ten percent according to James Heckman) returns for strategic interventions targeted on these children and their families. Pay for Success, funded by Social Impact Bonds, are a means for controlling the risks associated with these interventions. Providers are paid only if results are achieved. Investors experience with PFS during the last five years in Great Britain and elsewhere have encouraged two statewide efforts (South Carolina and Connecticut) in the United States.
I agree fully that investment in human capital is a primary path to boosting productivity in rich nations like the U.S. and Britain. In this light, it would be interesting in the future to hear more suggestions by the author on methods for tapping further into the cistern of trillions of dollars of profits held by American firms which are now sitting idle for want of promising opportunities for investment.
From a different slant, I would go further and claim that a particular type of human capital can have a whopping impact in wealthy countries and even more punch in the emerging regions of the world. The spry subset takes the form of social capital, as in the case of muted levels of corruption throughout the society in tandem with copious amounts of trust amongst the participants.
In contrast to the dogma in some circles, globalization is in general a win-win game. To begin with a counterpoint, the author cites research which portrays the loss of jobs in the manufacturing sector due to outsourcing by American firms to foreign vendors. But the author also notes that manufacturing comprises only a small part of a modern economy such as the American one. While making the argument, however, he glosses over the cornucopia of trillions of dollars in effective income enjoyed by consumers of all stripes – and thus the entire population including those within the manufacturing sector – thanks to the expanded array of products on the shelves coupled with the cutdown of prices.
To cite another example of the mutual gains due to global growth, a poor country that turns into a middle-income economy will have the wherewithal to ramp up their imports from the rich nations. The consequence is to support a multitude of high-paying jobs in the wealthy nations in areas ranging from luxury cars and designer clothes to consulting services and inbound tourism. In this way, each party ends up as a winner.