Senator Mark Warner critiques modern American capitalism during U. of C. visit

By NATHAN WORCESTER
Contributing Writer

Senator Mark Warner (D-VA) came to Ida Noyes Hall at the University of Chicago to discuss his views on fiscal policy, the gig economy, and the future of capitalism in the United States. The event, which was free and open to the public, was hosted by the University of Chicago’s Becker Friedman Institute for Research in Economics (BFI).

Warner was introduced by Provost Daniel Diermeier and economics undergraduate Lindsey Currier. He talked with the BFI’s director, Professor Michael Greenstone, a University of Chicago Laboratory Schools alumnus who has advised Presidents Obama and Trump in the past.

Warner predicted that history would credit Bush and especially Obama with taking correct if imperfect steps to prevent the 2008 recession from spiraling into a depression, singling out the bank bailouts, the stimulus package, and the efforts of former Federal Reserve chairman Ben Bernanke and former Treasury secretary Tim Geithner.

“All that combined led us to where the economy has recovered now. While we’re approaching full employment, we’ve not seen… job growth go along with the economic recovery at the level that I would like to see,” said Warner, who also predicted that the 2017 tax reform bill will be viewed as a disaster by history.

Warner struck a particularly dire tone when he spoke about the federal government’s “lack of fiscal discipline.” After noting that the United States’ debt-to-GDP ratio was approaching 80 percent to 90 percent, which he claimed was a criss point for economies, Warner warned that “this debt is gonna get us.” He argued that Republicans have contributed by increasing spending while cutting taxes and that Democrats have contributed through their unwillingness to “acknowledge the math about the fact that we are growing older” when considering cuts to entitlement programs.

When Greenstone asked where academics are falling short when translating their research to policy, Warner stated that there was a need for additional research justifying additional expenditures on education, basic research, and infrastructure.

Warner, stated that the nascent gig economy was promising but had also contributed to a larger trend in which companies outsource non-core jobs abroad or to contractors. Warner partly faulted what he called “short-termism” by many companies. He also articulated an urgent need for social safety programs that are not contingent on employment. Warner stated that such programs could potentially be managed by the private sector rather than by the government.

“Part of the disillusionment in our society today is not only based on income inequality but income insecurity,” said Warner. “Unless we can create a portable benefit system as well as income smoothing tools… the amount of social unease is going to exponentially rise.”

He also stated that he was open to giving companies better corporate tax rates if they in turn invested in worker training and noted that, at present, training generally appears as a liability on corporate balance sheets.

“Let’s take a very successful tool – the R&D tax credit… and apply an R&D tax credit for human capital upgrowth,” said Warner. “Why not put in place a human R&D tax credit for people who make less than $90,000?”

When Greenstone asked why men are struggling within the educational system, the job market, and many other areas, Warner described the harm visited upon many rural Virginians by globalization. Relatedly, Warner expressed strong skepticism about universal basic income.

“It sounds like a Silicon Valley dreamed-up solution from a group of folks who made a lot of money and then transfer the responsibility back to government to take care of everybody,” said Warner. “There is not only material sustenance that comes from work, but there is value that comes from work, and particularly amongst men. Women have [family raising], and men still have more of a reliance on work [for] self-value.”

Warner also talked about the Russia investigations, which he called a “pink elephant in the room.” This folksy idiom prompted some in the audience to turn around and look for an actual pink elephant.