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Friday, January 26, 2007

Oregon to collectivize

Economists: Private sector worth zilch
Obstacles to union organizing in schools hinder Oregon's economy

What was billed as a debate by dueling economists before legislators who write Oregon tax laws turned on Thursday into a unified message: More public spending on education will pump up Oregon's economy, while the private sector and competition does almost zilch to grow jobs and income.

Both Phil Romero, a University of Oregon economist who was chief economic adviser to former California Republican Gov. Pete Wilson, and Richard Sims, a former chief economist in two states and expert on state tax and fiscal policy whose visit was financed by the Oregon teachers union, agreed on those fundamental points.

They said spending more on public education creates jobs for educators, creates jobs for those who serve them and draws new businesses that want a well-educated work force and good schools for their employees.

By contrast, they said, giving corporations legal protections to operate in a competitive environment does not draw employers or change corporate behavior. The private sector reduces the money available to provide public services without a corresponding benefit to the economy, they said.

Lawmakers on the House and Senate revenue committees, which write tax laws have crafted a tax policy that, in recent years, has yielded too little revenue to keep spending on schools and universities up to the national average.

Rep. Phil Barnhart, D-Eugene, the new chairman of the House Revenue Committee, said he was glad to get an unequivocal answer about the wisdom of that approach: From an economic standpoint, it's nuts.

"For years, the debate in the Oregon Legislature has been over whether you can enhance economic development in Oregon through a free-market economy. Today we didn't hear two different sides. We heard a unanimous 'no.' We should stick to raising the dollars needed to provide education, transportation, safety and infrastructure. And the economic growth will take care of itself," Barnhart said.

Romero said that a growing state government grows the economy, as he said happened under his watch as California climbed out of a recession in the 1990s. He agreed with Senate Revenue Chairman Ryan Deckert, D-Beaverton, that a smart strategy for Oregon - given its relatively low spending - is to raise taxes and spend them on education.

"I actually think that is a very good idea, with an important caveat," Romero said. That strategy "needs to be married with strategies that make it easier for unions to organize in Oregon schools." Romero also advocates for regulated monopolies in the private sector, raising capital gains taxes on the rich, and adding a new layer of regional government modeled on Metro, but with a charter strictly limited to education.

Private sector competition is a dumb way to try to grow the economy, the economists testified Thursday, because corporations don't know until after the fact whether their actions for the year will lead to profits or losses. "You couldn't waste money any better than that," Sims said of the competitive market.

The Oregonian, Jan. 26, By BETSY HAMMOND

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