Let Businesses Speak Truth to Folly

December 6, 2009By Chuck Sheketoff

Recent news stories highlight a major challenge that legislative leaders faced when they adopted their balanced budget plan: the refusal by some business lobbying groups and some otherwise reasonable people to acknowledge that the public sector is an important part of the economy.

First, the Statesman Journal reported how rebuilding the Oregon State Hospital was benefitting about 100 Oregon businesses, many of them local to the Salem area. The breadth of the impact was clear — employing workers from landscapers, plumbers, roofers and electricians to engineers and glass and flooring suppliers. As chronicled there and in the Gresham Outlook, a 109-year-old business is reopening a mothballed facility in Gresham to make bricks for the project. The $280 million state hospital project is putting significant public money — yes, tax dollars — into the pockets of businesses operating in Oregon.

Many of the construction-related businesses benefiting directly from the project may be members of the Oregon-Columbia Chapter of the Associated General Contractors (AGC). Yet, two days after the Statesman Journal story ran, The Oregonian hit the stands with an article featuring that trade association’s opposition to the revenue package that was part of the balanced budget plan. Apparently, AGC wants voters to ignore the fact that the state hospital project is the largest use of General Fund financing this biennium and that state income tax revenues support General Fund-financed construction jobs.

Some of the disconnect stems from lobbyists perpetuating the myth that state taxes somehow take money out of the economy. The claim may be good bumper sticker fodder, but it is the equivalent in economic theory of the claims of Flat Earth Society members. Sadly, too many politicians and business lobbyists spout the deceptive bumper sticker talk, no matter how absurd.

The public sector is an integral part of the economy, not separate from it. Find me a business that has two cash registers, one for government employees’ purchases and one for everyone else. In every corner of Oregon the private sector benefits directly and indirectly from public spending.

The economic flat-earthers ignore headlines like “State hospital project provides an economic injection for Oregon businesses” and instead complain that public sector employment has not fallen like private sector employment during the Great Recession. Never mind the role the public sector has played as a safety net for the private sector and its employees. Never mind the thousands of private sector jobs throughout Oregon that are directly or indirectly the result of public sector spending, including jobs on the state mental hospital construction project, in the health care industry made possible with Medicaid dollars, with private businesses that provide food to government office buildings and meetings, and with private sector providers of services to emotionally disturbed children and to our elderly and disabled at long-term care facilities, to name a few. Never mind that we all should be thankful the public sector was the last actor standing in the face of the worldwide economic collapse.

Instead, the economic flat-earthers try to whip up public employment envy as a way to mask their own refusal to acknowledge the reality that private sector employers need a healthy public sector.

So how should Oregon’s legislators counter the economic flat-earthers?

I think the best practice would be to bring evidence of its absurdity directly to Oregonians throughout the state. Any business that does business directly with the state — a contract to provide services or supplies, work on a public works construction job, receive a tax credit subsidy, or benefit from a publicly-funded program such as those provided by job training or small business development centers — should be required by the Legislature to make public presentations about the important role that public sector spending had on their business or to put “your tax dollars at work” notices on their trucks, buildings, letterhead and such.

Oregonians would be well served by hearing firsthand from the businesses that accrue the benefits exactly how public sector spending is part of the economy. Imagine how many people would hear about government’s important role among private-sector businesses in Oregon if just the 100 Oregon businesses benefiting from just the Oregon State Hospital job had each made two community presentations about the importance of that work to their business?

People would remember the stories the businesses told. And just as they know that the earth isn’t flat, more Oregonians would know from the business community itself that the public sector is an important part of the economy in Oregon.

Charles Sheketoff is executive director of the Oregon Center for Public Policy.

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