All posts by Tim Grady

The Ohio Investment Bank and Why We Need it Now

I ran for state representative in 2018 on the premise that our government and policy makers were trapped in the 20th century and required new economic thinking to build a 21st century economy. That new economic thinking manifested itself in one ambitious policy proposal, the Ohio Investment Bank. I’ve spoken of it at length throughout the campaign but I don’t think I ever did it justice, I failed to articulate its potential as well as the urgency of Ohio’s economic situation. We have a problem in this country wherein we seem incapable of confronting a crisis before it manifests itself.  The election has come and gone with no significant change in Ohio’s government but I do not believe it’s too late for action. Even if our elected officials refuse to act now, when the impending economic crisis hits, it will be invaluable to have a plan like the OIB waiting in the wings.

Why is it Necessary? 

It’s not a secret that Ohio has been left behind by quickly changing national and global economies. Forty years ago manufacturing and heavy industry began to disappear in Ohio and the region became known as the Rust Belt. Our population has fallen as our best and brightest fled to better jobs in warmer climates. Economic despair as much as anything else led to the conditions in which the opioid epidemic boomed.

This is a path we will continue to progress toward unless there is a significant change in our way of thinking about the economy. Government and businesses operate within the same, flawed intellectual framework of neoclassical economics. Neoclassical economics came to dominate economic theory and policy in the 1970s as a response to stagflation. It propagated ideas like humans being perfectly rational, self-interested creatures, that markets move into equilibrium, that the only role for government is in market failure and otherwise should get out of the way, and that corporations have an obligation only to shareholder profit. This is wrong which I suspect much of you know. Economics is not a science no matter how much it pretends it is. Very little of economic theory is backed by empirical results.

The end result of neoclassical economics was the 2008 financial crisis that nearly plunged the world into another great depression. Neoclassical economics created the intellectual justification for the financial sector to dominate all aspects of the economy and, through regulatory capture, the government. This is a process called financialization and it is the biggest threat to the American economy, already it has laid waste to much of it.  I’ve spent much of the last few years campaigning against financialization and written at length on the subject and if you’d like to know more of how finance has had a hand in damaging every aspect of the economy Change Finance gives a comprehensive description.

To solve these problems we need a seismic shift in society, a reevaluation of our approach to economic policy, to business, and to education. The Ohio Investment Bank cannot possibly achieve this, instead what is required is for people to learn and understand what is wrong. Inform people, show them it’s financialization and flawed economic theory at the heart of our economic woes. It’s not immigrants and foreign countries, it’s not politicians and political parties, it’s not greedy corporations and billionaires. We’ve created an environment for poor decision making and we all share considerable blame. What the Ohio Investment Bank can do is demonstrate good economic policy and financial practice while repairing the damage done to Ohio’s economy.

How It Works:

The Ohio Investment Bank is a source of capital dedicated to meaningful investment that creates productive capital and drives further innovation. Innovation and productive capital accumulation are the main drivers of the economy. Private finance has not made these investment as it became more profitable to make money off of money. These are investments, not loans or grants, the OIB is buying a share of the business it is investing in and is looking to see a return on that investment. The OIB will never have a controlling share in any business.

The OIB offers a number of resources and services through its municipal partners/branches for entrepreneurs to build a successful enterprise and vibrant economy including:

  1. Seed and venture capital to help startups get off the ground.
  2. Business management services so that you have the expertise necessary to build your business right.
  3. Export and supply chain services and connections so you can navigate the complexities of the global economy in building your product or service and then find customers around the world and build Ohio’s export surplus (that’s how you do it without starting destructive trade wars)
  4. Help you raise capital from outside investors so your company can grow to keep up with demand. This in addition to any investment from the OIB which will allow you to choose where your capital comes from so you don’t have to rely on any shady investors or corporate raiders who do not have your economic success at heart.
  5. The OIB partners with the technology transfer offices of Ohio’s many exceptional universities so that technologies and advancements developed in the lab can be quickly brought to market and start changing the world while earning additional funding for the universities to pursue their work.

Targeting the right businesses and industries, the OIB will jump-start Ohio’s economy and make us a leader not just in the United States but around the globe. The OIB gives Ohio’s economy the initial kick but the economy will begin expanding rapidly as economies of agglomeration and clustering make Ohio a destination for skilled workers, new industries, and investment.

Gradually the bank will create the technologies to transform Ohio, to deliver energy, food, health care, and transportation cheaply and conveniently to all Ohioans without the government directly providing them through large spending programs or welfare. And as the economy grows, unemployment will decline and wages will rise and fewer Ohioans will need to rely on government assistance.

What Else It Could Do:

  1. Provide student loans at reasonable rates.
  2. Provide responsible mortgages.
  3. Provide business loans.
  4. Provide basic banking services.
  5. Absorb the Ohio Infrastructure Bank and take over its responsibilities.

These are not necessary for the OIB’s success and may not be the best role of the OIB. These are merely possibilities to consider.

How to Pay for It: 

Currently very little of the government’s budget goes to capital creation or investment. Much of it goes to servicing debt, managing the welfare system, or wasteful corporate giveaways designed to attract jobs. The Ohio Investment Bank is a much better use of the government’s money and much less costly in the long-term. The OIB would not need immense funding to be successful, the $2 billion in Ohio’s rainy day fund would be much more useful at the OIB.

Additionally, as the OIB earns returns on its investments it will be able to reinvest the profit in Ohio’s businesses or, if need be, transfer funds to the Ohio government. If the OIB is successful in creating a private sector and economy that adequately provides for the needs of Ohioans, many of Ohio’s largest expenditures would disappear requiring fewer taxes. If the OIB’s revenues are large enough and the Ohio government’s expenditures low enough, taxes could be completely eliminated and the OIB could fund the government’s operations.

Values

One would expect a candidate for office to have a clear understanding of their own values system. And often times, when we cannot be bothered to learn all there is about a candidate personally or politically, identifying them with a specific values system like Christian values, conservative values, liberal values, or what have you, can be a convenient signal of how they’ll act once in office. You can’t know exactly how they’ll respond to every piece of legislation, every unpredictable event that occurs while they’re in office, but if they share your values, they’ll do what’s right. Right?

But I’ve found that most philosophies mean different things to different people. That won’t be a surprise to you, we’ve all seen ruthless party primaries where candidates contend over the title of true conservative/liberal, we’ve all heard people quoting from the same books or sources in ever escalating attempts to discredit the other. I have, in the past, struggled to find a political philosophy that I can identify with, usually bouncing somewhere between classical liberalism, radical centrism, and progressivism. Unfortunately for me as well as clarity everywhere, what those terms mean to people is constantly and rapidly changing as evidenced by the fact I must call it classical liberalism and not simply liberalism.

I still consider myself to be all those things. But ask people what they think any of these terms mean and they’ll tell you something else entirely. I’m done having semantic fights trying to justify my terminology, I’d much prefer to have fights justifying the content of my philosophy. So rather than providing you a short hand to see if my values match yours, I think instead I’ll tell you as clearly and directly what my values are. Actions, of course, speak louder than words, but as I’ve never held office you have no record to hold me to. Fortunate for me, not so much for the voters. Let’s begin.

I’m a radical in that I seek swift and comprehensive reforms, I’m a radical in that I will fight fervently for what I believe to be right, and I’m a radical in that I remain uncompromising in my core values. I’m a centrist in that my policies fall somewhere in the center of the political spectrum because I do not see the community and the individual as being at odds, because I see a role for the government, markets, and commons in building our future, and because I believe in a pragmatic, experimental approach to policy making. I am a progressive like the progressivism of Theodore Roosevelt ready to fight for democratic reforms in government and trustbusting. I am a progressive because I wish to see society progress and push the frontier. And I am a progressive because I see it as an imperative that we make tremendous investments in our future. I am a liberal in that I am unsatisfied with the status quo, I am a liberal in that I am forever distrustful of the concentration of power in any form, and I am a liberal because I fundamentally believe in securing liberty for all people, for all individuals as only a free people can ensure all else that I believe can come to fruition. And, of course, I’m classical because I am simply classic.

That’s a little unsatisfying, I know. None of this is really telling you whether I share your values or not. But do you really care? Do you know what values you hold and how dearly you hold them? I’ve followed politics most of my life and made it my mission to understand the nature of society. Being twenty-two that’s not saying much and I welcome your disagreement with my next point because I so dearly wish to be proven wrong. I’ve asked this before and I’ll ask again because it’s a question we need to grapple with as a country. Do you know what America stands for anymore? I don’t think we stand for anything anymore. Sure, there are those things we claim to stand for but there isn’t a national consensus on what that is, and actions speak louder than words. What do our actions say about us?

On the world stage we bomb, invade, withdraw, and invade again. We routinely hold other countries to a higher standard than we hold ourselves. We’re for free trade when it benefits us, then we’re against it all together. We push for treaties and international law and refuse to ratify it at home. We’re for the liberal democratic order (as in democratic government and free markets) and then we’re best friends with autocrats and dictators when it’s convenient.

At home we claim to love small business then we give institutional advantages to the largest oligopolies. When the recession hit we gave trillions of dollars to the banks that caused it and abandoned the millions of Americans who lost their homes, their savings, and who the banks defrauded. We claim to value liberty and justice, yet we have the highest incarceration rate in the world and a justice system that favors the powerful and the well off. Every politician campaigns on the exploding debt, our crumbling infrastructure, and fixing the welfare system. But in office they spend most of their time on political grandstanding, the bills they do pass are corporate giveaways. The debt continues to grow, infrastructure continues to crumble, and the welfare system continues to be an inefficient, bureaucratic nightmare bankrupting the country without delivering results. More than anything else, fighting the culture wars is what defines our political parties, pandering to the single-issue voters and identity politics. Rarely what decides our vote is what is best for the country or our fellow Americans.

It’s not that our representatives are incompetent or that our government is corrupt. It is like this because there is nothing that unifies us anymore as a country. The government carries out the will of the people, it is beholden to us. But we don’t know what we want, every two or four years we give the other party control, Congress’s approval rating is consistently in the low teens, and a majority of Americans always think the country is on the wrong track, no matter who is in charge. Without core values we have become fickle, easily swayed by a cult of personality, the latest social trends, or whatever our preferred media tells us to want.

Yes, the American people have totally abandoned their responsibility as citizens of this country. And if we aren’t giving our representatives orders, who do you think they’re going to be taking them from? Anyone who can sway the outcome of their next election; the special interests, big donors, talking heads, and their party bosses. We put them in charge of our government, they didn’t have to conspire to take power, we made this happen. I think we might just be lazy idiots, we totally squandered our opportunity as the oldest democracy in the world, probably because we got complacent with it. You want to know my values? Figure out your own first.

But I’m an optimist and still a politician so I’m not going to end this by saying I have no faith in voters and America has no future (Prove me wrong voters, prove me wrong). We need to have a discussion of our values and now that I’ve finished insulting you, your loved ones, and this country, maybe you’re feeling up to it. I will lay out the values and ideals I believe America should stand for, drawing on my previously stated values (convenient that America’s values should agree with mine) and my (selective) reading of history. At the end, I encourage you to disagree, to debate me, to denounce me and everything I stand for, but then you have to stand for something, find the values you truly hold dear, that you can articulate, and that you’re willing to fight for.

 

Liberty

Liberty and freedom are terms that are bandied about quite a bit because of course, who doesn’t love liberty? But at some point we must stop and consider what liberty is and what it means to live by it as a guiding principle. Liberty, in simplest terms, is choice. The greater your ability to choose how you live, how your country is governed, and what you consume, the more liberty you have. That’s not going to be the most common definition, but that’s my definition. Most things in life are out of our control, so those choices we do get to make, while not always important, define who we are. And on a large scale, the choices we make define our future.

Every day we must make choices, small choices like what we have for breakfast and bigger choices like what religion to practice and which political system to support. These choices help us understand the world, they teach through trial and error, what works and what doesn’t. The better our choices, the better our lives. It is then in our interest as individuals, as a country, as a species, to have the most and best choices available to us as possible.

That choice is so important to a better world is not something everyone has always understood and many still do not understand today. It is why, in the long run, dictatorships and planned economies tend to fail. These systems of government were choices we had and choices we still have, but we do not choose them because we’ve learned from the mistakes of others and the past. Yes, there are still people in this country who would advocate for those forms of government and we must guard against that. One way to achieve this is to remember what liberty stands for, hold liberty as a guiding principle, and be wary of those who claim to stand for it when their actions speak otherwise.

In practice, what does it mean to be a country that values liberty? I think first and foremost it is about preserving our democratic institutions: ensuring all Americans their right to vote and participate in our democracy, rooting out corruption and making government responsive to the people, and limiting the growth of the bureaucracy. America was founded on the idea that a free people could best govern themselves. Our ability to govern ourselves is what makes us great.

A country that values liberty would strive to protect the liberties of people, of individuals. For America to be a country that values liberty we must end our practice of mass incarceration. We can not claim to be a free country when we have the highest incarceration rate in the world. A country that values liberty would have a justice system that protects all people from wrongful imprisonment, that does not place one person above another, that does not criminalize behavior that harms no one, and that does not seek to turn its people into modern day slaves.

To be a country founded in liberty we cannot empower the state to invade the lives of its people. We must not be a police state, we must not be a garrison state, we must not be surveilled by the state. Liberty is distrustful of power. Liberty cannot be exchanged for security and still be liberty. We cannot claim to be for liberty and then celebrate when we take it away from those we see as opponents.

To value liberty must mean more than just political liberty, it must extend to economic liberty. This means the ability to participate fully and freely in the market. A choice made in desperation is not a true choice. Often, people attempt to claim economic liberty means government has no place in the market. That is incorrect. The government can have a place in the market and often should. A free market means fair and equitable exchange, otherwise one would not freely participate in it. A choice made in desperation is not a true choice.

I’ll say it again, liberty is about choice. It is about being able to choose how we live without being unfairly punished or unduly burdened. Where there is not choice there is not liberty. Put bluntly, you should have a choice in your government, in who represents you, and who you do business with, and if they screw you over, you should have a reasonable alternative.

Opportunity

We have always prided ourselves on being a land of opportunity, so it seems right that opportunity should be one of our core values. Opportunity is the ability to improve one’s station with hard work, intelligence, or both. Opportunity is the American dream, the idea that we are capable of making something of ourselves, of giving our lives meaning. In the past opportunity has been evident in America’s social mobility, when people born poor could easily enter a higher class and achieve a higher standard of living. At present, social mobility is next to nonexistent as the circumstances of one’s birth is likely to dictate one’s entire future. Not only is that a land without opportunity, that is a land without liberty. If your life is determined entirely by events before your birth, you are not free.

What then, does a land of opportunity look like and how can we achieve it? Living in a land of opportunity means entering the educational system and coming out of it in a better position than you started. Where people can develop and nurture intelligence and creativity. Where that intelligence and creativity can be applied and combined with hard work and determination to achieve great things. It means a market, a government, a society where institutional bias and advantages do not exist. Where merit is the primary deciding factor. Our market economy must be as open as possible with free entry and exit. Innovation must be held in the highest regard, even above profit margins.

In many cases it’s a simple task to achieve opportunity, all that is required is an end to rent seeking, an end to crony capitalism. The government cannot be a tool for the wealthiest, the largest companies, and special interests to gain advantage above and beyond the rest of the country. A simple task but difficult to accomplish. A serious push for anti-corruption legislation is needed.

In other cases the task is more complex. Dismantling long standing institutional barriers, separating historical and geographical advantages from true merit is next to impossible and sure to anger those who benefit from those advantages. Opportunity means change and change is not always amenable to those in power, but it is necessary for success.  What is required is investment. Investment in education, in innovation, and in our communities. That is how we begin to build an opportunity society.

E Pluribus Unum

Present on the Great Seal of the United States, the phrase represents a clear founding ideal of the country, Out of Many, One. It is an ideal we would be well served to remember now, more than ever. We do not always agree with each other, in fact it is rare if not not impossible to see unanimity in America, but the design of our republic is such that it is a feature. We have great diversity in America. Diversity of cultures, diversity of people, diversity of politics, diversity of thought, diversity of religion, environmental diversity, diversity of goods, and even diversity of government. Diversity is perhaps one of our greatest assets. Yet it is undervalued and misapplied.

To succeed as a country, we must rediscover what “E Pluribus Unum” means. We must embrace our diversity. We cannot seek to destroy those whose ideas conflict with our own. We cannot seek to impose our will on the entire nation. We must recognize the potential of states as true laboratories of democracy and not an extension of Democrat and Republican national agendas. We must recognize the individual history and potential of our cities, towns, and rural communities. One policy will not work the same everywhere, our thinking must change to focus on bottom-up policy making, working at the lowest practical level. Every American has many identities, they are part of many groups, their country, their state, their school, their political party, their social clubs, their sports, their professions, etc. and they are individuals.

Out of all these differences, all these states and governments, cultures and communities, we begin to build a national identity. Our diversity, our eclecticism, our willingness to buck the trend is what defines us as a country, it’s what has made us so successful, and our ability to set aside our differences, no matter how large, how we can come together as Americans, as America, is what allows us to lead. Being part of something greater does not and must not diminish our individual identity. If we have to sacrifice who we are to belong, we have lost everything. Often times, people seek to hide from themselves, their past, their poor decisions, their responsibility, in the comfort of masses. Do not succumb to the allure of a mass movement.  That is not what E pluribus unum means.

Conclusion 

These values are not guarantees by the government, they are societal values. Government cannot and should not impose liberty, opportunity, and unity out of diversity. But if these are values we accept and strive to live by we can hope to be successful as a society and be better people for it. These are the values I see as integral to this country and its history, even when we have not adhered to them, even now as liberty, opportunity, and the spirit of “out of many, one” wane. And all three are deeply connected, I do not believe one can properly exist without the other two. I will fight for these values. I don’t expect you to vote for me, but I ask that you keep these values in mind when you consider your place in this country, when you participate in our democracy, and as you go about your life. Do not view all those who disagree with you with suspicion, do not disdain those who have lived a different life of different opportunity, and respect the choices of others. And spend just a little time thinking about what your values are, what our country’s values are, and what you stand for. This country is worth fighting for, but it has to stand for something better first.

 

Finance is Destroying the Economy

“In recent years, annual trading in stocks — necessarily creating, by reason of the transaction costs involved, negative value for traders — averaged some $33 trillion. But capital formation — that is, directing fresh investment capital to its highest and best uses, such as new businesses, new technology, medical breakthroughs, and modern plant and equipment for existing business — averaged some $250 billion. Put another way, speculation represented about 99.2% of the activities of our equity market system, with capital formation accounting for 0.8%.” – John Bogle, founder of The Vanguard Group

What this means is that the financial sector (banks, hedge funds, brokers, etc) does not do it’s job and it has a very basic job: to productively invest the nation’s savings, our savings, to create wealth. Instead it speculates, creates bubbles, and causes financial crises like the one that caused the Great Recession. As a reward for so poorly managing our savings and recking our economy, the financial sector takes home something like 25% of all corporate profits while representing something like 4% of employment. This is a sector that produces nothing, extracts wealth, and employs very few yet it is sucking up all the profits.

Worse yet is what the financial sector has done to the rest of the economy. Obsessed with the mantra of maximizing shareholder value (which somehow has translated into raising the immediate stock price even if it kills the company 5 years later), finance has taken hold of American industry. Our largest businesses no longer invest in research and development to remain competitive, they no longer invest in their workers, they no longer invest in capacity and efficiency.

Instead wages are stagnant, we have mass layoffs, off-shoring, extensive lobbying to accrue government handouts, selling off assets to temporarily boost profit margins, assuming massive debts to fund stock buybacks, all to raise the stock prices in the short term (so CEO’s and corporate raiders can sell off their stocks at the artificially created high and leave the company to flounder). It’s not just limited to those who work for a living though, all consumers suffer at the hands of an out of control financial sector, the financial sector was responsible for the spike in the cost of food around the time of the 2008 financial crisis for example (which partially led to the Arab Spring and the crisis in Syria and rise of ISIS, demonstrating how ludicrously connected the modern global economy is).

And most egregious of all is that we’ve been made complicit in our own destruction. Many people have a 401(k) or pension or other savings plans. These are typically invested with some hedge fund or other that manages your savings. Your savings gives these fund managers additional clout to buy larger percentages of shares, to become “activist investors”. And they’ll use this clout to demand the companies act to provide better returns and I’ve already mentioned what that means (layoffs, downsizing, off-shoring). Theoretically your retirement savings could be used to put you and people you know out of a job, in fact they most certainly have.

When the inevitable fallout comes, when the speculation and bubbles and deconstruction of the American economy becomes too much, we have recession and financial crisis like in 2008. But then what happens? Millions of regular people lost their jobs, millions of people had their savings wiped out, houses were foreclosed, small businesses shut down, factories closed their doors, immense wealth was wiped out in a matter of days. And then the United States government and the Federal Reserve bailed out the banks, they bailed out the financial sector with trillions of dollars (yes, TRILLIONS, it sounds absurd, but horrifyingly true), and everyone else who suffered at the hands of the financial sector’s gross negligence got NOTHING.

Is this how we want our country and our economy to be run? Is this what we believe to be right as a society? Fifty years ago this behavior was not tolerated but were we any less successful as a country, were our markets any less free, was our economy any weaker? Finance is not the economy, finance is meant to keep the economy running smoothly. It is time we took our country and economy back from the financial sector, back from the corporate raiders, back from absurdity of neoclassical economic theory! We survived the last crash but fixed nothing, every aspect of financial sector resilience is now worse than it was in 2008, can we survive the next one?

This is a disaster waiting to happen or more likely in the process of unfolding before our very eyes. My intent is not to fear monger or to drum up votes but to raise awareness of the serious problems we face as a state and a country, I care not at all if I win so long as someone is doing something to fix this. I believe Mark Romanchuk and Lane J. Winters will act when the seriousness of this issue becomes apparent but someone needs to make this clear to them now. If you care about Ohio, if you care about your neighbors, go tell your preferred candidates and your representatives in whatever district you live to act now! We need reform, we need alternatives, we need action, and yes, there are solutions we can take at the state and local level because we all know the federal government won’t do anything about it. The Ohio Investment Bank might not be the best solution but it’s the best I’ve got, what do you have? Seriously, I’m asking, everyone reading this, let’s figure something out to save Ohio.

The Ohio Investment Bank

What’s so great about the Ohio Investment Bank, the poorly named idea that I have put at the center of my campaign? Well I’ll tell you in 500 words or less!

The OIB is one stop shopping for all your entrepreneurial needs. Through an initial funding by the Ohio government, the bank provides seed capital to new businesses as well as existing small businesses not as loans or grants but as an investment which the bank aims to earn a profit on. So the bank has every interest in your business becoming sustainable and profitable.

The OIB offers a number of services through its municipal partners/branches for entrepreneurs to build a successful enterprise including:

  1. Business management services so that you have the expertise necessary to build your business right.
  2. Export and supply chain services so you can navigate the complexities of the global economy in building your product or service and then find customers around the world and build Ohio’s export surplus (that’s how you do it without starting destructive trade wars!)
  3. Help you raise capital from outside investors so your company can grow to keep up with demand. This in addition to any investment from the OIB which will allow you to choose where your capital comes from so you don’t have to rely on any shady investors or corporate raiders who do not have your economic success at heart.
  4. The OIB partners with the technology transfer offices of Ohio’s many exceptional universities so that technologies and advancements developed in the lab can be quickly brought to market and start changing the world while earning additional funding for the universities to pursue their work.

Targeting the right businesses and industries, the OIB will jumpstart Ohio’s economy and make us a leader not just in the United States but around the globe. The OIB gives Ohio’s economy the initial kick but the economy will begin expanding rapidly as economies of agglomeration and clustering make Ohio a destination for skilled workers, new industries, and investment.

Gradually the bank will create the technologies to transform Ohio, to deliver energy, food, health care, and transportation cheaply and conveniently to all Ohioans without the government directly providing them through large spending programs or welfare. And as the economy grows, unemployment will decline and wages will rise. The Ohio government will have significantly lower obligations and the size of government and the welfare state will shrink allowing us to lower taxes significantly. Additionally, as the OIB earns returns on its investments it will be able to reinvest the profit in Ohio’s businesses or, if need be, transfer funds to the Ohio government. Ideally, within a few decades, Ohio’s government could be entirely funded by the profits of the OIB and taxes in Ohio could be completely eliminated.

Seems like a fantasy but it is entirely possible given the right circumstances and the commitment of all Ohioans to break the mold. This is the role for government in the 21st century, a facilitator of the market, an investor in our future. We can do this; the opportunity is now. Let’s put the state ahead of the pack, let’s fight for our future, let’s save Ohio! Vote for me, Tim Grady, this November and make this reality!

Please Do Not Allow My Levity to Undercut the Earnestness of This Campaign

Neoclassical economic theory is deeply flawed, at best it is woefully incomplete, at worst it’s most basic assumptions are so incorrect as to render it next to worthless. Neoclassical economics has fueled everything from neoliberalism to financialization, it has led to faulty approaches to education, health care, and basic business practices. This is the dominant economic school of thought for the last 40 years. How many of you knew it existed? Who knew economics has different schools of thought?

It seceded Keynesian economics in the 1970s when stagflation proved too great a challenge for it to overcome. Neoclassical economic theory stepped in to fill the void. It had been waiting in the wings for years, fostered in think tanks supported by big businesses. Arguably it restored economic growth to the world in the 1980s and 90s or more likely the economy adjusted and recovered over time. That’s probably what happened post Great Depression too, Keynesian economic policies did not, on their own, spawn the greatest period of global economic growth in history.

The Great Recession and the sluggish economic recovery that has followed should have broken the back of neoclassical economics. It certainly spawned some serious thought and criticism of neoclassical economics. But no theory was around to replace it and you can’t beat something with nothing. At least there was no theory with political support. Instead we got rehashed Keynesianism from the left in the form of democratic socialism and the right was happy to bring up the Austrian school again. That was futile of course because we continued to elect neoclassicists rather than bring back old economic thinking.

There are actually new ideas ready to take their place in mainstream policymaking but the institutional rigidity of neoclassical economics has warded them off (not that neoclassical thought acknowledges institutional power). You’ll hear many economists say economics is apolitical and amoral. I believe for many they try to keep it that way but I recognize that economics is tied invariably to how we organize ourself as a society be it through government, politics, morality, or what have you. For our future we must recognize the intertwined nature of economics and government. That’s actually why I am running.

I am running to bring new economic thinking into politics, specifically Ohio politics because I think we can really capitalize on this before the rest of the country and world catches on. The type of economic thinking I have to offer is some mixture of complexity, evolutionary, and institutional economics. For simplicity I’ll refer to it as complexity economics. Complexity economics is how we beat the neoclassical paradigm and reverse our long period of economic and political decay. We can end financialization, make health care that works, revolutionize education, save the environment, and massively grow the economy all while making government leaner.

Yeah, that sounds like I’m promising a lot but clearly economics has a lot of power in the world, just look what neoclassical economics did to it. For a taste of how complexity economics can manifest itself in policy, I direct you to my platform. But that’s just a start. We need to bring complexity economic thinking to all levels of business and government. Truthfully this is what matters to me, bringing complexity economics to the mainstream.

I am so sick of hearing the same arguments between Democrats and Republicans that boil down to just how much or how little money we want to throw at failed programs. A bloated centralized government is not the answer and neither is a market society where the government is just a tool for cronyism and rent seeking. I would not be happier to lose if it meant that my opponents had adopted complexity economics. I mean good lord, talk about something new. You’ve had this argument for 40 years and we haven’t gotten anywhere! This is the future, this is what Ohio needs now. This is actually an urgent matter given that we’ve fixed nothing that caused the 2008 economic collapse and we’ve probably made it worse. Not to mention that budding trade war and a country that is so divided on partisan lines (lines drawn based partially on neoclassical economic theory) that it verges on sectarianism. I’m not saying I have the answer to everything here but I basically am.

 

The Next Recession

It is unusual for a bull market to last much longer than ten years. Increasing instability would suggest that this one is nearing its end. This has some important implication for the coming decade.
 
Since the financial collapse and the Great Recession we’ve seen little action by the government or anyone to fix the problems that caused the collapse. In many ways these problems have gotten worse; the Too Big to Fail banks are larger than ever, the shadow banking sector has expanded, private equity firms have caused housing prices to rise while homeownership has fallen, major US corporations have taken on considerable debt to fund stock buybacks (arguably stock market manipulation) rather than invest in R&D. Meanwhile government debt has skyrocketed and the Fed has held interest rates low for a decade. This means the government has little fiscal or monetary tools to counteract the effects of a financial crisis and ensuring recession.
 
Many households are in such a precarious economic position with debt and mortgages that the next economic downturn will lead to mass foreclosures and inability to cover both debt and living expenses. Considering rather stagnant wages the last decade, rising household debt, and the loss of wealth in 2008, most Americans are in a worse position than they were in 2007 meaning another recession has the potential to be considerably worse. Debt is dragging down growth and it has the potential to strangle the economy when the next recession hits. 
 
I am not fear mongering here, I am trying to properly express the urgency of the situation so that appropriate action can be taken while we still have the opportunity. Remember folks, before the Great Depression we used to call the depression of 1873 the Great Depression. It is a mistake to think the course of history is perfectly linear, that the present is a good indicator of the future. History has a way of taking sudden, unexpected turns.
tl;dr: The economy is going to slow down, the government and households aren’t prepared for it.

Health Care

It is no secret that the United States spends more on health care than anywhere in the world and has little to show for it. I would like to make it clear to everyone first that no matter the structure of the health care system in the country, health care as is, is prone to waste, high costs, and lacking service. There is not one way to make health care work, a market system or a socialized system doesn’t necessarily matter all that much in the end so long as it works. Below I outline several proposals I think will improve health care for Ohioans whether the policies are implemented all together or just one or two. These proposals are a combination of deregulation, market solutions, new regulation, and government solutions.

Interstate Health Care Standards

It is often said by Republicans that health insurance companies should be permitted to operate across state lines. This is already the case, what is actually meant is that Republicans want insurance companies to be able to operate in any state without meeting the requirements of the state so that they could offer junk insurance at a low cost. I propose something different, something that actually will offer good health insurance across state lines at a lower cost.

I propose we coordinate with neighboring state governments to standardize our health care laws. This will allow health care providers to operate effectively across state lines without the additional cost of trying to comply with the bureaucracy of multiple states while maintaining quality. The more states we have coordinating, the cheaper and more effective it becomes.

Delicensing 

I believe a simple step that could be taken to lower medical costs is for Ohio to allow nurse practitioners to operate their own practices without physician oversight. Many people see nurse practitioners for their primary care needs yet Ohio is one of several states that does not allow them to operate independently. By eliminating this regulation and allowing nurse practitioners to have their own practice we will improve the ability of Ohioans, particularly rural Ohioans, to receive primary care at a lower cost.

I feel the same could be done to an extent for dental hygienists.  You are not likely to see your dentist for more than a minute or two, it is the dental hygienist that does the greater deal of work. Allowing a dental hygienist their own practice would also improve availability of service and lower costs. For any issues outside a hygienist’s purview, they could recommend a patient to a dentist.

Those most likely to be opposed to this shift would be doctors and dentists, those who stand to lose money. It is simply the case that where there is money to be made there is lobbying to be done of government. I encourage policymakers to remain resolute and take the action that serves the public welfare, not their pocketbooks.

Investment in Medical Research and Development 

Ohio has global leaders in the health care industry like the Cleveland Clinic. We should leverage these existing institutions and invest in new medical technologies and new medical companies to grow this existing industry. This has two primary benefits with one policy initiative. First that advances in technology and a diverse market lowers medical costs for Ohioans as well as everyone in the world. Second that it grows Ohio’s economy and creates jobs. The health benefits of economic security are considerable after all. This investment can best be achieved by my major policy initiative of the Ohio Investment Bank.

Preventative Care for All

This policy is rather more ambitious than the others listed here and I am less certain of its effectiveness and its political feasibility. Nevertheless, I shall explain it to the best of my ability and open it up to discussion so that it can be improved or a superior alternative put forward.

As it stands now under the ACA all Ohioans must have health insurance and Ohioans have met this requirement from private insurance, employer provided insurance, government provided insurance, or simply failed to meet this requirement. First allow me to say I do not care for requirements on employers to provide insurance, I believe the point of so much government action in health care is to help alleviate the burden on employers. I would suggest a plan that eliminates this burden.

What I propose instead is that Ohio offer to all its citizens preventative medicine paid for entirely by the Ohio government. It would then be mandated that Ohioans purchase critical care insurance on their own. Preventative medicine is that which is meant to prevent the occurrence of illness rather than its treatment. This includes regular physicals, disease screenings, counseling, immunizations, birth control, and some prescriptions like insulin. I cannot at this time specify all that would be included, I think this would be a major policy that needs a fair amount of debate and consulting of relevant actors in the health care industry and the public.

This would improve the health of Ohioans over the long term because it would lower instances of more serious, more expensive illness. This improved health would, over time, lower costs for the government, Ohioans, employers, and insurance companies. Employers would not have to cover these costs anymore. Insurance companies would only have to cover critical care which are unexpected medical expenses and the instances of these unexpected medical expenses would decrease so insurance premiums would drop.

Market Application of Health Care Costs

This is a very simple regulatory change. Basically I support legislation that would require all health care providers to make all their prices for goods and services publicly available online in a searchable format. The expectation is that companies would quickly spring up to offer services that search this data and find consumers the best prices. Obviously in an emergency Ohioans aren’t going to search for the cheapest hospital in the ambulance but for every predictable medical cost Ohioans can plan ahead. This will steadily lower prices across the state as market forces will make health care providers operate more efficiently. Health care prices are inflated because insurance companies negotiate down prices for consumers, this is the primary service insurance companies seem to offer. With this service taken care of more efficiently by the digital age and market forces, one would expect insurance premiums to lower further as insurance companies focus on the primary task of collectivizing the risk of unexpected health care costs. It is a simple regulation that can accomplish much. Why hasn’t it been implemented yet? I don’t know, certainly one would hope it is not a result of nefarious motives of the health care lobby and our current legislators or the political parties that provide them their marching orders.   

Growing the Economy

That’s right, growing the economy as a health care policy. Eliminating poverty and economic security are tremendous in improving one’s health. Our problems are complicated and interconnected, fixing the economy helps fix health care. Eliminate the stress of not knowing how to pay for things, of having to work three jobs to get by, of having to work unpaid overtime to keep a job, and you have better mental and physical health. Give people more money and the ability to make good health decisions, to go to the doctor when they’re sick, to eat healthy, to live comfortably, and their health improves both mentally and physically. It’s not difficult to understand. If we’re going to fix things in Ohio let’s do it right, let’s attack all our problems on all fronts all at once. To fix health care we must fix the economy, fix education, fix government, fix the environment, fix agriculture. It can be done, we just require the grit and resolve to do it.