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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

May 25, 2011 at 10:00 AM

Human capital lost: Your tax cuts at work

Former UW President Mark Emmert talked about “the two Washingtons.” One is the affluent state with the high-quality economy, centered on Puget Sound, that draws world talent. The other is marked by a high dropout rate, mediocre schools and the inability to climb the ladder into 21st century opportunity. Whatever else is the legacy of the latest legislative session, it will be remembered for making the gulf between the two Washingtons wider by disproportionately hurting education and the poor.

According to the authoritative Kids Count report by the Annie E. Casey Foundation, 16.2 percent of Washington children lived in poverty in 2009, up from 15.5 percent in 2005. Only 58 percent of American Indians and 67 percent of African-Americans graduated on time. Some 486,000 children live in families where no parent has full-time, year-round employment. Census data show that Washington ranked 32nd nationally in per-student funding of elementary and secondary education, below the national average. A 2006 study by the Economic Policy Institute showed that income inequality had grown significantly in Washington state.

All these problems will grow worse because of the choices made in Olympia. From a purely economic perspective — aside from the cruelty of punishing the needy, the working poor and the lower middle class — it represents a major blow to the state’s human capital.

Education is more important than ever in the hyper-competitive world of the 21st century. So is opening up what urban thinker Richard Florida calls “port of entry jobs” that can lift the poor and unskilled into advanced careers. Without it, Washington and America will be poorer and more divided, less competitive, less, well, American. Meritocracy is already under siege, so much so that the conservative magazine The Economist declared it dead in America a few years ago. Technological advancement, poor schools, rising income inequality and the decline of civic culture have all played a role. Market forces alone won’t correct this. The great middle-class America of opportunity that existed in the mid-to-later 20th century was based on a fine balance of both private and public sectors. Now the Legislature has made it worse.

To add to the disaster, lawmakers have done nothing to address the fundamental disconnect between revenues and needs. The state needs new signs. It can place them outside schools, homeless shelters, un-built infrastructure. They should read: “Your Tax Cuts at Work.”

Today’s Econ Haiku:

This is not a game

The brain drain at Microsoft

Wall Street’s keeping score

Comments | More in Income/living standards, Infrastructure, Jobs/Unemployment

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