It Can't Wait Till Prosperity Returns


The divisive dynamics of a shrinking pie have driven the General Assembly toward painful choices.

The continuing recession and plunging tax revenues have already forced the state government to squeeze $500 million out of its budget for the current fiscal year. Those reductions haunt the future because they must be carried forward as the base numbers on which to build the budgets for 1992 and subsequent years.

The reductions have steadily degraded state institutions and services since the first round of cuts last August. Long ago, agency and department heads exhausted their capacities to absorb without damage further cutbacks. Now the General Assembly must find another $200 million. The process has turned into a politician's nightmare: a negative sum game. Everyone loses. The only question is how much.

As the House and Senate do their dismal calculations, they seem to recognize that the resolution of these dilemmas will require more than an adding machine. A balanced budget is a constitutional restriction imposed upon government, but it is not itself the goal. The purpose of the budgetary process -- the ultimate purpose of government itself -- is to increase the sum total of human satisfactions, that is, to make the pie grow.

As legislators approach their crunching budgetary choices with that ultimate mission in mind, they might consider the lessons suggested by a provocative new book on the dismal science of economics, "The Work of Nations: Preparing Ourselves for 21st-Century Capitalism," by Robert B. Reich from Harvard's John F. Kennedy School of Government.

Professor Reich argues that an American national economy no longer exists in the sense of a common continental economic boat in which all of us rise and fall together as we share in the tides of prosperity created by American technological productivity. Many corporations and their products have already lost any distinct national identity; their ownership, markets, planning, plants, work forces, executives and research facilities are global.

As the president of NCR Corp. put it, "We at NCR think of ourselves as a globally competitive company that happens to be headquartered in the United States."

Mr. Reich points out that the most important U.S. companies do not now emphasize large plants or high-volume production runs. Even in manufacturing the percentage of employees engaged in production has fallen substantially. Corporations now depend on the development and deployment of specialized knowledge in international high-tech networks which Mr. Reich calls "global webs of enterprise."

How will a region like Maryland prosper in a global economy in which national economic boundaries dissolve and a corporate organization's most important assets are its teams of creative, highly-trained people?

The question virtually answers itself. Mr. Reich demonstrates that brainpower has replaced capital and labor as the critical generator in the creation of wealth. His particular analysis of the global economy may spark controversy, but every other study has reached the same conclusion about the importance of excellence in education.

Maryland must become a hub of economically relevant intellectual power. We cannot achieve that goal with second-rate universities or with school systems that produce a third-world work force. Historically, Maryland, like the rest of America, has failed to invest adequately in education at all levels. Now we must move to correct that deficiency.

The legislative leadership must now confront this challenge, even in the midst of severe budget constraints. After all, we can't call "Time Out" for a couple of years in our global competition with the Germans and the Japanese while we wait for our budget crisis to end. The task of building first-class education systems in our state won't wait until prosperity returns. It demands the following:

* No further cuts in the higher-education budget. The governor's severe cuts have already set back the system's once-promising progress.

* Full funding for the $82.2 million 1992 increase in APEX, the Action Plan for Educational Excellence program instituted in 1987 to redress the glaring disparities in education funding between the richer and poorer subdivisions. The legislature should reject the specious objection that some counties may choose to invest their APEX money in teacher pay raises at a time when the state freezes its employees' salaries. Teachers are a strategic asset in which we have not overinvested.

* No relaxation in the "Maintenance of Efforts" requirements which prohibit the counties from frustrating APEX's educational purpose by using its funds to reduce their own general-fund appropriations for their school systems.

* Initial funding from a source other than APEX for the "Schools for Success" program proposed by the state school superintendent, Joseph L. Shilling, to encourage innovation and impose accountability on local school systems.

To fund these and other strategic investments, the legislative leadership has agreed to consider the only realistic solution to the state's budget crisis -- tax increases. With the Linowes Commission recommendations dead for this session, the House has specifically proposed $74 million in new cigarette and capital-gains taxes. The Senate must now decide whether and how it would raise the money for these critical investments in our educational infrastructure.

NB Tim Baker is an attorney who writes on Maryland and Baltimore.

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