Morning Must Reads: You Get What You Pay For: Human and Physical Capital

In the State of the Union address last week, President Obama called for more investment in programs that link training in higher education to employers. This morning the Harrisburg Patriot-News has an excellent article detailing one such program here in Central Pennsylvania.

ArcelorMittal and United Steelworkers Local 1688 are teaming up with Penn State Harrisburg and Penn State York, where [York County student Ryan] MacDonald studies, to launch Steelworker for the Future in Central Pennsylvania, a training program to prepare students for careers in the manufacturing industry. Most of the classes will be at Penn State York.

ArcelorMittal is the world’s largest steel company, with 18,000 U.S. employees and 280,000 worldwide in 20 countries.

Many of the employees at ArcelorMittal Steelton have worked there for decades. As they retire and the plant upgrades, the company needs skilled workers who understand new technologies, said Ray Napoli, president of United Steelworkers Local 1688.

ArcelorMittal broke ground in Steelton in December for a $54 million high-efficiency reheat furnace project that it hopes to use this year, spokeswoman Mary Beth Holdford said.

Last week the Bureau of Economic Analysis released a new round of detailed data on economic growth. Paul Krugman riffs off Jared Bernstein to point out that cuts in state and local spending are focused on two areas, physical and human capital.

That is, we’re sacrificing the future as well as the present. Oh, and the cuts that aren’t falling on investment in physical capital are largely falling on human capital, that is, education.

It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.

What an utter disaster.

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