Here’s an idea: What if, instead of treating Americans merely as taxpayers, we treated them as investors?
Think about it. The Internet and Siri both originated out of projects funded by the Defense Advance Research Projects Agency (DARPA) in the US Department of Defense. The US Navy invented GPS technology. The CIA created digital touchscreen display. The National Science Foundation funded the development of Google’s algorithm. Tesla Motors went public only after receiving a $465 million loan from the US Department of Energy (DOE). Two-thirds of the world’s most innovative pharmaceutical drugs have their genesis in research funded by the US National Institute of Health. And Amazon—which is now the largest company in the United States in terms of market value — simply would not exist without massive public investments in interstate highways, a national postal service, and publicly sourced smartphone technology.
In other words, the wellspring of mankind’s most remarkable innovations isn’t private industry; it’s the American taxpayer.
Taxpayers, however, never actually see a return on their investment; instead, their entrepreneurial rewards are funneled to corporate executives and wealthy shareholders in the form of exorbitant salaries and shareholder buy-backs. This is because current law incentivizes corporations to maximize short-term profits, an approach that necessarily pins the interests of the shareholder against those of the worker. As a result, wages are reduced rather than raised; healthcare and pension benefits are eliminated rather than expanded; and social trust is eroded rather than strengthened.
This economic philosophy of profit maximization and taxpayer marginalization contains a cruel paradox: Taxpayers don’t receive any dividends on their successful investments, yet they’re simultaneously forced to bear the burden of investments that don’t pan out.
Consider the twin tales of Solyndra and Tesla Motors. In 2009, Solyndra, a California-based start-up that manufactured solar panels, received a $535 million guaranteed loan from the DOE. That same year, Tesla, as noted above, received a similar loan of $465 million from the DOE.
Tesla, of course, has been wildly successful. It repaid its loan in full by 2013 and is now valued at $44.6 billion. Solyndra, on the other hand, filed for bankruptcy in 2011 and shortly thereafter became the centerpiece of a $8.4 million ad campaign launched by the Koch Brothers against President Obama. So while taxpayers were forced to foot the bill for Solyndra’s failures, they received nothing of value from Tesla’s successes.
The American economy, by design, privatizes gains and socializes losses. The upshot of this imbalance is that while corporate profits have soared, wages for middle-class workers have declined or stagnated; consumer and student loan debt has skyrocketed; almost half of working Americans have a side hustle; and nearly 80% of full-time workers live paycheck to paycheck.
To fix this profound inequity, I will pursue legislation that both rewards taxpayer innovation and incentivizes private investments in the public good.
Option 1: Allow public entities to retain equity in publicly funded technology
Like venture capital firms, the US government should be permitted to retain equity or royalties in companies for which they provide downstream funding. Doing so would ensure that the rewards earned from successful investments like Tesla outweigh the losses suffered from unsuccessful ones like Solyndra. In fact, as the economist Mariana Mazzucato explains in her book, The Value of Everything, had the US government retained an equity stake in Tesla in 2009, it easily would have recuperated the losses it suffered from its unsuccessful investment in Solyndra. Instead, it was the taxpayers who footed the bill.
Option 2: Cap prices of publicly developed medicines to avoid excessive price gauging and profiteering at taxpayer expense
According to a recent study, all 210 drugs approved in the United States between 2010 and 2016 benefitted either directly or indirectly from publicly funded research. Pharmaceutical companies then sold these drugs at prohibitively high rates under the guise that drug prices should reflect the value they provide to society.
Recent case studies, however, have shown that there is no discernible link between the price of cancer drugs and the benefits they provide. To prevent Big Pharma from unjustifiably jacking up drug prices, the government should impose a price cap on drugs funded with taxpayer money. Doing so would have the dual benefit of allowing companies to maintain their bottom line while also ensuring that taxpayers are able to obtain the drugs they need at a reasonable cost.
Option 3: Attach conditions to public support
After the Trump Administration passed its $1.5 trillion tax cut in 2018, S&P 500 companies proceeded to spend a record $800 trillion on shareholder buybacks. Funds that could have been invested in workers and communities were instead given back to shareholders and executives.
When companies are funded by taxpayer dollars, they should be required to prioritize taxpayer interests. This means that before companies can buy back their own stock, they must first invest in the public good.
Earlier this year, Democratic leaders in the Senate introduced a bill that would require companies to do just that. Specifically, the legislation would prevent companies from buying back their own stock unless they first paid their workers at least $15 an hour, offered seven days of paid sick leave, and provided “decent pensions and more reliable health benefits.”
In short, what we need is an economy that rewards taxpayers for their remarkable contributions to innovation. Only then can we fix the deep-seated structural issues that prohibit working families from getting ahead.
