Gonzaga economist: Economic issues associated with wealth distribution, immigration and trade policy pose problems

Income inequality, immigration and trade tariffs are key issues that should be addressed to improve the U.S. economy, Clarence Barnes, professor of economics and dean emeritus at Gonzaga University’s School of Business Administration said Tuesday at the university’s 26th Economics Symposium.

The top 20 percentile of wealthy people in the nation earned 41% of the nation’s income in 1980. More than three decades later, that number increased to 49% of the nation’s income, Barnes told a group of more than 200 people at the Davenport Grand Hotel.

“That’s a pretty significant growth if you think about the distribution of our tax base and progressive tax system,” he said.

Barnes said wealthy people are receiving more assets in the form of stocks and bonds as well as higher mortgage interest deductions and larger savings from employee-sponsored retirement programs than lower wage earners.

“This is a prescription for social tension among those who are finding themselves left out – even among those who are working,” he said.

However, Barnes said, wealth generates opportunity, productivity and involvement in entrepreneurship.

Barnes, who presented the keynote speech “America Divided: An Economic Perspective,” began his career as an instructor at Appalachian State University in North Carolina. After completing his doctorate at the University of Tennessee, he joined Gonzaga University’s School of Business Administration as an assistant professor of economics in 1973.

He was dean of the business school for more than 30 years and now is economics professor and dean emeritus. Barnes also has served on numerous private and public boards and is a consultant on issues of economic valuations, or the process of assigning value to environmental, nonfinancial factors.

Immigration containment is hitting U.S. industries hard, Barnes said, adding that farms are suffering because of the inability to hire workers, resulting in a $5.5 billion loss in GDP every year.

“We are 2 million workers short in agriculture. Our farms that produce vegetables, fruits, berries and livestock are not able to find the workers to help cultivate, harvest, pack and get those products to market in a timely fashion,” he said. “The containment of farmworker shortage in the future could lead to a 5 to 10% increase in our cost of food – one of the highest proportionate costs we encounter out of our disposable income.”

Barnes said the guest worker program for temporary agricultural workers as well as the H1B worker visa program – which allows U.S. companies to temporarily employ foreign workers in fields such as technology, science and engineering – should be redesigned by the government.

He added that Microsoft, Google, Nvidia and Pepsi are all Fortune 500 companies led by immigrant CEOs.

“The value of the contribution of immigrants is beyond what I can show you here today in terms of dollars,” he said.

Tariffs are another impact on the national economy through their interference with the free market flow of goods and services, Barnes said.

Small to medium-size companies make up more than 95% of the 300,000 businesses exporting goods and could be adversely affected by tariffs along with Washington state as a whole, which exports aircraft, soybeans, wheat and corn, he said.

“To throw tariffs up – it’s at a heavy cost on our society,” he said. “Usually, tariffs are brought about by political confrontation, not economic confrontation. They just are not healthy.”