Guest column: We need greater emphasis on economic development

This op-ed was originally published by the VC Star.

California has experienced a GDP growth of 125% over the past 25 years, putting it in line with some of the fastest-growing emerging economies. This is despite two significant downturns: the 2007-2009 recession and COVID-19.

You would think this robust growth has benefited the well-being and prosperity of its population, that people are enjoying a rising tide or even a trickle-down of better living conditions.

Sadly, Californians’ lives have not improved alongside the state’s spectacular economic growth. In fact, an outsize proportion of families are now worse off.

Let us look at California’s income distribution by measuring the gap between existing and perfect income distribution. At around 49%, California is among the 10th or 11th worst in the world, putting it somewhere between the Republic of Congo and Mozambique.

Bringing prosperity to a much higher proportion of people in an economy is not complicated and it was established a very long time ago: It is to focus on economic development, not just growth.

In other words, economic growth is just one element of fostering economic development. And, in the words of celebrated economist Amartya Sen, economic development provides people with a greater choice.

In early 2023, 31.1% of residents were poor or near poor (with resources up to one-and-a-half times the California Poverty Measure (CPM) poverty line), according to a recent Public Policy Institute of California (PPIC) study. This is up from 28.7% in fall 2021. CPM results are a much better indicator of poverty and are generated through a joint effort by PPIC and the Stanford Center on Poverty & Inequality.

A pathway for people to lead a better life, move upward across generations and reach their potential becomes possible with access to health care, education from early childhood to university, nutritious food, housing, the necessities of life, law protection and freedom to participate in the economy and society without fear of becoming victimized by prodigious injustice.

We must invest in ourselves, particularly in the early stages of our children’s lives.

A clear and good example for California is to create universal, high-quality early childhood education. The most puzzling part of the prevailing circumstances is that an overwhelming majority of families with young children qualify for federal or state entitlements to send their children to preschool. But they’re not using them.

A recent study in the Center for Economics of Social Issues at California Lutheran University shows that in each of the six counties within the Central Coast region (Ventura, Santa Cruz, Santa Barbara, San Luis Obispo, San Benito and Monterey), most families with 3- and 4-year-old children qualify for federal or state entitlements for early childhood education.

Out of the nearly 54,000 children between the ages 3 and 4 years, 62% are entitled and can be supported by the government to attend preschool, which will provide a much better opportunity for a better life. It’s estimated that around $367,000,000 of the eligible funds are not being used by families.

A more effective and efficient solution would be universal, high-quality early childhood education in the region. The Isabella Project in Santa Paula is proof this paradigm will work. The pilot program is building a roadmap for equitable access to early care and education. It’s spearheaded by the Ventura County Community Foundation and implemented with support from community leaders, institutions and parents.

On a wider scale, to create universal early childhood education with a ratio of eight children to one teacher, we would need around 6,750 teachers. Colleges and universities within the region would need to increase their capacity to educate students who want to enter the field. It will also create a need for more counselors, administrators, physical space, family outreach, transportation and much more.

This is one way we could create an industry to bring more significant economic development to our region, which would be one of the most effective factors in reducing and, hopefully, eliminating poverty.

Just imagine if California embarked on such a path for the entire state. We cannot simply give lip service to making life better in our economies. We need to act, and the time is now.

Jamshid Damooei, Ph.D., is a professor and executive director of the Center for Economics of Social Issues (CESI) at California Lutheran University.