Ryan Streeter
The Bush Institute gathered a stellar group in Dallas this week to try to answer the question: What would it take to get America’s economy growing at 4%?
The group included 4 Nobel laureates, top-flight economists, CEOs, and a range of accomplished activists and thinkers.
Stanford professor and former Council of Economic Adviser chairman Eddie Lazear summed up the current challenges well when he said that:
- Keeping growth at 3% will be challenging enough, let alone getting to 4% - barring radical changes in policy.
- Using Obama’s OMB projected spending and taxes numbers, we find a gap so significant that no tax hike scheme, no matter how it’s constructed, can close it.
- Growth, productivity, and standard of living are all intertwined. A main question for all of us, then, is how productivity affects wages. Can we see wages and standards of living increase in a way that makes living and working in America better for more people than it is today?
For those who like Big Ideas, the conferees debated a few. They can basically be summarized as essential ingredients for accelerating growth. Conferees were, naturally, not in agreement on all matters, but here are a few Big Ideas that stood out (from my view, as a conference participant):
- Limiting redistribution and achieving fiscal discipline are more important to bond markets than the actual size of our debt. Bold, aggressive fiscal reforms, such as we see in the Ryan budget, are necessary and urgent. There is no scenario under which tax increases come close to bridging the gaps.
- Manufacturing will still play a major role in our future growth. The myth of manufacturing leaving America will skew our policy and investment choices if we let it.
- We may not be able to quantify “uncertainty,” but it is having a profound affect on our economy and how foreign investors and trade partners are viewing our economy. Our regulatory regimes are a big driver of this, compounded by the laws that empower their ability to create more uncertainty each year.
- Human capital may be the biggest conundrum of all. Our workforce seems increasingly ill-equipped, with male workers falling behind women in many ways that present longer-term challenges to America's workforce.
- Related to the previous point, while limits on growth are often attributed to a lack of capital or lack of demand, a number of growing firms are hitting a wall because they can’t find the people with the skills they need.
- Growth is ultimately driven by either by the growth of existing firms, or the creation of new firms, and since it’s the latter that creates almost all of the jobs in America, we need to focus especially on how to create an environment conducive to more start-ups.
- We are subsidizing so much inefficiency in our economy that it’s now gotten to the point that it’s killing us.
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