Economic Growth

The Imperative For Growth– by Jerry Jasinowski

“Everyone complains about the weather,” said Charles Dudley Warner, “but no one does anything about it.”

Everyone in Washington complains about the lack of economic growth, but no one does anything about it. A variety of business, political, economic and academic experts routinely trot out proposals they claim will promote growth, but they are invariably focused on a narrow segment of the economy of particular concern to their constituents, usually their wealthier constituents. Business lobbies and trade associations represent their memberships which are business people largely focused on parochial concerns that in some cases are actually inimical to growth. Economists tend to be ideological and in thrall to one political bloc or another.

You can see this narrow orientation at work in the current debate about the tax bill, which is more focused on cutting taxes than reforming the system. For example, eliminating the estate tax would benefit people at the top of the heap but do little or nothing for growth.

In sum, while there are random issues here and there advocated by business groups that can contribute to economic growth, there are at least an equal number that would compromise growth. In the final analysis, there is no serious constituency for growth that offers a comprehensive strategy which might actually move the needle and get our country back into the 3-4 percent annual GDP growth that drove progress in the last half of the 20th century.

The lack of economic growth is the core driver of all the dissension and animus that handicaps our political life today. A substantial hard core of disenchanted voters are angry and all too ready to embrace conspiracy theories and nativism. But while these people may espouse radical views, they are voters and in our political system and they must be heard.

They are saying they feel betrayed by the ruling class that seems to have turned its back on people at the bottom of the heap. It offers scant comfort to cite sustained (though anemic) growth of recent years, the historically low unemployment rate or the soaring stock market. In 2016, the Federal Reserve survey of households found that 46 percent of Americans could not meet a sudden $400 emergency expense without borrowing or selling something they owned.

Just think about that. Almost half the population has little or no margin for error. They are hanging on by their fingernails. The rug has been pulled out from under them. They look around for scapegoats and focus on people in Washington, foreign countries, immigrants, minorities, the eternal “other.” In their incoherent desperation, they want to build walls against the outside world.

Thus we are left with the compelling need for a comprehensive growth strategy for both political and economic reasons. The ultimate goal is to increase the size of the economic pie to restore faith in the American dream. We need a comprehensive bi-partisan growth strategy and the politicians are not up to the job. It is up to business leaders to come up with that strategy.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements. November 2017

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