The Moral Case for Economic Growth
by Jerry Jasinowski
I have long believed that the number one priority of our country should ever and always be increasing the rate of economic growth, in part because it raises the standard of living for individuals and families, but also because it raises business profits that foster more capital investment and R&D, and revenue streams that enable the government to meet its commitments and obligations.
In his brilliant book, “The Moral Consequences of Economic Growth,” Professor Benjamin Friedman makes a persuasive argument that the benefits of economic growth extend into the social, political and moral spheres of society. Economic growth, Friedman contends, “fosters greater opportunity, tolerance of diversity, social mobility commitment to fairness, and dedication to democracy.”
A critical component of that picture is work itself. A most unfortunate legacy of the great recession is that millions of able-bodied adults are out of the workforce. They somehow contrive to get by without a paycheck. But work itself is essential not only to one’s standard of living but also to one’s sense of self-worth – of being a viable member of society.
Work is vital and growth is key to both moral and economic stability. The Wall Street Journal lead editorial of October 11, 2017 asserts that the Federal budget cannot be balanced without economic growth, and that the sub 3 percent growth we seem locked in today simply will not cut it. “CBO estimates that under current policies the U.S. economy, will grow by an average of only 1.9 percent a year,” the WSJ said. “That’s after not reaching even the 3 percent historical norm in a single year since 2005. If that’s as good as the economy can do, revenues will continue to trickle in and deficits will climb as far as the eye can see.”
Everyone in Washington understands the importance of growth, but there is no consensus on how to achieve it. Congress is now struggling to cut taxes under the pretext that that in itself will foster growth. But few business leaders say that taxes are deterring investment. Business is sitting on vast sums of financial assets that it could invest if it perceived opportunity for growth. It’s like the old riddle about which came first – the chicken or the egg. Tax cuts are less important than fundamental tax reform.
To foster growth for business to buy into, we need a long-term commitment to long-term education reform, fostering worker skills, upgrading infrastructure, promoting more global commerce, welcoming more immigration, getting health care costs under control, more capital investment and R&D, and stimulating entrepreneurship.
Unfortunately, our government is tied up in knots in an unprecedented political schism that deters constructive action. This situation offers a unique opportunity for business leaders to come together on a balanced growth strategy that if properly presented might – just might – evoke badly needed bi-partisanship in Washington.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. You can quote from this with attribution. Let me know if you would like to speak with Jerry. October 2017