Better Policies Can Turn Stagnation into Growth
(p. A19) . . . , now ought to be the time that policy makers in Washington come together to tackle America's greatest economic problem: sclerotic growth. The recession ended more than seven years ago. Unemployment has returned to normal levels. Yet gross domestic product is rising at half its postwar average rate. Achieving better growth is possible, but it will require deep structural reforms.
The policy worthies have said for eight years: stimulus today, structural reform tomorrow. Now it's tomorrow, but novel excuses for stimulus keep coming. "Secular stagnation" or "hysteresis" account for slow growth. Prosperity demands more borrowing and spending--even on bridges to nowhere--or deliberate inflation or negative interest rates. Others advocate surrender. More growth is impossible. Accept and manage mediocrity.
But for those willing to recognize the simple lessons of history, slow growth is not hard to diagnose or to cure. The U.S. economy suffers from complex, arbitrary and politicized regulation. The ridiculous tax system and badly structured social programs discourage work and investment. Even internet giants are now running to Washington for regulatory favors.
. . .
So why is there so little talk of serious growth-oriented policy? Regulated and protected industries and unions, and the politicians who extract support from them in return for favors, will lose enormously. The global policy elite, steeped in Keynesian demand management for the economy as a whole, and microregulation of individual businesses, are intellectually unprepared for the hard project of "structural reform"--fixing the entire economy by cleaning up the thousands of little messes. Even economists fight to protect outdated skills.
For the full commentary, see:
JOHN H. COCHRANE. "Don't Believe the Economic Pessimists; Memo to Clinton and Trump: The U.S. economy can and will grow faster with the right policies." The Wall Street Journal (Mon., Nov. 7, 2016): A19.
(Note: ellipses added.)