Let’s Focus on Economic Growth
In the Washington Post, Fareed Zakaria frets that Washington’s fixation on short-term solutions like the fiscal cliff deal lets policymakers avoid addressing the bigger problem of sluggish economic growth:
For more than a decade — and longer, by some measures — U.S. growth rates have slowed, recoveries have been jobless and median wages have declined. Some combination of the information revolution and globalization has placed tough pressures on high-wage countries such as the United States. These new forces are accelerating, and without a strategy to revive growth, all of our problems get worse, especially long-term debt.
Slow job growth is illustrated by Calculated Risk’s chart comparing the current jobs recovery to those after previous recessions.
Zakaria points how that the economy is weighed down by a “gargantuan” tax code and overlapping rules from federal and state regulators. He notes that we aren’t making needed investments in infrastructure—upgrading the air traffic control system for instance—and we’re falling behind in developing our human capital.
To promote growth, he wants a focus “on reforming and investing” along with fiscal stability. “The key to reviving growth is structural reforms to make an economy more competitive, as well as investments in human and physical capital to ensure the next generation for growth,” he writes.
Pro-growth ideas are exactly what our economy needs. Comprehensive tax reform would encourage more investment and make American companies more competitive globally. Regulatory reforms would lift burdens off of businesses and allow projects bogged down in red tape to go ahead. Policies encouraging more development of domestic energy would improve our energy security as well as create jobs. Making our educational system more accountable and more in tune with the needs of a changing workforce will improve our global competitiveness.
It’s not a magic wand, but a faster-growing economy will reduce unemployment, raise revenues to pay off debt, and improve the general welfare.