Friday, August 12, 2011

Jeb Bush (Yes that Bush Family) and Kevin Warsh (Don't Know His Family) Write About a New Strategy for Economic Growth

Except They Don’t

The Dismal Political Economist has always believed that economic growth was the key variable and key goal in any economic policy.  Economic growth produces increased employment, increased income, increase economic stability, higher tax revenues without raising tax rates and lower government spending.  With Economic Growth one group of people can increase their income without taking income from another group.

Real GDP - 2007 to present -
2011 Not Back to 2007 Level

Economic growth should be the highest priority goal of any government.

So imagine the delight The Dismal Political Economist felt when he came across a opinion piece in the Wall Street Journal by  Kevin Warsh a former Fed Governor and Jeb Bush, a somewhat gifted politician and not half bad Governor of Florida. 

The title and subtitle of their piece

The Illustration That Accompanies the Article
No, We Don't Understand It Either

A New Strategy for Economic Growth

Growth is not just about economics. Growth unleashes human potential.

So imagine the disappointment The Dismal Political Economist felt when it turned out the article had absolute no specifics about policy to increase economic growth.  Instead of clear instructions on how to generate economic growth, the article was instead one of the greatest collections of platitudes ever presented in print.  (That is not a compliment.)

So, what should be the economic grand strategy? In a word: growth.

Ok, we’ll go along with that.  We like one word answers to complex problems.

If This is Statism, We Are Against It

The grand strategy is sector-neutral. It doesn't have favored industries or political parties. It does not seek to curry favor with special interests. The grand strategy fights statism everywhere

Yep, that sounds good, always hated “statism” whatever that it..

A pro-growth strategy is decidedly long term in orientation. It aims for higher standards of living five, 10 and 20 years out, long past the next election cycle. It replaces the false promise made to the next generation of entitlement-program recipients with a solvent, dependable model that encourages work and savings.

All right, enough already.   The Dismal Political Economist is on board, he cannot argue with more work and savings. But now he is close to the end of the article, where are the specifics? What is the "solvent, dependable model that encourages work and savings"?

Well the article ends with this and this and this.

The growth strategy also demands an abiding respect for the rule of law, and stable, cost-effective rules of the road from regulators . . .

The strategy also demands investing in our own natural resources, such as shale gas and the commensurate infrastructure to re-industrialize our country, creating jobs here in the U.S. rather than shipping hundreds of billions of dollars abroad. . ..

We need to transform our education system through higher standards, merit-based teacher compensation and school choice

And the grand conclusion is this

we must take actions that demonstrate our resolve and resiliency. We must restore our faith in growth economics and reform our policies accordingly. This will bring strength to our markets and reaffirm our place in the world.

Would Wearing This Button Help?

So after all of this we learn that we can grow the economy if we “respect the rule of law” and “create jobs” and “have higher education standards” and most importantly “demonstrate our resolve and resiliency”. 

Who would have thought it would be that simple?  Someone go tell the government.

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