Writing in the Wall Street Journal, Glenn Hubbard calls for putting economic growth back on the policy agenda. Two slices:
In a campaign season dominated by the past, a central economic topic is missing: growth. Rapid productivity growth raises living standards and incomes. Resources from those higher incomes can boost support for public goods such as national defense and education, or can reconfigure supply chains or shore up social insurance programs. A society without growth requires someone to be worse off for you to be better off. Growth breaks that zero-sum link, making it a political big deal.
So why is the emphasis on growth fading? More than economics is at play. While progress from technological advances and trade generally is popular, the disruption that inevitably accompanies growth and hits individuals, firms and communities has many politicians wary. Such concerns can lead to excessive meddling via industrial policy.
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The wrongly focused hyperattention is supposedly grounded in putting American workers first. But it raises three problems. First, the interventions raise the cost of investments, and the jobs they are to create or protect, by using mandates and generating policy uncertainty. Second, they contradict the economic freedom in market economies of voluntary transactions. Absent a strong national-security foundation, why is public policy directing investment in or ownership of assets? Such policies threaten the nation’s long-term prosperity by discouraging investment and invite rent-seeking in a way that voluntary market transactions don’t. Both problems hamstring growth.
Charles Kenny ponders globalization and climate change. A slice:
Global trade has also played a huge role in driving down the cost of renewable energy. Between 2008 and 2013 alone, China’s solar panel industry reduced prices by 80 percent, helping to spark a global explosion in sales. Part of that was to do with tax breaks and subsidies, to be sure, but it was sustained by productivity advances linked to new manufacturing approaches and scale. The technology of fracking combined with global trade in liquid natural gas has already helped ween many countries off coal power, reducing greenhouse gas emissions per gigawatt by about 40 percent. And both solar‐plus‐storage solutions (needed to provide power when it is dark) or wind‐plus‐storage (for when it is calm) are rapidly becoming cost competitive with both gas and coal, thanks in part to a 97 percent reduction in the price of batteries over 30 years. With such advances, Africa will likely be the first region in the world to become wealthy without a significant coal‐fired base of electricity supply.
David Henderson remembers Robert Hessen, who recently died at the age of 87.
This progressivity is generally ignored by those who argue that taxing the rich is the solution to reducing the burgeoning U.S. national debt. Soaking the rich, while perhaps appealing in its simplicity, misses the scale of the problem. Brian Riedl, a Manhattan Institute senior fellow, noted that if we were to confiscate 100 percent of the income of everyone making over $500,000 per year, it would fund the government for less than a year. This puts into perspective the enormity of the $34 trillion national debt versus the income of the rich.
Taxing the rich is a convenient distraction hiding the reality that if spending isn’t cut, taxes will have to be raised on everyone, a lot. On this tax week, I suggest Congress starts cutting.
Ryan Bourne details five fiscal truths.
Megan McArdle has a better idea for ending road-closing protests. A slice:
There is no First Amendment right to halt the movement of other people, any more than there is a First Amendment right to burn down the White House, even if you sincerely believe that’s the only way to fully express your views on U.S. foreign policy.
These forms of expression are forbidden for good reason; both fires and road closures are dangerous and potentially deadly. A 2017 paper in the New England Journal of Medicine examining road closures for marathons found a small but significant increase in mortality among people with heart trouble on marathon days, apparently caused in part ambulance delays. November’s protest on the Bay Bridge delayed a transplant organ en route to the University of California at San Francisco, while Monday’s protests risked making at least two drivers late for major medical treatment. One of them told a local news reporter that he was on his way to colon surgery, and the other was worried about missing a stem cell infusion.
Lynne Kiesling writes about the knowledge problem and AI. A slice:
To riff off of [GMU’s Pete] Boettke and [Rosolino] Candela, economic calculation consists of the discovery of contextual knowledge, not the computation of data. Powerful computation machines are unable to discover contextual knowledge of opportunity costs without humans in the loop to distill their preferences into algorithms (which is itself a challenging epistemic question).
Jeffrey Blehar documents just how Babylon Bee-ish woke is NPR’s new chief.
