Saturday, January 30, 2016

On Slow Economic Growth
The U.S. economy grew by only 0.7% of GDP in the last quarter,  and it has only grown by 2.0% in the last 7 years, the slowest economy recovery from a recession since World War II.   To be fair,  under Obama, recovery has been sluggish, fitful, faltering, and historically weak but  it’s a recovery nevertheless, perhaps justified on moral grounds.  Slow growth has led to stagnant incomes, to economic anxiety, to political unrest to reduced health care access.
Is this slow growth due to Obama’s economic policies,  GOP obstructionism,  or factors beyond his control, such as the slow growth of the world’s economy?   Does the U.S, highest corporate income tax in the world contribute?   What about  those  inversions ;that are driving  major U.S. corporations  abroad to avoid high U.S. taxes? What about  the $500 billion in 20 new  taxes attributed to ObamaCare or those 8200 pages of new regulations on business?
Would lowering taxes and lightening regulations “lift all boats”? Would these moves  alleviate the economic  burdens on the middle class whose incomes have shriveled by 10%? Would a smaller government placate the rise gorge of populist anger? Or will it take a socialistic government to dampen the revolt among the young and idealistic?
Or would these moves lead to increased income inequality between the rich and poor and middle class?
 Is there in inverse relationship between government growth and economic growth?  Is there something to the saying that if you tax something more you will get less of it? Of is the Laffer Curve simply laughable? Is the economy trickle-down or bubble -up?
Economic growth,  lack of it,  or unfairness of it  are the key issues in the 2016 elections.  
On the Democratic side,  the candidates are saying economic growth is good but not if it produces unfairness.   Taxes on the rich and  on the middle class are necessary to right the social ship,  even,  in the case of Bernie Sanders,  it comes at the cost of $18 trillion to provide Medicare- for-all and free –college- tuition- for-all  and other assorted government goodies.
That’s too much ballast for the U.S. Ship of State,  say GOP candidates.  A rising tide lifts all boats.   Economic growth, not fairness,  is the number one political issue.  Lift   that boat,   tote that barge,  lighten those taxes and regulations,   and growth will soon lift  to 4% rather than an anemic  2%.  And all interests, for the rich, the middle class, and poor will be served
Says George Will, it’s a matter of simple arithmetic (The Simple Arithmetic That Could Jump-Start America’s Economic Growth.” Washington Post, January 29, 2015).    And observed Lewis Carroll in Alice in Wonderland 150 years before Will,  “Reeling and Writhing, of course, to begin with, and the different branches of Arithmetic – Ambition, Distraction, Uglification, and Derision.”
Slow growth and how to speed it up is  an ugly business,  with plenty of mixed motives to go around.   Economic growth is a messy business. But, given the resilience of a  freedom-loving entrepreneurial nation,  we’ll meddle and muddle through.



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