ON-Lion Letter

"In the 25 years before the Great Recession of 2008-2009, the United States experienced two brief, mild recessions and two strong, long expansions," begins a late-April column by Michael J. Boskin.  "Globally, incomes grew briskly; inflation abated; and stock markets boomed.  Moreover, the recovery from the last major slump, in the early 1980s, brought about a quarter-century of unprecedentedly strong and stable macroeconomic performance.  This time, however, the return to growth has been much more difficult."

Boskin is an economics professor at Stanford University, a senior fellow of the Hoover Institution, and a member of Hoover's Working Group on Economic Policy, which is supported by The Lynde and Harry Bradley Foundation in Milwaukee.  He chaired President George W. Bush's Council of Economic Advisers.

"America’s recovery since the Great Recession, has been inconsistent, with growth repeatedly picking up and then sputtering out," Boskin continues in "Are the Good Times Over?"  "In fact, the US has not experienced three consecutive quarters of 3% growth in a decade.  Though lower oil prices are helping consumers, this gain is partly offset by less energy investment, and the effects of the stronger dollar will be even larger.

"To encourage more robust growth and the associated improvements in living standards," he concludes, "governments should ensure that the private sector has sufficient incentives for innovation, entrepreneurship, and investment in physical and human capital.  For example, officials could cut red tape, rein in deficits and debt, enact tax policies conducive to capital formation, reform the education system, and invest in research and development.

"Of course, no one should expect a return to the pre-crisis boom years, given the demographic pressures that almost all major economies -- including China -- are facing.  But these incentives stand the best chance of continuing the flow of productivity-enhancing technology, from startups to the research divisions of established companies in industries from technology to energy to health care."

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