Unleashing the Economic Growth America Needs
By the George W. Bush Institute
Edited by Brendan Miniter
Crown Business. 329 pp. $26
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Reviewed by Joseph N. DiStefano
America's long slump began toward the end of the George W. Bush presidency, but the 26 professors, ex-government officials and writers hired by the "policy research arm" of his presidential library in Dallas to write this book are too polite to point that out.
Bush Institute editor Brendan Miniter tells us that 4 percent yearly growth (we are currently stuck below 2 percent) is a good national target: If we could convince companies, professionals and workers they could profit by producing several hundred billion dollars worth of additional goods and services a year, meeting the 4 percent target, hiring would recover, the federal deficit would be easier to shrink, and the nation could regain its eroded world influence.
It's odd to hear conservatives embrace target-setting, which smells of central planning, which the late, much-cited free-market economist Friedrich Hayek called the "Road to Serfdom." (He was more supportive of, for example, government-led, worker-paid health plans.) The slump has persisted despite Bush's tax cuts, which have helped drop effective federal tax rates to the lowest level since the 1970s, according to the Congressional Budget Office; still, many of these writers want more tax cuts.
Ex-Reagan aide David Malpass summarizes the case: America will grow faster with "sound money, low tax rates, limited federal government," less business regulation, and fewer labor unions. Also by taxing consumption, instead of business profits, as ex-Bush appointee James K. Glassman writes in the introduction. To the editor's credit, there's room here for rival ideas: Malpass writes in favor of a strong dollar (which attracts foreign investors), while Steven Gjerstad and Nobel Prize winner Vernon L. Smith, in a chapter titled "At Home in the Great Recession," would let the buck fall (making our exports more affordable).
Steven F. Hayward and Kenneth P. Green, both of the American Enterprise Institute, write sensibly about leveling energy subsidies, though they don't say much about the problems of externalities in energy extraction (who pays for pollution?). But ex-Kellogg Co. boss and Bush Commerce Secretary Carlos Gutierrez's pro-trade essay is twisted at its heart: He endorses free trade as the most efficient way to get the most goods, most cheaply, to the most consumers, worldwide. He's right, if we can look past the immediate losses of local capitalists and workers as foreign competition kills factories. But then he veers into an Orwellian declaration that unless we sign on more countries with an American-dominated free-trade empire, we're going to get isolated by the Chinese and European trade blocs. The Chinese and Europeans are protectionists; if Gutierrez really believed in free trade, he'd urge us to wait for their trade blocs to fail - or to break them up.
Charles Blahous and Jason J. Fichtner (both at state-sponsored George Mason University) blame Social Security for U.S. families' decision not to have babies. If old people were forced to work, more of them would decide to have kids to support them in their old age, they expect. How long this will take, they don't say. Whether aging Americans are ready to make that exchange is doubtful; it's not what Mitt Romney is preaching.
Economists Pia Orrenius and Madeline Zavodny are pro-immigration - they are right that immigrants renew America and keep it growing - but they say the way to make room for more systems engineers and gardeners is to end legalization for family members of recent arrivals. Apparently the lucky green-card winners are supposed to couple with Americans and have new families here, if they really feel a need.
Nobel Prize winner Robert E. Lucas Jr. and ex-Federal Reserve economist Kevin Hassett both rightly cite "uncertainty" as a cause of slow growth, though they seem to be referring to general economic uncertainty, which, as Jesus said of the poor, is always with us. They don't add that a major specific cause of business uncertainty and failure to hire is the partisan impasse in Congress, which keeps business owners guessing about personal and business tax rates and government mandates. Makes it tough for the owners of American businesses to plan.
A more convincing book for the Bush Institute might grill the bosses at Amazon.com, Dow Chemical, Philadelphia's own Monetate and QlikTech, and other big and little companies that have actually been hiring Americans on what it would take to get their customers, suppliers, and competitors to hire many more.
I don't expect the 4% authors would like the answers. Many CEOs would like the public - instead of individual companies - to pay for worker health care and retirement, specialized technical training, and basic scientific research.
That's not enough for many Democrats - and some in the media - who seem to think it's government's job to force American business owners to hire unemployed workers. To the contrary, these Bush Republicans are saying the government would do much better getting out of the way and rolling back more of the programs and restrictions that accumulated since the Great Depression.
Force has a poor history as a growth motivator, but government trims and lower taxes didn't work under Bush. With better basic public services, rational and appropriate taxes, and national leaders willing to work in a broad common direction, business would be more likely to bet on America's future.