I write with only a little exaggeration that my jaw nearly hit the floor while watching the Democratic Party’s presidential candidates discuss the merits of socialism during last week’s debate. The Washington Post’s E.J. Dionne writes that viewers of the debate “experienced something historic: For the first time in the modern political era, Americans got to watch leaders of a mainstream political party debate the relative merits of capitalism and democratic socialism.” This historic moment makes me want to stand athwart history, yelling “Stop.”
Of course, the support of Sen. Bernie Sanders (I-Vt.) for “democratic socialism” and his opposition to capitalism puts him to the left of the other Democratic candidates for president — including Hillary Rodham Clinton, who came (with insufficient vigor) to capitalism’s defense. (Though it is perhaps notable that when asked this summer by Chris Matthews for “the difference between a Democrat and a socialist,” the chair of the Democratic National Committee was unable to provide an answer.)
Yes, yes, while it didn’t turn out so well under Stalin and Mao, something of the dem-soc variety may work for the good people of Scandinavia. (Though some on the left may like the idea of Denmark more than the reality of Denmark.) But my AEI colleague James Pethokoukis colorfully points out that there are reasons why Scandinavia’s policies may work for Scandinavia, whereas “IKEAmerica” could never be.
Contrast the Democrats with the Republican candidates, who quite like capitalism and markets and who are tripping over themselves to be pro-growth. Jeb Bush is unfortunately enthusiastic about hitting a specific growth target (an integer greater than 3 and less than 5) but is admirable in his enthusiasm for economic growth. Donald Trump — never to be outdone in anything — claims his tax plan could lift economic growth to 6 percent. Sen. Marco Rubio (Fla.) has set out a tax plan that would quicken economic growth as well.
So we have quite a contrast between growth and equality — a contrast that is much sharper between the parties than it has been in a long time. Are conservatives correct to focus so much on growth?
For one, demographic pressures are pushing the potential growth rate of the economy below its historic average. The nation is headed for a period of naturally slower growth, which means that we need to take pro-growth policies even more seriously now than in previous decades.
True, public policy cannot deliver 6 percent growth, no matter how great a deal Trump makes with the economy. But policy can get rid of a bad regulation (or 20) here, encourage people to participate in the workforce there, make savings and investment a bit more attractive, make entrepreneurship and innovation a bit more common, make the government’s footprint in the economy a bit smaller — on the margin, a range of policies can increase the rate of economic growth. And when you add up all those marginal changes, good policy can make the economy grow at a non-trivially faster rate.
Exaggerations aside, conservatives on the whole are relatively more likely to care about growth than about targeted spending programs. Progressives on the whole are relatively more likely to care about targeted spending programs than about growth. Both because spending programs can impede growth and because growth is important, the demographic environment facing the country over the next many years makes a focus on growth today all the more important.
But why is growth important? (Put another way, why is it good to have “a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers?”)
Imagine the world in the year 1900 — a world without: air travel. Skype. Wikipedia. Google. Smartphones. High school. “Star Wars.” Amazon Prime. Modern air conditioning. Antibiotics. “The Big Bang Theory.” Springsteen concerts.
None of these existed then. What in the world of tomorrow does not exist today? We need growth to find out.
Over the past two centuries, growth has increased living standards in the West unimaginably quickly. Many more babies survive to adulthood. Many more adults survive to old age. Many more people can be fed, clothed and housed. Much of the world enjoys significant quantities of leisure time. Much of the world can carve out decades of their lives for education, skill development and the moral formation and enlightenment that come with it. Growth has enabled this. Let’s keep growing.
Economic growth is the most effective tool for lifting people out of utter destitution in human history. This is true to this very day, and it is no small thing; it should not be treated and dismissed as a small thing. The poor are still with us, both here and abroad. They deserve a robustly growing American economy and the benefits that come with it.
We must be careful never to embrace even moderately what the economist Deirdre McCloskey calls “a medieval theory of the zero-sum society.” If your income is going up, you worry less about whether the income of your neighbor is going up faster than yours. “Slower growth makes distributional conflict inevitable,” writes the Nobel laureate economist Angus Deaton, “because the only way forward for me is at your expense.” Is it too strong to say that growth impedes envy? That growth enables social cohesion?
Growth facilitates the flourishing life. By creating a dynamic environment characterized by increasing opportunity, growth gives the young the opportunity to dream and to strive. And it gives the rest of us the ability to apply our skills and talents as we see fit, to contribute to society, to provide for our families. A growing economy allows individuals to increase their living standards, facilitating economic and social mobility.
Not to be too much of a historical materialist about it (again, we know where that leads), but it seems safe to say that the political moment we are in now — represented by Trump on the right and Sanders on the left — is in large part the result of slow growth. Perhaps part of today’s political environment can be explained as simply as this: Slow growth, and its effect on our pocketbooks, gives space for the lesser angels of our nature to come to the fore. On the individual level, this is understandable and unfortunate. On the social level, it hurts the functioning of our democracy.
Of course, growth isn’t everything. Conservatives especially must be on guard not to genuflect with too much reverence before the altar of national income statistics. We have learned that for too many a growing economy is not enough — a rising tide does not lift all boats with sufficient speed.
So it is important to focus on another of the many fruits of economic growth: It provides the money to make targeted spending programs possible. In a nation as rich as ours, no one should fall too far — no one should go hungry, everyone should have a baseline level of education, no one should be bankrupted by a catastrophic medical event. Slow growth impedes progress toward social goals that require targeted spending, both because of the political climate it fosters and because those goals, even only those that are advisable, are expensive.
All the more reason that government, especially in the near term, needs to focus on growth.