Government Policies and the Delayed Economic Recovery examines the reasons for the weak recovery from the recent US recession and explores the possibility that government economic policy is the problem. In his insightful opening chapter, George Shultz explains why diagnosing the situation and then finding a solution to the problem of slow growth is extraordinarily important. If a slow-growth America becomes the new normal for the twenty-first century, not only will the future prosperity of the United States be sacrificed but so too will American leadership worldwide. Following his analysis, the book then focuses on six empirical research studies that examine issues from policy uncertainty to increased regulation as the reasons for slow growth. Taken together, the contributors to this volume offer a broad-based assessment of how government policies are slowing economic growth: by creating uncertainty and unpredictability, engendering short-term planning horizons, and depressing the incentives for businesses to hire new workers and invest in capital and new technologies.
The book contains various recommendations to help restore prosperity, including a broad-based tax reform that cuts tax rates, equalizes tax treatment across all types of capital, broadens the tax base, confronts entitlement spending, and, more broadly, reduces government spending as a percentage of GDP, as well as reforming unemployment benefits to reward job acceptance and accumulate human capital. It concludes with summaries of discussions that took place at a conference that centered on the book’s contents and topics.
These discussions and essays provide a blueprint for diagnosing our economic problems and advancing policy recommendations to help restore robust economic growth in the United States and the world economies.
Scott R. Baker, Nicholas Bloom, John H. Cochrane, John F. Cogan, Steven J. Davis, Alan Greenspan, Robert E. Hall, Kyle F. Herkenhoff, Ellen R. McGrattan, Lee E. Ohanian, Edward C. Prescott, George P. Shultz, John B. Taylor, Ian J. Wright