The Seven Cardinal Virtues of Equitable Growth for America

  1. Manage the macroeconomy to match aggregate demand to potential supply. Take the dual mandate seriously: maintaining full employment is as important a central bank goal as low and stable inflation–and much more important than preserving healthy margins for the banking sector. Run large deficits–run up the national debt–in times of war, depression, or other national emergency calling for government action. Pay down the debt in other times.

  2. Invest. Invest in ideas, in equipment capital, in structures capital, in education: we need more of all forms of investment. Boost public and private investment: we need both kinds.

  3. Over the past generation, America has shifted enormous resources into value-subtracting industries: health-care administration, prisons, finance, carbon energy. We need to reverse those shifts. We need to focus the American economy on the value-creating sectors rather than the value-subtracting ones.

  4. We ought to have had a carbon tax 20 years ago. We still need one.

  5. We need more immigration. It is much easier, worldwide, to move the people to where the institutions are already good than to make good institutions where the people are. More immigration produces a richer country for those already here. More immigration is a mitzvah for immigrants. More immigration is, to a a lesser degree, a mitzvah for those in poor countries outside, who see less population pressure on resources. And a U.S. in 2070 that has 600 million people is more of an international superpower than a U.S. in 2070 that has only 400 million people. If you would rather have the U.S. than China or Russia be the world’s superpower in 2070, you should want more immigration into the U.S. now.

  6. We need more equality. If we want to have equality of opportunity 50 years from now, we need substantial equality of result right now.

  7. We are going to need a bigger and better government. The private unregulated market does not do well at health-care finance, at pensions, or at education finance. The private unregulated market does not do well at research and early-stage development. The private unregulated market does not do well with commodities that are non-rival, or non-excludible, or produced under conditions of greatly-increasing returns to scale. We are, in all likelihood, moving into a twenty-first century in which these sectors will all be larger slices of what we do. Thus in the twenty-first century a well-functioning economy will need a larger government share in the economy than was needed in the twentieth century.

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