Morning Must-Read: David Wessel: Lousy Economic Growth Is a Choice, Not an Inevitability
Lousy Economic Growth Is a Choice, Not an Inevitability: “The notion that all this is inevitable and economic policy has done all that it can do…
…is defeatist and wrong…. The Federal Reserve has done a lot, more than some Fed policymakers would have liked, not enough for its critics. But fiscal policy in the U.S. at the local, state and federal levels has been a restraint on growth…. And gridlock in Congress is an obstacle…. Matters are even worse in Europe. Mario Draghi is stepping up his efforts at the European Central Bank with resistance from Germany. German politicians appear reluctant to take the widespread advice that a country with strong government finances, a trade surplus, decaying infrastructure, a slowing (if still low-unemployment) economy, and a huge stake in the European project should be investing more in infrastructure, considering pro-investment tax cuts, and raising wages…. ‘There is a real risk of subpar growth persisting for a long period of time, but what is important is that we know it can be averted,’ Ms Lagarde said at the end of the weekend meetings of economic policymakers from around the world. ‘We know it can be averted. And, it will require some political courage, some will, some degree of realism on the part of national legislatures, but it can be done.’ In other words, settling for the ‘new mediocre’ is a choice.