Growth Doctrine

I have written two essays on what I call the Growth Doctrine. This doctrine can be summarized by a quote from Brad DeLong.

Ultimately, long-run economic growth is the most important aspect of how the economy performs. Two major factors determine the prosperity and growth of an economy: the pace of technological advance and the capital intensity of the economy. Policies that accelerate innovation or that boost investment to raise capital intensity accelerate economic growth. -- Brad DeLong, Macroeconomics, p. 89

In the first essay, I conclude

Tax policy is debated in terms of who "deserves" a tax cut. Social security is debated in terms of arcane accounting shell games. This is not to say that the Growth Doctrine favors Republican or Democratic economic policy. Rather, we should lament the fact that neither side appeals to the Growth Doctrine to support its positions.

In the second essay, I conclude

when we try to assess whether government policies are helping to promote economic growth, it is not enough to "follow the money." Government affects growth by the way its rules and regulations set the framework in various endeavors. Better design of the regulatory framework has significant potential to improve the outlook for growth.

Both essays use specific examples to illustrate the points. In fact, the second essay brings in the issue of FCC spectrum regulation, discussed earlier in posts 35, 39, and 40.

Discussion Question. New discoveries in biology and genetics should be a major source of economic growth. What regulatory issues will be important?