I define myself as a fiscal conservative with a social conscience, because I want to address budget deficits and income inequality at the same time. There is so much divisiveness in politics these days that liberals accuse me of favoring austerity while, at the same time, conservatives accuse me of being soft on welfare.
The author Jay Cost has an article, “The Politics of Distrust” on this topic in yesterday’s Wall Street Journal. He says that the principal cause of this distrust is “the stubborn torpor of the American economy.”
According to Mr. Cost:
- For roughly half a century after WWII economic growth averaged 3.6% a year.
- Over the past 14 years, real growth has averaged only 1.7%.
- Persistently weak economic growth has contributed to our sour civic mood in three important ways:
- It has prompted voters to turn against the incumbent party time and again.
- Underwhelming growth has heightened anxieties about economic anxiety – liberals blame the unfairness of market-based capitalism and conservatives blame the corrupting hand of government – in taxation, regulation and monetary policy.
- Finally, weak economic growth has damaged the credibility of the experts – the experts failed to foresee the slowdown of the early 2000s, failed to anticipate the housing bubble, failed to predict that economic growth would remain weak after it burst, and failed to implement policies to return it to our postwar norm.
- These trends amount to a comprehensive assault on the political equilibrium of the past half century. During the postwar era public policy could evolve because broad agreement existed. Now the consensus has vanished and we are left with gridlock, indecision and drift.
- The tonic to this stalemate is as obvious as it is elusive: economic growth that approximates the levels of the late 20th century.
Perhaps surprisingly there is a fair amount of agreement between liberals and conservatives on how to speed up economic growth. This will be the subject of my next post.