Policies for Economic Growth

Hoover Institution fellow John Cochrane discusses the “new normal” of 2 percent annual growth in GDP, which doesn’t sound far off from the 3.5 percent growth that characterized the US economy from 1950 to 2000. Compounded over decades, however, this seemingly small disparity represents huge amounts of forgone income—for both individuals and the nation. Politicians and media may focus on interest rates, pay equity, or union rights as economic remedies, yet, as John Cochrane shows, economic growth is largely a function of productivity. Unfortunately, burdensome regulations act like “sand in the gears” of the US economy, slowing productivity and throttling economic expansion. Cochrane explains a number of commonsense fiscal and institutional reforms to accelerate economic growth and restore—or even surpass—the upward trajectory of incomes enjoyed in earlier decades.