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Tuesday, May 23, 2017

The Left's New Economic Slogan: "NO WE CAN"T"

After eight years of mindless chanting of "yes we can" while Obama was president, the left has now come up with a new slogan to chant when it comes to the growth of the US economy.  That chant is "No we can't".

Okay, it's not really a chant they use, but it is now the default position of the left.  The USA is going to experience declining rates of economic growth over the next few decades and it's all due to demographics.  If you'd like to see a summary of this position from the leftwing point of view, I suggest that you read this article at Vox.  The amazing thing to me is not that the left views 3% economic growth for the American economy as unobtainable.  Nope, the amazing thing is that these people actually seem to believe this nonsense.

Let's look at the record for a moment.

First of all, 3% growth is less than the average growth of the economy during the 20th century as a whole.  This is real growth, so it's not colored by inflation.  The century included the worst decade ever for the American economy, the 1930s, but even with the Depression in the mix, we still averaged over 3.0%.  Now, the left calls a return to 3% growth a pipedream.  Since World War II, the average annual real growth rate until Obama took office was 3.5%.  That period just ended less than ten years ago, but now we have to abandon all hope of ever getting back there (or so we are told.)

Second, the reason we are given for the woeful rate of growth is that the population is aging, so there are fewer people to work in the economy.  The funny thing about that is what you find if you look back at the two biggest periods of economic growth since World War II.  Both of those growth spurts were the result of major tax cuts:  one by Kennedy and one by Reagan.  During both periods, the labor force grew significantly.  That growth was not happening because of immigration or a higher birth rate.  No, the big growth came because the percentage of people working rose quickly.  Higher economic growth pulled many more people from the ranks of the non-employed to the crowd looking for jobs.  All through the Obama years, we have watched millions of people give up hope of finding work and stop looking for a job.  That decline in the labor force was how Obama was able to talk about lowering the unemployment rate.  Once people stop looking for work, they are no longer counted as unemployed.  Right now, there are tens of millions of people who could easily rejoin the labor force; that is more than enough to fuel economic growth.

Third,  the dour preachers of economic malaise on the left ignore what has always been the main driver of the American economy:  innovation.  Sixty years ago,  no one would have expected such a large percentage of our economy to depend on computers and related items.  Fifty years ago, the idea of cell phones was something from science fiction, not the basis for millions of jobs and a large part of economic activity.  Forty years ago, who would have expected people to shop on the internet where a big chunk of all economic activity now occurs?  Thirty years ago, how many of today's drugs and medical treatments were expected imminently?  Twenty years ago, did people expect hybrid or electric cars in large numbers across the country?  Ten years ago, how many of these same economists and leftists now predicting stagnation told us that we had passed "peak oil" or the point at which the earth and especially the USA was starting to run out of fossil fuels?  The point is that all of these discoveries/inventions have resulted in major increases in economic activity.  There is no reason to think that innovation will end.  We are not at "peak invention".  We will never be at "peak invention".

Fourth, demographics is not always what the left claims it to be.  Remember it was only eight years ago when the received wisdom on the left (and throughout the media) was that the Democrats would never again be challenged by the Republicans in American elections.  That view was based upon demographics that made Democrat victories inevitable.  The same leftists who now spout about the inevitability of stagnant growth told us that their hold on power would be eternal; demography was destiny -- or so they told us.  Since then, the Democrats have lost the state legislatures, the governorships, the US House, the US Senate and the White House.  They have the ability to contest elections mostly only on the coasts.  What happened to demography?

One last point must be discussed.  In predicting inevitably slow growth, the "experts" on the left conveniently leave out the results of repatriation of the corporate cash now parked overseas due to onerous US taxes.  If the law is changed and only half of that cash returns to the USA, it would mean something on the order of an increase to GDP of roughly 2.5%-3.0%.  By itself, that's enough to bring us well over the supposedly unreachable target of three percent growth.

It's sad that we have a whole party preaching pessimism.  The Democrats/media/left better change their tune soon.  Americans don't like being told "No we can't."

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