The duty of every columnist is to share his beliefs. Here is a core belief of mine: Growth—economic and personal—is not an option. Let’s go further and assert that growth is a moral requirement, for no other reason than that the opposite of growth is stagnation—a death of sorts.
Now to the economy: In round numbers, the US is a $16 trillion economy, which has been expanding at an annual 2 percent real (ie, noninflationary) rate since June 2009. Each year, we add $320 billion in real economic activity, which translates into 2 million to 3 million jobs and about $60 billion in federal tax receipts. We could use more jobs, and most of us want to cut the federal deficit and debt; therefore, growth is a good thing. But the US should be growing at 4 percent. Each year, we should be adding $640 billion in new activity, creating 4 million to 6 million new jobs and adding $120 billion in federal tax receipts. Why 4 percent growth? America has averaged 3 percent growth since World War II, but during those 68 years we have suffered 11 recessions, including the 2007–09 whopper. When the country isn’t in recession, 4 percent annual growth is quite normal.
Too many economists and pundits have thrown in the towel, saying that 4 percent growth is no longer possible. This argument is based on two factors: The law of large numbers (i.e., 4 percent growth off of a $16 trillion base is much harder to reach than 4 percent growth off of a $5 trillion base) and the generational problems we face (a growing part of the US population is either too young or too old to work to add to our statistical productivity).
We face challenges, of course, but getting back to 4 percent nonrecessionary growth is a moral requirement. If we care about jobs and deficits, choosing the right policy levers to lift economic growth should be the country’s highest priority.
So what kind of policy would get us from 2 percent growth to 4 percent (aiming for a long-term 3 percent to cover the inevitable downturns)? Lower, flatter and simpler taxes. Sensible regulation. Stable currency. Entitlement reform. A true health care revolution hitched to technological progress, entrepreneurial energy and market pricing. That should do it.
You may say this is fanciful thinking, given the paralysis in Washington. I’d say it’s a moral issue that transcends partisan turf wars. America’s history of facing big moral threats, whether they be slavery, war or nuclear annihilation, is actually quite good. History says we can do it.
Personal growth is everyone’s duty. Every major religion says so. And if you don’t give a fig about religion, fine; the secular pillars of society—science, reason and enlightenment—say the same thing. Progress comes only from inquiry, effort, discipline, testing, learning, reflection and wisdom. Rest a little bit, then repeat the cycle.
In his book The Score Takes Care of Itself, football coach Bill Walsh recounts how he took over a San Francisco 49ers team that had a record of 2 and 14 the year before. After a year of hard work—putting in new procedures and disciplines, finding out who would commit to the new system and firing or trading the rest—the Walsh-led 49ers went 2 and 14 again. It looked like a year of wasted effort. But that was only on the surface. Underneath—unseen by the fans and sportswriters—Walsh had rebuilt the franchise’s foundation. He had drafted the right players. Other statistical measures besides wins and losses had shown marked improvement. Two years later, the 49ers won the Super Bowl.
In business and careers, you often see opposites. The surface looks brilliant, the bottom line fat—General Motors in the 1960s, IBM in the 1980s, Dell in the 1990s, Apple in recent years. Or take the salesperson who meets the quota but refuses to push beyond. When formulas begin to harden and learning slows, death lurks. That’s as sure a thing as you’ll find in an unsure world. This is why growth—personal, corporate, societal—is a requirement, and a moral one at that.
Rich Karlgaard is the publisher at Forbes
(This story appears in the 28 June, 2013 issue of Forbes India. To visit our Archives, click here.)