Some Manure, Please, So I Can ‘Grow the Economy’: Caroline Baum
When he was running for president in 1992, Bill Clinton promised to “grow the economy.” Presidents, politicians and the press have been growing it ever since.
“Grow the economy?” The phrase is painful to the ears -- and only one reason it makes me wince. We grow old, we grow up, we grow out of our bad habits (hopefully). But grow the economy?
In search of clarification, I went straight to the source for all things etymological (words, not bugs): William Safire, the late New York Times columnist.
“Grow to like it, because the transitive use of grow in a citified sense has deep roots in the language and is here to stay,” Safire wrote in his Nov. 15, 1992, “On Language” column in the New York Times Magazine, complete with a citation from 1481.
I got no support from Merriam-Webster either. Grow is both an intransitive (first usage) and a transitive verb, in which case it means “to cause to grow” (farmers grow corn) or “to let grow” (he grew a beard), according to the dictionary.
Persuaded (reluctantly) by the authorities that “grow the economy” was acceptable usage, I moved on to the second source of my angst: the implication. If the economy is the direct object, exactly who or what is doing the growing? The president? The Congress? Government via the laws, rules and regulations it puts in place?
According to Safire, President George W. Bush was no fan of the phrase, calling it a not-so-concealed attempt to grow government. In return, Bush promised to “grow down the deficit.”
President Barack Obama talks a lot about growing the economy and grows the government instead. Government outlays as a share of gross domestic product rose to a post-World War II high of 25.4 percent last year.
After two years of vilifying banks, insurance companies and energy producers, Obama has started to make nice to the business community. (Maybe on some level he realizes he can’t grow the economy fast enough to ensure re-election in 2012.) According to the White House, the president will address the Chamber of Commerce on Feb. 7 and discuss his “commitment to growing the economy.”
Last week Obama appointed William Daley, scion of Chicago’s ruling family, as his new chief of staff.
“He possesses a deep understanding of how jobs are created and how to grow our economy,” Obama said in announcing Daley’s appointment.
Daley replaces Rahm Emanuel, who returned to Chicago after growing his prestige enough to give him a shot at Mayor Richard Daley’s seat.
No Instructions Needed
The idea that the government can grow the economy is seriously flawed. The economy grows on its own unless there are obstacles placed in the way. The best thing the government can do is remove those impediments, such as the high corporate tax rate, and allow the economy to send out new roots and green shoots. Water it periodically. Fertilize occasionally with organic material. And don’t overfeed.
“Grow the economy” conjures up images of bureaucrats sitting around a table distributing tax incentives to ethanol producers; doling out grants to private companies to advertise overseas; pouring money into pointless infrastructure projects, such as bike paths, pedestrian trails and critter crossings.
Oh, wait. The government does that already.
How does the economy know how to grow without anyone telling it what to do? It starts with individuals wanting to earn money to pay for their basic needs and accumulate savings. In our infinite wisdom, we -- at least entrepreneurs -- figure out how to produce or provide a good or service the public wants to buy at a price it’s willing to pay.
Some of us have a calling. We know from the age of six we want to sing at La Scala, find a cure for cancer or explore outer space. If we can’t get paid for following our dream, the call goes unanswered.
That’s the principle around which free-market economies are organized. Attempts to grow the economy by government spending can only provide support in the short run. The money borrowed today and confiscated via taxation tomorrow is a transfer from the private sector to the public sector, which has no incentive to spend other people’s money wisely.
When Obama talks about “growing the economy,” one can see the ghost of John Maynard Keynes rising from the grave. Lord Keynes, who developed the theory without coining the phrase, generally returns at times of economic crisis to advise the current occupant of the White House on how to borrow and spend our way to prosperity. Spending revives the economy, which reduces government transfer payments (unemployment compensation, for example) and raises tax revenues, according to Keynes’s theory.
In other words, the spending pays for itself.
“How marvelous is the Keynesian world!” wrote Henry Hazlitt in “The Failure of the ‘New Economics:’ An Analysis of the Keynesian Fallacies.” “The more you spend the more you save. The more you eat your cake, the more cake you have.”
In the real world, of course, the more you “grow the economy,” the less you have to show for it.
(Caroline Baum, author of “Just What I Said,” is a Bloomberg News columnist. The opinions expressed are her own.)
Click on “Send Comment” in sidebar display to send a letter to the editor.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.