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Noah Smith

The Next Big Idea in Economic Growth

Short-term gains are sexy, but if businesses want to win, it's about the long game.
If you build it, the money will come.

If you build it, the money will come.

Photographer: John Taggart/Bloomberg

This presidential election has driven home a problem that others have been noticing the last few years: The U.S. seems to be out of ideas for economic growth. The main argument appears to be over redistribution -- tax rates, the size of the welfare state, free college. Protectionism is also making a comeback; Bernie Sanders would restrict trade and punish Wall Street, while Republican candidates would curb immigration. These are mostly debates about the size of the pie. But what about growing it?

Most ideas for growth still endorse some form of neoliberalism -- a catch-all term that advocates free-market policies and deregulation. Free marketers tend to assume that slashing regulation will boost growth, possibly by dramatic amounts, despite only mixed evidence on the matter. On the left, “third way” proponents continue to emphasize targeted deregulations, such as a reduction in occupation licensing, weakened intellectual-property protections, a reduction in land-use restrictions, and increased immigration. I tend to agree with the latter, but neoliberalism is fundamentally an old idea. We’ve been trying to boost economic freedom for decades now, and there’s a good possibility that all the low-hanging fruit has been picked.