How Much Government Is Good for Growth?

What can policy makers do to increase U.S. economic growth and what role should government play? Bloomberg Opinion columnists Noah Smith and Michael R. Strain recently met online to debate.

Noah Smith: I think we both agree that Americans are upset because they aren’t better off than their parents. Growth is the lubricant that makes an economy function. But how do we produce faster growth?

For years, the conversation was captured by the idea that cutting taxes and slashing regulations was the key to making the economy grow faster. But the repeated failure of tax cuts to deliver capital investment booms or rapid wage growth shows that a growth agenda can’t rely on small-government methods anymore. Progressives need their own growth agenda, focused on government activities that complement private business -- better infrastructure, more scientific research, more immigration, denser and more affordable housing, fewer powerful monopolies, and a government health-insurance system that relieves employers of the burden of providing health insurance for their employees. It’s this agenda, and not a Reaganite program of smaller government, that can deliver the growth Americans crave.