- Hammond and Lindsey propose a "high road" economic approach, an all-hands-on-deck policy program aimed at both revving up the economy and sharing the results widely. Tweet This
- To those who blanch at a "transfers first" solution to this problem, Hammond and Lindsey's growth-focused approach offers a thought-provoking alternative. Tweet This
America just doesn't grow like it used to. Real GDP has increased by a sluggish 1% per year on average since 2000, a substantial decline from the 2% annual average throughout the 20th century. Similarly slow median wage growth, and a series of "jobless" economic recoveries have compounded to produce less wealth, especially for younger people.
This stagnation has substantial implications for family life. Forming a family is not free, and slower growth makes it harder for adults to become an attractive mate or afford kids. Among couples who cohabit, majorities cite finances as their main reason for not tying the knot; the ever-growing population of men not in the labor force is particularly unlikely to be married.
Finances are also the leading reason that couples choose fewer or no kids, particularly as the cost of childrearing continues to rise. Economic malaise may even help explain the "marriage gap" between high and low earners documented in a recent IFS brief—as growth slows, the number of people able to meet the minimum threshold to afford family life falls.
It is hard not to see a link between the heady, high-growth years immediately following World War II and the contemporary sky-high marriage and birth rates. Today, by contrast, the marriage rate is at its lowest point since at least 1900, as both men and women marry later and later. As a result, a woman can now expect just 1.7 kids in her lifetime, both a record low and well below the number women actually want.
To the extent that these problems are understood to have an economic component, popular solutions tend to come in the form of more transfer spending. Presidential candidates like Sens. Bernie Sanders and Elizabeth Warren focus on socializing the added costs of family through universal preschool programs and a more generous welfare state. While these approaches may (or may not) ameliorate the effects of low growth on the family, they do not target the root cause: economic sclerosis.
Those interested in pro-family policy but skeptical of the transfer approach, then, have much to appreciate in "Faster Growth, Fairer Growth," the new book-length report from the Niskanen Center's Samuel Hammond and Brink Lindsey. The report offers a "concrete, wide-ranging agenda for policy reform" with the overall goal of both accelerating economic growth and ensuring its fruits are more widely distributed—a pivotal goal if one is interested in ensuring the American dream of a job and family for more people.
Hammond and Lindsey's diagnosis of the economy's basic problem is far-reaching. They argue that key engines of growth in the 20th century—rising educational attainment, the mobilization of women into the labor force, and rapid technological innovation—are largely exhausted. Policymakers, meanwhile, have failed to prioritize growth, while allowing insiders to "capture" the regulatory process and accrue limited benefits to themselves. Against this status quo, Hammond and Lindsey propose a "high road" economic approach, an all-hands-on-deck policy program aimed at both revving up the economy and sharing the results widely.
They group solutions into three categories. The first is policy focused on keeping the labor market tight and minimizing unemployment, returning to the widely shared benefits of the pre-COVID record-low unemployment rate. This section includes wonkier proposals, like switching the federal reserve to an NGDP targeting regime, but also simple, universal supports meant to obviate the biggest risks of entrepreneurialism. That includes support for a universal child credit which, the report notes, has actually increased total employment in Canada—the opposite of what critics suggest might happen.
The report further focuses on the "captured economy," a phrase coined by Lindsey and colleague Steve Teles in their 2017 book of the same name. Private interests accruing rents to themselves, Hammond and Teles argue, further limit the benefits of already meager growth. To remedy this, they call for more competition in the healthcare sector ("the most pressing priority in health care reform is putting downward pressure on the bills, not changing who pays them"), as well as local deregulation to create more homes—a must for expanding new families' access to the home as a store of value and the associated lowered costs.
Lastly, Hammond and Teles advocate for expansive government investment in innovation. Such spending is at its lowest point since at least the 1960s, and the cost-benefit ratio to government R&D is likely much higher than that of the transfer approach. They also advocate for spreading this investment across the United States, in order to help rehabilitate fading locales which have missed out on the boom enjoyed by cities like New York and Los Angeles.
There are dozens more proposals in the report's 100-plus pages, which means there is something for everyone to like and dislike. But the key conceit, that of a growth-first policy program for reinvigorating America, is a goal well-worth considering.
After all, to the extent that policymakers want to reinvigorate the American dream—a steady job, two loving parents, and as many kids as they want living an economically secure life—doing nothing does not appear to be cutting it. To those who blanch at a "transfers first" solution to this problem, Hammond and Lindsey's growth-focused approach offers a thought-provoking alternative.
Charles Fain Lehman is a staff writer for the Washington Free Beacon, where he covers crime, law, drugs, immigration, and social issues. Reach him on twitter @CharlesFLehman.