OUR ECONOMIESTORBAKHOPPER|FLICKRchanges – witness China’s transition to amarket economy, India’s reforms to endthe license raj, or economic liberalization inLatin America. But advanced economies areall growing at very similar rates, and nothingin the last several decades suggests thatstructural policies can have a major impacton medium- and long-term growth (in certaincircumstances, short-run demand policies can.If advanced economies did everythingright, their growth rate might increase by,say, 0.3 percentage point. That is certainlyworth doing; much of economic policy is.Iour politics will change radically if the medianUS or French household gets an extra $1,800after a decade.Similarly, we should be making a much.Isome countries, that means strengtheningworkers’ bargaining power – higher minimumwages and stronger unions would be a goodstart – while tackling issues that weaken it,like employer collusion and restraints onJasonFurmanJason Furman,Professor of thePractice of EconomicPolicy at the HarvardKennedy School andSenior Fellow at thePeterson Institutefor InternationalEconomics, wasChairman ofPresident BarackObama’s Council ofEconomic Advisersfrom 2013-2017.employees’ ability to change jobs.Policies that promote competitionand reduce inefficient rents also have animportant role to play. This includes morereduce entry barriers, for example, by givingpeople ownership of their personal data. But,again, the plausible impact of such policieswould fall well short of overcoming people’sconcerns with inequality and slow incomegrowth.Some other policies are economicallysensible, but may be politicallycounterproductive. For example, while Istrongly agree with the widespread viewthat a robust social safety net is neededto protect the “losers” of globalization andmarket-based competition, I worry thatcreating one may be as likely to weaken asto reinforce social cohesion. In the US, theACAthe largest expansion of the social safety netin almost 50 years, and it is hard to imagineanother as large in the next 50 years. Butincreased funding for health insurance andthe greatly reduced chance of becominguninsured have not dramatically changedUS politics or alleviated concerns aboutjob losses due to trade. If anything, theAffordable Care Act may have increasedpolarization, given that some of what fuelspopulism is the resentment felt by thoseto others at their expense.Nonetheless, such economic policies arethe right steps to take, and they just mighthelp defuse a little of the anxiety. But we mustalso be humble about our understanding ofwhich solutions could address our currenteconomic problems, particularly the need topromote higher levels of employment.In fact, the solution to our politicalproblems, in 2018 and beyond, may lie notin any new policies or materially changedcircumstances, but in finding better waysto communicate about the challenges weface, the efforts being made to addressthem, and the inherent limits that confrontall policymakers. There has to be a betteranswer than just lying to people about whatour policies are capable of accomplishing.OUR WORLD | 2018Copyright: Project Syndicate, 2018. www.project-syndicate.org61
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