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“It would seem that not all economic ‘growth’ adds value to the economy.” So writes Myron Scholes in his insightful contribution to our new book, “The 4% Solution.” Scholes distinguishes between artificial growth that boosts numbers without adding what he calls “fundamental value” to the economy. Examples of artificial growth include building a road just in the name of creating temporary jobs, or a rise in housing prices that has nothing to do with home improvement or even demand but rather is the result of cheap credit courtesy of the Fed. The better kind of growth, Scholes says, is that growth that actually increases our net wealth, “and is usually driven by progress in human or physical capital or advances in technology.” Agreed. Scholes’s analysis applies to China, which, he accurately points out, features growth that probably isn’t as strong as official numbers suggests. But the U.S. too needs to reconsider our metrics. My own view is that our job these days, even at a project called “4% Growth,” is to doubt the growth numbers, and to begin to look for newer measures of growth that capture “fundamental value” more precisely than does GDP. Scholes notes that “shock creates change. We had a shock recently. Let’s not let a good shock go to waste.” Here the professor is speaking generally about all kinds of opportunities. But one can also hope that the shock of recent experience also inspires us to find more accurate ways to quantify growth.
TARIFFIED: Trade Talk with Matthew Rooney
This week, trade relations between the U.S. and India are continuing to escalate. Earlier this month, the U.S. stopped granting India special trade privileges by taking away the Generalized System of Preferences (GSP) program, and India has responded by enforcing more tariffs of its own. The George W. Bush-SMU Economic Growth Initiative Director Matthew Rooney breaks down the trade conflict: For more information on trade groups and the global economy, visit www.bushcenter.org/scorecard.
How Trade Spreads Holiday Cheer
It is projected that the average American household will spend more than $1,000 during the holidays this year.
Deporting Salvadorans May Lead to Economic Decline
We should think carefully about a policy whose major impacts are likely to be reductions in employment and economic activity here at home, and increased instability and lawlessness along our borders.
Bush Institute's Laura Collins Talks Immigration on Good Morning Texas
Last week, Deputy Director of Economic Growth at the George. W. Bush Institute Laura Collins spoke with Good Morning Texas about immigration myths. During the interview, Collins had the opportunity to set the record straight and address common misconceptions about legal immigrants living in America today. The segment was inspired from facts released earlier this fall by the Bush Institute in the third edition of America's Advantage: A Handbook on Immigration and Economic Growth. Watch the full Good Morning Texas interview here.