Not long after
Still, you can bet that if the economy continues to contract, Obama will propose the same remedy he always has: more "investments" in education, infrastructure and various industries of the future. It seems that whatever the ailment, Dr. Obama always writes the same prescription.
This is hardly shocking: Building roads and schools is a big reason why God created Democrats in the first place. And identifying the Next Big Thing — and taking credit for it — is something of a vocation for many liberal policymakers.
But are these really the drivers of economic growth?
Higher education in particular is almost universally championed as the key to "winning the future"
— a buzz phrase the president borrowed from Newt Gingrich awhile back.
Often channeling such writers as Thomas Friedman, whose fondness for the Chinese economic model borders on the perverse, Obama routinely elevates education to a national security issue. "There's an educational arms race taking place around the world right now — from
Now, obviously, education is important and necessary for a host of reasons (and nobody is calling for "disarmament," whatever that means). But there's little evidence it drives growth.
British scholar Alison Wolf writes in "Does Education Matter?": "The simple one-way relationship … — education spending in, economic growth out — simply does not exist. Moreover, the larger and more complex the education sector, the less obvious any links to productivity."
Nasim Taleb, author of "Antifragile: Things That Gain From Disorder," argues that education pays real benefits at a micro level because it allows families to lock in their economic status. An entrepreneurial father can ensure his kids will do OK by paying for them to become doctors and lawyers. But what is true at the micro level is not always true at the macro level.
Think about it this way: Growing economies spend a lot on education, but that doesn't necessarily mean that spending makes them grow. During the so-called Gilded Age, the U.S. economy roared faster and longer than ever before or since, while the illiteracy rate went down. But the rising literacy didn't cause the growth. Similarly, in the 20th century, in places like China, South Korea and India, the economic boom — and the policies that create it — always come first while the investments in education come later.
There are similar problems with claims that infrastructure spending will pay off. When I was in college, prominent experts and journalists — Lester Thurow, Robert Reich, James Fallows,
Japan is now well into its third "lost decade." Over the years, it has poured money into "stimulative" infrastructure projects that have yet to stimulate and protected industries that have steadily lost their competitive edge. Economic growth has averaged less than 1% since 2000, while government debt is now more than twice its GDP. If a highly educated workforce, support for allegedly cutting-edge industries and lavish spending on infrastructure was the recipe for economic growth (and if debt didn't matter), Japan would be doing great.
Obama surely wants to see some real economic growth. Perhaps the problem is that he thinks investing in a much bigger cart to put before the horse will get him where he wants to go.