Grow, Baby, Grow!

Republicans have a great message about economic growth for middle America. Why make it so boring?

By William McGurn



Photo: Getty Images/istock
 

Why can’t Republicans talk about economic growth the way Bernie Sanders talks about his potted socialism or Donald Trump about making America great again: with an enthusiasm that connects with ordinary Americans?

Take Mitt Romney. In his 2012 run for president, Mr. Romney’s days as a partner at Bain Capital led to his being caricatured as a real-life Gordon “Greed Is Good” Gekko. Mr. Romney responded by playing his opponent’s game, emphasizing, for example, how his plan would ensure that the top 1% income earners would pay no less and possibly even more than they were paying.

By going on defense, Mr. Romney allowed Democrats to define his Bain years as a time when he destroyed lives rather than rescued companies. His greatest strength became his greatest weakness. And amid the wreckage of the election results, we learned that he lost to Barack Obama 81% to 18% on the question “cares about people like me.”

It’s not looking much better today, at least judging from the way the Republican candidates spoke about economic growth during Saturday night’s debate in South Carolina. Almost all checked the right boxes—lower taxes, smaller government, and so on. But they sound as dry and distant as Ben Stein’s high school Econ teacher in “Ferris Bueller’s Day Off,” boring his students out of their skulls as he drones on about the Smoot-Hawley tariff and the Laffer curve.

The tragedy is that the GOP’s rhetorical flatness comes at a moment when economic growth ought to be the heart of the Republican attack. After all, since 2000 the economy has been limping along at a tepid average annual growth rate of 2%. By contrast, in the half-century before that, the economy averaged 3.5% annual growth.

Hint: It’s not about numbers. The issue is the damage that low growth inflicts on possibility and aspirations and a ladder up. And the huge improvement in life for the Ordinary Joe if we could bump up that growth just one percentage point.

John Cochrane, an economist at Stanford’s Hoover Institution, highlights what’s at stake in an essay that can be found on his blog, the Grumpy Economist. The most striking fact from that essay? From 1952 to 2000, real income per person in the U.S. rose from $16,000 to $50,000.

Think about that. That’s more than doubling the standard of living for the average American.

Here’s the kicker: If over that same period of time the U.S. economy had been growing at our present 2% rate, real income per person in 2000 would have been only $23,000, not $50,000.

In other words, a growing economy means a growing standard of living. In human terms, that 3.5% growth from 1950 to 2000 translated into more dreams fulfilled for more Americans, whether that meant a college degree, a home in a decent neighborhood, or just the certainty that your children would do even better than you did. Not to mention the national wherewithal to do everything from tackling disease to providing for a military strong enough to meet America’s many challenges around the globe.

Now consider the future. In a back-of-the-envelope calculation that assumes a modest 1% boost in population, Mr. Cochrane worked out the difference between a U.S. economy whose GDP grows at 2% (the “new normal”) over the next eight years or one that grows at 3% (better than what we have, but by no means pie in the sky). For a guy earning $50,000 a year, with 2% average GDP growth, his income would rise to $54,400 in eight years. With 3% GDP growth, it’s $58,675.

The point is, small marginal gains in economic growth translate into huge gains for the American people. Better yet, this growth is compounded—like getting a raise year after year.

“Next to this increase in the standard of living, nothing the candidates are talking about—monetary policy, Fed, fiscal stimulus, minimum wage hikes, pay equity, and so on—even comes close to what growth can bring ordinary Americans,” says Mr. Cochrane.

This is the Republican answer to all those Democratic promises of new goodies, whether it’s Bernie Sanders saying college will be free or Hillary Clinton promising paid family leave. Most Republicans understand that jacking up taxes to expand social spending is a sucker’s bet. But most Republicans are not yet fluent in a language of growth and opportunity that goes far beyond vows of “creating jobs.”

The dominant narrative today holds that economic growth is something that benefits only hedge-fund managers and Wall Street. In fact, a booming economy is the Ordinary Joe’s only real hope for a better future for himself and his family, and this future withers when growth is anemic. This presidential campaign still awaits the Republican with the wit and vision to make that case effectively to the American people.

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