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BLOG: Can government fix the economy?

Tom Jackson • Nov 28, 2011 at 12:46 PM

My last blog post discussed two books, The Great Stagnation and Race Against the Machine, which seek to explain why America's economy doesn't seem to be working well for most people.

Both of these books offer suggestions on what can be done.

Race Against the Machine's authors, Eric Brinjolfsson and Andrew McFee, offer 19 proposals. They are good ideas. But they read as if they were beamed in from an alternate universe, one where the United States Congress actually bases its decisions on good public policy.

For example, get a load of suggestion No. 16:

Eliminate or reduce the massive home mortgage subsidy. This costs over $130 billion per year, which would do much more for growth if allocated to research or education. While home ownership has many laudable benefits, it likely reduces labor mobility and economic flexibility, which conflicts with the economy's increased need for flexibility.

I agree with this, but would Congress? Congress can't even act when its blindingly obvious what should be done.

A case in the point is the so-called Supercommittee. Everyone knew that the members needed to reach a compromise between Democrats and Republicans that would reduce the deficit. But the 12, including Ohio's Sen. Rob Portman, couldn't bring themselves to do anything except issue press releases. How likely is it that Congress will end mortgage subsidies, just because economists across the political spectrum think it's a good idea?

This is where I think Tyler Cowen, author of The Great Stagnation, has a clear edge. Cowen's top prescription can be carried out by everyone, without waiting for John Boehner or Barack Obama to sign on.

Cowen's signature idea is that America needs more technological innovation to create new industries. And his most interesting remedy is this: Raise the social status of scientists.

Cowen explains,

When it comes to motivating human beings, status often matters at least as much as money. I would like to see both incentives pointing in the right direction. Right now, scientists do not earn enough status and appreciation. While scientists are not, in American society, a low-status group, neither are they thought of as especially high status either. Science doesn't have the cache of law, medicine or high finance. Few women or men dream of dating or marrying a scientist.

Raising the social status of scientists doesn't require an act of Congress, Cowen points out.

We simply need to will it, and change our collective attitudes, for it to happen. It's a potential free lunch sitting right in front of us. Challenge the scientists you know, ask them to educate you and your kids, and reward them with your sincere admiration.

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