- Edmund Phelps, economist
- Jul 16
Give us grassroots innovation
Our political instability comes from economic challenges that have only grown stronger over recent decades: wage stagnation, an alarming rise of working age people not in the labor force, a major loss of "good jobs" in manufacturing, a failure to pull up substantially the least advantaged workers, increased inequality of various kinds, bankrupt pension funds, and swollen public debt.
The political fashion has been to summon up government remedies for each of these challenges. Such piecemeal intervention, however, may please constituencies but not much improve matters. In fact, proposals to step up economic corporatism and socialism, to institute a universal basic income and enact huge increases in the national minimum wage, would have devastating effects on the country.
These challenges would not have arisen nor been as acute had we not been suffering a major slowdown of productivity growth since the 1970s.
Bottom line: We must first combat further hemorrhaging of the labor force, job losses, and deaths from opioids, by subsidizing employment of low wage workers. Any complete solution, however, depends on reviving rapid productivity growth. My book Mass Flourishing shows that the rapid growth of our history came from endemic, grassroots innovation. It dissolved many of society's problems. We must work to regain that.
Other voices in the conversation:
- Robert J. Gordon, economics professor, Northwestern University, author The Rise and Fall of American Growth: The political pendulum will swing back
- Darrick Hamilton, director of urban policy, the New School: The dice should not be loaded
- Lyman Stone, agriculture economist, USDA: Resist the taker-state
- Tobias Stone, founder, Newsquare: Inequality shatters societies
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