Stephen King the HSBC economist has an op-ed worthy of Stephen King the horror writer, warning that economic growth is over for Western countries. I find his argument that this is the case unpersuasive, but what’s really unpersuasive is his list of policy remedies. He favors entitlement reform, deficit reduction, openness to trade, and everything else you would expect an intelligent purveyor of the economic conventional wisdom to advocate in 2003 or 1993 or 1983 or 1973.
Something has gone wrong with your analysis if you manage to combine a striking diagnosis of the world situation with such a banal list of policy remedies.
After all, the assumption that economic growth will continue undergirds conventional wisdom about economic policy in a really profound way—namely it’s the key reason to limit political interest in redistribution of economic resources. There are a lot of metaphors about rising tides lifting all boats and baking a bigger pie instead of arguing about how to divide up a small one, and they’re all pointing to the same issue—distributional issues matter, but in the long-term, economic growth matters much much more. Average living standards in the West are much higher in 2013 than they were in 1863 not because we abandoned capitalism and workers seized control of the factories, but because society as a whole is much more prosperous than it was 150 years ago. Thanks to growth, middle-class people can enjoy miraculous opulence—antibiotics, cars, air conditioning—that was far outside the grasp of the rich in the 1860s.
But if growth is over, that whole logic collapses, and politics really should just consist of a bitter zero-sum scramble over the distribution of a fixed pool of resources.