Millions of Americans owe more on their homes than they are worth, long-term unemployment is alarmingly high, and the Congressional Budget Office is projecting a sustainable growth rate of only 2.3%—a full percentage point below the average for the past 60 years.
Unless a turnaround comes quickly, the United States could be mired in debt for years to come, and millions of Americans will be pushed to the sidelines of the economy.
The 4% Solution is the George W. Bush Institute’s plan for reversing the aforementioned fiscal trends and reviving America’s economy.
Focusing on removing government constraints, The 4% Solution (i.e., the desired rate of overall growth of the U.S. economy per year) defines the policies that it argues will allow Americans to save, invest, and create needed jobs.
And in addition to a foreword by former U.S. President George W. Bush, The 4% Solution draws on the expertise of leading economists, including five Nobel laureates:
- Robert E. Lucas, Jr., discusses the history and future of economic growth;
- Gary S. Becker tells us why we need immigrants in order to grow;
- Edward Prescott notes the cost (to growth) of the welfare state;
- Vernon Smith explains why housing leads us into and out of recessions;
- Myron Scholes asserts why we need to innovate in order to grow the economy.
Here’s George W. Bush and his take on the 4% solution:
The following excerpt is editor Brendan Miniter’s look at the deeper meaning of capitalism and the extent to which the U.S. government should be involved in shaping the American economy:
Today, there is a vigorous debate over how best to lift people out of poverty. In an era of high unemployment, economic uncertainty, and falling expectations of what is possible in the future, this debate has taken on added significance. This country may be at a crossroads, where its next steps could determine whether its future will be dominated by how it has decided to address poverty, unemployment, and economic distress of the middle class.
So let us step, for a moment, beyond the economic arguments and the ramifications of government debt, and address the underlying fundamental question of how we respond when our fellow citizens are being battered by vicious economic trends. Do we turn to government to provide for the people? Or do we turn to the people by empowering them to help themselves and each other?
If we care about poverty and if we care about enlivening the souls of our fellow citizens by freeing them from the economic despair of joblessness, we need to recognize that there is a moral component, and even a moral imperative, to a free economy. It has been said that there is dignity in having a job, but economics is about more than allowing people to have a modicum of dignity and self-worth inside the confines of what we collectively allow them to have. To be successful, economic policy can’t be thought of as charity. If it is to achieve its aim, it needs to allow an individual to live up to his potential. To thrive in a free society, people need to form strong bonds that connect them to others. Merchants must build trust among their customers, and individuals must build a community with their neighbors. We can only weaken those bonds when we take away the necessity and the imperative of forming them.
Former Florida Governor Jeb Bush adds his perspective on the subject: