Wrap up Discussion: Policy Prescriptions to Encourage Economic Growth

As we close the conference, we invite a panel of our own to help us answer the questions raised over the past day and a half. Welcome to Dean Robert Hanson, Dean Matthew Slaughter, Professor Richard D'Aveni, and Dartmouth Professor James Feyrer.

The discussion started with Matthew Slaughter soliciting recommendations for 3 policy prescriptions that could be important drivers to encourage growth in the economy.

James Feyrer offered:

1. Simply get prices right. In the context of the last panel's discussion around energy, it is important to get subsidies right and price carbon correctly (if we can even get there).

2. Fix patent policy. Defensive patenting has distorted the landscape.

Robert Hanson's suggestions involved removing wedges from markets and limiting mandates from the Federal government about quality levels that could be better set by the market.

1. Reform personal income tax and corporate tax system - make personal tax levels easier to predict and business taxes more competitive globally.

2. Redo healthcare reform because the large expense may not improve the level of quality. Furthermore, health care should not be tied to or burden the employer.

3. Put an energy policy in place. There should be a price on the carbon externality through a carbon tax.

[He wasn't able to get to immigration, education, etc.]

Though Richard D'Aveni points out that he is not as well educated as the economists on the panel, he does remind us of his closer ties to reality. D'Aveni does not believe that we can innovate or educate our way out, or progress through tax reform. These approaches haven't worked. Our antiquated system is set up to create efficient markets to benefit investors - who are no longer all Americans. We should be looking after the optimal use of American human capital, not just the efficient use of investment capital. More generally, economic models do not fit the reality with which we are faced.

1. Believes in more economic nationalism than current open trade policy because capital and jobs are leaving the country. Practically, we need to negotiate harder with China, Japan, and Germany using non-tariff barriers that are acceptable by the WTO.

2. Reduce the amount of finance capitalism that we have in the world, which prioritizes shareholder interests over public benefit. This could be done be reducing the power of shareholders and governing boards, shifting power to CEOs.

3. Historically, we have encouraged a consumption-focussed economy that has decreased our rate of savings and reinvestment in the economy. Using a consumption tax, we would incentivize personal savings.

Dean Slaughter next asked what policy each would recommend that the President do to spur growth and avoid:

Feyrer

Do tax reform. Avoid picking technology winners.

Hanson

Reform corporate tax. Avoid nationalistic reasoning to limit free trade.

D'Aveni

[aside from asking President to resign] Get the deficit and debt under control. Don't run for reelection.

Thank you to the panelists for the academic, humorous, and sometimes contradicting suggestions on how policy can change to spur growth!