Which Party Platform Is Better For Economic Growth?


James Pethokoukis is unhappy with the Democratic Party platform:

Other than more government R&D spending, it hasn’t much to say about entrepreneur-focused growth and innovation policy….Indeed, the very first section of the platform is titled: “Raise Incomes and Restore Economic Security for the Middle Class.” And the first item in that first section: a call for a $15 minimum wage (despite plenty of skepticism from center-left economists). The next section: “Create Good-Paying Jobs.” And the first item there: infrastructure spending.

Popular policies, I’m sure. But again, boosting productivity and innovation seem secondary even though they are key to rising living standards. At its core, this is a platform about broad-based wealth redistribution, not broad-based wealth creation.

Fair enough, I suppose—though supporting research, science, and technology seems like a pretty important part of the entrepreneurial agenda. The Democratic platform also supports stronger antitrust enforcement, which is good for entrepreneurs, as well as a promise to make it easier to start up small businesses. And infrastructure is important for entrepreneurs too, so let’s not disparage that. Also: guaranteed access to health care.

The Republican platform is still something of a mystery, but in 2012 its economic growth plan mostly focused on lowering taxes; passing a Balanced Budget Amendment; getting back on the gold standard; and letting the unfettered free market handle home mortgages (!). If we actually did all this stuff, it would probably crush economic growth for decades. Even with all its faults, anyone who cares about entrepreneurs really ought to prefer the Democratic Party platform to the Republican mess.

That said, let’s get down to brass tacks: The reason that neither platform has a lot to say about productivity growth is that no one really knows how to boost productivity growth. Democrats can pretend that a $15 minimum wage will do it, and Republicans can pretend that tax cuts for the rich will do it, but this is just random burbling. Technological innovation is the key to productivity growth—though even that requires some caveats—and nobody really has a good model of how to spark lots of technological innovation. Hell, we barely even agree about what technological innovation is. Does Facebook count? A new headphone jack on the iPhone 7? Tesla cars with autopilot? Pokémon Go?

As soon as we agree on the best way to spur technological innovation, then I’ll expect our politicians to support it. Until then, I think we’re expecting too much of our party platforms if we want them to solve problems that nobody yet knows how to solve.

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