Will This Be Our ‘Lost Decade’?
The estimated jobs loss of 85,000 in December was more than many economists forecasted but still indicative of a stabilizing job market. Combined with the revision upward of to positive job growth in November, the economy may have troughed. The real danger now is avoiding a “lost decade” similar to what Japan experienced in the 1990s and early 2000s. Indeed, Japan’s spending spree on its failed attempts to use fiscal policy to foster job growth put the nation on the precipice of public-debt default.
Unfortunately, policymakers inside the beltway in Washington, D.C., still think it’s government that needs to lead the economy out of the recession. In truth, it will be private investment in long-term wealth creation that will be the key to sustained recovery. The best approach for the U.S. government is to let the economy works its own way out of the recession by holding off on more regulation, bringing the deficit under control through a strategic reduction in spending, and avoiding grand new government jobs schemes that simply add uncertainty to the economy.
— Samuel R. Staley is Robert W. Galvin Fellow and director of Urban & Land Use Policy at the Reason Foundation.