It's time for a "game change."
The definition of insanity, a phrase misattributed to Einstein goes, is doing the same thing over and over again and expecting different results. Whoever first coined these words might give a sad and knowing nod today to the situation in Washington, where all too many policymakers have been following that path in endeavoring to "fix" the economy. Elected officials who want to pursue a more thoughtful course will need to break from the dead-end habit of concocting yet more government programs funded by higher taxes or debt as "solutions" to our anemic recovery.
Interestingly, a recent report from the McKinsey Global Institute provides major clues to changing direction for the better. The firm recently issued new research outlining five "catalysts" that will "quickly create jobs and deliver a substantial boost to GDP by 2020."
The "game changers" McKinsey highlights run the gamut from better talent development, particularly in science, engineering and math, to big-data productivity breakthroughs, from improved trade competition in knowledge-intensive goods to better infrastructure. But the No. 1 catalyst, McKinsey says, is oil and gas production, particularly from shale.
According to the report, maximizing the shale energy boom will result in:
We continue to hear a great deal of words from the White House and its allies in Congress calling for more jobs and better wages. But saying the same thing in different contexts and hoping they'll lead to a magical transformation is hardly a sound strategy. In any case, public officials have long attempted to revive economies by throwing more money at them (especially the current administration), resulting in huge deficits and debt for little gain.
Nonetheless, limited government advocates won't, and shouldn't, agree with everything in the McKinsey report, such as its seemingly overoptimistic assessment of high-speed rail's potential. Furthermore, tax-and-spenders could misinterpret and misappropriate some of the document's words as a call for bigger government. "Finding solutions for the environmental risks" associated with hydraulic fracturing, for example, has already been underway in the private sector and at the state and local regulatory level. McKinsey's advice should not serve as a pretext for expanding the Environmental Protection Agency's already excessive powers.
On the other hand, the authors do give remarkable insight into the ability of techniques such as public- private partnerships and more flexible teacher compensation to boost outcomes. Fiscal conservatives can make many additional contributions toward the realization of these "game changers." Infrastructure efficiency can be improved without huge infusions of tax dollars, through proposals such as truck-weight flexibility and open competition for pipe materials in water and sewer systems.
Private enterprise is willing to invest in the shale oil and gas boom. Such activity won't raise our national debt; indeed, as past studies of other oil and gas opportunities indicate, such development could actually generate more revenues as people get back to work and the economy grows. Why would any government pass up these kinds of benefits, particularly at a time when unemployment remains stubbornly high and the economy is just dribbling along? Apparently this is not a rhetorical question, as some of our elected leaders appear to be comfortable with doing precisely that.
Past White House budgets, as well as legislation in Congress, have attempted to paint a large target on the back of any energy company they can find, large or small. The naysayers don't want to encourage energy growth. They drag out the approval process for the Keystone XL pipeline. They don't want to approve liquefied natural gas (LNG) exports, even though other countries are eager to pay handsomely for our commodity. They do want to single out American oil and gas companies for tax hikes, which already pay higher average tax rates than do many non-energy businesses.
It's time for our leaders to send the right policy signals for the energy sector to grow, create new jobs, deliver prosperity and fulfill the potential for North America to become a net energy exporter. Even the economic superstars who are "game changers" need to operate within a set of rules, but insisting they follow the same old playbook is neither smart nor sane.
Pete Sepp is executive vice president for the 362,000-member National Taxpayers Union (ntu.org), a nonprofit, nonpartisan citizen group founded in 1969 to work for lower taxes, limited government and economic freedom at all levels.