John Tamny’s answer is for government to get out of the way and let the American people do what they do best:
So how do we start growing again? To answer this we must first acknowledge what will decidedly not work. In particular, “stimulus” spending is an oxymoron and an economic retardant for penalizing the work efforts of those from whom wealth is taken, while creating work disincentives for its alleged beneficiaries. Economic growth is always and everywhere the result of productive work effort, so rather than more economy-enervating handouts, the policies necessary to get our economy moving again must be focused on the removal of barriers to productivity. On the tax front, we must remember that any economy is blessed by the efforts of the vital few. To have a stated tax objective whereby we penalize the most productive at the highest rates is the equivalent of the National Football League (NFL) forcing Tom Brady and Peyton Manning to throw left-handed. Just as the NFL’s growth would subside if it shackled its best players, so will our economy perform at sub-optimal levels if we penalize our best entrepreneurs.
When we look at trade, Mill made the basic point that when we work, we do so in order to exchange our surplus for that of others. So just as taxes are a price put on work, so are tariffs. Removal of trade barriers will lead to an even greater division of labor that ensures workers within these borders will do that which they’re best at.
Much commentary of late has suggested that U.S. industry needs more regulation, but if we ignore for now that it’s always the regulated companies that fail on our dime, we must say that regulations at their core inhibit natural economic activity. Rather than impose rules on an economy that is surely regulated by profit-seeking investors, we should reduce the role of bureaucrats so that self-interested investors can decide themselves which firms will be the recipients of capital, and which ones will no longer be allowed to fail their customers.
And when it comes to the dollar, it has to be remembered that money itself is not wealth. Instead, money is simply a measuring rod that allows us to properly price our own output so that we can consume the products created by others. In that sense, it’s essential that we not just strengthen the dollar, but stabilize its value as a way of insuring the constant wealth-enhancing exchanges of goods that characterize a growing economy.
After that, there’s not much else we can or should do. Thanks to our natural economic advantages that result from the people who populate this country, the path to renewed economic vibrancy is very simple: Let our citizens produce as freely as possible. In short, let’s stop worrying about recessions and start growing again.
Lower taxes, lower trade barriers, less regulation and a stable dollar is the recipe for growth. Politicians seem intent on doing the opposite.