BETTER CAPITALISM

Litan and Schramm (Good Capitalism, Bad Capitalism, 2007, etc.) take on the question of how to increase the long-term rate of potential economic growth to get back in line with the roughly 3 percent that prevailed during the “ ‘golden’ post–World War II quarter-century spanning 1948 to 1973.”

The authors believe that what was then achieved through public expenditure for infrastructure, education and military commitments can now be mimicked by downsizing government to make it work “more like the private sector.” This involves transferring publicly owned infrastructure to the private sector, turning university research over to the marketing wizards of big business, and encouraging entrepreneurship wherever possible. “To navigate this complicated terrain,” write the authors, “people need to think of themselves as their own business.” They assert that the unemployed and school-age populations should “know how to launch actual businesses to implement ideas.” Of course, most won't succeed, but Litan and Schramm believe enough will to achieve their desired increase in the economic growth rate. They also believe American entrepreneurship was at its best in the century before Teddy Roosevelt and the trustbusters, when roads and bridges were privately owned and John D. Rockefeller held sway. Apart from opening up university research departments, the authors also recommend a package of immigration reforms designed to increase the number of scientifically and technically qualified graduates in America's colleges and encourage entrepreneurs to come here to invest in startups.

An uneven follow-up to Good Capitalism, Bad Capitalism, but it may find an audience in certain economics classrooms and among die-hard supporters of private-sector interests.