In his Oct. 8 op-ed column, “A global economy in peril,” Lawrence Summers argued that current bond prices are a sign that government debt levels are too low and urged higher government spending for productive investment.
Mr. Summers is a highly competent economist and not one to blindly advocate greater government intervention in the economy, yet he seemed overly focused on increasing demand, failing to address the regulatory impediments to innovation that are blocking the development of new products and slowing growth.
Rather than increasing the national debt or further politicizing investments of dubious value, economic liberalization, deregulation and privatization offer a proven way forward. When the moribund U.S. freight rail sector was freed from deadening regulations in the late 20th century, it quickly moved into profitability, dramatically increased productivity and added more than $500 billion in network investments. Similar gains were achieved by liberalization in telecommunications.
With promising creative innovations now being slowed or blocked — such as Uber and Airbnb — liberalization offers far better hope for breaking our economies out of the stagflation trap than more political “investments.”