Some Long-Term Problems of the American Economy

The theme of my comments today is that many of the problems facing the U.S. economy look intractable politically and expensive in resources if we want to solve them quickly. There are two basic reasons for that conclusion. First, no one has proposed reliable, quick-acting answers for such multi-faceted problems as crime, delinquency, welfare, illiteracy, drugs, low quality education, the low saving rate, the future shortfall of social security revenues, and several others. Several of these problems will take a decade or even a generation to show substantial improvement, if such improvement ever occurs. Second, many past efforts have not succeeded but they have left behind entrenched bureaucracies and clientele who exercise veto power over any proposal that is not to their benefit. These groups often function like the most entrenched private monopolists in textbook examples of monopoly power. In a modern economy open to trade, the most durable monopolies are often those supported or developed by governments.