Smart Government Focuses on Essentials: Reviving Family and Business Formation

So what’s smart government again? Government for the millennial age: disruptive, smaller, better – focused on service, convenience, ease-of-use and consumer benefits.

Most important, smart government empowers people to be their own solutions. An approach needed more than ever as panic sets in among the intelligentsia and governing elites.

The bureaucratic aristocracy at the Organization for Economic Cooperation and Development forecasts a growth slowdown to 2.9% in 2019 and 3% in 2020 – insisting on an “urgent response” to prevent “a long period of low growth.” (Right on cue, reported U.S. growth slowed to 1.9% in the third quarter.)

Coming right up, answer the Big Thinkers at the hoity-toity Economist. Their worry: the “mighty public institutions that try to steer the economy, including central banks” have “run out of ways to stimulate the economy when it flags” in an era of high debt and unprecedented negative interest rates. (Voila: the Fed cut interest rates again, continuing to unwind its unwinding of “quantitative easing.”)

The fussy Brits’ ivory-tower solution: make “mighty public institutions” yet mightier. “One idea,” they insist, apparently with a straight face, “is to beef up the government’s automatic fiscal stabilisers, such as unemployment insurance, that guarantee bigger deficits if the economy stalls.”

“Guarantee bigger deficits.” Rrrrr-iiiii-ght.

Another: “Give central banks a fiscal tool … say, transferring an equal amount into the bank account of every adult citizen when the economy slumps.”

Translation: free money for everyone.

The Economist’s conclusion: “The institutions that steer the economy must be remade for today’s strange new world.”

Precisely, diametrically and stupidly wrong. Big Government institutions designed to “steer” the economy don’t need to be remade. Rather, the institutions that truly drive the economy need to be restored.

Governments can’t and don’t create wealth. They merely redistribute it – and destroy it.

And in the process, destroy the institutions that truly generate prosperity and motivate and animate its creation: entrepreneurship and marriage.

The Census Bureau reports that since 2007, applications to form businesses likely to hire workers have plummeted 16%, as entrepreneurship shrivels across the OECD nations – resulting in falling productivity, income inequality, and declining R&D expenditures.

What’s causing this extended slump that’s resisting Trumpian tax and regulatory reforms? Explanations posited: regulations that are still plenty complex and often even more burdensome at the state and local level (read: California!). Low interest rates that ironically make affordable capital scarcer. Risk-averse millennials. Cut-rate, cutthroat competition from China plus big-box and online retailers.

And tighter labor pools and a smaller pool of innovative ideas – both possibly driven by an even more alarming trend: the advancing extinction of marriage and the traditional family.

Noted one worried business commentator a few years back, “Household formation is serious economic business. One new household usually adds about $145,000 to the U.S. economy, as the spending on building materials, construction wages and all those trips to Best Buy, Home Depot and Ikea ripple through the economy.”

Yet household formation has been collapsing since the 1990s. The obvious reason: record-low marriage and fertility rates – to an extent two social scientists recently noted has “rarely occurred historically in the absence of highly exceptional events such as wars and other major social disruptions.”

It doesn’t have to be this way. Last year, as it does periodically, Gallup revisited how many children Americans consider ideal. Stunningly, about half said two, and an additional 41% three or more.

The mean (half above, half below): 2.7.  A full percentage point above the current fertility rate for U.S. women.

Pro tip for smart government advocates: if America had maintained the 2.7 fertility rate that actually prevailed in the 1960s, we could finance Social Security and Medicare until time immemorial.

The nation can’t dream of restoring fertility (and BTW ending the millennial “sex recession”) without restoring marriage’s central role. The good news is that Gallup also regularly polls on marriage, and found in 2013 that nearly 80% of unmarried respondents aspired to wed.

What’s keeping them, pray tell? The number one reason: “Haven’t found the right person.” Which in part goes to the issue of the effect of government policies on marriageability of men – which in turn takes us back to, you guessed it, job-creating entrepreneurship.

So entrepreneurship is critical to job growth. And both marriage and child-raising are considered highly desirable by Americans and also key to economic growth in general, and in turn, to boosting entrepreneurship that, in a virtuous cycle, creates opportunities needed for Americans to feel secure and optimistic enough to marry and raise children.

Knowing all this – and we do – what might a smart government do?

Maybe: stop making abortion and gender madness our political epicenter and ideological dividing line.

Perhaps: halt the elevation of impeachment, immigration, climate change and free everything for everyone as platforms.

Conceivably: start focusing on Americans’ real priorities. Study and act on the factors behind business and wealth creation — and how to encourage and enable young people to get married and have larger and healthier families.

In short, stop trying to steer the economy and society – and empower Americans to be the drivers of their own destinies again.

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