There are two kinds of economic growth possible in this world. One can take good ideas already in use elsewhere, adopt them, and make use of underused stocks of people and capital. That's what China and India are currently doing, and we shouldn't mistake their rapid growth for something it's not. Or one can come up with new ideas and apply them in ways that allow the economy to grow.
…improvements in rich world living standards may, for the moment at least, come from the capture of policy low-hanging fruit. In other words, the rich world should focus on getting rid of blatantly foolish and costly policies. Moving from taxes on goods, like income, to bads, like traffic congestion, would be a good start. Not spending so much on medical treatments with dubious benefits would be another possibility. Cutting out policy foolishness like agriculture subsidies and the mortgage-interest deduction would be another positive step. Amid rapid growth, really silly policy choices could be tolerated, since surpluses continued to rise. As growth rates slow, the failure to cut out bad policies will mean continued stagnation or declines in living standards for some.
I agree with this thought—there are a lot of weird-to-crazy policies most developed countries have, and more to the point, they’re mostly different—different countries have different weird ideas. This suggests that best practices on a governmental level is nowhere near ubiquitous and that most countries have a degree of catch-up growth available. You can say the same thing about heavily-government-influenced sectors like health care that are (for various reasons) resistant to innovation or even to incorporating other countries’ good ideas. (e.g. joint registries in health care.)
This was my thought at least—and I wanted to supplement with this little factoid:
85 percent-plus of pharmacies are equipped to receive electronic prescriptions, yet only one-third of the nation’s prescribers use this system.The existence of that fact is pretty dumb, but on the other hand: how consequential is it really? The estimate in the article is that 7,000 lives are lost yearly from bad handwriting, which is a tragedy, but—by the standards of folly worldwide—a pretty minor one, all things considered.
You look at the odd policies of countries with really dysfunctional political systems and you see that whatever catch-up growth we’re due from optimizing our governmental policies are comparatively minor as compared to the big effects of, say, getting a functioning post office system.
(My guesses as to the most profitable American catch-up governmental changes: more infrastructure investment, health care, more favoritism to density, criminal justice reform—hopefully to figure out the less crime/fewer prisoners equilibrium.)