US Economy, the laggard?


“The clear message is that the U.S. — the richest nation on Earth, as is frequently proclaimed, although it’s actually not the richest per capita — is increasingly becoming the developed world’s poor relation as far as the actual living standards of most of its population go,” says Justin Fox in an interesting Bloomberg column that draws on the IMF’s last Article IV report on the U.S.  (Click here for a summary of the IMF report and the Fund’s  10 recommendations for boosting U.S. growth).

The reasons, according to Fox, are probably ideological, i.e. the aversion to the idea of Welfare State in the U.S.  “Welfare State” could be bloated, true, but it could also help to alleviate some of these problems the U.S. is suffering from when designed right.

Fox’s article resonates with a recent book by Historian Peter Temin of MIT (a paper version of which is available here) — whereby he argues that today’s U.S. economy can be explained by the dual-economy model developed by Nobel Laureate Arthur Lewis in the 1950s — for developing countries.  Temin’s recipe is “a renewed focus on education”.