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Tim Fernholz – Here’s one really obvious way to boost the US economy

If you’re confused about why American economic growth has been so disappointing, consider this: US government investment in capital, research and development, and education and training is at its lowest point in 45 years. In 2014, federal investment turned negative for the first time since 2001, meaning that government capital is depreciating or becoming obsolete faster than it is being replaced

Harvard economist and former Obama adviser Larry Summers recently highlighted this troubling trend in a Washington Post op-ed warning about future recessions. He notes that during previous bouts of low federal investment, the US was enjoying “peace dividends” in the wake of the post Vietnam and Cold Wars. This time around, he says, the lack of federal investment is a sign of counter-productive budget cutting.

Since leaving the White House in 2010, Summers been among America’s loudest advocates for a return to higher government spending, particularly in research, technology, and physical infrastructure, as a way to break out of the doldrums (pdf) that slowed the expansion of the US economy in the wake of the Great Recession.

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