Publications Archive • The Aspen Institute Economic Strategy Group

Top 12 Charts of 2024 from the AESG

As a group devoted to advancing evidence-based economic policy, the AESG appreciates the powerful role that charts play in telling the story of our economy. Enjoy twelve figures that showcase our work in 2024!

Figure 1: Manufacturing’s share of employment in the US has fallen consistently since the end of the Second World War.

In his AESG paper, Protectionism is Failing and Wrongheaded, Michael Strain argues that the goals of protectionist trade policies, including boosting US manufacturing jobs, are misguided. He points out that manufacturing employment in the US has been on the decline since the middle of the twentieth century.

Figure 2: The US labor market transformed over the past century due to productivity growth enabled by General Purpose Technologies (GPTs).

The US labor market transformed over the past century due to productivity growth enabled by General Purpose Technologies (GPTs). In their paper, Technological Disruption in the US Labor Market, David Deming, Christopher Ong, and Lawrence H. Summers explore past episodes of technological disruption in the US labor market, with the goal of learning lessons about the likely future impact of artificial intelligence.

Figure 3: The labor market is set to end 2024 nearly where Fed officials projected a year ago.

Luke Pardue’s December blog post examines employment trends over the past twelve months. Figure 2 illustrates that, while the path of the labor market has been uncertain this year, looking just at the unemployment rate, the job market is set to end 2024 quite close to where Federal Reserve officials predicted last December.

Figure 4: Construction costs in the US, particularly for urban transit megaprojects, are among the highest in the world.

Zachary Liscow’s paper, State Capacity for Building Infrastructure, highlights how infrastructure construction in the US is more costly and takes more time than other developed countries. For example, the US ranks fifth-highest in spending per kilometer of urban transit compared to other OECD countries.

Figure 5: Under a range of plausible policy and economic scenarios, the US federal debt is on an unsustainable path

In his paper, Eight Questions—and Some Answers—on the US Fiscal Situation, Jason Furman examines the current US fiscal situation and outlook. Even under scenarios with higher-than-expected productivity or lower-than-forecast interest rates, he finds that the US federal debt will continue to rise as a share of output through the next decade.

Figure 6: In the US, both violent and property crime rates fell nearly continuously from the early 1990s until mid-2020.

Jennifer Doleac’s paper, Why Crime Matters, and What to Do About It, describes recent trends in criminal activity across the US. Although measures of certain violent crimes have come down from their post-pandemic spike, she concludes that crime continues to be a first-order problem for a large number of communities.

Figure 7: US worker productivity is growing at its fastest pace since the decade-long surge of the 1990s.

In a Washington Post op-ed, U.S. productivity is popping. And it’s not because of AI, and an AESG IN BRIEF, The Recent Rise in US Labor Productivity, AESG Policy Director Luke Pardue attributed the recent upswing in US labor productivity in part to a surge in new business formation in the US. Figure 2 shows that in the first quarter of 2024, new business applications were tracking above 2019 levels by 54%.

Figure 8: CHIPS and Science Act investments tend to be in areas with both high STEM talent and above-average employment rates.

Luke Pardue’s IN BRIEF, Building Security in the Semiconductor Supply Chain, examines the talent needs of the semiconductor industry and analyzes data on the location of recent public and private investment in chip production. Such investments are largely in high-talent areas, an encouraging sign for their eventual success.

Figure 9: A higher share of women in the 35-to-44 age range across all races, income levels, employment statuses, regions and broad education groups are childless.

A Wall Street Journal article highlighted research from AESG Director Melissa Kearney, Author Phillip Levine, and Policy Director Luke Pardue demonstrating that the rise in childlessness amongst Americans is driving the decline in US birth rates.

Figure 10: Men spend an average of 6.6 non-sleeping hours alone each day, compared to 5.4 hours for women.

The Wall Street Journal featured data from Luke Pardue’s October blog post, The Widening Economic and Social Gaps Between Young Men and Women, on the decline in men’s labor force participation and increase in young men’s time spent alone.

Figure 11: The eight Ivy League schools accounted for less than 1 percent of total undergraduate enrollment in Fall of 2022.

In a blog post accompanying Melissa Kearney’s appearance on Bloomberg’s Wall Street Week, Luke Pardue points out that while conversations about higher education in America are often dominated by the Ivy League, these eight schools play a relatively small role in the overall college landscape and in the process of intergenerational economic mobility in America.

Figure 12: Recent Foreign Direct Investment flows are tied to the world’s major centers of tax avoidance.

Brad Setser’s AESG paper, The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation, evaluates the current landscape of global economic integration. Setser points out that a large share of the historical rise – and recent decline – in global financial flows can be attributed to tax avoidance strategies by multinational companies.

2024 Job Market Recap: Slow but Steady Labor Market Growth

The past year has been one marked by several significant swings in the labor market. It featured strong (possibly, immigration-fueled) growth in the labor market at the start, a sharp rise in the unemployment rate that fueled speculation of an incoming recession over the summer, and Hurricane-affected data to round out the fall. After all these moves, where did the job market end in 2024 compared to where it began – and where might it be headed in 2025?

Looking through November, the job market is rounding out 2024 in a cool – but still healthy – spot. Job growth has slowed, and the unemployment rate has risen, but the US avoided both a more significant slowdown in employment growth and a steeper rise in the unemployment rate that could have brought on a recession. Notwithstanding the enormous policy uncertainty in the coming year, economists generally predict a much calmer year in the labor market data ahead.

1. Monthly Employment Growth Slowed Throughout 2024

Although the monthly job gains in November returned to levels similar to those seen in January, the three month average of employment growth – which cuts through much of the noise in monthly data – tells the story of a labor market that has slowed considerably throughout the year. In January, the three month average stood at 243,000 jobs added per month, a pace that has fallen to 173,000 in November.

The question for 2025 will be: what pace of job growth can the economy sustain without overheating? That answer depends in part on the rate of labor force growth (which has stalled since the pandemic) but looking historically, the US economy averaged 166,000 jobs added per month across 2019 without generating inflation – just slightly below where we are now.

2. Despite heightened uncertainty, the labor market ended up close to where Fed officials predicted in December 2023.

A second aspect of the labor market slowdown in 2024 was the gradual rise in the unemployment rate across the year, from 3.7% in January to 4.2% in November. The increase in the unemployment rate garnered much attention throughout the year, particularly after it triggered the Sahm Rule recession indicator in July. But, despite all the focus, the unemployment rate in November is about where Federal Reserve officials forecast it would be in their Summary of Economic Projections (SEP) from December of last year. Currently, the unemployment rate is averaging 4.15% in Q4 2024 (excluding December), compared to the median Fed projection last December of 4.1%. This means that, as early as last year, monetary policy officials believed such an increase in the unemployment rate was consistent with a gradually cooling – but not recessionary – economic environment.

A second major question looming in 2025 is how much further the unemployment rate will rise. If Federal Reserve projections from this December can serve as a guide for next year, the answer is “not much.” The median projection for the unemployment rate across Q4 2025 is 4.3%. Of course, that projection comes with the caveats that it assumes each participant’s “appropriate path” of monetary policy and is surrounded by a large degree of uncertainty with respect to policy outside of the Fed’s control, but it seems that Fed officials believe we are currently in a healthy long-run environment with the unemployment rate holding steady.

Book Launch Recap: Strengthening America’s Economic Dynamism

This week the AESG published our seventh annual policy volume, Strengthening America’s Economic Dynamism. This year’s volume features six papers covering topics including US trade and industrial policy, America’s fiscal and state capacity, the impact of advances in artificial intelligence on the labor market, and evidence-based strategies to make communities safer. These papers also provided the basis for a number of essays and opinion pieces published by AESG authors throughout the fall.

On Tuesday the AESG hosted an event for the launch of the policy volume that featured discussions with economists and policymakers about some of the most pressing topics in US economic policy.

Session I of our book launch event featured Colorado Senator Michael Bennet in conversation with Washington Post opinion columnist Catherine Rampell about economic policy challenges facing the new Congress. Their discussion touched on Americans’ desire for a new economic paradigm, policies to help combat inequality, the future of US tax policy, and the country’s rising deficit.

“If you look at most of the polling over the last two years, when people were asked about the economy, what you would hear is that 70 percent of people say they want a radical transformation of the economy,” said Senator Bennet.

When discussing his priorities for the next Congress, the Senator underscored the need to address the nation’s fiscal situation in a bipartisan way. “We have to start addressing this deficit. We’re at a point where our interest expense means we’re paying more to service our debt this year than we are to fund the military in the United States,” he said. “We’re never going to be able to address this deficit unless we do it in a bipartisan way. Maybe this will be a moment for us to do it. I think people are beginning to feel that we are reaching an outer edge that is worrisome.”

Session II was a panel discussion about post-election economic policies, featuring Jason Furman, Aetna Professor of the Practice of Economic Policy at Harvard University, Michael R. Strain, Director of Economic Policy Studies at the American Enterprise Institute, and Allison Schrager, Senior Fellow at the Manhattan Institute, moderated by AESG Director Melissa S. Kearney. The panel focused on what the incoming Congress and presidential administration should do to advance economic growth, innovation, and widespread economic security and prosperity.

On the country’s rising debt, Furman remarked, “It is not at all reasonable to expect that we’re going to grow our way out of this problem, which means we’re going to need to do something. I think that starts with the easiest steps which is either not extending the tax cuts or paying for their extension.”

On trade, Strain argued, “Even if you share the President’s goals, the evidence shows that putting tariffs on imports, which invites retaliation from other nations, leads to declining manufacturing employment and higher costs for domestic manufacturers and doesn’t succeed in weakening economic ties.”

On the public’s growing discontent with the existing economic paradigm, Schrager noted, “We are in a state of economic transition. If you look at economic history and you look at the move from agriculture to industrialization, that also took a long time and made people very unhappy. But I think we can all agree it improved everyone’s lifestyle a lot. Trying to turn back the past is not the solution, but I think we can do more to help people rise and adapt.”

Watch a recording of the event here.

Photos by Allison Shelley.

Strengthening America’s Economic Dynamism

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The Aspen Economic Strategy Group’s seventh annual policy volume focuses on the theme, Strengthening America’s Economic Dynamism. The volume’s publication comes at a time when US policymakers are turning away from free-market principles in favor of protectionist policies and more active government-directed industrial policy. These shifts, combined with growing economic and political difficulties including the country’s mounting debt, limited state capacity, and rapidly advancing technologies, have the potential to hinder economic dynamism and growth. Our 2024 policy volume draws on these themes to answer questions about the state of the US economy amidst an era of rising global tensions, technological change, and a populist backlash to the economic status quo.

Introduction
By Melissa S. Kearney and Luke Pardue

PART I: ECONOMIC NATIONALISM IN AN ERA OF GLOBALIZATION

Protectionism is Failing and Wrongheaded: An Evaluation of the Post-2017 Shift toward Trade Wars and Industrial Policy
By Michael R. Strain

The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation
By Brad Setser

PART II: FISCAL AND STATE CAPACITY

State Capacity for Building Infrastructure
By Zachary Liscow

Eight Questions—and Some Answers—On the U.S. Fiscal Situation
By Jason Furman

PART III: WORKERS, FIRMS, AND COMMUNITIES

Technological Disruption in the US Labor Market
By David Deming, Christopher Ong, and Lawrence H. Summers

Why Crime Matters, and What to Do About It
By Jennifer Doleac

Why Crime Matters, and What to Do About It

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In this paper, Jennifer Doleac describes what is known about crime trends in the US and outlines the best evidence to date on the effectiveness of various approaches to reducing crime through prevention, deterrence, and rehabilitation.

Crime in the US rose during the 1980s and early 1990s before declining steadily until 2020. During the COVID-19 pandemic, homicides, shootings, and motor vehicle thefts spiked, but by late 2023, overall rates of homicides and shootings had returned to their pre-pandemic levels. Because less serious offenses such as carjackings are much more difficult to track with nationwide data systems, we currently have an incomplete picture of how those crimes have trended in recent years across the country. Certain types of crime remain high, however, and Doleac emphasizes that crime continues to disproportionately affect certain urban areas and communities.

Doleac considers the costs of crime on victims and communities through both direct and indirect channels. Direct victim costs encompass medical expenses, cash or property losses, lost earnings, and pain and suffering. In addition to directly affecting victims, crime indirectly affects broader communities through reduced property values, diminished business activity, reduced school attendance, and increased mental health issues like anxiety and depression arising from fear for personal safety and property.

The costs of crime also come in the form of resources devoted to law enforcement and punishment. The majority of such efforts are conducted by state and local governments, which spent 7.5 percent of their overall budgets on the criminal justice system in 2021, amounting to $274 billion. These funds cover the employment of law enforcement personnel, the costs of the judicial system, and the costs of housing prisoners in correctional facilities. The federal government contributes an additional $58 billion to criminal justice expenses annually, or 1.5 percent of its budget. Combining the direct—tangible and intangible—costs to victims with the costs of law enforcement and punishment, researchers estimate that this aggregate cost of crime in the United States (excluding indirect costs) totals $4.7–5.8 trillion each year.

Given the high cost of crime to victims and affected communities, it is important to allocate crime-prevention efforts to interventions with evidence of effectiveness. Doleac proposes three effective channels to address crime through, and examines the effective strategies in each one.

1. Preventing someone’s first interaction with the criminal justice system.

Studies across several cities have found that offering summer jobs for teens, which provides positive career exposure and mentorship, reduces future violent-crime arrests and lowers mortality due to gun violence. Additionally, cognitive behavioral therapy pushes individuals to think more deliberately about the relative costs and benefits of their actions, and has been proven to cause meaningful reductions in violent arrests and recidivism. Over the long term, investments in improving the health of children—such as removing lead from the environment and reducing air pollution—are extremely cost-effective, causing large improvements in educational attainment and reductions in criminal justice involvement.

2. Deterring crime in the community.

At the community level, Doleac proposes two main strategies for cost-effective crime deterrence. First, putting more police on the streets remains an effective, evidence-based way to reduce crime relatively quickly. Second, employing technology such as cameras, DNA databases, and blood-alcohol content monitors can enhance crime detection at a lower cost than increasing police personnel.

3. Rehabilitating people with past criminal justice involvement.

To enhance rehabilitation, erring toward leniency for first-time offenders—giving them a second chance to avoid a first criminal record—dramatically reduces recidivism. Doleac also recommends the broader use of electronic monitoring systems as an alternative to prison sentences. Making mental health care affordable and easier to access is also a smart crime-reduction strategy. Finally, bans on public benefits for those with a criminal record should be repealed, as these bans not only increase recidivism rates but also increase future criminal activity for children of parents with criminal records.

Doleac concludes by emphasizing the importance of three approaches in particular as the most likely to have meaningful effects: investing in early life interventions, including reducing young children’s exposure to lead; making better use of police and technology to detect and deter crime; and increasing access to mental health care for high-risk populations. As crime continues to be a challenge for communities across the United States, it is not only important to invest in crime prevention strategies, but to ensure those strategies are effective and well implemented.

Suggested Citation: Doleac, Jennifer., 2024. “Why Crime Matters, and What to do about it” In Strengthening America’s Economic Dynamism, edited by Melissa S. Kearney and Luke Pardue. Washington, DC: Aspen Institute. https://doi.org/10.5281/zenodo.13975447.

State Capacity for Building Infrastructure

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Data Appendix

This paper, by Zachary Liscow, examines state capacity for infrastructure construction in the United States. It identifies three elements of state capacity that drive up costs and slow down timelines: insufficient personnel, onerous procedures, and a lack of adequate tools. Liscow offers specific suggestions about ways to address these challenges and improve US public capacity to carry out infrastructure projects.

High costs, lengthy construction timelines, and increased input prices are core hindrances to US state capacity. The cost of building urban-transit infrastructure in the US is approximately $560 million per kilometer, over two and a half times the OECD average. These costs have increased sharply over time, more than tripling between the 1960s and 1980s and continuing to rise since.

At the same time, construction timelines are inefficiently long. For instance, when it comes to energy infrastructure, the typical deployment timeline for offshore wind in the US is between three and five years, and for extra-high-voltage power lines, the typical timeline is between five and 13 years.

Liscow identifies three forces driving these challenges in the US:

Personnel
Employment of government workers available for state infrastructure capacity have barely increased or have declined over time, and federal government pay has fallen behind private-sector pay over time. As there are fewer government workers per dollar of work done, planning and management are increasingly outsourced. To address these issues, Liscow recommends employing more infrastructure experts and aligning public-sector salaries with those in the private sector to attract skilled professionals. Expanding the size and quality of the government workforce in this respect would improve planning efficiency and reduce timelines, generating its own cost savings.

Cumbersome Procedures
It takes a relatively long amount of time to acquire infrastructure permits in the US, compared to other developed countries, and the process is lengthened by substantial litigation around infrastructure permitting. Liscow proposes simplifying administrative procedures and judicial-review rules to streamline the construction process. Empowering the executive branch relative to the judiciary can reduce the use of litigation to stall projects. He recommends streamlining feedback processes to better understand public preferences while reducing the time to gather such information.

Lack of Tools
Data infrastructure and transparency are weak, making it hard for the government and the public alike to understand the challenges at hand. Coordinated long-term planning is also lacking, hampering the development of renewable energy transmission lines and transportation infrastructure. Liscow first recommends that federal and state governments invest in better data systems, which would enable agencies to gain better insight into their projects and help the public advocate for more efficient spending. Second, coordinated planning would allow agencies to hire appropriate personnel and accelerate project execution. Moreover, well-developed project plans could mitigate potential litigation by addressing a wider array of stakeholder interests from the outset.

Liscow concludes by emphasizing the importance of state capacity to the effective use of government infrastructure-construction dollars. State capacity is not just an issue for infrastructure. In a wide range of government projects, hiring enough government personnel, paying enough to attract talent, having an appropriate number of procedural rules, and giving personnel the tools to succeed can help make government work better—producing better outcomes for the public and building trust in government.

Suggested Citation: Liscow, Zachary., 2024. “State Capacity for Building Infrastructure” In Strengthening America’s Economic Dynamism, edited by Melissa S. Kearney and Luke Pardue. Washington, DC: Aspen Institute. https://doi.org/10.5281/zenodo.14036826.

Eight Questions—and Some Answers—on the US Fiscal Situation

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In this paper, Jason Furman addresses eight specific questions essential to understanding the US fiscal situation and what policymakers can do to address the federal debt. He finds that an adjustment of between 0.7 and 4.6 percent of GDP is necessary to stabilize the debt over the next decade, and he proposes a broad set of reforms to achieve such an adjustment, including tax reform, PAYGO conditions for new spending programs, and reforms to Social Security and Medicare.

In fiscal years 2022, 2023, and 2024, the US ran an average deficit of 6 percent of GDP, despite a strong economy. As a result, 2024 ended with the debt at about 99 percent of GDP, higher than it had been in any year except 1945 and 1946. The CBO expects the primary deficit (excluding interest payments on the debt) to improve over the next decade, but that development will be offset by higher interest rates leading to larger interest payments on the debt. In short, the fiscal path remains unsustainable: The federal deficit ranges from 6 to 10 percent of GDP, and the debt will likely reach between 111 and 141 percent of GDP by 2030.

Furman emphasizes that, while the “known knowns” of rising debt, such as crowding out of private investment, are not particularly large, the “unknown unknowns” are potentially much larger and even more consequential. For instance, there are growing concerns about whether the Treasury will have access to the necessary borrowing ability in the future, should debt levels rise acutely. Although the likelihood of a fiscal crisis may seem low, its potential consequences would be severe.

The estimated deficit reduction needed to stabilize the debt by 2034 depends on the path of policy and on economic variables, such as interest rates and productivity growth. Under the scenarios Furman explores in this paper, an adjustment of 0.7 and 4.6 percent of GDP in higher taxes or lower noninterest spending is necessary to stabilize debt over the next decade (equivalent to between $2 trillion and $11 trillion in adjustments).

Furman reviews the likely impact of a menu of possible tax and spending proposals, highlighting several key takeaways. First, revenue from corporations and high-income individuals is not sufficient to close the fiscal gap. For instance, such provisions in the Biden administration’s 2025 budget would raise about 1.3 percent of GDP in revenue. A more aggressive set of proposals would likely run into Laffer-curve constraints before revenues reached 2 percent of GDP.

Second, extending the 2017 tax cuts would add another 1.5 percent of GDP to the fiscal gap, substantially exacerbating the situation. Third, outside cuts to Social Security, not even relatively dramatic spending cuts in other programs would come close to reducing the deficit by even 1 percent of GDP. Finally, restoring solvency to Social Security and Medicare through tax or benefit changes would close about 1.5 percent of the current law deficit.

Policy Recommendations

Furman concludes by recommending that policymakers balance the primary budget, which excludes interest payments, by 2030. Achieving this goal would stabilize the debt at 125 percent of GDP and, under both CBO and market interest rate forecasts, would keep interest payments below 2 percent of GDP. Debt would then, in turn, start to gradually fall as a percent of GDP—which is essential, given that periodic emergencies (such as wars, financial crises, and pandemics) ratchet up the debt-to-GDP ratio.

To achieve this outcome, he proposes that policymakers undertake the following four measures:

Do not pass any new tax legislation in 2025, unless it includes a reform plan that increases revenues by 0.5 percent of GDP relative to current law.
Implement a Super PAYGO system for all future legislation, where savings would exceed costs by 25 percent.
Reform Social Security and Medicare to ensure the trust funds’ solvency for the next 75 years.
Allow for flexibility to address economic and international emergencies.

Suggested Citation: Furman, Jason., 2024. “Eight Questions—and Some Answers—on the US Fiscal Situation” In Strengthening America’s Economic Dynamism, edited by Melissa S. Kearney and Luke Pardue. Washington, DC: Aspen Institute. https://doi.org/10.5281/zenodo.14036808.

The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation

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This paper evaluates the current landscape of global trade and financial flows and proposes a set of reforms to support healthier forms of integration. Brad Setser finds that, despite the growing, bipartisan skepticism about the value of liberal trade, global economic integration remains surprisingly resilient. In fact, Setser argues, the immediate risk facing the global economy is more accurately described as unhealthy integration than fragmentation. Setser identifies two unhealthy forms of globalization that have proven to be resilient – those driven by corporate tax avoidance strategies and persistent trade and payment imbalances with China – and offers three policy reforms to address these risks.

Tax avoidance tactics, such as the “Double Irish” strategy, have allowed major companies to route profits through offshore subsidiaries to minimize tax liabilities. The OECD’s 2015 base erosion and profit shifting (BEPS) reforms, aimed to curtail such practices by eliminating stateless income and zero-tax jurisdictions. The 2017 Tax Cuts and Jobs Act (TCJA) subsequently further addressed the issue of international tax avoidance by reducing the corporate tax rate, ending deferral, and introducing two new special tax rates for Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Tax Income (GILTI).

Despite these reforms, tax avoidance and offshoring are still considerable issues in the US tax system. The pharmaceutical industry serves as a prime example: US imports of pharmaceuticals have more than doubled since the TCJA, with imports primarily originating from tax havens such as Ireland, Singapore, and Switzerland. In 2023, seven of America’s largest pharmaceutical companies reported losing a combined $14 billion on their US operations while earning $60 billion abroad. The absence of reported profits in the US translates directly into a loss of federal tax revenues. Similar issues are present in other crucial sectors, leading to reduced domestic tax revenues and unhealthy global economic integration.

China’s domestic economic issues pose a further challenge to global economic integration. Recent data shows China’s economy is re-globalizing and exports have recently grown much faster than China’s own economy. However, this form of globalization is the result of high household savings rates and faltering domestic demand in China, which has led the country to rely again on exports to support its economic growth.

This export-led growth model is driven by extensive government support to favored sectors, mostly through the provision of cheap equity and cheap debt financing. Furthermore, the high level of savings creates internal imbalances in the United States, the eurozone, and in China, fueling bubbles and bad debts. The Chinese property sector has long absorbed the excess savings, but property construction is expected to normalize, creating greater pressure on exports to drive growth in China.

Setser offers three concrete steps which would start to define a path toward a healthier form of globalization.

1. Reform the US corporate tax code. Limiting offshoring, increasing the GILTI rate from 10.5 percent to 15 percent, limiting US firm’s ability to deduct R&D expenses of intellectual property in offshore subsidiaries, and making the sale of a firm’s intellectual property from one international subsidiary to another a taxable event would reduce profit shifting while raising US tax revenue.

2. Create subsidy sharing agreements among allies in key sectors. In industries such as electric vehicles and steel, subsidies sharing agreements and increased policy coordination between the US and EU would expand the market size for American and European firms and lower costs.

3. Address China’s internal imbalances. US policymakers and international institutions such as the IMF should pressure China to change its export-led growth model and address its internal economic imbalances.

Suggested Citation: Setser, Brad. 2024. “The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation” In Strengthening America’s Economic Dynamism, edited by Melissa S. Kearney and Luke Pardue. Washington, DC: Aspen Institute. https://doi.org/10.5281/zenodo.13973914.

Introduction: Strengthening America’s Economic Dynamism

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Global tensions and domestic discontent are driving a new era of economic policymaking. Leaders in both parties are turning away from free-market principles and endorsing an increase in protectionist trade policies and more active government-directed industrial policy. Further, these disruptions come when the country’s economic and political landscapes face systemic difficulties including limited state capacity and mounting federal debt. At the same time, rapid advances in generative AI have the potential to dramatically change the nature of work and the workforce as well as other fundamental aspects of society. This 2024 Aspen Economic Strategy Group (AESG) policy volume considers these topics and others, with a focus on strengthening America’s economic dynamism.

With the uncertain outcome of the November 2024 US presidential election ahead of us, there are a lot of unknowns about the specifics of how US economic policymaking will unfold over the coming years. However, given recent trends and current rhetoric, one thing that seems likely is that, whichever candidate wins the US presidency, the US will continue moving toward protectionist and nationalist economic policies. This movement has the potential to hinder economic growth and dynamism if not pursued wisely and cautiously.