A vision of what American economic growth over the next decade could look like might also help us address our immediate economic problems.
Macroeconomists have often used Japan in the 1990s as an example of bad monetary policy. It is abundantly clear that their outcome would have been better if the real estate bubble had been arrested earlier. And even taking the problems of the aftermath of that as given, a more expansionary monetary policy after the collapse could have still helped. But Japan also was burdened by longer run structural problems-- other countries were taking over the manufacturing markets in which Japan had historically excelled. It's easy to focus too much on monetary issues and too little on the more fundamental structural challenges in trying to draw the right lesson from Japan's experience.
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