8/24/18, 9)48 AMThe Good Times Can Roll On - WSJ Page 1 of 2https://www.wsj.com/articles/the-good-times-can-roll-on-1535063430?mod=searchresults&page=1&pos=1 DOW JONES, A NEWS CORP COMPANY DJIA 25798.91 0.55% ▲ S&P 500 2872.93 0.56% ▲ Nasdaq 7943.79 0.83% ▲ U.S. 10 Yr -0/32 Yield 2.830% ▼ Crude Oil 69.17 1.98% ▲ This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. https://www.wsj.com/articles/the-good-times-can-roll-on-1535063430 Some Keynesian economists argue that the U.S. economy’s recent uptick is only a “sugar high.” They predict that the slow-growth conditions of the Obama years will soon return. But this pessimistic view is misguided. Better economic policies are the primary reason the economy has improved since 2016. If pro-growth policies remain in place, the economy’s strong performance will likely continue. The growth paths in a market economy depend on the quality of government policies and institutions. These affect the incentives to innovate, start a business, hire workers, and invest in physical and human capital. If policies are reformed to increase incentives for market economic activity—as many have been under President Trump and the Republican-controlled Congress—then investment and labor input expand as the economy rises to a higher growth path. Once the economy reaches its new growth path, labor and investment stabilize at higher levels. When policies change to depress these incentives, the economy moves onto a lower long-run growth path. That happened after the 2007-09 recession. Because of the severity of the downturn, the economy recovered organically to some extent. But that partial recovery stalled by the end of 2014 because of higher tax rates and increased regulation. These policies produced a long-run growth path below the prerecession path. It’s clear the recovery ended in 2014 because the two hallmarks of recovery—investment’s share of gross domestic product and labor input relative to the adult population—stopped increasing. This left a large gap between actual output and the output level that would have occurred had the economy recovered to its prerecession growth path. According to our calculations, the U.S. cumulatively lost about $18 trillion in income and output between 2007 and 2016. Everything suggested this shortfall would persist or even grow. OPINION COMMENTARY The Good Times Can Roll On The economy isn’t on a ‘sugar high.’ Pro-market policy improved incentives to work and invest. | ILLUSTRATION: DAVID KLEIN Aug. 23, 2018 6:30 p.m. ET By Edward C. Prescott and Lee E. Ohanian https://quotes.wsj.com/index/DJIA https://quotes.wsj.com/index/SPX https://quotes.wsj.com/index/COMP https://quotes.wsj.com/bond/BX/TMUBMUSD10Y https://quotes.wsj.com/futures/Crude%20Oil%20-%20Electronic http://googleads.g.doubleclick.net/pcs/click?xai=AKAOjss8lFCi_yC3.

1. 8/24/18, 9)48 AMThe Good Times Can Roll On - WSJ
Page 1 of 2https://www.wsj.com/articles/the-good-times-can-
roll-on-1535063430?mod=searchresults&page=1&pos=1
DOW JONES, A NEWS CORP COMPANY
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https://www.wsj.com/articles/the-good-times-can-roll-on-
1535063430
Some Keynesian economists argue that the U.S. economy’s
recent uptick is only a “sugar high.”
They predict that the slow-growth conditions of the Obama
years will soon return. But this
pessimistic view is misguided. Better economic policies are the
primary reason the economy
has improved since 2016. If pro-growth policies remain in
place, the economy’s strong
performance will likely continue.

2. The growth paths in a market economy depend on the quality of
government policies and
institutions. These affect the incentives to innovate, start a
business, hire workers, and invest
in physical and human capital. If policies are reformed to
increase incentives for market
economic activity—as many have been under President Trump
and the Republican-controlled
Congress—then investment and labor input expand as the
economy rises to a higher growth
path. Once the economy reaches its new growth path, labor and
investment stabilize at higher
levels.
When policies change to depress these incentives, the economy
moves onto a lower long-run
growth path. That happened after the 2007-09 recession.
Because of the severity of the
downturn, the economy recovered organically to some extent.
But that partial recovery stalled
by the end of 2014 because of higher tax rates and increased
regulation. These policies
produced a long-run growth path below the prerecession path.
It’s clear the recovery ended in 2014 because the two hallmarks
of recovery—investment’s

3. share of gross domestic product and labor input relative to the
adult population—stopped
increasing. This left a large gap between actual output and the
output level that would have
occurred had the economy recovered to its prerecession growth
path. According to our
calculations, the U.S. cumulatively lost about $18 trillion in
income and output between 2007
and 2016. Everything suggested this shortfall would persist or
even grow.
OPINION COMMENTARY
The Good Times Can Roll On
The economy isn’t on a ‘sugar high.’ Pro-market policy
improved incentives to work and invest.
|
ILLUSTRATION: DAVID KLEIN
Aug. 23, 2018 6:30 p.m. ET
By Edward C. Prescott and Lee E. Ohanian
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Yet economic performance began to improve beginning in the
first quarter of 2017. Real GDP
growth accelerated to about 2.7% between the end of 2016 and
the second quarter of 2018, up

5. from about 2% between 2014 and the end of 2016. The share of
GDP devoted to nonresidential
business investment rose to a historic high.
The best measure of labor input—the total number of market
hours worked divided by the 16-
and-older population—is growing faster than in 2014-16, and is
now close to its all-time high.
This is all the more impressive since the growth rate of the
working-age population is slowing.
Perhaps the most exciting aspect of the current economy: The
emergence of better job
opportunities has reduced the number of people on disability.
This has led the Social Security
Administration to reverse its previous warning that the
disability system would become
insolvent as soon as 2023.
U.S. economic performance is the strongest in years. One policy
driving this turnaround is the
substantially lower corporate-tax rate, which has made the U.S.
more competitive with other
countries. Regulatory changes—such as the partial rollback of
Dodd-Frank and new leadership
within the Consumer Financial Protection Bureau—also have
proved helpful, particularly for

6. small businesses, which are benefiting from lower record-
keeping and compliance costs.
Meanwhile, the number of regulatory pages in the Federal
Register has been cut by a third since
President Obama’s last year in office. That’s a major reason the
National Federation of
Independent Business reports that more small-business owners
are hiring than ever. They’re
also increasingly optimistic about the future of the U.S.
economy.
As the two hallmarks of recovery are still rising, the economy
likely has not reached its new,
higher growth path. This means that the U.S. can expect above-
normal growth in the coming
months, possibly even years.
Growth rates could improve with further policy changes. One
example is a reduction in trade
barriers. Since the General Agreement on Tariffs and Trade was
signed 70 years ago,
international commerce has expanded dramatically, hugely
benefiting U.S. consumers by
lowering prices and increasing the variety of available goods.
The average household’s benefits
from trade are greater than $10,000 a year, according to the Tax
Foundation. Further

7. cooperative trade agreements—rather than wide-ranging
tariffs—would expand these already
large benefits.
A second area for reform that could put the U.S. on a still-
higher growth path is health care. The
rise of health-care costs is the most important reason wages
have not increased more for U.S.
workers. The extra compensation is swallowed up by health-
insurance premiums. Expanding
medical savings accounts and decoupling health plans from
employment would create
incentives for both consumers and their health-care providers to
economize on health-care
spending. This would lower costs without compromising
quality.
U.S. economic performance over the past decade illustrates the
substantial influence of
government policies on growth. While some are reluctant to
admit it, the current performance
is a result of policies that basic economic theory tells us will
increase investment and hiring.
Even greater prosperity is possible if policy makers stay the
course and continue to implement
pro-market economic policies.

8. Mr. Prescott, a 2004 Nobel economics laureate, is director for
the Center for the Advanced Study
in Economic Efficiency at Arizona State University. Mr.
Ohanian, a senior fellow at the Hoover
Institution, is associate director of the center at ASU.
Appeared in the August 24, 2018, print edition.
Rubic_Print_FormatCourse CodeClass CodeAssignment
TitleTotal PointsHCA-530HCA-530-O500Benchmark - Capital
Needs Essay100.0CriteriaPercentageUnsatisfactory (0.00%)Less
Than Satisfactory (74.00%)Satisfactory (79.00%)Good
(87.00%)Excellent (100.00%)CommentsPoints
EarnedContent70.0%In an essay (1,000-1,250 words) address
the following prompts, citing four to six scholarly sources to
support your claims: Explain the difference between the two and
which financing would be appropriate and why, considering that
this is a private, not-for-profit hospital. (C: 3.6)30.0%Essay
fails to explain the difference between equity or debt financing
and which financing would be appropriate considering that this
is a private, not-for-profit hospital.Essay explains the difference
between equity or debt financing and which financing would be
appropriate considering that this is a private, not-for-profit
hospital in a less than satisfactory way. Explanation is vague,
illogical, and lacks relevant evidence to support claims.Essay
explains the difference between equity or debt financing and
which financing would be appropriate considering that this is a
private, not-for-profit hospital in a basic way, but some
reasoning doesn’t make sense. Some relevant evidence is
provided.Essay adequately explains the difference between
equity or debt financing and which financing would be
appropriate considering that this is a private, not-for-profit
hospital using sound reasoning supported by some relevant
evidence.Essay thoroughly explains the difference between

9. equity or debt financing and which financing would be
appropriate considering that this is a private, not-for-profit
hospital, using logical reasoning and strong details supported by
relevant evidence.Explain the term working capital and how it
is related to debt financing for capital expenditures.20.0%Essay
fails to explain the term working capital and how it is related to
debt financing for capital expendituresEssay explains the term
working capital and how it is related to debt financing for
capital expenditures in a less than satisfactory way. Explanation
is vague, inaccurate, or lacks relevant evidence to support
claims. Reasoning doesn’t flow logically.Essay explains the
term working capital and how it is related to debt financing for
capital expenditures in a basic way, supported with some
relevant evidence to support claims, but some reasoning doesn’t
make sense.Essay adequately explains the term working capital
and how it is related to debt financing for capital expenditures
using reasoning supported with strong relevant evidence to
support claims.Essay thoroughly explains the term working
capital and how it is related to debt financing for capital
expenditures using strong logical reasoning supported with
relevant evidence to support claims.Discuss the importance of a
cash budget and how it can be used to assess the financial
viability of this capital expenditure.20.0%Essay fails to discuss
the importance of a cash budget and how it can be used to
assess the financial viability of this capital expenditureEssay
discusses the importance of a cash budget in a less than
satisfactory way and fails to address how it can be used to
assess the financial viability of this capital expenditure Lacks
relevant evidence. Reasoning doesn’t flow logically.Essay
discusses the importance of a cash budget and explains how it
can be used to assess the financial viability of this capital
expenditure on a basic level, some reasoning doesn’t make
sense. Lacks some relevant evidence.Essay adequately discusses
the importance of a cash budget and explains how it can be used
to assess the financial viability of this capital expenditure,
using logical reasoning supported with some relevant

10. evidence.Essay thoroughly discusses the importance of a cash
budget and comprehensively explains how it can be used to
assess the financial viability of this capital expenditure, using
logical reasoning supported with relevant evidence.Organization
and Effectiveness20.0%Thesis Development and
Purpose7.0%Paper lacks any discernible overall purpose or
organizing claim.Thesis is insufficiently developed or vague.
Purpose is not clear.Thesis is apparent and appropriate to
purpose.Thesis is clear and forecasts the development of the
paper. Thesis is descriptive and reflective of the arguments and
appropriate to the purpose.Thesis is comprehensive and contains
the essence of the paper. Thesis statement makes the purpose of
the paper clear.Argument Logic and Construction8.0%Statement
of purpose is not justified by the conclusion. The conclusion
does not support the claim made. Argument is incoherent and
uses noncredible sources.Sufficient justification of claims is
lacking. Argument lacks consistent unity. There are obvious
flaws in the logic. Some sources have questionable
credibility.Argument is orderly, but may have a few
inconsistencies. The argument presents minimal justification of
claims. Argument logically, but not thoroughly, supports the
purpose. Sources used are credible. Introduction and conclusion
bracket the thesis.Argument shows logical progressions.
Techniques of argumentation are evident. There is a smooth
progression of claims from introduction to conclusion. Most
sources are authoritative.Clear and convincing argument that
presents a persuasive claim in a distinctive and compelling
manner. All sources are authoritative.Mechanics of Writing
(includes spelling, punctuation, grammar, language
use)5.0%Surface errors are pervasive enough that they impede
communication of meaning. Inappropriate word choice or
sentence construction is used.Frequent and repetitive
mechanical errors distract the reader. Inconsistencies in
language choice (register) or word choice are present. Sentence
structure is correct but not varied.Some mechanical errors or
typos are present, but they are not overly distracting to the

11. reader. Correct and varied sentence structure and audience-
appropriate language are employed.Prose is largely free of
mechanical errors, although a few may be present. The writer
uses a variety of effective sentence structures and figures of
speech.Writer is clearly in command of standard, written,
academic English.Format10.0%Paper Format (use of
appropriate style for the major and assignment)5.0%Template is
not used appropriately or documentation format is rarely
followed correctly.Appropriate template is used, but some
elements are missing or mistaken. A lack of control with
formatting is apparent.Appropriate template is used. Formatting
is correct, although some minor errors may be
present.Appropriate template is fully used. There are virtually
no errors in formatting style.All format elements are
correct.Documentation of Sources (citations, footnotes,
references, bibliography, etc., as appropriate to assignment and
style)5.0%Sources are not documented.Documentation of
sources is inconsistent or incorrect, as appropriate to
assignment and style, with numerous formatting errors.Sources
are documented, as appropriate to assignment and style,
although some formatting errors may be present.Sources are
documented, as appropriate to assignment and style, and format
is mostly correct.Sources are completely and correctly
documented, as appropriate to assignment and style, and format
is free of error.Total Weightage100%
Read the article from August 24, 2018 ¡°The Good Times Can
Roll On,¡± by Edward Prescott and Lee Ohanian. Write a brief
essay (500 words, single spaced, Times Roman 12 inch font)
that assesses claims made in this article. Consider whether the
article takes a ¡°supply-side¡± or a ¡°demand-side¡±
perspective. Describe whether you agree with the overall
argument? Have recent developments in late 2019 or early 2020
changed the outlook? Comment briefly on one or two key policy
issues that now face the country. Focus on the incentive to
invest and work narratives. Juxtapose these narratives against

12. your understanding of the Keynesian view.
The article argues that policies aimed at increasing incentives to
invest (lower capital-tax rate) and work lead to strong economic
growth. Conversely, polices that depress these incentives lead
to lower growth. The authors also point to deregulation, trade
policies, and health care costs as factors that can either improve
or negatively affect economic growth.