Is today’sslow growth in advanced economies a continuation of long-term secular decline, or does it reflect the normal aftermath ofa deep systemic financial crisis? More important, do we need to answerthat question definitively in order to boost the pace of economic recovery?

At a recentInternational Monetary Fund (IMF) conference, former US Treasury Secretary LawrenceSummers argued that today’s growth blues have deeproots that pre-date the global financial crisis. Summers placed particularemphasis on the need for more infrastructure investment, a sentiment that mosteconomists wholeheartedly share, especially if one is referring to genuinelyproductive investment.

Others alsocertainly worry about secular decline, though most have emphasized the supplyside rather than the demand side. The economist JeffreySachs, for example, hasargued that the US economy needs to confront a plethora of structural impediments tosustained growth, including offshoring, skill mismatches, and decayinginfrastructure.

The Internetentrepreneur Peter Thiel and the legendary chess champion Garry Kasparov havesuggested that the malaise runs even deeper, as has theeconomist Robert Gordon. They argue that the technology engine that hasdriven mankind from one economic plateau to the next over the past 200 years is running out ofsteam. Simply put, the Internet may be cool, but it is hardly as essential asrunning water, electrification, or the internal combustion engine.

TheGordon-Kasparov-Thiel thesis is extremely interesting, though I have challengedtheir negative conclusions, both inprint and in a debateat Oxford. Personally, I think the greater risk is that the pace oftechnological progress will accelerate too much for societies to adapt, thoughthe experience so far has basically been positive.

Certainly,today’s advanced economies urgently need to address all kinds of technological,social, and political deficiencies. Nevertheless, the subpar growth of the past half-decade stillbears all the hallmarks of a typical sluggish recovery from a deep systemicfinancial crisis, as Carmen Reinhart and I documented in our 2009 book This Time is Different.

Of course,structural reform is essential after a financial crisis, as are policies tomaintain aggregate demand while the economy heals. To my mind, the biggestfailure of post-2008 economic policy has consisted in governments’ inability tofind creative ways to write down unsustainable debts, for example in USmortgage markets, and in Europe’s periphery. This includes the failure to issuepublic debt where necessary to facilitate restructuring, particularly ifoverall economy-wide (or eurozone-wide) debt could be reduced in the same operation.

But Summers iscertainly right that productive infrastructure investment is the low-hangingfruit. Of course, governments should be concerned about the long-termtrajectory of public debt, all politically charged and polemical nonsense tothe contrary. But productive infrastructure investment that generates long-termgrowth pays for itself, so there need not be any conflict between short-termstabilization and risks to long-term debt sustainability. With today’sultra-low interest rates and high unemployment, public investment is cheap and plentyof projects offer high returns: fixing bridges and roads, updating badlyoutmoded electricity grids, and improving mass-transportation systems, to takejust a few notable examples.

I appreciatethat there are those who take on faith that Keynesian multipliers are muchbigger than one, implying that even wasteful government spending is productive.But, given thin empirical evidence and legitimate concerns about underminingtrust in the effectiveness of government, and with so many options for theproductive use of resources, this seems like a titanic ideological distraction.

It is also farfrom clear why virtually all infrastructure needs to be publicly financed.There are still huge pools of private wealth sitting on the sidelines that canbe rapidly mobilized to support productive infrastructure. The government needsto help with rights of way before construction, and with strong regulation toprotect the public interest afterwards.

In his firstterm in office, US President Barack Obama suggested the creation of aninfrastructure bank to help promote public-private partnerships. It is still agood idea, particularly if the bank maintained a professional staff to helpguide public choice on costs and benefits (including environmental costs andbenefits). Even if Keynesian multipliers are truly at the upper end ofconsensus, mobilizing private capital for investment has most of the advantagesof issuing public debt.

Onequalification is in order. Some commentators have suggested that the root causeof secular decline, as well as the main explanation of ultra-low interestrates, is low fertilitythroughout the advanced world. If true, the case for any kind ofinvestment, public or private, would be more mixed; there must be labor to usethe capital. But I suspect that the drivers of today’s slow growth and lowinterest rates go far beyond low fertility rates, in which case this should notbe an obstacle.

The importantpoint is that the case for expanding productive infrastructure investment doesnot rest on one narrow ideological viewpoint or economic theory. WhetherSummers is right about secular stagnation in advanced economies, or whether weare still mainly suffering the aftermath of the financial crisis, it is time tobreak the political gridlock and restore growth.