Sweden in the 1990s is a case study in how this can work. In the wake of a severe banking crisis and real estate collapse, the Scandinavian nation needed both jobs and debt control. It had a host of problems, from high taxes to heavily regulated markets.
In a chain of pro-growth reforms, Sweden made its labor market more flexible, lowered tax rates (boosting incentives to work and invest), and deregulated large swaths of the economy. The changes scaled back the welfare state but were done the Swedish way, retaining a large government and relatively small income disparities.
"A lot of people were saying, 'Yeah, it's not a dynamic society, but it's an equal society.' Well, today it is both equal and dynamic," Sweden's finance minister, Anders Borg, told a gathering at Washington's Peterson Institute for International Economics in April.
The point isn't that America should pattern itself on Sweden in all respects. Rather, Sweden's story shows the benefits when a nation pursues growth, not just stimulus or austerity.
Sweden's debt today is a relatively affordable 36 percent of one year's GDP, whereas in 1993 it totaled almost twice that. While the country's total government debt today is higher, measured in kronor, than it was in 1993, the economy's expansion made the difference in the debt-to-GDP ratio.
What Lesson No. 1 means now
Obama and Romney talk plenty about the need for vibrant growth and job creation, but their proposals draw mixed reviews from economists. Growth-oriented policies can include everything from streamlining the tax code to cultivating scientific innovation.
Not all the ground can be covered in this story, but here are some important contrasts.
Romney's mode of nurturing growth emphasizes low corporate taxes and easing the regulatory climate, while Obama's emphasizes the positive role government can play as an investor in scientific research, education, and other projects (one of them being a network of institutes to promote manufacturing innovation).