Friday, September 17, 2010

Principles for Economic Revival

America's financial crisis, deep recession and anemic recovery have largely been driven by economic policies that have deviated from proven fact-based principles. To return to prosperity we must get back to these principles.

The most fundamental starting point is that people respond to incentives and disincentives. Tax rates are a great example because the data are so clear and the results so powerful. A wealth of evidence shows that high tax rates reduce work effort, retard investment and lower productivity growth. Raise taxes, and living standards stagnate...

As Milton Friedman famously observed: "Nobody spends somebody else's money as wisely as they spend their own." ...

The good news is that we can change these destructive policies by adopting a strategy based on proven economic principles:

First, take tax increases off the table.

Second, balance the federal budget by reducing spending.

Third, modify Social Security and health-care entitlements to reduce their explosive future growth.

Fourth, enact a moratorium on all new regulations for the next three years, with an exception for national security and public safety.

Fifth, monetary policy should be less discretionary and more rule-like...

These pro-growth policies provide the surest path back to prosperity.

My thoughts: We is offered is a slightly improved version of statism. Substantially there is not much market reform here. Now is proposed that will truly do anything that delay the next crisis.
Here a few suggestions:

First: Abolish the income tax. For every dollar "lost" in revenue, cut spending by $1.25.

Second: End Social Security and Medicare. End the social welfare state.

Third: Repeal regulations.

Fourth: End the Fed.

Do you want change or do you want to rearrange the deck chairs on the Titanic?

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