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Learning Economics from the Real World (Vol. 139)

It Makes our Case - Take a Look


I have been working on a project in which I plan to illustrate the economic systems that work best for ‘the people’ of a country - not best for the politicians or the special interests, but for you folks on Main Street. So, we examined countries that have worked well for its citizens and those that have not. If we understand the policies that work best, then we can see that some of what we do in DC may not be in our best interest, and may, in fact, eventually be destructive to our country. Perhaps then we can formulate policies that help us progress, grow and achieve a higher standard of living - and avoid disaster in the future.

 

Some of the best success stories are Switzerland, Taiwan, Hong Kong (before the Chinese interference), and Singapore. Others have done well, like the US, but not as well. 

 

Some of the ‘failures’ are Venezuela, Cuba, Argentina, Zimbabwe, and many more.

 

Unfortunately, there are many more failures than successes, and it is all tied into the governance and economic policies of a country. 

 

The differences show up in the Gross Domestic Product (GDP) or output per capita. It isn't just the actual data which we looked at, but also the trends based on the policies followed at the time.

 

Here is a recap of some of the main items we found:


  1. Individual freedom is crucial to a well-functioning economy.

  2. Private property is required to give people ownership and the incentives needed to create and produce.

  3. Rule of Law is needed for the protection of life, liberty, and property.

  4. Government is inherently inefficient as ‘government’ does not have individual ownership and the proper incentives.

  5. Incentives are crucial to the functioning of a growing and strong economy.

  6. Limited government and minimal regulation leave the individual the incentives and freedom needed to produce efficiently.

  7. The more that is spent on government, the less that is available in the private sector to invest and consume. Smaller governments are consistently associated with higher growth and prosperity.

  8. Fair and equitable tax structures enhance incentives to create, produce and grow an economy.


We learned that socialistic economies do not work for the good and welfare of the citizens, in time they have all failed their people with very low incomes per person.  Free enterprise/market economies work well for the citizens. The more freedom individuals have, the better a country performs. (Heritage Corporation provides an excellent analysis of this, the Index of Economic Freedom). We also learned that the smaller and less intrusive the government is, the faster an economy will grow, which creates a higher standard of living for the citizens. The difference is good governance and good economic systems. It isn’t magic.

For a more detailed analysis, I highly recommend you read a short, excellent article that Dan Mitchell wrote in a recent daily email, More Economic Liberty = More National Prosperity (Dan is an excellent, very objective, economist who writes a short daily article you will enjoy - sign up for this for free at this link, just enter your email in the email subscription box).


BOTTOM LINE


The US has been very successful in the past with high growth rates and one of the highest standards of living in the world. But there are very troubling trends, and our economic freedoms have been steadily declining. Our growth rates have slowed, and our government has grown and intruded into our lives well beyond what our Founding Fathers intended. This has led to enormous federal spending, deficits, and a ballooning federal debt, which someday will threaten our very existence.


We can plainly see the USS America, our Ship of State, headed into the iceberg, if we will only look. We must change course or there will be major trouble for all future generations. We are saddling them with debt that they will not be able to pay. Don't let that happen on our watch. 



Contact Congress on our website and let them know what you think before it is too late. You can make a difference, one person at a time.

 

LEARN ECONOMICS, THEN VOTE SMART

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