analyticsbox | Jan 19, 2022
What Happened to Good Economic Policy?
We all hear the political rhetoric about all the things Politicians are going to do for us. Are they real? Do they deliver? If they do, is it good for us? We explored the idea of Policy vs. Politics in No Spin #31. Let’s go a bit deeper and look at Promises made, kept, and results in history. (There was an interesting opinion article in The Washington Post on January 13 that is on point - worth reading.)
We are hearing a lot of promises from politicians. They want to provide for everyone, everything, it seems. For example, free childcare, medical insurance for all, free college tuition, etc. The list is endless. So, what happens if they deliver? And how do we pay for it, it isn't free, we all understand that, I hope.
Venezuela went down this road and elected a President who promised and delivered a lot of ‘free stuff’ for the population about 20 years ago. It seemed to work for a few years and was praised by all the like-minded politicians here. But that ‘success’ was short-lived and when they didn't have the funds to pay, instead of correcting course, they doubled down. Confiscation of private industry, printing money, and many bad policies led to a collapse of the economy, runaway inflation - you know the ‘rest of the story’. Venezuela is currently a military dictatorship, in effect, and a starving population. It only took 15 years to ruin this country. We discuss this in more detail in a video on our website explaining economic systems. Please take 3 minutes to watch and learn more.
The Scandinavian countries started down this road in the seventies, realized it didn't work, and corrected course. They chose to go to a free enterprise/market economy but kept many of the social programs. And they taxed everyone a lot to pay for them (but not enough it seems, they still run big deficits). This has impacted their growth rate, as they took a lot of money from the private sector and gave it to government, not a recipe for growth (see No Spin #23 on Sweden and No Spin #16, The Formula for Economic Growth).
Chile moved to good policy in the 80’s with excellent results, and just elected a ‘leftist’ President. If he changes course, it will be yet another great example of what works and what doesn’t.
History offers numerous examples of what good economic policy does for the welfare of the people - without exception it improves incomes and standards of living. The opposite is true as well. There is a reason Cuba, Soviet Union, North Korea, Venezuela, etc. live poorly or collapse. It is called bad economic policy.
Beware the great sounding policies of some politicians. There is no free lunch, and good economic policy entails economic freedom and limited government. This is what leads to growth in incomes and a better standard of living for all. It has worked in the U S in the past, let’s not change course for something that sounds great - but isn’t.
Here is a great 2-minute clip of Phil Donohue interviewing Milton Friedman that says it so well, please take a look.
LEARN ECONOMICS, THEN VOTE SMART