Sunday, September 4, 2016

Too Much Spice Makes Nothing Nice

Government should act as a spice: used sparingly in the recipe of prosperity it enhances the public good but, too much overpowers the natural flavors and, in excess, will poison.

Politicians proclaim how more spending and bureaucratic controls will stimulate demand, but there is no example to demonstrate how more taxes create more demand and incessant regulations create productivity.  As we discuss in our book, Vigilance The Price of Liberty, economic growth is dependent on productivity. Productivity flows from innovation. Innovation comes from investment. Investment needs lower taxes that enable investors to take risk.  Therefore, past a modest point, taxes choke investments which strangle the innovation that drives productivity and grows prosperity.

Too much government works against itself.  For example, the highest taxed people, if you compare by percentage, are the poor.  Welfare programs that provide disability income to some 10 million people, provide them a financial disincentive to break from the disability hand-out because for each dollar they earn in honest work, they lose a dollar in hand-out.  Rational financial response: don’t work.

The point being, most of what government does simply does not, cannot and will not work. With anemic GDP growth at the lowest level since the Great Depression, here is a collection of charts received today that paint the overall picture:

So what is the answer?  The best solution is less government.  One that is used as a spice to enhance prosperity, not a poison to success.  So when thinking about what you want this election cycle, maybe by asking less of government is more prosperity.

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