More than 50 years of experience clearly demonstrates that America prospers when economic freedom increases and suffers when it contracts. The Founders wisely grounded the Republic in terms of economic freedom. The unfolding years since then have served to prove them correct in this judgment
John B. Taylor succinctly defines the principles of economic freedom in the following terms:
“At their most basic level, these principles are that families, individuals and entrepreneurs must be free to decide what to produce, what to consume, what to buy and sell, and how to help others. Their decisions are to be made within a predictable government policy framework based on the rule of law, with strong incentives derived from the market system, and with a clearly limited role for government.” John B. Taylor, ‘Economics for the Long Run’, The Wall Street Journal, January 25, 2012
Between 1960 and 2012 American economic policy has displayed major shifts between more and less economic freedom, between more and less emphasis on rules-based fiscal and monetary policy, between more and less expansive roles for government, and more and less reliance on markets and incentives. Unequivocally, these shifts make the case for more economic freedom as above-defined.
From 1960 to 1980, economic freedom contracted – under the administrations of Kennedy, Johnson, Nixon, Ford, and Carter – as left-leaning Keynesian economists flooded into Washington, imposing short-term fiscal stimuli, temporary tax rebates or surcharges, stop-go monetary policies and wage-price controls against a back-cloth of high and rising marginal rates of income tax.
The result was stagflation.
Between 1981 and 2000 – under the administrations of Reagan, Bush Sr., and Clinton – economic freedoms advanced. Long-term tax cuts were implemented, fiscal policy became more predictable and less invasive, monetary policy followed well-articulated rules.
The result was significant economic growth, high rates of employment and price stability.
From 2001 onwards – under the administrations of Bush Jr. and Obama – economic freedoms have contracted, and will continue so to do for certain should Obama gain a second term.
The result is economic stagnation with high unemployment. Inflation lurks in the wings.
The evidence is clear. All rational, thinking individuals must be aware of it by now. The question remains:
Will the electoral majority in November 2012 be rational and thinking, or will it comprise irrational bundles of emotion driven over the economic abyss by the false rhetoric of economic fairness?