Here’s a new video, less than 2-1/2 minutes, pointing out some of the key differences between rich nations and poor nations. Not surprisingly, small government, free markets, and sound institutions are critical.
I narrated a similar video, released more than two years ago, that makes similar points. The production values are not as high, but I had six minutes to play with, so it gave me an opportunity to elaborate on the various factors that contribute to growth. I think the videos are good complements.
[…] I constantly use statistics because they so often show that free markets and small government produce the best outcomes. I even use data to show that Hong Kong’s economy should be […]
[…] I constantly use statistics because they so often show that free markets and small government produce the best outcomes. I even use data to show that Hong Kong’s economy should be […]
[…] closing argument is that people who generally favor economic freedom should ask themselves whether it’s legitimate or logical to make an exception in the case of […]
[…] I constantly use statistics because they so often show that free markets and small government produce the best outcomes. I even use data to show that Hong Kong’s economy should be […]
[…] I constantly use statistics because they so often show that free markets and small government produce the best outcomes. I even use data to show that Hong Kong’s economy should be […]
[…] closing argument is that people who generally favor economic freedom should ask themselves whether it’s legitimate or logical to make an exception in the case of […]
[…] I constantly use statistics because they so often show that free markets and small government produce the best outcomes. I even use data to show that Hong Kong’s economy should be […]
[…] I constantly use statistics because they so often show that free markets and small government produce the best outcomes. I even use data to show that Hong Kong’s economy should be […]
[…] I constantly use statistics because they so often show that free markets and small government produce the best outcomes. I even use data to show that Hong Kong’s economy should be […]
[…] Dan Mitchell Explaining Economic Growth […]
[…] closing argument is that people who generally favor economic freedom should ask themselves whether it’s legitimate or logical to make an exception in the case of […]
[…] claims to want a stronger middle class, but I’ve explained the keys to economic growth and Reich is on the wrong side of almost all of […]
[…] folks from the Koch Institute put together a great video a couple of months ago looking at why some nations are rich and others are […]
[…] folks from the Koch Institute put together a great video a couple of months ago looking at why some nations are rich and others are […]
[…] folks from the Koch Institute put together a great video a couple of months ago looking at why some nations are rich and others are […]
[…] closing argument is that people who generally favor economic freedom should ask themselves whether it’s legitimate or logical to make an exception in the case of […]
[…] closing argument is that people who generally favor economic freedom should ask themselves whether it’s legitimate or logical to make an exception in the case of […]
[…] Dan Mitchell, who has another related video on his […]
[…] Liberty is tough; but the tough is what makes it great. Demonstrated here via […]
A correction: I do not know about “growth miracles” with government spending higher than around 25% of and without liberalization or without reduction of government (mistakenly I said 20% of GDP). Adenauer’s Germany had higher than 25% government spending but they were under massive liberalization. When government reaches 30% of GDP usually the spectacular growth disappears, take a look at Ireland, no more spectacular growth after it stopped reducing government (after the private sector stopped growing faster than the public sector is the correct statement). Of course, I only know a small part of the empirical evidence.
Of course a country with big government can have high growth through massive debt or thanks to some miraculous commodity like oil.
The cure for the problem in the USA is a smaller streamlined government. They must cut out the pork belly glut that grows annually.
The first major cuts would be the EPA, TSA, FDA. Bloated wastes of money!
We need to do away with generations of welfare recipients and everything that goes with it.
The government needs to stop all foriegn aid to non democratic governments, especially the governments that breed terrorists, they will never be our friends.
The government needs to focus on it’s own problems and it’s own people for once.
Hillary Clinton certainly does not need to be Lady Gaga’s publicist!
Regarding video No 1, I fully agree with freedom being the key to happiness & prosperity but those economic freedom indexes promote tax hells and oppression by giving too little weight to the gigantic governments that are the rule in the industrial world.
The left says here in Latin America that we must increase our already exorbitant taxes because western European countries have higher taxes and they have a higher standard of living and therefore we must increase taxes to achieve their standard of living. That is their essential claim for raising taxes. But Western European tax hells have low growth rates, usually a 3% growth rate in Europe means throwing a party: Western European tax hells became rich decades ago with much smaller government and when they increased government they became stagnated tax hells. I do not know about a single country with -say- more than 40% of GDP taxation that has high growth without reducing government or reducing taxation & regulations. All the multi year growth miracles that I know had either moderate government -say about 20% of GDP or less- or were countries dramatically reducing government -Ireland, ex communist countries- I think this fact proves that high taxes are central in destroying growth. Here in Latin America we will never grow if we become european style tax hells. But Heritage data, that gives little weight to government spending, can be used by the left to say: “See, Sweden (more than 50% of GDP government spending) is a free country, Heritage says it, you must become too a tax hell”
Take China: Its growth is absolutely spectacular. But China’s Heritage’s Economic Freedom Index has been stagnated for years. How do you explain China spectacular´s growth if its freedom index remains so low and never increases? I explain it by moderate government spending -about 20% of GDP, much lower than in Europe- and by the humongous accumulation of capital that goes on in China. Bigger government would destroy that spectacular growth (moreover I think that the way in which they account GDP is biased toward exporter countries and against tax havens and importer countries. And “catching up” is a big factor that increases China’s growth)
Inflation is not necessarily a problem: If prices increase 15% a year because the exchange rate is under a predictable crawling peg regime then that is harmless, people can offset the loss of value of the currency with interest rates. But a very low inflation rate may mean that the country is in a very deep crisis caused by unnecessary “tight money” imposed by the Central Bank. So inflation and government spending should not have the same weight and inflation must be seen with great care.
Paul Krugman has alleged that tax cuts are unnecessary because the USA had high growth before tax cuts -I guess he means under Eisenhower-. But under Eisenhower government spending was much lower than what it is today, so again here we see the humongous importance of government size because here too higher government spending explains lower growth in this post tax cuts era.
Excellent. The power of video and the internet well demonstrated here.
Simple presentation. Easily understood. You really can’t get enough of this sort of message out. We all argue over the details, but it’s important to speak simply and clearly on the totality of what it is that works, and this does it.
Well done.