It was a deliberate choice because I view competition among governments as one of the few effective restraints on the greed of the political class.
Simply stated, in the absence of competitive pressure, politicians will over-tax and over-spend until the welfare state collapses of its own weight. Some of them self-destruct anyhow because sometimes politicians can’t resist myopic policy decisions even when they know the house of cards will come tumbling down. Greece is a good example, though this cartoon shows the same phenomenon in a more amusing fashion.
But if we want to save other nations from that fate, we need competition among governments so politicians have to worry that the geese with the golden eggs can fly away to nations with better policy.
This is why protecting, promoting, and preserving tax competition is my top issue. Heck, I’ve even run the risk of being thrown in a Mexican jail because of my efforts to defend the right of jurisdictions to compete with decrepit welfare states by implementing pro-growth fiscal policy.
With this as background, you won’t be surprised to learn that I’m a big fan of what Greg Mankiw wrote this weekend in the New York Times.
Get the Market Movements in Advance: William's Edge Webinar for Tuesday, March 11th, 2014 | John Ransom