If you live in America and believe in free markets and small government, it’s easy to get depressed. We suffered through eight years of wasteful spending and misguided intervention under Bush, and now we’re enduring four years of additional spending and red tape under Obama.
Moreover, it’s not clear things will get any better in the next four years, regardless of what happens on November 6.
But whenever I begin to feel sorry for myself, I remind myself of how bad things could be if I lived in the United Kingdom.
The burden of government spending in the U.K. rose from 36.5 percent of economic output in 2000 up to 48.7 percent of GDP today. This mostly happened under Labor Party rule, but the coalition of so-called Conservatives and Liberal Democrats that took power in 2010 hasn’t done much to restrain government spending.
To augment the damage, taxes also have been increasing. The feckless Gordon Brown of the Labor Party boosted the top tax rate to 50 percent (a disaster from a Laffer-Curve perspective) before getting evicted by voters.
The Tory-Lib Dem coalition is similarly bad. In recent years, the capital gains tax has been increased (see these amusing posters to understand why this was a foolish idea), along with a big hike in the value-added tax (though, to be fair, the corporate rate has been slightly reduced and part of Gordon Brown’s higher income tax rate has been repealed).
But the Tories and Lib Dems aren’t through with their assault on the economy’s productive sector.