My tireless (and probably annoying) campaign to promote my Golden Rule of spending restraint is bearing fruit.
The good folks at the editorial page of the Wall Street Journal allowed me to explain the fiscal and economic benefits that accrue when nations limit the growth of government.
Here are some excerpts from my column, starting with a proper definition of the problem.
What matters, as Milton Friedman taught us, is the size of government. That’s the measure of how much national income is being redistributed and reallocated by Washington. Spending often is wasteful and counterproductive whether it’s financed by taxes or borrowing.
So how do we deal with this problem?
I’m sure you’ll be totally shocked to discover that I think the answer is spending restraint.
More specifically, governments should be bound by my Golden Rule.
Ensure that government spending, over time, grows more slowly than the private economy. …Even if the federal budget grew 2% each year, about the rate of projected inflation, that would reduce the relative size of government and enable better economic performance by allowing more resources to be allocated by markets rather than government officials.
I list several reasons why Mitchell’s Golden Rule is the only sensible approach to fiscal policy.
A golden rule has several advantages over fiscal proposals based on balanced budgets, deficits or debt control. First, it correctly focuses on the underlying problem of excessive government rather than the symptom of red ink. Second, lawmakers have the power to control the growth of government spending. Deficit targets and balanced-budget requirements put lawmakers at the mercy of economic fluctuations that can cause large and unpredictable swings in tax revenue. Third, spending can still grow by 2% even during a downturn, making the proposal more politically sustainable.
The last point, by the way, is important because it may appeal to reasonable Keynesians. And, in any event, it means the Rule is more politically sustainable.
In Other News: Mary Landrieu Connects with Millennials; Lists Parent’s Basement as Louisiana Address | Michael Schaus
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for August 29th, 2014 | John Ransom
Today, at 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for August 28th, 2014 | John Ransom
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for August 27th, 2014 | John Ransom