Daniel J. Mitchell

On many occasions, I’ve explained that economic output is a function of how much labor and capital are productively utilized.

This is why I relentlessly criticize policies that undermine GDP growth by hindering the use of these “factors of production.”

That’s a bit of economic jargon, but it helps to explain why we shouldn’t bediscriminating against capital by double taxing income that is saved and invested.

And it helps to explain why we shouldn’t be discouraging labor by subsidizingunemployment and idleness.

But it’s time to issue a very important caveat. The goal of policy should be economic freedom, not maximizing GDP.

There’s nothing wrong with people choosing to be out of the labor force – so long as they’re not expecting taxpayers to pay their expenses.

Many women, for instance, may want to be at home with children, particularly during their younger years.

Moreover, some older workers may want to retire early.

So while I think it’s bad news that labor force participation has dropped under Obama, there’s more than one possible way to look at that data when you factor in the voluntary choices of some segments of the potential workforce.

But it’s very difficult to give any sort of optimistic or positive spin to these numbers from the Senate Budget Committee. They show a very worrisome trend among prime-working-age men.

These are people who should be in the labor force.


Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.