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Yes, Corruption Cripples the Economy

in Business and Economy, Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

Yes, Corruption Cripples the Economy

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

When analyzing the potential ramifications of picking one presidential candidate over the other, many prefer to overlook claims of corruption. On one hand, voters might not be exactly aware of what corruption may entail, but on the other, they might not be entirely sure of how corruption taking place in high levels of government will ever impact their personal finances. Unfortunately for those who do not seem to understand how corruption affects them, the consequences of rent-seeking and influence-peddling schemes go deeper than we expect.

corruptionIn Protectionism vs. Corruption: Which Is Worse for the Economy?, economist D.W. MacKenzie writes that while “an overwhelming majority of economists have agreed on the benefits of free trade since 1817,” many contemporary politicians believe that some trading restrictions help boost the U.S. economy.

But when it comes to analyzing the impact of corruption, few seem to take into consideration that political corruption “impairs economic efficiency and lowers living standards.”

Traditionally, corruption has always been treated as a legal affair, which might explain why the population’s attention is steered away from the real-world consequences of the practice.

According to MacKenzie, the problem with widespread corruption is that special interest groups take advantage of it, lobbying government elements directly to provide them with special treatment, therefore transferring wealth “from the general population into their pockets.” When analyzed closely, these special relationships between private industries and the government “make us all worse off” because the resources used to ensure these groups’ needs are being met could have been spared. In other words, taxpayer money spent on what many call corporate welfare could have stayed in the consumer’s pockets and then used for other purposes, getting that amount back into the economy and helping to make it grow.

Another aspect of political corruption that is often ignored is that free trade is the necessary condition for economic growth to occur, but in countries where markets thrive, their governments are often less impacted by corruption. Considering political corruption is inefficient and bad for growth, MacKenzie concludes, giving more power to politicians known for being corrupt will further damage the economy.

As voters cast their ballots for president, they must have in mind that the only policy that will bring economic growth and peace to America is the complete elimination of barriers to commerce, getting the government completely out of the business of picking winners. Unless the link between the government and the rent seeker is severed, there will be no room left for prosperity.

4/20 Weed Sales Prove the War on Drugs is Hindering Economic Development

in Drugs, Liberator Online, News You Can Use, Personal Liberty by Alice Salles Comments are off

4/20 Weed Sales Prove the War on Drugs is Hindering Economic Development

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

On April 20th, marijuana enthusiasts celebrate what they call a national holiday. With the sales of marijuana products exceeding the $37.5 million mark on this past 4/20, the ongoing efforts to put an end to the drug war and their lucrative consequences show that entrepreneurs have a lot to gain once the substance is rescheduled federally.

Woman_smoking_marijauana (1)Former aide to President Richard Nixon John Ehrlichman, who served time in prison over his involvement with the Watergate scandal, allegedly admitted that the drug war launched by the Nixon administration had two targets, “the antiwar left and black people.”

Ehrlichman allegedly told journalist Dan Baum that members of the Nixon White House “knew we couldn’t make it illegal to be either against the war or black, but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities.”

As US states disrupt the ongoing federal effort to put an end to drug consumption in America by passing their own marijuana legalization laws, the drug war is finally unwinding, at least partially.

According to Fox News, marijuana retailers registered a 30 percent increase in retail transactions on 4/20. The report comes from a software company that provides global cannabis businesses seed-to-sale tracking systems known as MJ Freeway. The startup, which was launched in 2010, is able to sift through data from cannabis retailers, producing an accurate analysis of 40 percent of America’s cannabis market.

As more states join the legalization bandwagon by passing recreational marijuana bills, legal retail sales are estimated to reach $6.7 billion by the end of 2016. As entrepreneurs heap the benefits, the industry promotes economic growth by offering great employment opportunities for residents of the states where weed is legal.

On April 20, MJ Freeway has disclosed, legally-licensed cannabis retail locations across the country sold $10,822 worth of products on average. The days before and after 4/20 have also seen a boost in sales. According to MJ, legal weed retailers sold $6,208 on April 19 and $5,442 on April 18 also on average.

California saw the largest dollar amount sold on April 20, beating others like Colorado and Washington, where recreational weed is legal. Colorado ended up beating all other states by having higher sales on average on April 20th.

While these numbers seem promising, it’s hard to assess just how much wealthier the country would be if all drug laws put in place in the name of an undeclared war on immoral behavior were lifted.

While discussing the health consequences associated with drug use is important, the burden should be shared by local communities, where individuals have access to religious entities and other privately-organized groups that support addicts, not in the hands of law enforcement.

As the country becomes increasingly enamoured with the idea of bringing the drug war to a halt, libertarian advocates claim that even gun violence would suffer a major blow once laws criminalizing drug consumption and sales are dropped.

According to Cato Institute’s Adam Bates, the only “common sense” approach to the gun violence issue in America is to end the drug war. After all, more than 2,000 homicides a year are gang-related, the government estimates. What is Washington waiting for?

Regulations Inhibit Growth, Time to Take The Negative Consequences Seriously

in Business and Economy, Economic Liberty, Liberator Online, News You Can Use by Alice Salles Comments are off

Regulations Inhibit Growth, Time to Take The Negative Consequences Seriously

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Regulations are good, some say. They keep evil elements from hurting consumers. But are regulations doing more harm than good?

By definition, regulations are laws that seek to produce pre-designed outcomes. The way they operate is by changing individuals’ behavior. As federal regulations grow, the number of restrictions on individual consumers and businesses also grow. Over time, the increased number of restrictions may completely close the paths to innovation. Who suffers? Both the consumer and the job seeker.

Regulations

According to a 2013 study, the American regulatory system is so crowded and chaotic that economic growth has slowed by about 2 percent per year between 1949 and 2005. While that doesn’t sound as bad as you might have expected, the real impact of the US regulatory system is hard to assess given the lack of a working process that helps to review regulations and weed out what’s obsolete and harmful. Without a system that helps us identify the issues with the regulations put in place, there’s no way to determine how bad these regulations really are.

While it’s hard to assess the cost of regulation now, earlier studies have at least been able to find that the American regulatory environment has been very bad for growth and very good in stifling innovation and keeping entrepreneurs from sprouting from sea to shining sea.

Despite several administrations’ efforts to modify or cut regulations that simply don’t work, all attempts were in vain.

In order to achieve success, future administrations should not take part in the same failed attempts. According to research carried out by the Mercatus Center, the US government should embrace a series of government reforms in order to remove obstacles to economic growth in America instead.

Based on the success of the Dutch Administrative Burden Reduction Programme and the Base Realignment and Closure Commission’s efforts, the Mercatus team concluded that the American government should begin by promoting an independent review of the regulatory system in place so the burden is assessed promptly and effectively.

But the key to success in this case is true independence.

An independent look into what’s stifling innovation must not be effected by crony influences, since once the influence of particular groups or stakeholders are taken into account, review teams will have a hard time assessing what works and doesn’t. Instead, those tasked with the chore of reviewing regulations should simply focus on how effective regulations have been since they were implemented.

While other steps should also be taken if the US government is serious about trimming the burden of regulations, guaranteed independence in the review process is the most important aspect of successful reforms. If future administrations are serious about growing the economy and helping America prosper, they should prioritize this type of reform. Why? Because removing roadblocks promote the growth of businesses, giving Americans the jobs they so desperately need to live their own version of the American dream.

U.S. Taxpayers Pay Billions — to Subsidize the Military of Wealthy Foreign Nations (Video)

in Liberator Online by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 18, No. 15 of the Liberator Online. Subscribe here!)

It’s just one minute long, but this Cato Institute video offers powerful intellectual ammunition for those wanting to lower taxes and reduce U.S. involvement abroad.

Beleaguered American taxpayers are being forced to pay to subsidize the military in wealthy allied nations that can (and should) defend themselves — while these nations in turn spend the money they save on economic growth and propping up their massive welfare states.

See the staggering amounts the U.S. spends on military matters in comparison to the rest of the world.

As Cato elsewhere says:

“The average American spends $2,300 on the military, based on the latest data available. That is roughly four and a half times more than what the average person in other NATO countries spends. These countries boast a collective GDP of approximately $19 trillion, 25 percent higher than the U.S. They obviously can afford to spend more. So why don’t they? Because Uncle Sucker picks up nearly the entire tab.

“Looked at another way, U.S. alliances constitute a massive wealth transfer from U.S. taxpayers (and their Chinese creditors) to bloated European welfare states and technologically-advanced Asian nations.”

Should struggling American taxpayers be forced to pay for the defense of wealthy developed foreign nations? Should foreign welfare programs be subsidized by your tax dollars?

Share this short informative video with your friends, family and colleagues, and see what they think.