Government Actions that Hurt Economic Growth

There are far too many to create a comprehensive list, but a few are obvious and stand out.  Effecting a change in any or all of these would lead to increased economic growth:

  1. Taxes on business.  It is generally agreed that reducing taxes on business yields the greatest ‘bang for the buck’ of any tax reduction on Gross Domestic Product.  It is beyond my comprehension why anyone believes that taxing business (corporations) is justified.  Any tax paid by business (corporations) simply becomes a ‘cost of production’ and is added to the product cost.  Since the consumer ultimately pays this cost it becomes a ‘hidden’ tax.  All the talk of ‘excessive corporate profits’ in order to justify increasing their tax burden is total nonsense.  If a corporation is realizing excessive profit it is because 1)  They make a superior product that people see as a ‘value’,  2)  They are protected from competition (often as the result of government action in tax policy or regulation).  If a company is making excess profit you can be certain that competitors will develop challenges to their product unless they are prevented from doing so.  Ergo, look for tax policies or regulations that are preventing that competition.
  2. Government spendingEvery dollar the government spends is a dollar that cannot be used to develop new and improved products.  It reduces innovation and growth.  It doesn’t matter if that spending is necessary (national defense) or spurious (stimulus, waste, fraud and abuse) it is money spent by a ‘central planner’ and decreases the availability of that money to be used in ‘free exchange’ that ultimately leads to economic growth.
  3. Government regulation.  Every regulation, whether justified or not, reduces our freedom of choice and the ability of the ‘free market’ to function.  Not only do these regulations reduce our personal freedom, they impact economic growth.
  4. Minimum Wage.  It seems very odd to me that the same politicians who cry for ‘more job creation’ are the very ones who also insist on ‘increasing the minimum wage’.  No single action reduces employment as much as a minimum wage.  Think about it.  All a minimum wage does is say to an employer ‘you must pay any employee this minimum wage’.  It doesn’t for the employer to actually employ anyone.  The result is that now an employer must realize the ‘value’ from the employee equal to the minimum wage.  If the employee cannot generate that much value he/she will not be hired and if currently employed, he/she will be released.  The inevitable result is fewer jobs.

These are key actions taken by government that hurt economic growth and personal freedom.  They apply to all governments, federal, state and local.  Reversing any or all of the above will lead to economic growth.

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