Wednesday, 26 September 2012

The Cure for Economic Depressions in practice

Following on from the article yesterday on Rothbard's and Mises' cure for economic depressions, a reader submitted this article which appeared in Forbes in August and titled "With Most Of Europe Still On Its Back, Sweden Tries Policies That Actually Work",
The headlines from across the pond read “Europe Rejects Austerity” as the French and Greeks elected socialists and even some neo-national socialists to office. These new officials have promised tax rates as high as 75 percent on millionaires, and have vowed to continue government spending unabashed in the wake of staggering levels of debt and anemic economic growth and persistent double- digit unemployment. However, there is one finance minister in one European nation that is bucking the trend, and, instead of ridicule and failure, he’s been named Europe’s best finance minister by the Financial Times. He’s not from Britain or Germany and certainly isn’t Greek. He isn’t some old fat cat in a suit either. In fact he’s famous for rocking a pretty awesome ponytail and gold earring. His name is Anders Borg and he’s Swedish.
That’s right, the European nation famously stereotyped for having aggressive taxation to fund an omnipresent state has actually decided that in response to the Eurozone crisis and the continued effects of the global economic downturn, or “Great Recession”, that it’s time to ease up on taxes and reduce the size of government. While Sweden is not technically in the Eurozone, as it does not use the Euro as currency, it has been drawn into the financial mess of the Eurozone by sheer proximity. Unemployment in 2011 was north of 7.5 percent and GDP growth was anemic at .4 percent projected for 2012.  
While the rest of Europe and the United States have gone on massive spending sprees fueled by government borrowing and tax hikes, Sweden took a different approach. In the Spring 2012 Economic and Budget Policy Guidelines, the Swedish Government and its Finance Minister, Anders Borg, have laid out a plan that is focused on lowering taxes. Their rationale? “When indviduals and families get to keep more their income, their independence and their opportunities to shape their own lives also increase.”
Hear, hear! What a relief to see some politicians are trying to do the right thing. Read the rest of the article here.
 

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