Stabbing People’s Money

I knew Aaron was deep in economic knowledge, so I’m glad he posted some definitive armchair analysis of the funny business of large-scale, central planning of economies (emphasis his):

And about 20 years ago, I did precisely that. Arguably one of my best charts I ever compiled proved me correct – government spending as a percentage of GDP versus economic growth. Albeit boring and now making your eyes glaze over like Ben Stein in Ferris Bueller’s Day off, the chart showed a NEGATIVE correlation between government spending and economic growth with a correlation coefficient of around .3.

The problem is that was 20 years ago and the data I had was not the greatest, merely what was available on the OECD at the time. So I figured it was time to pull new data and see if this relationship still held true. And boy howdy has it!

The title of the post, “More Proof Freedom is the Best Economic Policy,” is self-contradictory if one were to take it literally. It’s like figuring the best method of keeping someone alive while stabbing them repeatedly through the heart. If life is the goal, you don’t stab him in the first place. People tend to figure out how to stay alive by their own devices. The best policy is no policy at all.

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