Reflections on economic policy
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My dream of what the tax system should be is a complete flat tax. I think it’s really wrong to have tariffs to protect domestic industries. I think the gains from trade are enormous, but when we use threats of trade barriers in negotiations it’s not protectionist at all. I do think immigration for work has to be separated almost completely from immigration for citizenship. What really irritates me enormously is the discussion of income inequality. Whenever you redistribute income, you take from those who have a lot and you give to those who have less. The more you redistribute, the greater will be the loss in income. On monetary policy, if you put in the right price rule, you can stabilize the value of the dollar virtually for eternity. I don’t really think we should have an independent Fed. On the long run, debt to GDP is an inappropriate measure; what you want to look at is debt to wealth, or debt service to GDP, and while there is some government investment spending that is really critical, government investment that tries to replace private investment is a mistake. In conclusion, there is nothing this economy can’t do if you put the incentives correctly placed across the board.