Epstein on Politics

quotes economics regulation crony capitalism classical liberalism

14 May 2014

Richard Epstein on politics:

Right now, our economic prospects look grim. To classical liberals like myself, future growth is unsustainable in an age dominated by progressive politics. There are two reasons for this: an extensive system of regulation of all key sectors of economy—including labor, real estate, health care, and financial markets—and a combination of progressive income taxes, specialized levies (like the medical device tax), and a heavy estate tax, whose proceeds are used to fund an ever-expanding system of transfer payments.

Today’s unending cycle of regulation, taxation, and transfer payments induces non-stop political competition, which lets strong voting coalitions take from their adversaries in order to enrich their friends. This dynamic leads to crony capitalism that reduces the return to both capital and labor. States like Texas that work hard to resist these various trends do well in comparison to those states like Illinois that yield to political temptation. The solution requires systematic deregulation coupled with flat taxes to induce higher levels of competition that will in turn produce greater economic growth and human satisfaction.

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