Dan Mitchell has come up with simple but effective rules which should be adhered to by every single nation on this planet.
Firstly, his golden rule:
Good fiscal policy exists when the private sector grows faster than the public sector, while fiscal ruin is inevitable if government spending grows faster than the productive part of the economy.
Secondly, Mitchell’s law:
This term, which I am modestly calling Mitchell’s Law, describes what happens when government intervention (Fannie and Freddie, for example, or Medicare and Medicaid) causes problems in a particular market (a housing bubble or a third-party payer crisis), which leads the politicians to impose more misguided intervention (bailouts or Obamacare).
Want to get rid of political corruption? Simple, just implement a flat tax. This is why:
- With a system that you could fit on a postcard, people would no longer need to hire lawyers
- A single, low tax rate would be very competitive and attract business and people from around the world to reside in the UK and create jobs and wealth
- No double taxation on savings and investments (ie. no death tax, no capital gains tax, no tax on savings or dividends)
- It is easier to enforce and a low rate ensures its not worth rich people finding loopholes
For a great tutorial on how it would work, watch this Dan Mitchell video from the CATO institute: