I gave a couple of speeches about fiscal policy in Australia late last week.
During the Q&A sessions (as so often happens when I speak overseas), the audiences mostly asked questions about Donald Trump. I generally give a three-part response.
- I tell them I was surprised by the election results.
- I tell them Trump is not a small-government Republican.
- I plead with them (often with no success) to ask questions about fiscal policy.
So when I was asked to appear on Australian television, you won’t be surprised to learn that I was asked several questions about Trump.
But the good news is that the segment lasted for more than 18 minutes so I got a chance to pontificate about taxes and spending.
In particular, I had an opportunity to explain two very important principles of fiscal policy.
First, I explained the Rahn Curve and discussed why both Australia and the United States should worry that the public sector is too large. This means less growth in our respective nations because government spending (whether financed by taxes or borrowing)
diverts resources from the productive sector of the economy.
Second, I explained the Laffer Curve and tried to get across why high tax rates are a bad idea (even if they raise more revenue). As always, my top goal was to explain that a nation should not seek to be at the revenue-maximizing point.
I also had an opportunity to take some potshots at international bureaucracies such as the IMF and OECD. Yes, we get good statistics from such organizations and even some occasional good research, but they have a statist policy agenda that undermines global growth. And I never cease to be offended that bureaucrats at these organizations get tax-free salaries, yet get to jet around the world urging higher taxes on the rest of us.
