Arguing that government intervention is responsible for the slowdown of economic growth in the U.S., Chief Economist of the United States Congress Joint Economic Committee Brian Wesbury said government regulation and taxing must be kept at a minimum.
Wesbury discussed the role of the government in the economy in a speech before an audience of approximately 60 people in Rockefeller 1 yesterday.
He said it was important to dispel beliefs that "the government is the most important part of the economy and nothing can work without it."
According to Wesbury, government intervention "creates an economy that is out of filter."
He criticized government regulations on the basis that "artificial regulation of supply creates demand for more government intervention," which he said leads to an inflationary process.
To support his claim, Wesbury showed figures correlating periods of high regulation with periods of low economic growth.
Specifically, he referred to the U.S. economy in the mid 1960s, "when government intervention and taxing were still low," and the "U.S. Gross Domestic Product was increasing at a rate of 4 percent."
After the 1960s, he said, with the advent of "social security programs, the size of the government grew faster and GDP growth decreased and is now only 2.6 percent."
Wesbury argued that, had these policies not gone into effect, U.S. domestic product would now be $2.9 trillion larger, which would represent an average of $12,000 more for each U.S. citizen.
He concluded from these numbers that the U.S. is currently "under-performing."
Wesbury also argued that, after World War II, there has been a strong correlation between periods of increase in family incomes and periods of low government intervention.
Wesbury said economic intervention generally created "higher unemployment and less opportunities" for people.
During 1947-1973, a period he called "The Prosperous Years," government intervention, he said, was low and "as a result, family incomes increased in all levels of society."
Wesbury said after this time came "The Malaise," extending from 1973-1982. During this period, "the number of government regulations increased dramatically," which "resulted in a general decrease in family incomes," he said.
From 1982-1989, Wesbury explained, lowered taxes, spending and regulation caused family incomes to go up. Finally, from 1989-1994, a period Wesbury referred to as "The Funk," due to a comment made by President Bill Clinton about the U.S. economy, "government regulations and taxes are up again and family incomes in all levels except the wealthiest are going down," he said.
He concluded the government should elaborate "policies which encourage and not hinder opportunity."
