A lot of people are wondering what we can do to restore America’s prosperity and create more jobs. Both the president and his Republican rivals have offered their ideas in this election year. I believe the fundamental answer is simple: government policies must adhere more closely to the principles of economic freedom upon which the country was founded.
At their most basic level, these principles are that families, individuals, and entrepreneurs must be free to decide what to produce, what to consume, what to buy and sell, and how to help others. Their decisions are to be made within a predictable government policy framework based on the rule of law, with strong incentives derived from the market system, and with a clearly limited role for government.
The history of American economic policy displays major movements between more and less economic freedom, more and less emphasis on rules-based policy in fiscal and monetary affairs, more and less expansive roles for government, and more and less reliance on markets and incentives. Each of these swings has had enormous consequences. Taken together, they make for a historical proving ground to determine which policy direction is better for restoring prosperity.