U.S. Elections and the
Outlook for the Global
Economy
Robert Genetski
Website: ClassicalPrinciples.com
312-565-0112
Outline
I. Economic Framework
II. How Economic Freedom Promotes
Prosperity
III. Global Freedom & Economic Trends
IV. US experience with economic freedom
V. Impact of the US Elections
VI. What Lies Ahead for the US & the World
Outline
I. Economic Framework
II. How Economic Freedom Promotes
Prosperity
III. Global Freedom & Economic Trends
IV. US experience with economic freedom
V. Impact of the US Elections
VI. What Lies Ahead for the US & the World
Outline
I. Economics: scarcity and poverty
A. How to create growth and prosperity?
Outline
I. Economics: scarcity and poverty
B. Economic theories
1. Keynesian framework
2. Classical framework
Classical Economic Principles
1. Characteristics
-- fundamental to our human nature
-- universal: apply to all people in all countries
-- timeless
Classical Economic Principles
2. Basis: When individuals have the most control
over their own lives, they tend to make decisions
not only in their own best interests, but in the best
interests of others as well.
Classical Economic Principles
3. Classical Policies:
-- low tax rates & limited government
-- free markets
-- protection of property rights
-- a stable currency
Outline
I. Economic Framework
II. How Economic Freedom Promotes
Prosperity
III. Global Freedom & Economic Trends
IV. US experience with economic freedom
V. Impact of the US Elections
VI. What Lies Ahead for the US & the World
Freedom & Economic Prosperity
Measures of Economic Freedom
1. Size of government
2. Legal system & security of property rights
3. Sound money
4. Freedom to trade internationally
5. Regulation
Economic Freedom and Per Capita Income: 2010
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
Least Free
Third
Second
Source: Fraser Institute, Economic Freedom of the World: 2012 Annual Report
Least Free
Third
Second
Most Free
Most Free
Income of the Poorest 10%: 2010
$12,000
$11,000
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Economic Freedom Quartile
Source: Fraser Institute, Economic Freedom of the World: 2012 Annual Report
Least Free
Third
second
most free
Economics is not about statistics
It’s about people
Freedom & Economic Prosperity
The most effective solution to promoting
growth and prosperity is to spread economic
freedom throughout the world.
Outline
I. Economic Framework
II. How Economic Freedom Promotes
Prosperity
III. Global Freedom & Economic Trends
IV. US experience with economic freedom
V. Impact of the US Elections
VI. What Lies Ahead for the US & the World
European Nation's Economic Freedom Scores
8.6
score (10 = most freedom)
United Kingdom
8.1
Germany
7.6
Spain
France
7.1
Italy
Greece
6.6
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Economic Freedom Scores: Norway, Russia, Poland
8.0
score (10 = most freedom)
Norway
7.5
Poland
7.0
Russia
6.5
6.0
5.5
5.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
China's Economic Freedom Score
6.5
score (10 = most freedom)
6.4
6.3
6.2
6.1
6.0
5.9
5.8
5.7
5.6
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Outline
I. Economic Framework
II. How Economic Freedom Promotes
Prosperity
III. Global Freedom & Economic Trends
IV. US experience with economic freedom
V. Impact of the US Elections
VI. What Lies Ahead for the US & the World
The United States: A Unique
Experiment in Freedom
I. Founded on belief in God and Liberty
a. Declaration of Independence
b. Liberty involves limits on government
c. Defused power, checks & balances
d. Complex social & economic problems
e. Formula for freedom highly successful
The United States: A Unique
Experiment in Freedom
2. Rise in living standards
a. Government could solve problems
b. Shift in power & influence
The United States: A Unique
Experiment in Freedom
3. Progress toward freedom interrupted
a. 1st “progressive” movement: c. WWI
b. 2nd “progressive” movement: 1930s
c. 3rd “progressive” movement: 1970s
d. 4th “progressive” movement: 2000s
The United States: A Unique
Experiment in Freedom
3. Progress toward freedom interrupted
a. 1st “progressive” movement: c. WWI
b. 2nd “progressive” movement: 1930s
c. 3rd “progressive” movement: 1970s
d. 4th “progressive” movement: 2000s
United States Economic Freedom Rank
2000
2001
2002
2003
2004
2005
2006
2007
1
5
9
13
17
Source: Fraser Institute; Economic Freedom of the World, 2012 Annual Report
2008
2009
2010
The United States: A Unique
Experiment in Freedom
4. Factors eroding freedom 2010
a. increase use of eminent domain
b. war on terror and drugs
c. violation of bondholder property rights
d. size of government
e. regulation
f. trade restrictions
The United States: A Unique
Experiment in Freedom
4. Factors eroding US freedom since 2010
A. Fiscal policies
1. federal spending
2. private compliance spending
3. public debt
Federal Spending
trillions of dollars
(fiscal years trillions of dollars)
6.0
President Obama's
Budget
5.0
4.0
Ryan's House
Budget
3.0
2.0
1.0
2000
2005
2010
Source: President's Budget for Fiscal Year 2013; The Path to Prosperity (House Budget).
2015
2020
Federal Receipts
6.0
(fiscal years trillions of dollars)
trillions of dollars
5.0
President Obama's
Budget
4.0
Ryan's House
Budget
3.0
2.0
1.0
2000
2005
2010
Source: President's Budget for Fiscal Year 2013; The Path to Prosperity (House Budget).
2015
2020
Federal Debt Outstanding
25
(fiscal years)
trillions of dollars
President's
Budget
20
Ryan's House
Budget
15
10
5
2000
2005
2010
Source: President's Budget for Fiscal Year 2013; The Path to Prosperity (House Budget).
2015
2020
The United States: A Unique
Experiment in Freedom
4. Factors eroding US freedom since 2010
B. Rule of Law:
1. Government controls over healthcare
2. Government controls finance: Dodd-Frank
3. Edicts undermine law: immigration, welfare
4. Waivers from complying with law
5. Failure to enforce race-neutral laws
What Lies Ahead?
• Loss of freedom from current trends
– Healthcare law: government controls healthcare
– Financial reforms: government controls finance
– Edicts undermine law: immigration, welfare
– Waivers from complying with law
– DOJ failure to enforce race-neutral laws
The US economy is struggling due to
the erosion of economic freedom
Outline
I. Economic Framework
II. How Economic Freedom Promotes
Prosperity
III. Global Freedom & Economic Trends
IV. US experience with economic freedom
V. Impact of the US Elections
VI. What Lies Ahead for the US & the World
Election Implications
I. Federal Spending:
President Obama
Romney-Ryan
Difference:
2014
$3.88 trillion
$3.48
$400 billion
2. Regulatory Compliance:
President Obama
$2.4 trillion
Romney-Ryan
$2.0
Difference:
$400 billion
Outline
I. Economic Framework
II. How Economic Freedom Promotes
Prosperity
III. Global Freedom & Economic Trends
IV. US experience with economic freedom
V. Impact of the US Elections
VI. What Lies Ahead for the US & the World
What Lies Ahead?
The good news:
Freedom in the world is increasing
The US has a history of recovering
The End
Robert Genetski
Website: ClassicalPrinciples.com
312-565-0112
Questions or Comments
Robert Genetski
Website: ClassicalPrinciples.com
312-565-0112