I very much admire the scholarship of John B. Taylor, Professor of Economics and department head at Stanford University. He is also a Senior Fellow at Stanford’s Hoover Institution. His most recent book publication is, First Principles: Five Keys to Restoring America’s Prosperity. It is a profound and provocative 256 pages of economic insight and particularly apropos at this time.
“Our founding fathers created a unique country and constitution based on individual rights and five principles of economic freedom.”
- Predictable policy framework
- Rule of law
- Strong incentives
- Reliance on markets
- Clearly limited role of government
Taylor states, “These principles, first delineated in the Declaration of Independence in 1776, are remarkably similar to the principles of economics heralded that same year by Adam Smith in the Wealth of Nations, and that remain central to economics today.”
Continuing, “One of the amazing things about these defining principles of economic freedom is they also constitute a set of principles for economic success. Economic theory and experience show that they lead to superior economic outcomes including strong economic growth and rising prosperity.”
“Over the past 300 years, we have seen periods when careful attention was paid to them and alternating periods when they were neglected. And we can draw clear conclusions from the history. When policy makers stuck to the principles, economic performance was good. When they ignored or compromised the principles, economic performance deteriorated.” Taylor goes on explain in detail.
I’m guessing Taylor’s opinion, along with many others, is that both the Obama and Bush administrations demonstrated the latter. Happily, President Elect Trump’s administration, with cooperation of Congressional Leader, Paul Ryan, seems to be pointed back to governing within the guide lines of the Five Principles.
If this proves to be true, it is possible that we will begin to experience a sustained period of economic prosperity not seen since the period following WWII.
Over the next few months I will expand on the fundamentals of my optimism, whether Trump’s actions are consistent with his promises or regrettably, just the same old Keynesian tinkering. In that case, I’m wrong. Stay tuned, it should be exciting.
Carl W. Hulick, Chairman of the Advisory Board