The British pound coin (flickr)

By Daniel J. Mitchell

When I debate one of my leftist friends about deficits, its often a strange experience because none of us actually care that much about red ink.

Restraint v. Tax Increases

Im motivated instead by a desire to shrink the burden of government spending, so I argue forspending restraintrather than tax hikes that would feed the beast.

And folks on the left want bigger government, so they arguefor tax hikes toenable more spending and redistribution.

I feel that I have an advantage in these debates, though, because I sharemy tableof nations that have achieved great results when nominal spending grows by less than 2 percent per year.

The table shows that nations practicing spending restraint for multi-year periods reduce the problem of excessive government and also address thesymptom of red ink.

I then ask my leftist buddies to please share their table showing nations that got good results from tax increases. And the response is awkward silence, followed by attempts to change the subject. I often think you can even hear crickets chirping in the background.

I point this out because I now have another nation to add to my collection.

From the start of the last decade up through the 2009-2010 fiscal year, government spending in the United Kingdomgrew by 7.1 percent annually, far faster than the growth of the economys productive sector. As a result, an ever-greater share of the private economy was being diverted to politicians and bureaucrats.

Beginning with the 2010-2011 fiscal year, however, officials started complying with myGolden Ruleand outlays since then have grown by an average of 1.6 percent per year.

And as you can see fromthis chartprepared by the Institute for Fiscal Studies, this modest level of fiscal restraint has paid big dividends. The burden of government spending has significantly declined, falling from 45 percent of national income to 40 percent of national income.

This means more resources in private hands, which meansbetter economic performance.

But Thats Not Enough

Though allow me to now share some caveats. Fiscal policy is only a small piece of what determines good policy, just20 percent of a nations gradeaccording toEconomic Freedom of the World.

So spending restraint should be accompanied by free trade, sound money, a sensible regulatory structure, and good governance. Moreover, aswe see from the tragedy of Greece, spending restraint doesnt even lead to good fiscal policy if its accompanied by huge tax increases.

Fortunately, the United Kingdom is reasonably sensible, which explains whythe country is ranked #10byEFW. Though its worth noting that it gets its lowest score for size of government, so the recent bit of good news about spending restraint needs to be the start of a long journey.

P.S. The United Statesgot great resultsthanks to spending restraint between 2009-2014. It will be interesting to see whether Republicans get better results with Trump in the White House.

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review. This article was originally published on FEE.org. Read the original article.

EspaolBolivia's President Evo Morales has a new museum, and a new nickname to go with. The opposition has dubbed him "Ego" Morales following the US $7.1 million museum he built to glorify his life story and legacy. He led the inauguration of his museum, calledthe Museum of the Democratic and Cultural Revolution, in the remote village ofOrinoca, where he grew up. In anopinion column on Friday, February 10 published in Nuevo Herald,Andrs Oppenheimerdescribed Morales as an authoritarian populist. Read More: Mexican President Denies Approaching Trump to Renegotiate NAFTA Read More: Business Leaders to Trump: Canning NAFTA Could Kill 6 Million US Jobs The building was reportedly built with government funds, and features a life-size statue andseveral portraits of world leaders and Morales' honorary degrees fromseveral universities. He also displayed t-shirts from his soccer collection and childhood memories, such as a trumpet. Minister of Culture Vilma Alanocasaid it is "the largest and most modern museum" in Bolivia, proclaiming with tears in her eyes that its opening marks an important date in history. "This museum is the heritage of those who fought for the liberation of our people," she said. Orinoca is located in a remote area and has only 900 inhabitants, 90 percent of whom live in poverty, according to an Associated Press report on February 3rd. This is not the first time Morales has spent public funds on his own legacy.In 2015, the Ministry of Communications published a book containing poems written by Morales, titled"The Process of Change Turned Into Verse." googletag.cmd.push(function() { googletag.display('div-gpt-ad-1459522593195-0'); }); This bookwas published shortly after a scandal surroundinga military anthem written by army officers praising Evo Morales, which many at first thought was the country's new official song. In 2014, the government distributed part of another book, this time for children, titledThe Adventures of little Evo,aboutthe President's childhood, and which included illustrations calledLittle Evo Plays Soccer and Little Evo Goes to School. Morales has also tried hard to changeBolivia's constitution to remain in power, but he lost the referendum in February of last year. Source: El Nuevo Herlad

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Why Liberty Advocates Should Focus on Spending Restraint over Tax Hikes - PanAm Post