The Quote about the Five Pillars of Prosperity
“The five pillars of prosperity are:
- Low, broad-based flat tax
- Spending restraint
- Sound money
- Minimal Regulations
- Free Trade”
-Dr. Art Laffer on the five pillars of prosperity
Dr. Laffer‘s suggestion that those five items are “the five pillars of prosperity” makes sense to me, and they should make sense to all other capitalists out there.
As a basis for interpreting this quote, I think looking at another concept, “the magic formula of economic success,” is also important. Click that link if you want to read more about it, but, for this post, suffice it to say that Nathan Lewis, the creator of the “magic formula of economic success,” had a very similar idea as Dr. Laffer and his conception of the five pillars of prosperity.
That basic idea, as you can almost certainly grasp from the above quotation, is this: stability and freedom are what is required for prosperity to take root.
The first group in the five pillars of economic, stability, ties in with points 1, 2, and 3. Those are the ingredients of economic stability. Yes, political stability is also important, as any history book will show you. Prosperity can’t happen if there is political chaos. But, more than that, economic stability is crucial for economic success.
Randomly changing and often high taxes, like America’s, are horrible for the economy. Not knowing what they will have to pay from one year to the next, businesses and individuals must keep excess cash in reserve so that they can avoid the vengeance of the IRS by being late on their taxes.
Furthermore, high taxes and a lack of fiscal responsibility are just generally terrible for the economy and lead to instability. Skyrocketing debts, punitive taxes, and expansions of already big government are, unsurprisingly, anathema to prosperity.
And, of course, with Weimar Germany and Zimbabwe as our guide, it’s easy to see that hyperinflation is terrible and results in economic instability. Lenders can’t and won’t make loans, savings are wiped out, and prosperity is hindered. That can be easily stopped by implementing a stable currency, such as the gold standard, which is why, I think, Dr. Laffer included it in the five pillars of prosperity.
Secondly, economic freedom, represented by points 4 and 5, is necessary for prosperity. Prosperity isn’t man’s base state, poverty is, which is why it is historically so rare. At times the Romans were prosperous, but, other than them, few entire societies were. Instead, wealth remained stuck in illiquid assets like land that were held by a powerful and small elite.
When consent is allowed to rule, rather than by force and government diktat, prosperity flourishes. On the other hand, when anything else is held above freedom by the government, “chains, whips, and slavery” are the defining features of life, as Fransisco D’Anconia notes in his money speech.
In modern America, that economic freedom is often overridden by other, often phantom, concerns. Environmentalists, workers unions, and corporation-haters all wield government power in the form of regulations to limit American prosperity. Luckily, President Trump has been rolling back those regulations. But there is still a lot of deregulating left to do.
So, that’s what the five pillars of prosperity are and why they work. Without economic stability and freedom, prosperity won’t remain in America for long. Instead, our wealth and prestige will vanish into government spending on welfare and businesses fleeing an oppressive, anti-business regime. Support economic freedom, not “democratic socialism!” The five pillars of prosperity show just why you should do so!
By: Gen Z Conservative
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