I like to go back in time on occasion and get a dose of Harry Browne. He is perhaps the person who influenced me the most in my development towards libertarianism. One article, in particular, that I would like to discuss today is a piece in which he comments on the slow growth of the economy. This article was written over 8 years ago.
For anyone who follows this blog on a regular basis, you will know that I am an advocate of Harry Browne’s permanent portfolio plan as laid out in his book Fail Safe Investing. In this 2003 article, he mentions this investment advice in his conclusion.
However, I would like to emphasize what he wrote at the beginning of this piece. Harry Browne points out that “the economy was very strong for the 24 years from 1949 through 1973, but it has become more and more sluggish since then.”
He then goes on to say, “From 1949 through 1973, the median income rose an average of 3.1% per year. Since then the increase has been only 0.2% per year – barely any gain at all. If the earlier trend has continued, the typical American family’s income today would be more than twice as large as it is.” Again, this was written in 2003.
Browne then asks, “What’s so special about the year 1973?” He responds to his own question saying “nothing”. There was no particular thing that happened in 1973 except that the burden of government had finally gotten to a point where the free market economy could not take it any more. Again, this was written in 2003.
So where are we now? The federal budget is near $4 trillion per year. The annual federal deficit is running at about $1.5 trillion. The overall national debt is close to $15 trillion dollars. Just to add some perspective, the first trillion dollar budget did not happen until Reagan was in office. And now we have yearly deficits bigger than the entire budget was in the 1980’s.
Since this article was written in 2003, we have seen the continuation of two major wars, plus other minor ones. We have seen Bush’s Medicare prescription drug plan. We have seen a housing boom and bust. We have seen the financial meltdown from 2008. We have seen massive stimulus bills. We have seen massive bailouts of major corporations, including car companies and banks. We now have Obamacare and more financial regulations. We have seen a tripling of the adjusted monetary base in the last 3 years alone. We currently have unemployment above 9%.
Reading what Harry Browne said in 2003, it is easy to see why the economy is struggling so much now. In fact, it is almost surprising that it isn’t worse. The government at all levels takes about half of the income from the free market economy.
As long as the government keeps spending and regulating us to such a large degree, this economy will keep struggling. We might see growth again sometime, but it will be anemic. Unless there is some new technology or invention that is absolutely life changing, then the only way we will see robust growth again is by drastically reducing government interference.
I think even Harry Browne would be shocked by how out of control the government in DC has become.
On one positive note, I think Harry Browne would be pleasantly surprised by the Ron Paul revolution. While the government continues to make our lives difficult, people are starting to awaken. Harry Browne always retained hope that human liberty would flourish, but I think even he would be surprised at how fast things have changed in just the last 5 years.
Ron Paul and his followers, along with the internet, have helped changed the dialogue. So while the economy continues to look bleak, there is hope and Harry Browne could see that hope before it became more apparent to others.