We can build wealth for everyone as long as we have pro-growth economic policies

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Impulsando la libertad y el progreso

By Angel Merlos

Strategic director of The LIBRE Institute in Colorado.

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Given how tumultuous the economy has been the past few years, with inflation leading to higher prices for daily necessities, crazy gas prices, and fear of impending recession, it is not surprising that many people are filled with anxiety about their economic situation.

It is also not surprising that people are using this fear to promote their own economic vision of increased government control with more taxes and regulation. Not only do we see calls to “share the wealth” via higher taxes, but also more rules and red tape to make things “fair”.

TABOR a model for relationship between government and governed TABOR, modelo de relación entre gobierno y gobernados

However, even when such proposals are made sincerely, they are generally operating under a false conception of how the economy and wealth creation actually work. Many people have a static and zero-sum conception of human wealth.

In this view there is only so much stuff to go around, and if someone else has it then that means that I can’t. But history demonstrates that this is simply not true, and when governments make policies based on this understanding it leads to disaster.

A sad story

The sad history of Venezuela is a case in point. In 1970 Venezuela was the richest country in South America, and one of the top 20 richest countries in the world, surpassing even some European states. However, even amidst this wealth and prosperity the government continued to implement more and more onerous regulations that began to undermine the economic freedom that was the root cause of this prosperity.

By the time that Hugo Chavez came to power, Venezuela was already along the path of heavy state interference in the economy, but under Chavez these interventionist and socialist policies were ramped up to an unprecedented degree. Even the largest oil reserves in the world were not enough to save the Venezuelan economy, which spiraled into high inflation, mass shortages of everything, and the seizure of private property.

As a result of these terrible and destructive policies, over 7 million Venezuelans have fled the country, and of those who remain, 25% of the population requires humanitarian assistance. We can look at the similar socialist case of Cuba, which served as an inspiration for Chavez’s economic policies and see a similar disaster that prompted 2% of the entire population to flee to the United States in 2022.

Unfortunately, many people in the U.S. are seeking to emulate Venezuelan-style policies. As the economist Carmen Dorobăț notes in her analysis of the Venezuelan collapse, “it is the same brand of poor economic policies and government spending (albeit not in the same degree) that is sought after and implemented in the U.S. or Europe, where it is touted either as innovative, stimulating, or anti-cyclical.”

Policies to grow

Rather than obsessing about “spreading the wealth” and passing more and more regulations to try and divide the “economic pie” up, which as we can see from Venezuela and Cuba only leads to less wealth for everyone, the solution is to grow the “pie” through sound economic policies that unleash people’s entrepreneurial spirit.

Many Latinos, or their parents and grandparents, have come to America in search of a better life and are working hard towards that goal. In fact, Latinos are launching morebusinesses than any other group in the U.S.! However, there are numerous artificial barriers in our way that keep us from building more wealth for everyone.

Every time we go to the grocery store we see the damage that out of control government spending has, as inflation continues to inflict economic pain. But even beyond wild government spending, we must continue to fight against higher taxes that seek to punish success, and regulations that only serve to benefit special interest groups at the expense of everyone else.

Get more financial freedom

The LIBRE Initiative is seeking to build a thriving and free economy where we can all flourish together. But we need your help to rein in destructive government spending, stop punishing tax increases, and protect worker freedom.

Many Latinos are familiar with where the zero sum thinking inherent in talk about “sharing the wealth” ultimately leads. We only need to look at places like Venezuela to see what fate awaits us if American society continues to obsess about everyone getting their “fair share” of the “pie”. But in reality, we can make the pie bigger and bigger, so everyone can get a bigger slice. The way to do that is with more economic freedom to unleash human creativity, rather than more government control.