World Bank Study: Freedom Boosts Economies


by Byron Schlomach, Ph.D.
Goldwater Institute

In a happy coincidence, I saw a new World Bank study on entitlements and economic growth on the same day a lawsuit against cuts to Arizona’s Medicaid benefits was filed. The World Bank study provides evidence that while reinstatement of the Medicaid benefits might help some right away, in the long run it would likely hurt us all economically, including the people the lawsuit seeks to help.

The plaintiffs in the lawsuit want to restore Medicaid spending on adults with incomes above the federal minimum and up to the poverty level. Arizona has covered these individuals under a voter initiative passed in 2001. A tobacco tax was supposed to cover the expense, but it has never come close to funding the population covered by the initiative, requiring general funds to make up the difference. The legislature reduced this expense in an effort to balance the state’s budget.

The World Bank study looks at 100 nations over the last 30 years. It finds that economic and political freedoms, where individuals decide how to earn and spend their money, boost economic growth. Entitlements—tax-supported benefits like health care and welfare—either do not enhance economic growth or negatively affect it.

The lesson is that while social spending might be based on good intentions, entitlement programs can harm both those who make social spending possible and the recipients. As the author of the World Bank study put it, “For developed countries, [the study’s results] suggest that prioritizing economic freedom over social entitlements could be an effective way to reform the welfare state and make it more sustainable and equitable in the long run.”

In other words, deregulation, low taxes, and limited market interference make a society more prosperous, which ultimately reduces the need for social spending.

Dr. Byron Schlomach is the director of the Goldwater Institute’s Center for Economic Prosperity.

Learn More:

Goldwater Institute: Put Arizona on a Real Budget: New Spending Limit Can Restore State’s Fiscal Health

World Bank: On the Relevance of Freedom and Entitlement in Development

KTAR: Lawsuit challenges AHCCCS cuts as unconstitutional


Comments

  1. Oberserve says:

    I wish the Goldwater would tell itself about what Byron writes here.

    “Commerce Authorities” such as what some Goldwater staff supported, “Broadening the Tax Base” (in other words new taxes), something else the Goldwater Institute supports, or regional policing by police surveillance of law abiding citizens via fusion centers is not “freedom” or pro-free-markets.

    A little consistency from Goldwater would be nice. Is as if they are currently experiencing organizational schizophrenia.

    It seems to have started around the time Mr. John (“I voted against TARP before I voted for it” Bank Bailout) Shadegg joined the Board of Directors.

    • amattclarkson says:

      John Shadegg isn’t on the board of directors at Goldwater. Also, Oberserve doesn’t like equal taxation. Broadening the tax base means taking away tax breaks for specific industries the bureaucracy has “picked to win.” Instead of letting government give tax breaks to industries that lobby them the most, it seems Goldwater is backing an equal taxation of all industries.

  2. Bob in Mesa says:

    Yes Byron,
    I always suck up whatever the “World Bank” tells me to beleive.
    Nice Porn stache.
    And since when do real Arizonans need to listen to the “World Bank” to recognize common sense?

    Byron, why dont you go spend more time sucking up knowledge from your wine and cheese friends that care what the world bank says.

    I know that the Goldwater spends $150,000.00 to get common sense out of Byron, but they could save that money and ask me, and I could tell them that freedom and less regulation are the way to go for free.
    What a waste of money on salary on people that churn out this garbage. You blue haired people in Sun city keep sending your checks!

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