The Rahn Curve
As I head off to Las Vegas for an exceptionally inspiring conference called FreedomFest, I thought I’d leave you with a great video from my friend Dan Mitchell about the Rahn Curve, (developed by Richard Rahn) which graphically illustrates the relationship between the size of government and the economic success of a country. On the one extreme, anarchy is incredibly expensive and suppresses productivity. On the other extreme, an large government, with onerous tax burdens is also debilitating for an economy. As an investment advisor I watch the direction the nation is taking, as over the long-run that will affect overall GDP and investment opportunities. We are currently on a disconcerting trajectory of government expansion, with increasing sovereign debt and onerous rules and regulation to control and limit the growth of business. While Europe moves away from Keynesian economics as they realize the consequence of entitlement programs they cannot afford, we continue to expand ours.
