Jon Kyl's Farewell Address
4:52 PM, Dec 19, 2012 • By MICHAEL WARREN
“Policymakers must focus on the basic laws of economic inputs. A faulty view has gained traction in recent years: that consumption, fueled by government spending, actually creates economic growth. It doesn’t. It just moves money around, taking from people who produced it and could productively spend or reinvest it, and giving it to government to spend. Consumption is the wrong target.
“People only change their spending habits when they know that they will have greater consistent income over time—for example, when they receive a raise at work or get a permanent tax-rate cut. That’s why temporary ‘stimulus’ tax gimmicks don’t work.
“If the problem with the economy is supposedly a lack of consumption, the government can’t solve that problem by spending for us. After all, it’s our tax money that’s being taken out of the economy and spent. And when the government borrows, it will eventually have to tax the people to pay back what was borrowed. There is no free lunch. For the government to spend, taxpayers have to give up wealth that they could have spent or invested. Keynesian, demand-side economics assumes that the government is more efficient at spending our money than we are. This assumption has proved incorrect time and again.
“Wise policymakers will find the right balance between the need for more tax revenue and the need for more economic freedom. They will remember that there is no fixed economic pie legislators should try to divide. They will remember that labor, capital, and technology are the real factors that drive long-term economic growth, not government spending. They will stop shackling would-be entrepreneurs and job creators with ever more burdensome regulations.
“And here’s some more good news about growth-based free enterprise. It is the most moral economic system ever devised, for three reasons. First, it is premised on the truth that success only comes by supplying something to others that they really need or want. In the bargain, both sides benefit. Second, this system has produced incredible wealth around the world, lifting millions out of poverty. No economic system can come in helping people. So, it is the most moral economic system in providing material benefits.
“But, free enterprise provides more than increased income and material prosperity. Those things help, but they aren’t what make humans really thrive. The key determinant of lasting happiness and satisfaction is what American Enterprise Institute President Arthur Brooks has called ‘earned success.’ People are happiest when they do something they are good at—when they create value in the lives of others—and genuinely earn their income, regardless of how much it is.
“Brooks put it very well in his book The Battle: ‘Earned success gives people a sense of meaning about their lives. And meaning also is key to human flourishing. It reassures us that what we do in life is of significance and value, for ourselves and those around us. To truly flourish, we need to know that the ways in which we occupy our waking hours are not based on mere pursuit of pleasure or money or any other superficial goal. We need to know that our endeavors have a deeper purpose.’
“The earned success that comes from doing a job well explains why fabulously wealthy people often choose not to retire after they have earned their fortunes. They’re motivated by the satisfaction that comes from spending the day productively—creating, innovating, and solving problems. They’re creating purpose-driven value in their own lives and oftentimes tangible value in the lives of others.
“The effect of earned success also explains why people who win the lottery often become depressed when they find out that free money offers hollow joy.
“Because free enterprise promotes freedom to achieve, and, therefore, more opportunities to earn success, it is the most moral economic system ever created. It is also the fairest system because it rewards merit, hard work, and achievement. This is what brought my grandparents to this country, along with millions of other immigrants. Incidentally, real free enterprise has no place for crony capitalism because it doesn’t have government picking winners and losers.