Reforms boost the economy - and benefit politicians

IEA releases groundbreaking new book on economic liberalisation by Johnny Munkhammar

(Click
here to download (free of charge) Living with Leviathan: Public Spending, Taxes and Economic Performance , the prize-winning IEA book that demonstrates the economic case for smaller government.)

Free-market reforms have not just produced remarkable economic results in a number of countries – they have also led to re-election for reformist governments, says a groundbreaking new book released today by the Institute of Economic Affairs*.

The Guide to Reform** by Johnny Munkhammar*** busts several common myths about reform. First of all, almost all reform-embracing governments in OECD countries have been re-elected. It is also untrue that liberalising reforms have socially adverse consequences: on the contrary, incomes and employment have often increased the most amongst low-income groups. Neither is an economic crisis necessary for reform – several countries have reformed in good times.

The experience of countries like Estonia, Spain, New Zealand, Australia, Sweden, Iceland and Ireland provide important lessons for politicians in moribund economies such as France and Italy. The book visits more than a dozen countries and describes what they did and how they did it. This shows that, contrary to common belief, many countries have actually substantially reformed immigration, health care, pensions, taxes and labour markets.

The results from reforms have often exceeded expectations. The book is filled with facts from well established sources about the results as well as the need in all OECD countries to launch further reforms. Employment has risen by more than 50 per cent in Ireland during the past ten years. Average disposable income has increased by 140 per cent in Slovakia during the same period. Australia managed to achieve a rate of entrepreneurship more than twice as high as in the UK – a whole 14 per cent of the adult population take part in entrepreneurial activity. Spain managed to integrate almost 2 million immigrants in the labour market in ten years. Clearly, there are obstacles to reform, but also ways round them – it is a matter of strategy.

Having demonstrated the economic benefits of reform, Munkhammar explains how politicians can implement such a programme. The conclusions are practical, with a list of points about how to go from knowledge about the need for reform to political action. The message is essential for the future of Europe and the prosperity of Europeans. It is particularly relevant for opposition parties in the UK today: they should not be afraid of reform.

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