Hey, look at Iceland!
Stuck in the economic doldrums just a few years ago, Iceland today is enjoying an explosion of prosperity.
In fact, Iceland is now one of the world's richest nations, according to the World Bank. And it's arguably the wealthiest European country.
The economy is growing rapidly. The GDP (Gross Domestic Product) has grown about 50% since 1995. And the benefits are being felt throughout Icelandic society. Unemployment has almost disappeared -- dropping below 2 percent.
As a writer for the UK Spectator bluntly put it: "Today, Icelanders are absolutely rolling in it."
So what happened? Lots of lucky lottery ticket winners? Nope. Beginning around 1990, Icelandic leaders -- inspired by visits from libertarian free-market thinkers like Friedrich Hayek, Milton Friedman and James Buchanan -- instituted bold, fundamental free-market reforms.
Taxes were slashed, for both individuals and businesses. Personal income tax rates were cut from 33 percent in 1995 to 22.75 percent. The corporate tax rate was cut from 55 percent to 18 percent -- and a further cut to 10 percent is under consideration. A cumbersome income tax was replaced with a flat tax.
Wealth and estate taxes were slashed. Major segments of the economy were deregulated. Numerous government services were privatized. Monetary policy was stabilized; inflation, which hit 100% in 1983, is down to 2-3% today.
Government debt was hacked away. Private property rights were created for
fisheries, a major Icelandic industry. And so forth.
Due to such market-oriented reforms, between 1990 and today Iceland rose from 26th to 9th in the Economic Freedom of the World rankings (a respected annual ranking of countries by the amount of economic freedom they permit).
The result: Iceland is enjoying the same remarkable progress that other countries around the world which have adopted similar policies have also seen.
Lesson, anyone?
(Sources:
Cato Institute: http://www.cato.org/pubs/tbb/tbb_0207-43.pdf
NCPA: http://www.ncpa.org/sub/dpd/index.php?page=article&Article_ID=14288
Wall Street Journal: http://www.mps-iceland.org/img/WSJ-HHG.pdf
Thanks to Larry Alexander)
