Tuesday, June 21, 2011

From Liberal to Libertarian: The Power of Compounding

Why do some on the left evolve into libertarians? In one word, "compounding".

Leftists tend to think that the huner of the impoversihed is more important than economic growth. So they support programs that penalize incentive, therby making the poor better off and total share of the pie smaller than it could be.

But when on studies economics, one can understand the importance of economic growth moving at 4% rather than 2%. An economy growing at 2% will double in approximately 35 years. An economy growing at 4% will double in approximately 17.5 years.

So think about that, that's a much bigger pie. A pie so large that much more will be donated to charity. An economy with no safety net growing at 4% will eventually donte more to charity than the entire social welfare net of an economy growing at 2%. If not in 17.5 years, 35 years, then perhaps in 100 years.

That's the power of compounding.

Labels: ,


Post a Comment

Subscribe to Post Comments [Atom]

<< Home