Principle #4

When likened to a ship, the U.S. economy has three permanent ANCHORS:

1) Taxation

2) Regulation

3) Litigation

These three industries account for over 35% of the U.S. Gross Domestic Product.

All taxes (especially income, property, and sales taxes) suppress growth.

For example, taxation puts money in the hands of bureaucrats who use my money less efficiently than I can. This always has a negative effect on the economy (crowding out effect).

Regulations on imports in the form of quotas and tariffs will limit competition and ultimately raise prices on imported and domestic goods. This also has a negative effect on the economy because if the prices are not able to tell the truth (artificially inflated prices), then you will eventually have a reduction in demand (increase in supply) and a shrinking of the industry.

Litigation also has a negative effect on the economy because it does not produce anything. The money gets wasted in the court system or on lawyer's expenses.