Breakdown by Nation

Classical Economic Principles

The most important ideas in economics emerged more than two centuries ago. What makes these ideas classical is not the era they came from, but their very nature. They are classical principles because they are so basic, and so fundamental, they are timeless.

Liberty and freedom form the basis for classical economic principles. When individuals and markets are free from onerous and capricious government intervention, individuals prosper. And, when individuals prosper, nations prosper.

Over the past two centuries, there have been many refinements to classical economic principles. Some of these refinements have confused and misled people about this important subject. Economics is easy to understand when we recognize and discard much of the chaff that is too often present. Dr. G maintains that every major financial crisis in the past century, including the most recent one, was the result of placing too much power in the hands of government officials, who had no idea how to use it.
Understanding classical economics principles can’t prevent inept government officials from implementing destructive policies. However, understanding classical principles will help you to recognize and prepare for the consequences of misguided government policies. In so doing, these principles can help you to protect both your income and your wealth.

What Are Classical Principles?

Why classical principles are important and what they can do for you.
Developing the data used in Rich Nation/Poor Nation involved hundreds of excel worksheets. When the historical data are available, the series go back as far as 1820. Whenever raw data are available, they are in their separate worksheet. The main worksheets then link to the original data. The data shown in the files shown above are those in the main worksheets. Those interested in the entire set of excel worksheets should contact Dr. Genetski

The field of economics can be broken down to be understood quite simply. The main challenge of economics is to find a way to produce the things that people want in the most efficient way possible. Fortunately, economists solved this challenge over 200 years ago. At that time, the classical economists argued that people will naturally produce the things that others want, in the most efficient way possible, so long as they have the right environment. That environment consists of only four things; low taxes, free markets, protection of private property and a stable price environment. Over the past two centuries, whenever economic policies in any country have moved in the direction of lower taxes, freer markets, greater protection of private property and lower inflation, people have prospered. Whenever policies have moved away from these principles, economic trends have been disappointing.

​During the past half century, the wisdom of the classical economists has become obvious to any who take the time to look at the evidence. A movement away from classical economic policies led to inefficiencies, shortages and a sharp drop in living standards in the during the 1970s. In the early 1980s, the Reagan tax cuts and a return to classical policies produced the most dramatic turnaround in economic performance in the nation’s history. Inflation and interest rates plummeted while productivity and living standards improved dramatically. Politicians with their own agenda (and with little understanding of economics), often point to the large federal budget deficits that appeared in the wake of the Reagan tax cuts as an indication of a failed policy. These politicians ignore the improvement in the economy in the 1980s and the sharp increases in government spending that accompanied the tax cuts.

There is a widespread belief that spending by the federal government stimulates spending in the rest of the economy. Dr. G’s research on the impact of federal spending shows the opposite tends to be true. Rapid growth in federal spending tends to weaken the private sector and hence weaken the economy. Read more below on different components and trends of the economy.