Government Policy, Saving and Investment

Abstract

The author examines the role of government in its influence upon saving and investment and disputes the argument that past government policy with respect to income redistribution, high marginal tax rates, and social security have depressed national saving. With respect to investment he argues that government policy over the past thirty years has encouraged private investment and that currently more attention should be given to public investment in research, roads, health, and all forms of human capital, including job training and education generally. Although many of the arguments in the article are subtle, reference to a prior specific econometric prediction of the effects of tax cuts upon investment permits the author to say “I told you so.”