Global investing trap: Economic growth as red herring

First of a three-part series on misconceptions about international investing.

It seems a simple proposition: If you had a choice between investing in a country with an economy that promises rapid growth, or investing in one with flat or stagnant growth—such as the two economies depicted in the chart showing gross domestic product (GDP) growth —which would you choose?

Claim That Tax Cuts "Pay For Themselves" Is Too Good To Be True

Revised July 26, 2006

In recent statements, the President, the Vice President, and key Congressional leaders have asserted that the increase in revenues in 2005 and the increase now projected for 2006 prove that tax cuts “pay for themselves.” In other words, the economy expands so much as a result of tax cuts that it produces the same level of revenue as it would have without the tax cuts.

In fact, however, the evidence tells a very different story: the tax cuts have not paid for themselves, and economic growth and revenue growth over the course of the recovery have not been particularly strong.


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