Tuesday, October 19, 2004
And the kitchen sink....
A simple but true premise has been obscured in this nation’s debates about the economy. If you tax something, you get less of it. The price goes up and the quantity demanded goes down. There are many other factors that can affect this, and in the rare occurrence the numbers do not change. But the premise is still true.
The simple words “supply side economics” have a dangerous ability to obscure this truth. Visions of obscene deficits, absurd prophecies, and the disdain of the intellectuals trail behind these words. The questions about the facts of tax cuts: do they encourage work, how do they affect deficits, and how do they affect growth, are couched in political slogans. And this impoverishes our political discourse.
This poverty is particularly dangerous because there are very good reasons for a serious reform of our tax laws. High tax rates limit labor and capital formation rates. This idea is debatable but it is not crack pot. Nobel Prize winners such as Milton Friedman, Gary Becker, and Robert Lucas have made these points for years. And one of the two current Nobel Prize winners, Edward Prescott, has said the same thing this week.
But we have not heard about this in the New York Times, CNN, or in any of the mainstream media. In truth, that is probably too much to expect. But why has the Bush Campaign not loudly and repeatedly proclaimed the support of Professor Prescott and the other Nobel winners? Bush is fighting to repair our destructive tax system. To win this fight, he needs to battle in a public forum with all his resources in play. Let us hope that in the (potential) second term the President realizes this.
The simple words “supply side economics” have a dangerous ability to obscure this truth. Visions of obscene deficits, absurd prophecies, and the disdain of the intellectuals trail behind these words. The questions about the facts of tax cuts: do they encourage work, how do they affect deficits, and how do they affect growth, are couched in political slogans. And this impoverishes our political discourse.
This poverty is particularly dangerous because there are very good reasons for a serious reform of our tax laws. High tax rates limit labor and capital formation rates. This idea is debatable but it is not crack pot. Nobel Prize winners such as Milton Friedman, Gary Becker, and Robert Lucas have made these points for years. And one of the two current Nobel Prize winners, Edward Prescott, has said the same thing this week.
But we have not heard about this in the New York Times, CNN, or in any of the mainstream media. In truth, that is probably too much to expect. But why has the Bush Campaign not loudly and repeatedly proclaimed the support of Professor Prescott and the other Nobel winners? Bush is fighting to repair our destructive tax system. To win this fight, he needs to battle in a public forum with all his resources in play. Let us hope that in the (potential) second term the President realizes this.
