Monday, March 05, 2012

Trickle Down Economics Redux

Former Reagan administration budget directer David Stockman said that trickle down economics was designed to create deficits, that would justify cutting entitlement programs. The Reagan administration never expected trickle down economics to increase economic growth. Stockman also notes that trickle down economics was renamed supply-side economics because voters would not believe that they would somehow benefit from the wealthy getting tax cuts.

Gregory Mankiw served as Chairman of Council of Economic Advisers, under President George W. Bush. Paul Krugman noted that Mankiw has little respect for the Reagan economic team creating supply-side economics.

Consider Mr. Mankiw, in particular. Modern Republicans detest Keyes; Mr. Mankiw is the editor of a collection of papers titled "New Keynesian Economics." In an early edition of his best-selling textbook, he dismissed supply-side economics - the doctrine embraced by the sainted Ronald Reagan - as the creation of "charlatans and cranks." And, in 2009, he called for higher inflation as a solution to the economic crisis, a position anathema to Republicans like Paul Ryan, the chairman of the House Budget Committee, who warn ominously about the evil of "debasing: our currency.

Even Republican economists admit that supply-side economics is bullshit. Remember that the next time you hear Gov. Rick Scott and GOP presidential candidates talk about how tax cuts for the rich will magically create jobs for the middle class.

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