Tuesday, May 4, 2010

Some Links On Supply Side Economics

Found this through Douthat's blog, Kevin Williamson from the National Review discusses supply side economics and how it is being misused. Good stuff.

What we also need though, is for conservatives to acknowledge that spending has a multiplier effect so if you cut it you'll also reduce revenues (and growth and GDP) so you won't get dollar for dollar cuts. And if you go wrong enough you may see an absolute decline by more than the spending cost, though instances of this are trivially rare and would be pushing too far.

On the other side, the left needs to acknowledge that tax cuts do spur revenue growth and that the multiplier effect is often rather lower than they'd like to believe. Of course, I do think most on the left knows that tax cuts can spur revenue growth so maybe I should be more precise and say they need to acknowledge that you can only tax the rich so much more before you start cutting investment. I could also add acknowledge the need for dealing with the deficit and entitlements but I think the message has been received here as well, even if there is no panic yet.

Then, now that we're all one big happy family, we can start having a serious conversation about the long term balance between taxation and what we want for our money. Maybe even a frank discussion about the role of the state. And then maybe we'll all live in a utopia able to give every little girl a pony. Or something.

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