Sunday, October 30, 2016

JFK and the Reagan Revolution

I decided to watch Meet the Press which had Lawrence Kudlow on as a panelist. It seems he has written a book with Brian Domitrovic, which fellow wingnut John Tammy reviewed:
In writing their book, the authors set out to remind readers that life – and by extension economic growth – isn’t that complicated. It’s as basic as a low tax/sound money policy mix. Years ago Kudlow’s teaching of the correct policy mix was broadened to include free trade and light regulation, and that hasn’t changed ... The authors assert that “Both Kennedy and Reagan identified substantially cutting income tax rates and getting the dollar strong and stable as the specific policy mix that would let the private sector, which is to say the real economy, thrive.” ... Broken down to the individual we can easily see that no individual is made more prosperous if more and more of his income is confiscated through taxation. And as individuals take money in return for their production, their prosperity is surely not enhanced by devaluation of the very dollars, Pounds, euros, yen, and yuan they earn. Economists in the discredited economics profession have for the longest time believed in high taxes, and they still believe devaluation is great.
I’ll stop right there as I cannot bear to quote Tammy’s claim that the supply-siders are economic geniuses and that the member of Kennedy’s Council of Economic Advisers know nothing about macroeconomics. Tammy seriously misrepresents the economic discussions of the 1960’s, which I presume he drew from this book. That Kudlow believes tax cuts for the rich is the source of all good things on earth is nothing new but this obsession with dollar appreciation is just appalling. Of course this fits in nicely with the economic stupidity of Donald Trump. But let’s remind these supply-siders of the 1982 recession. The 1981 tax cut may not have directly caused this disaster but it certainly appalled the Federal Reserve enough to go for a second round of tight monetary policy. The toxic mix of fiscal stimulus and tight monetary policy led to a massive dollar appreciation which severely reduced net exports. Does John Tammy and Lawrence Kudlow not remember this?

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