I may or may not have more to say about this later, but for now I just thought I would call readers' attention to this article, which seeks to paint me as some sort of charlatan for having views today that are different from those I expressed in a book published 28 years ago.
http://www.realclearmarkets.com/articles/2009/10/27/desperately_seeking_the_bruce_bartlett_of_old_97470.html
In fact, my views haven't changed at all. What has changed are the facts, the circumstances, the actual economic conditions that policymakers must respond to. To erstwhile supply-siders like John Tamny it's always 1980--morning in America--and the exact same policies that were appropriate to deal with double digit inflation and interest rates are the exact same policies to deal with deflation and interest rates barely above zero. Moreover, they ascribe virtually magical power to every tax cut ever proposed because once upon a time Ronald Reagan reduced the top rate from 70% to 50% and got some pretty positive economic results. So if it worked once, then we must continue to do it again and again and again forever. (It's pretty absurd to think that temporarily lowering the top rate from 39.6% to 35% was going to yield anything close to the results from lowering the top rate from 70% to 50%, but many so-called supply-siders said it would; one even wrote a book called The Bush Boom, ascribing astonishing effects to this tax change.)
It's human nature to stick with what works and only change when there is strong evidence in favor of it. Normally, this serves people well. But this tendency is easily perverted into a foolish consistency that says we must never change our position on anything, regardless of the circumstances or the evidence in favor of a different position. If people like Tamny want to hold to such a foolish position, that's fine by me. But he and others who claim to be the true believers in supply side economics seem to feel compelled to label me a flip-flopper or an opportunist, rather than deal with the substance of my argument, because I threaten their position or perhaps just make them uncomfortable. (The last time I saw John, a few days ago, he could barely look me in the eye.)
I would welcome a substanive debate on the arguments I raise--which I have been raising for going on six years now. But until lately my enemies have refused to debate except behind closed doors. And then all of their arguments essentially boil down to the idea that there is one policy, tax cuts, that fits every single economic problem in every single economic circumstance. I believe their unwillingness to debate me publicly is because they know in their hearts that their position is intellectually untenable and can only sustain it by avoiding facts and arguments they cannot answer.
And so I had to be sacrificed for the greater good; fired from my think tank job--an action not one single solitary friend of my protested either publicly or privately--and exiled, figuratively speaking. Maybe if I was prevented from having a forum, maybe if the publications I used to write for would stop publishing me, and maybe if my old comrades stood together against me, attacking me for heresy and shaking their heads in sorrow over what I have become, then I would go away or at least turn my attention elsewhere. Perhaps, I would crumble under the pressure and renounce my heresy, in which case I would be welcomed back into the fold. Well, I'm made of sterner stuff and I don't need fair weather friends.
I just published a book, The New American Economy, going into much greater detail about what my views are today and why I hold them. Those that are curious as to who is right should read it and decide for themselves whether Tamny's characterization of me is remotely accurate or just a rationalization for policies he is paid by various organizations to represent. For the record, I don't work for any organization, have no clients or any other special interests paying me to say what I say.
Will Ambrosini ably makes a point I tried to make here before: http://www.ambrosini.us/wordpress/2009/10/bad-economics-from-mcardle/ In times of high unemployment we do not throw out supply & demand thinking. Just because there are fewer job opportunities doesn't mean there are no job opportunities and just because there are fewer taxable profits doesn't mean there are no taxable profits. Lowering tax rates can still stimulate the economy.
I can understand your argument for how the Bush years were a more inappropriate time for Keynesian deficit spending than now, but how would you respond to Tamney's comparison of the present to past recessions in 1920 and 1980?
You might specifically refer to the article's description of Volcker's monetary policies from 1979-1982 as 'disastrous'; my understanding was that his anti-inflationary prescription, while painful in the short term, made much of the future prosperity possible. Otherwise, Reagan's deficit spending would have led to inflation more quickly.
I won't talk smack about Robert Bartley and Jude Wanninski here, but would only observe that surely there are rightish economists of greater stature and accomplishment that might have been cited if Bartley's and Wanninski's views about the Reagan era were widely shared.
Tamny is a strong, vocal believer (or at least claimer) that "tax cuts increase revenues". Not only has he expressed that view in his columns, but in email correspondence with me last year he essentially said that he considered that supposed fact obvious and a view held by "everybody". And when I expressed concern about our long-term fiscal imbalance, and the views of experts that this imbalance presented a serious problem, his response was to scoff at "expert" views by remarking about how wrong the "experts" supposedly were about global warming, another supposed fact he seemed to be presenting as obvious to all. He insisted that low yields on long-term Treasuries mooted whatever the "experts" were saying, and refuted the views of "experts" asserting that the long-term fiscal imbalance was something with which we had to be concerned.
So when reading Tamny's writings, folks should consider the source.
As a side note, I've mentioned before that, unfortunately, Bruce's hyperbolic and puzzling line that (paraphrasing) "tax cuts can't help because there's no income to tax" leaves him wide open for criticism/ridicule, and I see that Tamny takes advantage of that opportunity. That kind of line make sound crisp and perhaps hyperbole is more effective with some people, but it's really a not-so-fastball right down the middle of the plate for anyone to knock out of the park, and thus diminishes one's credibility with many. It may be less entertaining to say something like "Tax cuts would not be nearly as effective at revenue or at stimulating the economy as proponents contend because income is down and tax rates are much lower than they were pre-Reagan" (if that's the argument), but hyperbole -- and puzzling hyperbole at that (since lower income hardly means that providing more incentive for income won't have a positive effect) -- ends up not worth its entertainment value.
Hayekian / anti-Keynesian free market economists were right to slam the tax cu cult of Kemp 30 years ago for pretty much the same reasons you are right to slam it today. That would be a truly consistent position.
Friedman was wrong about "starving government" -- and Kemp never believed in it any way, as his time in the Bush 1 government proved.
Most seriously, your whole position seems to depend on vulgar Keynesianism -- stuff most Ph.D'ed macroeconomists now reject -- and stuff which runs contrary to a macroeconomics which includes capital, e.g. Hayek and Garrison.
The problem isn't your valid criticism of Bush 2, the problem is your failure to see how elements of these same failures existed in Reagan's program -- especially the gift pony in the poop magical thinking that expanded America' growing incapacity for dealing with reality as adults and living within our means in a non kleptocratic society.
Bruce, I just put your book on my Amazon wish list.
You're a hero to me and, I suspect, many other moderates who desperately want to see thoughtful insight and deliberation on key issues rather than what passes for political and economic discourse in today's media.
We need more thinkers - economic and otherwise - who are reality-based problem solvers, not ideologues, rogues and fools.
Glad to hear you are made of "sterner stuff"!
Thanks for your views and stern material! I also used to be a huge fan of the supply side theory. But you are correct in that evidence and assumptions must always be challenged and reexamined. Without that rigor we are doomed to fail in whatever we do.
Keep up the good work and you have a fan here!
Those looking for heavyweight academic backing for the supply-side era of the 1980s and 1990s should review Robert Mundell's work. His famous policy mix -- sound money and tax cuts -- rejected both Keynesian and monetarist demand-side economics in favor of classical, producer-focused economics, and formed the basis of two decades of low inflation and expansion.
Now we are in an era in which A) the neo-Keynesian preference for devalued currency to fix the trade deficit was enacted, leading to a hard asset bubble and financial disaster; B) the Fed is clearly pursuing a monetary policy aimed at stimulating employment rather than maintaining the dollar's declining value; C) The President and congressional majority have declared their preference for higher taxes, especially on capital; D) Clueless Republicans have reverted to balanced-budget economics, rather than pro-growth economics.
John Tamny is stuck in 1980? He should be -- the description above is very similar to the 1970s.
Meanwhile, Bruce Bartlett is stuck in 1998, when a strong-dollar, capital-gains-cutting Democrat ratified the supply-side consensus and the market soared. Today, that consensus is being rolled back in almost every particular, and we're poorer for it.
A strange moment for BB to declare victory and disband the supply-side movement.
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