I've compared the two schools of economic thought in previous posts, around the figure of Jude Wanniski.
http://diaryofarepublicanhater.blogspot.com/2013/07/jude-wanniski-on-difference-between.html
However, at this point I've just begun Lawrence Lindsey's The Growth Experiment which claims that supply side econ was revolutionizing the economy. I say was as he wrote this back in 1990 at the height of the Right wing triumphalism about Reagan and supply side etc.
I do find it a very interesting and critical subject to look at and his book is important as a gauge. At the time he seemed to think that there had been a natural experiment between Keynesianism on the one had and supply side econ on the other and SS had scored more or less a TKO. He believes that the 1981 tax cuts were as clear a test of the Keynesian and SS paradigms anyone could have devised.
The claims for SS are big. Not only does he give the SS inspired Reagan tax cuts the credit for what he claims was the largest peacetime economic expansion in history-which I'm not at all sure was true; we know it isn't now as the Clinton 90s were the largest peacetime economic expansion-he gives the tax cuts credit for whipping inflation a claim that seems very dubious.
He reminds us of the Keynesians who had forecast that Reagan's tax cuts would lead to a huge burst of inflation beyond what it already was and that the deficit would skyrocket. It seems to me that there is no royal flush here for the SSers. Yes, claims that the tax cuts would lead to a huge burst of inflation were totally wrong. However, the claim that this would lead to skyrocketing deficits did indeed come to pass.
Lindsey tries lamely to blame the deficit not on the tax cuts which he claims 'only trivially contributed to the deficits' but on what else? Profligate government spending naturally. This is a very weak claim. If it was liberal government spending one wonders why the Great Cowboy himself didn't put a stop to it. Why wasn't Reagan able to whip the Democrats as they had only the House for the first 6 years of his Presidency while he had his Office along with the GOP Senate?
You have to admit that he signed all this spending into law. Please don't tell me that he couldn't impose his will as the Dems had the House. All he had to do is do what subsequent House Congressional GOPs have done and refuse to sign any of them. He could have just shutdown the government and refused to raise the debt ceiling unless the Dems agreed to a huge cut in government spending and vouchers for both Medicare and SS
Beyond this, we have to wonder why the deficit didn't explode under Carter or during the Kennedy-Johnson 60s or at any time during the New Deal era from the 30s till Reagan's victory. The Dems had the power during this era often with all 3 Houses of power and yet the deficit remained under control. How does he explain that?
Then he even attempts to claim that the tax cuts really did pay for themselves. Huh? Then how did we get the huge deficits if we had more money coming in than went out? I haven't gotten to his more in depth attempts to prove this but, yes, it's clear that 'dynamic scoring' is in the picture.
He claims that the SS 'revolution' supplanted Keynesianism which he claimed was the Old Guard just as Keynesianism defeated the previous Old Guard. Yet, what SS really amounted to was a kind of mutated attempt to return to pre Keynesian economics as it focused on microeconomics and treated demand as only derivative-as dependent on supply; 'supply created its own demand' once again.
I do think that its fitting that he quoted Keynes to the effect that the treatment of the new ideas are criticized as being
1. Totally wrong
2. Nothing new.
That is still the way Keynes' ideas is treated today by even many of the alleged Keynesians in the mainstream Neoclassical establishment. SS wasn't a new idea, it was just more old wine-microeconomics-in new bottles. Of course, 23 years later, Lindsey's triumphalism sounds rather laughable. Judging by what conservatives like Patrick Sullivan say, it seems that the Great White Hope for thinking conservatives at least is Market Monetarism.
Nevertheless, I'd say that SS remains the unofficial economic policy of the Republican party-Sumner also considers himself a SSer as well, as does Lars Christensen so there's no necessary conflict and in truth there is even less than meets the eye. Conservatism doesn't really care whether MM or SS are right just which one has a better shot at crushing the Keynesianism that they hate so much.
http://diaryofarepublicanhater.blogspot.com/2013/07/jude-wanniski-on-difference-between.html
However, at this point I've just begun Lawrence Lindsey's The Growth Experiment which claims that supply side econ was revolutionizing the economy. I say was as he wrote this back in 1990 at the height of the Right wing triumphalism about Reagan and supply side etc.
I do find it a very interesting and critical subject to look at and his book is important as a gauge. At the time he seemed to think that there had been a natural experiment between Keynesianism on the one had and supply side econ on the other and SS had scored more or less a TKO. He believes that the 1981 tax cuts were as clear a test of the Keynesian and SS paradigms anyone could have devised.
The claims for SS are big. Not only does he give the SS inspired Reagan tax cuts the credit for what he claims was the largest peacetime economic expansion in history-which I'm not at all sure was true; we know it isn't now as the Clinton 90s were the largest peacetime economic expansion-he gives the tax cuts credit for whipping inflation a claim that seems very dubious.
He reminds us of the Keynesians who had forecast that Reagan's tax cuts would lead to a huge burst of inflation beyond what it already was and that the deficit would skyrocket. It seems to me that there is no royal flush here for the SSers. Yes, claims that the tax cuts would lead to a huge burst of inflation were totally wrong. However, the claim that this would lead to skyrocketing deficits did indeed come to pass.
Lindsey tries lamely to blame the deficit not on the tax cuts which he claims 'only trivially contributed to the deficits' but on what else? Profligate government spending naturally. This is a very weak claim. If it was liberal government spending one wonders why the Great Cowboy himself didn't put a stop to it. Why wasn't Reagan able to whip the Democrats as they had only the House for the first 6 years of his Presidency while he had his Office along with the GOP Senate?
You have to admit that he signed all this spending into law. Please don't tell me that he couldn't impose his will as the Dems had the House. All he had to do is do what subsequent House Congressional GOPs have done and refuse to sign any of them. He could have just shutdown the government and refused to raise the debt ceiling unless the Dems agreed to a huge cut in government spending and vouchers for both Medicare and SS
Beyond this, we have to wonder why the deficit didn't explode under Carter or during the Kennedy-Johnson 60s or at any time during the New Deal era from the 30s till Reagan's victory. The Dems had the power during this era often with all 3 Houses of power and yet the deficit remained under control. How does he explain that?
Then he even attempts to claim that the tax cuts really did pay for themselves. Huh? Then how did we get the huge deficits if we had more money coming in than went out? I haven't gotten to his more in depth attempts to prove this but, yes, it's clear that 'dynamic scoring' is in the picture.
He claims that the SS 'revolution' supplanted Keynesianism which he claimed was the Old Guard just as Keynesianism defeated the previous Old Guard. Yet, what SS really amounted to was a kind of mutated attempt to return to pre Keynesian economics as it focused on microeconomics and treated demand as only derivative-as dependent on supply; 'supply created its own demand' once again.
I do think that its fitting that he quoted Keynes to the effect that the treatment of the new ideas are criticized as being
1. Totally wrong
2. Nothing new.
That is still the way Keynes' ideas is treated today by even many of the alleged Keynesians in the mainstream Neoclassical establishment. SS wasn't a new idea, it was just more old wine-microeconomics-in new bottles. Of course, 23 years later, Lindsey's triumphalism sounds rather laughable. Judging by what conservatives like Patrick Sullivan say, it seems that the Great White Hope for thinking conservatives at least is Market Monetarism.
Nevertheless, I'd say that SS remains the unofficial economic policy of the Republican party-Sumner also considers himself a SSer as well, as does Lars Christensen so there's no necessary conflict and in truth there is even less than meets the eye. Conservatism doesn't really care whether MM or SS are right just which one has a better shot at crushing the Keynesianism that they hate so much.
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