Writing at the Cato Insititue blog, Chris Edwards believes he has found the Ann Coulter of the left:
For those who think that it’s just conservatives, such as Ann Coulter, who are mean-spirited, they should check out the new book by Jonathan Chait, a senior editor of the New Republic, entitled The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics.
I managed to get through the introduction and first chapter of Mr. Chait’s book. Alas, I could read no more. Here are some of Chait’s characterizations of supply-side economists and supply-side economics-from the 1970s to the present day-in those first 44 pages:
Pseudo-economists, cult of fanatical tax-cutters, amateurs and cranks, patently ludicrous ideas, preposterous ideas, theological opposition to taxation, ideological fanatics, insane, detachment from reality, extremism of their agenda, triumph of the extreme, a cult, quasi-religious, totalistic ideology, crank doctrine, sheer monomania, plain loopy, magical, sheer loons, deranged, wingnuttery, utterly deluded, crackpot economic theories, lunacy, ludicrous, etc.
Having read and thoroughly enjoyed Chait’s book, I think I can point to an obvious area of disanalogy between Chait and Coulter. Chait uses harsh language, but then provides arguments and data to back it up. Coulter, by contrast, fills her books with a mix of outright lies and misleading propaganda. Some ideas and people deserve to have harsh rhetoric thrown at them, and devotees of supply-side economics certainly qualify.
Things get worse when Edwards actually tries to engage Chait’s arguments:
Interestingly, Chait ends the first chapter arguing that “Tax rates under 40 percent simply do not have much effect on economic behavior.” Thus, he seems to be admitting that all those crackpots back in the 1970s and 1980s who cut income tax rates from 70% to the pre-Bush 40% might have been right after all.
This is really silly. First, stating that tax rates under 40% have little effect on economic behavior in no way implies that tax rates over 40% are too high. So Edwards’ logic is incorrect.
More to the point, however, is that Chait is very clear that there are circumstances where cutting taxes will lead to increased government revenue and increased growth. Like all pseudosciences, supply-side economics has a little nugget of truth at its core. What Chait describes as loopy in his book is not the mere idea that cutting taxes can sometimes spur economic growth. Rather, it is the fanatical obsession with tax rates as the sole determinant of economic health, to the exclusion of virtually all other factors that is insane. But that is precisely what has characterized the economic policy of the right in recent years.
A convenient example is the right-wing response to Clinton’s first budget . The budget contained small tax increases on very wealthy people with tax cuts for the middle-class and the poor. The right-wing verdict was unanimous and unambiguous: Raising taxes on the rich will curtail economic growth and cause a recession. End of story. Not one single Republican voted in support of it. I recall one Republican politician describing it as Clinton’s Dr. Kevorkian budget. Chait includes many other choice quotes on the matter in his book.;
We all know what happened. The economy boomed like never before in the nineties. So the supply-siders scrambled for explanations. Some pointed to the tech bubble, others to something or other Reagan did, still others to many reasons besides. But that is precisely the point. It is insanity to point to one variable, marginal income tax rates, and use that as the sole basis for a prediction about the behavior of the economy. That, alas, is what supply-siders try to do. (Incidentally, I am not saying that the desperation moves taken by supply-siders to explain away their comically wrong predictions about Clinton’s economic policies are correct. That’s a subject for a different post).
Alas, Edwards is not yet done being foolish:
Finally, note that for Chait’s supply-side conspiracy theory to work, the cult would have had to include governments of every major industrial nation, because they have all cut top marginal rates since the 1970s. The top individual income tax rate across the 30 OECD countries has plunged by 26 percentage points since 1980. If that’s wingnuttery, then I’m all for it.
Which would be a fine point if “cutting top marginal rates” were the last word in supply-side economics. We have already seen that is not the case. There are circumstances in which cutting taxes leads to increased growth and revenue. That’s not controversial. The delusional part of supply-side ideology is thinking that those circumstances always obtain.