Mr. Obama praised Reganomics as a 'sense of dynamism and entrepreneurship that had been missing,' while Bill Clinton called it 'a Gilded Age of greed and selfishness, of irresponsibility and excess, and of neglect.' (see Debunking the Reagan Myth) So, who makes more sense?
In recent years, we witnessed two round of massive tax cuts, based on idea of supply side economics.
It tried to provide an alternative to Keynesian economics which could not 'prevent or even moderate business cycles, rising inflation, and a bias
toward the public sector at the expense of the private sector' according to supply side economics. (see Bush's tax-cut talk more keynesian than Reaganesque)
The rise of supply side economics and its practice leave the Federal Reserve as the only viable player when facing economic crisis. Just today,
Yet, the possibility of low investment cost not always lead to a right correction path. Just take a look at tech bubble in late 19990s (see Who Benefited from the Tech Bubble? an Interview with Michael Hudson) and subprime mess (see Economists Brace for Worsening Subprime Crisis) we are facing now. No investor would put money in an alternative if there's a promising high rate of return, even if the assumption seems unrealistic or somewhat distorted. The resulting dynamism is a dangerous tide which in many cases boarded on irresponsibility.
Technorati Tags: Obama, Clinton, supply side, Keynesian, Federal Reserve, irresponsibility
In recent years, we witnessed two round of massive tax cuts, based on idea of supply side economics.
In 1974, a group of economists and journalists got together in a bar and
launched supply-side economics. It was a superb political and economic
package. It addressed a big problem: stagflation. It had a clear policy
focus: marginal tax rates. It celebrated a certain sort of personality:
the risk-taking entrepreneur. It made it clear that the new,
growth-oriented Republican Party would be different from the old,
green-eyeshade one. (see Middle-Class Capitalists)
It tried to provide an alternative to Keynesian economics which could not 'prevent or even moderate business cycles, rising inflation, and a bias
toward the public sector at the expense of the private sector' according to supply side economics. (see Bush's tax-cut talk more keynesian than Reaganesque)
The rise of supply side economics and its practice leave the Federal Reserve as the only viable player when facing economic crisis. Just today,
The Federal Reserve, responding to an international stock
sell-off and fears about a possible United States recession, cut its
benchmark interest rate by three-quarters of a percentage point on
Tuesday. (see Fed Cuts Rate 0.75%, but Dow Drops)
Yet, the possibility of low investment cost not always lead to a right correction path. Just take a look at tech bubble in late 19990s (see Who Benefited from the Tech Bubble? an Interview with Michael Hudson) and subprime mess (see Economists Brace for Worsening Subprime Crisis) we are facing now. No investor would put money in an alternative if there's a promising high rate of return, even if the assumption seems unrealistic or somewhat distorted. The resulting dynamism is a dangerous tide which in many cases boarded on irresponsibility.
Technorati Tags: Obama, Clinton, supply side, Keynesian, Federal Reserve, irresponsibility
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