It seems the economic policy known as ‘supply-side’ has made a comeback in the U.S. under Donald Trump.
The underlying idea was, I understand, proposed by Arthur Laffer in the 1970s and formed the basis of Ronald Reagan’s approach in his presidency. The claim is that if taxes are reduced, society as a whole will benefit because of increased economic activity, and government revenue will actually increase because of the economic growth.
Now I’m not an economist, but I do remember that Reagan’s policy was labelled ‘voodoo’ economics by George H. W. Bush.
As well, supply-side has been criticized for benefiting mostly the wealthy. So it’s no surprise that Trump would want to follow Laffer’s ideas.
Which leads to the pop quiz:
Supply-side economics is:
- Laffer bull____
- Laughable
- Both
Answer: 3
Numeracy Footnote:
How high can you count – if you’re a supply-side economist?
In looking around the internet on this topic, I came across a column on Forbes.com from late last year. It was written by Brian Domitrovic, an economist at Sam Houston State University in Texas. In 2016, he co-authored a book with Larry Kudlow, currently Trump’s Director of the National Economic Council and a long-time advocate of supply-side. The column contained the following: The four semi-immortal words of George H. W. Bush were “voodoo economic policies”.