Tuesday, June 25, 2013

Jonathan Chait — Republican Harvard Economist Writes Terrible Defense of the One Percent

Gregory Mankiw plays a small but important role in the political ecology: an accomplished Harvard professor who validates Republican economic policies. It’s almost impossible to find empirical support for debt-financed tax cuts, but when George W. Bush proposed them, Mankiw and his Harvard pedigree were there to reassure that they were “fiscally responsible” and would surely lead to higher growth. The failure of these reassurances to come true has not prompted Mankiw to reassess his thinking. That’s because the fundamental basis for his beliefs about such matters has nothing to do with economics. Mankiw believes rich people deserve to keep their money, regardless of economic consequences.
Now, many conservatives share this belief, but since it is unpopular, they instead argue that higher taxes on the rich hurt the non-rich. Mankiw, to his enormous credit, does not conceal his agenda. He lays his agenda on the table in the form of a paper, “Defending the One Percent,” explicating his beliefs. In so doing, Mankiw — perhaps admirably, or at least bravely — ventures completely outside his area of expertise, economics, into moral philosophy. The result is — well, there’s no other way to put it. It’s an embarrassing piece of ignorant tripe.
New York Magazine
Republican Harvard Economist Writes Terrible Defense of the One Percent
Jonathan Chait

Professor Mankiw is at least up front about his conservative rationale: "Some people are better than others" and therefore deserve more. That they have more is sufficient proof that they are better than those that have less. Yeah, he actually uses this as the basis of his argument.

5 comments:

F. Beard said...

"Some people are better than others" and therefore deserve more. That they have more is sufficient proof that they are better than those that have less. Tom Hickey

That argument does not hold water given the existence of the government-backed backed credit cartel which exists for the benefit of the rich and other so-called "creditworthies" and to exploit everyone else.

Bob Roddis said...

Isn't "debt financed tax cuts" part of MMT? As opposed to spending money out of thin air without concern for tax receipts. Meant as a serious question.

Tom Hickey said...

"Debt-financed tax cuts" refers to the failure of Art Laffer's argument, based on his eponymous curve, that purports to show that tax cuts "pay for" themselves, that is, result in more revenue than they cost. Evidence shows that they don't. But that hasn't stopped fiscal conservatives that demand "discipline" in spending from pushing tax cuts that increase the fiscal deficit.

MMT regard all this as misguided analysis, based on a lack of understanding of monetary economics.

Matt Franko said...

Bob,

govt SPENDS FIRST and THEN collects the taxes...

So there are no "debt financed" tax cuts... these are flow adjustments that you see...

govt currently has authority (tremble at this word Bob!) to spend on whatever it deems to be in the public's best interest...

rsp,

paul said...

"govt SPENDS FIRST and THEN collects the taxes..." - Matt

Exactly.

Spending funds taxes.