Wednesday, May 15, 2002
Supply-side economics not borne out by evidence
You do readers a disservice by presenting the views of Jack Kemp. While he offers statistics and many self-congratulations, his supply-side economics is a matter of political faith that is not borne out by evidence.
For example, his May 8 column goes through a sequence of statistics and comes up with "after-tax returns to profit and labor must rise," by which he means more tax cuts. Never mind that the original Bush tax cuts were followed immediately by a recession that -- if it has ended -- has ended in a period of near stagnation. Never mind that in our own state the tax cuts following Initiative 695 did nothing to stimulate our economy and probably hurt us statewide. Never mind that the same policies were tried in the 1980s with the result of tremendous government deficits. Never mind that the same policies under Bush II are yielding the same results. Never mind that the high tax regimes of Europe have produced excellent growth and quality of life for their citizens, not the quagmire imagined by Kemp.
Supply side is a bankrupt economic idea, no matter its wealth of right-wing political exponents such as Kemp. Our own state recently commissioned a report that showed tax rates placed a distant seventh in importance with regard to business siting decisions. The list was led by "market." A market economy will always be led by the market -- the demand side of the equation. The market is composed of demand from consumers, business and government. The sooner we learn this, the better off we'll all be, including the business interests that Kemp counts as his constituents.