12-05-2016, 02:41 AM
(12-05-2016, 12:38 AM)Bob Butler 54 Wrote:(12-04-2016, 08:47 PM)Warren Dew Wrote:(12-04-2016, 07:39 PM)Bob Butler 54 Wrote:(12-04-2016, 05:15 PM)Warren Dew Wrote: You're confused about what supply side economics is. See my to playwrite for an explanation. It's not about investment at all.
As I see it, Mikebert is using the Reagan era's original meaning for 'supply side', but like 'neocon' the phrase 'supply side' has come to take on new meanings. You probably shouldn't argue about which use of the phrase is the correct one, but rather each might try to understand what the other is trying to say.
Radical thought, I know...
Actually, I'm the one using Reagan's original meaning. Mikebert is using the leftist propaganda version, though he may not realize it. Apparently you've bought in to the leftist propaganda version too.
Granted Reagan played up the Laffer curve, which is a rather minor aspect of supply side economics, to sell it to the Republicans who preferred austerity. His job was to fix the economy, after all, not to turn everyone into economists. That said, it should be obvious that supply side economics is primarily about the supply curve and the supply of goods and services, and not primarily about the laffer curve.
The University of California at Santa Barbara has an American Presidency Project, featuring notable speeches and documents from various presidencies. Reagan's entries include "White House Report on the Program for Economic Recovery" from February 18, 1981. Four key paragraphs provide the summary.
Quote:The leading edge of our program is the comprehensive reduction in the rapid growth of Federal spending. As shown in detail below, our budget restraint is more than "cosmetic" changes in the estimates of Federal expenditures. But we have not adopted a simple-minded "meat ax" approach to budget reductions. Rather, a careful set of guidelines has been used to identify lower-priority programs in virtually every department and agency that can be eliminated, reduced, or postponed.
No doubt or question that small government is a key element of Reaganomics. While the cuts might arguably have started as 'careful', as time passed, deficits grew and confrontation between parties escalated, one might argue that a meat axe came into play.
How does this jive with the claim by you on the left that Reagan ran up spending and deficits?
In fact, few of Reagan's proposed cuts ever happened at all, because the Democrats in Congress insisted on retaining the pork. We're just lucky the rest of Reagan's economic plan performed so spectacularly that continued growth in spending was sustainable.
Cuts in spending, while a nice idea and one that I would have approved of, were never part of Reaganomics as implemented. Nor did they ever have anything to do with supply side economics; rather, they stemmed from Reagan's libertarian views.
Quote:Quote:The second element of the program, which is equally important and urgent, is the reduction in Federal personal income tax rates by 10 percent a year for 3 years in a row. Closely related to this is an incentive to greater investment in production and job creation via faster tax write-offs of new factories and production equipment.
This is where I am coming from, and likely Mikebert. Cut taxes and tweak tax codes to increase investments is one of the four pillars of Reaganomics.
The first part of this, across the board income tax cuts for all individual income tax brackets, supports my view and not yours. Those are cuts for wage earners to increase the incentive to work. They have nothing to do with investment, and everything to do with putting more money into workers' pockets.
The second part, accelerated depreciation, does have to do with investment, but are only indirectly connected with supply side economics.
And of the two, which is considered more characteristic of Reaganomics today? I'd say it's the tax rate cuts on individual income taxes, which support my view. Depreciation rates are an obscure technicality that few remember, with limited application today - and it's to be noted that to the limited extent they have current applicability, Obama further accelerated depreciation, and he's not exactly considered a fan of Reaganomics or supply side economics.
Quote:Quote:The third key element of our economic expansion program is an ambitious reform of regulations that will reduce the government-imposed barriers to investment, production, and employment. We have suspended for 2 months the unprecedented flood of last-minute rulemaking on the part of the previous Administration. We have eliminated the ineffective and counterproductive wage and price standards of the Council on Wage and Price Stability, and we have taken other steps to eliminate government interference in the marketplace.
The following has nothing to do with prior posts, and goes on at length, but I'm in a mood to ramble a bit.
I worked as a software engineer servicing the military industrial complex. I know about government procurement, documentation and procedural requirements. At one point there were two projects being worked in my building. One Navy project developed under full military standards kept eighty engineers busy for five years. Another project for an intelligence agency who was more interested in getting the work done than paperwork kept five of us busy for three years. The two projects produced roughly the same number of lines of code.
So I know all about excessive bureaucracy and paperwork. I was very pleased to be one of the five rather than one of the eighty.
This has more to do with rescinding Carter's counterproductive restrictions on the free market than with Reagan's own initiatives. Reagan did continue to reduce regulation throughout his term, which further improved the functioning of the market. However, these policies were general economic good sense, and not especially supply side initiatives.
Nor do the goals especially have to do with corporate investment as opposed to individual employment. Both are mentioned equally, along with "production", which is applicable to both.
Quote:Still, I think Bush 43 cut the banking and Wall Street regulations too much, resulting in the 2008 economic collapse. Cut the bureaucracy, yes. Definitely. A lot. Still, I'd balance the careful with the meat axe.
Bush 43 was not the one who made the changes that facilitated the 2008 crisis. The critical reduction in regulation was the repeal of the Glass Steagall prohibition on mixing investment banking with commercial banking; that was repealed in 1999 under Clinton, and is a key part of why the Clintons are viewed as in bed with the banks by portions of the left. The other critical factor was the change to the Community Reinvestment Act which, together with case law, effectively required banks to start making bad housing loans. Those changes also happened under Clinton. It just took a few years for the resultant housing bubble to inflate and then burst.
In any event, that's relevant to neither Reaganomics in general, nor to supply side economics, as those regulation changes happened long after Reagan.
Quote:Quote:The fourth aspect of this comprehensive economic program is a monetary policy to provide the financial environment consistent with a steady return to sustained growth and price stability. During the first week of this Administration its commitment to the historic independence of the Federal Reserve System was underscored. It is clear, of course, that monetary and fiscal policy are closely interrelated. Success in one area can be made more difficult—or can be reinforced—by the other. Thus, a predictable and steady growth in the money supply at more modest levels than often experienced in the past will be a vital contribution to the achievement of the economic goals described in this Report. The planned reduction and subsequent elimination of Federal deficit financing will help the Federal Reserve System perform its important role in achieving economic growth and stability.
As we know, the "planned reduction and subsequent elimination of the Federal deficit" didn't happen.
As noted, the planned budget cuts didn't happen due to congressional opposition, so of course the deficit wasn't eliminated.
The fact they didn't happen does suggest they weren't Reagan's first priority. And that make perfect sense, since deficits are part and parcel of supply side economics. Remember "deficits don't matter"? I bet Eric does.
Quote:There is no mention of the Laffer Curve in the above document. It obviously didn't work as hoped for. Is anyone promoting use of the Laffer Curve anymore? Is there anyone out there who remembers that elimination of the deficit is part of Reaganomics?
Anyway, thats my idea of what Reaganomics was originally. I can admire a lot of the intent. It obviously didn't work as intended. There is much need for back to the drawing board.
Please note that I was discussing supply side economics with Mikebert, not "Reaganomics". "Reaganomics" depended heavily on supply side economics, but included other policy initiatives as well.
While there is no mention of the laffer curve in your paragraphs, neither is there mention of supply side economics, so it can't be taken as indicative of what supply side economics is. But it's unsurprising that a left wing university would choose an unrepresentative document for Reagan's economic plan.
If you were following coverage of DC at the time, surely you remember discussion of the laffer curve. And the basic idea, that on the right side of the laffer curve, tax rate cuts increase revenues, is most certainly still ingrained in the discussion - I'm sure Eric has noticed, even if you haven't.
The laffer curve was in fact spectacularly successful, with Reagan's tax rate cuts resulting in a doubling of inflation adjusted revenue from the end of the recession in the early 1980s through 2000. They didn't eliminate the deficit during Reagan's term because he didn't get the spending cuts he wanted, and because he did get the defense spending increases he wanted. The deficit was eliminated - briefly - when the defense spending increases were rolled back after we won the Cold War.
But, as I said, the laffer curve was even then a sales technique, and not a fundamental part of supply side economics. Supply side economics was about the supply of goods and labor, through cuts in individual income tax rates to increase the incentive to work in the case of labor, then as now.