02 May 2017

Catching Up on Contra Krugman

Contra Krugman 2 Comments

I think I’m way behind. (I went to Europe for a week.) Here you go:

==> In Episode 82 we talk about the cruise missile attacks on Syria. We have Dan McAdams from the Ron Paul Institute as a guest.

==> In Episode 83 we talk about Trump’s focus on bringing back manufacturing jobs. We kinda sorta agree with Krugman. The technological innovation in this episode is the audio clip from Obama. (Start around 12:20.)

==> In Episode 84 we talk about “voodoo economics.” Here’s a quick outline:

1:25 Tom and I talk about my European adventure.
3:10 We talk about public marriage proposals.
4:02 We note the irony of Krugman and zombies.
4:55 Tom summarizes the column. Krugman argues that the Trump Administration’s tax plan relies on the same old voodoo Laffer curve scam.
9:05 Tom points out that the Reagan Administration never claimed the original tax cut would “pay for itself” via growth. (Their point was merely that a dynamic analysis was more optimistic than a static one.)
11:00 I point out that the Laffer Curve by its very nature doesn’t claim that all tax cuts pay for themselves. So clearly it can’t be the case that Arthur Laffer doesn’t know how to read his own curve!!
13:25 A really important point from Laffer is that the term “tax cut” is ambiguous; it’s better to refer to “tax rate reductions” or “reductions in tax receipts.”
15:08 Tom is optimistic about the details (such as they are) of the Trump tax plan.
18:15 I point out that many libertarians won’t tax “yes” for an answer when it comes to Trump’s policies.
19:15 I give some stats on how much “the top 1%” pay in income tax. This is why tax rate reductions “go to the wealthy.”
20:23 I show how odd Krugman’s argument is when he claims that the supply side doctrine has “been tested time and again and has failed every time.”
21:20 I give the stats on federal tax revenues in the 1980s, showing that on a naive level, Reagan’s “tax cuts for the rich” really did “pay for themselves.”
22:10 I point out that tax cuts boosting the economy is consistent with Keynesianism too! We have another sound clip, this one from Krugman.

2 Responses to “Catching Up on Contra Krugman”

  1. Tel says:

    The bit about the Laffer curve that isn’t made clear is how long it should take to see the returns.

    Let’s suppose you offer a 10% tax cut and achieve an extra 1% growth. Clearly 1% growth in the economy won’t make up the difference… not in the first year anyhow. But after 10 years, if you can continue getting 1% growth each year, won’t be long before government tax receipts are well ahead. That’s not a completely implausible scenario when you think that the extra incentive means more capital goods, more inventions, etc. Each round of growth takes advantages of the capital goods from the last round.

    That’s the point… the extra growth will compound. Krugman expects the entire scope of all policy decisions is one year, or two at most.

  2. Darien says:

    Sure, all this Krugman stuff is rad, but let’s get right down to it: my interests are tangerine juice and cruises. Are there any podcasts you guys know of that address my particular niche?

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