Read Something Else 2010-07-27

Reviewer: D. MILLS

I'm a supply-sider. Who isn't? Really. All other things being equal, lower taxes are better than higher taxes. I think most people would agree with the Laffer Curve also. At a certain level, raising tax rates actually results in less revenue. But this book is not the book to explore the subject. While the authors' favored economic theories are sound, their dishonesty, partisanship, ignorance and obsession with tax cuts make supply-side economics seem like just another cheesy political campaign platform that isn't necessarily supported by decades of sound economic data from all over the world.

First, I am very disappointed in the dishonesty of the writers of this book. They cherry picked data to support assertions that weren't true, they made false implications and outright lied on some occasions. The saddest thing is that it's not necessary to stretch the truth or skew data. I don't think the authors are stupid. I think that the authors think their readers are stupid. I mean look at the title. We're talking about capital gains tax rate going from 15% to 20% and other taxes going back to the levels they were during the roaring 1990s. It's ridiculous to argue that the same tax rates we had during the 1990s is going to end our prosperity and doom the economy. Give me a break.

One issue is the effect of Reagan's tax cuts and W. Bush's tax cuts. They claim that the tax cuts did not cause the deficits of the 1980s and 200s. In fact, they never concede that reducing tax revenue has any negative effects none whatsoever. The fact that the nation is currently drowning in debt with enormous benefit obligations for Social Security and Medicare is not caused by tax cuts, according to the authors. They should have been honest and admitted that tax cuts do in fact result in lower revenue.

They addressed critics who claimed that the middle class didn't get much from the W. Bush tax cuts. They wrote that between May 2003 and May 2007 households increased their wealth by $6 trillion and only $2 trillion was lost as of the writing of the book (a net increase of $4 trillion). They didn't address how much this was attributable to the tax cuts. What they didn't know was that households lost $5.1 trillion of their wealth in the last three months of 2008 (a net loss of $1 trillion since the W. Bush tax cuts). They don't mention that median household income was flat during that period despite rising steadily for the prior ten years. They should have been honest and admitted that median household income was flat and that lower and middle class persons received negligible direct benefits from the W. Bush tax cuts.

With respect to immigration, they claim that there is "very little" evidence that immigrants displace native workers or depress wages "on average". They should have admitted that, although immigration has a net positive effect on the economy, it does in fact adversely affect some members of society.

One of the most outrageous claims they make is that the tax codes violates the Constitutional principle of treating people equally under the law. They don't elaborate on this. They really can't because it's a ridiculous claim.

Second, the writing is rather smug and partisan. They refer to Ted Kennedy and Jimmy Carter as "Tweedledee and Tweedledum". This style of writing may thrill Ann Coulter fans, but it does not contribute to a serious discussion of economics. They reserve praise for republicans only. If a Democrat does something good, they try to twist the facts to make it seem like he was pushed by Republicans. For example, they suggested that Bill Clinton signed NAFTA only after the Republicans took over Congress and pushed free trade policies. Clinton actually signed NAFTA over a year before Republicans took control of Congress. They make George W. Bush out to be some sort of economic hero because he cut some taxes dedicating pages and pages to praising his tax cuts. His outrageous spending, farm subsidies and protectionism are mentioned in but one sentence.

Third, they pay lip service to other policies like free trade, but truth be told all these guy want to talk about are tax cuts. They claim that supply-side economic theory involves other policies such as free trade, stable currency, open borders and "less costly more efficient government", but these other policies are rarely mentioned in the book. Tax cuts, tax cuts and more tax cuts are the be all and end all the economy. They describe taxes as Robin Hood robbing rich people and giving the money to poor people. They don't admit to the reader that taxes are necessary to provide government services such as defense, police, courts, education and roads.

But the worst is that their ignorance of the demand side despite being slapped in the face with it. They claim that insufficient demand is not a problem not even in poor nations. They claim that lack of supply is the problem in Bangladesh and other poor countries. I don't know where this comes from, and I don't think many agree with them. Set up a BMW dealership in a Dhaka slum and see how well you do. The world economy is currently suffering from a problem of low aggregate demand. For decades the world has relied on American consumers to purchase their products. With easy credit from credit cards and home equity loans, American consumers were happy to oblige. Now with millions of families living in underwater homes and over their heads in credit card, consumer and student loan debt, consumers aren't consuming as much. In addition, governments are strapped with debt and are cutting salaries and laying off employees.

The debt of the U.S. federal government has been growing steadily for decades all during the time that Laffer and Moore claim that tax cuts caused the economy to boom. Yet they do not concede that the lower taxes had anything to do with the debt accumulation. In addition to the debt the obligations for Social Security and Medicare are seemingly incomprehensible. Future generations are going to have to pay the debts that Laffer's generation accumulated.

And neither Laffer nor Moore admits that tax cuts had anything to do with this. There are two sides to the equation: revenue and spending. Has spending been outrageous? Is spending currently outrageous? Yes. But simply blaming spending and ignoring the fact that tax policy was set without regards to the amount of spending that was planned is dishonest. That's why readers should pass on this book and read something else.

A Must Read! 2010-05-07

Reviewer: Jason F. Yost

This is a timely book, one that should be taught in classrooms. Its non-partisan and objective way of discussing the successes and failures of financial policies in history is great. A must read for every patriotic American.

The right approach to economic prosperity and the facts supporting it 2010-05-07

Reviewer: J. Groen

This book clarifies the right approach to economic prosperity and growth and provides the facts to support its case. In the process, it debunks the other approaches although I doubt that the myopic elitists that support these will listen or pay attention. So, do the authors and this is the reason why they believe that we are facing the end of prosperity - we need to learn that these other economic approaches don't work again the hard way - and in fact, we already are (with the recent data showing that the unemployment rate for April, 2010 is 9.9% more than 13 months after passing the so-called "stimulus" bill).

The prosperity period was launched in 1982 by Reaganomics or supply-side economics and over the next 25 years for 95% of the time that we followed it, we had prosperity with only two brief recessions, or 5% of the time, not having prosperity. These two brief recessions were caused because the Presidents at that time strayed (Bush senior and Clinton).

The authors list the four killers of prosperity as the following: (1) trade protectionism, (2) tax increases and profligate government spending, (3) new regulations and increased government intervention in the economy and (4) monetary policy mistakes. It doesn't take a rocket scientist to recognize that since January 20, 2009, all four of these killers have been followed by the Obama administration and the liberal Congress. So, we shouldn't be surprised that we still have 9.9% unemployment. Obama's policies and the liberal Congress' actions have caused it, this is the reason that the Tea Party, rightfully so, is so concerned.

Over 30+ years of studying the economy, the authors list principles that link the impact of taxes on economic growth:
1. When you tax something you get less of it and when you tax something less you get more of it.
2. The best tax system makes poor people rich not rich people poor.
3. The higher the tax rate, the more damage to the economy and the greater the economic gain from reducing the tax rate.
4. If tax rates get too high, they may lead to a reduction in tax receipts - as demonstrated by the "Laffer Curve".
5. An efficient tax system has a broad tax base and a low tax rate.
6. People, businesses and capital move from high-tax to low-tax areas.

The best part of the book is the summary of their historical study of the impact of economic policy on growth and prosperity. Some of the key points, richly supported with facts and data are:
- FDR didn't get us out of the Great Depression with his spending and central government control - what did was WWII.
- The first supply-side president was John Kennedy whose tax cuts in 1964 caused a mini-economic boom in the late 1960s (to be reversed by the liberal spend programs of Johnson and the liberal congress).
- The "four stooges" - Johnson, Nixon, Ford and Carter - as presidents inacted economic policies that resulted in the "awful 70s".
- The economic boom started with Reagan's tax cuts and the active pursuit of supply-side economics in 1982.
- Bush senior made a mistake in raising taxes because it caused the mini-recession of 1991 which resulted in his loss of the presidency.
- Clinton was lucky, not smart, because the Republican Congress of the late 1990s reduced spending and balanced the budget. However, a small increase in taxes caused the mini-recession of 2000-01.
- Bush junior's supply side program of reducing taxes in 2003 caused a boom from that year to 2007 that increased jobs by 8 million and reduced unemployment to excellent levels.

Of course, the naysayers will comment well if Bush was so great, why the current recession? Well, Bush made mistakes too through interventionism and allowing spending to increase at the highest level in recent decades. Further, there is the sub-prime issue which the authors don't go into; and the profligate spending at the state level, e.g. California, which has resulted in series financial difficulties across the country. The authors do go into this issue.

These are the facts and needless to say, we will need to learn them again because we have a elitist liberal administration and Congress who don't know squat but think that they have all the answers in their pursuit of "fairness". Needless to say, we will have to weather through another awful 1970s decade and hopefully survive and then maybe we'll listen and pay attention to the facts.

A Clarion Call for Supply-Side Economics and Flat-Taxes 2010-04-29

Reviewer: Jazz It Up Baby

Written in an easy to understand and entertaining prose, this book utters a clarion call for supply-side economics and flat-taxes as preemptive remedies for what at the time, three years ago, was the fear of a toxic-tax-heavy economic leftward or socialistic tilt in the U.S. As we all know, the authors' well documented fears proved true and, even though they were not as prophetically correct as some Austrian economists were, they didn't miss anything important in their dire predictions.

Their points are supported by easily verifiable and available data, with clear, simple and excellent graphs and tables, often taken for granted in this type of literature. The pertinent historical record is applied and examined without being encyclopedically pedantic about it and it is even good humored, fair, objective and in touch with popular culture. It sets many issues straight on Bush's, and many other Presidents', correct and incorrect economic decisions and it even closes with a chapter offering a personal prescription for inoculating yourself economically against what we are currently experiencing.

I would, however, suggest checking out Mises.org for critiques of supply-side economics, specially the fact that it does not reduce governmental size and its depredations enough, thus it does not increase the market's economic liberty as much as it should and, by lowering taxes without said radical delimiting of the scope of governmental intrusion in economic matters, it actually gives mo' money to the government to do its usual wasteful and enslaving thing in all regards. Until the Austrians have their day, if they ever learn how to play politics rather than just think that they can win with the right ideas, supply-side economics is most certainly a better alternative for the U.S. and the world than Bushbamanomics.

Tax Policy 2010-02-10

Reviewer: Boyd H. Blackwell

This is a good review of how tax policies of our government affect the economic health of the economy. Uses examples from other countries and our country with charts and graphs to illustrate how tax policies really impact economic growth.