[ExI] A world drowning in excess savings

[John Clark]

On Tue, Feb 18, 2020 at 9:54 PM Dylan Distasio via extropy-chat <
extropy-chat at lists.extropy.org> wrote:

* > I put zero stock in Krugman and think he's a partisan hack. *


A see no evidence of that. A partisan hack will scream loudly that deficit
spending will bring the end to western civilization when a Democrat is
President but remain strangely quiet when a Republican is President even
though the deficit is ballooning faster than ever, but Krugman doesn't do
that. When a partisan hack has a economic theory he refuses to modify it
one iota regardless of what new evidence arrives, but Krugman follows the
scientific method and knows that regardless of how beautiful a theory may
be if it doesn't fit the facts it must be rejected.

This is from Krugman's  Feb 3 column and all the facts in it are
objectively true, so a scientific man would have no choice but to modify
his previous belief that deficits are always bad and that high taxes always
mean high deficits.
==

"A zombie idea is a belief or doctrine that has repeatedly been proved
false, but refuses to die; instead, it just keeps shambling along, eating
people’s brains. The ultimate zombie in American politics is the assertion
that tax cuts pay for themselves — a claim that has been proved wrong again
and again over the past 40 years.

Back in 1980 George H.W. Bush called Ronald Reagan’s extravagant claims
about the effectiveness of tax cuts “voodoo economic policy
<https://archives.nbclearn.com/portal/site/k-12/flatview?cuecard=33292>.”
Everything that has happened since has vindicated his original assessment.
Deficits ballooned after Reagan cut taxes; they shrank and eventually
turned into surpluses after Bill Clinton raised taxes, then ballooned again
after George W. Bush’s tax cuts.

Voodoo has also crashed and burned at the state level: The Kansas experiment
<https://www.npr.org/2017/10/25/560040131/as-trump-proposes-tax-cuts-kansas-deals-with-aftermath-of-experiment>
in
radical tax cuts was a dismal failure, while California’s tax hike under
Jerry Brown, which conservatives declared a case of “economic suicide
<https://danieljmitchell.wordpress.com/2012/11/07/californias-economic-suicide-and-other-news-from-yesterdays-ballot-measures/>,”
was followed by a revenue and economic boom.

Yet voodoo economics has become unchallengeable doctrine within the
Republican Party. Even fake moderates like Susan Collins justified their
support for the 2017 Trump tax cut by claiming that it would reduce the
budget deficit
<https://www.collins.senate.gov/sites/default/files/12.18.17%20Sen.%20Collins'%20Floor%20Remarks%20on%20Tax%20Reform%20Bill.pdf>.
Predictably, the deficit actually exploded, and now exceeds $1 trillion a
year <https://www.cbo.gov/publication/56020>."

John K Clark
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