DOCSLIB.ORG

The Laffer Curve and the Failure of Stimulus Spending

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Laffer Curve and the Failure of Stimulus Spending 1 The Laffer Curve and the Failure of Stimulus Spending Lecture delivered to the Institute of Economic Affairs 27th June 2012 IEA Current Controversies Paper No. 38 by Dr. Arthur Laffer November 2012 The Institute of Economic Affairs, 2 Lord North Street, London, SW1P 3LB; Tel 020 7799 8900; email [email protected] 2 About the author Dr. Arthur B. Laffer is founder and chairman of Laffer Associates and was a member of President Reagan’s Economic Policy Advisory Board for both of his two terms. Dr. Laffer also advised Prime Minister Margaret Thatcher on fiscal policy in the U.K. during the 1980s. He has been a faculty member at the University of Chicago, University of Southern California and Pepperdine University. Dr. Laffer received a B.A. in economics from Yale University in 1963. He received a MBA and a Ph.D. in economics from Stanford University in 1965 and 1972 respectively. 3 Contents Executive Summary 4 Lecture 5 Raising tax rates and reducing revenues 7 “Stimulus” spending 11 Questions and discussion from the floor 14 4 Executive Summary • If there is a Republican administration after the November presidential elections, we can expect a significant change of policy on tax, spending and stimulus. • There is a rich variety of data from the USA that demonstrates that raising tax rates often reduces revenues and vice versa. This is especially so when raising taxes from the high rates that we currently have. • There are many examples over the last century when tax rates were reduced, economic growth increased and the proportion of the tax take from rich people increased. • So-called fiscal stimulus policy does not work. A stimulus has to be financed and the income effects on those benefiting from the stimulus are cancelled by the “destimulus” from those financing it. • To make matters worse, a fiscal stimulus will normally raise taxes – at least in the long term – and may well be used to provide benefits to those not paying taxes. This reduces work incentives, gives better off people incentives to hide income by avoidance and evasion and reduces economic growth. The better off are particular adept at finding ways not to pay taxes. • During George W. Bush’s last two years in office the USA had the biggest ever increase in federal government spending in peacetime – from around 21 per cent of GDP to 27.5 per cent of GDP. The Great Recession began in that period. 5 Lecture We have an election coming up in November, and, obviously, it’s President Barack Obama versus former Governor Mitt Romney, the presumptive Republican nominee, and it’s a very different time today than it was four years ago. Four years ago, it was hard to tell the players without a play-card. Both Barack Obama and John McCain took a day off so that they could go back to Washington and vote for TARP. TARP was the ‘Toxic Asset Relief Programme’. Most of the Republicans voted for TARP, most of the Democrats voted for TARP. If you look at the issues back in 2008, you really couldn’t tell a Republican from a Democrat. If you look at what George W. Bush did - we had a stimulus package in 2007 - add-ons to a housing bill and a farm bill to “stimulate the economy”: deficit-financed stimulus spending. And then, of course, in March 2008 we had the Larry Summers’ famous $600 per capita tax rebate. They called it a tax rebate but, of course, it wasn’t really a tax rebate, because if you paid too much in taxes, they didn’t give it to you but, on the other hand, you didn’t have to pay any taxes for them to give it to you. You just received a cheque. Then we had the bailout of AIG. That was about $170 billion. Forgive me for rounding errors on some of these things. Then we had some asset swaps with Bear Stearns. Do you even remember that one? And then, of course, we had TARP. The bill Paulson gave to Congress that he insisted had to be passed in one day granted him total control over $700 billion to spend as he saw fit to save the US economy. It was a four-page bill, but those are Congressional pages. Congressional pages have really wide margins, big print and large spaces between lines. It’s about 100, 150 words per page max on a Congressional bill. So, it was maybe a 400-600-word bill that gave him $700 billion with no hearings or any other oversight. We then nationalised Fannie Mae and Freddie Mac followed by Barack Obama with his own plans. He had an $862 billion stimulus package; Obamacare; and the Dodd-Frank Bill. So, we had all this stimulus. At first, it was during the Bush years: there was no distinction between him and the Democrats. However, while you couldn’t tell the players apart in 2008, this year, in 2012, the lines are drawn precisely and very sharply. I’m going to go through a couple of them with you because they’re really fun issues. Today, there is not one Republican who would vote for additional stimulus spending. In fact, there’s 6 not one Republican who would ever admit that he or she ever voted for TARP. Republics are, to a person, against any additional stimulus spending. The Democrats, to a person, are for additional stimulus spending. The divide has been really made very sharp and very clear. The divide is not just on stimulus spending but it is also on tax rates on the rich. This election is probably the single most important election in my lifetime; maybe the 1980 election was right at the same level - but this one will be a huge determinant of future policy. If the Republicans win, you will see something along the lines of Simpson-Bowles, where the tax base is going to be broadened substantially. We are going to have a much lower rate flat tax. You will see spending restraint: something along the lines of the Ryan Budget or ‘Cut, Cap and Balance’. You are going to see monetary policy change dramatically, much more towards a sound monetary policy. And you are going to see trade move to a free trade type of model. I think you’ll see all that and I think you are going to see regulation reform in the US as well. We don’t want regulations going beyond the specific purpose at hand and thereby doing a lot of collateral damage to the overall system. So, what I think you’re going to see in the US is a lower rate flatter tax, spending restraint, sound money, free trade and minimal regulations going forward. But let me take further two of the issues that I think are really important: tax rates on the rich and stimulus spending. Those two issues have really, crystallised. If you look at the tax rates on the rich, President Obama has been arguing that we should raise them to fund programmes etc. These people have plenty of money, they can afford to pay a little bit more, it’s only just and fair and we need the money badly, it is argued. 7 Raising tax rates and reducing revenues Let me take you through the Republican view of this. Rich people don’t like to pay taxes. That may in fact be why they’re rich. We have had a long experience in the US on tax rates and the rich. We put in the progressive income tax in the United States in 1913. When we put in the progressive income tax in 1913, the highest marginal tax rate was seven per cent. Seven per cent was the tax rate on the rich. I want to stipulate today, just so no-one has any ambiguities in relation to my views, that, by raising the highest rate from zero per cent to seven per cent, tax revenues on the rich went up. Now, let me take you through what happened after that. By 1919, Washington had raised the highest tax rate on the rich to 77 per cent. After the War, Woodrow Wilson picked his candidate to run for president. He was the governor of Ohio, a man named James Cox. Cox picked his best friend to be his running mate, New York Governor Franklin Delano Roosevelt (FDR). So, the race of 1920 was James Cox and FDR versus Warren Harding and Calvin Coolidge. The issue was exactly the same issue we face today: tax rates. Calvin Coolidge and Warren Harding ran on a slogan of “a return to normalcy,” which meant cutting tax rates back to their pre-World War I level. Harding and Coolidge beat Cox and Roosevelt by the largest percentage ever in US history. It was a landslide victory. Let me now tell you what they did once in office. They cut the highest income tax rate in America from 77 per cent to 25 per cent. We have magnificent data on taxes including data on tax revenues from the top one per cent of income earners. Now, as you know, in the US, as opposed to the rest of the world, we had a boom during the Harding-Coolidge period. It was called the ‘Roaring Twenties,’ a huge economic expansion. If you look at the tax revenues from the top one per cent of income earners, as a share of GDP - not just in dollars but as a share of GDP - tax revenues from the top one per cent of income earners went through the ceiling during the Roaring Twenties.
Load more

Recommended publications
  • The Impact of the New Right on the Reagan Administration
    LONDON SCHOOL OF ECONOMICS UNIVERSITY OF LONDON THE IMPACT OF THE NEW RIGHT ON THE REAGAN ADMINISTRATION: KIRKPATRICK & UNESCO AS. A TEST CASE BY Isaac Izy Kfir LONDON 1998 UMI Number: U148638 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U148638 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 2 ABSTRACT The aim of this research is to investigate whether the Reagan administration was influenced by ‘New Right’ ideas. Foreign policy issues were chosen as test cases because the presidency has more power in this area which is why it could promote an aggressive stance toward the United Nations and encourage withdrawal from UNESCO with little impunity. Chapter 1 deals with American society after 1945. It shows how the ground was set for the rise of Reagan and the New Right as America moved from a strong affinity with New Deal liberalism to a new form of conservatism, which the New Right and Reagan epitomised. Chapter 2 analyses the New Right as a coalition of three distinctive groups: anti-liberals, New Christian Right, and neoconservatives.
    [Show full text]
  • Notes and Sources for Evil Geniuses: the Unmaking of America: a Recent History
    Notes and Sources for Evil Geniuses: The Unmaking of America: A Recent History Introduction xiv “If infectious greed is the virus” Kurt Andersen, “City of Schemes,” The New York Times, Oct. 6, 2002. xvi “run of pedal-to-the-medal hypercapitalism” Kurt Andersen, “American Roulette,” New York, December 22, 2006. xx “People of the same trade” Adam Smith, The Wealth of Nations, ed. Andrew Skinner, 1776 (London: Penguin, 1999) Book I, Chapter X. Chapter 1 4 “The discovery of America offered” Alexis de Tocqueville, Democracy In America, trans. Arthur Goldhammer (New York: Library of America, 2012), Book One, Introductory Chapter. 4 “A new science of politics” Tocqueville, Democracy In America, Book One, Introductory Chapter. 4 “The inhabitants of the United States” Tocqueville, Democracy In America, Book One, Chapter XVIII. 5 “there was virtually no economic growth” Robert J Gordon. “Is US economic growth over? Faltering innovation confronts the six headwinds.” Policy Insight No. 63. Centre for Economic Policy Research, September, 2012. --Thomas Piketty, “World Growth from the Antiquity (growth rate per period),” Quandl. 6 each citizen’s share of the economy Richard H. Steckel, “A History of the Standard of Living in the United States,” in EH.net (Economic History Association, 2020). --Andrew McAfee and Erik Brynjolfsson, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: W.W. Norton, 2016), p. 98. 6 “Constant revolutionizing of production” Friedrich Engels and Karl Marx, Manifesto of the Communist Party (Moscow: Progress Publishers, 1969), Chapter I. 7 from the early 1840s to 1860 Tomas Nonnenmacher, “History of the U.S.
    [Show full text]
  • Tax Notes International Article It's Time to Update The
    ® Analysts does not claim copyright in any public domain or third party content. Tax All rights reserved. Analysts. Tax © 2019 taxnotes international Volume 96, Number 8 ■ November 25, 2019 It’s Time to Update the Laffer Curve For the 21st Century by George L. Salis Reprinted from Tax Notes Internaonal, November 25, 2019, p. 713 For more Tax Notes® International content, please visit www.taxnotes.com. © 2019 Tax Analysts. All rights reserved. Analysts does not claim copyright in any public domain or third party content. VIEWPOINT tax notes international® It’s Time to Update the Laffer Curve for the 21st Century by George L. Salis economic theory could use a redesign for our George L. Salis is the principal economist modern global digital economy. In fact, most economic theories and models evolve in how and tax policy adviser they’re framed and/or applied over time. As at Vertex Inc. and is based in King of economist Dani Rodrik notes in his book, Prussia, Pennsylvania. Economics Rules: The Rights and Wrongs of the Dismal Science, “older models remain useful: we In this article, the add to them.” author discusses the necessity of updating Additions to the theory could be important to the applicability of the business and tax executives, given how the Laffer Laffer curve theory to curve and the Tax Cuts and Jobs Act it the modern global theoretically helped create continue to produce digital economy. economic, policy, and trade ripple effects around the world. The influence on economic cycles and It’s staggering to think that notes scribbled on national debt levels in turn have major a restaurant napkin can transform into a implications for tax policy decisions, as well as fundamental notion that has for decades served as strategic tax planning activities in the (possibly a rationalization for major tax cuts.
    [Show full text]
  • June 1-15, 1972
    RICHARD NIXON PRESIDENTIAL LIBRARY DOCUMENT WITHDRAWAL RECORD DOCUMENT DOCUMENT SUBJECT/TITLE OR CORRESPONDENTS DATE RESTRICTION NUMBER TYPE 1 Manifest Helicopter Passenger Manifest – 6/2/1972 A Appendix “B” 2 Manifest Helicopter Passenger Manifest – 6/5/1972 A Appendix “A” 3 Manifest Helicopter Passenger Manifest – 6/6/1972 A Appendix “A” 4 Manifest Helicopter Passenger Manifest – 6/9/1972 A Appendix “A” 5 Manifest Helicopter Passenger Manifest – 6/12/1972 A Appendix “B” COLLECTION TITLE BOX NUMBER WHCF: SMOF: Office of Presidential Papers and Archives RC-10 FOLDER TITLE President Richard Nixon’s Daily Diary June 1, 1972 – June 15, 1972 PRMPA RESTRICTION CODES: A. Release would violate a Federal statute or Agency Policy. E. Release would disclose trade secrets or confidential commercial or B. National security classified information. financial information. C. Pending or approved claim that release would violate an individual’s F. Release would disclose investigatory information compiled for law rights. enforcement purposes. D. Release would constitute a clearly unwarranted invasion of privacy G. Withdrawn and return private and personal material. or a libel of a living person. H. Withdrawn and returned non-historical material. DEED OF GIFT RESTRICTION CODES: D-DOG Personal privacy under deed of gift -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- NATIONAL ARCHIVES AND RECORDS ADMINISTRATION *U.S. GPO; 1989-235-084/00024 NA 14021 (4-85) THF WHITE ,'OUSE PRESIDENT RICHARD NIXON'S DAILY DIARY (Sec Travel Record for Travel AnivilY) f PLACE DAY BEGAN DATE (Mo., Day. Yr.) _u.p.-1:N_E I, 1972 WILANOW PALACE TIME DAY WARSAW, POLi\ND 7;28 a.m. THURSDAY PHONE TIME P=Pl.ccd R=Received ACTIVITY 1----.,------­ ----,----j In Out 1.0 to 7:28 P The President requested that his Personal Physician, Dr.
    [Show full text]
  • Nine Lives of Neoliberalism
    A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Plehwe, Dieter (Ed.); Slobodian, Quinn (Ed.); Mirowski, Philip (Ed.) Book — Published Version Nine Lives of Neoliberalism Provided in Cooperation with: WZB Berlin Social Science Center Suggested Citation: Plehwe, Dieter (Ed.); Slobodian, Quinn (Ed.); Mirowski, Philip (Ed.) (2020) : Nine Lives of Neoliberalism, ISBN 978-1-78873-255-0, Verso, London, New York, NY, https://www.versobooks.com/books/3075-nine-lives-of-neoliberalism This Version is available at: http://hdl.handle.net/10419/215796 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative
    [Show full text]
  • Snake-Oil Economics
    The second voice is that of the nu- Snake-Oil anced advocate. In this case, economists advance a point of view while recognizing Economics the diversity of thought among reasonable people. They use state-of-the-art theory and evidence to try to persuade The Bad Math Behind the undecided and shake the faith of Trump’s Policies those who disagree. They take a stand without pretending to be omniscient. N. Gregory Mankiw They acknowledge that their intellectual opponents have some serious arguments and respond to them calmly and without vitriol. Trumponomics: Inside the America First The third voice is that of the rah-rah Plan to Revive Our Economy partisan. Rah-rah partisans do not build BY STEPHEN MOORE AND their analysis on the foundation of profes- ARTHUR B. LAFFER. All Points sional consensus or serious studies from Books, 2018, 287 pp. peer-reviewed journals. They deny that people who disagree with them may have hen economists write, they some logical points and that there may be can decide among three weaknesses in their own arguments. In W possible voices to convey their view, the world is simple, and the their message. The choice is crucial, opposition is just wrong, wrong, wrong. because it affects how readers receive Rah-rah partisans do not aim to persuade their work. the undecided. They aim to rally the The first voice might be called the faithful. textbook authority. Here, economists Unfortunately, this last voice is the act as ambassadors for their profession. one the economists Stephen Moore and They faithfully present the wide range Arthur Laffer chose in writing their of views professional economists hold, new book, Trumponomics.
    [Show full text]
  • THE EMERGING WORLDVIEW: How New Progressivism Is Moving Beyond Neoliberalism a Landscape Analysis
    THE EMERGING WORLDVIEW: How New Progressivism Is Moving Beyond Neoliberalism A Landscape Analysis REPORT BY FELICIA WONG JANUARY 2020 ABOUT THE ROOSEVELT INSTITUTE Until the rules work for every American, they’re not working. The Roosevelt Institute is a think tank and student-driven national network that believes in an economy and democracy by the people, for the people. The few at the top—corporations and the richest among us— hold too much wealth and power today, and our society will be stronger when that changes. Armed with a bold vision for the future, we want our work to move the country toward a new economic and political system: one built by many for the good of all. ABOUT THE AUTHOR ACKNOWLEDGMENTS Felicia Wong is the president and CEO of the Roosevelt This report draws on research Institute, which seeks to reimagine the social and economic and analysis conducted by Nell policies of Franklin and Eleanor Roosevelt for the 21st century. Abernathy, Ariel Evans, Mike She is the coauthor of Hidden Rules of Race: Barriers to Konczal, and Katy Milani. The an Inclusive Economy (Cambridge University Press, 2017). author thanks Joelle Gamble, She holds a PhD in political science from the University of Angela Hanks, Jennifer Harris, California, Berkeley. Chris Hughes, Michael Linden, JW Mason, Julie Margetta Morgan, Lenore Palladino, Brishen Rogers, K. Sabeel Rahman, Ganesh Sitaraman, Dorian Warren, and Tracy Williams for their comments and insight. Roosevelt staff Kendra Bozarth, Matt Hughes, Jeff Krehely, Tayra Lucero, and Victoria Streker all contributed to the project. This report was made possible with the generous support of the Hewlett Foundation and the Omidyar Network.
    [Show full text]
  • Convention Speech Material 8/14/80 [1]
    Convention Speech Material 8/14/80 [1] Folder Citation: Collection: Office of Staff Secretary; Series: Presidential Files; Folder: Convention Speech material 8/14/80 [1]; Container 171 To See Complete Finding Aid: http://www.jimmycarterlibrary.gov/library/findingaids/Staff_Secretary.pdf . �- . "". ·· . · : . .... .... , . 1980 · DEMOCRATIC PLATFORM SUMMARY .··.. · I. ECONOMY··. Tliis was·· one.of ·the mOst .. dfffibult sections to develop in the way we. wan:ted,.>for there wei�· considerable ··.support among the Platform committee .members for a,' stronger·· ant-i�recession program than we have 'adopted. to date·. senator :Kennedy's $1.2.·bili'ion'·stimulus ·prOpof>al was v�ry · attraeffive to ·many .. CoiiUJlitte.e ine.�bers, but in the . end •We were able to hold our members.' Another major problem q()ri.cerned the frankness with which· we wanted to recognize our current ecohomic situation. we ultimately .decided, co:r-rectly I believe, to recognize that we are in a recession, that unemployment is rising, and that there are no easy solutions.to these problems. Finally, the Kennedy people repeatedly wanted to include language stating that no action would be taken which would have any significant increase in unemployment. We successfully resisted this .by saying no such action would be taken with that .intent or design, but Kennedy will still seek a majority plank at the Convention on this subject. A. Economic Strength -- Solutions to Our Economic Problems 1. Full Employment. There is a commitment to achieve the Humphrey�Hawkins goals, at the cu�rently pre­ scribed dates. we successfully resi�ted.effdrts:to move these goals back to those origiilally ·prescribed· by this legislation.
    [Show full text]
  • The Long New Right and the World It Made Daniel Schlozman Johns
    The Long New Right and the World It Made Daniel Schlozman Johns Hopkins University [email protected] Sam Rosenfeld Colgate University [email protected] Version of January 2019. Paper prepared for the American Political Science Association meetings. Boston, Massachusetts, August 31, 2018. We thank Dimitrios Halikias, Katy Li, and Noah Nardone for research assistance. Richard Richards, chairman of the Republican National Committee, sat, alone, at a table near the podium. It was a testy breakfast at the Capitol Hill Club on May 19, 1981. Avoiding Richards were a who’s who from the independent groups of the emergent New Right: Terry Dolan of the National Conservative Political Action Committee, Paul Weyrich of the Committee for the Survival of a Free Congress, the direct-mail impresario Richard Viguerie, Phyllis Schlafly of Eagle Forum and STOP ERA, Reed Larson of the National Right to Work Committee, Ed McAteer of Religious Roundtable, Tom Ellis of Jesse Helms’s Congressional Club, and the billionaire oilman and John Birch Society member Bunker Hunt. Richards, a conservative but tradition-minded political operative from Utah, had complained about the independent groups making mischieF where they were not wanted and usurping the traditional roles of the political party. They were, he told the New Rightists, like “loose cannonballs on the deck of a ship.” Nonsense, responded John Lofton, editor of the Viguerie-owned Conservative Digest. If he attacked those fighting hardest for Ronald Reagan and his tax cuts, it was Richards himself who was the loose cannonball.1 The episode itself soon blew over; no formal party leader would follow in Richards’s footsteps in taking independent groups to task.
    [Show full text]
  • Corporate Tax Reform: Issues for Congress
    Corporate Tax Reform: Issues for Congress Updated June 11, 2021 Congressional Research Service https://crsreports.congress.gov RL34229 SUMMARY RL34229 Corporate Tax Reform: Issues for Congress June 11, 2021 In 2017, the corporate tax rate was cut from 35% to 21%, major changes were made in the international tax system, and changes were made in other corporate provisions, including Jane G. Gravelle allowing expensing (an immediate deduction) for equipment investment. Recently, proposals Senior Specialist in have been made to increase revenue from corporate taxes, including an increased tax rate, and Economic Policy revise the international tax provisions to raise revenue. These revenues may be needed to fund additional spending or reduce the deficit. Some level of corporate tax is needed to prevent corporations from becoming a tax shelter for high-income taxpayers. The lower corporate taxes adopted in 2017 made the corporate form of organization more attractive to individuals. At the same time, higher corporate taxes have traditionally led to concerns about economic distortions arising from the corporate tax and newer concerns arising from the increasingly global nature of the economy. In addition, leading up to the 2017 tax cut, some claimed that lowering the corporate tax rate would raise revenue because of the behavioral responses, an effect that is linked to an open economy. Although the corporate tax has generally been viewed as contributing to a more progressive tax system because the burden falls on capital income and thus on higher-income individuals, claims were also made that the burden falls not on owners of capital, but on labor income—an effect also linked to an open economy.
    [Show full text]
  • Corruption Consultants Conservative Special Interests and Corporations Hurt State Economies and Democratic Processes
    GETTY/NICHOLAS KAMM Corruption Consultants Conservative Special Interests and Corporations Hurt State Economies and Democratic Processes By Malkie Wall, Danielle Root, and Andrew Schwartz July, 2019 WWW.AMERICANPROGRESS.ORG Corruption Consultants Conservative Special Interests and Corporations Hurt State Economies and Democratic Processes By Malkie Wall, Danielle Root, and Andrew Schwartz July, 2019 Contents 1 Introduction and summary 6 Economic policies driven by special interests 14 Efforts to undermine democracy 21 The spread of dangerous policies across states and at the federal level 24 Recommendations 27 Conclusion 27 About the authors 28 Endnotes Introduction and summary Federalism encourages states to act as “laboratories of democracy,” wherein states experiment with untested ideas and policies to gauge their effectiveness and potential value elsewhere, including at the federal level.1 Over the decades, state-level innova- tions have made dramatic improvements in the lives of millions of people in the areas of social insurance, child labor protections, and health care reform. States continue to take up the mantle of innovation by experimenting with various economic and election-related policies.2 However, this mantle of states being laboratories of democracy has not always been used for the public good. Unfortunately, states can also be used as a testing ground for policies that skew political and economic power toward corporations or billion- aires and away from everyday Americans. In too many states, this is precisely what is happening today. Across the country, conservative lawmakers are adopting policies that make corpo- rations and billionaires richer while hurting American families. These legislators are accomplishing this by implementing irresponsible tax cuts, depriving governments of revenue for public goods and services, and making communities and workplaces less safe through deregulation and attacks on unions.
    [Show full text]
  • Critical Lessons from the Neoliberal / Neoconservative Take-Over Deniz Kellecioglu [United Nations Economic Commission for Africa,1 Ethiopia]
    real-world economics review, issue no. 85 subscribe for free How to transform economics and systems of power? Critical lessons from the neoliberal / neoconservative take-over Deniz Kellecioglu [United Nations Economic Commission for Africa,1 Ethiopia] Copyright: Deniz Kellecioglu 2018 You may post comments on this paper at https://rwer.wordpress.com/comments-on-rwer-issue-no-85/ Abstract This paper examines the transformation in economics during the 1970s in order to distil lessons to transformative efforts today. A historiography is developed around four spheres of change: ideas; corporations; politics; and the economics profession. This history is explained through three inter-connected phenomena of the time: ‘neoliberal economics’ (the intellectual backbone); ‘neoconservativism’ (the resulting power system); and ‘elite appropriations’ (the essential instrument of power). First, neoliberal economics ascended as a result of corporate reactions to deteriorating profits and policy influence, in conjunction with the broader economic and political crises. Secondly, neoconservative political elites ascended mainly through the support of economic elites, neoliberal economists, and effective voter strata that harboured negative norms, especially strict egoism, class elitism, sexism, and racism. Thirdly, the ideological gap between neoliberal economics and neoconservativism were strategically transcended by covert and overt power impositions, but especially through the appropriation of neoliberal ideas to achieve neoconservative results. Altogether,
    [Show full text]