POLITICAL ECONOMY

I once heard an Israeli economist say that left-wing economists are interested in quantities, right-wing economists in prices. This corresponds to the supply-side insight that quantities on the spending side of the budget are politically immovable objects, whereas intelligently designed tax changes are politically feasible and permit economies to grow around these immovable objects. Quantities are static. Qualitative change is dynamic. George Gilder and Warren Brookes make an analogous distinction: The wealth of nations resides not in matter but in minds.

Two or three months ago a Treasury supply-sider I know was distraught because in the bureaucratic battle over the Treasury tax proposal then being shaped, the advocates of static, quantitative analysis were winning. Any proposal would have to be “revenue neutral.” Revenues lost by lowering tax rates would have to be offset by revenues captured elsewhere, that is by closing tax loopholes.

TB

About the Author

Tom Bethell

Featured Tags

Department of the Treasury

I once heard an Israeli economist say that left-wing economists are interested in quantities, right-wing economists in prices. This corresponds to the supply-side insight that quantities on the spending side of the budget are politically immovable objects, whereas intelligently designed tax changes are politically feasible and permit economies to grow around these immovable objects. Quantities are static. Qualitative change is dynamic. George Gilder and Warren Brookes make an analogous distinction: The wealth of nations resides not in matter but in minds.

Two or three months ago a Treasury supply-sider I know was distraught because in the bureaucratic battle over the Treasury tax proposal then being shaped, the advocates of static, quantitative analysis were winning. Any proposal would have to be “revenue neutral.” Revenues lost by lowering tax rates would have to be offset by revenues captured elsewhere, that is by closing tax loopholes.