September 7, 2016

LAFFER SHOULD HAVE CALLED IT THE HAMILTON CURVE:

Maybe Supply-Side Economics Deserves a Second Look (Tyler Cowen, 9/07/16, Bloomberg View)

Maybe it's time to start paying more attention to other approaches, specifically those based on the supply side. Supply-side economics has been discredited since the Bush tax cuts failed to boost economic growth, but there is another way of thinking about the problem. It is not enough for funds to be left in the hands of the wealthy; rather they must be invested in risk-bearing equity capital, focused on innovation.   

So argues Edward Conard in his new book, "The Upside of Inequality: How Good Intentions Undermine the Middle Class." Think of it as a revamp of supply-side economics but with the concept of risk-bearing at the core, a fitting perspective for an author who was a founding partner of the private equity firm Bain Capital and a former business associate of Mitt Romney.

In this view, traditional demand stimulus is at best defensive in nature. It may limit further collapse, but it won't much revitalize risk-taking. For Conard, "Weak demand is not a cause in and of itself. It is a symptom of a shortage of equity willing and able to bear risk." 

Continentalist, no. 5 (Alexander Hamilton, 18 Apr. 1782)


They can have no temptation to abuse this power, because the motive of revenue will check its own extremes. Experience has shown that moderate duties are more productive than high ones. When they are low, a nation can trade abroad on better terms--its imports and exports will be larger--the duties will be regularly paid, and arising on a greater quantity of commodities, will yield more in the aggregate, than when they are so high as to operate either as a prohibition, or as an inducement to evade them by illicit practices.

Posted by at September 7, 2016 2:45 PM

  

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