Common Tragedies

Thoughts on Environmental Economics

Supply side economics trickles down to env econ

Posted by Daniel Hall on October 14, 2007

Mark Thoma points us to The Onion:

Reagonomics Finally Trickles Down to Area Man: Twenty-six years after Ronald Reagan first set his controversial fiscal policies into motion, the deceased president’s massive tax cuts for the ultrarich at last trickled all the way down to deliver their bounty, in the form of a $10 bonus, to Hazelwood, MO car-wash attendant Frank Kellener.

“Back when Reagan was in charge, I didn’t think much of him,” Kellener, 57, said, holding up two five-dollar bills nearly three decades in the making. “But who would have thought that in 2007 I’d have this extra $10 in my pocket? He may not have lived to see it, but I’m sure President Reagan is up in heaven smiling down on me right now.” …

It’s well worth reading the article in its entirety.

I know, however, faithful reader, that you are wondering exactly what this has to do with the insightful commentary on environmental economics you’ve come to expect around here.

Never fear, N. Gregory Mankiw gives us the smallest of hooks to hang the last shreds of our dignity on:

Strange Bedfellows: Consider a person who

A. takes an important truth developed by others,
B. exaggerates it for dramatic effect,
C. as a result, draws public attention to this important truth, and
D. also brings acclaim to himself as a profound, far-sighted, truth-telling guru.

Who do I have in mind?

Maybe you think it’s Al Gore, and if so, you are correct. But I also have in mind the supply-side economists of the 1980s. The more I think about it, the more similar Al Gore and the supply-siders appear.

They both noticed something that many serious scholars had been working on (human carbon emissions are causing the planet to overheat, high tax rates are causing the economy to underperform.)

They both overstated the scientific consensus (if we do nothing, temperatures will rise so quickly that sea levels will increase twenty feet; if we cut tax rates, the economy will grow so quickly that tax revenues will rise rather than fall). …

They both ended up more famous as a result (a Nobel prize, an eponymous curve). …

Herb Stein once said, “There is nothing wrong with supply-side economics that division by ten wouldn’t fix.” I thought of this quotation when I saw Al Gore’s movie. The more I think about it, the more I realize how parallel these two efforts of public education, or perhaps political propaganda, really are.

Again, the full post is worth reading.

One way or another, that should give most of our “faithful readers” a tweak.

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