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Thoughts Online Magazine
Collected Articles on Culture & Politics
Some People Don't Understand Economics 
1st-Aug-2005 07:22 am
Here's an example.

There appears no understanding of incentives and growth anywhere in the essay. You'd think that the basic insight of microeconomics "People respond to incentives" would have made a dent after all these years: but not here. Result? Lost in a sea of macroeconomic numbers, without a reference point in behavior or the results of policies, silly things get said.

To the extent the Laffer curve is a one-variable explation of the health of an economy, it has flaws. To the extent that taxes are not recognized as a drag on growth, someone has failed to do basic econ.

Which is worse?

Oddly enough, she'd have some of her basic questions answered if she would read "The Seven Fat Years" and figure out what the Laffer curve was, how it fits into economic understanding, and what its limits and strengths are. Of course, this is the same person who can't seem to notice the increase in tax revenues from a cut in capital gains taxes under Clinton. Indeed, I seem to miss most of the discussion from her on what the relationship is between tax revenues and tax rates -- you'd think it was important a discussion of Laffer.

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