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May 6, 2013

'This is Self-Evidently Absurd'

Jon Chait:
Why Left and Right Economics Can’t Just Agree, by Jonathan Chait: Adam Davidson writes a joint profile of Democratic economist Lawrence Summers and Republican economist Glenn Hubbard for The New York Times Magazine. ...
Hubbard tells Davidson he came to his interest in economics by reading Hayek’s Road to Serfdom. That book warned that centrally planned economies would lead to tyranny. In fact, western governments abandoned central planning after World War II, but conservatives, including Hayek himself, simply transposed the generalized fear of government from central planning onto other forms of government intervention. According to Davidson, Hubbard’s current fear centers around rising federal debt...
But this is self-evidently absurd, given Hubbard’s role in crafting Bush administration policies that transformed a budget that ran a surplus of 2.4 percent of GDP at its peak to one that ran a deficit of 1.2 percent of GDP at its peak. Debt is simply the current way Hubbard expresses his philosophical preference for smaller government. He argues that low taxes are vital for fast economic growth, but twenty years of recent experiences strongly suggest otherwise. ...
It also absurd because the call for lower taxes is inconsistent with the call to reduce the debt (but reducing spending and then "starving the beast" through reduced taxes both work toward the goal of a smaller government). Too few people realize that calls to reduce the debt are really about a "philosophical preference for smaller government" rather than the fear of debt itself. Similarly for lower taxes and claims about economic growth.

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