Suppose you wanted to understand Donald Trump’s supply-side economic reforms where would you go?
There was this story on the front page of the Financial Review yesterday morning with the heading: Trump reforms ‘not understood’. It begins:
The United States economy is poised to enter a period of sustained higher economic growth on the back of President Donald Trump’s supply side economic reforms, according to two leading US economists who have been tipped to join the US Federal Reserve board.
Should you wish to have some idea of what Trump is trying to do, you might therefore find of interest the endorsement by Professor Art Laffer – the Art Laffer of the Laffer Curve – that he has provided for the third edition of my Free Market Economics.
“This book presents the very embodiment of supply-side economics. At its very core is the entrepreneur trying to work out what to do in a world of deep uncertainty in which the future cannot be known. Crucially, the book is entirely un-Keynesian, restoring Say’s Law to the centre of economic theory, with its focus on value-adding production as the source of demand. If you would like to understand how an economy actually works, this is one of the few places I know of where you can find out.”
Art Laffer is the original supply-side economist. Free Market Economics is indeed one of the few places you can go to find out what supply-side economic theory means in practice and in detail.
ADDITIONAL COMMENT ON THE COMMENTS: Supply-side economics as an approach to understanding how an economy works is different from the how these principles might be applied in any given circumstance. It is not a theory of tax, although, as in Reagan’s time, these principles were part of the effort to get taxes down, where the real point was to transfer spending from the public sector to the private. If all you know about supply-side economics is the Laffer Curve, I’m afraid you actually know very little about the base principles. The central issue is Say’s Law. Unless you understand what the classics meant by Say’s Law, I’m afraid the underlying principles are unknown to you. Art Laffer, however, made Say’s Law the touchstone of his own understanding of supply-side theory. If you are truly interested in understanding these principles, you can either read Mill, or Clay or my own Free Market Economics. If you have another you would like to add to the list, by all means let me know. They hardly exist although there are others, but that is what you need to know.
[My thanks to TMc for directing me to the AFR article.]