Every time I think we are making progress on getting rid of Keynesian macro, I come across something like this from The Financial Times in the UK: Donald Trump’s trickle-down delusion on tax.
Today, debt is 77 per cent of GDP, productivity is flat and, not only have the major gains from female participation in the labour force been realised, but birth rates are lower, and the president is doing the best he can to limit immigration. Growth equals productivity plus demographics. Game over, unless something in that equation changes. . . .
But if you survey the economic landscape, it’s not like there isn’t plenty of money sloshing around. Dealmaking, asset values and corporate debt are at record highs. The money is there. The jobs are not.
I would argue that this is because there is not enough consumer demand. . . .
Sure, we can cut taxes. But it will not change the fact that we have a private sector market system that no longer serves the real economy. Business leaders who care about long-term growth and competitiveness need to think hard about how to fix that, and stop kidding themselves that a trickle-down tax plan is the answer.
They don’t want the US to cut business taxes but do want it to increase consumer demand! As dumb as FILL IN YOUR OWN and then some.