The latest Bloomberg Businessweek describes the Obama team’s efforts to discredit supply-side economics. It’s fortunate that author Peter Coy includes responses from economists who know better.
Going all in on “middle out” holds risks for Democrats. At least in Democracy’s formulation, it leans on the Keynesian theory that putting more money into consumers’ pockets is the way to promote growth, notes Luigi Zingales, a professor at the University of Chicago Booth School of Business. But even Keynes said that consumption isn’t always the problem; economies also need entrepreneurs with animal spirits. What’s more, some inequality is good for growth because it gives the poor and middle class something to strive for, Princeton University economist Angus Deaton argues in a forthcoming book, The Great Escape: Health, Wealth and the Origins of Inequality. …
… Douglas Holtz-Eakin, a former economic adviser to President George W. Bush, describes Obama’s “middle out” rebranding as “sloganeering trumping policy.” But with Republicans blocking Obama at every turn, slogans might be the only weapon the president has left. Expect to hear more about the middle class and “middle out” as Beltway brinkmanship ratchets up again this fall.
If Zingales‘ name sounds familiar, you might remember him as N.C. State University’s 2013 John W. Pope lecturer.
