The Classical Economists Perceive the Industrial Revolution
DeLong Smackdown Watch (Joint New York Times Death Spiral/Edward Luttwak/Clark Hoyt/David Shipley/Greg Mankiw Edition)

Greg Mankiw's Marginal Educational Product Is Negative

Part of the New York Times death spiral watch...

Greg Mankiw writes:

Economic View - The Problem With the Corporate Tax: AT this point in the presidential campaign, Senator John McCain is the candidate of ideas on issues of tax policy. Too many ideas, in fact. While some of his ideas are great, others are almost laughable.

The one that has received the most attention recently — a gas-tax holiday — falls in the second category.... It is hard to find [any]one who thinks that a temporary cut in the gas tax is a sensible response to the current spike in gas prices.

Lost in this hubbub, however, is a bigger idea that Mr. McCain and his economic team have put forward: a cut in the corporate tax rate, to 25 percent from 35 percent. It is perhaps the best simple recipe for promoting long-run growth in American living standards...

No. An UNFUNDED tax cut is not the best simple recipe for promoting long-run growth in American living standards. It is the best simple recipe for promoting long-term decline in American living standards. You see, the government has a budget constraint: if it does not tax now to fund its activities it must tax later, one way or another. And unknown, uncertain future taxes in the long run plus the medium-run costs of carrying the debt until those taxes are levied--they are almost surely a significant net drag on the economy. McCain has no plan to fund the corporate tax cut save the same two dodges Republican politicians have been using for thirty years: First, the magic asterisk ofcutting "waste, fraud, and abuse." Surely by now this argument is well-past its sell-by date and thoroughly rotten? Second--and this Mankiw spends a couple of long paragraphs on--the Laffer curve applies and so the tax cut won't lose but will raise revenue.

Some editor should have held this up. Some editor should have called Mankiw and said: "Greg, you have written a piece that analyzes McCain's corporate tax cut as if its revenue loss is offset by an equal contemporaraneous revenue gain elsewhere in the system--as if McCain is proposing a funded tax cut. But he isn't. He is proposing an unfunded tax cut. What gives?" And Mankiw would have been forced to work much harder to come up with the pro-McCain column he wants to write. Perhaps something that informed readers--or at least did not disinform them so grossly--would have emerged.

But no editor had the smarts to do that. And the case for closing down the Times gets stronger.

Why oh why can't we have a better press corps?

UPDATE: In other New York Times death spiral watch news, public editor Clark Hoyt writes a column that I cannot see as other than a call for the immediate firing of op-ed editor David Shipley:

Entitled to Their Opinions, Yes. But Their Facts?: On May 12, The Times published an Op-Ed article by Edward N. Luttwak.... Many Times readers saw the article as irresponsible... or false... assertions that Luttwak did not know what he was talking about. The Times Op-Ed page, quite properly, is home to a lot of provocative opinions. But all are supposed to be grounded on the bedrock of fact. Op-Ed writers are... not entitled to get the facts wrong or to so mangle them that they present a false picture.

Did Luttwak cross the line from fair argument to falsehood?... [F]ive Islamic scholars, at five American universities, recommended by a variety of sources.... All of them said that Luttwak’s interpretation of Islamic law was wrong.

David Shipley, the editor of the Op-Ed page, said Luttwak’s article was vetted by editors who consulted the Koran, associated text, newspaper articles and authoritative histories of Islam. No scholars of Islam were consulted.... That’s a pity....

Luttwak... said he was not out to attack Obama and regretted that, in the editing, a paragraph saying that an Obama presidency could be “beneficial” was cut for space.

Shipley, the Op-Ed editor, said he regretted not urging Luttwak to soften his language about [the] possible assassination [of Barack Obama], given how sensitive the subject is. But he said he did not think the Op-Ed page was under any obligation to present an alternative view, beyond some letters to the editor.

I do not agree...

UPDATE 2: Some commenters complain that Mankiw has a plan to fund the tax cut via a gasoline tax. Well, yes. But that's Mankiw's plan, not McCain's. And Mankiw calls McCain's unfunded cut the "bigger idea that Mr. McCain and his economic team have put forward... [that] is perhaps the best simple recipe for promoting long-run growth in American living standards..."

It would be overkill to point out that Mankiw has now used the gas tax to (very partially) fund the extension of the Bush tax cuts, Medicare Part D, and the structural long-term deficit. Double-counting is one thing. Quadruple-counting another.