Mark Thoma sends us to Richard Green:
How does Michael Boskin do math?, by Richard Green: He writes in the Wall Street Journal this morning:
The lower marginal tax rates in the 1980s led to the best quarter-century of economic performance in American history.
This didn't seem right to me, so I went to the National Income and Products Account web site. For GDP growth after 1947 (the beginning of the quarterly NIPA data), the best 25 year period was between the first quarter of 1949 and the last quarter of 1973, when the economy grew by a multiple of 2.68. This is well before Reagan took office. The period of 25-year spells after Reagan took office is small, but the best period is the fourth quarter of 1982 until the third quarter of 2007, when the economy grew by a multiple of 2.26.
GDP growth likely overstates the benefit of the post Reagan era, because the benefits of the growth have been unevenly distributed. If we look at median household income, it is really hard to figure out how to find a "best in history" 25 year period after Reagan.
Indeed--especially if one does not allow the obvious cheat of measuring trough-to-peak, but actually makes a sensible estimate of trends.
Indeed. If you look at GDP per capita the post-rate reduction quarter century looks marginally, marginally superior to growth during the oil shock-ridden 1970s--but distinctly inferior to the 1960s and what came before.
And if you look at labor productivity it is the high marginal rate 1950s and 1960s that do best, the post-Clinton tax increase technology boom starting in 1994 that looks second best, and the Reagan-Bush low marginal rates period is once again barely, barely better than the oil shock-ridden 1970s.
Can't say I understand where Boskin is coming from on this one...