Should-Read: First, Robert Barro and Mike Boskin—and John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, and John. B. Taylor—unprofessionally claining that one might get to the Solow growth model steady state in as little as ten years (rather than the right answer, which is more like fifty). Now Eddie Lazear. There's something in the water hitting right wing economists at Stanford (and elsewhere) that makes them regard their models as ornaments to be ignored when inconsistent with the political claims they want to make. For us the economic models we teach are insight generators. For them, they seem to be something else... Jared Bernstein: Spending, work, and taxes: "Ed Lazear.... The part that didn’t make sense...

...the idea that other countries are demonstrably worse off because they tax more and work less.... Lazear asserts that we in the US are better off because our relatively low taxes encourage “hard work” and “robust growth.” He’s conflating growth with welfare/well-being. All the other economies in the figure collect 30-40% of their GDP in order to support more robust (there’s that word again) public health care, education, safety net, child care, and other public goods expenditures. These are sovereign choices made by their citizens, based on their legit preferences. Before you assert that our model is better than theirs, ask the Canadians and Europeans if they’d like to trade some tax points of GDP for our health care system. From a welfare point of view, btw, Lazear’s argument is non-economic....

The resonant part is this: “…programs that we agree are useful must be financed.”... Lazear... is, unsurprisingly, consistent with the R’s and Trump’s budget: we’ve cut the taxes; now we must cut the spending. But based on our aging demographics alone, simply maintaining the current services requires more, not less, revenues. Outside the pages of the WSJ oped page, the public will not support the tradeoff Lazear touts. He’s definitely right that spending requires taxes. It’s just his solution that’s off...

Spending work and taxes Jared Bernstein On the Economy

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