Airy Slogans Are No Substitute for Economic Policy

In his Daily Beast  article below, Michael Tomasky says that the presidential election has finally killed off Reaganomics which he further defines as “trickle down” economics which he also refers to as supply side economics and tax cuts for the rich.

He then says that this bad economics needs to be replaced by “middle-out economics” and defines that as government helping the middle class. He admits that this needs “more definition” but doesn’t offer any.

This is  rather pathetic. Economics by slogan doesn’t get us anywhere. “Middle-out” economics is meaningless if not specifically defined. No one in their right mind wants to help rich people at the expense of the middle class and especially the poor (Tomasky does’t mention them.)

I am not a fan of supply side economics. For one thing, leading supply siders think the Federal Reserve and other central banks should print money with abandon if the economy weakens. This doesn’t make sense because it is all the money printing in the first place that leads to the bubbles that lead to the economic collapses. More alcohol is not a hangover cure. I am not sure if there was something that could properly be called Reaganonmics. Reagan brought common sense to economic policy, but he appointed Alan Greenspan head of the Fed and Greenspan brought us the Dot-Com Bubble that led to the Housing Bubble and so on. As Thomas Sowell has pointed out, “trickle down” economics is an oxymoron: rich people have to invest in jobs and plants and otherwise hand out their money to others before they can get any of it back, much less with a return. Tax cuts for the rich can help the economy so long as they are not part of deficit spending (a major caveat, especially today), because the rich are the only ones with enough extra money to invest rather than spend, and investment is the key to creating jobs. But so many of the rich today got their wealth from the Fed’s money printing and other crony capitalist policies that it is hard to discuss this dispassionately.

Everybody noted during the election how little President Obama said about what he would do in a second term other than raise taxes on the rich. He criticized Romney and there was a lot to criticize, but like Tomasky he spoke of strengthening the middle class without saying how he would do that. This isn’t good enough. The election is now over. Let’s hear something specific. What exactly does “middle-out” economics mean?

Click here for Tomasky’s ariticle.