That truth should be silent I had almost forgot.
Antony and Cleopatra,  Act 1, Scene 2

Unsilent Truth
June 18, 2004

Silver bullet to the foot



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This should be a fairly easy argument to follow, but apparently it has eluded both those who effusively praise Ronald Reagan and those who merely write dispassionately about his "legacy" of reducing government.

First, I invite the reader to pretend that everything he has ever heard about Ronald Reagan and his policies from his right-wing admirers is correct. Let us not dispute the accuracy of the claims made for him.

One of those claims is that he lowered tax rates. That will be my first given for the purposes of this article.

Now let us fast-forward to the Clinton years. Any number of right-wing apologists for Reagan and critics of Bill Clinton objected to Clinton's tax increases. They argued that when Democrats raised taxes, they were undermining what they said was their purpose, namely, to increase government revenues. (That assertion, in turn, was used to argue that Democrats did not really want the increased revenues; they wanted the power represented by the increased taxation. Whether that is true is not part of this discussion.)

Supply-side economics, with the help of the bell-shaped Laffer curve, argued that tax revenues would increase as tax rates increased (i.e., both would, as it were, ride up the curve) until a certain point was reached (the apex of the bell-shaped curve). When tax rates increased past that point they rode down the right side of the bell-shaped curve, and tax revenues declined. Therefore, if tax rates were graphed on the right side of the bell-shaped curve, decreasing them (i.e., moving up the curve) would cause revenues to increase as they moved up the right side of the bell-shaped curve to the apex; as one descended the left side of the bell curve both rates and revenues would decline. Since no one imagines for a moment that current tax rates are to be located on the left side of that curve, the way to increase tax revenues was to decrease tax rates.

This analysis, it was asserted over and over, had been validated by the Reagan tax cuts. Whereupon supporters of Reagan's policies would haul out statistics and recite figures to substantiate their claims.

Again, I urge the reader not to get caught up in his own understanding of these matters, whether to criticize the theoretical model or to dispute the supposed facts. And I hasten to add, lest it be thought that I have apostatized from my anti-tax, anti-government position since the last time I wrote in this forum, that I am happy to see any reduction in taxes. I oppose taxes not because of the policy implications of cutting them but because to take anything from a man that he has honestly earned without his consent and agreement is theft, pure and simple. And I oppose theft.

So the Reagan adulators and supporters give us these two premises:

Reagan decreased tax rates.

Tax revenues increased.

And somehow, they conclude that this made government smaller.

But the conclusion of the first two assertions is and can only be that Reagan made government much stronger. Government took in more money; and if government is richer, it, like any honest citizen, can do more things. But the ability to do more things is precisely the definition of being more powerful.

Our argument, then, should run:

Reagan decreased tax rates.

Tax revenues increased.

Government got richer.

Therefore, government got more powerful.

And that is exactly what free-market critics of Reagan say of him: that during his administration, government became larger and more powerful. [See Murray N. Rothbard, "The Reagan Phenomenon," Free Life, vol. 4, no. 1, apparently published in 1984.] Those of his admirers who dispute the libertarian analysis are invited to explain why their praise of Reagan does not support that analysis.

Of course, the remarkable fact of an analysis such as this is that it will have no effect. Once a myth is established — and those of who who lived through the Reagan years were living through a period of mythologizing — it takes more than a few facts or arguments to enfeeble it. No matter how badly the mythologizers shoot themselves in the foot, the myth remains standing.

Which reminds me ... have you reread Nineteen Eighty-Four yet this year?

© 2004 by WTM Enterprises. All rights reserved.

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