I’m too young to know much about Arthur Laffer, the Yale- and Stanford-educated guru of supply-side economics. By the time I took an interest in macroeconomics in the late 1990s, Laffer’s ideas were about as relevant as the music of Corey Hart and sunglasses at night. Ronald Reagan’s tax cuts clearly hadn’t paid for themselves, as Laffer, who served on the president’s Economic Policy Advisory Board, and other disciples said they would. The focus of mainstream policy in the United States, the United Kingdom and Canada was fiscal prudence, low interest rates and freer trade. “Trickle-down” economics had become a punchline. If not for the op-ed pages of the Wall Street Journal and a couple of think tanks, the ideas of Laffer and others would have disappeared from mainstream view.
The inauguration of Donald Trump as the 45th president of the United States gives supply siders new life. Laffer predicted Trump would win, suggesting he may have a better sense of the current American condition than the dozens of Nobel laureates and former officials who dismissed the president. He and others from the Reagan White House helped develop Trump's economic platform, which is an echo of Reaganomics: big tax cuts, heavy spending on defense and infrastructure, and repeal of Obama-era environmental and financial regulation. The consensus was a Trump victory would bring chaos and fear. Not on Wall Street, where equity prices have surged some 5 percent since election day. The supply siders can barely contain their glee.
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