As if we Didn't Already Know it: Reaganomics Works

From Keith Marsden in Monday's Wall Street Journal: New Evidence on Government and Growth

In the early 1980s, Ronald Reagan embraced the ideas of a small group of economists dubbed "supply-siders." They argued that lower taxes and slimmer government would stimulate growth, enterprise, harder work and higher levels of saving and investment. These views were widely ridiculed at the time, dismissed as "voodoo economics."

Reagan did succeed in lowering some taxes. But a Democrat-controlled Congress weakened their impact by raising government spending sharply, resulting in large budget deficits.

A quarter of a century later, many more countries have cut taxes and reined in heavy-handed government intervention. How far have they gone down this path, and with what success?(...)

The early supply-siders were right. My findings firmly reject the widely held view that lower taxes inevitably result in cuts in public services, slower growth and widening income inequalities. Today's policy makers should take note of how tax cuts and the pruning of inefficient government programs can stimulate sluggish economies.

Marsden's study shows countries with the lowest tax burdens outperforming their high-tax counterparts across the board.

Yes, Reagan was right. The supply-side logic is so obvious, it annoys me to no end that we still are debating this point. Fortunately, real life keeps slapping the other side upside the head.