Following from Matt Yglasias is an interesting analysis of how we got here, starting with a situation where "supply side" had some plausibility, to a situation where it has none.
This pinpoints a great source of my frustration with journalists today: they won't seem to be able to ask "Why?" If they ever asked the Republi-CON sloganeers and blowhards "Why did the economy collapse under W. Bush?" And "Why would be expect any different result from your policy prescriptions?" All they could do is sputter or chance the subject. Here is Yglesias:
"What you have here is a political movement that no longer understands its own theory. Flash back to the 1970s. You have high unemployment. But you also have high inflation. Because inflation is already high, you can’t boost growth by boosting aggregate demand. You need reforms that operate “on the supply side” and lower marginal tax rates count. Now we can debate ’till the cows come home whether or not Ronald Reagan’s 1981 budget actually had important supply side benefits, but the basic story makes sense. But by 1996, what is the problem that Bob Dole is trying to solve with this tax cut? He’s grappling with the political problem of “a steady stream of solid economic news—low unemployment, mild inflation and rising wages.” We need supply-side reform because . . . why? Ever since then, conservatives haven’t really answered “why” questions about their economic prescriptions. Instead they prescribe a cure for stagflation regardless of the situation. And over time, this scenario has become more and more toxic, such that today they’ve decided that we are experiencing high inflation even though we’re not."
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