Excerpt provided by the Committee to Unleash Prosperity. Sign up to receive a free subscription to the full weekday Unleash Prosperity Hotline newsletter by clicking here: https://committeetounleashprosperity.com/hotline/
This past weekend the world lost a great hero with the passing of supply-side icon Robert Mundell.
Committee to Unleash Prosperity co-founder Arthur Laffer fondly remembers him:
Bob Mundell changed the world all for the better. I was blessed to spend lots of quality time with him as his sidekick trying to hold back the forces of evil and push truth to the fore. I loved him dearly and believe him to be the greatest economist of at least the past century.
Our friend Sean Rushton wrote this beautiful remembrance:
At the height of the 1970s stagflation — runaway inflation paired with high unemployment — Keynesian economics and monetarism blew up.
Robert Mundell and Art Laffer proposed a then-novel solution: supply side economics. This was the combination of stable monetary policy to fight inflation plus marginal tax rate cuts to spur growth and jobs. The idea got legs, promoted by Congressman Jack Kemp and then Ronald Reagan, and the supply-side economics revolution was underway. Inflation collapsed, the economy took off, and the U.S. embarked on what became a quarter-century boom that included the decisive triumph of capitalism over communism, a global tax revolution, the rise of Silicon Valley and the Internet, and the expansion of freer markets across the globe, resulting in a huge reduction in poverty and misery.
Based on Mundell’s advice, not only did the U.S. boom but Europe abandoned its multiple junk currencies to unite under the euro, and China smartly fixed its currency to the dollar while enacting pro-market reforms which spurred a 30-year run of rapid economic growth, for better and worse. In 1999, Mundell was awarded the Nobel prize for economics, and he continued to advocate for lower taxes, freer markets, and fixed exchange rates well into his 80s. One of his profoundest insights was that international capital flows discipline policymakers and punish them when they make bad decisions that lower the after-tax rate of return [i.e. raising marginal tax rates].
Biden has adopted a Keynesian, industrial policy model of government directing capital, which is the diametric opposite of the Mundell-Laffer model. Alas, it is destined to fail miserably.
Editor’s note: We also recommend the attached article from Laffer Associates by economic historian Brian Domitrovic.
Also, to know more about:
- The Stimulus We DO Need
- Biden Corporate Tax Rate: We’re #1! Woo Hoo!
- MLB = Major League Blunder
- And much more . . .
click here: https://committeetounleashprosperity.com/hotline