Supply-side economics still needs its day in court, proponent says
Some establishment economists have written, in effect, obituaries for supply-side economics. They regard this economic school, with its emphasis on factors affecting the supply of goods and services, as a strange creature that thrived briefly in the early days of the Reagan administration and then faded away.
But that's far from the case, says Paul Craig Roberts, who as assistant Treasury secretary for economic policy was a leading supply-sider in the administration. He maintains that supply-side economics is having a ''permanent'' impact on national economic thinking.
Mr. Roberts has the intense eyes of a man convinced of his views. Indeed, he probably sees it as his duty to convert the nation to his vision of economic reality.
As a professor, then an editorial writer for the Wall Street Journal, next at the Treasury, and now back again at the Center for Strategic and International Studies at Georgetown University (writing on the side a column for Business Week), Mr. Roberts has always been an enthusiastic advocate. While explaining his supply-side opinions, he frequently asks: ''Do you see what I'm saying?''
Offering evidence of the continued vitality of supply-side economics, Mr. Roberts points in two directions.
First, he argues that the administration and Congress, in making decisions about taxes, are showing more sensitivity to supply-side effects than ever before.
''It is now taken for granted by all economists that when you change taxes you also are affecting the behavioral response of people in the economy in terms of savings rates, willingness to invest, taking risks, work attitudes,'' he said in an interview.
Supply-side economics, he says, stands behind the strong resistance in Washington to raising marginal tax rates - that is, the tax rate on the last dollar an individual earns. Congressmen are concerned that such tax hikes would damage incentives to produce.
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