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An Economics Lesson for the New York Times

Posted on Tuesday, October 10, 2023
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by AMAC Newsline
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AMAC Exclusive – By David Lewis Schaefer

This photograph a computer screen displays the homepage of New York Times.

A favorite device of writers for the New York Times when they wish to assert a preferred view on public policy while dismissing alternative opinions is to attribute the view to unnamed “experts,” or at most to one named expert with conspicuous ties to partisan liberal organizations – all without even acknowledging the existence of legitimate disagreement.

Nowadays, this happens most commonly in stories on climate, where major weather events like hurricanes and droughts (which have occurred throughout known history) are said to have been caused, or exacerbated, by “climate change” according to an alleged scientific consensus. In fact, considerable disagreement exists among well-qualified climate scientists about the extent, causes, and effects of such changes, and it is impossible to attribute any single such event to continuous alterations in the climate.

A recent Times story exemplifies this problem in a different realm: economics. Reporting on the British Conservative Party’s annual conference last week, which was attended by the current prime minister, Rishi Sunak, as well as Sunak’s immediate predecessor Liz Truss and Suella Braverman, two rivals for leadership of the Party should it lose in next year’s national election, Times reporters Mark Landler and Stephen Castle judged Truss’s anti-tax and pro-deregulation program critically.

According to “economists,” the Times maintains, Truss’s “emphasis on tax cuts misses the point of what has held back the British economy … a dearth of public and private investment.” Jonathan Portes, the only economist actually named, who teaches at King’s College is quoted as saying, “taxes need to go up, not down, to restore public services and meet demographic pressures.” (Portes never specified what those pressures are.)

While Portes agrees with Truss’s “point” that Britain “need[s] aggressive pro-growth policies in some areas,” the areas he cites – “housing, planning, infrastructure, skills” – are those in which he deems it the responsibility of the government to “deliver.” In other words, to promote economic growth, expand the size of the welfare state and government bureaucracy, raising taxes to finance it.

Reading Portes’s remarks, one must conclude that he has no recollection of how Margaret Thatcher’s cutbacks in government spending and regulation in the 1980s lifted the British economy out of the doldrums (just as Ronald Reagan’s parallel policies did to the United States). Under Reagan, who cut the top income tax rate from 70 percent to 28 percent and the corporate rate from 46 percent to 34 percent, the United States added 16.5 million jobs, a 16.6 percent increase.

Like Reagan, Thatcher brought down rampant inflation, which had risen to 25 percent in the UK. Under her administration, home ownership also grew substantially.

We might note here as well that following Donald Trump’s 2017 tax cuts, unemployment dropped during the next two years, with black unemployment hitting record lows, prior to the onset of the COVID-19 pandemic.

Dismissively, the Times story describes Truss’s proposed economic policy as “trickle-down” in nature. The Times suggests that Truss wrongly supposes that reducing taxes on corporations and on individuals in higher income brackets will somehow magically increase employment and income among lower-income earners.

But Truss is right, and the Times reporters (along with Portes) are wrong. Remember Ronald Reagan’s defense of his 1981 tax cuts against the charge that wealthier people would gain more from them (in absolute dollar terms) than poorer ones would: his citation of a blue-collar worker who observed, “I never got a job from a poor man.”

This is the truth of supply-side economics, captured by Reagan, Thatcher, and Truss: if you want to encourage productive business investment and therefore employment and incomes across the board, cut business taxes and reduce the progressivity of the income tax system (as well as reducing the overall level of income taxes).

But why does Portes not think that reducing corporate taxes (and those on the “investing” class) will encourage the supply of meaningful jobs and wages, while raising them will have the opposite effect?

Portes and like-minded left-leaning economists in the U.K. and the U.S. conflate private investment with “growth” in the public sector. This approach, however, ignores the fact that private investment, to be profitable, must normally provide goods and services that consumers actually want, at prices that they are willing to pay.

By contrast, raising taxes to promote “public services” and meet “demographic pressure” leaves the decision of what goods to produce, and at what price, entirely to public bureaucrats and their political superiors.

As every reasonably informed observer recognizes, bureaucrats and politicians also typically lack the same incentives towards efficiency and innovation that private businesses and public servants who aren’t part of the regular bureaucracy do. Consider, for instance, the way that “regular” public education in the United States is stymied by the teachers’ unions, in contrast to nonunionized charter schools and many Catholic schools.

No serious person denies the need for public investment in infrastructure (roads, bridges, dams, school buildings, and so on) in order for private businesses and the general population to prosper. Nor would most deny the need for properly managed public services to assist the genuinely needy and open opportunities for the underprivileged, along with providing medical services to those otherwise unable to afford them.

But Ms. Truss, speaking to Conservative Party members at what was dubbed the “Great British Growth” rally, urged the need for Britons “to acknowledge that the government is too big, that taxes are too high, and we [the government] are spending too much.”

While tax cuts on individuals have widespread appeal, at least to those who earn enough to have to pay a significant amount, it will always be harder to demonstrate to many people how reducing taxes on corporations and high earners will typically boost the economy, and hence everyone’s income, more than raising taxes and enlarging government’s scope.

As if to fortify the point, on the day after it ran the anti-Truss story, the Times reported on Joe Biden’s latest student-debt cancellation scheme costing $9 billion, this following the Supreme Court’s rejection of his previous “more ambitious” plan of $400 billion in “relief.” The Times justified the cancellation by observing that “many economists” – not one of whom it named – “have expressed concerns that the resumption of student loan payments … could cause a substantial drag on the economy at a crucial point” in its “recovery.”

Not a word, however, from the “many” economists who fear that the growing inflation resulting from the massive budget deficits that the administration has run, in turn engendering higher interest rates while also raising everybody’s cost of living, is a far greater threat. This threat can only be exacerbated by the administration’s latest giveaway to favored supporters, whose votes the president desperately needs in his reelection bid.

The lessons of supply-side economics need to be re-learned in every generation. Even if Times reporters never learned them, the canons of journalistic ethics would seem to dictate that instead of quoting only economists who agree with their own predispositions, they give the other side a hearing, rather than effectively deny their existence.

David Lewis Schaefer is a Professor of Political Science Emeritus at College of the Holy Cross.

 

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PaulE
PaulE
4 months ago

No one seriously reads the New York Times for accurate and unbiased information related to most of the articles that appear in the newspaper. Everything is skewed with a specific political bias (ultra-liberal or simply pure socialist perspective) or just outright promotes a leftist political agenda. Their readership is the faux intellectual that buys the paper to virtue signal to others, the academic who is blindly committed to the leftist narrative and a small segment of the overall population that has no real critical thinking skills but wants to pretend he or she is well informed. The family that has owned the New York Times for several decades wants a publication that reflects their personal political views, which is exactly what the newspaper does on a daily basis. If you want accurate reporting of economic and business issues, which is what this article above touches on, then you certainly wouldn’t rely on the New York Times for such information. It’s focus is strictly on promoting a specific political narrative in all its articles.

The MSM constantly quotes the NYT in their on-air reporting as a form of reinforcement to their own leftist bias reporting. It’s kind of like Lenin quoting Trotsky and about the merits of communism and calling it proof that what is being promoted is all true and completely workable. The idea that the New York Times would ever seriously consider something like balanced reporting is unfortunately quite laughable. They would need to replace everyone from the owners on down to the writing staff, which is never going to happen. The family that owns the newspaper would rather shut it down than have it become anything other than what it is today.

Donna
Donna
4 months ago

Historically ignorant writers, write for their historically ignorant readers. Excellent article, Mr. Schaefer.

S Ga
S Ga
4 months ago

As Thomas Sowell has said, “Putting decisions in the hands of people who suffer no consequences for bad decisions is ABSURD!!”

Ben Franklin
Ben Franklin
4 months ago

Corrupt left wing media, supporting the Marxist Democrats in office.

God help America.

MAGA 2024

Robert Zuccaro
Robert Zuccaro
4 months ago

All media are guilty of confirmation bias. Bad weather MUST BE climate change, a Democrat city MUST BE crime free, the border MUST BE secure,… until it takes stark reality for them to finally admit the truth.

Bil Smith
Bil Smith
4 months ago

Taxation equals removal of the fuel which enables economic activity. Remove the fuel and the engines of growth and prosperity will be unable to functiion.

Rik
Rik
4 months ago

Anything to EXPOSE The New York Slimes from advancing the DEMOCRATS MARXIST AGENDA, I’m ALL FOR!

NIcholas Elder
NIcholas Elder
4 months ago

The only thing worthwhile from the NYT is the Sunday crossword puzzle, everything else nothing but commie propaganda!

Chuck
Chuck
4 months ago

“No person denies the need for properly managed public services to assist the genuine needy and open opportunities for the underprivileged, along with providing medical services to those otherwise unable to afford them” Oh really? Fredric Bastiat described “legalized plunder” in his treatise The Law in 1848. The same year, ironically of the debut of The Communist Manifesto publication. Under the force of law, Bastiat describes how the govt. takes from some forcibly and chooses to whom it shall be given. First “understandably” to the needy and underprivileged and then to the special interests to maintain power. Socialism becomes more and more popular to those receiving and less popular to those working and providing. Bastiat described the end result “everyone plundering from everyone.” It is more benevolent, effective and morally sound to allow religious and charitable organizations to provide and police proper dispersal of care.

anna hubert
anna hubert
4 months ago

Isn’t it time they were told there is no Santa Claus no matter how hard they try to convince people there is

William S. Klocek
William S. Klocek
4 months ago

Mises: Omnipotent Government, Liberalism- The Classic Tradition, and his, The Anti-Capitalist Mentality. LvM d 1973. Check out mises.org for all sorts of good economics, and Hillsdale College for solid academics.

Thinking
Thinking
4 months ago

The left is governing to make everyone dependent on government with the results being deficit spending which will never be paid.
The right wants to elevate everyone to have a living wage. And this can only be reached if there are jobs, well paying jobs, and that can only be reached if everyone makes money that includes businesses. Only the left doesn’t want that. They want everyone be dependent on the government for their survival. The hand outs are ruling the world. To give them a hand is not in their plan. The next generation has to see this to save America. The way things are going the generations that are now depending on the government will be working till their death. There will be equity but barely living. And what if the economy collapses. Because it will. We will see hunger, disease and suicides the likes we have never seen.

johnh
johnh
4 months ago

Cutting corporate taxes make sense, but when you look at the salaries of CEOs then you realize that they have received the biggest benefits & not the working employees. The salaries of top management , university presidents, college football coaches, etc. have escalated way too much since 1990s vs the employees that produce a product.

Gabe Hanzeli kent wa
Gabe Hanzeli kent wa
4 months ago

The New York Times use to have real economists on staff who understood economics. today they just of bizarre leftists who work at finding ways to justify stupid leftist beliefs.

Jack
Jack
4 months ago

Picking nits here. . . On the one had you criticize NYT for being indescript about an “alleged scientific consensus” among unnamed scientists and then you say, “. . . considerable disagreement exists among well-qualified climate scientists . . .” providing a link to a 2020 pubication on the NYT Best Seller List. Somewhat ironic, eh? That, and how do you really know if anyone followed the link?

Somewhere in this article it occured to me that, were it not for politicians and MSM repeatedly telling generations of people that they are indeed vicitms of the wealthy elite, many of the now endemic, generational failures, (welfare, housing projects, family planning, etc.) would have been (at least) mitigated decades ago. People make a decision to act-out their victim-hood in protests, violence, abuse, climate change, election fraud and, of course, in what used to be ‘journalism’. “If you’re not a victim, there’s clearly something wrong with you”. And THAT, has been the overwhelmingly tuneful, repetitive, earworm-message from North American news media for decades. I avoid news organizations as much as possible. AMAC is the exception. Plan accordingly.

David E. Saucier
David E. Saucier
4 months ago

A large part of our bloated government is consumed by public employees, (Federal/state/local) and their union patrons. We’re subservient to them. How will it be possible to pare back that number by 25% or 40% or more in light of political reality? An economic calamity perhaps, but who, among us, wishes for that?

Joanne4justice
Joanne4justice
4 months ago

NYT has lost its credibility; did it to themselves! Majority of media is complicit at this time!!!

Charles Burnett
Charles Burnett
4 months ago

I recall a basic of economics from my younger days. The US Government only gets approximately 20 % of GDP/GNP. No mater what the economy is doing or tax levied…But if the country is doing great the 20 % uncle Sam gets is bigger. if he has to tax more our GDP/GNP gets smaller because we don’t have the money to spend or onvest..so high taxing is more for power than success of the country

Jim McDowell
Jim McDowell
4 months ago

Politicians and liberal do gooders ALWAYS believe that raising taxes is the universal answer to everything. In fact, raising taxes often backfires on them. Having lived in the sorry state of CA I can speak with some authority on the subject of raising taxes. Sometimes, the new tax revenue is less than the old tax revenue.

invictus
invictus
4 months ago

Chronic liars such as NYT, Joe Biden et al often begin their quacks with “experts say…” or “honestly,….” or “I’m telling you truthfully…” and numerous other indications these failed and unpopular types are also chronic liars. Pretty soon NYT will be telling us all how they won a fight with “Corn Pop” and how a dead train conductor invited them to dinner.

Paul W
Paul W
4 months ago

The slimes has been a politically biased, narrative driven propaganda rag for over 80 years. It’s only suitable use is for lining bird cages…and only if you want your bird to hate your guts!

TPS
TPS
4 months ago

They are allowed to publish misinformation because it usually/always lines up with the leftist/dem agenda. IMO

Melinda
Melinda
4 months ago

????????????

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