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We’d call this from Joe Stiglitz propaganda, not economics

Summary:
It is, of course, possible to argue about the effects of economic changes. But we do think it helps to be reasonable about this. Which isn’t quite how we’d describe this assertion from Joe Stiglitz: Given tax cuts that disproportionately benefit the ultra-rich and corporations, it should come as no surprise that there was no significant change in the median US household’s disposable income between 2017 and 2018 (again, the most recent year with good data).The tax cuts were signed into law in late December 2017 and took effect for the tax year (which is in the US the calendar year) 2018. Now we do indeed believe in the healing power of money fructifying in the pockets of the populace but we’d perhaps think that that effects of a 1% of GDP change in tax revenues might take a teeny bit longer

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It is, of course, possible to argue about the effects of economic changes. But we do think it helps to be reasonable about this. Which isn’t quite how we’d describe this assertion from Joe Stiglitz:

Given tax cuts that disproportionately benefit the ultra-rich and corporations, it should come as no surprise that there was no significant change in the median US household’s disposable income between 2017 and 2018 (again, the most recent year with good data).

The tax cuts were signed into law in late December 2017 and took effect for the tax year (which is in the US the calendar year) 2018. Now we do indeed believe in the healing power of money fructifying in the pockets of the populace but we’d perhaps think that that effects of a 1% of GDP change in tax revenues might take a teeny bit longer than that to come through.

Especially as the claimed and planned route is to be through higher business investment.

It’s possible to note that we lack the Nobel Joe has so whadda we know but a more reasonable conclusion here would be that Professor Stiglitz is indulging in a little bit of propaganda rather than economics. After all the standard New Keynesian models all do conclude that fiscal policy does take a finite amount of time to take effect.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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