November 25, 2009

"Reagonomics" Experiences Comeback as "Obamanomics"

NEW YORK CITY, NY -- Call it a flashback or maybe a comeback.  Trickle Down Economics, also called "Reagonomics", is experiencing a revival in a new form.  The trickle down economic theory, which has been thoroughly discredited by leading economists, held that businesses create value and therefore, jobs.  The idea was that if you make it easy for businesses to operate - even encourage them, through low taxes and a minimum of regulation - they will go on creating value and the economy will grow.  The concept did not produce instant results, however, and sometimes poorly run businesses will fail.  Overall, the effects of a business-friendly atmosphere might take a couple years to produce results, but - proponents say - those results are real and sustainable.

Flash forward 20 years.  Professor Walter Wallaby, the George Soros Distinguished Chair of Economics at Columbia University, thinks Reagan may have been on to something after all, even if he didn't get the details right, in his dotage.  "The main thing Reagan got wrong was that businesses create value.  Our computer models show clearly that it is government that really creates value."  He continues "He had this crazy notion that businesses will make the most effective use of resources because the owners and workers have a vested interest in getting it right - they stand to be rewarded.  Times have shown, however, that only disinterested legislators and bureaucrats have the skill and education to properly decide how money should be used to the best effect."  In the revised trickle down theory, the government is the one that is sprinkling money down until it reaches the states and, finally, private citizens.

Prof. Wallaby is optimistic about the future.  "The current administration gets it.  Unfortunately for those of us who suffered through the late 80s and 90s - when Reagan's policies really started to have an impact on the economy - he was close but not quite there."

He ends the interview with a rueful smile.  "It is a bit ironic that Reagan spent his life fighting against a political system in the USSR that had it right the whole time."

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