Ben Stein, Ferris Bueller, and the Ecconomy
In 1986, yes 1986, Ben Stein was the “Economics Teacher” in Ferris Bueller’s Day Off. Some may remember this scene which helped launch Mr. Stein’s career. In it Stein discusses the Laffer curve and “something d-o-o economics”
In 2008 Stein wrote an open letter to John McCain about taxes. Stein is a rather loyal Republican as far as I can tell. Nonetheless, the letter notes some key points that seem to be lost time and again.
Here is a choice quote:
The next thing is that the Republican Party (my party and yours) has for the last 30 years or so been operating under a demonstrably false and misleading premise: that tax cuts pay for themselves by generating so much economic growth that they replace the sums lost by tax cutting.
This would be a lovely thing if true, and the best of all ideas, the “something for nothing” idea. In fact, tax cuts lower federal revenue and generate federal deficits. It is also true that they do stimulate the economy and after a long period of years, federal tax receipts go back to where they were before the tax cuts.
In addition, Stein explains that the system of spending and cutting taxes cannot pay for itself. As he puts it, cuts make folks happy but passes the cost on to the next generation. Worse:
[I]mmense federal deficits in modern life are financed largely by foreign buyers of our debt. This means that the American taxpayer must work a good chunk of the year to send money to China, Japan, the petro-states and other buyers of United States debt. In effect, we become their peons.
By flooding the world with debt, we in effect beg foreigners to take our dollars, and this leads to a lower value of the dollar and a higher cost of imports, including oil. If you feel pain filling up the tank, you can partly thank those tax cuts. If you feel the sting of inflation, you can partly thank the supply siders. Deficits matter.
Then Stein says point blank the only group who can and should be taxed are the rich because, “By definition, the truly rich have a lot more money than they need. If they don’t, then they are not rich by my standards.” Higher taxes and strong enforcement against off-shore tax-evasion were the keys for Stein. He closes by pointing out that all the things that we love to have such as health care and a strong military requires money which can be had in several ways “by indenturing our children, selling ourselves into peonage to foreigners, making ourselves a colony again, generating inflation — or we can have some integrity and levy taxes equal to what we spend.” Finally he asks the hard question: “Do you have the guts to stand up to the myth makers and tax cutters and the rich? Or will you just kick the can down the road?” I think it is time that we ask the same questions of all of us. Will we suck it up and set things right or try to push the problem onto the next generation (a tactic whose time is probably gone anyway)? Anyone? Anyone?