Reaganomics vs Keynesianism

Peter Ferrara at the American Spectator goes into depth on something that should be glaringly apparent: Keynesian economics is a failure.

[T]he economies of both the United States and Canada moved in lockstep during the financial crisis, with unemployment at 6.1% in both countries in August 2008, and rising to around 8 percent in February 2009, when President Obama’s Keynesian trillion dollar stimulus bill was passed. U.S. unemployment then continued to shoot up to over 10%, and stayed above 9.5% for almost another year and a half, lately resuming its upward rise. But in Canada, unemployment peaked at 8.7% in September 2009, and has fallen since to 7.4% today, behaving more like the American economy used to, before Obama’s neo-socialist hope and change.

That is because instead of relying on Keynesian government spending, deficits and debt, Canada adopted instead the Reaganite supply-side economics of cutting tax rates and reducing regulatory cost burdens. While President Obama has maintained America’s corporate tax rate at nearly 40% counting state corporate rates, and gleefully proposes still more tax increases on American business, Canada cut their corporate rate to 16.5% this year, scheduled to fall to 15% next year. Lott reports, “By last year, Canada had the lowest overall tax rate on business investment of any major industrialized country.”

Read the whole thing here.

 

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