To the Daily:

I will leave it to my economist colleagues to refute the finer points in Alexander Franz and Anthony Cerrato’s recent viewpoint (Big government, big debt, 02/26/2010). But two errors are so glaring that they are obvious even to a psychologist.

The authors say, “The Reagan administration oversaw annualized nominal GDP growth of 9.4 percent despite two recessions.” According to World Bank data, during Reagan’s eight years in office, the U.S. annual growth rate averaged 3.41 percent, reaching above five percent only once (7.2 percent in 1984). Of course Franz and Cerrato use the term “nominal GDP,” which does not account for inflation, and therefore does not reflect real growth.

Secondly, in discussing the theory that increasing taxes lowers revenue, they refer to “Nobel Prize-winning economist Arthur Laffer.” It’s interesting that the Nobel Prize website seems to have omitted his name from the list of economics laureates. Now there’s a real laugher!

David Winter, Ph.D.
Faculty

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