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Taxulationism:
The Obstacle to
Economic Recovery
By Jack Bouroudjian
September 25, 2011
In
the decades that followed World War
II, Keynesian theory was the widely accepted economic tenet of the day.
As
such, it was believed that recession and inflation could not occur
simultaneously—it simply didn’t make sense.
But in the 1970s, during the dark days of
Jimmy Carter, economic growth
stalled and inflation skyrocketed. The world needed a word to describe
this new
economic condition. “Stagflation”—a portmanteau of stagnation and
inflation—fit
the bill, and the word caught on.
I
bring this up because, about a
year-and-a-half ago, my old friend and colleague Alan Rohrbach and I
were
talking about the anti-business policy coming out of Washington. We
realized
that there was no word to describe what had been unleashed on the
American
people by our fellow Chicagoan. So we decided to come up with one.
That’s how
“Taxulationism” was born.
Taxulationism
= taxes + overregulation
+ trade protectionism. Three of the four so-called prosperity killers,
as
defined by Art Laffer. (The fourth is inflation—which has evolved as a
byproduct.) Not the most melodious word in the world, but it does serve
as a
way to encapsulate the systematic erection of barriers to job creation
and
economic growth that has taken place under President Obama’s leadership.
We’d
tabled the word for a while—the
November 2010 election stared the pendulum swing of American political
thought
back in the right direction, and the end of the secular bear market
felt almost
like the green shoots of a recovery. But after the summer we’ve had,
the
president’s American Jobs Act and the so-called Buffett Tax that’s
going to
help pay for it, Taxulationism is back and more relevant than ever.
Let’s
break this word down, shall we?
Taxes
Earlier
I mentioned the dark days of
Jimmy Carter. Having lived through that era, I saw first-hand the ways
an
inefficient tax policy could stymie growth—and the ways that efficient
tax
policy under his successor, Ronald Reagan, could unleash the American
entrepreneurial spirit. So last week, when the president announced his
plan to
raise taxes on the rich because Warren Buffett’s secretary supposedly
paid a
higher rate than the Oracle of Omaha himself, I cringed...
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