A Saturday Evening Post reporter asked, in 1932, John Maynard Keynes if there had ever been anything like the Great Depression. Keynes replied, “Yes. It was called the Dark Ages and it lasted 400 years.” While the Great Recession is not so severe as was the Great Depression, it begins to appear that the world is enduring something that could be called “The Little Dark Age.”
It is odd that the long stagnation has not emerged as a focus of the presidential election — from either nominee or either party. That possibly is because both parties, embarrassingly enough, are at fault. America is entering its fifth decade of punk (less than 3% average annual GDP) growth and second decade of pure stagnancy — growth arguably averaging under 2%. Less than 3% is bad, but less than 2% is slower than population growth. That implies a severe absence of opportunity to flourish: a “Little Dark Age.”
Some among the privileged elite are settling for this, complacently, and dubbing it the “new normal.” Some, such as Obama, are responding to it with policies of redistribution — policies which supply sider Jude Wanniski argued are desired by the electorate for periods of economic contraction. It doesn’t have to be this way.
The classical supply siders taught more than tax rate cuts… although the political community has yet to really internalize this. British political economist Peter Bauer, in reviewing Wanniski’s The Way the World Works , summed up the essence of Wanniski’s primary argument, an argument that he won and was assimilated by the political culture. Tax rate cuts have come to define Republican doctrine:
According to Mr. Wanniski the task of political leadership is to find the rate of taxation which maximizes production, and is consistent with the distribution of income conductive to welfare. When the rulers understand this central issue and act on it, the society prospers and progresses; when they fail there is decline, conflict and chaos.