Don all economists agree that adding more taxes for additional social spending will only weaken our economy and slow growth?
No all economists don’t agree. Alan Greenspan, the Federal Reserve chairman, says the nation should cut future domestic spending, including Social Security benefits, to balance the budget and that higher spending or higher taxes would deter economic growth. The committee should have asked the statistically oriented chairman for the evidence. A comprehensive analysis by the economic historian Peter H. Lindert, published in a new book, “Growing Public” (Cambridge University Press), contends that there simply is no evidence of this widely held notion. The principal problem with such studies, Prof. Lindert writes, is that they are simulations of a highly simplified world. The economists recreate an economy where almost all incentives lead to slower growth, but that world does not exist. Why, then, have high levels of social spending proved no deterrent to growth in The real world? Mr. Lindert has several explanations, some of them surprising. First, he says, the tax systems of countries wi
