Prometheus 6   

A Mercantilist Economist Responds:

My Dear Mssr. Bush:

It is with great apprehension I broach the matter of your economic stimulus plan, which peradventure was only attributed to your counselors by a most condign device�

Methinks it would but ill boots your grace to take amiss at such well-meant words as I have to proffer. The purpose you undertake is dangerous; the institutions you name, uncertain; the time itself unsorted; and the whole plot too light for the counterpoise of so great an opposition. The tax cut on corporate dividends wouldst serve in another time marvelously well; I would well content me to endorse it when your exchequer is in better sorts, but the flight of treasure from these shores is of great urgency. God wot I hath in past days praised subsidies and immunities from taxes; but only companies bound to the service of the state.

Charles Davenant

A Classical Economist Weighs In:

To the Esteemed Mr. President:

In the matter of your proposed economic stimulus package, as cited in The Washington Post, I have undertaken to enlighten your discretion, and elevate your satisfactions, by the following advice.

You say you intend to stimulate investment in your country by a reduction in taxes on dividends. I say, well and good, if you wish to bring about in ensemble the abolition of just-such rent-seeking behavior as would bring your republic into fiscal balance. But be advised that such a course of action, while noble in the endeavor and virtuous in the execution, cannot be looked to as a source of exogenous stimulus. It is a canard to suppose that your state can endlessly reap bounties from deficit spending, when in fact such deficits merely tie up lendable funds.

Jean-Baptiste Say

A Keynesian Economist Responds:

Dear George,

At the risk of blowing a perfectly good opportunity to gloat, Old Boy, I'm going to dispense with the chortling references to how your crew heaped opprobrium on my name for about 24 years, utterly knocked me about like a disgraced maid aunt, and generally used the opportunities created thereby to peddle a bastardized version of the wholly benevolent advice I offered up to you decades ago. Oh, I could prophesy! But tell me, Dear Lad, what in God's name "supply side" is supposed to be the supply side of? Are we perchance talking about my policy recommendations as "demand side," whilst you muck about trying to cut taxes to run deficits? Well, I guess you ought to know I did include that in my general theory but I included constraints as to when one ought and oughtn't to stimulate with tax cuts.

John M. Keynes