Larry Lindsey Rides Again

THE award for most frightening thought of the week goes to Associate professor of Economics Lawrence B. Lindsey, former head section leader of Social Analysis 10 and associate director of the Office for Policy Development in the Bush Administration. Lindsey told a Crimson reporter, "I was impressed at how much of what we teach at Ec 10 has direct policy application."

This week, The Liberal Boutique continues the saga of Larry's Misleading Ec 10 Statistics. Lindsey returned to Cambridge last Friday to lecture Ec 10 students on the glories of supply-side economics.

In it's most moderate guise, supply-side theory says that greasing the palms of the rich and swelling the coffers of corporations induces them to invest that money for productive purposes. More radical supply-siders say that cutting marginal tax rates in the top brackets spurs productivity so much that total tax revenues increase.

The experience of the Reagan years contradicts both propositions. In 1981, Congress gave former President Ronald W. Reagan sweeping across-the-board tax cuts, weighted heavily in favor of the rich, with the wealthiest 5 percent of taxpayers getting 35.1 percent of the cuts.

Neither the flurry of savings and investment nor the increase in revenues predicted by supply-siders ever materialized. Net domestic savings available for investment averaged only 1.9 percent of GNP under Reagan, compared to 7 percent during the 1970s. Real fixed investment by corporations increased by 2.6 percent per year under Reagan, compared to 7.1 percent under Jimmy Carter. As for revenues, they plummeted by 10 percent--$66 billion--by 1983.

Since only a few hard-core ideologues still believe that lowering marginal tax rates produces an actual increase in revenues, Lindsey had to content himself by telling the gathered students that lowering the top marginal rates makes the rich pay a larger share of the nation's total tax bill.

This is true, but misleading. That "larger share" is smaller in actual dollars. Revenues from corporate income taxes and income taxes from the top brackets actually declined in real terms from 1980-1987. This represents a larger proportion only because total revenues fell so dramatically after the fiscally irresponsible 1981 tax cut.

Do as I Say, Not as I Do Dept.: (The following is excerpted from a notice included in an invitation to a Fly Club punching party.)

"The clubs as organizations do not provide alcohol to anyone. When individual club members provide alcohol to or in club-related social settings, such hosts must ask punchees for an I.D. imprinted with a birthdate to determine who may or may not drink..."

"Drinking alcohol is not a prerequisite for membership in any club. In 1989, an excessive drinker is seen as a potential liability, not an asset..."

Yeah.

HARVARD Democracy, Tammany Hall Style: During the Undergraduate Council's campus-wide referendum to decide whether students should choose the council chair by plebiscite, I had occasion to watch a few of my democratically-elected representatives at work.

Winthrop House representatives Julie A. Chodacki '89 and Richard R.J. Pinkerton '91 supervised the polling place in the Winthrop dining hall. I watched as Pinkerton advised six students to vote no.

After turning in my own ballot and asking to have my name checked off of the list of voters, Chodacki informed me that "We don't have a list. We're just remembering people."

When I complained about these lax measures she replied, "We're supposed to have a list, but we're just trusting people not to vote more than once."

It gets worse. Another student, overhearing our exchange, asked Chodacki if he could vote again. She told him, "Not if you ask me. But if you just do it you can."

Arsenal of Hypocrisy Dept: The Liberal Boutique has some rare, albeit conditional praise for the Bush Administration. Executive branch officials belatedly acknowledged yesterday that the Nicaraguan contras are guilty of human rights abuses, including torturing and raping civilians. Bush, however, still supports his favorite terrorist group.

The Administration's criticism of the contras, whom Reagan described as "the moral equivalent of our founding fathers," comes almost six years after they announced that schools and medical clinics are considered legitimate military targets.

Kind of reminds you of Thomas Jefferson, doesn't it?