After all is said and done, the only thing that really matters now is how we fix and redirect a badly broken economic engine that is currently chugging its way off a fiscal cliff. Whatever theory of economics one subscribes to, the focus of tax and spending policy should be solely about how to create enough wealth and the revenues it provides to the treasury to prevent our country from going bankrupt. As I have shown, there is no question that we need to cut spending and dramatically change the structure of failing entitlement programs in the long term. However, we must also raise revenues by dramatically increasing economic growth. As we have seen, you could tax every dollar of income of the wealthy, the near wealthy and the just doing fines and you might be able to pay the bills for one year. But then what?
We can intellectualize and theorize and use our own common sense like we did in the last two chapters and that’s all well and good. We can argue about whether the theory of Supply Side economics is intellectually superior to Keynesianism or Annieism till the cows come home and that’s the problem with ideas and theories, they can’t be proven, therefore, nothing would be solved. Or can they? Do we have any actual evidence about what works in reality? As my buddy “Fred” so eloquently pointed out to me once in his typically cynical fashion:
Have any of these philosophies worked yet? Does anybody know for sure? Whose statistics can you believe? On and on. It will never end.
The only way we can determine whether anything has “worked” for “sure” is to go beyond theory and examine the data of what has happened when these theories have been applied in the real world and see if it that knowledge can help us in the future. To do this, we need to determine whether there are some actual numbers and data that we can agree upon that can be used as a basis for analysis.