Nathan B. Oman: GOP tax policy should ditch Keynes for Hayek

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  • EJM Herriman, UT
    Sept. 30, 2012 10:01 a.m.

    As I just looked at the headline my first thought was "Yes I would ditch Keynes for the actress Selma Hayek anyday, regardless of her financial policy leanings". But then I read the article and became heartbroken. I was really hoping it was Selma. Oh well, back to the funny pages.

  • Twin Lights Louisville, KY
    Sept. 23, 2012 5:59 p.m.


    But how can you test an economic philosophy EXCEPT with data and numbers? If the economic ideas don’t stack against the data, then the philosophy is likely wrong.

    I have done a bit of homework. Though there is always more to do. Perhaps I have been listening to biased voices. Or perhaps you have. Which remains to be seen. The test will be in the data - the real world results. Otherwise, our economics philosophies are just nice sounding ideas.

    To quote Keynes (hey, I couldn’t resist): "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."

    Finally, remember that you noted that Hayek moved away from strict Austrian ideas as he aged. Perhaps there was a reason other than being co-opted. It is worth considering.

  • SEY Sandy, UT
    Sept. 21, 2012 10:33 p.m.

    @Twin Lights: this is my last comment, so you get the last word.

    Data and short-term results rule the economic world, there's no argument there. But crunching numbers is an exercise in futility when the philosophy behind their use is wrong. Data are like the rungs of a ladder to help you surmount a wall. But if your philosophy directs you to place the ladder against the wrong wall, what good does it do you? That's my complaint about econometricians who spend their time spinning out useless or, worse, misleading data that do more damage than good. That's why we're in such mess.

    Your charge that Austrian economists are outdated is baseless and, I'm sorry to say, ignorant. You know not whereof you speak. You've been listening to biased voices. I suggest you do your own homework before you say something like that again.

  • Twin Lights Louisville, KY
    Sept. 21, 2012 9:45 p.m.


    In modern economics, it is data and results not philosophy that generally rules. This is where the strict Austrians cannot compete. Its not prejudice, its that they practice as though this were the days pre computer.

  • SEY Sandy, UT
    Sept. 21, 2012 12:34 p.m.

    @ Twin Lights: or you could say that Hayek forgot his roots. "Learning" does not always and necessarily mean increased wisdom. The fact is that it's next to impossible for an Austrian economist to earn an academic post at a prestigious university or economic thinktank. Some of them have been known to cave in to Keynesianism in exchange for a coveted appointment or academic praise. Sadly, this was something Hayek couldn't resist. Ludwig von Mises and several other Austrian economists stayed true to their principles, so Hayek is not the best example of the Austrian school.

    I'll have to take issue with one point: Keynesians get almost everything upside down and backwards. So I'm content in believing that Keynesianism has essentially nothing worthwhile to offer, unless you want to say they are a good example of what not to be or do.

  • Roland Kayser Cottonwood Heights, UT
    Sept. 21, 2012 12:19 p.m.

    To Joe Capitalist 2: A deficits financed tax cut provides the same economic stimulus as deficit financed spending. That's basic Keynesian economics.

  • Twin Lights Louisville, KY
    Sept. 21, 2012 12:18 p.m.


    So Hayek learned as he aged. Not that Keynes is the be all and end all. In truth modern economics takes from many schools, not just one. Because each school has some good points and others it gets wrong.

  • JoeCapitalist2 Orem, UT
    Sept. 21, 2012 10:43 a.m.

    While I agree with most of the article, I take exception to the following quote "Tax cuts are a kind of government-created economic stimulus, like building highways or buying aircraft carriers."

    This thinking follows the liberal mindset that tax cuts are a "gift" to those receiving them. Letting people keep more of their hard earned money (whether rich or poor) is not a gift by the government.

    Government needs taxes to operate and contrary to what many liberals say, those who suggest that the government collect less taxes do not advocate "No Taxes" which can lead to anarchy.

    We can argue all day about what a "fair share" of taxes is for rich, middle class, and poor alike, but we need to get rid of this mindset that the government "owns" all our money and if they let us keep some more of it, it is a gift. That is a socialist mindset.

  • Eric Samuelsen Provo, UT
    Sept. 21, 2012 10:40 a.m.

    Wow. Amazing. A column about the eternal debate between Keynes and Hayek that completely gets both economists wrong.

  • SEY Sandy, UT
    Sept. 21, 2012 10:02 a.m.

    @ Kent: still waiting for you to explain what you mean when you say "We need to restructure the way corporations are owned," and how that's compatible with capitalism. Sounds very Marxist to me.

  • SEY Sandy, UT
    Sept. 21, 2012 9:46 a.m.

    As Hayek aged, he tended more towards Keynes, so even he was no longer "Hayekian." So it depends on which Hayek the author is referring to, the early or the later Hayek. It was the work of the early Hayek that won him the Nobel prize (even though he received the prize later).

    GWB and his economic advisors were not Hayekian by any stretch. Supply-side economics is just another version of Keynesianism, so some of the argument put forth by the author is a false one. The early Hayek was a strong proponent of Austrian economics which the author only touched on. The main point is that government subtracts from capital formation, it doesn't and can't add to it. Wealth can be created only by capital formation and creating a demand for savings, not by government stimulus of fiat money and low interest rates. The less money diverted away from the economy by taxation and borrowing, the better. But it works only if the government spends less. Lower taxes by themselves only create greater debt.

    GDP calculations are misleading. They are a Keynesian measure of spending as if spending is the key determinate of economic health.

  • Kent C. DeForrest Provo, UT
    Sept. 21, 2012 9:06 a.m.

    Under certain circumstances, tax cuts may increase revenue. But taken to its logical conclusion, this argument assumes that cutting tax rates to zero will increase tax revenues. This is utter nonsense. Currently, our problem is not that we are paying too much in taxes. That may have been true when the top marginal tax rate was 94 percent, or even 77 percent, but our rates are at historic lows (since the 1930s).

    We need to gradually cut expenses (cutting too much at once simply shrinks the economy); we need to raise tax rates, especially on the wealthy; and we need to close loopholes, which primarily benefit the upper class.

    But this is still a short-term fix. We need to restructure the way corporations are owned, so that those who actually create the products and the wealth receive a fair share of the profits their work generates. Only then will we be addressing the underlying cause of the inequality that is devastating our economy.

  • Roland Kayser Cottonwood Heights, UT
    Sept. 21, 2012 8:39 a.m.

    Federal spending currently is 23.5% of GDP, not the 40% figure cited in the article. As a comparison, it averaged 22% under Reagan.

    GM was showing off prototypes of the Volt on the auto-show circuit in 2007, almost two years before Obama became president. The car has absolutely nothing to do with Obama.

    We could also mention that Hayek thought that the provision of healthcare was a legitimate government function.

  • pragmatistferlife salt lake city, utah
    Sept. 21, 2012 8:27 a.m.

    Mark I, Lower tax rates can generate more revenue. That is absolutely true..but the key to it's truth is the word "can". It's not true if you change the operative word to "will".

    If the American economy is part of a global economy where capital moves freely from oppportunity to opportunity why should we believe American capitalists will invest their resources in such a way that it benefits Americans? What's the incentive..patiotism..I don't think so. The intent of a mixed economy is to tilt the playing field to the locals. It may mean a less efficient economy, and it may help fuel bubbles and down turns..but at least we're still in the game. We're not on the sideline watching someone else "prosper".

  • Joe Moe Logan, UT
    Sept. 21, 2012 8:00 a.m.

    Disagree Esquire. I've been reading The Price of Enequality and trying to reconcile important points in that book to current GOP policies. I think this guy just gave me one of the keys. I am a Republican that thinks we need to raise taxes somewhat on the upper third, close loopholes, and reduce spending in some areas. This guy asserts that the GOP needs to stop focusing on tax rates per se, and instead look at how govt is trying to push certain markets (like the housing market in the nineties). This is key.

    In short, we need more regulation, I think, but less market-managing by govt. I had thought of those as the same thing before, but I'm befinning to see that they need not be. We can do both, and we must.

    Sept. 21, 2012 7:58 a.m.

    This whole piece is flawed because it fails to mention one critical word, rates! Lower tax rates can generate more revenue. When a retail store wants to generate more revenue, it doesn't raise prices it lowers them. Making less money per item, but more money overall.

    Republicans fell for the "spending cuts for tax increases trap" twice before. Reagan agreed to this, and so did Bush 41. The tax rate increases happened, but the spending cuts NEVER showed up. That is why Republicans are not going for this "compromise" again. Fool me once, shame on me....

  • Furry1993 Ogden, UT
    Sept. 21, 2012 7:56 a.m.

    The economy tanked in the GWBush administration. It is slowly beginning to recover in the Obama administration. Oman is wrong in his assessment.

  • Esquire Springville, UT
    Sept. 21, 2012 6:41 a.m.

    Oman should stick to teaching law rather than dipping his toes into selective facts to bolster his political views on fiscal policy. While a few of his points have some merit for discussion, he distorts reality with essentially political points and fails to address some bigger flaws in the GOP policy pursuits we have seen over the past 30 years.