The Economy: A Bleak Outlook

Supply-side economics, the official Reagan alternative to the scorned Keynesian prescription, amounts to a gamble on the proposition that lower taxes will stimulate enough new investment and effort to flood supermarkets and showrooms with cheap merchandise of steadily improving quality. More production, the argument runs, is the best cure for inflation. This assurance is the core of the supply-side position. But with varying degrees of emphasis, supply siders also advocate substantial curtailment of social programs, relaxation of environmental and other regulation, and Friedmanite monetarism. Jack Kemp, now Number Three in the House of Representatives’ Republican hierarchy, took a comparatively mild line on social spending in his 1...