Are We All Supply-Siders Now?

by Conor Clarke

Let me toss my hat in with Matt Yglesias and say that I don't quite know what Greg Mankiw has in mind when he writes that "We are all supply-siders now." The term "supply-side economics" has done a really bang-up job of shedding all meaningful definitional content over the past decade. But my sense is it usually refers to one of three claims, and not the one Greg has in mind.

Here's my quick and dirty taxonomy: The "strong" version of the supply side argument is that tax cuts will generate enough growth to increase tax revenue. (Not to be confused with the general Laffer Curve proposition that tax cuts can do this, which will probably be true under some circumstances -- say, if a tax rate went from 100% to 99%.) The "semi-strong" version is that tax rates are the key factor governing economic growth. And the "weak" version is that the growth and efficiency generated by lower taxes is more important than the equality generated by redistribution. (The "weak" version pretty much just restates the big difference between the left and the right, so it's really quite general.)  

Anyway, I don't think anyone uses the term "supply-sider" how Greg Mankiw seems to be using the term -- which is to describe someone who believes in the general proposition that taxes affect incentives. Everyone believes that! But I can assure Greg that all of us are not supply-siders.