Last week a group of economists called on Britain's Chancellor of Exchequer Gordon Brown to follow the lead of the US Treasury and create an institution to look at the dynamic effects of tax cuts and include these in his public finances forecasts. Brown assumes at present that changes in tax rates have no impact on economic growth, investment behaviour or tax evasion. In British — and indeed in European — politics the economy is viewed almost exclusively as a static entity. This despite the fact that it has been repeatedly demonstrated that tax cuts (if they are substantial enough) stimulate economic activity. This ignorance of a fundamental principle of economics is truly remarkable on the part of those who consider themselves a cut above everyone else. It is well known that European elitists almost uniformly believe that we Americans are dunces. But on this point they are badly mistaken. In fact, the average American voter is a veritable wizard compared with even the...(Read Full Post)