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is one person's liability, but another person's asset.

Debt is one person's liability, but another person's asset. Paul Krugman

is, contrary to Milton Friedman's belief, unable to fight depressions unaided as evidenced first in Japanese and now across the western world. A more activist government is needed than friedman was willing to countenance.

Now, I don't want to put Friedman on a pedestal. In fact, I'd argue that the experience of the past 15 years, first in Japan and now across the Western world, shows that Keynes was right and Friedman was wrong about the ability of unaided monetary policy to fight depressions. The truth is that we need a more activist government than Friedman was willing to countenance. The point, however, is that modern conservatism has moved so far to the right that it no longer has room for even small concessions to reality. Friedman tried to save free-market conservatism from itself but the ideologues who now dominate the G.O.P. are beyond saving.

is a wrongheaded theory of 'free lunches' and is responsible for budget deficits during the regan administration, thus proving the laffer curve wrong.

Critics of 'Reaganomics' claim it failed to produce much of the exaggerated gains some supply-siders had promised. Krugman later summarized the situation: 'When Ronald Reagan was elected, the supply-siders got a chance to try out their ideas. Unfortunately, they failed.' Although he credited supply-side economics for being more successful than monetarism which he claimed 'left the economy in ruins', he stated that supply-side economics produced results which fell 'so far short of what it promised,' describing the supply-side theory as 'free lunches'. .

is an economic policy implemented by Reagan when he reduced taxes from a top marginal rate of 50% to 28% and saw an increase in government revenue during his term, but this ignores increased budget deficits and the fact that that payroll taxes were raised during the same period.

. . Also, Reagan reduced taxes from a top marginal rate of 50% to 28%,[32] and saw an increase in government revenue during his term.[33] . . . . . . . . .Krugman and other critics point to increased budget deficits during the Reagan administration as proof that the Laffer Curve is wrong. Supply-side advocates claim that revenues increased, but that spending increased faster. However, they typically point to total revenues[52] even though it was only income taxes rates that were cut while other taxes, notably payroll taxes were raised.[53] That table also does not account for inflation. For example, of the increase in revenue from $600.6 billion in 1983 to $666.5 billion in 1984, $26 billion is due to inflation, $18.3 billion to corporate taxes and $21.4 billion to social insurance revenues (mostly FICA taxes).

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Paul Krugman