So, it turns out that greed isn’t good after all – at least not for the vast majority of the American people. But this is a lesson that many U.S. opinion leaders still resist.
For the past three decades – since Ronald Reagan’s Republican landslide in 1980 – the United States has undertaken arguably the most destructive social experiment in American history, the incentivizing of greed among the rich by halving their top marginal tax rates.
The idea – once famously sketched out by right-wing economist Arthur Laffer on a napkin – was to slash the tax rates on the rich to spur a “supply side” bonanza of economic growth and higher tax revenues for the government.
Before becoming Reagan’s vice presidential running mate, George H.W. Bush labeled this tax strategy “voodoo economics,” and Reagan’s first budget director David Stockman warned that, without severe spending cuts, it could create a sea of red ink as far as the eye could see.
But the experiment was undertaken anyway, with Reagan persuading a large swath of the American electorate – especially alienated white men – that tax cuts heavily weighted to the rich were the way to go and that the most important priority was to get rid of federal regulations, or as Reagan phrased it, “government is the problem.”
Reagan’s sharply lower tax rates meant that the rich had a much stronger incentive to pad their salaries and grab whatever they could.