The Religion of Low Tax Fueled Economic Growth
One would have expected a more honest argument from a professor of Finance. Economic stimulus tend to grow an economy regardless of whether that stimulus happens through increased purchasing power from the private or public sector. Since Donald Trump is financing his tax deductions through heavy borrowing, this is nothing but a short term economic stimulus.
To avoid mentioning that is tantamount to presenting a white lie. To dismiss the arguments of Paul Krugman with the argument that the world is entirely different today is overly simplistic. There are a wide variety of both states within the US and countries outside the US, which has expereimented with different tax rates. There is no clear proof that low taxation leads to economic growth.
In fact OECD has concluded that wealth inequality hampers economic growth. This is of course conventiently not mentioned by our professor because it pokes holes at the narrative he wants to present, which is that we need to small government/low tax type of regime to bring prosperity.
Crying crocodile tears over the plight of working class Americans is not very convincing. The US has seen tremendous economic growth since the late 1970s. Yet working class wages have barely changed. The working class has only gotten higher wages due to more hours worked and more women entering the workplace. When that effect ran out, they started borrowing heavily leading to the 2008 financial crisis. Not very different from the 1929 depression also caused by inequality levels reaching levels where people at the bottom started borrowing heavily to keep up with the Joneses.
It is not lack of economic growth which is the problem but the fact that this growth has barely benefitted working class Americans.
A good counter example Michael Busler are nordic countries which have managed to grow the economy while maintaining fairly high marginal tax rates. This has been accomplished while letting the working class take a much bigger share of that growth.
What is the point of economic growth if it is only to the benefit of the 1% year after year after year? This is what leads to polarized politics and radicalization. Economic liberalists need to take responsiblity for the radicalization and social dysfunction their policies result in.