The theory expresses by an slim state that does only a few things, but does not interfere with businesses. "Trickle-down" is one "theory" of theirs: if you give money to the rich, directly or reducing taxes, the money lands in the end at the poor, but this "theory" has been disproven so often that you can't call it a theory anymore.
"Neoliberalism" is Reaganomics, a series of beliefs about the world:
* The government is generally the problem [with our economy], not the solution to our [economic] problems.
* Low taxes, low regulation, and low barriers to trade favor positive-sum economic development.
* The market will perform most regulatory tasks for us out of enlightened self interest.
* Ricardian specialization in international trade is to the benefit of all.
* Money made by the wealthy will trickle down to everyone else's quality of life.
* The Laffer Curve is self evident and we are self-evidently always on the right side of it; Cutting taxes will increase receipts.
Conservatism is highly compatible with this worldview, but it was embraced by liberals as well after the country re-elected Reagan in a landslide. Clinton's "Third Way" portrayed itself as an alternative to traditional Republican and Democratic concerns that was socially progressive but promoted a slightly softened version of this economic theory.
Some version of or equivalent to the Third Way has basically been in control of the Democratic party ever since due to its superior ability to fundraise for campaigns, due to the slow death of the labor movement, and due to the death of the dream of international communism among fringe intellectuals.
In an attempt to differentiate itself, conservatives tilted hard, hard right on social politics (if not always policy), and brought the economic policies to an extreme that would have been nonsensical a generation earlier.
Most people who didn't spend the last two or three decades living off of returns on their investments, have been frustrated with the failed promises of neoliberalism, and it is losing traction with liberals; Or rather, [neo]liberals are losing traction with the electorate.
I don't think the claim that there is atleast one highest total tax collected point in between 0 and 100% tax is that wild? It aint that much more to it? (I agree with the rest of the point about missusing it)
You could argue that the model is too simple ofcourse. Or that 100% tax on certain things don't give 0 revenue and that 100% tax is not the roof. E.g. some people are paying to work at farms.
The response of tax revenue to tax rate changes might be discontinuous and highly dependent on the current tax rate and other temporal factors. Like, the optimal strategy for the next 5 years might be to increase tax for one year and then decrease it, whilst the optimal strategy for 10 years time is to do nothing at all. Imo this renders the idea of the Laffer curve to be pretty useless.
Thanks for this. The mention of compatibility between conservatism and neoliberalism is interesting. The UK Conservative party historically aligned with a more "mercantilist" economics. This sometimes stood in opposition to free market ideology; for example the Corn Laws divided the party, and there was strong support for tarrifs well into the 1900s. But Thatcher instituted a shift very similar to Reagan's, and by the 1990s everyone was a neoliberal.
Neoliberalism is an economic theory embraced by both parties (and globally really), and have been since the oil crisis during Carter. It can be confused with liberalism the political theory, but it's different. Each US political party has a slightly different flavor, but economically it's the same. It's good from a macroeconomic perspective and a strategic perspective, but eliminating trade barriers allows US companies to outsource labor to poorer countries at the expense of US workers for lower prices (in a nutshell). Think Apple in China, Tata, US manufacturing in Mexico, etc.
I assume neoliberal conservatives are the conservatives who embrace neoliberalism, but both parties have embraced it for generations. We seem to be rolling it back somewhat since the main strategic benefit (containing the Soviet Union) is no longer as relevant (until recently I suppose).
Even when Carter is identified during the correct time frame, it's always best to remember that the oil crisis and runway inflation that followed were the complete doing of Nixon and OPEC beforehand.
Actually in current hindsight it could most realistically be said, pointing to the most prominent national leadership involved, that such distorted economic policy arose "during" Al Saudi.
