Economics is not a science; it’s a story: what the wealth tax debate tells us about the bias of economists

Business Insider | 10/9/2019 | David Goldstein
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David Goldstein is a senior fellow at Civic Ventures and co-host of the Pitchfork Economics podcast.

In this opinion piece, he argues that the "neoliberal narrative" has led to a gap between the economics we teach today and the actuality of the economic landscape. For instant, theory on minimum wage and regulations has been proven to be incorrect.

Goldstein - Story - Years - Story - Interests

Goldstein says "the economic story we've told ourselves these past 40 years is a neoliberal story deliberately crafted to serve the interests of a wealthy elite."

For more on this topic, listen to the latest episode of Pitchfork Economics.

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One of the clearest illustrations of the economic notion of a "market failure" is the market for academic economists — a market so captured by the dominant neoliberal narrative, that it has proven nearly impervious to competition from empirical facts.

Example - Senator - Elizabeth - Warren - Call

Take, for example, Senator Elizabeth Warren's recent call for a 2% annual tax on household wealth over $50 million. The proposal instantly drew derisive catcalls from economic experts arguing that taxing wealth would inevitably result in "slower growth ... fewer jobs and lower incomes." And why not raise this theoretical objection? The inverse relationship between taxes and growth is basic Econ 101. Raising taxes slows growth.

Except, of course … it doesn't.

Studies - Likes - Brookings - Institution - Congressional

Multiple studies from the likes of the Brookings Institution, the Congressional Research Service, the Center on Budget and Policy Priorities, and many others have found absolutely no correlation between top marginal tax rates and GDP growth. And the same holds true for nearly every other economic metric, including job growth, wage growth, investment growth, productivity growth, and so on. When it comes to taxes, economic theory and economic reality simply don't match: "The argument that income tax cuts raise growth is repeated so often that it is sometimes taken as...
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