View in your browser.

Simple: Because he dare not mention North Carolina.

On June 29 Krugman blasted Kansas for its recent tax cuts, which he says have resulted in a "debacle," and which he blames upon supply-side "charlatans and cranks" peddling the idea that tax cuts have "magical powers" to grow the economy.

(Astute Krugman watchers will realize with mirth that to make this argument, Krugman had to walk back a recent column arguing that the Reagan Boom was because Reagan was a Keynesian. The politically expedient ‘truth’ of the day then required propping up obviously failing Keynesianism with memories of Reagan’s economic revitalization, just as now it requires disavowing a Reagan boom so as to reconnect Reagan with supply-side economics in order to hurl invectives at Kansas.)

Stephen Moore, one of the "charlatans and cranks" named in Krugman’s column (which means Krugman has also flipped on his supposed aversion to ad hominem argumentation, which no one believed anyway, since it had all the believability of Ronald McDonald declaring an aversion to sesame seeds), answers Krugman’s charges with aplomb in Investors Business Daily:

Krugman says such moves went awry in Kansas, where Republican Gov. Sam Brownback cut the top tax rate from 6% to 4.5% and to zero on small-business income. According to him, "Kansas isn’t booming; in fact its economy is lagging." Kansas shows that "tax cuts don’t have magical powers," he concludes.

Well, it’s true: Tax cuts don’t have magical powers, and it’s an often-repeated caricature by the left that Laffer and I and others believe that to be true. There are dozens of reasons why some places grow and others lag behind — and taxes is only one of them.

But what is irrefutable from the evidence in the states, not just Kansas, is that strategic tax-rate reductions can ignite growth and employment. Memo to Krugman: Read our new book: "An Inquiry into the Nature and Causes of the Wealth of States."

Or just read John Hood’s recent Spotlight analysis of 681 peer-reviewed academic studies over the past 25 years, which showed that "it is clear that the policy preferences of fiscal conservatives have strong empirical support. Most studies find that lower levels of taxes and spending, less-intrusive regulation, and lower energy prices correlate with stronger economic performance."

Continuing with Moore’s rebuttal:

Here’s what the national data tell us: Over the past two decades, the nine states without an income tax have had double the population growth and more than double the income growth of states with very high income taxes. These results are statistically significant, which means it’s very unlikely they happened by chance.

This does not mean all states that cut taxes have growth or that all states with high taxes don’t have growth. It means there is a strong propensity for low-tax and tax-cutting states to grow. Period.

This is a problem for the left because places such as New York, Massachusetts, Illinois and California that have been following Krugman’s (and President Obama’s) economic strategy to a tee are getting clobbered by tax-cutting states. …

As for Kansas, the tax cut has been in effect a mere 18 months — not a lot of time to measure the impact. What we do know is that Kansas had slightly more economic growth (2.4%) than the nation as a whole (2.2%).

Nevertheless, with Kansas only slightly outperforming the nation, Krugman has the thinnest of opportunities to declare a "debacle." Why isn’t he doing so in North Carolina, which not only made significant tax reforms but also earned his premature opprobrium for its unemployment insurance (UI) reform?

Here are some of the ways Krugman chose to characterize North Carolina’s UI reform (which, as should surprise no one by now, meant he completely subverted what he wrote in his own macroeconomics textbook on generous unemployment benefits):

  • "the proposition that we can cure unemployment by making the jobless even more miserable"
  • "war on the unemployed [that] isn’t motivated solely by cruelty: rather, it’s a case of meanspiritedness converging with bad economic analysis"
  • "the move to slash unemployment benefits is counterproductive as well as cruel; it will swell the ranks of the unemployed even as it makes their lives ever more miserable"

Why so silent now? As John Hood has shown, and will elaborate on in this coming Saturday’s edition of the Wall Street Journal, since those reforms North Carolina’s labor-market improvement has been one of if not the best in the nation.

And Krugman, at the very least, can reach a point at which even he will ignore a failing position. The work of University of Chicago labor economist Casey Mulligan gets no discussion from him, for example. How could it, when it shows that roughly half of the nation’s excess unemployment owes to generous unemployment benefits, and much of the rest owes to other policies Krugman loudly promotes, including especially Obamacare?

The News & Observer, on the other hand, will rush in where even Krugmans fear to tread. On June 30 the paper chose to reprint Krugman’s editorial, which didn’t mention North Carolina, and which was titled by The New York Times "Charlatans, Cranks, and Kansas."

The N&O gave it the title "Supply-side charlatans, cranks, Kansas – and NC?"

Click here for the Rights & Regulation Update archive.

You can unsubscribe to this and all future e-mails from the John Locke Foundation by clicking the "Manage Subscriptions" button at the top of this newsletter.