How does Michael Boskin do math?, by Richard Green: He writes in the Wall Street Journal this morning:
The lower marginal tax rates in the 1980s led to the best quarter-century of economic performance in American history.
This didn’t seem right to me, so I went to the National Income and Products Account web site. For GDP growth after 1947 (the beginning of the quarterly NIPA data), the best 25 year period was between the first quarter of 1949 and the last quarter of 1973, when the economy grew by a multiple of 2.68. This is well before Reagan took office. The period of 25-year spells after Reagan took office is small, but the best period is the fourth quarter of 1982 until the third quarter of 2007, when the economy grew by a multiple of 2.26.
GDP growth likely overstates the benefit of the post Reagan era, because the benefits of the growth have been unevenly distributed. If we look at median household income, it is really hard to figure out how to find a “best in history” 25 year period after Reagan.
As subtle but important point here is how to define “best.” For example, echoing Richard’s point, is growth all that matters if it is distributed inequitably?