Published: 6th Jul 2011

Since my last blog on voodoo economic development raised some comments and discussion, I thought I would explain it some more. Voodoo ‘economics’, was first coined by George Bush senior in his fight for the Republican nomination in 1980 with Ronald Reagan, where he attacked the logic of Reaganomics. Simple Reaganomics was focused on a ‘having your cake and eating it logic’, which was brilliant in its simplicity, namely that a lowering of taxes would improve the economy and lead to more tax revenues. This would happen because the low taxes would reduce the barriers for companies to produce (supply) goods and service. This would create a flood of products to the market, which would induce lower prices, as companies increasingly compete for business. This would in turn result in more consumer demand, increases in tax revenues, and would offset the tax decreases! George Bush senior called this logic ‘voodoo’. … (To read the full article, subscribe below)