Introducing The Schumpeter Club

Over at his marvelous blog, economist Greg Mankiw created the Pigou Club, an "elite group of economists and pundits with the good sense to have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes.” (The club is named after English economist Arthur Pigou.)

I like the idea so much I am stealing it the general concept. Consider this the inaugural post of The Schumpeter Club. Joseph Schumpeter was the noted Austrian economist who analyzed the critical role of innovation in generating long-term economic growth.  (The transformational effect on business from innovation he termed "creative destruction.")

For my purposes, members of the Schumpeter Club are those folks who believe a crucial way to strengthen the floundering American economy is by unleashing our free-market, entrepreneurial, innovative dynamism through lower taxes. Now this doesn't mean you can't also be for smart infrastructure investments or selected capital injections into our banking system or a federal homeowners refinancing plan. You can even also be a carbon-tax-loving member of the Pigou Club. But Schumpeterarians understand that reinvigorating private enterprise needs to be key to any pro-growth economic recovery plan. (Not bailouts. Not government spending. Not quantitative easing by the Fed.)

1) Now the Honorary Chairman has to be my friend Larry Kudlow. For starters, his favorite economist not named Arthur Laffer is Schumpeter. And Kudlow has been increasingly vocal about the strange and disturbing lack of tax cuts in the Obama stimulus plan:

"President-elect Obama has been cagey about the details of his massive $700 billion infrastructure spending plan and whether he’ll raise taxes on successful earners. But this new New Deal, including Obama’s middle-class tax credits, will not create permanent economic growth incentives. What will? A genuine supply-side growth agenda to reduce tax rates across-the-board."

2) I am also inducting (whether he likes it or not) Greg Mankiw. Here is what he wrote on his blog yesterday:

"My advice to Team Obama: Do not be intellectually bound by the textbook Keynesian model. Be prepared to recognize that the world is vastly more complicated than the one we describe in ec 10. In particular, empirical studies that do not impose the restrictions of Keynesian theory suggest that you might get more bang for the buck with tax cuts than spending hikes."

3) Another member is Stanford University economist John Taylor. As he put it recently in the WSJ:

"Many good fiscal packages are consistent with these principles. But what can Congress and the incoming Obama administration do to give the economy a real boost on Jan. 20? Here are a few fairly bipartisan measures worth considering: First, make a commitment, passed into law, to keep all income-tax rates were they are now, effectively making current tax rates permanent. This would be a significant stimulus to the economy, because tax-rate increases are now expected on a majority of small business income, capital gains income, and dividend income."

More nominations welcome!