Professor of Economics Richard Grossman had an op-ed in The Hartford Courant on Jan. 5 about negotiations over the “fiscal cliff” in Washington. He writes that though reasonable people may disagree over what top marginal tax rate is ideal for the economy, the stubborn resistance of Congressional Republicans to any tax increases is the product of ideology, not reason. Looking back over history, he writes, the “abdication of sound economic reasoning in favor of ideology” has resulted in numerous policy mistakes with long-lasting economic impacts.
As an historical example, Grossman cites Britain’s decision to return to the gold standard following World War I out of nostalgia for a former all-powerful empire. This decision was made “despite structural changes that rendered the gold standard inappropriate in the postwar world,” and helped usher in the Great Depression, he writes.