This is the story of a revolution in economic policy that emerged from the Congressional budget process and the challenge posed by stagflation. Keynesian economics, or demand management, had focused on stimulating consumer demand while neglecting the adverse impact of high marginal tax rates on supply. Consequently, higher rates of inflation became necessary to eke out employment gains, and higher rates of unemployment were required to arrest inflation. Supply-side economists established that marginal tax rates determine important relative prices that shift the aggregate supply curve. This discovery led to a change in the economic policy mix, with tighter monetary policy used to restrain inflation and lower marginal tax rates used to increase the rewards to work and investment. The result was the collapse of stagflation and two decades of economic growth that did not have to be paid for with rising rates of inflation.
"I read this book because I was studying the economic changes brought about by the Reagan victory in 1980. I’ve seen many favorable and unfavorable mentions of the “supply-side” theory, so I was looking for an account from a true supply-sider. This book fits that need. It describes the immediate intellectual origins of the policy (but not the fundamental long-term origins). It then describes the political battles that went on in the legislative and executive branches from 1978 to about the end of 1981. I enjoyed reading how the free-market Republicans, Keynesian Republicans and liberals fought it out behind the scenes. These battles shaped the relatively vague “supply-side” theory into a specific government policy. This book is a good view into those years and provides perspective to the more recent government tax and spending issues. "
"Don’t buy this book if you just want to know the history of supply-side economics — it is so much more than that. If you want to know how economic policy making REALLY happens inside the beltway (including even the most boring parts, the ugliest warts, and more!), this book gives it to you straight."
"A timely masterpiece. It will have a real impact on economic thinking in the years ahead."
"Dr. Roberts has written a beautiful, compelling, factual and detailed view of how the supply siders came into “power” and began to dominate economic policy formulation in Washington DC."
"A rare, revealing and brilliant account of how economic policy is made and unmade in Washington. This is a case study without equal of the politics of economic policy by a prime mover of supply-side economics. Must reading."