May 19, 2008
Is Jodie Foster Responsible for Reaganomics?
What was the greatest wealth-creating film of all time? That question was answered by Robert Mundell, a Nobel Prize-winning professor of economics at Columbia University. His answer: Taxi Driver, Martin Scorsese's 1976 classic starring Robert De Niro and Jodie Foster.
Mundell's explanation, according to a report in The Financial Times, works like this: Ronald Reagan's would-be assassin, John Hinckley, claimed he shot the president in an effort to impress Jodie Foster. (The movie features a scene in which De Niro attempts to assassinate a politician.)
The wave of sympathy for Reagan in the wake of the shooting deterred Democrats in Congress from voting against his proposed tax cuts. According to Mundell, the passage of those tax cuts at the same time that Paul Volcker at the Federal Reserve was administering tight money was instrumental in creating the era of prosperity that followed.
"Taxi Driver is the most important movie ever made from the standpoint of creating GDP," Mundell said. "It's the movie that made the Reagan revolution possible. That movie was indirectly responsible for adding between $5-trillion and $15-trillion of output to the U.S. economy."
Evan Goldstein | Posted on Monday May 19, 2008 | PermalinkComments
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To say nothing of creating huge federal deficits and massive national debt.
— Ed Hynes May 19, 03:25 PM #
It was voodoo economics then, it’s voodoo economics now. Republicans borrow agains the future middle class to engorge themselves at the moment. It is the ultimate greed.
— original marcii May 19, 03:31 PM #
Now we know why economists are held in such high regard. On this evidence, economics is not only the dismal science but the delusional science.
— jd May 19, 03:31 PM #
Economics students will now scramble to prove this assertion empirically. Good luck!
— Sol May 19, 03:35 PM #
Reaganomics makes as much sense as running up the Visa bill. If you did it to build a sustainable economy (I buy a computer with which I then make an income), there may be a way to justify it if done with prudence. Problem was that Reagan built an industry (Defense) with one customer (US Govt). It wasn’t sustainable.
— dhimes May 19, 03:37 PM #
And we wonder why so many people find academe frivolous and out of touch…
— Melissa May 19, 03:57 PM #
Unbelievable. More than likely, this work was done on a six figure grant. Mundell should be ashamed for masquerading this trivial garbage as intellectual output—perhaps he is angling for a feature, with photo art, in Us magazine—-that is where this belongs, not the Chronicle of HIGHER Education.
— History Professor May 19, 04:03 PM #
Jodie Foster is responsible? You meant to say the mental illness and actions of the man that was obsessed and attempted the assassination, didn’t you? Jodie Foster had nothing to do with the incident.
— reader May 19, 04:17 PM #
After these comments, it is no wonder that many people consider academics humorless ideologues.
— fvn May 19, 04:25 PM #
Your point is well taken, fvn, and surely (hopefully!) this ‘study’ was done in jest. But while I risk further proving your point, I must confess I have a hard time seeing the humor in disastrous economic policies, mental illness and attempted murder.
— Melissa May 19, 04:43 PM #
Nobody mentions that Reagan’s massive tax cut led to higher Federal tax revenues (adjusted for inflation) at the end of his presidency than at the beginning? Or that, as part of the deal, the Democrats controlling Congress publicly promised to pair tax cuts with curtailed spending but didn’t?
Why wouldn’t a transfer of money from the least-creative, most-risk-averse economic sector — the government — to the most-creative, most-entrepreneurial sector — private enterprise — stimulate the economy and increase tax revenues?
— S. Britchky May 19, 05:02 PM #
I beg to differ. Mr. Mundell should study the impact Star Wars had Ronald Reagan. The series inspired his thinking and led to his “Evil Empire” speech and his Strategic Defense Initiative which was kept alive by subsequent presidents though renamed by each. The amount of spending on defense and all efforts to spread democracy in the Soviet Union and elsewhere dwarfs any positive cashflow resulting from Taxi Driver.
— L Wood May 19, 06:03 PM #
Beg the question: Was it worth it? And, if so, for whom?
— Constance Lavender May 20, 04:43 AM #
Wow…all this time and you still can’t get over it. In addition to the prosperity, you should thank Reagan for giving you something to b*tch about for years. If not for the RNC and such, what would academics ‘bemoan’ and ‘lament’ (they are too smart to just whine and complain!) . Humorless is right. Nothing like liberal ‘tolerance’ in full flower. The study is a neat and funny comment on the (often) unintended impact and interwoven nature of events.
— Frank May 20, 06:15 AM #
This is social science in its purest manifestation. To understand the evolution (or development) of significant policy decisions we must not only understand what fits the basic equation, but what other factors are significant modifiers of the equation. It may appear “cute,” and it may seem trite, but can you dismiss the possible effect that public sympathy for a wounded president had on political decisions at a specific point in time? Don’t forget the Hofferbert cone!
— Droste May 20, 08:33 AM #
Reaganomics WAS classical economics, in the truest sense of the word. Read the Muqaddimah by Ibn Khaldun. Presaging the economic policy of the Republican Party from Reagan through the Bushes, Ibn Khaldun explained how raising taxes could actually result in lower tax yields by slowing down economic activity. Conversely, he noted, when:
“tax assessments and imposts upon the subjects are low, the latter have the energy and desire to do things. Cultural enterprises grow and increase, because the low taxes bring satisfaction. When cultural enterprises grow, the number of individual imposts and assessments mount. In consequence, the tax revenue, which is the sum total of the individual assessments, increases.”
The problem wasn’t (and the same is true today)the cutting of taxes, it was/is the failure to curtail spending.
— Old Hand May 20, 10:19 AM #
Indeed those who think that a majority of us have missed the humor in Mundell’s comments have themselves missed the essence of our comments—that we are just being sarcastic—not serious.
— Sol May 20, 04:12 PM #
Interesting article in 5/20 Wall Street Journal by David Ranson on what he calls “Hauser’s Law.” For over 50 years revenue as percentage of GDP has been virtually the same, about 19.5%. During that same time marginal tax rates ranged from over 90% to less that 30%. Of course, question remains: on what does increase of GDP depend?
— Jim May 27, 11:26 AM #
I think that all of the comments on this article are wonderfully entertaining and in some ways more informative than the article itself. Pointing out the greed and voodoo economics…I appreciate that.
— Kittie Jun 10, 10:50 AM #
What’s I find hilarious is that this piece of ‘academic’ work has already been covered by an episode of the cartoon ‘American Dad’ in an episode called “The Best Christmas Story Never”… only that was funnier and more historically accurate
— matt Jun 10, 02:00 PM #