Ben Stein’s Day Off

by Burt on July 1, 2011

Economist Ben Stein is a wonderful human being, and when asked, he admits that his couple of minutes on camera as an economics teacher in “Ferris Bueller’s Day Off” will probably be his most lasting mark on society. In a hilarious scene, Teacher Stein instructs a spaced out group of high schoolers on the intricacies of the Smoot-Hawley Tariff and the Laffer curve. Stein’s teaching is accurate, but the snoozing students are uninspired.

In real life, Ben Stein is oddly campaigning against the Laffer curve: He wants higher tax rates on the rich, even though such actions in the past have led to diminished revenue. When a nation tells its entrepreneurs they don’t get to keep what they earn, they leave and invest elsewhere. When tax rates drop, by contrast, entrepreneurs start businesses, or expand existing ones. To Professor Stein, that ought to be Econ 101, and listeners today are reacting to his current message the way his students did in “Ferris Bueller’s Day Off.”

One of the best books that supports my critique of Ben Stein is The Fiscal Revolution in America, written by his father, Herbert Stein. On page 209, Herbert Stein notes that after World War II, Congress cut the sky high income and corporate tax rates that were stifling economic growth. In January 1946, the government estimated it would take in $31.5 billion in revenue, but the tax rate cuts spurred entrepreneurs to invest, and government collected $43.3 billion in revenue that year with lower rates. The same thing happened again in 1948. According to Stein, “By the time the tax cut was finally enacted in 1948 the estimate of revenues had been raised to $46.5 billion and the deficit had been converted to a surplus of $8.8 billion.”

The father is right, but the son is wrong when he suggests that higher tax rates will generate economic growth. Ben Stein’s homework assignment for the July 4th weekend is to read his learned father and then move back to the head of the class to teach us sound economics

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