Occupational Licensing, the Criminal Law and Vocational Liberty

He Told You So

A story on the Wall Street Journal's "Law Blog" highlights a study by the National Employment Law Project demonstrating one of the many perils of occupational licensing statutes, namely, that many such statutes needlessly exclude individuals with a criminal record, including some with misdemeanors, from employment in the field in question.  According to the story, about one in four Americans works in a profession that requires a state license, and nearly one third of Americans have a criminal record.  While some states (e.g. Minnesota), ignore convictions for offenses unrelated to the licensed occupation in question, others invoke unrelated convictions to bar individuals from a licensed occupation, sometimes declaring such convictions evidence of the sort of "moral turpitude" that requires such exclusion.

As a result of these restrictions, perhaps millions of Americans cannot pursue the vocation of their choice in some states, thereby undermining basic occupational liberty, preventing countless voluntary transactions, and depriving society of the productive services of talented individuals. To be sure, some of these restrictions may serve valid public purposes, as when a state bars convicted bank robbers from driving armored cars. However, many such restrictions do not, as when, for instance, a state bars an individual convicted of marijuana possession from serving as a manicurist, landscape worker, make up artist, travel guide, bar tender, taxidermist or animal trainer.  (See here for a list of 102 occupations to which some or all states limit entry.)

At the same time, this anti-liberty "synergy" between the criminal law and occupational licensing is just one negative facet of a legal regime that grants states nearly limitless authority to prevent individuals from pursue their chosen vocation.  As Milton Friedman explained more than half a century ago, many such statutes infringe the basic human freedoms to engage in voluntary wealth-creating transactions, while simultaneously protecting incumbent producers from competition, reducing output and increasing prices. See Milton Friedman, Capitalism and Freedom 137-160 (1962).  Thus, Friedman contended, society should adopt a very heavy presumption against such regulation.  See id. at 144.   These conclusions, of course, followed ineluctably from basic economic science. Even some progressives, including the Obama Administration, have finally conceded Friedman's point that occupational licensing wreaks significant harm on the economy.  Unfortunately these same progressives still maintain their ideological and anti-scientific support for other intrusive regulations of labor markets, thereby weakening the sort of intellectual milieu necessary to true reform.  (Indeed, the same National Employment Project supports the anti-liberty and anti-wealth measure known as the "minimum wage.")

The National Employment Law Project identifies a serious problem, namely, numerous unjustified abridgments of personal liberty.  These results come as no surprise to those who have long internalized Friedman's lessons. However, Friedman also provided the best solution to this problem, viz., a wholesale embrace of economic science and the resulting elimination of the vast majority of occupational licensing statutes, period.  Nibbling around the edges by altering the interaction between the criminal law and unjustified occupational licensing is at best, a half-measure. 

Occupational Licensing, the Criminal Law and Vocational Liberty

He Told You So

A story on the Wall Street Journal's "Law Blog" highlights a study by the National Employment Law Project demonstrating one of the many perils of occupational licensing statutes, namely, that many such statutes needlessly exclude individuals with a criminal record, including some with misdemeanors, from employment in the field in question.  According to the story, about one in four Americans works in a profession that requires a state license, and nearly one third of Americans have a criminal record.  While some states (e.g. Minnesota), ignore convictions for offenses unrelated to the licensed occupation in question, others invoke unrelated convictions to bar individuals from a licensed occupation, sometimes declaring such convictions evidence of the sort of "moral turpitude" that requires such exclusion.

As a result of these restrictions, perhaps millions of Americans cannot pursue the vocation of their choice in some states, thereby undermining basic occupational liberty, preventing countless voluntary transactions, and depriving society of the productive services of talented individuals. To be sure, some of these restrictions may serve valid public purposes, as when a state bars convicted bank robbers from driving armored cars. However, many such restrictions do not, as when, for instance, a state bars an individual convicted of marijuana possession from serving as a manicurist, landscape worker, make up artist, travel guide, bar tender, taxidermist or animal trainer.  (See here for a list of 102 occupations to which some or all states limit entry.)

At the same time, this anti-liberty "synergy" between the criminal law and occupational licensing is just one negative facet of a legal regime that grants states nearly limitless authority to prevent individuals from pursue their chosen vocation.  As Milton Friedman explained more than half a century ago, many such statutes infringe the basic human freedoms to engage in voluntary wealth-creating transactions, while simultaneously protecting incumbent producers from competition, reducing output and increasing prices. See Milton Friedman, Capitalism and Freedom 137-160 (1962).  Thus, Friedman contended, society should adopt a very heavy presumption against such regulation.  See id. at 144.   These conclusions, of course, followed ineluctably from basic economic science. Even some progressives, including the Obama Administration, have finally conceded Friedman's point that occupational licensing wreaks significant harm on the economy.  Unfortunately these same progressives still maintain their ideological and anti-scientific support for other intrusive regulations of labor markets, thereby weakening the sort of intellectual milieu necessary to true reform.  (Indeed, the same National Employment Project supports the anti-liberty and anti-wealth measure known as the "minimum wage.")

The National Employment Law Project identifies a serious problem, namely, numerous unjustified abridgments of personal liberty.  These results come as no surprise to those who have long internalized Friedman's lessons. However, Friedman also provided the best solution to this problem, viz., a wholesale embrace of economic science and the resulting elimination of the vast majority of occupational licensing statutes, period.  Nibbling around the edges by altering the interaction between the criminal law and unjustified occupational licensing is at best, a half-measure. 

Robert Bork and Transaction Cost Economics

Lawyer and Scientist

Economic science and antitrust doctrine go hand in hand.  Over a century ago, in Standard Oil v. United States, 221 U.S. 1 (1911), the Supreme Court famously announced that the Sherman Act bans only those agreements and other conduct that results in monopoly or the consequences of monopoly. The Court identified three (and only three) such consequences: (1) output below the competitive level; (2) prices above the competitive level; and (3) quality below the competitive level. Thus, as Justice Stevens explained for the Court in National Society of Professional Engineers v. United States, 435 U.S. 679 (1978), Standard Oil is based upon "economic conceptions," and courts applying  the decision's "Rule of Reason" must focus solely on a challenged restraint's impact upon "competitive conditions."  It is thus no surprise that advances in economic science have influenced the content of antitrust doctrine over the past century or more.  As Herbert Hovenkamp put it over two decades ago:

"One of the great myths about American antitrust policy is that courts began to adopt an 'economic approach' to antitrust problems only in the 1970s.  At most this 'revolution' in antitrust policy represented a change in economic models.  Antitrust policy has been forged by economic ideology from its inception."

See Herbert Hovenkamp, Enterprise and American Law, 268 (1991).

Of course, judges are not economists, and they lack the leisure time and expertise necessary to keep abreast of the latest developments in economic science.  At the same time, economists are generally not lawyers, with the result that many will have difficulty "translating" developments in economic science into appropriate proposed changes in antitrust doctrine.  For decades, then, economically sophisticated legal scholars have played the role of translators, bridging the divide between economists and economic science, on the one hand, and generalist judges, on the other.   Successful translators have included Robert Bork, Philip Areeda, Donald Turner, Frank Easterbrook, Herbert Hovenkamp, and Richard Posner.  

This account of the relationship between economic science and antitrust doctrine treats economic science as exogenous and legal scholars and judges as passive recipients of developments in economics.  Indeed, some legal scholars have described their contributions in exactly this way.  For instance, Robert Bork claimed that his work simply assessed and critiqued antitrust doctrine in light of what he called "conventional price theory" and "basic price theory."  See e.g. Robert H. Bork, The Antitrust Paradox, 117 (1978) (invoking "conventional price theory"); Robert H. Bork, Resale Price Maintenance and Consumer Welfare, 77 Yale L. J. 950, 952 (1968) (invoking "basic price theory").   Richard Posner also claimed that the Chicago School of Antitrust Analysis was simply a manifestation of rigorous application of "price theory" to antitrust problem, an approach that Posner characterized as "novel."  See Richard A. Posner, The Chicago School of Antitrust Analysis, 127 U. Penn. L. Rev. 925 (1979).  By characterizing their contributions as mere applications of scientific principles determined elsewhere, these and other scholars could enhance the authority and persuasiveness of their proposals.

The assumption that economic science is exogenous to the legal academy is roughly true. There is, however, one counter-example suggesting that this assumption is not entirely accurate, namely, Robert Bork's contributions to the body of economic theory known as Transaction Cost Economics.  Contrary to his modest claim that he merely applied basic price theory to antitrust problems, Bork also made original contributions to economic science.  Ironically, these contributions actually undermined certain facets of price theory, particularly price theory's account of non-standard contracts. As previously explained on this blog, basic price theory identified two and only two rationales for complete or partial vertical integration: (1) the realization of technological efficiencies or (2) the acquisition or extension of market power.  By their nature, technological efficiencies arise "within" individual firms, during production and before sale.  However, non-standard contracts (minimum rpm, exclusive territories and the like) necessarily reach beyond the boundaries of the manufacturer to control the behavior of other firms, particularly wholesalers and retailers.  As a result, price theorists naturally assumed that such agreements cannot produce efficiencies and thus inferred that they were instead efforts to acquire or preserve market power.  The result was the so-called "inhospitality tradition" of antitrust, which was particularly hostile to various forms of partial contractual integration.

Of course, even before World War II, Ronald Coase undermined price theory's account of vertical integration, demonstrating that such integration could reduce transaction costs, regardless of any technological efficiencies.  See R.H. Coase, The Nature of the Firm, 4 Economica (n.s.) 381 (1937). However, this contribution went unnoticed at the time, exhibiting no influence on economic theory itself, let alone antitrust doctrine.  Indeed, according to conventional wisdom (including the work of Coase himself), no one understood or applied Coase's insight until various economists, particularly Oliver Williamson, rediscovered and expanded upon Coase's insight, particularly by expanding the definition of transaction costs to include the risk of opportunism that can arise due to relationship specific investments.

There is no doubt that Williamson played the preeminent role in bringing attention to Coase's insight and developing the transaction cost paradigm of industrial organization.  For this work he properly earned the Nobel Prize in Economic Science.   At the same time, this essay, prepared for a conference at Yale Law School and recently published by this blogger, contends that Robert Bork, although not an economist, played a hitherto unappreciated role in rediscovering Coase's transaction cost explanation for vertical integration.

As the essay shows, in a 1966 article, Bork critiqued the conventional wisdom regarding certain forms of contractual integration, particularly: (1) vertical contractual integration between a manufacturer and its dealers and (2) horizontal contractual integration between partners in an otherwise valid joint venture.  See Robert H. Bork, The Rule of Reason and the Per Se Concept: Price Fixing and Market Division II, 75 Yale L. J. 373 (1966).  (For more on Bork's revolutionary contributions to antitrust thought, go here.)  This critique cited Coase's 1937 work for the proposition that "contractual" integration and "ownership" integration can be alternative means of achieving the same economic objectives, an assertion at odds with price theory's technological conception of the firm.  (By contrast, Lester Telser's transaction cost interpretation of minimum resale price maintenance, on which Bork also drew, did not mention Coase.) Moreover, Bork also employed transaction cost reasoning to explain how exclusive territories (both vertical and horizontal), customer restrictions and ancillary horizontal minimum price fixing could overcome various costs of relying upon unfettered atomistic markets to conduct economic activity.  In so doing, he expressly assumed the existence of post-transaction opportunism, a condition unknown to price theory, albeit not in so many words.  That is, Bork assumed that a manufacturer's or joint venture's reliance upon an unfettered market to distribute goods could result in "parasitical" behavior by some distributors, behavior that would "take advantage" of and "victimize" fellow trading partners by "appropriating" to the parasite the contributions of others.  Parties would anticipate such opportunism, he said, and respond by adopting non-standard agreements that could prevent such behavior and, for instance, ensure an optimal quantity and type of promotional expenditure. 

Bork also explained how relegating manufacturers and joint ventures to the alternative of specifying the promotional obligations of distributors would entail prohibitive information and monitoring costs, costs that price theory simply assumed away, such as a manufacturer’s cost of ascertaining the appropriate type and amount of promotion for each dealer’s locality.  Thus, Bork conducted the sort of comparative analysis of alternative contractual mechanisms that today is a hallmark of transaction cost analysis.  Indeed, Bork even went so far as to characterize vertically-imposed exclusive territories as contractual property rights that aligned the interests of manufacturers and dealers, thereby departing from price theory's assumption of fixed property rights. (For additional elaboration on the "property rights" interpretation of intrabrand restraints, go here.)


In short, despite his repeated invocation of "price theory" as the only appropriate source of economic knowledge relevant to antitrust, Bork himself rejected various price-theoretic assumptions and developed tools of transaction cost economics to offer a novel interpretation of various non-standard agreements that price theory's "inhospitality tradition" had condemned.  Instead of functioning as a passive recipient of scientific change, Bork helped initiate such change himself.  Hopefully Bork's contributions to economic science will receive the notoriety they deserve.   

Kansas Gets it Right on Minimum RPM

 

Embracing Economic Science

 

Kansas Governor Sam Brownback  recently signed legislation reforming the state's approach to minimum resale price maintenance ("minimum rpm"), thereby conforming the law to the dictates of modern economic science.  (The legislation appears here. An official summary appears here.)  The legislation in question amended the state's Restraint of Trade Act to make it clear that the Act only forbids unreasonable restraints of trade, thereby incorporating into Kansas law the sort of "Rule of Reason" that the U.S. Supreme Court read into Section 1 of the federal Sherman Act in Standard Oil v. United States, 221 U.S. 1 (1911). In so doing, the new statute nullfied the Kansas Supreme Court's recent decision in O'brien v. Leegin Creative Leather Products, 277 P.3d 1062 (Kansas 2012), which had held that the state's Restraint of Trade Act bans any and all minimum rpm agreements, regardless whether the contract is reasonable in a particular case.     

 

The O'brien decision would have made perfect sense as a matter of antitrust policy in, say, 1950.  At that time economists and others were hostile to so-called "non-standard contracts," that is, agreements that limited the autonomy of dealers and others who purchased and took title to a manufacturer's product.  This hostility followed naturally from the state of economic learning at the time. For, as previously explained on this blog, during this era economists and others believed that complete or partial vertical integration could serve only two purposes: first, the realization of technological efficiencies and second, the creation or exercise of market power, by depriving rivals of sources of inputs or otherwise stifling competition.  Because minimum rpm and other non-standard agreements reached across the boundaries of one firm to dictate decisions by other firms, sometimes in other states, such agreements could not produce technological efficiencies.  As a result, economists and others inferred that such agreements, which reduced rivalry, necessarily fortified or exercised market power to the detriment of society's consumers.  The result was the so-called "inhospitality tradition" of antitrust law.  (See pp. 68-80  of this article for a more detailed explanation of the origins of the inhospitality tradition.) 

In 1960, however, everything changed.  In a path-breaking article, Professor Lester Telser explained how minimum rpm could prevent a manufacturer's dealers from free-riding on each others' promotional expenditures, thereby overcoming the market failure that would result if each dealer was left to his or her own discretion when determining promotional tactics. See Lester G. Telser, Why Should Manufacturers Want Fair Trade?, 3 J. L. & Econ. 86 (1960).  Six years later, and as previously recounted on this blog, Robert Bork reiterated Telser's argument and extended Telser's reasoning to non-price vertical restraints such as market division as well as horizontal price and non-price restraints that are ancillary to otherwise legitimate joint ventures. See Robert H. Bork, The Rule of Reason and the Per Se Concept: Price Fixing and Market Division, part II, 75 Yale L. J. 373 (1966).  (See also here,  here, and here for this blogger's views on the appropriate characterization and treatment of such restraints)   

The Supreme Court eventually took these lessons to heart.  Thus, in 1977, the Court, citing Bork and others, overruled a prior decision that had banned non-price vertical restraints such as exclusive territories.   See Continental T.V. v. GTE Sylvania, 433 U.S. 36 (1977).  Two decades later, the Court, again citing Bork and others, overruled a previous decision condemning maximum rpm as unlawful per se. See State Oil v. Khan, 522 U.S. 3 (1997).  Finally, in Leegin Creative Leather Products v. PSKS, 551 U.S. (2007), the Court overruled Dr. Miles v. John D. Park & Sons, 220 U.S.373 (1911), which had banned minimum rpm outright.  Writing for the Court, Justice Kennedy persuasively explained that Dr. Miles was based upon an economic misconception, namely, that manufacturer-imposed minimum rpm is economically indistinguishable from a horizontal cartel among the dealers of a manufacturer's product.  Relying upon the work of Bork, Telser and others, Justice Kennedy explained that, instead, manufacturer-imposed minimum rpm often produces significant efficiencies, by, among other things, preventing free-riding and thus ensuring an optimal amount of promotional expenditures, with the result that per se condemnation of the practice is not justified.  In so doing, the Court followed Standard Oil's requirement that courts employ "reason" to adjust antitrust doctrine in light of "more accurate economic conceptions," that is, advances in economic science.

Of course, the Supreme Court's Leegin decision only governed the federal Sherman Act, which generally does not preempt more interventionist state antitrust regulation, no matter how ill-advised.  Thus, Leegin left states perfectly free to ban minimum rpm as unlawful per se under their own antitrust laws, as some have, thereby reducing the welfare of a state's consumers.  Perhaps Kansas law left the O'brien court with little choice but to reaffirm such a per se ban in 2012.  Be that as it may, the people of Kansas are fortunate to have a legislature apparently committed to conforming the state's antitrust law to the dictates of economic science.

Conservatives Embracing Science, While the Left Balks

Accepts Science 

Ditto

Rejects Science/Thinks He Knows Better

Senator Marco Rubio (R-Florida) and Pat Robertson, both pictured above, have made news recently, both embracing the scientific consensus that the earth is 4.5 Billion years old.   As Senator Rubio, a Roman Catholic,   put it:  "Science says (the earth) is about 4.5 billion years old.  My faith teaches that's not inconsistent. . . . God created the heavens and the earth, and science has given us insight into when he did it and how he did it."   Mr. Robertson, a Southern Baptist and the Chancellor of Regent University, put things this way:

"Bishop Ussher [who opined that the Earth was created in 4004 BC] wasn't inspired by the Lord when he said that it all [creation of the Earth and Man] took 6,000 years. It just didn't. You go back in time, you've got radiocarbon dating. You got all these things and you've got the carcasses of dinosaurs frozen in time out in the Dakotas.  They're out there. So, there was a time when these giant reptiles were on the Earth and it was before the time of the Bible. So, don't try and cover it up and make like everything was 6,000 years. That's not the Bible."

Mr. Robertson's remarks won the praise of national luminary "Bill Nye the Science Guy," who expressed hope that Mr. Robertson would continue to press his view on the age of the Earth.  Previously Mr. Nye had argued that the belief that the Earth is 6,000 years old "threatens science."

Unfortunately, some public officials still reject basic scientific teachings.  For instance, as previously explained on this blog, President Obama's repeated claim that tax cuts caused the recent "Great Recession" contradicts basic economic science of the sort taught to thousands of college freshmen each year in the United States and around the world.  More recently, Vice President Biden (pictured above) joined the anti-science chorus, claiming, again contrary to basic economic science, that tax cuts and increased spending during the G.W. Bush Administration caused the Great Recession.  Here's what the Vice President said, during his debate with Congressman Paul Ryan.  According to the Vice President:

"And, by the way, they [Republicans] talk about this Great Recession [of 2008-2009] as if it fell out of the sky, like, 'Oh, my goodness, where did it come from?' It came from this man [Congressman Ryan] voting to put two wars on a credit card, to at the same time put a prescription drug benefit on the credit card, a trillion-dollar tax cut for the very wealthy. I was there. I voted against them. I said, no, we can’t afford that."

Like President Obama's claim about tax cuts, Vice President Biden's claim that deficit spending caused the recent recession is economic nonsense, akin to a claim that the Earth is flat or the center of the Universe.  Just as there is a scientific consensus that the Earth is 4.5 Billion years old, there is a longstanding scientific consensus that increasing the deficit, whether by tax cuts, increased spending or both will stimulate aggregate demand, increase employment and increase the nation's real economic output.  See e.g. N. Gregory Mankiw, Macroeconomics, 296 (7th Edition 2010) (explaining how tax cuts increase the budget deficit and thus aggregate demand and national output); Rudiger Dornbusch and Stanley Fischer, Macroeconomics, 73-83, 401-11 (2d Edition 1981) (explaining how tax cuts and spending increases can increase aggregate demand and thus national output).  The only exception is for cases in which the economy is already at full employment.  In such cases, deficit spending cannot increase output but can only result in inflation.  However, so far as I know, no one contends that the economy was at full employment when, say, Congress enacted the so-called Bush tax cuts in 2001.  In the same way, the economy was at less than full employment when President Kennedy proposed across-the-board tax cuts in an effort to "get the economy moving again."

Of course, there are other reasons to oppose budget deficits and the resulting increase in the national debt.  For instance, government borrowing to encourage consumption can crowd out private investment, thereby partly (but only partly) offsetting any resulting increase in national output.  A nation could decide to forgo higher GDP in the short run in the hopes that, in the longer run, increased private investment will increase national productivity and thus potential national output.  But it bears emphasis that this argument against increased deficits assumes that such deficits increase national output, contrary to Vice President Biden's assertion.

Oddly the economics profession has been relatively silent in the face of this Administration's rejection of basic economic science.  To be sure, hundreds of economists endorsed Mitt Romney in the recent general election.  Six of these individuals were past recipients of the Nobel Prize in Economic Science.  However, so far as I know, no such economist has called out President Obama or Vice President Biden for their rejection of basic science.  This is surprising, because the rejection of economic science can have serious real world consequences for millions of ordinary Americans.  (Imagine if, instead, the President and Vice President claimed that vaccinations do not work or that smoking does not harm your health.  Surely the relevant scientific professionals would (properly) be up in arms.)

Perhaps the economics profession needs its own "Bill Nye the Science Guy" to shame public figures who reject basic economic science. 

President Obama's Rejection of Economic Science

Thought the Earth was Flat

Thinks Tax Cuts Slow the Economy

Embraced Economic Science for the Common Good

A recent survey (discussed here) finds that Conservatives are losing faith in Science.    Remarks by President Obama in Iowa earlier this week (reported here by USA Today) suggest that he, too, has abandoned some basic tenents of science, in this case, economic science.  In particular, the President accused Republicans of clinging to policies that would, in his words "double down on some of the policies that didn't work and got us into this mess in the first place."  According to the report in USA Today, the President "cit[ed] in particular proposed tax cuts for the wealthy" as examples of such policies that caused the current downturn and would, if maintained prevent recovery.  The "tax cuts for the wealthy," of course, referred to the 2001 across-the-board reduction in tax rates advocated by President Bush and passed by Congress.

Perhaps USA Today has mis-reported the President's remarks.  If not, the President has apparently decided the repudiate basic science.    There is simply no plausible economic theory or evidence supporting the President's claim that tax cuts for the wealthy or  tax cuts for anyone else, result in an economic downturn.  On the contrary, tax cuts put more money in the pockets of consumers, including rich consumers, who in turn spend a portion of this new wealth, thereby increasing aggregate demand and national output.   See N. Gregory Mankiw, Macroeconomics, 296 (7th Edition 2010) (explaining how tax cuts increase aggregate demand and thus increase national output).   This result is a basic scientific fact, taught annually to thousands of college freshmen annually across the country.  Indeed, the nation's unemployment rate remained below 5.0 percent for all 24 months in 2006-2007, compared to a peak of 5.7 percent the year Congress enacted the tax cuts the President Obama has decried.  (Of course, there were other sources of fiscal stimulus during the first term of the Bush Administration, including increased military spending, such that the tax cuts were not the sole source of economic stimulus.) There is only one circumstance in which tax cuts will not increase output and employment, namely, when the economy is already at full employment.  While tax cuts (or spending increases) will increase aggregate demand in these circumstances, national output will remain the same, because society is already employing all of its resources in their highest-valued uses, with the result that national output is at its maximum.  No one argues that the current economy is at or near full employment.

The President's rejection of scientific fact and theory in this context is particularly odd.   After all, the centerpiece of the President's economic recovery program entailed a so-called "Stimulus Package" of nearly $800 Billion (discussed previously on this blog), spread out over five years, a portion of which included tax cuts.  The logic of the stimulus package depends upon the very same economic models establishing that tax cuts, even tax cuts for the rich, stimulate aggregate demand and national output.

It is also noteworthy that President Obama's attitude toward economic science stands in stark contrast to the approach taken by President Kennedy, pictured above with Dr. Walter Heller, who chaired the Council of Economic Advisors during the Kennedy Administration.  As previously explained on this blog, President Kennedy advocated across-the-board tax cuts as a means of "getting America moving again," the theme of his 1960 presidential campaign.  In so doing, he followed the advice of Heller and others who understood that across-the-board tax cuts would stimulate the economy, not get us into a "mess" as President Obama now claims.

Of course, across-the-board tax cuts are not the only means of stimulating the economy.  The national government could also rely upon spending increases and/or an expansive monetary policy.  Moreover, the government could reduce taxes for lower income and middle income workers.  Nonetheless, any claim that extending such cuts to "the rich" will cause an economic downturn is akin to the claim, by Thales of Miletus, pictured abouve, that the earth is flat.