27 thoughts on “After Forty Years…

  1. What a Laff…

    Didn’t Kansas use Arthur Laffer as a consultant before their tax policies dragged the state into collapse?

    The crux of Mr Laffer’s argument is that is “government policies punish capital investment.” There is no proof that the income tax (personal or corporate) is the variable constraining US economic growth or that high taxes are the cause of Jerome Powell’s well placed concern for capital investment and productivity. Economics, in its public dimensions, is not just about incentives. If it were, we’d already have found the golden formula and solved our problems—pretty much in their entirety. That is always the promise of panacea solutions, and Laffer is famous for sketching out his panacea solution on the back of a napkin in the 1970s to launch Supply Side Economics. The larger public economic decision is the
    allocation of overall resources between private and public, investment and consumption.

  2. No one really disputes the Laffer curve. All Laffer did was state the obvious — that at some point increasing taxes reduces revenue.
    The problem that I have with Laffer & his acolytes is that they assume the most effective tax policy is the tax policy that raises the most revenue for the state.
    This is Keynes by the back door (hah!). My economic activity does not have the purpose of funding the state. As far as I know, there is not a single person who believes that the purpose of their economic activity is to fund the state.

  3. You “progressive” hamsters love to yap about Kansas – a state that tried to mix conservative taxation with liberal spending, with dubious results.

    But then you always ignore the Dakotas, the Carolinas, Idaho, Ohio, Montana and to a great extent Texas, Wisconsin and Florida, which actually followed honest-to-pete conservative principles and have prospered pretty wildly.


    Question, EI: do you ever learn?

    It’s almost like you progs couldn’t do actual economics if we held a gun to your head.

    Tell the truth, EI – you’re really Eric Austin, aren’t you?

  4. The Laffer Curve works best at zero — because…. math

    The economic fallout from the virus clearly shows us that much of our economy is optional. Those service jobs that cater to the rich and the middle class provide things that are nice to have, but that you can live without. Those jobs are necessary for the people who have them but optional to the people who use them.

  5. That, right there. Read that again. That is the mindset we’re up against.

    This is a person who says: “I am so much smarter than everybody else, I am capable of accurately determining which jobs are necessary and which jobs are optional. If I decide your job is optional, then you are no longer useful to society. You will be reassigned a useful function and if you resist, you will be eliminated from society.”

    The arrogance is breathtaking.

  6. Emery Incognito on June 22, 2020 at 9:19 am said:
    The Laffer Curve works best at zero — because…. math

    No one says this.
    But this kind of analysis is what you get when your most famous political commenters are comedians.

  7. Speaking of irreverence

    Economic modeling was developed to make Astrology look respectable ~ John Kenneth Galbraith

  8. MBerg: Laffer has been quiet since the 1980s, and with good reason. His famous Laffer curve never showed up following Reagan’s tax cuts. He goes on to look with approval of the Clinton growth record, but through a contortion of fact and theory, he attributes it to tax cuts. What Laffer doesn’t know or acknowledge is taxes are not like ordinary prices. Yes, if taxes raise prices of products, they might discourage demand, and vice versa. But the relationship between taxes and prices, as every first year student of economics knows, is not straightforward or predictable. He also doesn’t know or acknowledge that taxes are raised to be spent (remember “tax and spend”, the Republican complaint). While taxes might discourage production of certain activities (especially where it is the policy objective), government expenditures promote growth.

    Please read up on the ancient but still relevant “balanced budget multiplier”. Please keep your simpleminded nostrums to your circle of economists. To serious economists, they are sheer nonsense.

  9. My big takeaway on the Laffer curve is that tax revenue doesn’t increase in direct proportion to marginal tax rates. Over time revenue more closely follows GDP. The legendary (in Rachel Maddow’s squirrel brain) 90 % brackets of the 50s didn’t produce any more revenue than when that neocon buccaneer JFK lowered tax rates. It follows that taxing less gives corporations and consumers more money to spend. And just like that, the economy improves.

  10. Reagan’s tax rate reductions produced MORE tax revenue, exactly as Laffer had predicted. But Tip O’Neill and House Democrats spent it all and more.

  11. because…. math
    because…. science
    because…. history
    because…. facts

    These utterances are what you hear from low IQ slobs who couldnt…

    Convert a fraction to a decimal…
    Explain the difference between an electron and a neutron, or a virus and a bacteria…
    Name the country where the Magna Carta was signed, or by whom…
    Recognize a fact from a hemorrhoid…

    They also cannot fix an engine, sharpen a knife, weld, wire a light switch, read a tape measure, preserve food, hunt, fish; they couldn’t even start a fire without a bic lighter.

    Their ignorance is most easily recognized by realizing the civilization they are working to destroy is the only thing standing between them and an untimely demise, or at best, a particularly unpleasant existence.

    When the country devolves into chaos, the ability to pour coffee won’t be recognized as having any value at all, and woken will be seen for what they are; a drain; a mouth to feed…decent fertilizer. And there won’t be any HR departments to complain to. #Sad

  12. The Laffer Curve is essentially Keynesian. In the Keynes equation for GDP, government spending has no multiplier > 1.0. Consumer spending does have a multiplier > 1.0, because consumers spend to increase value (I spend a dollar for an ice cream cone because I perceive it as a beneficial exchange).
    People on the Left have been to react as Pavlovian dogs to certain words and phrases. “Laffer curve” is one of them. There is no reason behind it, it is a cliche, a substitute for thought.
    Federal income tax receipts in 1981, before Reagan’s Laffer-curve-inspired tax cuts, was 286 billion $. In 1988, after the tax cuts of 1981 & 1986, federal income receipts were 402 billion $.

  13. So, I for one, am looking forward to the seeing a rhetorical bridge built between “Economic modeling was developed to make Astrology look respectable” and all those “serious economists”.

    Also waiting on that link showing how Columbus died in prison. There was also something about a “coherent plan” or something regarding the Kung flu, but I’m sure the dog ate that homework.

  14. Emery, you are completely ignorant in economics and tax policy and it shows.

    Let’s take a very simple example: capital gains tax rates. I remember many lefties complaining when they’ve been cut over the years. But a strange thing happens when you cut capital gains taxes: the government actually collects more money in taxes. It’s been that way now for six decades.

    I know, it’s completely against what lefties think will happen, but again, you’re lefties so you really have tenuous associations with economics, and you’re painfully allergic to both math and looking at the actual numbers that result from policies. Instead, lefties like to think that a policy of possibly punishing “the rich” is the real reason for capital gain taxes, rather than paying for government. And then you wind up punishing government and future generations who will be paying to fund today’s programs. (Doubt the effect on future generations? Just consider this: if we were to return to average historical rates of interest on government debt, all the discretionary spending of the federal government wouldn’t be enough to pay the interest on today’s debt.)

  15. Trump has increased our annual borrowing by an additional 2% in order to produce “growth” of 2%.

    So much for the geyser economy — everyone is capable of getting growth with a 4.6% deficit (of GDP). Absent that borrowing, we’d have likely seen reported growth fall to zero. Unbelievable.

    Twelve consecutive years in which anything close to a normal interest rate threatens to crush the US economy.

    Just paying off the mortgage with the credit card. Maybe someone should ask the Greeks how that worked out…

  16. Once again, Emery, you illustrate your complete ignorance. It’s actually sad, but we realize that instead of taking economics courses, you probably took women’s studies.

  17. Care to elaborate — or is this another drive-by

    Why does self-awareness matter?

  18. emery does not need to study actual economics. He reads the neo-liberal and proud of it The Economist.

  19. The Laffer curve has reasoning and empirical data behind it.
    What you should avoid is “rear view mirror” economics. That’s where you fail miserably at actually predicting important economic events and milestone, but can nevertheless explain in breath taking detail the causes and effects of economic events and milestones after they have happened (see Krugman, Paul).

  20. ^^ I’m curious you believe Krugman to be an economist rather than a political opinion writer….

  21. Yeah, it is curious. Perhaps that Nobel prize in economic sciences he got in 2008 is some sort of hint or indicator that he’s an economist.

  22. That’s it? A passive-aggressive ad hominem that I’m an a55hole for calling you out (yet again) for being a putz, making 5hit up and/or out-and-out lying? You can’t even defend yourself, you just change the subject. Again.

  23. Emery Incognito on June 23, 2020 at 7:04 am said:
    ^^ I’m curious you believe Krugman to be an economist rather than a political opinion writer….

    Krugman’s qualifications to publish anything are the fact that he writes economic textbooks & once won the Swedish banks prize for economics.
    Why do you think that the NY Times publishes Krugman, Emery? His actual writing is cliched and utterly predictable, and he a long-documented problem telling fact from fiction — in economics, of all things. He once drew a trend line from a single point.

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