The latest from Art Laffer

oldfart

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[quote="Business Insider interview, Jan 4, 2014]
Arthur Laffer is a legend in Washington, having been the leading voice on President Ronald Reagan's hawkish Economic Policy Advisory Board.

His "Laffer Curve," which argued that there are diminishing returns after a certain point of taxation, was taken as gospel.

If his views are not quite as frequent a presence in public debate, it's largely because Laffer's pet issues, regulation and taxes, took a back seat during the George W. Bush and Barack Obama administrations.

But Laffer himself still occasionally makes appearances on the public scene.

And in June of 2009, he penned an op-ed warning excessive quantitative easing would inevitably lead to higher inflation and interest rates.

...we haven't ever seen anything like this in the U.S. To date what's happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits ...Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn't a pretty picture.

Obviously, nothing like that happened.

In an interview with Business Insider from his office in Tennessee, Laffer admitted that he was wrong. The old maxim that dictates increasing the availability of cash through lower interest rates will lead to higher prices, he said, may need to be reexamined.

"Usually when you find the model this far off, you've probably got something wrong with the model, not that the world has changed," he said. "Inflation does not appear to be monetary base driven," he said.

He's not totally comfortable with what the Fed is doing, however. "Ask me whether inflation represents longer-term problem, I think there's a potential there for excess reserves to create problems."

But it now seems impossible to predict.

"I feel very uncomfortable with respect to looking at inflation," he said.

Laffer remains critical of both the bank bailouts and QE, arguing both have held back job creation and the housing market. Left to its own devices, the economy always finds ways to recover, he said.

"If you look at [the] 2001-2002 [financial crisis], we barely had a decline in GDP, it corrected itself fairly quickly. The only other time we had intervention was in the 1930s. I think we had a Great Recession, and the reason we had a Great Depression, was because of intervention, not in spite of it."

He now predicts Republicans will take over the Senate in 2014 — and in fact has consulted on recent campaigns. Anger over Obamacare, he said, will push them to victory. He drew a parallel between Jimmy Carter's response to the 1970s' energy crisis, which did nothing to alleviate demand for gasoline and President Obama's approach to expanding insurance.

"You can't give away healthcare and not expect the system to overuse it," he said.
[/quote]

Arthur Laffer Interview - Business Insider

I avoided editing this piece because of it's brevity and the strength of its content. With the piece by Marty Feldstein advocating a trillion dollars of fiscal stimulus, this brings me back to the questions no one responded to about Marty:

1. Will Marty and Art be drummed out of the conservative movement?

2. Who will replace Marty and Art as economic thinkers on the Right?

3. What ideas will those thinkers offer?

Personally I find it tremendously damaging that two such prominent figures the right have been quoting for decades have had the intellectual honesty to recant when proven wrong, and no one on the Right will talk about it. Are you guys so intellectually bankrupt that you have stopped trying to do economic analysis altogether and retreated to clichés that even the authors have abandoned? Talk about going out with a whimper.

And that's the problem. They are not going out. They demand discredited policies continue and it has cost America $8 trillion and counting in lost production.
 

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
 
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oldfart

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Notice no one from the Right has responded. Again.
 

Kimura

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Notice no one from the Right has responded. Again.
Also, it surprises me how many of these guys don't understand the mechanics of QE or how bank reserves function. It's sort of bonkers this dude is even interviewed at this point.
 

AquaAthena

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Notice no one from the Right has responded. Again.
Art Laffer has my respect and in this piece he is very optimistic about the future for America:



[ame=http://www.youtube.com/watch?v=Itri2NeWRG0]What will happen to the economy in 2014? - YouTube[/ame]
 
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oldfart

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Notice no one from the Right has responded. Again.
Art Laffer has my respect and in this piece he is very optimistic about the future for America:



[ame=http://www.youtube.com/watch?v=Itri2NeWRG0]What will happen to the economy in 2014? - YouTube[/ame]
Actually I met Professor Laffer in the sixties and he was a most pleasant speaker. He has a refreshing air of not taking himself too seriously and has always been a mainstream competent economist. Amazingly, he doesn't seem to have changed much since then.

Like several others, he was seized upon by the Right because some of his conjectures (which is what he usually called them) fit their ideological agenda. I never believed that he fully agreed with that agenda and suspect he was smart enough to be a bit uncomfortable with how much he was lionized for work he never intended to be central to his research or career.
 

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Actually I met Professor Laffer in the sixties and he was a most pleasant speaker. He has a refreshing air of not taking himself too seriously and has always been a mainstream competent economist. Amazingly, he doesn't seem to have changed much since then.

Like several others, he was seized upon by the Right because some of his conjectures (which is what he usually called them) fit their ideological agenda. I never believed that he fully agreed with that agenda and suspect he was smart enough to be a bit uncomfortable with how much he was lionized for work he never intended to be central to his research or career.
http://www.usmessageboard.com/econo...know-if-bush-tax-cuts-pay-for-themselves.html
 
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oldfart

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Actually I met Professor Laffer in the sixties and he was a most pleasant speaker. He has a refreshing air of not taking himself too seriously and has always been a mainstream competent economist. Amazingly, he doesn't seem to have changed much since then.

Like several others, he was seized upon by the Right because some of his conjectures (which is what he usually called them) fit their ideological agenda. I never believed that he fully agreed with that agenda and suspect he was smart enough to be a bit uncomfortable with how much he was lionized for work he never intended to be central to his research or career.
http://www.usmessageboard.com/econo...know-if-bush-tax-cuts-pay-for-themselves.html
Blast from the past! I'm glad your research from then comports with what I have seen of the man's work.
 

bripat9643

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Can you quote Keynes where he discussed anything resembling the Laffer Curve?
 
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oldfart

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Can you quote Keynes where he discussed anything resembling the Laffer Curve?
I still have not had any comment on the three questions and it occurs to me that you might be in a position to add to the discussion. I really want to know. So let me restate them as neutrally and as specifically as I can.

1. With Martin Feldstein's proposal for a trillion dollars of stimulus and Arthur Laffer's comment that his basic model behind the Laffer Curve must be wrong, will these two economists still be considered as spokesmen on economic policy for the Right?

2. If the answer to the previous question is "no" or looking forward to the time these gentlemen of mature age are less active in writing and speaking, who will succeed them as economic thinkers on the Right?

3. What ideas will these new leaders advance to replace the theories they have now re-evaluated?

I would be interested in your thoughts.
 
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oldfart

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ALL economists are full of shit......every one of them.
My students shared that opinion when they got their papers back.

Now do you have anything to say on topic as you troll through?
 

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Can you quote Keynes where he discussed anything resembling the Laffer Curve?
Sure.

The Laffer Curves demonstrates that tax cuts will increase government revenue due overall improvements in the general economy. These tax cuts support an increase in demand which is the fiscal equivalent of a spending increase. They are basically identical. This is classic Keynes.
 
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A healthy level of inflation is the result of increased economic activity--which comes from spending consequent to rising wages.

The government has created unhealthy inflation in the past by fucking around with interest rates.

If the government pursued (1) full employment and (2) minimal interest rates, the economy would come roaring back.
 
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oldfart

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Can you quote Keynes where he discussed anything resembling the Laffer Curve?
Sure.

The Laffer Curves demonstrates that tax cuts will increase government revenue due overall improvements in the general economy. These tax cuts support an increase in demand which is the fiscal equivalent of a spending increase. They are basically identical. This is classic Keynes.
More often Keynesians use the contrapositive argument: raising taxes in a downturn in an attempt to balance the budget REDUCES income sufficiently to cause an offsetting decrease in revenue. In fact, all evidence is that the effect of tax rates on production are asymetrical, tax cuts helping more in a downturn and tax increases stifling output less in an upturn.
 

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Did he ever admit he jacked the idea for the Laffer Curve straight from JM Keynes? He's such an ideologue it makes me cringe.
Can you quote Keynes where he discussed anything resembling the Laffer Curve?
Sure.

The Laffer Curves demonstrates that tax cuts will increase government revenue due overall improvements in the general economy. These tax cuts support an increase in demand which is the fiscal equivalent of a spending increase. They are basically identical. This is classic Keynes.
Sort of, but causation remains debatable; as an example, the "Reagan recovery" MAY have been the result of tax cuts, but it might also have come from simple economic business cycles. And the increased tax revenue in that era was almost CERTAINLY because of the economic recovery.

BTW, all economic recoveries generate more tax revenues--no matter what tax policy is in place.
 

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