The latest from Art Laffer

[Kimura]

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.

I know. I was giving a general overview.

 

[Kimura]

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.

Also, we need to look at their (supply-side/right wing reactionaries) logic. They constantly argue that deficits as a result of lower taxes aren't a problem because we will see an increase in tax revenues, investments, and public debt won't increase as quickly as GDP. Here's the problem: deficits as a result of spending will result in an increase in debt since the government sector is spending as opposed to firms. We have no accumulation to capital stock so to speak. This is the entire basis for tax cuts since Reagan. It's kooky and off the reservation.

 

[Zander]

A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?