Economist: ‘It’s 1979 All Over Again’ In America

[Revmitchell]

Arthur B. Laffer, an effervescent, energetic economist made famous by “the Laffer Curve” in the late 1970s says “it’s 1979 all over again” in America.

Laffer argues we are “just about due for a huge turnaround” in our economy in this video interview conducted in April. “One of the nice things about being very old, is you can actually remember old time events. This is 1979 exactly.”

He described being worried of rising socialistic policies back then, but “bang, it all changed. In 1980, the clouds opened, the sun shone forth on the planet, the fields turned green, the trees blossomed and bore fruit, the animals multiplied, and Reagan was nominated and elected. We changed the course of the world. But we are just about to flip it again.”

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Later in the interview, he says, “remember, without Jimmy Carter, there never would have been Ronald Reagan.”


This optimist believes, “the economy is this masterful creation of evolution. It’s just spectacular, and I stand in awe before the economy… If you leave the economy alone it does really well.” Laffer believes government officials should first, do no harm. He indicts both parties with “bipartisan ignorance” of fiscal policies.

The four presidents he names as wrong on economics are Johnson, Nixon, Ford and Carter — the “four stooges: the largest assemblage of bipartisan ignorance probably put on planet Earth.”

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Government has a tendency to grow in power, and pick winners and losers, but Laffer explains how a limited-government economy handles taxes.

“All taxes are bad. Some are worse than others. You want to collect your revenues in the least damaging fashion, and spend the proceeds in the most beneficial fashion,” he says. “When the pain or damage done by the last dollar of taxes collected is a little bit less than the benefit done by the last dollar of government spending spent, stop already! That’s where government functions stop, and the rest is taken on by the private sector.”

Read more: http://dailycaller.com/2015/09/05/economist-its-1979-all-over-again-in-america/#ixzz3kya9AsVQ

 

[InTheLight]

Article gives no reasons to believe economy today is similar to 1979 except for Laffer's say-so.

“One of the nice things about being very old, is you can actually remember old time events", Laffer says, "This is 1979 exactly.”

I remember 1979 as well.

Interest rates were double digit. Interest rates now are non - existent.

Back then there were lines at the gas stations. Now we have a gas glut.

The unemployment rate was 6% and climbing; today it's 5% and dropping.

Budget deficits were increasing; today they are decreasing (admittedly from record highs).

I could go on and on but I think I've made my point.

 

[Crabtownboy]

Laffer must be playing politics as he neglected much in his article.

For instance, inflation was running at a double digit rate. It is running very low now.

Also the world is a very different place now than in 1979. China was not a factor at all in the US economy then. It is a big factor now. If the Chinese economy collapses the US economy will take a big hit.

This is a pretty worthless article as so much is neglected.

 

[preachinjesus]

https://www.youtube.com/watch?v=uhiCFdWeQfA

Laffer has been pretty well disregarded in most economic conversations. Interviews like this, where he lacks any basis for his claims, are examples of why.

 

[InTheLight]

https://www.youtube.com/watch?v=uhiCFdWeQfA

Laffer has been pretty well disregarded in most economic conversations. Interviews like this, where he lacks any basis for his claims, are examples of why.

He's famous for the "Laffer Curve" which is accepted by most economists as theoretically true, the problem is where to decide the line is drawn where more taxes result in lower tax revenues.

 

[Crabtownboy]

He's famous for the "Laffer Curve" which is accepted by most economists as theoretically true, the problem is where to decide the line is drawn where more taxes result in lower tax revenues.

The Laffer Curve is too simplistic to base an economy or a tax program upon. It is based on a single tax rate with a single labor supply. This can never happen in the real world. The Laffer curve is the holy grail of supply side or trickle down economics. Trickle down has been shown that it does not work in the real world. It is more likely to trickle up. George H.W. Bush called it voodoo economics.

The Laffer curve does not take explicitly into account the nature of the tax avoidance taking place. It is possible that if all producers are endowed with two survival factors in the market (ability to produce efficiently, ability to avoid tax) then the revenues raised under tax avoidance can be greater than without avoidance and the Laffer curve maximum thus is found further right than thought.

https://en.wikipedia.org/wiki/Laffer_curve

 

[InTheLight]

The Laffer Curve is too simplistic to base an economy or a tax program upon. It is based on a single tax rate with a single labor supply.

No it isn't. It's based on overall tax revenue vs. overall tax rate.

The Laffer curve is the holy grail of supply side or trickle down economics.

No, it's not. It's the holy grail of flat taxers and/or tax cutters.

Trickle down has been shown that it does not work in the real world.

Whatever you want to call it, go look at the growth of the US economy in the 1980's under Reagan policy. Whatever that was, it worked.

 

[preachinjesus]

He's famous for the "Laffer Curve" which is accepted by most economists as theoretically true, the problem is where to decide the line is drawn where more taxes result in lower tax revenues.

His Curve theorem is, perhaps, his best work. The challenge is the arbitrary measurements as you've mentioned. Ergo my video clip.

His other economic work has received mixed reviews. I'm not a Keynsian of course, more Chicago School (during the good ole days) than anything.

 

[Crabtownboy]

No it isn't. It's based on overall tax revenue vs. overall tax rate.

Yes but it assumes a single tax rate with a single labor supply. This is too simplistic.



No, it's not. It's the holy grail of flat taxers and/or tax cutters.

Whatever you want to call it, go look at the growth of the US economy in the 1980's under Reagan policy. Whatever that was, it worked.

It wasn't the Laffer Curve. It was policies. The Laffer Curve is not a policy and, as I said, is too simplistic to base an entire economic policy upon.

Sorry, but it is holy to the supply side folk:

The Laffer Curve is one of the main theoretical constructs of supply-side economics, and is often used as a shorthand to sum up the entire pro-growth world view of supply-side economics. However, the Laffer Curve itself simply illustrates the tradeoff between tax rates and the total tax revenues actually collected by the government.

Importantly, the Laffer Curve does not say whether a tax cut will raise or lower revenues, nor does it predict that any and all tax rate reductions would necessarily bring in more total revenues. Instead it says that tax rate reductions will always result in a smaller loss in revenues than one would have expected when relying only on the static estimates of the previous tax base. This also means that the higher the starting tax rate, the more dramatic the supply-side stimulus will be from cutting the tax rate. It is possible that this economic effect will swamp the arithmetic effect, causing an actual increase in tax revenue.

http://www.laffercenter.com/supply-side-economics/laffer-curve/

 

[targus]

Unemployment 5% and dropping?

All you have to do is disregard anyone who has been without a job for three months or more.

 

[InTheLight]

Yes but it assumes a single tax rate with a single labor supply. This is too simplistic

No, it doesn't. I'm quoting the article you quoted here:

The Laffer Curve itself simply illustrates the tradeoff between tax rates and the total tax revenues actually collected by the government.


There is nothing about a "single labor supply" with regards to the Laffer Curve.

It wasn't the Laffer Curve. It was policies. The Laffer Curve is not a policy and, as I said, is too simplistic to base an entire economic policy upon.

I never said the Laffer Curve was policy. Supply side economics is an economic policy that states if tax rates are cut TO MAXIMIXE THE EFFICIENCY OF THE LAFFER CURVE then tax revenues will increase because economic growth will increase. This is exactly what happened in the 1980's under Reagan.

Sorry, but it is holy to the supply side folk:

Nope. It's holy grail to tax cutters. The connection between the Laffer Curve and supply siders goes only so far as tax cuts will increase economic growth. Once the economic growth is maximized supply siders will not advocate further tax cuts whereas tax cutters will always advocate tax cuts believing that tax revenues should always be reduced, because they think reducing taxes will always lead to economic growth.