Art Laffer - wrong

[Craig234]

I'm re-treading some old ground here, but learning from history here is useful.

Art Laffer came up with his 'Laffer Curve' that was used - and misused IMO - by Republican politicians for the purpose of the agenda they have: give more to the rich.

The real Laffer curve was bad enough, but the politicians ignored that there was a limit to even its claims of now low taxes could be cut, to sell the policies for the rich.

But it's long understood that the grain of truth to cutting taxes having some benefits have been greatly exaggerated, for example one study showing that the tax cuts returned not over 100% in taxes from increased productivity, but about 22 cents per dollar.

But this isn't about that issue. It's rather to look at this economist so embraced earlier on his later predictions.

I'm not endorsing Peter Schiff here, but this 2006 clip shows him rarely being so completely right in contrast to Laffer being so completely wrong.

Schiff even got it right when he modified the host's referral to a 2007 predicted crash to '2007 or 2008'.

But I think it's educational to listed to how far Laffer stuck his neck out, not only predicting there were be no real problems, but his mocking all of the claims that there would be, that they were ridiculous, outrageous, based on not any idea what the data was, and 'staking his honor' that he was right and the predictions of a crash were wrong.

It's good to understand how wrong he was, and what it says about how Republicans latched onto him when he served their purpose to sell bad economic policy.

Policy even George H. W. Bush called 'voodoo economics', policy even Reagan had to reverse with several tax increases.

It's good to learn how someone so wrong can be used to sell bad policy, that serves certain interests.

Then it was major tax cuts that greatly helped lead to the deficit problems today as phony 'supply-side economics' and de-regulation, today it's more tax cuts for the rich.

It's an 8 minute clip good to enjoy and learn the lesson from about the selling of bad policy.

http://vodpod.com/watch/1046236-pet...predictions-about-the-dow-and-dollar-freefall

 

[JS80]

There is plenty of empirical evidence aside from plain old good common sense and logic that supports the Laffer Curve.

The problem is people like you think that money earned does not belong to the earner to belong with - that it's the property of the collective, and scaling down the tax rates is from the goodness of the government. That's why you use words like "give more to the rich" when it's really "steal less from the productive."

 

[matt0611]

Schiff did get a lot of things right in that clip and Laffer a lot wrong, interesting clip, thanks.

Tax cuts without spending cuts is a recipe for failure.

The private sector always can grow the economy better than the government. If we really need some government programs than fine, but the less the better IMO.
We can't have low taxes and big government though.

 

[Anarchist420]

Well, if the top marginal rate were raised to 75%, I don't see why anyone in the top bracket would waste their money paying it.

Reagan's deficits were due to enormous spending, not supply-side economics. Reagan raised taxes anyway.

 

[masteryoda34]

The Laffer curve is most certainly a real phenomena. The difficult part is figuring out where on the curve the country is.

The Laffer curve does not suggest that cutting taxes always raises tax revenue, as some have incorrectly asserted.

Laffer was clearly wrong about everything in this clip.

 

[Hacp]

There is plenty of empirical evidence aside from plain old good common sense and logic that supports the Laffer Curve.

The problem is people like you think that money earned does not belong to the earner to belong with - that it's the property of the collective, and scaling down the tax rates is from the goodness of the government. That's why you use words like "give more to the rich" when it's really "steal less from the productive."

Exactly. Collective=socialism~communism~soviet union. We all know how well the soviet union did didn't we?

 

[JS80]

BTW before anyone wastes their time, the video he posts has almost nothing to do with OP's usual crazy wall of text.

 

[Craig234]

Schiff did get a lot of things right in that clip and Laffer a lot wrong, interesting clip, thanks.

Tax cuts without spending cuts is a recipe for failure.

Thanks for that part.

The private sector always can grow the economy better than the government.

That's just a silly statement.

It's like saying 'the football team can score goals better than the coaches, referees, stadium builders, police who protect them, and fans.'

Well, of course they can, but they aren't going to be scoring all that many points without those other things. Who pays their salaries?

The government's role isn't to own the means of production generally and beat the 'private sector' at producing more goods.

The government's role is to represent the public interest - to help the system serve the public interest.

Sometimes that means rules allowing the private sector to be productive, sometimes it means limiting private sector activity (e.g., selling unsafe drugs), sometimes it does mean the government providing goods and serves where is can do so better than the private sector, primarily because of the lack of benefit from the profit-driven system.

That includes things like public education and NASA, but also some areas can be better with the government when the profit motive gets in the way. For example, when the privatization prisons sees the prison industry turn into one with a powerful lobbying arm, pushing for far higher incarceration not for the public need but to increase profits; when it's incented not to rehabilitate, to have HIGHER recidivism, it might be better for the state to not privatize.

If we really need some government programs than fine, but the less the better IMO.
We can't have low taxes and big government though.

I actually agree we should avoid excessive government programs - the issue is the definition of what's excessive.

If it's more efficient with the government, if it's in the public interest, do it. That leaves the vast bulk of the production of goods in the private sector.

Our society's financial health isn't all about the government's spending and taxes. Waste is waste. Excessive concentration of private wealth is very destructive.

If the private sector has a hugely polluting industry using up limited resources that will lead to disaster, that's not a good thing just because it's the private sector.

We have way too much anti-government ideology that blinds people to the private risks, spread by the wealthy to prevent democracy doing what it's designed to.

We should have a lot of skepticism, oversight, prevention of entrenched power and abuses in the government - but we go well past that to a sort of ignorant paranoia.

Meantime, what's the private financial sector doing?

 

[matt0611]

Thanks for that part.

...

Yes, if the government can do something better than by all means I want the government doing it. And if the private sector can do something better let the private sector do it. I agree.

I'm sure we probably disagree a fair amount about what things go in what category though.

 

[LegendKiller]

Well, if the top marginal rate were raised to 75%, I don't see why anyone in the top bracket would waste their money paying it.

Reagan's deficits were due to enormous spending, not supply-side economics. Reagan raised taxes anyway.

This is just a BS argument. Something that is economically worthwhile doing is compared to the time, effort, and capital put into the project versus other projects. Anybody that is in the top bracket will do anything they need to do to keep economically viable projects going. The idea that the top marginal dollar is "worthless" is silly, otherwise somebody in a lower tax bracket would undertake it and reap the profits. Furthermore, those in higher brackets often have lower costs of capital and labor, enabling more projects to be profitable even after tax.

The laffer curve is far from law or settled.

 

[sandorski]

Whenever somebody pulls out the Laffer Curve in a conversation, I pretty much put them on Ignore mode. It may have legit uses, but it's been used for clearly nefarious purposes. Mainly to add the air of legitimacy to Economic nonsense.

 

[surfsatwerk]

Exactly. Collective=socialism~communism~soviet union. We all know how well the soviet union did didn't we?

It can be argued that the NFL practices communism and they are easily the most successful professional sport in existence.

 

[Steeplerot]

Exactly. Collective=socialism~communism~soviet union.

Mmmm, you can hear the brain cells cooking when they try the whole logic thing.

 

[MovingTarget]

The Laffer curve is a tool that does provide some useful insight just as many of Marx's theories did, but to base economic policy too heavily on either tool is a fool's errand. The Soviet Union is defunct (closed for repairs?) and the American middle class has been stagnant, if not shrinking for some time. It is time to put the final nails in the coffins of Reaganomics/Supply Side economic theory.

 

[Infohawk]

It can be argued that the NFL practices communism and they are easily the most successful professional sport in existence.

And the argument would fail miserably...

 

[Steeplerot]

The whole pioneer spirit thing and the founding of this country from sea to sea was done by collectivists.
If the libertopian fantasy world exsisted anywhere but in ignorant minds how exactly would towns/villages take off with no collectivist investment and efforts? Who would save them from pissed off natives who think ron paul is a douchebag?

Could you imagine pioneer fireside chats about fractional reserve banking and economics till the break of dawn?

The chance of these folks breeding with human females would be nil sadly, even in the woods.

 

[Darwin333]

Meantime, what's the private financial sector doing?

Wiping the Dems cum off of their faces and getting ready to start blowing the Reps again.

 

[DominionSeraph]

The problem is people like you think that money earned does not belong to the earner to belong with - that it's the property of the collective, and scaling down the tax rates is from the goodness of the government. That's why you use words like "give more to the rich" when it's really "steal less from the productive."

Except the rich are rich not because they're building 500,000 widgets with their own hands but because they leverage property rights to skim from the workers who are building those 500,000 widgets.
The middle class is not hurt by limiting the ultra-luxury market. If the government skims off the wealthy's skim so that they can only buy 5 private jets instead of 10 and rolls the money into things that benefit the middle class, how is the middle class hurt? The jobs of those 5 planes? That's paid for in money skimmed off the middle class -- no benefit there; and the wealth created in the product cannot be afforded by the middle class. If there was less skim on the middle class in the first place that segment of the economy would be larger as the wealth would be used to service the middle class, thus creating jobs.

The government cannot regulate things on the front end because there's no good way to micromanage the leveraging of property rights. So it regulates things on the back end with taxes to return the wealth to those who earned it.

 

[matt0611]

...

The government cannot regulate things on the front end because there's no good way to micromanage the leveraging of property rights. So it regulates things on the back end with taxes to return the wealth to those who earned it.

What do you mean by this statement?
What do you mean by those who earned it?

 

[DominionSeraph]

What do you mean by this statement?
What do you mean by those who earned it?

Those who physically create wealth: The workers.

Somehow conservatives have gotten it into their silly little heads that a rich man sitting on the beach in the Bahamas sipping a Pina Colada is creating wealth just because he's still raking in money. HE isn't doing anything -- the workers back home are (at least those that he hasn't yet outsourced thereby siphoning wealth off BOTH the worker through normal means AND the purchaser by leveraging the wage gap between the First and Third Worlds to concentrate the delta in the rich as the First Worlder's wages plummet to Third World rates.)
And capital reinvestment towards growth does not require the capital be concentrated in an individual.

The rich are needed for capital lubrication, but you do not need the top 1% to hold 35% of the wealth of the country/ top 5%, 62%/ top 10%, 73%.

 

[JS80]

Those who physically create wealth: The workers.

Somehow conservatives have gotten it into their silly little heads that a rich man sitting on the beach in the Bahamas sipping a Pina Colada is creating wealth just because he's still raking in money. HE isn't doing anything -- the workers back home (that he hasn't yet outsourced) are; he is just siphoning money away from them.
And capital reinvestment towards growth does not require the capital be concentrated in an individual.

The rich are needed for capital lubrication, but you do not need the top 1% to hold 35% of the wealth of the country/ top 5%, 62%/ top 10%, 73%.

Somehow liberals have gotten it into their stupid little brains that a rich man is sitting on the beach in the Bahamas sipping a Pina Colada doing nothing while raking in money. When in fact he is working 100 hours a week while graciously paying his employees -- the workers back home (that aren't completely useless and aren't monkeys putting together parts that you can teach anyone in the Earth can do) that get a guaranteed salary while he risked his capital to produce a company that generates value to society; he is probably overpaying them too because of government regulations and labor laws.

 

[Steeplerot]

Somehow liberals have gotten it into their stupid little brains that a rich man is sitting on the beach in the Bahamas sipping a Pina Colada doing nothing while raking in money. When in fact he is working 100 hours a week while graciously paying his employees -- the workers back home (that aren't completely useless and aren't monkeys putting together parts that you can teach anyone in the Earth can do) that get a guaranteed salary while he risked his capital to produce a company that generates value to society; he is probably overpaying them too because of government regulations and labor laws.

What a tool.
Now the middle class is overpayed -it's just too bad the poor oppressed rich have to pay anyone at all

 

[matt0611]

Those who physically create wealth: The workers.

Somehow conservatives have gotten it into their silly little heads that a rich man sitting on the beach in the Bahamas sipping a Pina Colada is creating wealth just because he's still raking in money. HE isn't doing anything -- the workers back home are (at least those that he hasn't yet outsourced thereby siphoning wealth off BOTH the worker through normal means AND the purchaser by leveraging the wage gap between the First and Third Worlds to concentrate the delta in the rich as the First Worlder's wages plummet to Third World rates.)
And capital reinvestment towards growth does not require the capital be concentrated in an individual.

The rich are needed for capital lubrication, but you do not need the top 1% to hold 35% of the wealth of the country/ top 5%, 62%/ top 10%, 73%.

To physically create wealth is not the only way to create wealth though...

 

[MovingTarget]

Somehow liberals have gotten it into their stupid little brains that a rich man is sitting on the beach in the Bahamas sipping a Pina Colada doing nothing while raking in money. When in fact he is working 100 hours a week while graciously paying his employees -- the workers back home (that aren't completely useless and aren't monkeys putting together parts that you can teach anyone in the Earth can do) that get a guaranteed salary while he risked his capital to produce a company that generates value to society; he is probably overpaying them too because of government regulations and labor laws.

Somehow conservatives have gotten it into their stupid little brains that the rich man is frantically running around working 100 hours a week while graciously paying his employees for sitting around being completely useless monkeys that don't deserve anything for their time or labor. The reality is that the rich man, being in the position he is, overpays himself and not the workers. He is often idle in comparison to his workers once he reaches his position of power (sometimes at birth - imagine that! Hooray for gutting the estate tax!). Idle wealth (risked or not) is not earned wealth in nearly the same manner as wealth earned by those risking time and direct labor (even their own health). The American working man/woman has gotten the shaft for the good part of the last thirty years because of thinking like this.

 

[DominionSeraph]

To physically create wealth is not the only way to create wealth though...

Then tell me, how does one non-physically create wealth? Create; not transfer or leverage position for creators of wealth.

You can find wealth; i.e., Love. But to create wealth with no labor? Good luck finding an example.