Swift reviews the recent PopConversation between economist Art Laffer and Mark Littlewood
Art Laffer is 83. His famous curve is a little younger, just on its half-century. Originally, according to legend, it was sketched on a Washington restaurant napkin.
Both are still going strong. Indeed, to judge by Laffer’s performance when interviewed by Mark Littlewood (the PopCon head honcho) in the latest of the PopConversation webinars, he retains the vigour, the enthusiasm, and the machine-gun delivery of a rapper straight outta Compton.
Swift assumes his readers will know all about the eponymous curve. But if not it demonstrates that rises in taxes do not necessarily increase revenue: they depress activity, encourage evasion, and spread general poverty.
That is so self-evident (except to socialists, LibDems, Greens and pretty much everyone under the age of 30) that it hardly needs a theoretical demonstration, but if you would like to examine the evidence, could Swift recommend Taxes Have Consequences, by the man himself? Perfectly comprehensible for non-economists, and perfectly convincing.
The unstoppable Dr Laffer had five propositions for a healthy economy:
- Low rates of taxes, paid by a broad base of taxpayers
- Spending restraint by government
- Sound money
- Minimal but effective regulation
- An unswerving commitment to free trade
It is remarkable how far we have come from this obviously successful recipe since the days of Reagan and Thatcher, both of whom Laffer advised. But that is an illustration of the truth that these battle have to be fought in every generation, because we live in societies where faith in the power of big government to solve every problem can never be eradicated, only beaten down.
Laffer has his political heroes – we can add Bill Clinton, Jack Kennedy and Donald Trump to the list - although apparently Clinton never returned the favour. He also has an enjoyable black list of enemies. Take a bow, the Four Stooges: Presidents Johnson, Nixon, Ford and Carter, whom ignored the Laffer curve to their cost (as well as making mistakes on the wider political stage). But Laffer reserved particular intellectual contempt for Thomas Piketty and the redistributionist school. They are ‘creepy people’ he said, with genuine loathing.
As far as Laffer goes, taking money from rich people and givng it directly to poor people fails the most obvious test: the result is that both groups work less. Everyone is thus poorer.
What about trade? Here Laffer raged like some fundamentalist preacher callng down fire and plagues on the ungodly. There should be free trade with everyone – from North Korea to Iran, by way of Russia. Sanctions are worthless (viz. Cuba since 1959). Trade with people, talk to them, and if they aren’t playing ball, whack them. The man is fearless, to be sure.
Swift cannot do full justice to to the perpetual ideas machine that is Art Laffer. He is a national – no, international treasure. That napkin (if there ever was one – Laffer himself isn’t sure) should have been saved and exhibited in the Smithsonian. But at least we still have the originator to challenge and provoke us into better ways of thinking.
Click here to watch the full webinar.