Tag Archives: Arthur Laffer

The Mythical Laffer Curve

I’ve mentioned the Laffer Curve a few times on this blog, often in connection with one of its greatest proponents, Señor Daniel Hannan. This excellent blog from Robert Nielson expertly debunks the myth of the Laffer Curve. The curve was allegedly sketched on a napkin in a restaurant by right-wing economist Arthur Laffer to illustrate “taxable income elasticity” and to thereby rationalize the so-called “trickle-down effect” (also known as voodoo economics) and flat taxes, in particular. The Laffer Curve is closely associated with supply side economics and, in particular, Reaganomics. The idea that flat taxes will magically benefit everyone is patently absurd, especially when one considers the example of the Poll Tax and the effect that it had on low-income households.
The Laffer Curve is also known by the name “Laffer-Khaldun” Curve on account of the fact that it was originally devised by the 14th century Muslim philosopher Ibn Khaldun. Laffer simply appropriated it and deployed it as a sort of neoliberal talisman.

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Filed under economic illiteracy, Economics, neoliberalism

Let them eat ketchup.

On an earlier blog, one poster laughingly claimed that the class war was “over” and how the working class had become “derivatives traders”.  Such wit. This is the small state mentality of our ‘libertarian’ friends: they promote the lie that unrestrained capitalism will create greater equality.  For them it’s all about the ‘evils’ of regulation, because regulation means that someone somewhere is being protected from harm at the expense of someone’s profit margin. What a bummer! In his blog today, Hannan says that governments “always find tax rises easier than spending cuts” and claims to have noticed a ‘concession’ to the poor contained in the budget. But he still isn’t happy. He wants those poor people to pay,

Not that this concession has appeased Left-wing pundits, who are insisting that the budget is unfair to the poor. It is true, of course, that any spending cuts will necessarily affect net beneficiaries of state expenditure more than net contributors.

Ah, nothing like a simple binarist rationalization: it’s all about the economy’s contributors and beneficiaries.  The poor really do get it in the neck from you, don’t they? I get the feeling you’re one of those Randists…something to do with rational selfishness…no?  But hang on, what about the Train Operating Companies? They receive massive state handouts yet none of you want to mention them or any of the other private interests who receive state funding. Are they all worth the money? It’s highly debatable, particularly in the case of the TOC”s who raise fares for the benefit of shareholders while providing a shoddy service for their passengers. But this is risible,

As Art Laffer says, if you pay people to be poor, you’ll never run out of poor people.

And Art Laffer is a numbskull…we know all about about his infamous curve and how that curve became popular with St. Ronnie and co. We remember ‘voodoo economics’ too and how ‘trickle down’ was meant to raise up the poor. The poor? To hell with them, let them eat ketchup. Next you’ll be telling us how flat taxes are ‘fairer’.

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Filed under ConDem Budget 2010, Government & politics