This is perhaps a little on the late side, but it is definitely worth posting up.
I hope that it is true that Georgia's economic outlook truly is the best in the United States. After all, Georgia has a proud history in the South as being an industrial center, and has several first-rate institutions on its side. We have excellent schools (I myself migrated more than 3000 miles to enroll in Georgia Tech) and some big players coming into the state fairly shortly.
Yet, at the same time, I must question Governor Perdue's wisdom (or, perhaps like any politician, he is eager to claim any gain as his own) in celebrating a recent study by Arthur Laffer. Do not worry if the name is not immediately familiar. Mr. Laffer is an economist most closely identified with Ronald Reagan's "trickle-down" economics theory. You know the one - be nice to the rich, and they will be so ecstatic that they will, eventually, throw a few sheckles at the feet of the plebians that supplicate at their feet.
I should be more precise, however, so that I do not ruin the good reputation of the good Laffer. The main claim to fame of this man is the "Laffer curve," a sketch drawn on a napkin that shows that tax revenues peak at an optimal tax rate. Too many taxes, and the business sector is sufficated (no tax income there). Too few taxes, and nothing comes into the government coffers. Of course, lost in this discussion is any rational conversation about the appropriate role of government taxation - it is just a maximization game to Laffer. More about his theories later.
Back to Sonny. You see, Governor Perdue believes that any "Number One" study should be shouted from the rooftops. Again, that is his choice. If he bothered to read the study with any scrutiny, however, I would hope that he would be as disturbed as I am. Laffer believes that a state's economy can be predicted entirely on its tax policy. No consideration as to its industrial base, educational facilities, the works of famous sons or daughters, nothing. The only question that Laffer posits is "Do you require the rich to pay their fair share?" The study gives 25 percent of its score to the regressive nature of a state's tax code. Forget "soak the rich," we are talking about "screw the middle class."
I should also mention that Laffer says that the state can improve by shifting its tax burden from corporate and property taxes to sales taxes. We are talking about increasing the regressive quality of the tax code.
Why do I think that Sonny is a fool for throwing in with Laffer? Well, let's mention a fellow by the name of Lysenko. Lysenko was a biologist in the Soviet Union who became good friends with Joseph Stalin. Lysenko himself was a poor biologist - he bet on Lamarckian heritage when Mendel proved to be in the right. Until Lysenko's appearance on the Soviet scene, the Russians were actually pretty good at genetics and biology (as they continued to be in math and physics). However, Lysenko's campaign of self-promotion and political maneuvering established himself as a well-heeled scientist while costing his country a valuable vein of scientific thought, in addition to ruining farming yields. Yet, his story as a "peasant genius" was useful to Soviet propaganda, and so his hero status remained intact.
Laffer is an economic Lysenko. His theories are useful to certain factions, and so he is promoted as an excellent economist. On the other hand, as the report on Georgia's economy shows, his analysis is shallow as he ignores all forms of capital (educational, industrial and so forth) built up within the state. Taxation is everything in this study, and I believe that is a great disservice to anyone with contributions to make to this state. Schools, trained workforce, a nice place to live ... nothing. What's your top tax bracket is all this guy can cope with in his models.
Again, someone in the office of governor should know better, even at the expense of being able to proclaim that his home state is number one.
Who's the one that celebrated Flat-Earth economics? Oh, yeah. Sonny did.
For links, check here:
http://atlanta.bizjournals.com/...
http://www.gov.state.ga.us/...