Republican ideology says that tax cuts are always good for the economy. If they don’t work, that means you didn’t cut taxes hard enough. Art Laffer promoted this nonsense with a clear truth and a maximal delusion. (Pun intended.) We have suffered trillions of dollars of budget busting giveaways to the rich for forty years, as part of the vicious Starve the Beast project to bust the budget and try to force cuts to social programs. We are just now getting over it with Bidenomics, which has provoked maximal Wrong-Wing screaming—almost the clearest sign possible that we need to do more of it.
Well, there is, of course, the current and now the projected state of the actual economy, where
All of this is occurring as we claw back tax giveaways and increase IRS enforcement.
Trump gives creator of failed economic theory the Medal of Freedom
Hayes gave a shoutout to the Ferris Buehler movie for its shoutout to Voodoo Economics.
OK, so what did Laffer get right, and so thoroughly wrong? How did it fit with the whole Republican ideology?
First, I want to point out that Laffer is not an economist, but a crank, a perpetual motion enthusiast who dismisses the entire profession and insists that only he has the one single truth—tax cuts.
Men of one idea, like a hen with one chick, and that a duckling.
Henry David Thoreau
A curve that is 0 at the endpoints and positive in the middle necessarily has a maximum in between. This is known as the Extreme Value Theorem. So a tax rate of 0% and a tax rate of 100% both produce 0 revenue, and the maximum must be somewhere in between. This is true, but turns out not to be helpful, because we have no idea how to find that maximum. Laffer posited, because reasons, that we must be above it, so we must always cut taxes, especially on corporations and the ultra-rich.
I call this philosophy of knowledge Neo-Cartesianism.
I think so, therefore it am.
Martin Gardner, the Mathematical Games columnist for Scientific American, took aim at Laffer in December 1981.
SciAm [paywalled]: The Laffer curve and other laughs in current economics
This is a real version of the Laffer curve based on actual tax data from various countries.
The Book
Intelligencer: An Insider Book Tries to Praise Trump, But Instead Exposes His Corruption
by Jonathan Chait
Trumponomics is a damning exposé of the corrupt bargain between Donald Trump and the party’s wealthy insiders. The odd thing is that the book is not intended as an exposé at all, but as an auto-hagiography written by three Republican policy entrepreneurs who helped win Trump over and shape his program, and are so lacking in self-awareness that they earnestly believe they are defending both Trump and his partners.
The authors of Trumponomics are Larry Kudlow (who left in the middle of its writing to accept a job as director of the National Economic Council), Stephen Moore, and Arthur Laffer. The three fervently propound supply-side economics, a doctrine that holds that economic performance hinges largely on maintaining low tax rates on the rich.
The rich don’t care whether it’s true, or even remotely plausible. It suits the financial interests of those who care about nothing but money.
Their record of being wrong about everything is so incomprehensibly vast it is astonishing they have retained their positions of influence over a major party.
This is known as Cognitive Dissonance, the inability to deal with the failures of prophecy. I have written about it here on DK several times.
Grokking Republicans: Cognitive Dissonance
Grokking Trumpists: Their Cognitive Dissonance is Even Stronger This Time
Truth Brigade: More of Putin's Biggest Mistakes
But returning to that review,
Trumponomics inadvertently clarifies how an economist who was declaring the U.S. housing market to be perfectly sound and on its way up in July 2008 secured a job as chief economist to the president of the United States as a matter of course.
The supply-siders have maintained absolute faith in their dogma in the face of repeated failure by banishing all doubt.
Foreign Affairs [paywalled]: Review Essay: Snake-Oil Economics
The Bad Math Behind Trump’s Policies
N. Gregory Mankiw is Robert M. Beren Professor of Economics at Harvard University. From 2003 to 2005, he was Chair of the Council of Economic Advisers under U.S. President George W. Bush.
The lies and delusions begin in Larry Kudlow’s introduction, and continue throughout the text. Laffer and Moore begin, in the Introduction,
Donald Trump won the biggest upset in American Presidential history by promising…a transformative change in U.S. economic policy after eight years of an economic rut under Barack Obama and eight years before that of George W. Bush.
This, of course, turns out not to be the case.
- Trump won the Electoral College, not the popular vote, by lying, cheating, and stealing, with Russian help.
- We now know how Hillary Clinton could have won, even against all of the decades of hatemongering.
- Trump promised to continue and increase White Male Christianist Supremacist privilege.
- And coal.
- Obama got us out of the housing crash, and gave us a massive boost to health insurance.
- Bush threw away trillions of dollars and multitudes of lives in Afghanistan and Iraq, while letting Osama bin Laden escape, and handing Iraq to the crazies.
- And then Trump gave Afghanistan to their crazies.
- Don’t get me started on the Neo-Conservatives.
The chapter Obamanomics and the Assault on Growth asserts
Trump…wasn’t running just against Hillary Clinton and her closet overflowing with scandals, [🤦] but the Obama economy as well. [🤦] He was running against Obamacare. [🤦] He was running against the regulatory assault on business. [🤦] He was running against the tax hikes [🤦] and faulty trade deals. [🤦] He was running against Obama’s climate change fanaticism. [🤦🤦🤦] He was running against opioid addiction, [🤦] the plague of crime in inner cities, [🤦] the $10 trillion rise in the national debt, [🤦] and income stagnation. [🤦]
No, he was running against the majority of the American people—promising to stomp on the press, minorities, women, immigrants, scientists…
I can’t begin to repeat and expose all of the nonsense in this book. I’ll just give you one more example.
Our prediction was that the combination of Bush’s disastrous bailout policies in response to the financial crisis and Obama’s catalog of anti-growth interventions was going to capsize the world financial markets and turn a temporary trauma into a full-scale deep recession. Which is exactly what happened.
You call this “anti-growth” and a “full-scale deep recession”?
I rest my case, although not from lack of further evidence.
Laffer was an Associate Professor of Business Economics at the University of Chicago from 1970 to 1976 and a member of the Chicago faculty from 1967 through 1976.[10] From 1976 to 1984 Laffer held the status as the Charles B. Thornton Professor of Business Economics at the University of Southern California School of Business.[11] During this time Laffer helped pass Proposition 13, the California initiative that drastically cut property taxes in the state in 1978.[12] In the mid-1980s, Laffer was the Distinguished University Professor at Pepperdine University in Malibu, and a member of the Pepperdine Board of Directors.[13]
He now teaches his bogus economic and political views at Christian Nationalist school Hillsdale College, notorious for supplying a bogus school curriculum to Florida.
NBC: Conservatives are changing K-12 education, and one Christian college is at the center
Republican officials are turning to Hillsdale College in Michigan for teacher training, textbook reviews and a curriculum that celebrates American patriotism.
Publications
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