Idiot of the Week
For the first three we employ our features the History Note and Idiot of the Week. Let's begin with this week's idiot, that emblem of Reaganomics, whose well-named Laffer Curve had no intellectual basis, never worked, yet continues today as the centerpiece of the Radical Right Republican economic understanding. We mean none other than Arthur Laffer.
The Laffer Curve was originated by this man and purported to show that government tax revenue increases in times when tax rates are cut. This depends on an unleashing of largely imaginary creative and productive impulses which previously have been restrained by the marginal tax rate. It requires that total output -- in say a 33% tax world -- increase by tremendous amounts so that the lost revenue from the rates is recaptured by the volume.
Never happened, yet it has never been renounced, or even explained. This is similar to the entire Supply Side rationale, which was supposed to generate big new investment and creativity by favoring the private sector. Business investment languished under Reagan and Bush II. And as we've said many times here on Demand Side, economic growth under Republicans since Reagan took office in 1980, when netted for government borrowing, equals zero. All growth under Republican presidents in the last thirty years has been borrowed.
The clip here displays Mr. Laffer not engaged in economics, but in marketing. His supply Side brand has been badly damaged by its obvious deficiencies. It would have been recalled long ago but for a few highly monetarily endowed sponsors. Mr. Laffer is protecting his brand. It should be mentioned that he was among the economic advisers to Mr. McCain during the last election.