Arthur B. Laffer, an effervescent, energetic economist made famous by “the Laffer Curve” in the late 1970s says “it’s 1979 all over again” in America.
Laffer argues we are “just about due for a huge turnaround” in our economy in this video interview conducted in April. “One of the nice things about being very old, is you can actually remember old time events. This is 1979 exactly.”
He described being worried of rising socialistic policies back then, but “bang, it all changed. In 1980, the clouds opened, the sun shone forth on the planet, the fields turned green, the trees blossomed and bore fruit, the animals multiplied, and Reagan was nominated and elected. We changed the course of the world. But we are just about to flip it again.”
Later in the interview, he says, “remember, without Jimmy Carter, there never would have been Ronald Reagan.”
This optimist believes, “the economy is this masterful creation of evolution. It’s just spectacular, and I stand in awe before the economy… If you leave the economy alone it does really well.” Laffer believes government officials should first, do no harm. He indicts both parties with “bipartisan ignorance” of fiscal policies.
The four presidents he names as wrong on economics are Johnson, Nixon, Ford and Carter — the “four stooges: the largest assemblage of bipartisan ignorance probably put on planet Earth.”
Government has a tendency to grow in power, and pick winners and losers, but Laffer explains how a limited-government economy handles taxes.
“All taxes are bad. Some are worse than others. You want to collect your revenues in the least damaging fashion, and spend the proceeds in the most beneficial fashion,” he says. “When the pain or damage done by the last dollar of taxes collected is a little bit less than the benefit done by the last dollar of government spending spent, stop already! That’s where government functions stop, and the rest is taken on by the private sector.”
Laffer has seemingly limitless ideas and energy for changing the incentives in Washington for economic growth. He wants to get rid of the IRS, embargoes and engage in more free trade. He offered Democrat presidential candidate, Pat Brown, a flat tax plan in 1992 and brags that Al Gore is a close personal friend of his. He is confident that he and Elizabeth Warren could see eye to eye, in spite of Warren’s radical rhetoric.
His five criteria for assessing economic policies are: low rate, broad based, and flat taxes, spending restraint, sound money, free trade, and minimal regulations. Then, he says, “get out of the way and let the economy take care of itself.”
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