Luridly Loathsome Laffer

Nov 6th, 2011
by F. Grey Parker

As much as rational economists from both right and left continue to hope that Art Laffer will, at long last, simply shut up, Mr. Laffer shows no signs of doing so. Nor, it would seem, does he have any interest in lessening the actual damage to our country that he has done over the course of two generations. In fact, Mr. Laffer continues to double down on promoting the very policies which have brought us to our knees.

Yesterday afternoon, Neil Cavuto hosted Mr. Laffer over at Fox Business.

Something so very wrong was said that it cannot go unchallenged; It was not any part of the predictable litany of anti-Obamaisms. Nor was it Mr. Laffer's pandering declaration that the stimulus is "the reason we have... high unemployment." What was truly shocking was Cavuto's description of Mr. Laffer as "about as fair and balanced an economist as you're going to get."



This is rather like describing Idi Amin as having been a well rounded humanitarian.

Some of you might still be asking, "who's Art Laffer?" Well, here's a primer, kids.

Starting roughly forty years ago, Mr. Laffer began positioning himself as one of the conservative movement's "new thinkers." The entire premise of "supply-side economics" is predicated on the acceptance of a theorem known as the "Laffer Curve." This was the "brilliant insight" he made... on a cocktail napkin... during a typical, inside-the-beltway discussion in the early 1970s. It is the notion that the lowest possible tax rates on corporations and the very rich not only raise revenues, but also naturally create a "trickle-down" of wealth to, well, everybody else.

It was beyond childish. It was insane. It was then, is now, and will forever remain, an argument against sending one's child to Stanford for an "advanced degree"... ever.

It is not so much that he has been consistently wrong regarding economic theory for four decades which makes him worthy of disdain; The problem with Mr. Laffer is that he has never been apolitical about his pronouncements. He is a hyper-partisan.

Mr. Laffer has spent his life helping to engineer a form of repressive social policy which masquerades as economics. In recent years, other conservative players, including Harvard Professor and former Bush II economic adviser Greg Mankiw, have moved to distance themselves from his assumptions.

In fact, most savvy economists seem to increasingly regard him with a mixture of annoyance and contempt.

Barry Ritholz, not exactly an anti-free market fellow, famously dissected a self-flattering WSJ op-ed by Laffer as having included "unmitigated and embarrassing nonsense."

It did.

Even Laffer's fellow supply-sider and former acolyte, Brian S. Wesbury, clearly argued that the same piece was, at the very least, severely flawed.

Fellow veterans of the "Reagan Revolution," like Bruce Bartlett and David Stockman, have made a regular routine of exposing Laffer's wrongness; There are examples HERE, HERE, HERE, HERE and HERE.

During the raging debates over "Obamacare," Laffer did the bidding of message-master Frank Luntz. On Fox, he breathlessly exhorted seniors to be terrified of change by saying "just wait till you see Medicare, Medicaid ... done by the government." You can't make something like that up.

Quite recently, Laffer endorsed Herman Cain's "9-9-9" plan. "Mr. Cain’s plan is simple, transparent, neutral with respect to capital and labor, and savings and consumption, and also greatly decreases the hidden costs of tax compliance. There is no doubt that economic growth would surge upon implementation of 9-9-9," he said.

None other than Josh Barro, of the National Review, was politely appalled by Laffer's "embarrassing" promotion of this ridiculous scheme:

"If you take a tax and split it up into a few parts, still requiring people to pay each part, you haven’t cut the marginal rate. And 9-9-9 consists of three taxes on more or less the same base: consumption. As the Tax Policy Center puts it: "The bases of all three taxes are essentially the same as the base of a national sales tax… the three taxes combined are equivalent to a 25.38 percent national sales tax." (Because of interaction between the taxes, the rate does not sum to 27 percent, but it gets close.)"

The whole piece should be read. Here's another gem:

"Then, Laffer says this: "this 9-9-9 plan has made certain that even on static terms those below the poverty line will be better off—period." It’s hard to see how that could be true, but the Cain campaign’s description of 9-9-9 has been so haphazard that we can’t know for sure."

The real problem here is that Barro, like so many others, continues to treat Laffer as if he were an economist. He is not. He is an activist who pretends to use economic theory when he is actually sloganeering.

There are many examples of Laffer simply refusing to treat opposing analyses based on real evidence with even a kernel of respect. The most notorious of these is, of course, the following exchange; Peter Schiff, a longtime confidante of Ron Paul and a very savvy watcher of international markets, appeared with Laffer on CNBC in August of 2006. Schiff predicted a total collapse of the mortgage industry. He also predicted that a global financial tsunami would follow. What's more, he predicted a recession lasting "years" and not months. Laffer's response? Not content to merely dismiss Schiff, he dared him to bet his "honor" and "a penny" on it.


To date, Laffer has reportedly neither apologized nor has he paid Schiff that penny.

So. How is it that a man like Art Laffer, who is recognized as a fraud and a charlatan by many legitimate conservative intellects, still able to muster so many bylines and appearances?

He has some very powerful friends.

Laffer found a safe haven long ago within the confines of ALEC. Yes, that ALEC. The American Legislative Exchange Council. In fact, he is one of their central propagandists. Below is a screenshot from the ALEC/Laffer produced Rich States, Poor States.

This document should be read by anyone who participates in a discussion on the topics of Laffer's "work" or ALEC. Its bizarre and narcissistic self-glorification would be funny (the word ALEC appears no fewer than two hundred and three times and Laffer's name appears one hundred and seventeen) if it were not essentially a partial blueprint for instituting a form of 21st Century American indentured servitude.

Art Laffer has been recognized as dishonest by most people that understand complex monetary policy. He can't seem to actually do math. He can't parse history. And, most importantly, he refuses to admit that he's ever incorrect. His fantasies should have remained little more than stains on paper. Unfortunately, for decades, his endless stream of proposals have been embraced by wealthy elites. What's more, many in government still cling to them in spite of 30 years of flat wages for the vast majority and that pesky $14 trillion deficit that we now grapple with.

Art Laffer is a man who has been instrumental in creating our ongoing crisis. He is a man who has helped to disseminate the most pernicious lies and propaganda of the right. His influence is literally one of the reasons average Americans can afford less milk and bread.

Even for Fox, to describe him as "fair and balanced" takes more than a small amount of nerve.