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The Lovitz Curve

May 11th, 2012 - 5:39 am

Socialists absolutely hate the Laffer Curve because it takes as its starting point the assumption that under real-world conditions a completely collectivist economy (in which there is no personal reward for working) will always stagnate to the point of complete paralysis. Unfortunately for the haters, the history of communist economies largely confirms Laffer’s assumption; one only need look at what happened in the Soviet Union in the ’20s and ’30s, and China in the ’50s, to see that productivity collapses and the economy implodes when you outlaw individual rewards for labor (which is what a 100% tax rate would do).

Similarly, the Lovitz Curve is going to be a rude awakening for the Obama campaign. He and his strategists had thought that they could amp up the class warfare rhetoric to the absolute maximum and still count on unquestioned support and unlimited donations from the Hollywood elite. But Jon Lovitz’s game-changing rant brought them crashing down to Earth; turns out that the wealthy liberals have acquired a taste for luxury, and their guilt-assuaging support for the proletariat has a limit. Obama unwittingly crossed that line, and he learned the hard way that the curve’s drop-off in RASH is steep and pitiless as you approach Leninhood.

And what holds true for the Hollywood elite almost certainly holds true for hypocritical wealthy liberals from San Francisco to the Hamptons. The Obama campaign may begin to see those big liberal donors suddenly making themselves scarce if he keeps demonizing the 1%.

Will Obama heed the harsh realpolitik of the Lovitz Curve? Or will he throw caution to the wind as he tries to whip up the underclass into a scapegoating frenzy?

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