Okay, terrible title, but an honest question: To what extent is Arthur Laffer’s simple theorem – lower tax rates actually generate higher government revenues – actually correct? If it is substantially true, then the likes of Paul Krugman and Timothy Geithner should pack it in with their endless op-eds, theories and charts and stop bothering us. (Well, maybe they should anyway.)
Laffer’s theory was on display again in the Wall Street Journal earlier this week with a new column – The-Soak-the-Rich Catch-22. The economist writes well and is convincing, at least to me, taking us on a tour of the history of government spending, starting with Hoover (a Republican who sounds like a Democrat) through JFK (a Democrat who sounds like a Republican) to the present administration, most of whose economic pronouncements just sound like gibberish.
Compare Laffer’s piece to the pro-administration cheerleading offered in today’s NYT by Timothy Geithner – Welcome to the Recovery. Well, if you say so,Tim. Or, better yet, in the words of the immortal Pirandello, “Right You Are If YouThink You Are.”
Actually, Geithner’s piece was so boring (it read like a mediocre term paper) I could barely get through it, let alone have any interest in its arguments, which came down to “believe us – it’s okay.” But I remain fascinated by Laffer. At least he has a theory. Geithner et al have nothing but words. And more and more people know it.