Tax Hikes and the 2011 Economic Collapse - Laffer

[dem mba]

http://www.ritholtz.com/blog/2010/06/art-laffer-make-up-your-own-facts-here/

To a man whose only tool is a hammer, pretty soon everything begins to look like a nail.

I couldn’t help but be reminded of that aphorism as I read the most popular article on WSJ.com yesterday — Tax Hikes and the 2011 Economic Collapse — a screed on the Laffer curve and Supply Side Economics by none then than Art Laffer.

If either the WSJ OpEd page or Mr. Laffer had foreseen the most recent economic collapse we just lived through, or the credit crisis, or the housing collapse, or the derivatives problem, or any of the other economic disasters that befell the country I might give their warnings some credence. (I give credit to Laffer for discussing the possibility of a recession in Feb 2008 — way ahead of most right wing economists) But considering all this occurred with their man in the White House for 8 years, and they somehow missed it, leads me to one of two conclusions: Either they are extremely bad economists, or they are extremely partisan observers.

Given that so many of the dismal set missed all of the above, we should give them the benefit of the doubt. Let’s not simply assume they are bad economists — instead, this looks like just another money-losing partisan screed.

/snip

I'm becoming quite a fan of Ritholtz...

and while we're at it...Laffer v Schiff
http://www.youtube.com/watch?v=IU6PamCQ6zw

[truedelphi]

1. I know of and enjoy Schiff, but had not heard of

Ritholtz. Will check out the vids you mention.

And thanks.

[dem mba]

3. check out the link below, his critique on a McCain advisor

who had perhaps the worst timed economic prediction ever. I was dying when I read it. So funny.

http://www.ritholtz.com/blog/2009/03/quit-doling-out-that-bad-economy-line/

[BobTheSubgenius]

2. "Either they are extremely bad economists, or they are extremely partisan observers."

This sentence ignores the rather obvious (and likely) condition; that they are both.

As an aside, I took a few economics courses back in the day, and my sister has a Masters from Oxford on the economics of the North Atlantic Triangle, and never once did either of us (most notably her, of course) hear the term "supply side economics" or "trickle down...garbage" How did this ever become a serious alternative to actual economics theory?

[dem mba]

4. it got credence because Laffer was Reagan's economic advisor

and the 80s were generally considered a Bull market, high GDP, low-tax, jazzercizing fuckfest for all involved.

Naturally, Laffer and his cohorts take all the credit. Krugman and others can tear apart their arguments better than I.