Arthur Laffer (1940- ) is an American economist of the Chicago school; that is, he believes in the Laissez Faire economic system. His claim to fame is his teaching that governments obtain more revenue by growing business (supply side) so that they produce goods and services, sell them and the economy expands. He does not want governments to over tax the goose that lays the golden egg. He would prefer that governments did not tax corporations and businesses at all but since governments cannot exist without revenue from taxation, that corporate taxes be very minimal. This does not mean that he was for large taxes for the American people. Like many so-called neocons he would the people did not pay taxes at all.
One wonders where the government would obtain the trillions of dollars it spends on the military to make the country the world superpower, and sole Hegemon of the world. Conservatives like it that their country is the most powerful military power in the world; indeed, they seem to believe that funding the military is the only legitimate function for government and that the rest should be left to free enterprise, including education.
If the public had not funded education one supposes that Laffer’s ancestors, who were peasants in Europe but came to America to obtain education and expand their brains, would have remained peasants and Arthur would have become a wage slave in a factory.
We can summarize Laffer’s contribution to economics as his call for lowered taxes, especially business taxes. With his statistics (econometrics) he shows that lower taxes leads to more economic activity hence the wealth of the nation. This is called supply side economics. It is music to the ear of the gatekeepers of the American political economy.
As long as America is a world colossus and is able to essentially carte the resources of the third world to its citizens and they live well and not pay taxes to support their government it is all nice and dandy. But now that Europe is reconstructed and is flexing its muscles, and Asia is on the verge of economic independence America has only Latin America to take resources from.
In time Americans would have to justify their high standard of living. America is a world where janitors live way beyond their status in life (drive SUVs, live-in houses, all because the political system subsidizes many things for them and prevents them from paying the market value for their life style). Well, soon the props that enable American workers to live as rich folk would be gone and America joins the rest of the world and her people live according to their means.
At that point we shall see if the bloated government, especially the expansive military can be maintained without paying high taxations; we shall see whether the economy would collapse and the country become a has been empire.
Laffer is a praise singer for the American economic system.
Arthur Lifer. The Ellipse: An Explication of the Laffer Curve in a Two-Factor Model. Financial Analyst’s Guide to Fiscal Policy. New York: Greenwood Press. 1986.