The Laugher (Laffer) Curve

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Arthur Laffer didn't earn his badge of distinction serving as advisers to republican presidents nor did he earn many kudos for his rather hapless and highly partisan op-ed in the WSJ this morning.  In it, he of course made his "debt ceiling" pitch - something that  goes with the wild overspending and perhaps it wouldn't be a bad idea to default and teach everyone a lesson.

He used the percentage of spending/debt to GNP coming out of World War Two where it was over 30% at the end of the war and dropped by 2/3rds in the 3 years after and the economy grew. Well duh.  The east coast got hit by a snowstorm yesterday and the stock market went up...so we need a storm every day for stocks to rise?

It is the simple view of history that I find most irritating.  2006 with its run away Bush spending, off budget wars, etc., is not to be confused with stimulus spending now or in the two years that Mr. Obama has been in disaster management mode and that is the point.  A family, hypothetical, has a fixed mortgage - an old one and also spends $100 a day on home decorations and does this even though it eats up all available extra money. The home burns down and they have no insurance. Now the family spends all their money plus that $100 a day on putting a roof over their heads and feeding the family because it is just more expensive to live in temporary housing than in their old 30 year fixed mortgage home. Please tell me how the circumstances of their spending is the same? How is $100 spent on stuff the same as $100 spent on food?

Times change.  Yesterday isn't today, wish that it was. And it is that simply simon view of the good old days that makes Mr. Laffer such a laugher.

Comments

  1. AnonymousJanuary 14, 2011 at 11:10 AM

    I'm bored with your false analogies

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  2. Opus One MediaJanuary 14, 2011 at 11:17 AM

    ok

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  3. AnonymousJanuary 18, 2011 at 9:41 PM

    The Constitution does not forbid a "standing army". If it did there would not be separate provisions for erecting forts, magazine, arsenals and doc-yards. Nor would the same document distinguish between armies, the Navy and Militias. Nor would there be provisions for establishing rules and regulations for the "land and naval forces"

    What the Constitution actually says is "The Congress shall have the Power To … raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years...."

    The intention was clearly to give Congress the power to kill or curtail funding of "armies", which back then were mostly engaged in fighting foreign wars.

    But no army except when we are in a declared state of war? You're not even close.

    ReplyDelete
  4. Opus One MediaFebruary 10, 2011 at 4:05 PM

    If you read the article in context, a standing army is only possible during a state of war. The 2nd amendment has the historical intention of arming the state miltias so that they can be called up quickly in time of need and that the standing army was to be disbanded when not needed hence the 2 year rule.

    ReplyDelete

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