Why I Can’t Take Conservative Economists Seriously: The Arthur Laffer Edition

So Arthur Laffer, the creator of the Laffer Curve, which was used to justify lower taxes on the grounds that the increase in economic activity would actually increase the amount of tax revenue despite the lower rates, just crapped out on national television this pearl of wisdom:

If you like the Post Office and the Department of Motor Vehicles and you think they’re run well, just wait till you see Medicare, Medicaid and health care done by the government.

If I were a Very Serious Blogger, I’m sure I would have something trenchant to say, but, damn, what a fucking moron. Laffer is the brilliant mind that has motivated much of the last two decades worth of Republican and conservative economic thought (in practice: I don’t care what the few True Scotsmenconservatives really think).
Consider it the economic version of Palinism.

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17 Responses to Why I Can’t Take Conservative Economists Seriously: The Arthur Laffer Edition

  1. In fact, I do think that the Post Office and the DMV are much beter run than private companies that do a similar ammount of business. I can’t wait for Medicare and Medicaid to be run by the government!
    What a douchebag!

  2. george.w says:

    Bill Maher; “the post office that takes a letter from my hand and delivers it anywhere in the country in a day or two for forty-three cents? THAT post office?”

  3. Mark P says:

    The Post Office has problems, and they started when the Post Office became the Postal Service and it was required to make money. Service went to hell, and expenses rose because of a number of things. For example, the private delivery services cherry-picked the most profitable types of deliveries, making it harder for the USPS to make money on what was left. I think it’s an example of how “conservatives” try to destroy public services to demonstrate that public services don’t work.

  4. Gray Gaffer says:

    I thought Medicaid was already run by the Government? Or is it Medicare? Or both?
    Anyway, he obviously thinks they’re not and that doing so would be a disaster of the same magnitude as the USPS. He’s right. But obviously not very practiced in parsing his own English. If ‘That Post office?’ ‘s performance is what you call a disaster, bring it on!
    The removal of the profit motive leaves room for, you know, actual job performance to be its own incentive. Speaking naively, of course;) But there are some of the greater ills of corporatism that go away. Now if we do the medical stuff so that the government part acts as the conduit between patients and doctors, much like the USPS acts as a conduit between letter writers and letter readers, without getting involved in the content, it may well work out peachy.

  5. QrazyQat says:

    Last time I renewed my license at the DMV I went in without an appointment and walked out with my new license in 15 minutes. Last time we renewed the RV license it was the same; the time before that we went through the drivein window and it was 10 minutes. This does not seem onerous to me.

  6. mrcreosote says:

    Isn’t DMV a state responsibility?

  7. Mark P says:

    Some of you younger folks might not know that the Post Office used to deliver twice a day six days a week. You could post a letter in your little town and it would be worked at the local PO and in all likelihood delivered the next day. Now with the streamlined, for-profit USPS, your letter is picked up at your local post office and, if you live in a smaller town (up to say 50,000) it will be trucked to the nearest big city to be worked. Then it will be trucked back to your local PO where it will be worked again and delivered. It usually takes at least an extra day now, and quite often more than that. And now the USPS is talking about cutting delivery from once a day six days a week to once a day five days a week. And that’s all so that the postal service can be made to make money. Or die.

  8. Paul Murray says:

    The reason that white right-wingers hate the DMV and the Post Office is that they have to queue up behind black and poor people. This is the core of their objection to socialised medicie, this is precisely what they detest about the idea.

  9. NewEnglandBob says:

    I have been laughing at Laffer curves for decades.
    His theories have always been idiotic and wrong. Reaganomics and supply side economics is just one big Republican swindle.
    The right wingnuts never had even one good idea.

  10. Jim Thomerson says:

    Wasn’t the post office funded by taxpayer money back when we had twice a day delivery? I once mailed a check, to the next state, in the morning mail and received a reply with recipt in the afternoon mail. Better than that, I got a postcard from my fiance postmarked a week in the future.

  11. Forrest says:

    Some “early Laffer”…from Jonathan Chait’s The Big Con: Crackpot Economics and the Fleecing of America:
    “Laffer quickly suffered a bout with infamy when he made a wildly unconventional calculation about the size of the 1971 Gross Domestic Product. President Nixon seized on Laffer’s number, which was far more optimistic than estimates elsewhere, because it conveniently suggested an economic boom under his watch. When it was discovered that Laffer had used just four variables to arrive at his figure – most economists used hundreds if not thousands of inputs – he became a Washington laughingstock. Indeed, he turned to be horribly wrong. Laffer left the government in disgrace and faced the scorn of his former academic colleagues…”
    Chait seems to paint Laffer’s fellow economic traveler Jude Wanniski as the greater Nut Job, actually…

  12. Troublesome Frog says:

    I love the post office. It’s like going to the bank, except with more services at a lower price, and everybody who works there actually knows how to perform those services. You can walk in with 10 questions and have 10 things taken care of correctly the first time for a few dollars.
    As for the DMV, I live in California. Everything you do by mail takes weeks to months, the paperwork is often nonsensical, and the people there can’t answer any questions. If you’re lucky, you can go to your local AAA office for the service you need and it gets taken care of.
    I’m the last person you’ll see advocating privatizing everything, but the CA DMV gives every other government organization a bad name. I’m pretty well convinced that if any halfway efficient private company took it over, the whole thing could be run by about six semi-literate employees, a server farm, and a room full of printers. I can’t even guess why it takes so long for paper to go through that system now.

  13. william e emba says:

    There are many things wrong with the Laffer curve. Everyone knows that it’s a ridiculously gross oversimplification, reducing tax policy to one variable. Everyone knows that its advocates do not even bother to attempt to apply the alleged Laffer curve theory in the first place: they just blindly assume it’s a fact that we’re on the curve’s right hand side, so tax cuts become the automatic response.
    Beyond this, thought, there is a more fundamental error, invalidating the very point of the Laffer curve. The purpose of government (to an economist) is push the markets towards maximal efficiency. Period. Government revenue is a means to an end, not an end in itself, and treating it as an end is simply fraudulent economics.

  14. william e emba says:

    CommonSense posted a link that says people have been quote mining Laffer on the Internet to make it seem like Laffer didn’t think Medicare and Medicaid are government programs.
    Wrong.
    Our Mad Biologist did not quote mine, and the full quote quite clearly implies Medicare and Medicaid are not yet government programs.

  15. Troublesome Frog says:

    CommonSense,
    I have zero idea how the link you posted does anything but confirm that Laffer’s statement implied that Medicare and Medicaid were not currently run by the government. In fact, I can’t really come up with a sensible way of rephrasing what he said to imply otherwise.
    Can you help?

  16. minneapolitan says:

    Laffer’s quotation is idiotic, of course, on the face of it. But let’s pretend that he’s not quite so much of a moron, just for a moment. What’s wrong with comparing government-supported health care (which tens of millions of US citizens already enjoy) to state-run services like the DMVs or to the Postal Service?
    For one thing, the point of both of those operations is speed and volume. We expect the USPS to deliver billions of pieces of mail quickly and cheaply, and by and large it does so. Similarly, we expect the DMV to oversee a very small part of people’s lives — their pentannual ID renewal — very quickly and very accurately. One number wrong on your ID is the difference between a clergyman and an arsonist, but if you’re in the office longer than 20 minutes, most people have steam coming out of their ears.
    It’s just a category error to compare health care, a slow, considered, life-long process, to these fast, high-volume examples of government work. The problems are different and therefore the solutions will be different as well. Laffer’s analogy fails on every level.

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