Arthur Betz Laffer (born August 14, 1940 in
Youngstown, OhioYoungstown is a city in the U.S. state of Ohio and the county seat of Mahoning County, whose urban area borders Trumbull County. The municipality is situated on the Mahoning River, approximately southeast of Cleveland and northwest of Pittsburgh, Pennsylvania...
), is an American
"supply-side"Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created using incentives for people to produce goods and services, such as adjusting your income tax and capital gains tax rates, and by allowing greater flexibility by reducing...
economistAn economist is an expert in the social science of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
who became influential during the
ReaganRonald Wilson Reagan was the 40th President of the United States and the 33rd Governor of California .Born in Tampico, Illinois, Reagan moved to Los Angeles, California in the 1930s...
administration as a member of Reagan's Economic Policy Advisory Board (1981-1989). Laffer is best known for the
Laffer curveThe Laffer curve is an economic concept used to illustrate the theory that increases in the rate of taxation do not necessarily increase tax revenue. The basic assumption is that both a 0% income tax rate and a 100% tax rate will generate no revenue. An optimal tax rate is therefore assumed to lie...
, an illustration of tax elasticity which asserts that, in certain situations, a decrease in tax rates could result in an increase in tax revenues.
Although he does not claim to have invented the Laffer curve concept (Laffer, 2004), it was popularized with policy-makers following an afternoon meeting with
Dick CheneyRichard Bruce "Dick" Cheney served as the 46th Vice President of the United States from 2001 to 2009 in the administration of George W. Bush....
and
Donald RumsfeldDonald Henry Rumsfeld is a United States businessman, politician, the 13th Secretary of Defense under President Gerald Ford from 1975 to 1977, and the 21st Secretary of Defense under President George W. Bush from 2001 to 2006...
in which he reportedly sketched the curve on a napkin
http://www.polyconomics.com/gallery/Napkin003.jpg to illustrate his argument (Wanniski, 2005).
Arthur Betz Laffer (born August 14, 1940 in
Youngstown, OhioYoungstown is a city in the U.S. state of Ohio and the county seat of Mahoning County, whose urban area borders Trumbull County. The municipality is situated on the Mahoning River, approximately southeast of Cleveland and northwest of Pittsburgh, Pennsylvania...
), is an American
"supply-side"Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created using incentives for people to produce goods and services, such as adjusting your income tax and capital gains tax rates, and by allowing greater flexibility by reducing...
economistAn economist is an expert in the social science of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
who became influential during the
ReaganRonald Wilson Reagan was the 40th President of the United States and the 33rd Governor of California .Born in Tampico, Illinois, Reagan moved to Los Angeles, California in the 1930s...
administration as a member of Reagan's Economic Policy Advisory Board (1981-1989). Laffer is best known for the
Laffer curveThe Laffer curve is an economic concept used to illustrate the theory that increases in the rate of taxation do not necessarily increase tax revenue. The basic assumption is that both a 0% income tax rate and a 100% tax rate will generate no revenue. An optimal tax rate is therefore assumed to lie...
, an illustration of tax elasticity which asserts that, in certain situations, a decrease in tax rates could result in an increase in tax revenues.
Contribution to economics
Although he does not claim to have invented the Laffer curve concept (Laffer, 2004), it was popularized with policy-makers following an afternoon meeting with
Dick CheneyRichard Bruce "Dick" Cheney served as the 46th Vice President of the United States from 2001 to 2009 in the administration of George W. Bush....
and
Donald RumsfeldDonald Henry Rumsfeld is a United States businessman, politician, the 13th Secretary of Defense under President Gerald Ford from 1975 to 1977, and the 21st Secretary of Defense under President George W. Bush from 2001 to 2006...
in which he reportedly sketched the curve on a napkin
http://www.polyconomics.com/gallery/Napkin003.jpg to illustrate his argument (Wanniski, 2005). The term "Laffer curve" was coined by
Jude WanniskiJude Thaddeus Wanniski was an American journalist, conservative commentator, and political economist. He is perhaps best known as the associate editor of The Wall Street Journal from 1972 to 1978...
(a writer for the
Wall Street Journal), who was also present. The basic concept was not new: Laffer himself says he learned it from
Ibn KhaldunIbn Khaldūn or Ibn Khaldoun Ibn Khaldūn or Ibn Khaldoun Ibn Khaldūn or Ibn Khaldoun (full name, , , (May 27, 1332 AD/732 AH – March 19, 1406 AD/808 AH) was a North African polymath — an astronomer, economist, historian, Islamic scholar, Islamic theologian, hafiz, jurist, lawyer,...
and
John Maynard KeynesJohn Maynard Keynes, 1st Baron Keynes, CB was a British economist whose ideas have been a central influence on modern macroeconomics, both in theory and practice...
.
A simplified view of the theory is that tax revenues would be zero if tax rates were either 0% or 100%, and somewhere in between 0% and 100% is a tax rate which maximizes total revenue. Laffer's postulate was that the tax rate that maximizes revenue was at a much lower level than previously believed: so low that current tax rates were above the level where revenue is maximized.
At the time of the famous napkin
http://www.polyconomics.com/gallery/Napkin003.jpg incident, Laffer was on the faculty of the
Marshall School of BusinessThe Marshall School of Business is the business school at the University of Southern California. It is the largest of USC's 17 professional schools. The current Dean is James G. Ellis. The school was named after alumnus Gordon S...
at the
University of Southern CaliforniaThe University of Southern California is a private, nonsectarian, research university located in the University Park neighborhood in Los Angeles, California, USA...
. Earlier in his USC tenure, Laffer played a key role in the writing of Proposition 13, the California property tax cap initiative that spawned a host of similar laws around the United States and is generally credited with launching the
tax revoltA tax revolt is a political struggle to repeal, limit, or roll back a government-imposed tax.-1930s, The Great Depression:In the United States, it is often used to refer to a series of anti-tax state initiative campaigns. The first significant wave of these campaigns was during the 1930s. The...
of the 1970s and 1980s. During the mid-1980s, Laffer and many other conservative USC faculty members decamped to
Pepperdine UniversityPepperdine University is an independent, private, medium-sized university affiliated with the Churches of Christ. Seaver College, the School of Law, the Graduate School of Education and Psychology, the Graziadio School of Business and Management, and the School of Public Policy are located on the...
in nearby
MalibuMalibu is an incorporated city in western Los Angeles County, California, United States. As of the 2000 census, the city population is 12,575....
; Laffer remained on the faculty for several years.
In 1986, Laffer was a Republican primary candidate for the US Senate in California. (Congressman
Ed ZschauEdwin Van Wyck Zschau represented California's 12th District in the United States House of Representatives from 1983-1987. In 1986 he ran as the Republican candidate for a seat in the United States Senate. He defeated conservative Bruce Herschensohn in the primary but then lost to incumbent...
won the nomination and lost in the general election to the incumbent Democrat,
Alan CranstonAlan MacGregor Cranston was an American journalist and Democratic Senator from California.-Education:Cranston earned his high school diploma from the old Mountain View High School...
).
Laffer is the author and co-author of many books and newspaper articles, including
Supply Side Economics: Financial Decision-Making for the 80s. An example of his recent work is an article entitled "Destination USA" concerning the trade deficit, which appeared in the January 3, 2005
The Wall Street JournalThe Wall Street Journal is an English-language international daily newspaper published by Dow Jones & Company, a division of News Corporation, in New York City, with Asian and European editions. As of 2007, it has a worldwide daily circulation of more than 2 million, with approximately 931,000...
. The article argues that the trade deficit is an artifact of the American economy's strong structural features.
Laffer received a
BABachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences or both....
in economics from
Yale UniversityYale University is a private research university in New Haven, Connecticut, and a member of the Ivy League. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States. Yale has produced many notable alumni, including five...
in 1962. He graduated from
Stanford UniversityThe Leland Stanford Junior University, commonly referred to as Stanford University or Stanford, is a private research university located in Stanford, California, United States...
with an MBA in 1965 and a
PhDDoctor of Philosophy, abbreviated PhD , for the Latin , meaning "teacher of philosophy", or alternatively, DPhil, for the equivalent , is an advanced academic degree awarded by universities...
in economics in 1971.
Arthur Laffer is Policy Co-Chairman (with Lawrence "Larry" Kudlow) of the Free Enterprise Fund. Despite being identified as a staunch conservative, Laffer has repeatedly enthusiastically admitted on CNBC's Kudlow & Company that he supported
Bill ClintonWilliam Jefferson "Bill" Clinton was the 42nd President of the United States from 1993 to 2001. He was the third-youngest president; only Theodore Roosevelt and John F. Kennedy were younger when entering office...
in 1992 and 1996
Professional activities
Arthur Laffer is the founder and CEO of Laffer Associates in
Nashville, TennesseeNashville is the capital of the U.S. state of Tennessee and the county seat of Davidson County. It is the second most populous city in the state after Memphis. It is located on the Cumberland River in Davidson County, in the north-central part of the state...
, an economic research and consulting firm that provides global investment-research services to institutional asset managers, pension funds, financial institutions, and corporations.
He sits on the board of directors of several public and private companies. Dr. Laffer has been appointed to the advisory board of
Sonenshine PartnersSonenshine Partners, is a boutique investment banking firm based in New York City that offers integrated strategic and financial advisory services...
, an independent investment bank focused on providing integrated strategic, financial and corporate advisory services. In 2004 Dr. Laffer joined the Board of
Pillar Data Systems, a non-public Data Storage Company funded by Tako Ventures, a funding arm of Larry Ellison. In 2008, Dr. Laffer joined the Board of
Alpha Theory, a non-public Fundamental Portfolio Optimization software for hedge and mutual funds.
He was named a Distinguished University Professor of Economics by
Mercer UniversityMercer University is an independent, private, coeducational university with a Baptist heritage located in the U.S. state of Georgia. Mercer is the only university of its size in the United States that offers programs in eleven diversified fields of study: liberal arts, business, education, music,...
(Georgia) in 2008
http://www2.mercer.edu/News/Articles/2008/080520professors.htm.
In the run-up to the "great recession" of 2008 and 2009, Laffer dismissed the then-minority view that the sub-prime mortgage crisis was a precursor to a major market correction. Indeed, Laffer predicted that the economy would continue to expand unabated by the growing credit crisis.
In August, 2009, Laffer campaigned against a single payor version of healthcare reform for the U.S. In a CNN interview, he said, "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 healthcare done by the government.".
Larry Laffer
Unbeknownst to him, the computer game character
Larry LafferLarry Laffer is a fictional character and the main character of the Leisure Suit Larry series of games. He was created by game programmer Al Lowe.-Biography:...
of the popular
Leisure Suit LarryLeisure Suit Larry is a series of adventure games written by Al Lowe and published by Sierra On-Line from the 1980s to the present. The character, whose full name is Larry Laffer, is a balding, dorky, double entendre-speaking, leisure suit-wearing "loser" in his 40s...
series of games was named after him. Arthur Laffer had no idea about the existence of the games for years until their creator,
Al LoweAl Lowe is a musician and game designer/programmer who developed several adventure games, mostly for Sierra On-Line. He is best known for his creation Leisure Suit Larry and the long-running series it spawned.- Early Career :...
sent him a letter. Lowe planned to program a new application under the name
Laffer Utilities and wanted Arthur to provide a cover blurb.
Publications
The following is a partial list of publications for which Arthur B. Laffer is an author (mainly focusing on articles for which he is first author), in descending order by date.
- Arthur B. Laffer, "Taxes, Depression, and Our Current Troubles", Wall Street Journal (September 22, 2009)
- Arthur B. Laffer, "The Prognosis for National Health Insurance: A Colorado Perspective, The Independence Institute (August 2009)
- Arthur B. Laffer, "Get Ready for Inflation and Higher Interest Rates", Wall Street Journal (June 11, 2009)
- Arthur B. Laffer and Stephen Moore, "Soak the Rich, Lose the Rich", Wall Street Journal (May 19, 2009).
- Arthur B. Laffer, "Spend it in Vegas or Die Paying Taxes", Wall Street Journal (April 2, 2009).
- Rep. Bob Inglis
Robert Durden "Bob" Inglis, Sr. is a United States congressman from the Republican Party. He has represented South Carolina's 4th congressional district in the United States House of Representatives since 2005. The district includes much of the Upstate region, including Greenville and Spartanburg...
& Arthur B. Laffer, "An Emissions Plan Conservatives Could Warm To", New York Times (December 28, 2008).
- Arthur B. Laffer, "Obama Should Forget About Energy Independence", Wall Street Journal (December 17, 2008).
- Arthur B. Laffer, "The Age of Prosperity Is Over", Wall Street Journal (October 27, 2008).
- Arthur B. Laffer and Stephen Moore, "New Evidence on Taxes and Income", Wall Street Journal (September 15, 2008).
- Arthur B. Laffer, "That Stimulus Nonsense", Wall Street Journal (February 13, 2008).
- Arthur B. Laffer, "The Tax Threat to Prosperity", Wall Street Journal (January 25, 2008).
- Arthur B. Laffer and Stephen Moore, "The (Tax) War Between the States", Wall Street Journal (December 10, 2007).
- Arthur B. Laffer, "You don't need to read this Bush's lips" Wall Street Journal p. A18 (February 14, 2005).
- Arthur B. Laffer, "Destination USA," Wall Street Journal p. A8 (January 3, 2005).
- Arthur B. Laffer, "The Laffer Curve: Past, Present, and Future," Heritage Foundation Backgrounder #1765 (1 June 2004).
- Arthur B. Laffer, "Mowed down by taxes", Wall Street Journal p. A16 (October 2, 2003).
- Arthur B. Laffer, "State of the economy: Tax amnesty—A win-win for everybody", Wall Street Journal p. A15 (June 23, 2003).
- Arthur B. Laffer and Stephen Moore, "A tax cut: The perfect wartime boost", Wall Street Journal p. A10 (April 8, 2003).
- Arthur B. Laffer, "California Drainin'," Wall Street Journal p. A10 (January 13, 2003).
- Arthur B. Laffer, "We've cut rates, now let's cut taxes", Wall Street Journal p. A12 (November 11, 2002).
- Arthur B. Laffer, "Wall Street woes—Long-term trends suggest a stock market undervalued," San Diego Union-Tribune p. G1 (21 July 2002).
- Arthur B. Laffer, "A buying opportunity," Wall Street Journal p. A12 (15 July 2002).
- Arthur B. Laffer, "Keep the dollar strong," Wall Street Journal p. A20 (20 May 2002).
- Arthur B. Laffer, "Real stimulus: A national sales-tax holiday," Wall Street Journal p. A14 (21 November 2001).
- Arthur B. Laffer, "The Fed needs help from a cap-gains cut," Wall Street Journal p. A22 (3 October 2001).
- Arthur B. Laffer, "Europe must reverse the Euro's slide," Wall Street Journal p. A22 (19 July 2001).
- Arthur B. Laffer and Thomas J. Martin, "Bullish on Japan," American Spectator p. 28-30 (1 June 2001).
- Arthur B. Laffer, "How to make Dubya a winner? The flat tax," Wall Street Journal p. A16 (31 May 2001).
- Arthur B. Laffer, "So you thought the Fed set interest rates?" Wall Street Journal p. A22 (22 March 2001).
- Arthur B. Laffer, "Tax cuts work—and Ireland proves it," The Scotsman p. 14 (21 February 2001).
- Arthur B. Laffer, "Tax Cuts, Then and Now; A veteran of Ronald Reagan's 1981 cuts looks at the Bush plan," Newsweek Web Exclusive (9 February 2001).
- Arthur B. Laffer and Stephen Moore, "To soak the rich, cut their tax rates," Wall Street Journal p. A26 (24 October 2000).
- Arthur B. Laffer, "Economist of the Century," Wall Street Journal p. A16 (15 October 1999).
- Arthur B. Laffer, "Japan rises again," Wall Street Journal p. A22 (11 October 1999).
- Arthur B. Laffer, "The Reagan-Clinton Presidency," International Economy 12 (2), 22-24 (1998).
- Arthur B. Laffer, "Creating wealth, not just 'savings'," Wall Street Journal p. A22 (15 October 1996).
- Arthur B. Laffer, "Reaganite's view of Bush," San Francisco Chronicle p. A16 (17 October 1992).
- Arthur B. Laffer, "Trading Policy Outlook," Industrial Policy and International Trade, p. 175-186, Volume 62 in Contemporary Studies in Economic and Financial Analysis (London: JAI Press, 1992).
- Arthur B. Laffer and Christopher S. Hammond, "Either California's Housing Prices Are Going to Fall or California's in for One Helluva Rise in Personal Income," Investment Strategy and State and Local Economic Policy, p. 49-64 (London: Quorum Books, 1992).
- Arthur B. Laffer, "Is the California Tax Revolt Over? An Analysis of California's Proposition 111," ibid., p. 157-167.
- Arthur B. Laffer, "Golden State swings its ax at golden goose," Wall Street Journal p. A14 (16 July 1991).
- Arthur B. Laffer, "Water, water everywhere, not a drop at market prices," Orange County Register p. K01 (3 March 1991).
- Arthur B. Laffer, "America in the World Economy: A Strategy for the 1990s: Commentary," America's Global Interests: A New Agenda, p. 122-125 (London: Norton, 1989).
- Arthur B. Laffer and Martin G. Laffer, "Yes, tax the guy behind the tree," Wall Street Journal (6 September 1988).
- Arthur B. Laffer and Truman Clark, "Don't blame deficit for market problems," USA Today p. 10A (26 October 1987).
- Arthur B. Laffer, "Heightened foreign competition only route for American prosperity," The Journal Record (9 June 1987).
- Arthur B. Laffer, "The Ellipse: An Explication of the Laffer Curve in a Two-Factor Model," The Financial Analyst's Guide to Fiscal Policy, p. 1-35 (New York: Greenwood Press, 1986).
- Arthur B. Laffer, "The Complete Flat Tax," ibid., p. 108-140.
- Arthur B. Laffer, "The Tightening Grip of the Poverty Trap," ibid., p. 141-159.
- Arthur B. Laffer, "Congress throws curve at supply-side cure," Chicago Sun-Times (26 August 1985). Also published as "Supply side: It works," Washington Post p. A15 (20 August 1985).
- Arthur B. Laffer, "A High Road for the American Automobile Industry," World Economy 8 (3), p. 267-286 (1985).
- Arthur B. Laffer, "Vindication," Wall Street Journal (25 May 1984).
- Arthur B. Laffer, "Reinstatement of the Dollar: The Blueprint," Economic Notes 0 (2), p. 158-176 (1982).
- Victor A. Canto, Douglas H. Joines, and Arthur B. Laffer, Foundations of Supply-Side Economics—Theory and Evidence (New York: Academic Press, 1982).
- Arthur B. Laffer and Richard Zecher, "Some Evidence on the Formation, Efficiency and Accuracy of Anticipations of Nominal Yields," J. Monetary Economics 1 (3), p. 327-342 (1975).
- Arthur B. Laffer, "Monetary Policy and the Balance of Payments," J. Money, Credit, and Banking Part I 4 (1), 13-22 (1972).
- Arthur B. Laffer and Eugene F. Fama, "The Number of Firms and Competition", American Economic Review 62 (4), p. 670-674 (1972).
- Arthur B. Laffer and R. David Ranson, "A Formal Model of the Economy," J. Business 44 (3), p. 247-270 (1971).
- Arthur B. Laffer and Eugene F. Fama, "Information and Capital Markets" J. Business 44 (3), p. 289-298 (1971).
- Arthur B. Laffer, "Trade Credit and the Money Market," J. Political Economy 78 (2), 239-267 (1970).
- Arthur B. Laffer, "Vertical Integration by Corporations, 1929-1965," Review of Economics and Statistics 51 (1), p. 91-93 (1969).
- Arthur B. Laffer, "The U.S. Balance of Payments—A Financial Center View," Law and Contemporary Problems 34 (1), p. 33-46 (1969).
Media appearances
- Appeared as a panelist on Kudlow & Company
The Kudlow Report is a news television program about U.S. business and politics hosted by Lawrence Kudlow that airs on the CNBC television channel at 7pm ET. It was previously known as Kudlow & Company, America Now, then later Kudlow & Cramer when Jim Cramer co-hosted...
on August 28, 2006.http://www.youtube.com/watch?v=4zZMLrgccCY
- Appeared as a panelist on Real Time with Bill Maher
Real Time with Bill Maher is a talk show that airs weekly on HBO, hosted by comedian and political satirist Bill Maher. Much like his previous show, Politically Incorrect on ABC , Real Time features a panel of guests that discuss current events in politics and the media...
on October 29, 2008
- Appeared on Wall Street Crisis, Main St. Crisis on November 3, 2008
- Appeared on Fox & Friends
Fox & Friends is an American morning television show on the Fox News Channel.-History:The program starts at 6:00 a.m. Eastern Time with the latest Fox News Live headlines and analyzes the news of the morning...
on December 1, 2008 to discuss the proposed bailout of the automobile industry.
- Appeared on the Glenn Beck program on May 6, 2009
- Appeared on the Glenn Beck program on May 26, 2009
- Appeared on the Rush Limbaugh Radio Show on August 4, 2009
- Appeared on Your World with Neil Cavuto on September 22, 2009
External links