Today’s Brew 12-28-14

The Pittsburgh Tribune-Review has a preview of some books coming out in 2015. Among them, they mention a book by Arthur Laffer and Stephen Moore. The book, unfortunately, doesn’t come out until late July, but you can pre-order it today.

New year, new books

In “Blue Exodus: Why Americans Are Moving to Red States” (Encounter Books, July 28), Arthur Laffer, supply-side economics icon and “Laffer curve” namesake, and Stephen Moore, The Heritage Foundation’s chief economist, analyze an American division driven by both politics and personal bottom lines. They tackle what’s increasingly driving individuals and businesses to vote with their feet for lower taxes and debt, fewer regulations, energy development and right-to-work laws by relocating from liberal “blue” states to conservative “red” states.

Blue Exodus by Laffer and Moore

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Today’s Brew 12-27-14

Nice to see Stephen Moore slip one past the editors and get this published in enemy territory, the Washington Post, aka, Pravda on the Potomac. And, you have to love the name “Laffer Curve deniers.”

The Laffer Curve turns 40: the legacy of a controversial idea

In the four decades since, the Laffer Curve and its supply-side message have taken something of a beating. They’ve been ridiculed as “trickle down” and “voodoo economics” (a phrase coined in 1980 by George H.W. Bush), and disparaged in mainstream economics texts as theories of “charlatans and cranks.” Last year, even Pope Francis criticized supply-side theories, writing that they have “never been confirmed by the facts” and rely on “a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.” And this year, French economist Thomas Piketty penned a best-selling back-to-the-future book arguing for a return to the good old days of 70 percent tax rates on the rich.

But I’d argue — and not just because Laffer has been a longtime friend and mentor — that his theory has actually held up pretty well these past 40 years. Perhaps its critics should be called Laffer Curve deniers.

Solid supporting evidence came during the Reagan years. President Ronald Reagan adopted the Laffer Curve message, telling Americans that when 70 to 80 cents of an extra dollar earned goes to the government, it’s understandable that people wonder: Why keep working? He recalled that as an actor in Hollywood, he would stop making movies in a given year once he hit Uncle Sam’s confiscatory tax rates.

When Reagan left the White House in 1989, the highest tax rate had been slashed from 70 percent in 1981 to 28 percent. (Even liberal senators such as Ted Kennedy and Howard Metzenbaum voted for those low rates.) And contrary to the claims of voodoo, the government’s budget numbers show that tax receipts expanded from $517 billion in 1980 to $909 billion in 1988 — close to a 75 percent change (25 percent after inflation). Economist Larry Lindsey has documented from IRS data that tax collections from the rich surged much faster than that.

 

Today’s Brew 12-24-14

G. Tracy Mehan III writes for The American Spectator about an event that took place in Washington last week featuring supply-siders galore.

A Growth Strategy For The New Congress

Reconciling economics with concerns over inequality.

Last week, at the Heritage Foundation in Washington, CNBC Commentator and economist Larry Kudlow hosted a very lively, even provocative, blue-ribbon panel discussion on the theme, “And Now for a Congressional Growth Agenda.” Besides the supply-side guru, Arthur Laffer, discussants included the impressive Carly Fiorina, former CEO of Hewlett-Packard, unsuccessful California Senate candidate and possible presidential candidate; the astute economic commentator, James (“Jimmy”) Pethokoukis of the American Enterprise Institute; and Stephen Moore, Heritage’s own Chief Economist and former Wall Street Journal editorial board member.

http://cdn.livestream.com/embed/thfallison?layout=4&height=340&width=560&autoplay=false

Watch live streaming video from thfallison at livestream.com

Today’s Brew 12-15-14

Ralph Benko is great reading  this morning with his Forbes.com column:

The Yellen Tug Of War

For the rest of us, getting it right — as did Chairman Volcker and (during his first two terms), Greenspan is crucial to the creation of a climate of equitable prosperity in which jobs are created in abundance.  39 million jobs were created during the “Great Moderation.” We haven’t seen anything remotely like that since.

Getting it right is crucial to economic mobility — raises, bonuses, and promotions — to let us workers climb the ladder to decent affluence. Thus, just when to raise rates is much less important than the bedrock issue.

For over a decade now job creation has been poor. Poor, too, has been economic mobility.  The left is very much on record as calling for extended ease — keeping interest rates down.  The right has been critical over the Fed’s “zero interest rate policy.” Yet the real tug of war is over whether the Fed should follow a monetary rule or exercise discretion; and, if a rule is preferable, what rule?

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It is my guess that Janet Yellen reaches out to the social-democratic left because it represents her native intellectual milieu. They speak her language.  Many progressives simply find the right foreign, our language alien. (Memo to Yellen: If all I knew about my team was what I read from Paul Krugman I, too, would disdain me. The mainstream media portrayal of the right is a grotesque caricature.  We’re not the way we are portrayed.  We are, however, skeptical of the efficacy of central planning.  For good reason. And, Dr. Yellen? America is a center right nation.)

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In a way, it’s “Yellen vs. Volcker.” Contrast a statement by Madam Yellen with one made by former (and iconic author of the Great Moderation) Fed Chairman Paul Volcker, reprised in an earlier column:

Madame Yellen [at hearing of the House Financial Services Committee chaired by Chairman Jeb Hensarling earlier this year] stated that “It would be a grave mistake for the Fed to commit to conduct monetary policy according to a mathematical rule.” Contrast Madame Yellen’s protest with a recent speech by Paul Volcker in which he forthrightly stated: “By now I think we can agree that the absence of an official, rules-based cooperatively managed, monetary system has not been a great success. In fact, international financial crises seem at least as frequent and more destructive in impeding economic stability and growth. … Not a pretty picture.”

Also, from Twitter:

Today’s Brew 12-14-14

Dan Mitchell has a really good post today with a lot of good links and explanation.

Pro-Keynesian Journalist Accidentally Shows that Smaller Government Is Good for Economic Growth

I don’t know if this is a good personality trait or a character flaw, but it always brings a big smile to my face when a leftist tries to argue for bigger government but inadvertently makes an argument in favor of smaller government. Sort of like scoring a goal against your own team in soccer.

With a lead-in like that, you know you want to read more. Click here.