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To: remember

I think there is a basic disconnect between Arthur Laffer and Lars Christensen, in that they are looking at similar things, but from different perspectives.

In Laffer’s case, he is looking at the relationship between government and economics, based on the assumption that policy does impact economics, by changing the behavior of people. But Christensen’s viewpoint is that economics functions on its own, that the influence of government can often not be directly correlated to economics.

Yet this means that both can be substantially correct, yet partially wrong.

But in economics what matters is not theory, but how theory plays out in the real world. Laffer was right, whether he expressed it in a way that Christensen though was proper in economics; but in his time, Christensen’s doom and gloom predictions for northeastern Europe missed by a mile, though in theory they were quite accurate.


14 posted on 08/13/2012 7:56:46 AM PDT by yefragetuwrabrumuy
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To: yefragetuwrabrumuy
Laffer was right, whether he expressed it in a way that Christensen though was proper in economics;

Laffer may be correct that some governments implement stimulus programs that are not productive. Personally, I think that the truth is probably much more subtle than stimulus being generally good or bad. Spending on infrastructure that is really needed and will provide benefits to future productivity is likely a good thing. Spending on unneeded projects, like digging a hole and filling it in again, is likely a bad thing. It's a mistake to treat all stimulus the same.

In any event, my whole criticism of Laffer's editorial was his math. Was there anything in my comment above or my analysis at this link that you disagree with? In fact, I have run across a number of similar critiques of Laffer's editorial. Following are a few of them:

Arthur Laffer you’re embarrassing yourself

Arthur Laffer, Anti-Enlightenment Economist

Why History of Economic Thought Is Important: Whack-a-Mole Wall Street Journal/Arthur Laffer Edition

Poor Spokesmen

Arthur Laffer’s Anti-Stimulus Curve Ball is a Foul

There seems to be a general consensus that Laffer math is deeply flawed and that none of it provides any evidence for his contention that stimulus doesn't work. There may be a case to be made but Laffer did not make it. The only case that I think that he made was that all publications should mandate that precise sources be given and, if possible, links be provided to background material that explains the author's calculations. That would have saved a lot of people a great deal of time analyzing his deeply flawed table.

15 posted on 08/14/2012 12:52:21 AM PDT by remember
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