Laffer Writes a Laugher

As I tend to do most morning after I've checked the jobs sites in my attempt to find full employment, I came across this piece of gibberish written by Arthur Laffer for the Wall St Journal (via Google). For those too young or too memory impaired, Laffer was the "author" of the "Laffer Curve" which was used by the Reaganauts and subsequent Republican politicians to justify massive tax cuts for the rich.

It's hard to know where to begin in tackling the various strawman and out right fallacious arguments Laffer uses in this opinion piece.

On the face of it, the idea that higher unemployment benefits won't lead to more unemployment doesn't make much sense. Imagine what the unemployment rate would look like if unemployment benefits were universally $150,000 per year.

First off, few people are actually calling for higher Unemployment compensation, although with an average weekly payment of $293 per week, with only a few states maxing out their Unemployment payments over $500 per week, it surely would not be a bad thing to raise the compensation a bit.

Then comes his contentions that Unemployment Compensation does not provide a stimulus to the economy.

While the unemployed may spend more as a result of higher unemployment benefits, those people from whom the resources are taken will spend less. In an economy, the income effects from a transfer payment always sum to zero. Quite simply, there is no stimulus from higher unemployment benefits.

The fallacy in this argument is based on his Laffer Curve contention that cutting taxes raises revenues when all it did was provide funds for the uber-rich to gamble in the stock market, create gambling vehicles (CDOs among others) that almost destroyed the world economy. Laffer continues on by creating false equivalencies and analogies, assertions without any justifications or proofs.

Laffer is an economist, a practitioner of the "Dismal Science." And once again affirms my belief that economics is considered the "dismal science" precisely because of the dismal record of most economists and their predictions. Especially those who for whatever unfathomable reasons, are listened to by our elected officials. As a former Sociology major back when, I'm thinking maybe we should start listening to folks who study society more than folks who create economic models out of thin air, models that are based on fantasy and ephemera.

And because I can: