Sunday, June 30, 2019

Congratulations Dr. Arthur Laffer on being awarded the Presidential Medal of Freedom.

Dr. Arthur B. Laffer was awarded the Presidential Metal of Freedom last week in ceremonies at the White House.  It is an honor well deserved.  

I have had the privilege of seeing Dr. Laffer speak on several occasions, once was a full lecture with slide shows and historical data to support his economic doctrine.  I have also had the opportunity to attend a reception in his honor.  He is charismatic, persuasive and charming.  His theory is so commonsensical and supported by experience that is hard for me to see how it still has detractors. 

Art Laffer was a member of President Reagan’s Economic Policy Advisory Board for both of his two terms. He also advised Prime Minister Margaret Thatcher on fiscal policy in the U.K. during the 1980s. He has been a faculty member at the University of Chicago, University of Southern California and Pepperdine University. Dr. Laffer received a B.A. in economics from Yale University in 1963. He received a MBA and a Ph.D. in economics from Stanford University in 1965 and 1972 respectively.

Dr. Laffer was the creator of “The Laffer Curve.” The Laffer Curve is one of the main theoretical constructs of supply-side economics, and is often used as a shorthand to sum up the entire pro-growth world view of supply-side economics.  However, the Laffer Curve itself simply illustrates the trade-off between tax rates and the total tax revenues actually collected by the government. Dr. Laffer is widely regarded as the father of Supply Side Economics. 

Laffer CurveSupply-side economics emphasizes economic growth achieved by tax and fiscal policy that creates incentives to produce goods and services.  In particular, supply-side economics has focused primarily on lowering marginal tax rates with the purpose of increasing the after-tax rate of return from work and investment, which result in increases in supply. The broader supply-side policy mix points to the importance of sound money; free trade; less regulation; low, flat-rate taxes; and spending restraint, as the keys to real economic growth. 

These ideas are grounded in a classical economic analysis that understands that people adjust their behavior when the incentives change.  Accordingly, the lower the regulatory and trade barriers, and the lower and flatter the tax rate, the greater the incentive to produce.

Dr. Laffer currently lives in Nashville, Tennessee where he is the founder and chairman of Laffer Associates, an institutional economic research and consulting firm, as well as Laffer Investments, an institutional investment management firm utilizing diverse investment strategies.  The firms provide research and investment management services to a diverse group of clients, which includes institutions, pension funds, corporations, endowments, foundations, individuals and others.

A few years ago when I heard him speak, he said that he left California because of he mismanagement and high taxes.  He says he selected to move to Tennessee in large part because of our state was so low-tax and financially well-managed. We are fortunate to have him as a citizen of our state and our city.

Congratulations Dr. Laffer! 

(Much of the above is copied from this website and was not composed by Rod Williams. )

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