Arthur Laffer is a famous American economist who is best known for his theory of the Laffer curve, which suggests that there is an optimal tax rate that maximises government revenue and economic growth. He is also a prominent advocate of supply-side economics, which emphasises the role of tax cuts, deregulation, and monetary policy in stimulating the economy. In this article on Zatrun.com, we will explore Arthur Laffer’s life, works and ideas.
Who is Arthur Laffer?
Arthur Laffer was born on August 14, 1940, in Youngstown, Ohio. He graduated from Yale University with a bachelor’s degree in economics in 1963, and then earned his MBA and PhD in economics from Stanford University in 1965 and 1972, respectively. He taught at the University of Chicago, the University of Southern California and Pepperdine University, among other academic institutions. He also served as a consultant to various governments and corporations, including the Nixon, Ford and Reagan administrations.
Arthur Laffer’s most famous contribution to economics is the Laffer curve, which he first sketched on a napkin in 1974 during a meeting with Dick Cheney, Donald Rumsfeld and Jude Wanniski, who were then working for President Gerald Ford. The Laffer curve illustrates the relationship between tax rates and tax revenues, showing that beyond a certain point, higher tax rates will reduce tax revenues by discouraging work, investment and economic activity. The Laffer curve implies that there is an optimal tax rate that maximises both government revenue and economic growth.
Arthur Laffer’s theory of the Laffer curve was influential in shaping the economic policies of President Ronald Reagan, who appointed him as a member of his Economic Policy Advisory Board in 1981. Reagan implemented a series of tax cuts based on the supply-side economics advocated by Laffer and other economists such as Robert Mundell and Milton Friedman.
These tax cuts were intended to boost the economy by increasing incentives for work, saving and investment. The Reagan tax cuts were controversial among economists and politicians, as some argued that they stimulated economic growth and reduced inflation, while others claimed that they increased budget deficits and income inequality.
Laffer’s Other Works
Arthur Laffer has authored several books and articles on various topics related to economics, such as monetary policy, international trade, fiscal policy and welfare reform. Some of his notable works include “The End of Prosperity: How Higher Taxes Will Doom the Economy-If We Let It Happen (2008)”, “Return to Prosperity: How America Can Regain Its Economic Superpower Status (2010)” and “Trumponomics: Inside the America First Plan to Revive Our Economy (2018)”.
Laffer also received several awards and honours for his contributions to economics, such as the Presidential Medal of Freedom in 2019 by Donald Trump. He is still active as an economist and a public figure, frequently appearing on media outlets and giving speeches on current economic issues. Additionally, he is the founder and chairperson of Laffer Associates, an economic research and consulting firm based in Nashville, Tennessee.