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If we care about the future of the economy, then we have to pay close attention to the policies that shape it.

We are currently living in an age of extreme — and in certain cases, unprecedented — levels of monetary and fiscal policy.

Is that wise? Or should market forces be allowed to play out more & free us from the constant intervention of the central planners?

To explore this, we welcome economist Dr Arthur Laffer. Dr Laffer was the first to hold the title of Chief Economist at the Office of Management and Budget in the early 1970s. He then later served as a member of President Reagan’s Economic Policy Advisory Board. He’s perhaps best known for developing the Laffer curve, a model for determining the optimal balance between tax revenues and economic growth.


Dr Art Laffer 0:00
For the last 25 years, the US has been in a secular decline of really very major proportions. And Chinese growth rates are declining at a rapid rate. Eu the EU is on a long term secular decline. So this is truly a global phenomenon. Now, the US is part of that global phenomenon. I would say that right now, the US is probably the tallest midget in the group. But it is still declining. But it has always been the responsibility for I mean, for literally for centuries to lead the recovery, to lead the change back to pro growth, supply side, free market economics. And so far, I see no signs of that happening here. That is my real concern.

Adam Taggart 0:48
Welcome to Wealthion. I’m Wealthion founder, Adam Taggart. If we care about the future of the economy, then we have to pay close attention to the policies that shape it. We’re currently living in an age of extreme and uncertain cases, unprecedented levels of monetary and fiscal policy. Is that wise? Or should market forces be allowed to play out more and free us from the constant intervention of the central planners? To explore this? We welcome economist Dr. Arthur Laffer. Dr. Laffer was the first to hold the title of chief economist at the Office of Management and Budget in the early 1970s. He then later served as a member of President Reagan’s Economic Policy Advisory Board. And he’s perhaps best known for developing the Laffer curve, a model for determining the optimal balance between tax revenues and economic growth. Dr. Laffer, thank you so much for joining us today.

Dr Art Laffer 1:44
My pleasure. Thank you for having me. It’s been really fun.

Adam Taggart 1:47
Good, good. Yeah. We’ve had a great time before we even started the camera so far. Yes, we were on a good footing. Let’s go putting in to two fellow grads of Stanford Business School, though you preceded me there by a few years, and I think had a much more glorious tenure there. But but that’s to be expected three years.

Dr Art Laffer 2:03
By 34 years, Adam.

Adam Taggart 2:05
Wow. I look old counting who’s counting? Counting? All right. Well, look, I have a number of questions for you. Bill difficult to put together questions for such an Agus a guest a guest as you but I did my best. To kick it off, though. If I could just start by asking you the very general question I asked everybody who comes on this program. First, is what’s your current assessment of the global economy and financial markets?

Dr Art Laffer 2:32
Let me if I just can say that, I’m not going to talk to recession, recovery and that sort of stuff, because I don’t think that’s really the relevant issue. For the last 25 years, the US has been in a secular decline of really very major proportions. The way I look at this, and if I had the tips yield correctly done going way, way back, it would be the probably the proper measure. But what I look at is, I look at the one year bond yields. All right, and I subtract out that year’s rate of inflation, and I get the effective real yield during that year, if you will. And I’ve looked at that real that real yield has been declining for about 25 years, little blips, ups and downs, but it’s at a very low level right now. And it’s been declining for a long, long time, which tells me that the real rate of return on a unit of capital is declining. And that is clearly a sign of secular stagnation and decline of our country, this has been a long, long period coming down, which portends a very bleak future unless there is a political change that would reverse those numbers. Now, we are not the only country you said global, we’re not the only country suffering from a decline. Britain has gotten so bad that they’ve changed the name of the pound to the ounce. It’s been around for so long. If you look at Russia, I’ve never seen a collapse in a society so bad and they were horrible to begin with. And now they’ve just, I mean, Russia has no future whatsoever. Japan, which if you go back to the late 1980s, Japan was the major challenge to the US and the global marketplace, you know, equal market cap of both. Now, no one even knows where Japan is what I mean, is there a country called Japan it’s, it’s been a huge secular decline. If you look at Chile, the probably the VIP shops wonder of South America. I was down there in the 70s with the Chicago Boys when we did all the reforms. Chile outperformed every single Latin American country by major major major amounts until the last four or five years and now is flipped over and is starting a rapid descent as well. Even China now I was, I think of the first one of the first Americans to go to China in October of 1970. We did the pre Kissinger trip I was George Shultz and John Ehrlichman at that time China was at its trough it in real GDP per adult was nothing, I mean virtually nothing.

They have increased 66 fold through supply side economics up until the present. They, they got rid of the state run enterprises, they privatize their they, they outsource monetary policy to Alan Greenspan in 92 by pegging the yuan to the dollar. They’ve of course increased trade dramatically, the three legs of the supply side stool tax cuts, sound money, and free trade. And they increase enormously in that time. And I may have those numbers a little bit wrong, Adam, but I think they increase their real GDP per adult by 66 fold. During that time, the US increased its real GDP per adult threefold. G has just reversed those policies dramatically. And now is imposing all sorts of state run operations, regulations, restrictions, taxes, controls, and Chinese growth rates are declining at a rapid rate. Eu the EU is on a long term secular decline. So this is truly a global phenomenon. Now, the US is part of that global phenomenon. I would say that right now, the US is probably the tallest midget in the group. But it is still decline. But it has always been the responsibility for I mean, for literally for centuries to lead the recovery, to lead the change back to pro growth supply side, free market economics. And so far, I see no signs of that happening here. That is my real concern.

It reminds me of the latter last days of Jimmy Carter, where we had Johnson, Nixon, Ford and Carter, the post Kennedy period, which was I called it the four Stooges, the largest assemblage of bipartisan ignorance ever put on planet Earth. And then Reagan reverse that, and we got the shot up. So you can see the same secular decline from 1929 to 1958, let’s say in the US, I mean, all of these periods have happened. I don’t yet see hope, on the political front. But I don’t see a lot of things that actually come to happen. But that’s where I’m very concerned about the US and the global economy, if that makes sense to you. That doesn’t make sense. Alright, I’m going to throw out most of the questions that I had, maybe we’ll get to them later. So you basically just painted a picture of I understand you correctly of sort of global secular decline. You don’t yet see a light at the end of that tunnel here. I don’t. You’re okay, so So let’s start with a couple of questions. So first, and maybe we start with a US centric tack here, but But feel free to take it in any other direction you want. How do we get here? Well, because we’re how we got here. It’s the way I look at it. If you go to your macro economics textbook, Adam, you see that the macro economics are broken into usually five segments, I’ll describe them and some of them are different. Some of them bounce them differently. But number one, there’s a big section on taxation. And then there’s a section on government programs spending, then there’s a big section on monetary policy and inflation to different views. Then there’s a big section on regulations, restrictions, requirements, mandates, all of that sort of stuff. And the last big segment of macroeconomics is called trade, of the dealings of one country with another all tariffs, quotas, vetted all of that stuff. And let me take you through those five from my perspective and how we got here.

You know, when you look at the ideal and let me sit back and sort of imagine where an Alice in Wonderland and we’re looking at the ideal, the ideal tax structure would be the lowest possible tax rate on the broadest possible tax base. Now you want the lowest rate, so that you provide people with the least incentives to evade, avoid or otherwise not report taxable income. This is the Northstar, then you want the broadest possible tax base. So you provide people with the fewest number of areas where they can stick their income and thereby avoid paying taxes. Like we want to minimize deductions, exemptions, exclusions, omissions, credits, all of that stuff. So you have a low rate broad base flat tax, that’s the North Star. Second, spending. On spending everyone understands government spending is important is needed desperately. But what you want on fiscal policy, taxation and spending as all taxes are bad, but some are worse than others. What you want to do is collect your revenues in the least damaging fashion and spend the proceeds in the most beneficial fashion. And what you want to do is when you get to the ideal state is when the damage done by the last dollar of taxes collected is less than the benefit done by the last dollars.

Spending spent, you stop already, that is the correct size of government. Any government smaller than that is too small, and you need to increase the involvement of government. Any government larger than that is too large, and you need to contract it. But that gives you the concept of the ideal, ideal size of government doing what they do best, and providing the most benefit for the overall society and economy. You follow me on that? I’m following exactly. The North Star and spending on monetary policy, you know, you know, there’s nothing that can bring an economy to its knees quicker than unhinged paper currencies, high inflation, high interest rates, it’s devastating for long term contracts for all sorts of relationships among the participants in the economy. So you want stable prices for the long period. So you and I know with a high degree of certainty, what the value of $1 Bill is going to be two years, five years, 10 years from now. So we can make contracts. This is what the bond market is all about. You land on a nominal and you get a 30 year bond, you get a coupon there being you know that the value of the coupon and flip all of that. So stable, hinged paper currency, you want to be your ideal state for monetary policy, lower a broad based flat tax spending restraints, sound money, all right. Number three, regulation for regulations. We all know we need regulations, this is not news. You can’t wake up in the morning one day and decide to drive on the left hand side of the road. And then the next day, the right hand side, we all know we need a lot. And government provides those regulations, restrictions, requirements, mandates, all of that stuff, which are desperately important ingredients into society. They really are the safety measures and all of that stuff. But what you want to make sure is that these regulations, requirements, mandates and rules don’t go beyond the specific purposes at hand, and create a lot of unnecessary collateral damage to the overall economy. So what I would say with regard to regulations and requirements and mandates is that we need to make sure that they are well rationalized, well directed and well focused to do the things they’re supposed to do and not create a lot of damage. I’m going to call that minimal regulations. Oh, we need a low rate, broad based land tax, minimal regulations, sound money, and spending restraint. Those are the four. And then lastly, and this may be the Oh, it’s right up there. And being as important as anything has been in US history, it’s free trade. In a we make some things better, and foreigners and they make some things better than we do. And we and they wouldn’t be foolish in the extreme. If we didn’t sell them those products we make more efficiently than they do. In exchange for those products they make more efficiently than we do. It’s called the gains from trade. It’s called comparative advantage. It’s called David Ricardo. This has been the essential feature of American economy from the 1600s to let’s say, 1900, that is generated what is enterprise America the fastest growing most wonderful, free market, democratic capitalist nation in the world, providing prosperity to all of its citizens across the board. This free trade is essential. Not only is it free trade and comparative advantage in the David Ricardo sense, but foreigners have provided us with a real capital. You know, from from effectively from the first day we had person land on the shores here to 1870, the US ran trade deficits. And they provided us with a capital to grow our economy all the way now, there were a couple of exceptional years in 1776. Bretton was a little bit less than reluctant to provide us with capital. So we did not run a trade deficit that year 1812 1813, we did not run a trade deficit in those two years 1842 to 1844. We did not run trade deficits when we had the canal bond collapses and all of that European said they’d never lend another penny to America that that pledge lasted for two, three years before they found the outrageously high returns. And they came back into the market. But we have been developed by capital provided from the rest of the world. And we have made enormous profits internally by Americans by investing in foreign countries together. So it’s not only the transfer of total resources, but it’s also the comparative advantage of individual products that is done that every time we put on major restrictions like the Smoot Hawley tariff, it has led to a collapse in the markets. It’s led to the Great Depression by fiscal response, and it’s led to World War Two. There’s no question in my mind that trade caused World War Two period.

There’s no question in my mind that Nixon on Camp David on the restrictions and the tariffs he placed caused the decline and collapse of the US economy in the 1970s. You know, I could go on and on but low rate broadbase flat tax spending restraint, sound money, minimal regulations, free trade, and then get the hell out of the way. And let the American economy do what it does best, which is create an entrepreneurial spirit and creation of new products developments and full employment and keep government out of the picture. But the government has very important roles in these five areas. And I’m willing to in any way, shape or form, discuss them as you’d like or anything else that you want to do. But that’s my vision of the world. We have fallen short on taxes. Recently, we’ve fallen short on government spending recently, we’ve fallen very short with Powell and the idiots at the Fed recently, we fall very short on all the imposed regulations and restrictions, especially in energy and healthcare, that of justice. And we fall very short with these Yahoo politicians screaming and yelling, put sanctions on them, and they don’t understand straight up from second madam. And they’re doing all these stupid things, unknowingly unwittingly, taking personal advantage of bad economics to try to create suffering. This is what has led to this huge secondary decline in the US this person’s view of the world. I hope I haven’t been too shy for you in this discussion.

Adam Taggart 16:17
I’m just wondering where you stand now. Okay. Well, Dr. Laffer, I hear you go through each one of those five, as I heard you talking about each and, you know, giving your assessment of you know, what you think it should be in a perfect world? Yeah, it sounds like you’re describing a different universe than than what we live in right now. So you gave some brief areas, you know, brief letter grades to each one of these, and for the most part we’re getting Ds or failing.

Dr Art Laffer 16:47
Every single one of them.

Adam Taggart 16:48
Okay, US as a democracy, but but for a little while, I make you emperor. Are there any sort of specific reforms that you would have right at the top of your list?

Dr Art Laffer 17:00
Can I describe democracy if I can a little bit the way sometimes it acts, it’s like two wolves, and a lamb voting on what’s for dinner.

And there is an aspect of democracy that is very, very destructive. When you appeal when you have equal votes of everyone, when 40% of the population suffers massive losses, for small gains for 60% of the population, democracy often does not provide the right answer on that. You know, that’s there. When I look at something like health care transparency, which is just absolutely essential for the future of America that the this industry should be providing us with what the products are, they do buy consumable units, and telling us what the transactions prices are, so that we can make the decisions as to whether we want a CAT scan or not or what the operation is, and that hospitals compete with other hospitals to provide us high quality medicine at competitive prices. That’s a huge one there. We have had the biggest decline in life expectancy of any OECD country, relative to the and we’ve had the biggest increase in cost as a share of GDP of any OECD country. We are the I call it the auto Asante where you see our our outcomes have declined dramatically relative to the rest of the OECD. And our costs have increased dramatically relative to the OECD, because we do not have price transparency. And I could go on and on. But what about the US the rest of the question? Well, I asked you about if there any like specific reforms that if we made you emperor, biggest we’ll see enacted price transparency is the biggest transparency. Okay, understanding the Bhagwati theorems. This is crazy stuff. Let me explain that for us. Let’s talk about energy. I don’t know whether there’s global warming or not. I’m not a climatologist. I’m not a PhD in the physics of the environment. It makes some a lot of sense to me, by the way. But if there is a problem in the environment, and if it is because of pollutants being dumped into the atmosphere, especially carbons, how you know carbons in the atmosphere, what you want to do is tax the is tax the hydrocarbons being dumped into the air. But why do a lot of people oppose that, for example, me? Why would I oppose a carbon tax as a standalone because it’ll destroy the economy Adam, it’ll destroy the economy now, if you were Al Gore, and Al Gore is one of my dear friends. And I did the blurb on his book the future I did that with the with the EO Wilson and Berners. Lee, the three of us had the blurb on his book, Al Gore is every single time he talks about pollution and what we should do, has said we should put a tax on carbon emissions. And we should offset that tax a carbon emissions by an income tax cut or a payroll tax cut of equal size.

If you did that, I would support that bill. Every day of the week and twice on Sunday, Al Gore and I came to that conclusion. Now, he wanted to do it with a payroll tax, I wanted to do it with an income tax. So we split the difference, half payroll, half income, but it’s the right way to treat these things. Now, we are not, we do not have a problem of pollution caused by the production of oil, gas, oil, natural gas, all these things. We’re really efficient good producers of hydrocarbons, we really are. We have less pollution, lower costs and all that. Why would you tax the production of hydrocarbons, when in fact, we’re the best producers in the world and let the hydrocarbons be produced by schlub. overages in other countries who are polluting the world producing these awful things that much higher costs, but we should do is have no taxes on the production of hydrocarbon but have significant taxes on the pollution of the environment by the use of hydrocarbons. When you use hydrocarbons in in fertilizers. Why would you tax that? Why would you tax the production of plastics? No, they don’t cause the pollutants in the environment. It’s the cars, it’s the burning of coal, it’s all of that that doesn’t. So what you want to do is if you’ve got a production problem, you should have a production solution. If you’ve got a consumption problem, you should match it with a consumption solution. Bhagwati and throne of Austin have always shown that whenever you do use an indirect cure, when you use a production cure for a consumption problem, you always get bad results. The best example is drugs. Why on earth would you try to control junk drug importation into the US that’s a trade solution for a consumption problem. If you were successful on limiting the amount of drugs coming into the US, you know what would happen? I know what happened, the price would go so damn far up that everyone would be bribed. And you can’t cure the drug problem with a border solution. No matter how many TV faces talking about about bah, bah, bah, it’s stupid. You need to get rid of the consumption problem on drugs. And then the other solutions will follow suit. Now how do you do that? Well, if you have someone who’s already addicted, and is willing to pay massive amounts for illegal drugs, provide them with free clinics for drugs. So they come in if they take the drugs in the clinic, we won’t let them take the unit out. But we’ll do it for free. So they can satisfy their addiction without having to pay drug dealers fortunes, and therefore enticing drug dealers to come in and import stuff. If you did that you would destroy the market for drugs, right, presumably have some sort of recovery services, hopefully, you’d provide them with recovery too. But if they won’t do recovery, you don’t want them to pay exorbitant monster drug dealers to get them to smuggle drugs in. And plus, you wouldn’t have any incentive on on on addicting people. Because if you addicted someone, they go right to the free clinic and you wouldn’t have any market for it. Right? So what’s your point you’re going after demand? If demand is where the problem is? It’s a drug addict. That’s the problem. It’s not the guy importing drugs, it’s a problem. It’s the drug and it’s not the growing poppies. That’s the problem. It’s not a production problem. It’s not a trade problem. It’s a consumption problem, cure it with a consumption solution. Energy, we have a consumption problem and the burning of hydrocarbons, solve it with a tax on the burning of hydrocarbons with an offsetting tax cut on income or production. And you’ll get rid of the problem. We have a huge pricing problem in health care, these guys are, are doing just what you and I would do if we were there. We’re trying to get monopoly profits by screwing the consumers. And they’re doing a very good job of it. We should mandate requirements of pricing health care in a free market. Well, okay, great. So let me just Sure. I wanted to ask this question. You’re getting right into it. So this is what you expected from me, isn’t it? Right? This is great. This is exactly the territory somebody get into.

Adam Taggart 24:05
You know, clear, we have problems of central planner overreach and a lot of the issues that you listed earlier and clear the you have a lot of respect for the free market with the free market government.

Dr Art Laffer 24:21
I have loved some respect for government. I’m not a Milton Friedman. Okay. Where it’s okay.

Adam Taggart 24:27
And we could talk more about that it’s true row and all that type of stuff. I think both you and I, you know, I have a high respect for the free market. But we seem to have a system right now where a lot of our industries are have really kind of almost become modern day cartels. Right. And you’re describing what’s happened in healthcare. We can say the same thing in a whole bunch of other industries. How do we how do we tackle that part? You know, where these guys have so much advantage they’ve reinvested it in in excessive regulation that makes it hard for competition to break in. They’re able to have these opaque pricing strategies and how would we break this?

Dr Art Laffer 25:04
They’ve, they’ve combined with the government to exploit the electorate. Right, right. And the consumers. And the way you do it is dramatic having a low rate, broad based flat tax. You know, let me you’ve got these guys from Goldman Sachs. They spent five years at Goldman Sachs, then they go work for Obama spent five years developing policies that they then leave and go back to Goldman Sachs and use those policies as tax shelters, tax dodges. Look, I mean, you know, taxpayers, rich high income taxpayers, they’re able to change the volume of their income. They’re able to change the location of their income, they’re able to change the timing of their income, they’re able to change the composition of their income, they have all of these things that other people are not, cannot avail themselves. When you look at the income tax, every single time we this is in my latest book on taxes, death consequences with Brian Dimitrijevic and Jean Sinfield. Every time we’ve raised the highest marginal income tax rate and rich people, two things have occurred. The economy has underperformed, three things have occurred. The economy has underperformed, the rich suffer, but the poor suffer more, and tax revenues go down. I was going to assume that third one. But it’s not assuming I have all the data of every single tax return from 1913. to the present. It’s not about your goddamn opinion. It’s about the facts. I don’t care how you feel what actually happens. We know what happens. We have every single tax return from the top 1% of income earners. Go figure you get me anyone who wants to debate the facts, rather than sit there and spout a Bernie Sanders line or Elizabeth Warren sign or an AOC? Isn’t there? Yeah, who isn’t there, northbound ends of southbound horses, they don’t care about the truth. They don’t care about any of this stuff. We know the facts. Every time you raise tax rates in the rich revenues have gone down. Every time you’ve lowered tax rates and the rich revenue has gone up. They not only earn more Adam, but they also shelter less duh. If tax rates are lower, sheltering is less, less economically efficient and valuable. You know, rich people can hire lawyers, accountants, deferred income specialists, favor grabbers, lobbyists, when you see a bunch of people hanging out with Obama, Obama, it’s not a group of street people trying to explain to him what it’s like being poor. It’s Goldman Sachs people trying to figure out the new tax time so they can move over to their firm dividend. If you ever looked at the tax return, when when when Trump’s tax return, I guess 44,000 volumes of it. Well, if it’s all legal, because they’ve all put it in there, you and I couldn’t understand tape page one of it. But they can’t.

Adam Taggart 27:39
I just had an accountant here on the channel not that long ago. And he basically said what you’re saying you said the tax code, it’s like 75,000 pages long. And he said Page One says everything is taxable, unless we say it isn’t. Nothing’s deductible unless we say it isn’t. And then the remaining 799 pages are all the exceptions.

Dr Art Laffer 27:59
You will love my book, you will just love it. I go through it. The second chapter, I went through the 20 major shelters for the whole history. It’s from 1913 to the present 110 years of data right after the 16th Amendment was passed six months later Wilson put into tax, then the highest marginal tax rate when he put it in was 7%. Okay, but that doesn’t really tell the story. It’s graduated from 1% to 7%. But only 350,000 People were required to file the income tax in 1913 out of 62 million adults. So teeny tiny group were required to pay it and it was a progressive tax from there. That still stood for 1314 and 15. Then they popped up by 1918. They popped up the highest rate to 77%. And they’d increase the number of people requiring to file by 17 fold to six and a half million. Then they lowered the rate. Woodrow Wilson said hey, we won the war we got through the pandemic. Then they dropped the thank you America, we dropped the highest rate to 73%. Up. That’s when the battle of 1920 occurred between Harding and Coolidge and and Cox and Roosevelt, the Democratic candidate Cox was the governor of Ohio, and Roosevelt was the Assistant Secretary of the Navy. They ran, it was all on taxes. The Republicans won by the largest percentage ever. That rate they didn’t take office until 21. March of 21. That rate stayed at 73% for 1990 1920 1921. Then those guys pop that rate down to 25%. It was called the roaring 20s. We ran budget surpluses for 11 straight years, tax revenues from the rich went through the ceiling. It was nirvana. The poor did really well. The rich did well we had this whole the economy performed like mad all three of them dropping taxes over performance in the economy, who are doing really well and and the time rich paid buckets of taxes. Then of course we had in 1929, we have the Smoot Hawley tariff, which was passed by the House and the Senate. In the last quarter the stock market started its collapse. It was signed into law in June of 1930. Hoover signed it into law. We had the Great Depression Bang was onset, the stock market went from its peak. Alright, in the third quarter of 1929. It went down by 96% percent. What was $100? That was $4. Duh. What did Yahoo Hoover do? Well, we’ve got to keep the budget fine. So he raised the highest marginal income tax rate on January 1 1932. He raised from 25% to 63%. Good enough for you put in text every damn thing you can think of put in a gift tax and estate tax, put it in an unrealized put it in a retained earnings tax. All these corporate tax all of them raise tax on the lowest entry. We had the Great Depression 25% on unemployment. How’s that work out for you? From 28 to 1932. All right, reported incomes tax reported reported incomes adjusted gross income reported by the top 1% fell by 67%.

The economy went down, reporting tax shelters, boom there. Then Roosevelt comes in 1933 wins the election 32 in March to 33. He puts in a wealth tax he confiscates all private gold at $20.67 An ounce in March. That’s the first section of called the Bank Holiday Act of 1933 confiscated all the gold compensated $20.67. Six months later, he raises the price of gold to $35, which is a wealth tax devalues the dollar by 60%. In the foreign exchanges, he didn’t do a tax increase there. He waited until 1936. To raise the highest rate to 79% ended up in 1944. He raised the highest marginal income tax rate to 94%. Every dollar you earn, you’re allowed to keep six since then we have I could go on and on. We have all of these data. We have every single tax return, and I have to listen to Bernie Sanders frothing at the mouth stupidities. It’s the tax cuts that have causes this problem. And he sits there and says, Now I’ll debate any damn one of you ever want. If you guys want to sponsor, I’ll do it with syas Picotee. Any of the Harvard ones, let’s talk about taxes and the facts. And Bernie Sanders, I dare him to do that. I just dare him or Elizabeth Warren. She’s a competent Professor of Law. She should know facts. Let’s do it, guys. Let’s take the gloves off and have an honest, serious civil conversation of what the facts are.

Adam Taggart 32:41
Well, Dr. Laffer if we can get one of them to come on with you, I would love for Wealthion to be there. You got to make it two hours. You can’t do it. So it’s cliches and one liners. You got to go through the numbers. And the numbers here. It’s it’s all about numbers. I can imagine that if you raise tax rates, you could raise revenues. I can imagine that has been true. Why couldn’t it happen? Of course it could. I can imagine if you raise tax rates, it’s caused Shelburne to collapse and you lose revenues. I can imagine both those which happened.

Dr Art Laffer 33:08
What happened? States what states are doing the best of the United States, the highest tax states, New York, Connecticut, New Jersey, Massachusetts, California, New Illinois can or is it Tennessee, Texas, Florida, Nevada, which I mean, come on, help me. You got to be dumb, blind and stupid not to see this world. And you know, you’ve got to be openly deceitful. To make this world look the way it does politically. Biden it his economists know better. Now I understand their plight, I made a vow I was the highest ranked economist in the White House in 1970 was George Shultz, his right hand person, he was an economist too. So I’ve been in government I was with Reagan is you know their stature I was with Trump I visited all these people, even for Dick Cheney when I was my classmate at Yale when I did the napkin there with Cheney and, and Rumsfeld. So I’ve been involved in this stuff as much as any democratic economist ever. We got to have it honest. I made a vow back in 1970, to never take another penny from a politician. And the reason I did that is because when you take pay from a politician, you’re an employee. And when you’re employee, you do your boss’s bidding. That’s what employees are supposed to do. That’s the right role, but not good for economists. These people had, these people were rebuffed arguments they know to be true. In order to curry favors, were their political benefactors. That’s Republicans and I mean, poor Romer, Christina Romer, when she took the job as head of the Council of Economic Advisers under Obama did that stupid stimulus package under Obama, which was all just spending spending, welfare spending, transfer payments, all of that. Her article came out in the next few months in the American Economic Review, showing that the principal stimulus of economic growth is tax cuts. And yet she sat there and defended this as opposed to tax cuts. Why? It’s your job. Right? Sinclair, don’t it? Yes. But it’s hard to convince a man of something when his livelihood depends on his not understanding. Exactly. It’s lovely. Thank you, God, you’re more educated than I thought you were.

You know, you’re not as dumb as I look. You know, and it’s true of Janet Yellen. She she would never run an economy with the way she spouts her sports, she wouldn’t ever do what Biden did. None of them would.

I mean, and it’s tragic when you see that, that’s why I made a vow I’d never I mean, regular got irritated at me a number of times, but I never changed my my terms, because he couldn’t fire me. He couldn’t double my pay, couldn’t have my pay. And yet, I was able to have far more influence on him than any of the professional economists working with him. Because that wasn’t bought off. Yeah, I actually really liked by the way, independent economic advisors that aren’t aren’t monetarily tied to whoever is running. They’re all monetarily tied. They’re all appointed by the administration. Powell. Have you ever seen a worse fed in your life than this guy? The balance sheet of the Fed has gone from what when? 2008 2009 It was like 700 billion, and now it’s 9 trillion. And you don’t you wonder why we have inflation? Hello, right.

Adam Taggart 36:33
What was the actually let me let me ask you this since you brought it up. So giving you the advantage of perfect hindsight here. Let’s say you were in charge of a decision making post pandemic, you know that what happened in reality is we had unprecedented amount of monetary and fiscal stimulus never seen before in human history, or at least, you know, modern history. Yeah, you’re right. So what what would you have done with the perfect hindsight that you have right now, what would have been the right thing.

Dr Art Laffer 37:05
Let me tell you what I wrote in The Wall Street Journal in 2008 2009, on stimulus spending, but done by W. And done by Obama, a trillion dollars by each of them. And I wrote very simply, I wrote the what’s called the transfer payments theorem. All right, these guys call it stimulus. But that’s like, say, it’s, it’s the it’s the inflation Reduction Act, it’s a lie. transfer payments are not stimulus. Let me let me go through a transfer payment with you. And I’ll do it verbally, but it’s much easier math. A transfer payment occurs when you take from someone who has a little bit more. And you give to someone who has a little bit less. You with me? So far? Yeah. Okay, by taking from someone who has a little bit more, you reduce that person’s incentives to produce. And that person will produce a little bit less. You with me?

By giving to someone who has a little bit less, you provide that person with an alternative source of income other than working. And that person too, will produce a little bit less right

Adam Taggart 38:07
so disincentives to produce for both of them.

Dr Art Laffer 38:09
Yeah, yeah, both of them. The theorem here and it’s math. It’s not Republicans, not Democrats, not liberal. It’s not conservative. It’s math. It’s economics, is whenever you redistribute income, you reduce total income. Now, that doesn’t mean you don’t do it, but you have to understand what the consequences are. All right. If you tax people who work and you pay people who don’t work.

Don’t be surprised if not as many people are going to work. Okay. That’s what it is. Now, the lemma from this theorem is really cool. And I’ll not go through it verbally with you much. But the lemma is very simple that the more you redistribute, the greater will be the decline in total income.

That’s the pretty intuitive limit function of this theorem is absolutely delightful. It’s beautiful. It’s got that big conflict bill, it just makes my skin flush, its was so delicious. If you were able to redistribute income, so that everyone came out exactly the same.

If you were, there will be no income whatsoever. Let me describe it to you. So you can see it clearly. In order to get everyone to come out exactly the same. What you have to do is tax everyone who makes above the average income 100% of the excess.

And you have to subsidize everyone below the average income, up to the average income 100% of the difference. Now, if you act that’s the only way you can guarantee that everyone comes out exactly the same. Now, if you actually did that, if you actually taxed everyone above the average income 100% of the excess. And if you actually subsidize everyone below the average income up to the average income, I will stipulate today counselor will all be equal at zero. Yeah, that’s what everybody wants to be under it.

what is so profound about what I just told you? absolutely nothing. Why does no one else say it? No one else except Reagan, Thatcher and Trump.

Adam Taggart 40:08
Okay, I’m gonna mention a word that might be like throwing a grenade at you here. But I’m guessing I know what your thoughts on universal basic income are. But let me give you a chance to clarify.

Dr Art Laffer 40:21
it makes no sense at all. No look at and you know what I suggested to Trump and I lost the debate I had that with minutia and Larry Kudlow, Gary Cutler was on my side 100%, instead of doing the three and a half trillion dollar spending program for COVID, which was silly run a trillion on Operation warp speed was wonderful. That that really was that was really getting stuff through the healthcare stuff through quickly. I thought that was spectacular what Trump did, and really greatly undervalued for what he did on that. But what I would have done is I’d waive the payroll tax for two years.

Adam Taggart 40:54

Dr Art Laffer 40:55
You know, you make it so that it’s incentive for you make it so it’s more attractive for people to work and it’s more attractive for companies to employ. If you’d waive the payroll tax, we would have never had a decline in the participation rate, we’d never had the declines in the average hours, we would have had GDP growth through the ceiling during this period. It would have been SPECT tech, that’s what I actually did. In the one I did in 2008. With Obama, and and and, and Obama and W stimulus packages, I made a suggestion that I think it was two and a half trillion dollars worth of stimulus package there. I said, instead of spending two and a half trillion, what I would have done is I’ve had a waiver on all federal taxes for a year and a half, which would have come out $2 trillion. No federal taxes for two years. Okay, same exact amount of money. Can you imagine what the world would look like if we had no income taxes, no corporate taxes, no capital gains taxes, no death taxes, no payroll taxes, employer or employee? No. Medicare, Medicaid taxes, no excise taxes, no tariffs for a year and a half. Hell we sell cars in the central China, it’s the heart attack model. We would have been the most prosperous nation that ever set the federal and we’d have still had the same amount of budget deficit created.

You see how I’m thinking? I totally see how you’re thinking. And look, I mean, I’m, I’m personally you have a lot of saying this, don’t they? Pardon me? You have lots of guests that say exactly what I just said.

Adam Taggart 42:24
I don’t know if I’ve had a guest say exactly what you just said, this is the first time I’ve talked about sort of the the tax holiday in response to a crisis,

Dr Art Laffer 42:31
which is of course what you do.

Adam Taggart 42:33
Yeah. Well, it’s I’m curious, because some will be asking this question. So how do you fund the government? During those two years? Same way you funded the two and a half trillion dollars that Obama and W spent

just selling a bunch of treasuries or are you firing up the printing presses.

Dr Art Laffer 42:48
There? Yeah. Yes, your treasuries there, and you have no taxes instead of excess spending. When you give people money. That’s the that’s the transfer theorem. Yeah. Well, we did in those things. We convince people, they should never go back to the labor force. If I gave you a million bucks, Adam, wouldn’t a couple of things you’d shout your friends and beer, wouldn’t you? And would you take a couple of weeks off to tour the world and have some fun with oh, that’s what everyone does. So every stimulus package convinces people not to work, because they got more than that. Why should I work? I’ve got some bucks here. I’m gonna take a vacation. I didn’t like my job anyway, at Walmart up here as Walmart monitor, I’m going to quit. And I’m going to go out and buy a new car.

Adam Taggart 43:29
Right? But let me ask you this too. So when one thing that maybe surprised a lot of people, though, probably not people like you really understand flows was okay, bunch of stimulus in there to keep the economy from crashing. But

Dr Art Laffer 43:43
but then doesn’t keep it from crashing. It causes it to CRASH

Adam Taggart 43:46

Dr Art Laffer 43:47
And that’s a that’s a misnomer, stimulants, it’s a destructive spending, destructive spending. Think of it that way. It makes the economy worse, because it causes both the people you take it from and the people you give it to, to work less and

Adam Taggart 44:01
work less. But what it also did, at least in this pandemic round, was it really juiced financial asset prices, right?

Dr Art Laffer 44:10
It’s a big deal.

Adam Taggart 44:11
But yeah, inflation inflation is a big deal. Yeah. And I guess my question is, if you did that tax holiday, would you avoid having the Bubblicious aspects of just pumping stimulus in the way they did distort prices?

Dr Art Laffer 44:24
Let us do this in the pandemic context. Okay. Let me now go back to 2008, where I said we had a holiday, we had a fairly fairly sharp I don’t know if you’ve noticed, but when the pandemic hit, there was a fairly sharp drop in asset values. I don’t know if you noticed that. I did. But it was very short lived very shortly. We had a huge drop in production as well, which was also short lived. And then it started coming, but it never came back to where it was. Production didn’t know if you take the trendline if you look at asset values, deflated you’ve got to look at them in real terms. Okay, you got a problem there that didn’t have happened. I mean, let me take you back to John F. Kennedy, my first hero, Pres I’ve been. I’ve worked with more Democrats and I have Republicans, by the way, I’m a Kennedy Democrat. I’m a Reagan Republican. I was Gary Hart’s economist and one of them in 1988.

Did Jerry Brown flat tax when he ran for president in 1992? I’ve worked with a lot of Democrats and still do, by the way, you if you look at February of 1966, Adam, at the end of Kennedy, that the stock market, the Dow Jones Industrial Average, had an intraday high of 1000. Okay, that was in February of 66, in August of 1982, and God loved the earth. All right, once again, in August of 1982, just before the Reagan tax cuts took effect, the Dow Jones Industrial Average was at 777.

Now that’s a 16 and a half year period, where the nominal value of the Dow Jones Industrial Average went from 1000 to 777. That’s a 22.7%. decline, it’s a 22.3% decline in the nominal value of the America’s capital stock. You follow me? I do. And that’s just a nominal decline over the price level during this period traveled.

Alright, so if you look at if you look at the stock market in 1982, in 19 $66, alright, the market went from 1000 and February of 66, to 235 in August there now, that’s a that’s a 76.5% decline over that period. Now, let me put it in sort of terms that you and I and others understand that’s a decline in the stock market of 7% per annum compounded annually for 16 and a half years. Would you agree with me, Adam, that that’s a bear market? That is a bear market that is a miserable bear market, then you know what happened when we came in? If you look at Nikkei, if you look at the Nikkei in December of 1989, it hit 30,900. All right, that was its peak today it is at 28,500.

It’s down what 35% In a period of 89, that’s 11 years to 90, that’s 11 years to 2023 years. So that’s 34 years, it’s down 35% in 34 years in nominal terms, would you concede that’s a bear market?

Adam Taggart 47:29
Especially how much they printed.

Dr Art Laffer 47:32
But you know, taxes have consequences. You look at New York, I have a paper just out and I’ll send it to you or any of your clients you want I’ll be glad to share it with you. I call it the seven deadly tax the rich states and what’s happened to them on the outflow of of adjusted gross income from those seven states. The worst one, of course, is New York, that has the outflow of adjusted gross income, you know, we have tax data on that. California, second, Illinois third, then there’s Connecticut, then there’s Massachusetts, Maryland, New Jersey, okay, those are the seven deadly tax third states. If you look at them, these states are hemorrhaging adjusted gross income, just Amridge. Then you look at what are the characteristics of these states? And so I go through in this paper, where do they rank on property tax? Where do they rank an income tax? Where do they rank on death taxes? Where do they rank on sales taxes? Where do they rank on corporate tax? And they’re right at the top of every single one of these? And what do those Massachusetts miracle people do? I mean, this is where the IQ of a New Englander has to be put in single digits, probably maybe low double digits. What did they just do in Massachusetts? They raised the highest income tax rate to 9% to 9% they put it in a progressive tech as if they haven’t done enough damage already. Look at Illinois those Yahoo’s I mean, Pritzker, for God’s sakes, Lori Lightfoot, you know, what is she called? Beetlejuice? And who would they like to replace her? Go figure? I mean,

Adam Taggart 49:04
People deserve the government’s they get and if they don’t take my class or do my thing at Hillsdale my course at Hillsdale they’re going to be destroyed to. The earth these people are scorching is their Earth too. If you think this is good for the inner city inhabitants who voted those people in or the liberals in the suburbs is good for them. Go figure you’re wrong. These people deserve the crap they’re getting

In this is the arc of history right it’s Mike killing his name but is it titler who says that you know, sort of governments and when are democracies and when the realizes it can vote itself or just from the Treasury that’s that you’re

Right. No, you’re right that I was thinking of had been called Doom but the same thing you know, it’s there. Everyone knows this is true. Every common sense person knows it’s true. Everyone knows that if you raise tax rates, you’re gonna try to find tax deductions, aren’t you?

Dr Art Laffer 50:00
Yeah, and look, I moved to Tennessee from Rancho Santa Fe, California.

Adam Taggart 50:08
It’s sort of a version of Gresham’s Law right which is that you know, bad money chases out good bad policies chase out your your good producers, right. That’s they deal with we all go to Tennessee or we go to other countries, you know, we can we can earn less, we can shelter more. All right, we can choose the composition of our income, we can choose the location of our income we can. And we lobby government. Now you talk about companies, and you said it in a very mature good way. Adam, you didn’t you already did I do about companies not behaving? Of course, they don’t behave come behave properly. How does Microsoft make money? How does Goldman Sachs make money by lobbying government not by providing good products?

And so because you’ve been in a system, how do we, how do we address that?

Dr Art Laffer 50:57
Well, I’m trying I’ve tried with a lot of politicians. I’ve worked with Prop 13. Is California. We won there. I worked with Reagan, we won there. I worked with Thatcher, we won there. But you know, it can’t be just speechifying. You know, we all know that a low rate broad based flat tax, I did Jerry Brown’s flat tax in 1992. Let me describe this to you. We got rid of all federal taxes. We got rid of the income tax. We got rid of the corporate tax. We got rid of Paul payroll taxes, employer and employee, we got rid of excise tax, we got rid capital gains death, we got our tariffs, and we replace it with two flat rate taxes. One business net sales, that’s if you’re a Republican. If you’re a Democrat, it’s called a bap. All right. And one a personal and adjusted gross income. With no deductions, no exemptions, no exclusions, no emissions, you pay taxes on the first dollar to the last dollar at the same rate. We made it revenue neutral would have come out about 11.0 11.85%. I rounded it up to 12%. Jerry rounded up to 13% or 13%. flat tax I need you may remember that race. We went from eighth in the race to second in the race. We were coming into New York and California in the Democrat this in the Democratic primary with all the liberal Heebie Jeebies, okay. We’re coming into the primaries in New York in California, we had just won the primary in Connecticut. And we just won the primary in Oregon. We had him in the crosshairs. I mean, literally out of we had Jake, we had Bill Clinton in the primary. And then Jack Jerry analysis, Jesse Jackson’s is running mate.

We still got the second largest number of delegates. Now the truth of the matter is that I don’t believe Jerry really wanted to be president. He loved running for president. And he was really good and really articulate and great guy. But he really didn’t want to be president. And so that’s why he did that move. But we can win easily on a flat. If you make 15 times as much as I do an income, you should pay 15 times as much in taxes as I do. But the rich people don’t. Why? Because we put in all these tax codes which allow at you know, at a 94% tax rate, they don’t think it’s fair.

Adam Taggart 53:14
Can I ask one devil’s advocate question on that, which is sort of a defense of a lot of the tax cuts, slash loopholes that the wealthy use to avoid paying taxes is, well, the government is providing incentives for you to invest your money in these areas that the government wants to see more of, right? You you invest in an oil well, and you get tax deductions as a result of better how, oh, what’s your response to that? I mean, providing a valued role, or is that just,

Dr Art Laffer 53:45
That is just that’s what it is? Okay, you know, I did the piece in The New York Times, the Wall Street Journal, on Warren Buffett, who’s a big hero of mine, by the way, the neatest thing about Warren Buffett is he’s honest, and he reported his tax return from 2010, where he reported that he paid much lower taxes than anyone else in his office. Now, it was a much larger amount of income he had, he paid 17.4%. He said he paid a little less than 7 million in taxes. And I did the calculation, which made it is that his taxable income was about 39,000. I then go into his adjusted gross income was about 62 million. All right, and that’s what he did. What he didn’t say what his unrealized capital gains was about, was about 10 billion is gifts to tax exempt charities that are deductible was about 2 billion, if not a lot more than that. That his true Simon Hague income was close to 13 billion and he paid 7 million in taxes all legal all perfectly wonderful. And God bless him for telling us what how he did it. But this is what everyone if you read the pro publica pieces coming out, and all the rich people don’t pay taxes. Oh, you should. I mean, it’s illegal what they did, and it’s wrong.

And it’s every but as long as Saudi you might as well look at the pictures, and if you do, everyone does that, because they know that the tax rates of 9095 75 are not right. They’re not fair. They’re not correct. And when asked about it, Warren Buffett by Becky quit was asked about, you know, why don’t you just volunteer the money to the government says, because I can do a lot better job than the government can with that money.

And we all believe that’s true. Yeah. So why give it to the spendthrift who are trying to jack the system around when they’re at why not just exploit the system is best you can spend the money the way you should. I admire Bill Gates, I admire Warren Buffett, I admire these people enormously. If we had a low rate, broad based flat tax, where we taxed the increases in unrealized capital gains and deducted the decreases in unrealized capital gains. So it’s an income tax, not that you could have a flat tax at 12% 10%. And collect way more revenues than we do now.

Adam Taggart 56:01
I’m, I’m gonna start wrapping it up here only out of respect for your time, Dr. Laffer, I hope we can have you back into programm in the future.

Dr Art Laffer 56:07
do it if you want. And we could go into this stuff a lot more in trade and stuff, a lot more money, a lot more in regulations, LeBron healthcare transparency, a lot more in the enterprise zones, you know, I wrote enterprise zones in the seven, how do you really want to help the inner cities, make them tax free zones, don’t pump welfare there. And then when they earn an income, you take it away from them, and they have over 100% taxes? Don’t do that. It’s a poverty trap. So I wrote enterprise zones in there, which made the inner cities tax free zones so that the poor, the minorities of disenfranchised could share in the prosperity that we all the rest had had. They deserve a shot, and we’ve taken it away from them.

Adam Taggart 56:44
Okay. Well, here’s, here’s the question I want to ask you about this, which is, you’ve just talked about the flat tax, which obviously is a very, it’s elegant in its simplicity, right. And you’ve given us the theory why it actually may give us the most amount of tax income to to work with, right? It’s the broadest rate, lowest rate on the broadest amount of revenue. I gotta imagine that the status quo of that benefits so much from the current, you know, incredibly arcane system is not going to go lightly. So how do you deal with the pushback from them?

Dr Art Laffer 57:19
You really don’t want the honest answer. I’m putting up with this. You want the honest answer? Yeah. Put politicians on commission.

Adam Taggart 57:27
On commission, okay, talking about,

Dr Art Laffer 57:29
okay. 3% GDP growth, you get your pay. 4% GDP growth, you get double your pay 5% GDP growth, you get triple your pay to GDP growth, you get no pay.

Adam Taggart 57:46
The way we compensate people in the private sector,

Dr Art Laffer 57:48
Would you buy stock in a company where the officers and directors own no stock and had no stock options? Would you buy stock in that company? Right now? That’s the government. So what you want to do is put their Commission’s you know, there are lots of ways I’m describing you, you can argue what you think should be in the gray, you still have to make it simple to make it so the politicians, they’re going to make more money, they got the power. Why should you want to make a crookedly? Why not honestly, if you get 5% growth, you can make a fortune being a congressman, what’s wrong with that? I love it. If they make a lot of money as long as I do too. Align their incentives with ours.

Adam Taggart 58:25
aligning incentives. We talked about that alot here.

Dr Art Laffer 58:27
all it is yeah, that’s all it is, you know, and defense, let’s do defense for one second, then you can shut me up and click down and everything like, go back to John F. Kennedy. Are we always talking about defense spending? John F. Kennedy puts so beautifully said the best form of defense spending is always wasted. Whenever you find yourself in a situation where you are required to use your military hardware and prowess, that is a clear sign that you did not spend enough. Putting locks on your doors is not wasted money. We need defense spending so we never have to use it. So we don’t have a goddamn land war in Asia, and now a land war in Europe. If we were well armed, no one would do that.

No one would. John F. Kennedy’s other quote, I’m a Kennedy Democrat, as you can tell that he gave the commencement address at my university when I graduated Yale. And you know, Kenny’s other ones. No American is ever made better off by pulling a fellow American down. And we’re all made better off if any one of us is made better off. And the line I stole out of those speeches. They gave the Reagan and we campaigned on it in 1980 was a rising tide it raises all boats. We’re all in this boat together as Americans. I mean, why don’t they who cares whether you’re gay or straight? You know, if you’re gay and believe in low taxes, you’re on my team. If you’re straight and believe in low tech, you’re on my team. I don’t care about the, All of these things disappear. What’s the meaning of civil rights in a soup kitchenWhat’s the meaning of gay rights in an unemployment line? It’s stupid.

Adam Taggart 1:00:11
Right and just to opine on this I say often on this program I’m curious if you feel the same way like one of the one of the biggest ways to improve equality across all races, creeds, cultures, etc. is fair monetary policy.

Dr Art Laffer 1:00:28
Economic growth. Right sound money, low rates, low taxes, minimal regulations. We are spending restraint free trade. Yeah, yeah. Do you know who wrote grow grew the rice that you bought at the grocery store the other day with the guy black? You may have been? He was Chinese. So no, you don’t give a damn it’s good rice at a good price. That’s all you care. That’s the way to get rid of discrimination. Free markets does it and you know, if you believe in free markets, low rate broad based planning, spending restraint, so many minimal regulations, free trade, you’re in my party. I don’t care whether you’re tall, well tall maybe I hate

but old young, fat, skinny, black, white, gay, straight, it doesn’t matter. I’m trying not to take this personally. But you’ve gone after New Englanders, Californians and tall people and to all the politicians in those states. I have not gone after the people in those states. Now I know. I’m just making no, no, no, you’re right, though. You’re right. They’re all ignorant voters. That would they put in governments that hurt them? You know, why would you ever want to put in a government that’s going to hurt you? But they do. Look at what’s happened to Massachusetts, the outflow of adjusted gross income. Look at how many people from Connecticut now live in Florida?

Yeah, Florida is very, very nice. And I am a big fan of Florida. I like it a lot but not be. I don’t think people should move there because they hate Connecticut. They should like Connecticut, they should like Florida and then choose which one they liked the most, not which one they hate the least. Right? You know, I want to give people up here. I want to balance up not down. The dream in America is to make poor people rich not to make rich people poor. And hating rich people is a vile disease that Bernie Sanders has.

Adam Taggart 1:02:17
Alright, well look, Dr. Laffer,

Dr Art Laffer 1:02:19
I’ve done it. Am I done? Is this what you expected today?

Adam Taggart 1:02:22
No, but it’s it’s been a phenomenal conversation. So let me let me unfairly ask, you know, one fair one of the many questions that I’ve thrown out the window here, just because we haven’t had time. But as you talked about the secular decline that you see ahead of us, right. If I can ask you to look sort of in the nearest term. What do you expect over the next year or two, based upon the economic indicators that you’re looking at?

Dr Art Laffer 1:02:50
I don’t? Well, I don’t see anything really, that makes me optimistic about the world in the next year or two. Now, what I’m hoping is the party start getting together and aligning with on economic growth, that they start feeling the pension. They do, what we did in the late 70s is put a person in there who puts the economic agenda first. But we’ll see. I mean, no, I have no magic in this. And I’m trying my best with all the candidates, Democrat and Republican. I work with both by the way, I seriously work with both and I have maybe even more Democrats and Republicans over time. I’m, I’m a tax guy. I’m a growth guy. And if the Democrats espouse that I’ll be on their side, if the Republicans espouse that I’ll be on their side. Nothing else matters in my agenda world. But if I could, if I could see some sort of move towards it, the growth agenda coming forward? I would love it. But so far, why are the Republicans going after my orcas? Why are they trying to go after Hunter Biden, who cares? You know, that’s that’s the yesterday’s news. What we should do is do something that makes America better, not trying to get revenge on what was done in the past. I told Trump when he took office, that the first thing you should do is pardon Hillary, get her out of the way that stop this stuff. And I think the first thing Biden should have done is pardoned Trump on anything. I mean, just get those things behind you. You know, I thought Jerry Ford The one good thing I thought Jerry Ford did was department Nixon so that he would not be the subject of of discussion for the next five years. And just interest a lot of companies in the country to focus on moving on and moving on trying to make the country better not trying to revenge past the past transgressions. You know, revenge is a very very awful trait and people it’s it’s it’s the poison people take in the hopes of making someone else die. You know, and revenge is just awful. That’s what William William Blake’s poison tree right? Exactly. You are a well educated Stanford young man good songs in essence in the Songs Of Experience. The it’s totally true. That’s it. All right, so just poison. We have we have

Adam Taggart 1:05:00
You know, regular most of the people who watch this channel are just regular people who are trying to figure out how to navigate what’s going on here. If I could distill what I hear you saying is just, you know, look, expect more of the same going forward in the near term, at least, and maybe almost sort of like a batten down the hatches mode like this is this is not a

Dr Art Laffer 1:05:18
I don’t know what’s going to happen to asset values and stuff. I don’t see any recovery coming. You know, I really don’t I don’t see them doing anything that makes me feel elated that oh, boy, that’s cool. I don’t see anything done in health care transparency. I don’t I don’t see anything done in inner city poverty. I don’t see anything done in race relations. I don’t see anything done on economic growth, on stopping lobbying from government getting, you know, all the bad things of the last 25 years that I described you when I started, are still here, and they are in very large proportions. I don’t I don’t imagine anything really materially happening for at least four years. I mean, you have the election in 2024. Then you have the administration taking policy and 2025, then it takes a full year for them to do those policies and get them up and they may pass a few of them at the end of 2025. They may start taking effect in 2026. More likely 2027. And what year is it this year? Right. 23? Thank you. I don’t see any material impact of good economics for a long, long time. Now it will come and if you don’t do it now, it’ll never come. But if you look at Reagan, I mean, we started seeing the 78 You saw Steiger Hansen and seven eight paths, capital gains tax rate reduction. Then you saw the campaign of Reagan coming in Reagan took office in 1981. On January 20 1981. The prime interest rate in this wonderful country of ours was 21 and a half percent. You saw him getting shot by Hinckley. It was the shot by Hinckley that allowed us to have his favorables go way up, we got our tax bill passed, we made a huge mistake on the tax bill of phasing and the tax cuts. That’s why the tax cuts did not begin until January 1 1983. And that’s when the boom grew from January 1 1983. Add them to June 30 1984. That’s an 18 month period. By six quarters year and a half real GDP grew in that year and a half period by 12%. A grew by 8% per annum compounded annually. That’s what policies can and we haven’t seen that for a long, long time. But that also was if you remember what I started doing 78. And it didn’t start until 83. It’s it takes a long time for these Yahoo’s to do stuff and get good things done. And you know, I’m 83. And that’s if good policies getting put on the table, which right now you’re saying you aren’t even seeing that happen? Oh, I don’t even know that there’s gonna be a political change. I don’t even see that yet. I don’t see it from the Republicans in the House. I don’t.

All right. Well, Dr. Laffer, this has been fascinating. And not only just from the content, the quality of the content, but also the fact that it’s coming from somebody who has worked for all these different administrations and knows all the different players in the mix. It really has been a real privilege to talk to you about all this. I hope we can have you back on in the future. Because I have multiples more questions

Anytime you want me to, I would love but I’ll give you the Stanford slogan at the end. D lift Deathrite. Wait, oh, my goodness. Remember what that means. So go ahead. That means the winds of freedom are blowing. Now whether they find the correct sail to put it in. But this is a time when change can start happening.

Adam Taggart 1:08:33
All right. Well, I like to end on a positive note like that in terms of things that people can do. One is they should vote smarter, or take their vote responsibly, what you said earlier, to if they’ve been very intrigued by this discussion, particularly your positions on taxation, you have a new book out, you briefly mentioned it but just want to make sure folks know about it’s called taxes have consequences in income tax History of the United States. Where Can folks go get that

Dr Art Laffer 1:09:00
anywhere. Amazon is doing really well. It’s selling very well. I’ve got two callers with me on it. Dr. Brian Dimitrijevic, who’s an economic historian, phenomenal person. And Dr. Jean Sinquefield, who’s a phenomenal person is She’s a data freak. She’s really great on this. The book, Brian has made the book really entertaining reading. And Jean has made the data Yes, beautiful together, two of my best friends and wonderful people. And the book is doing well. And it is we have every single tax return. This is not. This is not what my opinion is that it’s not about opinions. It’s about facts. I don’t give a damn how you feel. What happened when you did it. Yeah. What does the math say?

Adam Taggart 1:09:41
All right, and enjoy this conversation. Maybe this is a data. Only few I’m sure but this is the first time they’ve heard you speak at length. If they want to go learn more about you and your work. Is there a place they should go

Dr Art Laffer 1:09:52
Hillsdale has a course that I’ve done in macroeconomics on their website, they do it on their on their learning thing there you can. I’ve got tons of books. I’ve written 22 books, international trade and with Steve Moore. I’ve written a couple books. I mean, they can look me up in Wikipedia or whatever it is. They can see all my detractors comments as well, which they should look at as well.

Adam Taggart 1:10:16
Okay, well, it’s Dr. Laffer when we edit this. I’ll put up the links there to your book. I’ll put into our websites you want to on some of the papers we read. I’ll be glad to share any papers with your clients and your people that you want. The Seven Deadly Sins, my state stuff? Well, great. Yeah. So So both of those if you could send them to me, folks, if you want to go access those documents, just go to And we’ll have them loaded there so you can download them for free. Thanks for allowing us to do that. Dr. Laffer.

Dr Art Laffer 1:10:45
My pleasure.

Adam Taggart 1:10:46
All right. Well, Dr. Leffert this has just been a phenomenal conversation. Thank you so much for giving us so much of your time. Like I said, I’d love to have you back on the program again in the future whenever we can make it happen. It’s been a great discussion.

Dr Art Laffer 1:10:56
Fun for me too thank you.

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