Lion of the Blogosphere

Saint of libertarian economics: Arthur Laffer

There are many saints of economic libertarianism. For this post I profile one of them: Arther Laffer.

Laffer (still alive today) was a relatively unimportant economists, though prominent enough to be at a meeting in 1974 with Donald Rumsfeld and Dick Cheney, at which a divine miracle happened in the form of him drawing a squiggly line on a napkin which became known as the Laffer Curve which proved, once and for all, that high taxes are really really bad.

Now, to give a certain amount of fairness to Laffer’s point of view, the top marginal income tax rate in 1974 was 73%, but at the same time there was only a 35% capital gains rate, plus there were a lot of loopholes which allowed taxpayers to present their income as capital gains, and even bigger loopholes which allowed taxpayers not to show any income at all (pass-through of partnership losses because of accelerated depreciation played a big part in those loopholes). The corporate income tax rate was also lower than the personal income tax rate, which encouraged wealth to be kept in corporations rather than paid out as dividends. They say that there’s no avoiding death or taxes, but in fact the 73% tax rate in 1974 was avoidable, which meant that tax collections were a lot lower than 73% of true income, and also that a lot of business activity went into tax avoidance rather than productive growth of companies.

I could state a general rule of tax avoidance behavior, which is that if different types of income have different rates, then over time an increasing percentage of declared income will be of the types that have the lower rates. I applaud the efforts during the Regan administration to reform the tax code by closing loopholes, which did in fact result in higher tax collections despite lowering the top rates.

I have stated before my belief in the importance of closing tax loopholes and eliminating tax deductions. If there’s a need increase tax revenue, we should always attack loopholes and deductions before raising rates. However, for each loophole or deduction there’s a strong lobby behind it. This is because, unlike libertarianists, real-world rich people see wealth as a zero-sum game: so as long as everyone’s tax rates increase, their status in the economic pecking order remains unchanged, so they aren’t actually harmed by higher tax rates, they are only harmed if a deduction or loophole which benefits them in particular is eliminated.

Libertarianists, have come to worship the Laffer Curve as proof that all taxes are evil and their worldview is correct, much like Christians see the Shroud of Turin as proof that Jesus really existed. From the libertarianist comments on my blog, I see that they think that current tax rates like the 39% top income tax rate or any amount of estate taxes are causing rich people to retire and stop working entirely, much like the rich people of Atlas Shrugged.

Why is it even a problem if rich people want to retire? It’s only a problem if you take the Atlas Shrugged point of view that rich people are needed to make the economy function and if they stop doing work, there aren’t any people with modest incomes who could step in and take their place.

However, the libertarianist point of view doesn’t make any sense if you assume that rich people behave rationally and want to be richer than their peers. Who would pass up the opportunity to make a billion dollars on account of the fact that 50% of it, or even 70%, of it was taxed? Isn’t it better to have $300 million than to have nothing? I would say it’s a hell of a lot better. I hear about all of the amazing businesses that have not been formed because the tax rates are too high, and it’s all nonsense. No one who starts a business is thinking about what happens to their estate after they die. Libertarianists, despite thinking of themselves as rational economists, are clueless about why people start businesses. And even if they did think about estate taxes, if they were even the slightest bit rational they would realize that it’s much better for their children if they die rich than if they die middle-class or die poor, and that would still be true if estate taxes were increased significantly over their current levels.

Written by Lion of the Blogosphere

October 10, 2015 at 10:29 am

63 Responses

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  1. Your next article should be about libertarians themselves. What is their primary ethnicity? Are they mostly nerds? Are they liberal or conservative before becoming libertarian? How much game does the average libertarian have? How long since the average libertarian has had a girlfriend? Why do libertarians like bowties? Why do libertarians have the same fascination with gold that pirates have?


    October 10, 2015 at 10:48 am

    • It’s more the paleoconservatives pretending to be libertarian who have a fascination with gold, although Ayn Rand had a fascination with gold.

      Lion of the Blogosphere

      October 10, 2015 at 10:51 am

      • No, proper libertarians have a crazy fascination with gold, especially the Austrians (who are the only real libertarians — well really the only principled libertarians are anarcho-capitalists).


        October 10, 2015 at 11:33 am

    • There are two types of people that call themselves libertarians.

      The first type are basically solid conservatives. These the the Thomas Jefferson/Ron Paul types. They are socially conservative though they prefer to focus on big picture economic issues. These libertarians are good guys with a practical understanding of things.

      The second type are SJWs who don’t understand that the point of being SJWs is to revel in hunting down regular people. They actually believe the SJW nonsense but they differ on economics. These people have far more reasoning power than they have data or experience. They treat it all like a math proof. Anarcho-capitalists are the extreme (and modal?) manifestation of this type.


      October 10, 2015 at 1:19 pm

  2. High income tends to be high risk too, which means that you’ll not get paid 10 million dollars with no risk. Maybe there’s a 1 in 100 chance of making it, say a usual start-up, which means that you’ll make in expectation 100k, which is not much. If the taxes are 70% on that 10 million, then the expected return is 30k with a lot of sigma. Simply put, it’s not worth the risk. People would be much less likely to start a business under the high tax conditions. So your analysis misses one vital point: the risk involved.


    October 10, 2015 at 10:51 am

    • “High income tends to be high risk too”

      My next libertarian economics post will be about the absurdity of that statement.

      Lion of the Blogosphere

      October 10, 2015 at 10:52 am

      • It’s not stupid at all, but rather it’s very natural.

        I went thru the same thing. After graduation I had several options, and they did have different risk profiles. Working in a big corporation gives you a low sigma salary, but the upside wouldn’t be great. Working in a start-up gives you high sigma, great expectations but low salary. I have many friends who made over 10 million dollars working in a start-up, but also lots who completely failed. I ended up in an industry where I can manage my risk and optimize for my own personal sharpe, return/risk.

        If you think about investments, it’s very similar. Comparing returns is not the entire story. But you go further, and make a much bigger mistake: you compare tachyonic returns, after they happen. You say that it’s ok to tax somebody after he took the risk and make 10m, or whatever. Well, the same faulty logic can be applied to investments: say oh, it’s ok to invest in 1 company since that 1 company (say Google, Apple, Tesla or a select biotech) went up 1000% vs a relatively flat market. After the fact (tachyonic) it sounds right, but doing that before it’s complete madness. The returns of investing into only 1 company are very risky, and your risk adjusted returns would be very bad, ie, you may easily lose a lot more.

        You can’t look at the world without considering risk (and this applies to so many things). Everything must be adjusted for risk. Unfortunately, most people are not trained nor capable of doing so.

        Looking forward to your post.


        October 10, 2015 at 11:03 am

    • I find the idea of “risk” and “risk management” very interesting; and, in fact, earned a Master of Science in Risk Management from large well-respected university hoping (at one time) to use that degree, my MBA, and experience as an entree into a senior risk management or Chief Risk Officer position with a large bank. I’ve realized that my own low risk tolerance (and other factors and non-optimal decisions) has stymied my career progress over the years.

      E. Rekshun

      October 10, 2015 at 2:26 pm

  3. “Who would pass up the opportunity to make a billion dollars on account of the fact that 50% of it, or even 70%, of it was taxed? Isn’t it better to have $300 million than to have nothing? I would say it’s a hell of a lot better.”

    OK, $3 million is a hell of a lot better than nothing too.


    October 10, 2015 at 11:35 am

    • For most people, $300,000 is a lot better than nothing.

      Lion of the Blogosphere

      October 10, 2015 at 12:35 pm

      • A 99.97% rate seems pretty reasonable then. Call Sanders.


        October 10, 2015 at 4:28 pm

      • But your other option is losing everything you have, so $300,000 seems like shit.


        October 11, 2015 at 1:49 pm

  4. Mainstream republicans are more likely to care about Laffer than libertarians. The libertarian saints are Ayn Rand, Hayek, Friedman (even though he advocated a minimum income in the form of a negative income tax), Hazlitt (Economics in One Lesson is one of libertarianism’s holy books), Ron Paul of course, and Murray Rothbard and Ludwig von Mises. There are some lesser saints but those are the big ones.


    October 10, 2015 at 11:38 am

    • What would the Libertarian Canon be? Atlas Shrugged, Road to Serfdom, Economics in One Lesson, Human Action would represent the most sacred core scripture. Perhaps Bastiat’s The Law, Walter Block’s Defending the Undefendable and Friedman’s Capitalism and Freedom are just outside. Maybe an honorable mention to Hoppe’s Democracy.


      October 10, 2015 at 3:18 pm

    • Yeah, what a weird idea to attack Laffer as a libertarian symbol. Almost as if the idea is to kick at a strawman.


      October 11, 2015 at 10:02 am

  5. “a divine miracle happened in the form of him drawing a squiggly line on a napkin which became known as the Laffer Curve which proved, once and for all, that high taxes are really really bad.”

    Laffer pointed out the tax revenue curve has a maximum. This was considered bewildering treason by socialists, possibly because it involved math. Time for a maoist struggle session.


    October 10, 2015 at 11:42 am

  6. Little progress was made eliminating or reducing the inheritance (estate) tax when people thought it was the rich leaving money to lazy heirs who didn’t work for the money. Once the inheritance tax was renamed the “death tax” , it became politically popular to reduce. People don’t like the dead to be taxed but love the thought of the lazy billionaires kids not getting an inheritance.


    October 10, 2015 at 11:59 am

    • It would be better to charge it on the recipient i.e. give them a lifetime allowance for inheritance received. Then no one could really call it a death tax, it would be a little fairer (since you can inherit an unlimited amount from, say, many uncles without paying tax), and it could even be eugenic as, for a rich person, children would be free for their estate. Albeit that assumes that the genes of people that get rich are desirable.


      October 10, 2015 at 6:48 pm

  7. Who would pass up the opportunity to make a billion dollars on account of the fact that 50% of it, or even 70%, of it was taxed?

    This runs in the other direction as well. Warren Buffett has a $500M incentive to avoid the 50% tax rate on his billion dollars. And assuming you’ve got absolutely everything locked down, Buffett’s choice would be to forego the activity that triggers the higher rate in favor of the less remunerative activity with the lower rate.

    Is there a real-world example of an effective, real tax rate of 50% or more? Germany, maybe?

    The Anti-Gnostic

    October 10, 2015 at 12:00 pm

    • Is there a real-world example of an effective, real tax rate of 50% or more? Germany, maybe?

      So far as I know, none. The only 50% rate that would theoretically pull in such a portion might be a European-style VAT. But not even the highest taxed European nations apply VATs anywhere near 50%, except in a limited number of niche economic areas.

      The Undiscovered Jew

      October 10, 2015 at 1:24 pm


      IT doesn’t say how much is borrowed. But plenty of ~50% countries all of which are nicer than the US.

      Lloyd Llewellyn

      October 10, 2015 at 9:25 pm

  8. “Libertarianists, despite thinking of themselves as rational economists, are clueless about why people start businesses. ”

    It’s not just libertarianists that are delusional. Liberals think that people start businesses so they can give health care to their employees or “provide jobs for the community.” I started a business 25 years ago, for two reasons, (a) I wanted a chance to make more money than I would as someone else’s hired hand, and (b) I don’t do well taking orders from other people, especially if they know less than I do.

    Sgt. Joe Friday

    October 10, 2015 at 12:07 pm

    • “I started a business 25 years ago, for two reasons, (a) I wanted a chance to make more money than I would as someone else’s hired hand, and (b) I don’t do well taking orders from other people, especially if they know less than I do.”

      This is pretty much what I assume is why people start businesses, with (b) being equally as important as (a), and even a modest increase in income (say 10% to 20% more income) is sufficient motivation for (a).

      Lion of the Blogosphere

      October 10, 2015 at 12:38 pm

      • “This is pretty much what I assume is why people start businesses, with (b) being equally as important as (a), and even a modest increase in income (say 10% to 20% more income) is sufficient motivation for (a).”

        On (a), you make the same mistake again — not taking risk into consideration.

        10-20% more income is useless if you don’t take the risk into account. If you have 1 in 100 businesses making 100 millions and the rest making 1 million, then you have an expected 2 million dollars, which say it’s 33% more than your job of 1.5 millions would give you (say compounded over 10 years, to make things more realistic). Now, 25% increase in your expected income is big! Are you going to take your chances with the start-up/new business in this case? I wouldn’t under these conditions. And btw, these are roughly the numbers for a tech start-up — if you’re a founder, you may make 100 mill (chances about 1%) and you will take a pay cut in the base salary. Increasing taxes at the top will make the 100 million reward so much less attractive, and people like Sgt Joe Friday or others will shift towards the safe corporate job. That’s a loss (personal and for society too) on so many levels.

        On (b), there are actually other safe jobs which give you the benefit of being your own boss: academia is built this way, but also some new corporations which recognize that good people can be trusted to be in charge of their work and they don’t need too much management (Google, Facebook and many other start-ups; also, most jobs in research, hedge funds, some positions in banks, etc)


        October 10, 2015 at 1:38 pm

      • Michael Dell, Steve Jobs, Bill Gates, Sergey Brin, Mark Zuckerberg didn’t have million dollar jobs.

        Lion of the Blogosphere

        October 10, 2015 at 1:46 pm

      • “Michael Dell, Steve Jobs, Bill Gates, Sergey Brin, Mark Zuckerberg didn’t have million dollar jobs.”

        I said compounded over 10 years (a regular exit for a tech start-up is 5-10 years). So yes, they all had million dollar jobs over 10 years. In tech, a PhD track like Sergey would start at 200k (base 130-140, plus stock and bonus), expect 250k within 3 years, and then if you’re good expect 350k with in 6-8, with very little risk involved (what are the chances of Google going bust and not finding a similar job in tech afterwards). A bachelor graduate can expect about 160k in total comp first year at Google. So yes, these numbers compounded over 5-10 years look very attractive compared to the average payoff of a start-up. With these comps, good people nowadays either start their own thing or go to google. Working for a start-up (not a founder) is unattractive, since upside is not big enough to compensate for the risk. Taxing at the top end would make start-ups even less attractive, and actually benefit the big established companies like Google/Apple/FB.

        I don’t know much about the rest, but I bet they all had options opened to them. They didn’t go into start-ups because they had no marketable skills, but rather because they saw at attractive pay/risk reward at the time. You’re proposing tweaking this, so that there will be fewer Dells, Jobs, Gates, Brins or Zuckerbergs.


        October 10, 2015 at 2:05 pm

      • Nonsense, none of those people were thinking about tax rates when they founded companies. Nor did they take much risk because they didn’t give up a job. They surely believed that could get a job later if their business didn’t pan out.

        Lion of the Blogosphere

        October 10, 2015 at 2:13 pm

      • I think Zack makes some good points with respect to risk and expected value. I’ve done the same calculations when considering salaried job opportunities, but especially when evaluating an entrepreneurial land-lording opportunity. But I have a low risk tolerance. I suspect that Messrs. Dell, Jobs, Gates, Brin, & Zuckerberg have a very high risk tolerance (and perseverance) and likely just plowed ahead with their ideas and never considered working a corporate job.

        LotB: Nor did they take much risk because they didn’t give up a job.

        They gave up the opportunity to work a less-risky corporate job.

        E. Rekshun

        October 10, 2015 at 3:00 pm

      • “They gave up the opportunity to work a less-risky corporate job.”

        Did they consider a corporate job less risky? If you have a corporate job, you are at the mercy of your bosses. You can be fired or laid off at any time. Owning your own business actually has less risk and more security.

        Lion of the Blogosphere

        October 10, 2015 at 3:16 pm

      • “Did they consider a corporate job less risky? If you have a corporate job, you are at the mercy of your bosses. You can be fired or laid off at any time. Owning your own business actually has less risk and more security.”

        Lion, you’re really taking things being black or white. The reality is more like shades of gray.

        First of all, everybody has a boss. An entrepreneur may have investors, or a big client (like my friend in advertising, he’s got 1 big client and the rest does matter; the same with my friend who owns a good gallery — one big collector and one big artist, the rest being second rate). Even if you produce for the masses, you still have bosses. Apple has to innovate every year to stay in business. If they stop innovating they lose fast, in a few years (after they built the brand for decades). See Blackberry, Altavista, Friendster, etc, etc.

        Second of all, the risk of getting fired or laid off is generally much lower than losing a business. There’s a stickiness on the jobs and salaries too. Companies like to put a stop on hiring, and generally look humane to the employees, especially compared to the raw market forces that a business has to deal with. Owning a business has more risk and less security. Ask any owner. (otherwise, if starting your own business would give you less risk and more reward, everybody would be starting successful businesses left and right)


        October 10, 2015 at 3:34 pm

      • btw, Lion, I challenge you to find any paper or analysis by a reasonable economist that claims that starting your own business carries both higher returns and lower risk compared to working in the industry, in a first world country where there’s a market economy. (crony capitals/socialist countries don’t count, where some people may leverage their connections to get government contracts at very advantageous prices)


        October 10, 2015 at 3:43 pm

      • Zack,

        You presume a level of risk calculation that almost no entrepreneur ever makes. There are two general kinds of entrepreneurs. One is the kind that simply wants to be in charge of his own business. he is not dreaming of vast riches, just making his own money his own way. If he does well he assumes he will do better than if he works for someone else but either way he will run things his way and make enough and that is why he does it. This by the way is most entrepreneurs. As time goes on if things go well they may try to expand and get bigger but they just want to get away from “the man.” These are restaurant owners, insurance agents, real estate agents, independent electricians, plumbers, handymen, beauty shop owners, wedding photographers (or any photographers), etc, etc, etc. There are 10s of millions of these people and very few of them are going to get rich and they aren’t thinking about it in those terms either.

        The second kind of entrepreneur is the one who starts his own new business venture to create the next great product or service with visions of making it big. There are far less of these entrepreneurs but there are still quite a lot of them. These are the innovators 1% of whom will create new and amazing things and the rest will go broke. This is the risk you are talking about. But here is where you go wrong. Exactly 0% of these people ever do the risk analysis you are talking about. These people are high rollers, big talkers and even bigger believers. They see themselves as better than everyone else, smarter than everyone else, and destined for greatness. They would not do an analysis that determined their mathematical expectation based on a 100 million dollar payout and a 1% success rate. That kind of silly math experiment would never enter their mind. They are the kind to jump first and ask questions later. They would never even consider a risk analysis because that would presume some reasonable chance of failure for which they see almost none. If by some chance they were to do such an analysis their expected gain would be more like 1 billion and their chance of failure would be something like 1 in 2. Entrepreneurs in this category have a level of excessive optimism that defies all logic. They are also nearly clueless about tax law at the time they are even thinking about starting this business, so the idea that they would need to discount their gains by tax law would never enter their minds. This excessive optimism is actually critical to their success. Studies of successful businesses shows that those that succeed are the ones that believed they could and were successful in convincing everyone working on the projects of their assured success even in the face of obstacles that should have caused them to become defeated and give up. It doesn’t guarantee success by any means but it is necessary to end up in the 1% who do succeed.

        I have been partnered with these second kind of entrepreneurs by the way so while I have read business books about this kind of entrepreneurial optimism, I have also seen it first hand. I know how these people think and they don’t think rationally. Unfortunately that appears to be a necessary trait for the few who will succeed wildly. We all know by know that Steve jobs for famous for it with what everyone around him referred to as his “reality distortion field”

        Now as to Venture Capital and getting some wild hair brained idea funded, that’s an entirely different story. I can’t say I have much experience with that side of the equation. I assume that the risk calculations and tax consequences will be considered more heavily there. However the people we have been throwing around here like Gates, Jobs, Brin, Zuckerburg, etc, didn’t have to go get VC on a hair brained idea. They were able to boot strap it until they already had something worth investing in before they had to go get VC. They all did it out of garages or dorm rooms, and they didn’t do any risk analysis based on mathematical expectations of success discounted by tax rates.


        October 12, 2015 at 1:39 am

      • This is such a great comment.

        Lion of the Blogosphere

        October 12, 2015 at 2:28 am

    • ” Liberals think that people start businesses so they can give health care to their employees or “provide jobs for the community.”

      But this is why governments grant businesses owners preferential legal treatment, such as limited liability.


      October 10, 2015 at 1:16 pm

      • Liberals think that people start businesses so they can give health care to their employees…

        And health care expense reduces a business’s taxable income.

        E. Rekshun

        October 10, 2015 at 2:40 pm

      • I wasn’t really talking about government types, either politicians or bureaucrats, I was talking about your garden variety leftist or SWPL who doesn’t think much and just mouths dumb platitudes.

        As for the idea that private businesses should give their employees health insurance, wasn’t that an unintended side effect of the wage and price controls during WW 2? Employers could not give pay raises to their employees, but they could give them a tax free benefit, i.e. health insurance, and so the practice began.

        Sgt. Joe Friday

        October 10, 2015 at 5:14 pm

    • Same here… I never accomplished (a). Though I’ve always come close. That doesn’t matter much because I value (b) so much that part (a) isn’t as important. All of the business owners I know say the same thing. It’s about your autonomy.


      October 10, 2015 at 2:15 pm

  9. LotB: However, for each loophole or deduction there’s a strong lobby behind it.

    And, as LotB has pointed out, republicans think they’ve pulled one over on democrats when the republicans slip a loophole or opaque deduction into the tax law.

    Libertarianists, despite thinking of themselves as rational economists, are clueless about why people start businesses.

    An entrepreneur wants to work for herself and get rich, or at least get richer than she could working for someone else as an employee.

    E. Rekshun

    October 10, 2015 at 2:16 pm

    • I’m not sure it’s Republicans pushing all the loopholes. I suspect it’s Democrats too.


      October 10, 2015 at 2:59 pm

      • democrats tend to be crony-er than republicans. they understand the fact that high taxes are a burden on the new comers, new businesses and they benefit the entrenched interests. the new money, the new billionaires come from industries that are low taxed, that have low barriers of entry, where smarts/ingenuity/business acumen matter more than connections or with whom you went to prep school. this is one reason why some very rich people push for democrat causes, in particular higher taxes on the middle class. (Obamacare is such a tax btw, although people that benefit there are the low income people)


        October 10, 2015 at 3:55 pm

  10. Lion you’re just chasing your tail. The reason Libertarianism is taking off is not because of sound theory, its the fact that people see the incredible stupidity and ineffectiveness of the Federal Government. If we lived in a homogeneous society where taxes were flowing to your kids and parents, Libertarians would be Cheech and Chong smoking dope in the bathroom instead of a political philosophy, but when you see hundreds of Billions of Dollars going to feed Invaders who hate you, and breeding savages who want to kill you and rape your women, then tax avoidance is a matter of survival. If you’re White, this system wants you DEAD – straight up DEAD. White people need to unplug from a system that wants to kill them, and lets face it without White people in positions of power, this whole country is going to go Detroit and Haiti, with no electricity or clean water available when it goes FULL ZIMBABWE.

    Joshua Sinistar

    October 10, 2015 at 4:18 pm

    • Insofar as that’s true, then all it means is that libertarians have an immense incentive to destroy the system through immigration and dysgenic population policies. It’s like how, if you want socially conservative policies, you need lots of people who need lots of supervision to have lots of babies at the expense of their more intelligent counterparts.

      Frankly, I don’t trust libertarians, not only because they’re wrong but because what they want is only feasible if they rip apart the social fabric.

      A word on the race talk. It’s not that you’re wrong, per se. It’s that one of the great advantages of being white is that – traditionally, at least – you don’t have to engage in the race politics that colored people do. When most white people see white people engaging in the same kind of race talk and race hustling, they feel revulsion. Sure, the blacks and Hispanics might not be able to help themselves, but jeez, we’re white. Show some pride, man. (And, no, the irony of finding race hustling demeaning on a racial level is not lost on me.)


      October 10, 2015 at 5:12 pm

      • What is repulsive is White people denying the obvious threat. These blacks don’t hate you because of slavery, or Jim Crow, or racism, they hate you because you’re not black. Saying they want to kill you, when they themselves say it daily is hardly controversial is it? Acknowledging threats that people make against you is hardly paranoia. The Mexicans have an organization called La Raza. La Raza means “The Race” in Spanish, and no I don’t care if you don’t believe they are a race, because they believe it. Why are only White people racist? White people are the least racist people in the world, and its costing them big. Its costing some their lives, because they are ignoring an obvious daily threat to their lives by people who want them DEAD because of race, and its not about anything your ancestors did, that’s just an excuse. Not every White person has ancestors who owned slaves, but do these people of “color” care? NO.

        Joshua Sinistar

        October 10, 2015 at 7:42 pm

      • “Insofar as that’s true, then all it means is that libertarians have an immense incentive to destroy the system through immigration and dysgenic population policies. It’s like how, if you want socially conservative policies, you need lots of people who need lots of supervision to have lots of babies at the expense of their more intelligent counterparts.”

        You blame libertarians and conservatives for what liberals and socialists do. The left has been pushing Immigration and dysgenic welfare policies since the 60’s. Socialists are the ones who want government to micromanage everyone’s lives. And that’s what takes large numbers of dumb people. Radicals crow about how flooding the country with 3rd world migrants will give them the votes to ram through their policies. All they have to do is promise them welfare and they’ll vote for anything.

        “Frankly, I don’t trust libertarians, not only because they’re wrong but because what they want is only feasible if they rip apart the social fabric.”

        Once again, it’s leftists who’ve been trying to “rip apart the social fabric” since the 60’s. Conservatives and libertarians aren’t the ones pushing all these radical causes.


        October 11, 2015 at 7:48 pm

      • “Conservatives and libertarians aren’t the ones pushing all these radical causes.”

        No one’s saying that they are. But if you listen to the right, you’d think that it’s *all* down to the left. And it’s not.


        October 12, 2015 at 6:12 am

      • And just what radical causes do you imagine the right is pushing? Ya know, the main characteristic of the right is opposition to the radical causes pushed by the left. That isn’t just my opinion. That’s pretty much accepted among academics and political scientists. Even the marxists recognized this and labelled the right “reactionaries” and “counter-revolutionaries”. Meaning that the far left was doing the revolutions and the right’s actions were a reaction trying to stop it. Sorry, cupcake, but you don’t get to label the other side “radicals” just because they don’t like your socialist agenda.


        October 12, 2015 at 2:40 pm

  11. Lloyd Llewellyn

    October 10, 2015 at 9:22 pm

    • Of course we can trust the New York Times to be completely unbiased when writing about Republicans.

      Lion of the Blogosphere

      October 10, 2015 at 9:53 pm

      • A better answer would be that democrats are donating at this stage because the republican race is totally wide open and the democratic one isn’t.

        Lloyd Llewellyn

        October 10, 2015 at 10:17 pm

      • democrats aren’t donating, rather.

        Lloyd Llewellyn

        October 10, 2015 at 10:18 pm

    • That is a garbage study. Notice that for all of their conclusions, they do not list at all the 178 or so donors completely. What they show are pictures of a dozen people with houses clustered around a Houston neighborhood.

      It is, in fact, a hit list.


      October 11, 2015 at 12:45 am

      • It’s an illustration of which groups it’s widely considered intellectually and morally sophisticated to attack (whites, men, old people, rich people). I definitely grant you that. But I don’t think there’s any reason to doubt the statistics that are offered.

        Lloyd Llewellyn

        October 11, 2015 at 9:38 am

      • Providing data is easy online. The fact that it is not provided is telling.


        October 12, 2015 at 2:03 am

  12. Lion,

    I think that you are missing something important in your analysis of libertarianism.

    There seems to be a train of thought current throughout this blog and its commentators that libertarianism is about providing the incentives for people to become rich and, as a byproduct of doing so, that this has social benefits. There is a great deal of talk regarding incentives and risk, but I think that this is largely misconceived.

    The fact of the matter is that a powerful and wealthy elite always emerges in every type of society. They may be kings and princes, autocrats, commissars, moguls and industrialists, but they always emerge in relatively great numbers. They do not do so as a result of how their risks and incentives are calculated, but they can always be counted on to be there.

    Look at your example at the beginning of the article. You mention that the top income tax rate was 73%, but all kinds of loopholes reduced the effective rate to roughly 35%, arguably for the richest people. Was this result due to the fact that society in 1974 was insufficiently libertarian, or was it due to the fact that society in 1974 was sufficiently libertarian? For the wealthy, the political ideology did not matter. They will extend to themselves whatever rights, privileges and freedoms they want.

    Libertarianism, then, is an argument to extend to ever larger cohorts of the population freedoms that the wealthy already enjoy in the political, economic and regulatory sphere in exchange for the social circumstance of a much more dynamic economy that throws off huge amounts of wealth. If it’s good enough for the wealthy to pay a 35% income tax, then it’s good enough for the middle class.

    Libertarianism also admits to a practicality that others lack: you are never going to have a system where the rich are substantively taxed but the middle class is not. There is not going to be a 90% income tax rate with a 50% asset confiscation on Warren Buffett, while Lion only pays a 20% flat rate. It is not going to happen. Any “get the rich” policy dies with lobbying efforts.

    Libertarianism also produces the kind of smaller government that would not result in the predatory actions of the Mark Zuckerbergs and Bill Gates’ of the world.

    Of course, libertarianism has no hope of politically winning and its adherents have turned in fanatics.


    October 11, 2015 at 1:21 am

    • map, also capital has legs. If you start taxing “the rich” at something that’s perceived unreasonable, they can relocate easily. Money can be transferred in a matter of minutes, hedge funds can relocate trivially, new start-ups will start somewhere else (like it was the case with the french tech moving to Berlin recently), corporations already use complicated international laws that can bypass everything, but to consolidate their position they can relocate the head-quarters and hence the company. Sure, everybody will be screwed by this to some degree, but some much less than others. If something like this happens, it’ll be the average Joe who would pay the most — you can see this at smaller scale, in Detroit, but also in the 1970’s NYC (remember NYC was bailed-out big time in the 70’s to get its people back)

      US is the most progressive developed country by far in terms of taxes. I find it very weird that some people want to make it even more progressive.


      October 11, 2015 at 12:06 pm

      • Zack,

        You have a good point, but I’d like to point out something you seem to be missing. Capital is “mobile” because that is what the elite want. There is nothing natural about the mobility of capital. Look at North Korea, where capital is highly immobile. Mobile capital is the artifact of the system, not something outside of it.

        The point I am trying to make is a little more subtle. The elite have learned to protect themselves from the French Revolution with, ironically, socialism. Karl Marx was a student of the French Revolution and he developed a theory to prevent the bourgeoisie from ever attacking the elite again. Basically, pit the lumpen proletariat against the burghers and you will stay in power forever. This is why, despite the vast socialist reforms of the decades, the concentration of wealth has been going up. Libertarianism is just an attempt to reverse the true power of socialism.


        October 12, 2015 at 2:15 am

      • map, is not only about capital being mobile, but rather than taxes are unnatural. no tax is really fair. what is fair? more tax on capital, you say, oh, you want to tax capital and have less businesses? but then, the reversal is, oh, you want to tax work more? taxes are money transferred from some people to others. why does somebody else have a claim on your money? the left wing answer is that they don’t have enough, ie, from those who can to those who need. well, in that case, those who can will simply do less, and those who need will have less incentive to do anything. thus, less for everybody, which makes leftists happy. hey, at least you have more “equality”


        October 12, 2015 at 10:18 am

  13. I have two issues with the Laffer curve myself,

    1st that it is too generalized and lacks social context.

    Different societies have different tax avoidance contexts. The US level is pretty low for a developed nation, Hauser’s Law notes it at around 20% GDP for the Feds but its much higher elsewhere

    Such contexts over time in theory can even be changed if policy is carefully crafted . We cannot craft such policy for a lot of reasons though and recent mass immigration and year of oligarchy has basically rendered the US a permenent 3rd world political structure . Even if there was mass changes back to 80% European, trust has been ruptured and as such we’ll find collection increasingly harder as coercion breaks down and people become impoverished

    2nd Libertarian psychology rules out the idea that there are reasons that revenue collection for high taxes

    A tax structure can be arranged to level wealth levels even at the cost of economic activity or even to modify behavior within limits, For example you could have a tax code that encouraged hiring people at up to upper middle class wages and punished for other choices, This would actually when combined with other trade controls and the like probably result in a richer society but again our current tax code is to facilitate oligarchy not build wealth.

    A.B Prosper

    October 11, 2015 at 4:10 am

  14. I don’t know from economics but I wonder how Murray Rothbard is regarded nowadays. He was very good on issues of race and his protege Lew Rockwell wrote those Ron Paul newsletters in the early 90s.


    October 11, 2015 at 7:33 am

    • “Suppose … police beat and torture a suspected murderer to find information (not to wring a confession, since obviously a coerced confession could never be considered valid). If the suspect turns out to be guilty, then the police should be exonerated, for then they have only ladled out to the murderer a parcel of what he deserves in return; his rights had already been forfeited by more than that extent. But if the suspect is not convicted, then that means that the police have beaten and tortured an innocent man, and that they in turn must be put into the dock for criminal assault”

      “The law, therefore, may not properly compel the parent to feed a child or to keep it alive. (Again, whether or not a parent has a moral rather than a legally enforceable obligation to keep his child alive is a completely separate question.) This rule allows us to solve such vexing questions as: should a parent have the right to allow a deformed baby to die (e.g., by not feeding it)? The answer is of course yes, following a fortiori from the larger right to allow any baby, whether deformed or not, to die. (Though, as we shall see below, in a libertarian society the existence of a free baby market will bring such “neglect” down to a minimum.)”


      October 11, 2015 at 10:04 am

  15. The Laffer curve is the modern equivalent of the law of diminishing returns, which states that after a certain point the return on investment halts or begins to decline. If you flood the market with a product the prices will have to fall because merchants can’t afford to stock merchandise on their shelves that doesn’t sell, and have to liquidate it to make room for other products.
    Its an interesting idea for policy, but market economics is not really sound for government programs. How much money should be spent on education for bright students for example. There is probably a limit to how much you can fit into the school day and based on curriculum some material needs to be cut thus controlling cost. But socialism is a scam. This Early Childhood Education System is a perfect example of False Altruism. To set up this cash cow, the socialists claimed that minority students were dumb and uneducated based on poverty which limited spending on them. However, the reason they’re dumb is because most of them have IQs in the moron and retarded range. This is what makes this a cash cow. There is literally no way to educate retards, and this ECE program is full of nothing but retards. That’s how this scam works. By claiming that resources and funding is causing the problem they can fund extravagant make work jobs for many Government workers. They make large six-figure salaries to supposedly solve an insoluble problem. When they fail, they just ask for more money, and that’s how this scam of socialism works.
    Most government programs are not dependent on supply and demand. Water treatment plants have to supply enough clean potable water for residents, but there has to be a continuous chain of maintenance and upgrades built in to serve increasing population and have enough resilience to provide for any excess needs due to emergencies or accidents in the pipe systems. This Government service cannot be done in the private sector because most of the pipe are on public property, and having a private enterprise run it will not be profitable enough to any investors.
    Public Utilities are the perfect example for why Libertarianism will not work. There are now pilot programs to try to get electric companies to compete for customers. This is stupid because they all use the exact same power grid. Having multiple power grids is impossible because you have to have a complete circuit to maintain the system that provides the electricity. If a customer switches from one company to another and they use separate grids, then the power company he left will have to disconnect his house and the one he joins will have to connect him to their power grid. You would probably have to have double the amount of power lines just to have one competitor which is completely insane. Just think how long it takes to fix one power system and multiply that by how many companies you have. With multiple companies you would have a crazy multiplicity of power lines crossing over and under each other with workers constantly getting in each others way. There are some services you need that CANNOT BE MADE PRIVATE.

    Joshua Sinistar

    October 12, 2015 at 2:54 am

  16. Reblogged this on oogenhand and commented:
    Arthur Laffer was a man I’ve looked up to until this piece.


    October 18, 2015 at 3:44 pm

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