I enjoyed my debate with Arthur Laffer yesterday.
I admit I enjoyed winning. If this was tax competition then I was in it for only one outcome.
And I have to also say I was hardly surprised I did win. Arthur provided an insight into the still present mind of the right wing that has for too long had excessive influence on the economic agenda of the world.
What do I mean by that? I mean that in his first session he argued that competition works because we know the world is optimal when businesses trade at the point where their marginal revenues equal their marginal costs. Arthur had assured me that he has been the director of real companies. That's hard to believe when he can think this equation has ever held true. I'd suggest that if it does it can only ever by accident. There is good reason for that: no company can really know what it's marginal revenue is. It has little better ability to calculate its marginal cost, and if it could the cost of doing so would not be worth the effort expended, literally by definition (think it through and I think you will find I am right). In other words, what Arthur argued was based on something a long way removed from real-world conditions.
Now I do not pretend that I did not play to his arguments, because I clearly did. That was always my intention. I deliberately put the case that if he believed in the theory of markets then he could not also believe in tax competition since the true cannot co-exist. I happen to believe that is true, and think I made the case for it.
But I also made other real-world arguments for my opinion. And that is what I hope won the day. It was interesting to hear Pascal St Aman, head of tax at the OECD, then follow up in a discussion of tax competition and make other arguments that I have in my time made. He argued, for example, that there is a case for minimum tax rates. I think that true now.
But the real point is something more important. Laffer is one of a literally dying breed of economists who helped hustle in the neoliberal era: he was a Reagan adviser, just as he is now a Trump adviser. And that generation is ceasing to have the influence they once had: Arthur Laffer must be one of the few still really active, and he is a sprightly 78. Those that have followed lack the conviction and the zeal. More importantly, in their hands the ideas seem tarnished and irrelevant.
I am not saying that, MMT apart, there are many new shows in town, although when it comes to tax the tax justice agenda has largely prevailed. What I am saying is that the old guard is passing. As one person said to me in Paris, with Trump, Kavanaugh and Brexit they might leave decades of turmoil behind them as their last gasp legacy. But that does not mean the era is not ending, because it is. We just have to suffer the Gramscian moment until the new might emerge. That could be very painful, and too prolonged. But I look forward to it. I want to see it well before my own time is up.
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Hear Hear!
One question i am often asked is why did the neoliberal economic viewpoint gain such credibility in the 80s and beyond & what circumstances allowed that to happen? I have my take on it but i am interested to hear yours?
they found backers with lots of money to push those views? Those backers stood to gain the most.
This could have been your finest hour, Richard. Delicious.
I don’t think so. But it was fun.
any footage of the debate?
Not yet
I will post when I get it
Well done you! Is there a video of the event? And while in Paris, did you pick up any interesting vibes re the current political scene both here and there?
Re. Gramsci – all available evidence accumulating exponentially from different disciplines suggests we’ve entered one of those historic periods of tectonic change on a scale at least equivalent to the 1st Industrial Revolution and possibly greater. Who knows where it will ultimately lead. Because the speed of change is now breath-taking the challenge to maintain social stability (and justice) will be enormous. The danger is that this feeds into a fascist agenda, as we’re already seeing in some areas. My take is that it’s already a very dangerous era with all the uncertainties that Gramsci predicted.
I wish I shared your implied optimism for the victory of ‘good’ over ‘bad’. That’s not to say the world won’t ultimately end up a better place than it is now. But it’s going to be a very long drawn-out struggle on all fronts, sadly with too many casualties in the process. With the continuing insane conflict in the Middle East it would even be naive to rule out WW3.
On the plus side, there is an amazing amount of progressive communication on the Internet reflecting both the level and direction of academic enquiry in parallel with public events such as the one you’ve been a successful part of. It’s difficult to believe that all this energy won’t eventually translate into political policy somewhere on the planet. Its success will be measured by the level of hostility launched by the Neoliberal status quo via the MSM. Since the end of WW2 there has been an on-going war of ideas in progress which ‘they’ are currently winning.
One can only hope that in this Gramscian interregnum the ‘great variety of morbid symptoms’ won’t be terminal and that you’ll live long enough to witness healthy shoots of positive change. Being older than you it’s very doubtful I will.
Sorry for this extended diatribe triggered by your Gramscian head-line which coincided with my re-dipping into how Ayn Rand’s ‘Objectivism’ has influenced the current Neoliberal agenda. But that’s another topic for another day! Once again, congratulations on your victory of enlightenment over ignorance.
Barista, un caffè corretto per favore!
For the politically motivated young (and young at heart) the navigation of this transition is the big challenge to face
Just noticed here and on the other blog that you’ll post footage of the debate when available. Look forward to that. Thanks.
From Mises.
Any thoughts?
https://mises.org/wire/governments-default-debt-more-you-think
Yes
Go do some reading as to the real causes
Joe –
I read that article… thanks for that. I needed a good laugh.
Lacelle seems to posit that governments capable of issuing their own currency can default on domestic debt because – and I quote – “It needs to issue in foreign currency precisely because few trust their monetary policies”. Ignoring for a second the glaring logical disconnect that a fiat currency will fail because of a need to issue another currency (which is just barking… you’re not looking at a fiat currency anymore. You’re looking at exactly the opposite – a government working in a currency that is not its own)… Do you really believe that faith in Sterling is so low that people would rather deal in Gold or Bitcoins as the author claims?
Utter, complete and total bullshit. There’s a healthy appetite to acquire UK gov bonds. Always has been. If the currency was victim of a crisis of faith, nobody would touch those with a barge pole. Sorry, but if you give any credence to Sterling being in crisis, you need to wipe the bubbles off your chin and have another more realistic look at things.
The rest of the article is written on the basis that a sovereign nation issuing its own currency will automatically result in inflation. That’s total crap as well. I agree that beyond a certain level inflation will result if a gov keeps pumping money into an economy, but we’re not even close to that level. See how much was spewed in after the finance sector made a right unholy mess of things… compare that to the current rate of inflation. QE bloody D, mate. Claims of hyper-inflation at the first sign of money creation are quite simply wrong.
And then there’s the hilarious little diatribe about inflation, with Milton Friedman’s quote about inflation being taxation without legislation. Fair enough to that… but stop and think about it. Under a really loose definition, Inflation is harsh on those with capital and really quite good news for everyone else. And what is inflation? It’s when prices go up. And why do prices go up? Prices go up because merchants – usually those merchants who are the main owners of capital in the first place – decide to put their prices up. They do it whenever they sense there is more money to be had. Viewed in that way (and I do view it that way), Lacelle’s complaint distils down to “We took too much money off people and now what we’re left with is worth less as a direct result”.
The whole article is in defence of the extremely rich and how it’s unfair that some policies might not allow them to be quite as rich as they misguidedly believe they need to be. Dry your eyes, folks… it’s a tear jerker.
Anyways, I don’t know if Richard’s comments would have been anything like this, but those are my views for what they’re worth.
Thank you
Nice one Geearkey!
Not only are companies very, very unlikely to know their marginal revenue, but if they discovered their marginal revenue equalled marginal cost it would terrify them. It is the last thing they want to hear; unless they are deliberately trying to squeeze out a competitor. Otherwise, the first thought would be to exit the market fast; the second thought would be that they were already too late to make a dignified exit.