Monday, October 27, 2008
Laffer Excoriates the Bailout
My ex-boss has an uncharacteristically harsh op ed in today's WSJ. When I worked at Laffer Associates a couple of years ago, he would sometimes have to tell his critics, "I'm not always an optimist, I just happen to be right now." Well, I don't think he'll need to worry about that particular caricature for the next few years... Some excerpts:
I am glad that a solid group of free market economists are yelling and screaming that this bailout is nuts. At least we will be on record when the excrement hits the rotating blades.
No one likes to see people lose their homes when housing prices fall and they can't afford to pay their mortgages; nor does any one of us enjoy watching banks go belly-up for making subprime loans without enough equity. But the taxpayers had nothing to do with either side of the mortgage transaction. If the house's value had appreciated, believe you me the overleveraged homeowner and the overly aggressive bank would never have shared their gain with taxpayers. Housing price declines and their consequences are signals to the market to stop building so many houses, pure and simple.
...
If you don't believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they'll do with Wall Street.
I am glad that a solid group of free market economists are yelling and screaming that this bailout is nuts. At least we will be on record when the excrement hits the rotating blades.
Comments:
But ... but ... wasn't Laffer (no full name w/ underscores) the one who was saying in '06, in a famous TV debate with Peter Schiff (no underscores) that the higher home prices were real signs of higher wealth and productive capacity? As opposed to Schiff's dismissal that they were "paper gains"?
Isn't this a pretty damning admission of his former wrongness in that interview?
And weren't you working for him then?
(LOL@the captcha: "Art L, ex-PA", after adding a little capitaliztaion and punctuation.
Isn't this a pretty damning admission of his former wrongness in that interview?
And weren't you working for him then?
(LOL@the captcha: "Art L, ex-PA", after adding a little capitaliztaion and punctuation.
Damn, I don't know what it says for me that I was just going to post the same point as Silas.
BTW, you can see the interview by a quick search of youtube. Here is one:
http://www.youtube.com/watch?v=LfascZSTU4o
Every time Laffer goes out in public, someone should ask him if he's paid Schiff yet.
BTW, you can see the interview by a quick search of youtube. Here is one:
http://www.youtube.com/watch?v=LfascZSTU4o
Every time Laffer goes out in public, someone should ask him if he's paid Schiff yet.
There are some other things in the piece you could take issue with, but on the whole it is nice to see someone reminding people exactly what they are running into at full steam.
Jim O'Connor
Jim O'Connor
# posted by 
: October 27, 2008 at 3:13 PM
: October 27, 2008 at 3:13 PM
The really funny thing was the CNBC gal was defending the "privilege" of working outside the home "instead of just raising children." Yes, a glamorous job on TV is cool, but that isn't what most people have as an alternative to a family. And the stay-at-home mom with lots of time on her hands was a very recent and now fleeting stage in civilization. That it would be considered a BURDEN to raise your own kids is just amazing to me.
Jim O'Connor
Jim O'Connor
# posted by : October 27, 2008 at 3:28 PM
: October 27, 2008 at 3:28 PM
Silas,
Yes he was wrong in his debate with Schiff, and I linked to that debate in one of the first posts on this blog (in the context of my own apology to Schiff for ripping him in my mises.org articles).
Are you saying that because Laffer was wrong then, we shouldn't trust him now about the bailout? I think one difference is that his earlier error was (in my opinion) due to his failure to realize that the Fed screwed up intertemporal coordination during the housing boom with its low rates. In contrast, in this WSJ op ed piece he is talking about fiscal policies, where he is the king.
Another thing to keep in mind is that surely some people at his firm have Google Alerts set up and will see this blog post. Hi everyone! You guys rock! Don't worry, this guy Silas hates everyone! :)
Yes he was wrong in his debate with Schiff, and I linked to that debate in one of the first posts on this blog (in the context of my own apology to Schiff for ripping him in my mises.org articles).
Are you saying that because Laffer was wrong then, we shouldn't trust him now about the bailout? I think one difference is that his earlier error was (in my opinion) due to his failure to realize that the Fed screwed up intertemporal coordination during the housing boom with its low rates. In contrast, in this WSJ op ed piece he is talking about fiscal policies, where he is the king.
Another thing to keep in mind is that surely some people at his firm have Google Alerts set up and will see this blog post. Hi everyone! You guys rock! Don't worry, this guy Silas hates everyone! :)
I don't think I could frame the issue any worse if I tried.
Bob, of course we should agree with Laffer about the bailout. And we should agree with my broken clock at midnight! But my clock's estimates are, nevertheless, unreliable -- unless and until I see evidence that it has established a stable, rather than coincidental, correlation between its statements and the truth.
I hold Laffer to the same standard.
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Bob, of course we should agree with Laffer about the bailout. And we should agree with my broken clock at midnight! But my clock's estimates are, nevertheless, unreliable -- unless and until I see evidence that it has established a stable, rather than coincidental, correlation between its statements and the truth.
I hold Laffer to the same standard.
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