At the end of Art Laffer’s presentation at the IPA tonight, John Roskam said there may never have been a presentation as good as the one we had just heard. And if I have misquoted John, let me apologise but whatever it was that John did say, I have never heard a presentation as good as the one I heard tonight. Lunching with Dick Chaney and Don Rumsfeld must have been the most fun group anyone has ever been part of. What a bunch they must have been [and for evidence, see the video above]!
Naturally, I think all of this because Professor Laffer said only things I could agree with instantly. And he said one thing in particular that I could not have agreed with more, and if you see what he is saying, you have to appreciate just how badly our economies have been managed. And what he said was this: “The Great Recession was caused by the stimulus package.” Imagine, my friends, what that means, not just about economic policy, but about economic theory, if that is true.
He then gave his six-point plan, not just for economic recovery but for maintaining strong rates of growth ever after:
- introduce a low-rate broad-based flat tax
- bring in genuine spending restraint
- base monetary policy on a sound-money imperative
- ensure free trade is the basis for international trade
- keep regulation of industry to an absolute minimum
- leave the market to itself to solve the problems businesses find themselves in.
And then at the end of the evening, there was one question that stood out only because it is has an answer that is still not easy for everyone to understand in our days of low grade macroeconomic knowledge: “Why”, he was asked, “didn’t the stimulus work?” His answer: “if you want production, you must reward production. It’s not consumption that does it, it’s production”. Seems clear enough to me, although, I fear, not to those who do not see the point.
And let me finally thank the ACCI for having had the good sense to bring Arthur Laffer to Australia.