Looking for Laffer-Likes

8+ Ed Meese jumped in, as he usually did when he saw that his boss was discomfited and at a lo
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Mike S
Mike S
1 year ago

Great perspective, we get caught up in the minutia too much sometime….made me think of another recent good read!

Of Dollars and Data Blog…

“In Everybody Lies, Seth Stephens-Davidowitz illustrates how the news media doesn’t influence peoples’ beliefs, but rather, the audience determines what kinds of stories news agencies cover and publish.  He states:

Many people, particularly Marxists, have viewed American journalism as controlled by rich people or corporations with the goal of influencing the masses, perhaps to push people toward their political views.  Gentzkow and Shapiro’s paper suggests, however, that this is not the predominant motivation owners.  The owners of the American press, instead, are primarily giving the masses what they want so that the owners can become even richer…There is no grand conspiracy.  There is just capitalism.

Stephens-Davidowitz’s conclusion suggests that you are the gatekeeper to your own mind.  You decide what comes in.  You decide what sticks.  So whether you see the universe as kind or hostile, this belief will flow through your entire belief system and affect all the others.  When you choose between kindness and hostility, choose wisely.”

Situational Awareness! Reset, look again, look at what’s not said, move upstream, get to high ground! Get a different look! High Risk Decisions for Low Risk Outcomes or vice versa…

Mark Kahn
Mark Kahn
1 year ago

This is kind of a reverse reductio-ad-absurdum argument where the premise is true at the extremes, but is not a continuum in the middle. That said, IMHO, it probably is a continuum, i.e., tax rates and revenues are inversely related, although with varying first derivative rates along its continuum. However, in a real economy, the impact of small changes to tax rates on government revenue can easily be overwhelmed by all the other variables at play.

An example that fits Rusty’s point even better might be government debt and interest rates – away from the extremes, there appears to be no consistent correlation. And Japan is, at minimum, proving that the extreme of one end of the relationship is farther out than previously believed.

Paul Benjamin
1 year ago

My take is that it is the simplicity of the two-variables model that is core to the flaw in “laffer-like” beliefs. Rarely in any system are two and only two variables the factors which determine outcomes. We live in a complex inter-related world and do ourselves a disservice believing we can distill the complexities into a 2-dimensional model. This flaw is repeated in every aspect of our lives. Here are two examples outside of Politics and markets: physical fitness: how much you workout vs what you eat = weight gain/loss or school: how much you study vs raw intellect = academic success. each of these are equally flawed as the laffer-likes…

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