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Follow on Google News | Dr. Arthur Laffer's "Program for Prosperity" Released TodayDr. Arthur Laffer, a leading advocate of Supply-side Economics, outlines his "Program for Prosperity" in a series of nine free lectures released to the public today by Yorktown University.
Dr. Laffer's begins his commencement address by observing that the American economy is worse today than it would have been had there been no stimulus policies of the Obama Administration. The reason, he argues, is that government spending does not create jobs. Dr. Laffer asks his audience to imagine that the whole world is comprised of two farmers: Farmer 1 and Farmer 2. If farmer 1 gets benefits, who pays for them, he asks? Government spending to stimulate the economy is taxation and as such for every transfer recipient there is a transfer payer. The idea that taking from one person to pay another can grow the economy is just bad economics, he argues. Only good economics creates jobs. The employer looks at the total cost—all payroll taxes, income taxes, insurance, threats of lawsuits, parking spots for his employees and calculates what economists call “gross wages paid.” If the gross wages are less than the marginal value to the firm, he will hire the worker. The difference between what it costs an employer and what a worker receives is called the "tax expenditure wedge." Stimulus spending doesn’t lower the tax expenditure wedge. Only reducing that wedge creates economic growth. There are five critical policies, Dr. Laffer argues, that reduce the tax expenditure wedge and thus contribute to economic growth: 1) Low marginal tax rates or a 12% flat tax 2) Spending restraint 3) Sound money 4) Government regulations that are not excessive 5) Free trade Yorktown University’s free lecture series may be accessed online at http://www.yorktownuniversity.edu/ Contact: Wade Shol wade@yorktownuniversity.edu Phone: (877) 757-0059 End
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