All Hail the Virtue of the Oligarchs
“Wealthy folks have no need to steal or engage in corruption.” Larry Kudlow, in regards to Trump’s cabinet.
I am not even sure where to begin. One thought is that both Plato and Aristotle would have found this a laughable proposition–both thought that being governed by the wealthy would lead to ruin. Beyond that, history hardly shows that once one reaches a certain level of wealth that this translates into some sort of transcendental level of virtue.
The rest of the column is not much better, insofar as it is just magical thinking about the economic boon that will be the Trump administration. We shall see on that count (and, for that matter, on the corruption issue).
Kudlow also believes in the Laffer Curve, ‘nuf said.
HA! HA! HA! HA! HA! HA! HA! HA! HA!
I know Barret Rochman. On Sundays forty years ago when we were all hippies I went out to The Bird Farm that he rented out to some freaks to play volleyball, smoke dope, drink, and go skinny dipping and screw in the woods.
He was a millionaire slumlord then.
The Biggest Stock Scams Of All Time
Apparently Larry Kudlow was born yesterday and has not heard of these scandals involving wealthy citizens committing crimes to fill their personal coffers with loot!
If I can find his eMail maybe I should send him the link?
This statement is so stupid I have to think it was produced for word count reasons rather than to advance, you know, an argument.
There’s also the sticky problem that the fact that there might not be any need to steal or engage in corruption will not have any bearing on an inclination to do so. Not every criminal is forced by the exigencies of life to engage in crime–some are simply evil people or people who imagine themselves to be apex predators. (or was that redundant?)
“Behind every great fortune is a great crime”, which pretty much puts the lie to that idiot.
Kudlow’s mind was no doubt destroyed by his cocaine problem. Hey, isn’t using cocaine a crime? Just asking.
The statement is true. When the wealthy and well-connected do it, it’s called standard practice.
How many people went to jail for the massive mortgage fraud collapse of 2008?
The general drop in trust in our institutions has the potential to herald a steady decline of the American economy: http://www.samefacts.com/2016/12/woolgathering/the-economic-value-of-trust/
Here is fixed investment from 1950:
https://fred.stlouisfed.org/graph/fredgraph.png?g=cged
We can see private investment permanently fell from its post-war average once Reagan’s supply-side takeover was full in effect after 1983.
Here is GDP growth over the same period:
https://fred.stlouisfed.org/graph/fredgraph.png?g=cgej
Again, notice that since supply-side measures and monetarism displaced Keynesian economics as the dominant paradigm, GDP growth has permanently fallen, rarely reaching a 3% annualized rate depending upon how it is measured.
This is after the corporate tax rate was reduced to 28% from 70% during the Reagan Administration.
Furthermore, the tax reform plan Kudlow pushes is incoherent. The so-called corporate tax holiday can have no appreciable effect on the U.S. economy because dollar profits are already on deposit at the Federal Reserve and foreign currency profits are used to sustain overseas business operations. I’m not sure why multinationals would want to transfer those profits back to the U.S. and cripple themselves. Nor would anyone not a fool think corporations will spend or increase wages solely due to a tax cut.
But, Larry … they often do steal or engage in corruption. They are not, by virtue of their wealth, somehow superior moral beings, or if you want to leave morality out of this, averse to unethical or illegal behavior.
Pardon me taking off on a tangent here but, has Larry Kudlow, since the 2008 economic crash, been right, correct, or accurate on any of his predictions concerning the economy since Obama was inaugurated back in 2009?
@Mr. Prosser:
The Laffer Curve exists — government revenue does not peak at a 100% tax rate. What doesn’t exist is the idea that tax cuts “pay for themselves”. This only happens if the marginal rate is very high (e.g., 97% when Kennedy cut taxes) and/or the tax code has lots of complicated loopholes so that you can eliminate a lot of deadweight loss.
@Ben Wolf:
First plot doesn’t show anything. And the second plot shows a small dip that correspond to a hundred things (e.g., globalization, aging populace, maturation of the economy, etc.)
That’s the personal income tax rate. And the wealthy ended up paying more in taxes after that because loopholes were removed. Do try to keep up.
Returning to the subject at hand … Kudlow’s comment is mind-bogglingly stupid, an early front-runner for dumbest comment of the year. I was just reading an article in the NYT about how a sleazy businessman tried to make $400 million disappear through a byzantine labyrinth of shell companies and offshore banks. His businesses would make million of dollars but only declare a few thousand in the US by shuffling the money to other countries. And this part of a massive elaborate system to allow the very rich to avoid taxes (or lawsuits).
What has made this possible is not that taxes are “too low” contra above. What’s made it possible is the maddening labyrinth of tax laws, financial transaction laws and banking laws that make tracking down rich people’s money almost impossible. And the attempts to “reform” the system — Sarbanes-Oxley or Dodd-Frank — have only made things worse, bringing down the hammer on small businesses while allowing the megarich to continue to milk the system.
This is one of the reason I’m open to eliminating the corporate tax system (with revenue made up by taxing dividends/capital gains as ordinary income). The money from the corporate tax system ain’t worth the corruption.
@Hal_10000:
1) Correct. I was in too much of a hurry.
2) First plot shows flatly that fixed investment after 1983 never again reached 4.5%.
3) And please stop being an ass.
Furthermore, revenues failing to peak at 100% is not the original argument behind the Laffer Curve (as we can see above arguments in its favor have repeatedly shifted as empirical evidence has shot each down in turn.) The original argument was high tax rates on the wealthy discourage their productive investment. This lack of investment thus means lower revenues.
The argument Hal is making could just as easily be explained by tax avoidance, which is most certainly not a factor in the supply-side case made forty years ago. Also, it is a matter of sleight-of-hand to argue that supply-side measures must have been offset by something else which just happened to occur at exactly the same time.
@Hal_10000:
Well, as an owner of a profitable though small corporation (consisting of my wife and me), and as a guy who will also stand to benefit greatly from the proposed cut in income taxes, I welcome the notion that the 1% should get still richer on the backs of the idiot coal miners who put their faith in Trump.
More for me! Yay!
What’s that Trump voter? You lost your health insurance? And you’re still unemployed? And you think giving me more money will somehow help you? Ah hah hah hah!
Ahem. Sorry. What I mean is yes, yes my friend, making me richer will totally help you. You just wait right there in Shitheel, Kentucky, and I’ll be along shortly with your high-paying job. I just first have to maybe buy a new Mercedes and perhaps a house in the south of France. But then, I’m totally going to invest in a dead town in the rust belt.
@Mr. Prosser: Actually, the Laffer curve is real, and economists have known it for many decades. Well, maybe not the whole curve as sketched by Laffer, but the idea that there is a tax rate above which revenue goes down. Econ types have known roughly since rocks that if your goal is to maximize revenue, the marginal income tax rate should be around 70-75%. This is why Kennedy lowered it to that rate, a genuine supply side tax cut that worked. As with many things, Dems know how (or more to the point, when) and Rs don’t. I do, however, love the unspoken assumption by Laffer that the goal of any tax should be to maximize the take.
Unfortunately, Kennedy’s cut seems to have put rates on a slippery slope. Any claim that cutting the marginal income tax rate to 30% or 50 or whatever is a supply side cut is a lie. Also, you may remember that we recently suffered a financial crash and recession caused by what was called the savings glut. Despite the wipeout of capital in the crash, the glut still exists. We have more money than we have productive projects. That’s why the Fed can barely give away money at zero real rates. In our current situation, any talk of tax cuts to promote savings and investment is complete nonsense.
Kudlow is also the guy who, in late 2007 said:
http://www.nationalreview.com/kudlows-money-politics/2452/recession-debate-over-larry-kudlow
It’s rumored that Trump is considering him to be the chairman of the President’s Council of Economic Advisers. What could go wrong?
@Ratufa:
Yes, and by late 2007, there were some bank economists who were becoming very worried about the trillions of dollars in defective mortgage backed securities that were on balance sheets of major financial institutions, and which ultimately crashed the economy in 2008 and into 2009.