The Atlas Society Asks Art Laffer

Speaker 0 00:00:00 3, 2, 1. Speaker 1 00:00:04 Hello everyone, and welcome to the 45th episode of the Atlas Society. Asks, my name is Jennifer Grossman. My friends know me as Jag, I'm the c e o of the Atlas Society, which of course is the leading nonprofit, introducing young people to the ideas of Ayn Rand in non boring ways like our webinars, like our living history events, like our graphic novels, and our animated videos. So today is a big, big privilege. Um, we are joined by Dr. Art Laffer. And of course, I want to give all of you the opportunity to, to ask Dr. Laffer your questions directly. Uh, so you can get started, get first in line by typing those questions into the Zoom chat. Of course, if you're joining us on Facebook or YouTube, just write them on into the comment section. So, uh, Dr. Art Laffer has been called the Father of Supply Side Economics. Speaker 1 00:01:05 He is the recipient of the Medal of Freedom Award. I was actually honored to be able to attend that ceremony. Um, he is of course, famous for the Laffer Curve, which we're going to discuss a little further in the interview. He was a member, uh, of President Reagan's economic, um, policy advisory board for both terms. And he was also, um, an advisor to Donald Trump's 2016 presidential campaign. He and our previous webinar guest, Steve Moore, co-authored the 2018 book, Trump Trumponomics Inside America's America, first Policy to Revive Our Economy, as well as many other books, including The End of Prosperity and the Return to Prosperity, which I've been listening to on audio. So, Dr. Laffer, well welcome again, thank you so much for joining us. Speaker 2 00:01:59 Thank you, Jack. It's a real pleasure to be with you. Speaker 1 00:02:02 So, okay, let's start off with the Laffer Curve. Uh, the Smithsonian Institute has the napkin where back in 1974, hard to believe it. I don't also gonna wanna know what you do to keep looking so young. Um, you outlined what, of course, became known as the Laffer Curve. Can you tell us, explain briefly, uh, for the uninitiated, uninitiated, what is the Laffer Curve and maybe a bit more about the circumstances, but behind that famous napkin? Speaker 2 00:02:34 Well, the Laffer Curve precisely is when I stand up and then turn profile. That is the Laffer Curve that you see in the profile there. No, seriously, the Laffer Curve just shows the relationship between tax rates and tax revenues. It, it's a very straightforward thing. I didn't invent it. It was named by a guy named Jude Wanniski. He listed, of course, as the Laffer Curve. And, uh, it's been around for at least a thousand years. They know it was in the mu edema by Iben kdo and references throughout time, but it'd been forgotten, uh, in the fifties and sixties and seventies in tax theory at least, that had been almost totally, completely forgotten. And what it does is it shows that, you know, there are always two tax rates that are associated with the same tax revenue. This is now, this is a pedagogic device. Speaker 2 00:03:22 I'm gonna describe to you not a literal numerical representation of some country, but a bottom line is it, it at zero taxes, you're not gonna collect any government revenues. You may have a lot of output and a lot of production, a lot of income, but it a zero tax rate. There'll be no revenues. And likewise, at a hundred percent tax rates, uh, there will also be no revenues. 'cause there's no incentive for people to work or produce. And so therefore be no revenues. And between those two points, uh, what you find is as you lower tax rates from the high level there sooner, they, someone will start to work and start paying taxes. And likewise, if you raise tax rates at the lowest point, you'll get start getting some revenues as well. And they'll, it'll map out this curve. I, I did it with a very linear demand curve. Speaker 2 00:04:05 So it's really simple. Uh, and I just did it as a pedagogical device to show to my students that there are two effects taxes have on revenues. One is the arithmetic effect, which is obvious, is if you raise tax rates, you collect more revenue per dollar of tax base. But then there's the economic effect, which if you raise tax rates, you reduce the incentives to produce, and there'll be a smaller tax base. And those two always work in opposite directions. And sometimes, uh, the tax rate effect works, and you're in the normal range of the lfr curve, and sometimes the tax, uh, the tax base effect works dominates. And then you're in the prohibitive range of the lfr curve. And politicians had forgotten all about this. And so they assumed every time you raise tax rates by 10%, you would get 10% more revenues. And that, that's just plain not true. Uh, now sometimes one win, sometimes the other, we have to measure to do that. But this is just to illustrate a principle, uh, to politicians so they don't go way off the deep end. But as you can see, they still go way off the deep end <laugh>. Speaker 1 00:05:10 Yes. And it looks like they're gonna go even further off of the deep end and take us, um, with them soon. You, you'd mentioned Jude Wanniski. And, uh, this upcoming interview ha re-inspired me to go back and reread, um, Jude's book The Way the World Works, which I, I was delighted to see. You called one of the, the greatest, if not the greatest book on economics ever, ever written. Uh, and I had first read it at the, uh, time when I was, um, uh, the senior writer for the National Commission on Economic Growth and Tax Reform. And I had the, uh, the opportunity to write their final report. And my biggest takeaway from that experience was, um, this chart, which we included, which showed the fluctuation of the top, uh, marginal tax rate throughout the decades, and then also matched that against the, uh, the level of, of revenues as a percentage of G D P and what struck me, yeah, that was like 18%. It just, it really remained constant. And so is that kind of a reflection of, of the Lfr curve, and is that sort of 18% level something that, uh, that we can expect and that we should be trying to Speaker 2 00:06:39 You? If you remember Jude called that the Hauser constant, I think he called it back then the Hauser constant. 'cause that just straight flat line to, we went from tax rates of 92.5% to tax rates of 28%. And yet still it's always 20 18% or 19, whatever it is there. It's very, yeah, that's an illustration of it. I mean, that's an illustration of the two effects. And uh, and if you got into that illustration now, if you did a time series analysis of that curve and tax rates, you, you would find that the Laffer Curve was alive and well throughout the whole period there. Whenever you rose to raise tax rates in that one. Alright, you reduce the tax base by at least the same percentage and didn't collect any more evidence, why on earth would you ever raise tax rates? Why would you do that? You just don't like rich people. I love rich people. My problem is with poor people. And my problem is I'd like to see poor people become rich. Not rich people become poor, is the way I'd like to see the world go. Speaker 1 00:07:36 Yeah. Well, and of course that's, Speaker 2 00:07:38 Yeah. Speaker 1 00:07:39 You know, we, we are going to continue to replenish the population hopeful. We're gonna continue to have young people, um, graduate from college or not decide not to go to college, start off in the world, and they're not gonna start off rich. Right. And to the extent that we're also, uh, welcoming immigrants, we've always been a nation of immigrants. They're going to come here from Somalia or wherever, and, uh, usually they're, they're not going to come with a great deal of, um, of, of wealth. Sometimes they, maybe they will, uh, although why they would want to right now, I'm not sure. But, um, so usually, yeah, they're gonna be people coming from desperate circumstances. They are not starting out with, uh, with large wealth. And as long as that is always part of the equation, I think these, um, these kind of comparisons of inequality are really not taking, uh, into account. Speaker 1 00:08:32 It's not sort of a, uh, a institutional fundamental, uh, poverty level. There's so much mobility as, as you have, right. Rightly pointed out. But getting back to this, um, I, you know, I've been looking at this data, um, it, it seems like it's, it's pretty obvious. It seems like it's been demonstrated. Um, so yeah, getting back to your question, question, why would, if, if all you wanted to do, if all you wanted to do, you didn't really care about economic growth, you just wanted more revenues for government, you just wanted to spend more, wouldn't you want to have, um, 18% of a larger, you know, you'd get more revenues that way. So where's the disconnect? Are they looking at different data, uh, than, than we are? Or is it really as, I think we might argue at the Atlas Society, that it is a desire for the unearned, it is evasion and it is, uh, envy? Speaker 2 00:09:29 Well, it, it may be all that, but I, I don't think the taxes that are in their realm are viewed the same way. We look at taxes. Uh, you know, there are three, uh, you know, there are three things you sort of talk about, taxes and redistribution. You talk about it with regard to revenues. Uh, you talk about revenue, uh, taxes with regard to punishing people. And I think those are the three sort of ways we tax cigarettes now. And why do we tax cigarettes? Why do we tax speeders? Why do we tax people who drink alcohol? We, we don't do it. Uh, we, we we do it to get them to stop smoking, to stop drinking, and to stop speeding. Uh, and that's why we do it. Now in the same breath, uh, why then do we tax people who earn incomes? Why do we tax people who employ other people? Speaker 2 00:10:16 Uh, why do we tax businesses that make great products at low cost and make lots of profits? Now we don't tax them, uh, to get them to stop earning income. We don't tax them to stop employing other people. We surely don't tax them to stop making wonderful products at low cost and all of that. But just because we use a different logic in why we tax doesn't mean that the same consequences don't occur, JAG, they do. And so when you tax people who earn in income, don't be surprised that people earn less income. Uh, when you pay people who are unemployed or low income people, don't be surprised if that that also discourages employment. So taxing people who work and paying people who don't work is, is not a, a good path to provide prosperity for the society. It's just not Speaker 1 00:11:03 Yeah. And, and not necessarily a good path to provide revenues either. Um, I was, uh, revisiting what you wrote in, uh, return to prosperity, which I think you wrote in the Obama years, uh, in which you talked about the estate tax and that the, uh, that it's brings in, you know, maybe 1% of, uh, of tax revenues. Speaker 2 00:11:25 Well, it's, it's, uh, clearly in the Laffer Curve region, it's just terrible unless you catch some guy, uh, on an off day. And like John John Kennedy flying up to his sister's wedding up, up his cousin's wedding up in Massachusetts in the plane crashed very young with his wife, both of them, you know, then the estate tax nailed them. I mean, really nailed them. But most people who plan, who are wealthy plan, and they don't get their money. I mean, it's just a huge expense that probably doesn't even cover the expense of trying to collect it and the costs that it is to them. It's just a ridiculous tax. I mean, you can earn your income, you can pay your taxes fair and square. You can take that money and go to Vegas. Uh, you can gamble, you can drink, you can smoke, you can corral. You can do all that. Speaker 2 00:12:09 And that's fine as far as the federal government's concerned. Go for it. It's your money. But if you wanna give that money to your kids, you rat. How dare you do that? I mean, you know, that's the only reason I work. I'm 81 years old, Jennifer, and the only reason I work is I've got six kids, 13 grandchildren, four great-grandchildren. And you may have kids, your friends may have kids, all of that. And there may be wonderful kids, but I don't wanna work for them. I wanna work for my grandkids and I wanna work for my great grandkids. And my, well, not so much my kids anymore, but I'm just joking, <laugh>. But that's the incentive there. And when you talk about redistribution, I mean, I look at these guys, EZ and Pickety and San Chava and these others and, uh, uh, Zuckerman and, you know, you see all that crowd of redistributions, it's such silliness. Speaker 2 00:12:55 'cause you know, whenever you raise that highest rate, I've got a book coming out with Brian Demetri. And, uh, you know, whenever you raise tax rates, if you look back at when taxes were high, what what you find happening is that the distribution of income doesn't get better. All they do is hide their income. And all that happens is the poor are just hammered. I mean, they started the big high tax rates in 1932. The highest rate was raised from 25% to to 63%. Is that a good enough raise for you? They really wanted to get, then they raised up then 79% by the time we got the end of the war in 1945, the highest rate was 94%. Now, what do you think happened to the poor, the minorities, the disenfranchised, everyone? It ruined everyone's lives. It was the worst period in human history. And that they want to go back to because they think that's when incomes were equal. Well, what you know is that when you do those taxes, if incomes were equal, it'd be equal to zero. So everyone suffered equally. No, that's not what we want. Speaker 1 00:13:54 Yeah. Um, so talking about going to, to Vegas and all of the, the things that one does in Vegas, um, in one of your books, uh, the Handbook of Tobacco, tobacco Taxation, uh, you, you wrote that tobacco policies should be levied, the taxes should be levied locally, not nationally, not internationally. And apparently the World Health Organization has a goal of worldwide 70% excise, uh, taxes on tobacco. And of course, our confidence in the World Health Organization, uh, has been a bit shaken over the years with the handling of, of the pandemic. Uh, and, uh, you know, the, the policies that they want us to follow again at, um, these, these larger national or even international levels. Um, why is it important for us to be, uh, trying to, to locate taxes, uh, and the regulations even at the most local level? Speaker 2 00:14:57 You know, the tobacco taxation book is one of the fun ones I've ever had. I, I'm not a smoker. I, I'm not a big fan of combustible tax, uh, tobacco products. I, I, I, I don't like lung cancer. Uh, I don't, I think there are a lot of very associated diseases with it there. So when they asked me to do the book, I would whoa, yeah. <laugh> me full. But they gave me full authority. You know, why I would do such a book is very obvious. I mean, there is no product on Earth that has in every different form, shape, way, country, every, they've tried everything with regard to tobacco taxation. I mean, they tax cigarettes per unit in Poland. So they got six foot cigarettes with little dotted lines where you could cut the cigarette <laugh>, you know, and smuggling in Ireland, they raised the taxes in Ireland, smuggling. Speaker 2 00:15:42 The revenues went way down dramatically. And everyone still kept on smoking the same amount, although it was all contraband illegally. So, you know, this is just great, great. They had the one there that, uh, they, they did, uh, uh, smoking to cigarette tobacco, but not cigar tobacco. So they packed cigarette tobacco in cigars. And so they'd slice 'em open. I mean, it just, the, it's the miraculous wonders of the human, uh, ingenuity. That just is amazing. You know, they did it by states. You can see it all the way, and it's just great stuff. So that's why I did that. But it really illustrates all the principles, all of 'em really clearly. It's just beautiful, beautiful stuff. And, uh, you know, and, and the one I'm gonna mention to you here, and I, I hope your, uh, friends who are on the line, uh, uh, understand, but they have a product. Speaker 2 00:16:29 Philip Morris International has a product coming out, not coming out. It's been out for nine years now. Uh, it's called, I quotes. It's called a heat stick. Now it's a warm tobacco product, not a combustible product. So therefore, the carcinogens are really low now. It delivers the flavor and the nicotine. Someone should go there and look at the science and P m I website over there in Anne Switzerland. And look at this thing. 2020 5% of all of Japan have shifted to now, uh, uh, uh, non-combustible, uh, warmed tobacco product, getting the nicotine, getting the flavor, but not the carcinogens. And you should see what's happening to this. Now, the World Health Organization, Billy Gates and his buddies are all against it, but, you know, this is the type of ingenuity we need to find is fine, you know, healthy products. I mean, uh, you know, there are a lot of things out there that just need to be made healthy with that information. Speaker 2 00:17:23 And tax policy can influence that and does. But you know, when you have this big clump of a wet blanket place and everything, you allow for no variety, ingenuity, or any of that stuff. So I, I, I love doing the book. I just loved it because it was so fascinating. But as I said in the introduction, I made them sign a thing that I had total authority over the product, over the, over the content that, you know, my mom died of lung cancer. She was a smoker. Three packs a day. And I mean, look at the, the tobacco, the cigarettes didn't pop into her mouth light themselves and force it to go down her lungs. I, I, I know she had choice on that. Uh, but I still don't like 'em. Uh, but the pro, I mean, the, the, the responses there, I mean, that tobacco taxation book, I didn't know you even knew about it, but that was one of my technical pieces. And, you know, you'll love, I mean, that stuff in there is really fun stuff. Speaker 1 00:18:15 It really, it really is. I, I would highly recommend it. And, uh, maybe if we can, um, our gremlins here can put some of the links, uh, to Dr. Loffer's books in there. That would be, uh, that would be great. Some Speaker 2 00:18:27 Of 'em are reading boring, Jennifer. So I, Speaker 1 00:18:30 I, I learned, uh, that you and I, I fell down on this. Um, I didn't tell you that I was in Malibu, so you didn't tell me that you were coming to Malibu because I would've hosted a, uh, party for you. And of course, you were coming, maybe not back to Malibu, but you were coming back to California because you left California, uh, and are now in the city where another one of, uh, the Atlas Society's supporters and a previous webinar guest, um, Andy Puzder, decided to, to call folks. I got him Speaker 2 00:19:02 To move here. I got him to move here. Speaker 1 00:19:04 Okay, look, this is such a Speaker 2 00:19:06 Small, I've know Danny p for 40 years now, 35 years, and I got him to move here. It's so, I mean, as Larry Speaker 1 00:19:12 And I failed to get him to stay in California. So now we know, you know, who really is, lemme Speaker 2 00:19:16 Give you a great quote from a, from a, from a national resident, Larry Gatlin, if you know the Gatlin Brothers, sure. Uh, it ain't rocket surgery. <laugh>, we have no income tax here, either earned or unearned. We have no death tax. No gift tax. We have the eighth lowest property taxes in the nation. Now we do have big sales tax. That's true. Alright. But you know, this is the third lowest tax state in the nation. I think the lowest. I mean, what's not to love? Now we don't have the buildings of New York City. We don't have the beaches of California. We don't have the sailfish fishing down in Florida. We don't have the big mountain with the faces up like South Dakota does. But, you know, we're the fastest growing state, one of the fastest growing states in the nation. One of the lowest property, big surplus. Uh, our pension funds are fully funded. Uh, we've had the biggest improvement in education of any state in the nation. Fourth grade math reading, eighth grade math, reading. And we've had the biggest reduction in the differences between, uh, black and white educational outcomes of any state. But other than that, we're really rotten. I mean, we're not very good. It's just exactly what Speaker 1 00:20:21 You <crosstalk> and you have the go, you have the music. So we have that. Speaker 2 00:20:24 I, I do love the music. Do you? No, you're not, you're not a country western person. Speaker 1 00:20:28 Uh, no. I am. But, but I, I just still can't let go of my Malibu view. And I feel like somebody has to main Speaker 2 00:20:36 Here. So are you in point doom, or are you in point doom, or where in Malibu? No, Speaker 1 00:20:39 I'm actually really close to, to Pepperdine, so Speaker 2 00:20:42 Oh, really? On the hills. I'm just, Speaker 1 00:20:43 Yeah. On the hills, looking out at the ocean. So that's why next time Speaker 2 00:20:48 My fav my favorite singer of all time was at Point Doom on the beach there. Do you know Linda Ronstadt? Of Speaker 1 00:20:54 Course Speaker 2 00:20:55 I did. Lu By You. I loved. Oh, I just think she's wonderful. I'm in love. Uh, you know, I did Jerry Brown's Flat Tax when he ran for President Jerry's one of my dearest friends. And, uh, you know, he used to date Linda Ronstadt, and I've got some great stories, but that's probably for another podcast. But, uh, I mean, yes. Let me tell you what Jerry Brown ran on, just so all of your friends can see it. It ain't Republican, it isn't a Democrat, it's not, it's economics. Jerry Brown ran on getting rid of all federal taxes, all of them. Alright, well, one exception. He, he kept the sin taxes. Um, and, and the reason we have sin taxes is not so much to raise revenues as it is to change behavior. I jokingly say we Americans don't like drunk people smoking while we shoot each other. <laugh>. Speaker 2 00:21:42 But then he got rid of all had two flat rate taxes. One in business net sales. If you're a Democrat, you call that value added. And one in personal unadjusted gross income, again, from the first dollar to the last dollar rates, no deductions, no exemptions, no exclusions. Two flat rate taxes. If you did that, static revenue neutrality. Now this replaces all of 'em. Income tax, capital gains tax, the death tax, the payroll tax, both employer and employee Medicare, Medicaid taxes, excise taxes, tariffs. It gets rid of everything. If you did that, you could have a tax of 11.8% on each of those would replace all federal, all of 'em included the gas tag and all that stuff. I mean, what's not to love. So he ran, he raised it 1%. He went to 13%. We went from eighth in the race in the Democratic primary in 1992. Speaker 2 00:22:30 We went from eighth in the race Jag to we to a second in the race. We had that blue-eyed fellow from, from Hope, Arkansas. And our crosshairs, we had that guy, we just won the primary in Oregon, and we just won the primary in Connecticut. We're coming to New York and California, and we had him dead to rights. The polls were closing. We were just gonna smash him. And then Jerry announced that Jesse Jackson's his running mate. And somehow that didn't work out well in New Yorker, California. But, but bottom line, we still got the second largest number of delegates in the Democratic primary in 1992. I mean, everyone loves good economics. Everyone does, except for the politicians. 'cause then they don't get to control yet. Speaker 1 00:23:10 And yet, you know, with Clinton, uh, winning that wasn't, um, something that you were, that distraught o over, I mean, you, as you mentioned before, you are not a partisan, not Republican, not Democrat. You've never been someone. Speaker 2 00:23:26 But you can't vote for George Herbert Walker Bush after he raised taxes after Reagan. I mean, come on. No, I, Speaker 1 00:23:31 You Speaker 2 00:23:31 Know, I, I voted for Clinton. I Speaker 1 00:23:33 Worked for him. So, you know, well, Speaker 2 00:23:36 That doesn't mean you have to, Speaker 1 00:23:36 Like I didn't have, I didn't have to. I, I, that was the, uh, that was before my time when he, he, uh, reneged on Peggy Nan's beautiful line and was Speaker 2 00:23:48 Rovers. That was, I was the guy in the TV thing that night in the convention, read my lips, no new taxes. That's the line you're talking about. Yeah. Sam Donaldson had me send Line and all the here, and that was his promise to me personally. And, and he broke it. And, you know, look at, I can understand politicians, you know, I never thought of them as the straightest shooters in the world. But when you do something like that, I mean, that's just a little hypocritical. No, Speaker 1 00:24:15 Uh, yeah. I, I agree. And that's why, you know, we, we love Grove Norquist. Um, he's been on this show and, uh, he's just been such an important, not only advisor to the Atlas Society, but he's working absolutely every day in every single state. And that tax pledge, I mean, has just been such a powerful institution, really. And I think, you know, in a way, what you're saying, even though I was sad, I lost a job. Um, but, but Speaker 2 00:24:44 You've done enough. Good job. Much better. You're the executive director of the A society. Speaker 1 00:24:48 Yes. And I actually went on from, from that job working at the White House to working for, uh, Ted Forman. And that's how I met. Now, Speaker 2 00:24:55 Ted Forces is my classmate at Yale. He's one, and I'm a share, I'm an owner, part owner of some of his companies, of a bunch of his companies. I see. And talk to him all the time. I knew all three Forman brothers. Yeah. And they were great. Uh, you know, just super. I mean, what more could you want? I mean, you a great, that's great job. Speaker 1 00:25:14 True. That's true. Um, all right. So, you know, not understand, somebody, uh, went back on the most important pledge and that, you know, uh, <crosstalk>, but Speaker 2 00:25:26 He thought it was wrong to have made the pledge. The, the problem with him is he thought that the mistake he made was he made a pledge. Yeah. Rather than, the mistake was he didn't keep his pledge. That's the problem. Uh, Nancy Reagan, um, Michael told me this story. She came down and, you know, uh, she said, oh, did all of you hear the news? Uh, Michael said that George Bush just raised taxes. Did you hear that? And she just, Nancy goes, he's our Carter. Speaker 1 00:26:02 Yeah. <laugh>. Speaker 2 00:26:06 I mean, you know, there's nothing worse than one of the, he wants the Speaker 1 00:26:09 Who? Dead Speaker 2 00:26:09 One. You know what? Well, they're all dead now. I mean, come on. Someday you'll hear this quote from a, from a Atlas Society video archive, and we'll all be dead. But it'll still be funny. Speaker 1 00:26:21 Um, yes, I, I agree. Um, so, but you know, I, as I mentioned, re-reading, uh, your return to prosperity and listening to your very compelling argument about, uh, against tariffs, I mean, even against not supporting tariffs against people that whose policies were, were, we find, find very objectionable, that we wanna pressure them. That you're saying, you know, tariffs aren't the way to go trade is, is the way to go. Uh, now then you also, um, you advised, uh, president Trump, uh, and we tend to think of his trade policies as, uh, very different from the ones that you recommended. So maybe is that a misperception? Speaker 2 00:27:08 No, no. This is, Speaker 1 00:27:10 Or is that, yeah, Speaker 2 00:27:11 Let me go through this with you if I can. And trade is my specialty area, as you know, I, my book International Economics, uh, is the big textbook in that. And, you know, did my dissertation in this area and all that. Let me, if I can say that trade is one of the most complicated, uh, arcane, uh, mathematical fields in economics by far. And it's very nuanced. For example, no one wants to trade nuclear weapons with North Korea. No, no one wants to do that. Uh, we raised all of our revenues for the federal government up until 1930. Not all of them, but a vast majority of our revenues, federal government revenues, came from tariffs. That's a perfectly legitimate use of tariffs there. What is, what you don't wanna do is use trade, uh, tariffs for trade policies to protect industries. Now, what Donald Trump did with his tariffs, and, and I'll, I don't know if you'll want two minutes of how he explained it to me. Speaker 1 00:28:10 Yes, please. Speaker 2 00:28:11 Let me give you how he explained it. He called me right at the beginning, and he called me. I talked to him a lot, uh, but he said, look at our, I'm a free trader. And I, I I, I told him, I've known him for a long time. I said, you know, I, I know that, uh, I know you are a free trader. He said, yeah. And I said, you know, anyone who runs an international company, the way you have the Trump industries through all the hotels, et cetera, has to be a free trader. I know of no, c e o of a major international company. That's not a free trader. I mean, just, they are, they always wanna find the cheapest places to source their supplies, the most expensive places to sell their products. And that's how they make it. And governments just screw that up and they make it bad. And I know that, and I, I told 'em that's very, very true. And plus I said, you know, anyone who's imported two foreign wives has to be a free trader. That was a joke. He did not laugh. That's, Speaker 1 00:28:59 That's a good one. Speaker 2 00:29:00 He did not laugh though. He, but, uh, but I said, yeah, a free trader. He said, but let me just tell you, uh, the problem I have is how do I explain to them that their tariffs hurt them? And us, you know, of the big countries, Arthur, we are the freest trade country. They're the big ones. Now, there's Isle of Man and Jersey Guernsey and Sark, and the, you know, whatever these are, uh, who are more free trade, but we're the freest trade. And Japan and these other trades use protectionism all the time. You know, he said to sell a car that's road ready here in the US to sell it in Japan, so it could be driven on Japanese roads, would cost about $50,000 to get around non tariff barriers. It's just awful. They manipulate curds. They do do all this. And how do I get to them to get them to negotiate for your trade? Speaker 2 00:29:49 And you know what, he was making sense. He said, look, it, the only thing they care about is their exports here. So I'm gonna threaten the pajamas out of 'em. I'm gonna threaten their markets here and get them to come. And if you look at what happened with the U S M C A, or you looked at what happened with South Korea, even Japan, to some extent, they, they did do freer trade in that. South Korea did a lot freer trade. But he said, I'm using this as a tool to negotiate a better one. He is a negotiator. I am not. Now in the, in the one, uh, G seven meeting that he had in Ottawa, he was going to Singapore to meet with Kim Jong-un. Remember when he met with Kim Jong-Un, uh, right head of North Korea? In, in there, he had the lead. Speaker 1 00:30:29 The body language in that meeting was really something Speaker 2 00:30:32 Watched. Well, there were two bodies there. They, they're, they're biggins <laugh>. And I shouldn't talk that way. That's, that's body shaming. I don't mean do that to people, especially if you could see, well, I'm should be body shame more than anyone. You Speaker 1 00:30:46 Look marvelous. Speaker 2 00:30:47 Well, thank you. Thank you. Marvelous. Thank you. Uh, but he said, he said the G seven and he apologized to everyone there, the other six members there, you know, I've gotta leave. I've gotta go to Singapore, and please forgive me, but I've got one thing to tell you. And this is true. He said, I have one thing to tell you before I leave. And just one thing I will right now promise to get rid of all tariffs and non tariff barriers in the US if you guys will agree to do the same thing in your countries. And they looked at him, went, Speaker 2 00:31:15 I mean, this man, I believe is a free trader, but he's a negotiator. Mm-hmm. <affirmative>. And, you know, trade is so nuanced that, you know, when you look at trade, what you wanna do is look at what you expect the outcomes to be now, to protect a domestic industry so you can get profits in a, uh, in, in a very inefficient company or business. That's wrong, wrong, wrong. And when you ever hear me talking about this, that is what I'm talking about is protectionist of domestic industries, but using it for political purposes, using it for revenues, for running government. What, you know, and if I can just finish on the trade stuff without China, but Jag, without China, there would be no Walmart. And without Walmart, there would be no middle class or lower class prosperity. Have you ever gone into a Walmart and I'm a gardener, and they had all these different types of shovels, long skinny, one, big fat one scoopy ones, all these things there. Speaker 2 00:32:09 And they're beautiful. I mean, they're perfectly made 20 bucks each. I just tried to sit back and think of how much would it take me to get something that's a 10th? The quality of those things. I mean, trade is wonderful, and having foreign investments in our country is wonderful. China owns about 1.2 trillion of our national debt. Now, let me just, this number. They earn about 1.2 trillion of our national debt. Uh, they pay us to lend us the money. Their interest is way less than 1% inflation's much higher. So they're giving us the money and paying us for taking it. And how do they get rid of it? They don't want that debt to go to zero in value. They've got all these companies in, in the US operating, they're our biggest cheerleaders on having us do, you know, be very careful because without China, we're in real trouble. Speaker 2 00:32:58 I mean, we just prosper enormously. Now, do we need to get agreements and military and political stuff? And, but, you know, be very, very careful how you treat them. And, and make sure you don't pow yourself in the head in some sort of gungadin moment of falling down the dung heap dead. I don't wanna kill American no matter what the principle is. And I'm really worried about this administration. And I was not worried about Donald Trump. I think Donald Trump un understood exactly what I just told you. And, uh, you know, and I'm a free trader beyond free trade. Uh, and I thought he did a great job on trade and trying to bring them to the table to get them to cut their tariffs, and they're non interpreted. Speaker 1 00:33:42 That's a really important distinction that I, I think too many people just, uh, lose. That he, he was a negotiator, a deal maker, first and foremost, and that this was, he scared part of he change Speaker 2 00:33:52 The chambers outta me. Have you ever negotiated Jack? I, I, yes. I'm, I'm, I'm a wuss. I'm, I'm a wuss. You know, the first thing I do is once a negotiation starts, it gets tense there, I start getting all nervous. I roll up, I curl up in a fetal position, I crawl under my bed, and I start crying. If I have a fallback position, I immediately blurred out my fallback position before the <inaudible>. I'm no good at good. But he is good. I mean, he's really Speaker 1 00:34:16 Good. That's, that's, you know, uh, that's something I will keep in mind. Uh, when we eye down the road bringing you on board as, uh, another senior scholar at the Atlas Society. I will, I will file that away. And, um, Donald Trump, Speaker 2 00:34:29 You'll be amazing. Why don't you have him on? Speaker 1 00:34:32 Uh, well, we will, I'd love to. I and among various, okay. Do you have his number? <laugh>? Speaker 2 00:34:39 I do, as a matter of fact. Okay. Speaker 1 00:34:40 Alright. Well, we'll, uh, talk about that afterwards. Um, and one of the first questions that I, I would, would ask him, I don't know if you know this, uh, art, but hi, what he was asked in April, um, of 2016 by U s a today, what his favorite book was and who his favorite author was. And he mentioned, uh, aand and the Fountain Head, and gave a sort of involved answer about how, for him it related to not just building things where you could understand why he liked the book from that, uh, regard, but to beauty and to inner emotions. And anyway, and then I would get friends, you know, even friends that were relatively, uh, non antagonistic to Trump, like John fun saying, oh, you know, he never read the book. I said, you know what, if you were going to just on the fly, come up with a book that you know, you wanted to tell an interviewer that you had read, you would not say, I'm Rand. Speaker 1 00:35:38 Right. Because she's relatively so, she's controversial. Um, but I I, I bring that up because we have, speaking of senior scholars, and I wanna get to these questions. Um, our senior scholar, Richard Salzman, who we actually had reunited, he and I, uh, at your ceremony at the one that Steve Forbes had hosted across from, from the White House. So Richard, uh, Salzman has a question for you, and that is, have you, uh, Dr. Laffer ever thought about the rather close relationship between Ayin Rand's theme and Atlas shrugged, uh, shrugging and, um, the prohibitive range of your tax curve? In short, the top producers will shirk it or quit if you punish them. Speaker 2 00:36:29 Yeah. It, it's all the same principle of incentives. I mean, economics is all about incentives. And, and there are two types of incentive. If I can go to the 30,000 foot pace mm-hmm. <affirmative>, there are two types of incentives. They're positive incentives and they're negative incentives. Uh, by way of illustration, if you feed a dog, you know exactly where the dog will be at feeding time, right where you put the bowl. Okay. Positive incentives tell you what to do. Then there are the other incentives, the negative incentives. If you beat a dog, you know where the dog won't be. It won't be where you gave it the beating, but you have no idea where it's gonna go to. It's gonna, ah, well take off. Likened negative incentives tell you what not to do. Do not put your hand on the hot stove. The hot stove doesn't care where your hand is just not on it. Speaker 2 00:37:20 So negative incentives tell you what not to do, and positive incentives tell you what to do. Now, the government can influence these incentives dramatically for if you tax something. Uh, people don't like that and they avoid taxes. Now, the thing is, you don't know how they avoid taxes. Uh, taxes are a negative incentive. They'll cause people to evade, avoid, otherwise not report taxable income, move to different jurisdictions or just go outta work. But you don't know how positive incentives tell you what to, to know what Ayn Rand does. I think beautifully. Although she, she's wordy <laugh>, she got a lot of words in those books. They were royal big fat things, and I'm just an old mathematician. But she describes these incentives so beautifully. The, the one I loved most of all was, uh, um, uh, a Harrison Bergeron, um, uh, what's his name? Sure. What? Harrison Bergeron? Um, uh, Speaker 1 00:38:16 Yeah, it was, it was a play. I think it was also made into a, a, a movie about putting disincentives on the abler the people, right? Speaker 2 00:38:26 Yeah. And I'm an older person. What? Yeah, it's Kurt Vogan. It's Kurt Vogan. And there he has, we had to put little, uh, neo diodes in your brain to stop you from being smart Speaker 1 00:38:38 Rights. Figure Speaker 2 00:38:38 You, if you're pretty, you know, shorten your legs, you chop your knees off and put a little blend in there and make it shorter. Stop. I mean, it's just a beautiful, beautiful story about the whole thing. And that is Ayn Rand, and it's the <inaudible>. It's the, it's the, it's the human spirit and it's the love that you, I mean, yeah. How could you not? I Speaker 1 00:38:58 Mean, her, her love, her love stories. I think also the, the romance, the, the glamor, the, the sex appeal. Um, all right, we, I am gonna get in big trouble if I don't get to some of these questions. 'cause we've got a ton. We have record, uh, registrations, uh, on both, um, YouTube and Facebook. And, um, and Speaker 2 00:39:20 You know, I don't even have a computer, so I don't do email. And I have a flip phone. Know, Speaker 1 00:39:24 You don't have to have a computer. It's like, I don't even Speaker 2 00:39:26 Know what YouTube or Facebook is, but go ahead. Speaker 1 00:39:29 All right. Jim wants to know, do you think we will see the seventies style inflation with the massive dump of money and, uh, tax hikes by the government? Speaker 2 00:39:38 So far, I do not see any of that happening. Nor do I really understand fully the logic. This is a different world than the 1970s. When I wrote that piece in the journal, the very bitter fruits of devaluation, I said, we'd have double digit inflation. I was, I got Samuelson and Friedman and all of 'em told me I was way wrong. I didn't understand economics. And we did, you know, when you have those types of things. But the mass dump of money today is a very different money than we had in ancient times where you would've had inflation if there'd have been a quadrupling of the gold supply. Believe me, you would've had inflation just like Spain did, uh, in the 17th century. I mean, you would've had exactly that. Uh, but what's happened this time is the huge increase in the monetary base is the Fed issues, liabilities, $4 trillion worth of liabilities, deposits held at the Fed, uh, and pays a basis, 30 basis points interest. Speaker 2 00:40:29 And then they buy government bonds from the banks. Four trillion's worth, they yield 30% interest. So I don't really understand how an issuing 4 trillion in debt and taking on 4 trillion in assets, the both of which are yield the same amount, has any effect on anything. Now, if you ask me what does cause inflation, I'm going to be honest with you, I really don't know. I don't know. But I do not feel any sense that this should be the cause of it. Uh, because we don't really have money in the old timey sense. Uh, we have now cryptocurrencies that come in and replace gold. So even gold prices are falling, which is falling gold. Prices is not a, a harbinger of inflation falling or very, very low interest rates is not a forecaster of high inflation. It's not, we don't have any of those inflation warnings coming. So my guess is, uh, I wouldn't be surprised if we had inflation, but I have no reason to expect it's coming right now because there's just no signup that that fair Speaker 1 00:41:28 Encouraging. Yeah. Yeah. No, it's encouraging. All right. This is a slightly technical question, but I think you, you'll get the gist of it. And it's the first one that was submitted, so must be asked. And also from a Donna Jeffrey Kivit, uh, he is writing that he recently heard you, Dr. Lafa, make a point that we shouldn't compare a stock, the national debt with a flow, the current year's G D P, you said we should compare G D P to another flow, the yearly interest of the debt. And whether you could elaborate, this is old. Tell me what that means. Speaker 2 00:42:04 This is old timey business one. You never compare a balance sheet item with an income statement item. And you never compare an income statement item with a balance sheet item. You compare flows with flows, that's income statement. And you compare stocks with stocks. That's a balance sheet. And when you look at the US federal government, it's no different. If you wanna do it, you should never look at debt to G D P. 'cause G D P is a flow and debt is a stock. If you look at that number, our debt's gone from 82.5% of G D P in 2017 or 18 or whatever it was. Now to 115% of G D P. Oh my god, I wanna jump off a cliff. But if you look at US debt to wealth, I don't know what the number is, but it's something like 16 or 17%. Speaker 2 00:42:50 It's high and it's going up and it's clearly not good, but it's not jumping off the edge of the cliff. Now the one that's shocking is if you look at g a debt service, which is the interest we had to pay on the debt, and compared to G D P, it's half the level. It was in 1981 when coming right out of the hyperinflation there. Now admittedly, interest rates are lower, but then don't you borrow more money at low interest rates? Debt is not the problem we have. The problem we have is redistribution. Can I, can I spend a second on this with you? Yes, please. Because it's just so, but it's so don't understand it. Redistribution occurs when you take from someone who has a little bit more and you give to someone who has a little bit less. You with me? Yep. You take from someone who has more and you give to someone who has less, and that's called redistribution. Now, by taking from someone who has a little bit more, you reduce their incentives to produce and they will produce a little bit less because you took a little bit more from them who made more you with me? Speaker 1 00:43:53 Yep. Speaker 2 00:43:54 Now, by giving to someone who has a little bit less, you provide that person with an alternative source of income other than working. And so that person too will produce a little bit less, this is just math, but I'm trying to do it in fun, intuitive terms. You follow me Speaker 1 00:44:10 Completely. Speaker 2 00:44:11 The theorem is really clear. No acceptance. It's a theorem. Whenever you redistribute income, you always reduce total income, period. That's math. And there's no exception. You can be liberal, you can tall, short, fat, anything. You wanna be old or young. It's a theorem. Now, the dilemma from this theorem is beautiful too. The more you redistribute, the greater will be the loss in total income. You, you follow me? Mm-hmm. <affirmative> at the first one is, whenever you redistribute, you lose total income. The dilemma is the more you redistribute, the greater will be your loss in total income. And the limit function of this theorem is beautiful as well. The limit function is if you were to succeed in redistributing income completely so that everyone came out exactly the same, the theorem here says there will be no income whatsoever. Now, let me explain that to you if I can. Speaker 2 00:45:08 So it's fun to, to your group. In order to get everyone to come out exactly the same, what you have to do is you have to tax everyone earns above the average income a hundred percent the excess. You, you with me? Yep. And you have to subsidize everyone below the average income a hundred percent up to the average income. Now, if you actually did that, Jennifer, if you actually taxed everyone above, made above the average income, 100% of the exits, and you actually subsidize everyone below the average income up to the average income, I'll stipulate today, counselor, you know, everyone will come out exactly equal at zero. There will be no income. This is math. I don't give a damn what your ideology is. You can't, the, the, the, the emperor sitting on the beach, the tide's coming in, he's gonna get it's meth. You can be Paul Krugman, you can be ses, you can be pika, you can be all these guys. They don't know straight up from s they don't understand math. They don't understand these things. They are ideologues pushing a line. And I'd be glad to debate any one of these guys who claims to be an academic. You know, I was in all my classes. They were all in my classes doing tell me I got better grades. And they didn't, in the classes I taught, they didn't do all that well either. I mean, you know. Well, have Speaker 1 00:46:23 You ever had the opportunity to, Speaker 2 00:46:24 Uh, well, they won't, they, they won't debate Sez was going to, and then he, uh, no, I would not do that. No. I mean, they won't for good reason. I mean, I've got this book coming out, which is on which, which is on when taxes we're high. Mm-hmm. <affirmative>, it's, it's, it's, as I said, it ain't rocket surgery. It's obvious. And, you know, let me, can I one second to go through what the results are. Whenever you tax a product, the price of that product rises to the consumer and the price of that product to the supplier falls. So taxes raise it. What they look at is they look at pre-tax, uh, pre reported distribution of incomes and show that the pre-tax reported distribution of incomes improve, quote unquote, they say improve, uh, when taxes are high. All that means is that no one tax, no one reports their income anymore. Speaker 2 00:47:15 They, I mean, they, they find lawyers, they find accountants, they find deferred income specialists. They find favor grabbers, lobbyists. I mean, when you see a group of people hanging with Obama wma, a group of 'em, don't think for a moment those are street people trying to explain to Obama what it's like being poor. No, it's not. These are tax guys from Goldman Sachs flipping back and forth doing their, their trades, their their straddles, their whole stuff. You know, low rate, broad based, flat tax. Jerry Brown. There's nothing wrong with Warren Buffett doing what he does, but Warren Buffett in his letter said he paid 7 million in taxes in the year. He, according to Hague, Simon definition made 12 point a half billion. His effective tax rate was six one hundreds of 1% legally all great. I love Warren Buffet, I love, and he's just doing what he should be doing. Speaker 2 00:48:04 But if we had a low rate, broad based flat tax, he'd have paid what, 1,000,000,005 in taxes and which is, and he would've loved it more, and he just wouldn't have had to use all the shelters and all the stuff there. These guys don't understand how you do a tax return. They don't understand this stuff. They're just, I, I just, and then we subsidize them with tax exempt in industries, which are called universities. They're 5 0 1 c threes. Besides, they don't even know any of their contributors. They've never responded to an incentive in their life. And they sit there, I think as income, say income at Berkeley, it's like $400,000. If you look at the Berkeley spread. Hello, help us get rid of all of these tax exempt organizations, have one lower rate, broad-based flat tax and be done with it. And never, Speaker 1 00:48:47 Never, okay. But until we do that, everybody, yes, until we, we do that. And, and I, I'm all with, uh, with Dr. Laffer on this, but until we do that, remember the Outlaw Society as a nonprofit and you want to lower your, um, Speaker 2 00:49:02 But, but they would give to you Jag because of what you do, not because you're taxed. Speaker 1 00:49:07 No, I agree. I'm just, I wouldn't be doing my fiduciary duty if I didn't, uh, put, put in a plug. But, um, but I agree with you. All right, we got a question. Just, uh, Thomas Wrights, uh, he was asking, where is, uh, Dr. Laffer located? Well, that's good because we were talking about it back and forth. He thought you were located in Montana, but no, he is located in Nashville, Tennessee, along with our beloved Andy P Okay. Uh, Arthur Holtz, another one of our donors, um, says, considering the incredible and disturbing governmental departments and infrastructures built up around huge tax revenues, what is the best way to, to reverse course? I mean, would, would a, would a flat tax help us to, Speaker 2 00:49:55 To reverse? No, that, that one, the degree for, for revenue would always be there with this Arthur Holtz, did you say it was? Speaker 1 00:50:02 Yes. Mm-hmm. Speaker 2 00:50:03 <affirmative>, you know what a cool question. The way you handle th this issue is the way you handle every other issue in economics. It's all about incentives. Jag. Now, if you're a politician, uh, what are the consequences of you raising taxes and collecting more money? None. Absolutely none. I mean, if you look at two companies, company A and company B, company A has all of its, uh, officers and directors, uh, get paid very high salaries. They have no stock options. They own, own any stock of their own company. B is the exact same company, but the officers and directors have low salaries. They got a lot of stock options. They all own a lot of stock. Which one of those two companies would you rather invest in? The one where the incentives are aligned, our incentives with our politicians are not aligned. You remember Jimmy Stewart, Mr. Speaker 2 00:50:53 Uh Smith goes to Washington, remember the movie? Oh, it was wonderful. Comes there with a blah, blah, blah, blah. He just, oh, he's just imbued with, you know, helping a better altruism, all crying out there. And imagine he, he lowers the unemployment rate. He lowers the poverty rate. He lowers inflation. He creates prosperity. The stock market soars. The enemies of America pushed offshore. What happened to that congressman's salary? Nothing. Now his evil twin comes in, he comes to Washington, he does just the opposite. Poverty rates go way up. Little kids are committing suicides in the streets. The orphanages are stuff full of people. The fields are dry. The prophets of the country, the enemies are coming up on the beaches of America. What happens to that guy's salary? Nothing. The problem with this society and the problem with democracy, if I may say, and the real problem is these people are not incentivized to behave correctly. Speaker 2 00:51:51 And how would you get them to incentivize, behave correctly, put 'em all on commission? You know, Ja jag, imagine 3% growth. Congress, you get your salary, Hey, it's yours. Got 3% growth, 4% growth will double your salary. Mm-hmm. <affirmative>, 5% growth. My God will triple your salary. 2% growth. I'm sorry. You're not gonna get any checks from us. 1% growth. You owe us the money back. They would never vote the way they vote today. You know, they vote today. They get all sorts of slings and woggles and ugal of things. And by, you know, corrupt, I use corrupt. Not in an illegal sense. Corrupt. And a, uh, morally an IAnd sense. Exactly. It's corrupt to the fundamental core. We need to put politicians on commission just like we do everything else. An incentive structure should be every department and agency all the way down. Make 'em simple enough so that people can understand them and follow them. Speaker 2 00:52:47 You don't want 'em so complicated. So it takes a trial lawyer to get it. You want to make it really straightforward. That's what you do. And if we don't put politicians on commission, democracy will not survive very long because they're gonna make extra money. And they're gonna do it by corrupting the system, not by doing. Look at this administration. Look at the corruption that exists, and I mean, the corruption in the core. Look at it in Russia with Putin. He's the wealthiest man in the world. Duh. He's got the most guns of any man in the world. That's, we don't want that you tell your society. The key thing we need to do is put politicians at every level on commission, and then you will find the society and democracy really working. There's nothing wrong with shareholders voting a c e o out of office, but the c e o should be incentivized to do well. Do you understand that? No, but that's really something that no p no economist is talking about. None of your It's true. It's just true. None of on your shows here have ever talked about that. That's the only thing that's really, it's Speaker 1 00:53:48 Revolutionary, Speaker 2 00:53:49 But it's all the way down to the core teachers who teach well should be paid more than teachers who don't teach. Well, school administrators who bottom line dedication to excellence is demonstrated by the performance of their students should be paid more than those who don't. Students who do well should get grants that those don't, you know, just imagine you took the s a t scores or what they call act now or whatever they are, these things, alright? People in the top 5% of the S a T scores give $15,000 tax free, no questions asked people in the second 5%, give 'em seven and a half thousand dollars, no questions asked. None. Just there's the check. Can you imagine what would happen to you? Come home and, Hey dad, I just missed the top 5% by one guy getting in here. Son, what you did, grandma sitting there tutoring the little guys all week long. Speaker 2 00:54:36 You would spend fortunes developing an education. I don't give a damn if it's public school, private school, grammar tutorials, home school, any of that. What matters is excellence and reward excellence and let the competitive marketplace take it over. That's what you gotta do in education. You gotta do that in politics. You gotta do it in everything and all of your people that you have on this stuff. That's the answer. And that's what the Atlas Society of all people on Earth should be espousing. Is this, I mean, I talked to you about my dream of a low rate, broad based flat tax to provide the least incentive to aid, avoid or otherwise not report taxable income, the least place to w your stick, your income. But the bottom line is you need uncorruptible politicians and the only way you get them to be non-corrupt is pay them if they do well a lot. Speaker 1 00:55:24 Is your, is your next book gonna, um, have a lot on this topic or which Speaker 2 00:55:29 Of the books? I did this back in the 17, 1970s and eighties, you know, and I just, it just, it never gets traction. I mean, but Speaker 1 00:55:38 Alright, we'll we're gonna see if we can, we can change this. Uh, we're, we're running out of time. This is totally flown by. Speaker 2 00:55:43 I'm, I'm 81 and I'm running out of time too, Jack. Speaker 1 00:55:46 Yeah. Okay. That's, we, we'll we have to change that too. Did Speaker 2 00:55:49 I feel sorry for me? Speaker 1 00:55:50 Uh, I, I, well Speaker 2 00:55:52 They don't, I look like a victim. Speaker 1 00:55:54 Uh, no, not at all. And you do not look 81. You hardly look 41. And that's always been the case. Um, I wanna get a couple more questions in, including from our senior scholar, Richard Salzman, who says he, uh, agrees that tax rates matter, but isn't the real burden on the economy government spending, no matter how financed, if so, shouldn't that be the focus of, uh, su supply siders, um, or say, given a choice between tax finance and debt finance is the latter better because it is voluntary and less confiscatory. Speaker 2 00:56:27 Richard's got the two best questions. I mean, they really are. This is for, he's, Speaker 1 00:56:31 He's he's awesome. Speaker 2 00:56:32 He is awesome. I mean, this question is perfect and forgive me, Richard, I'll try to answer it the way. Yeah. Three things are important in policy. One is how you collect your taxes matters. That's why I want a low rate, broad based flat tax where I think it does all taxes are bad, some are worse than others. What you want to do is collect your taxes, uh, in such a way that it does the least damage per dollar of revenue raised with me. The second thing is government spending matters. Uh, you wanna spend in the most beneficial programs that you possibly can, uh, and go down the list there with the money that they have. So how you tax matters, how you spend also matters. And then the final thing is how much you tax and spend is when the, the last dollar of taxes collected does less damage. Speaker 2 00:57:23 Then the last dollar you spend, you stop already. You know, government can be too small and government can be too large. There is a very appropriate role for government in society, but that government should not go beyond that role. It's like everything else. And you know, how you collect your money matters. How you spend your money matters and how much total you spend and collect. Milton Friedman was totally correct when he said, government spending is taxation. He's right. Government doesn't create resources. Government redistributes resources. And for every dollar they give to someone, they have to take from someone else. What you wanna make sure is it's done in the rate range. And when it hits the level, you stop. And Richard, thank you for that question. Uh, and you gave my philosophy on that I am not anti-government. I'm not pro-government. I think there's a role for government, just like there's a role for electricity that's like the role for cars, like any other product in society. And there's, if too much of it's there, it'll hurt you too little of it's there. It'll hurt you too. Speaker 1 00:58:31 Agree. And Ayn Rand, uh, was not an anarchist by any stretch of the imagination. She believed that government had a role, uh, with defending our borders, with defending us against criminals, with courts to adjudicate different Yeah, of course. So we do need to fund those, those legitimate, uh, functions, but hopefully in, in a way that once Speaker 2 00:58:48 You give a person power in government, they have that power and they will then use it for nefarious reasons. They will be at the at, at the, at the altar of atu, unless you put 'em on incentives. Agreed And agreed. When I tell you that they, they've gotta pay a penalty when they spend your money if they don't spend it. Well, and they gotta be Speaker 1 00:59:07 Reported, I'm sensing of, of a platform for the next presidential, uh, campaign. That should be. Speaker 2 00:59:15 I tried this idea out with Jared. He didn't go for it. <laugh>. Speaker 1 00:59:19 Well, Speaker 2 00:59:20 He thought it was kooky and weird. Maybe you Speaker 1 00:59:21 Need to pick, you know, take it up with the big guy. So, Speaker 2 00:59:24 Oh, I do. I think it's, I did <laugh> Speaker 1 00:59:27 Well, we'll see, we'll see Ronald Reagan. Anyway, Speaker 2 00:59:29 Everyone and Ronald Reagan. Ronald Reagan loved it. Ronald Reagan loved it. But you know, my godfather was Justin Dart, as you probably know, if you remember Justin Dart. And of course he was Reagan's best friend. That's how I got the relationship I had with a, with Reagan, the real president. You know, I, I tell everyone, he, he had all the economists in the US on the stage, and he said, I'll take the little short fat one over there at wa. And, but the truth about it is not true. That's not how it happened. It's my godfather was his best friend. It's nothing's better than having privilege. I love it. I just love, love, love it. And, Speaker 1 00:59:59 And those relationships, those relationships are, Speaker 2 01:00:01 They matter a lot. Speaker 1 01:00:02 They, they do. They really do. And so that's part of our, our, uh, message to the young people to take advantage of all of the resources that we have at the Atlas Society, to join our book club, to join our social hours, to become an atlas advocate, to come to our gala. Um, it's not just about learning, which we are today, but also about forming those relationships that are, you just can't imagine today how, how much of a benefit that they will be in in years to come. So anyway, uh, for those of you who joined us today on YouTube, Facebook, zoom, thank you, thank you to all of the great questions from Professor Salzman, from, uh, all of the, the donors, existing donors, future donors. Um, if you enjoyed this work, please consider making a donation to the Atla Society. And most of all, thank you. Um, Dr. Laffer, this was really, uh, something I've been looking forward to for a very, very long time. You exceeded all expectations and my expectations were high. And I look forward to, to hosting you in, in Malibu, coming to visit you soon in Nashville. Speaker 2 01:01:11 Thank you, Jack. It's been really fun with all of you guys. Speaker 1 01:01:15 Thanks. All right, uh, everybody come back next week. We're gonna have Tim Draper, uh, the great, um, venture capitalist and, uh, Bitcoin proponent joining us. So we'll see you next week. Thanks everyone. Bye.