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I've always called it "the Laffable Curve".  That is, the entirely bogus economic "theory" (less "theory" than assertion) that cutting marginal tax rates increases income tax revenues.  It never was true, it was an insult to common sense that it was ever rolled out on a public stage.  Unfortunately, the result of that rollout  was further proof of the accuracy of Mark Twain's observation, "The problem with common sense is that it isn't very common."

So it was with no little amusement that today surfing the web that I ran across this item at Gawker:

Supply-side Hero Arthur Laffer Sued for Hyping Ponzi Scheme.  It was with some disappointment that I discovered it wasn't for his public policy prescriptions, but rather a purely privatized "investment plan".

Excerpts below the Doodlebug.

Laffer gave us the Laffer Curve and was a prime architect of Reaganomics; he's so dreamy to tax-haters that Newt Gingrich speaks his name, and touts his endorsement, with reverence. Turns out he's also—at least according to 52 investors who are suing him in Texas for fraud, negligence, and breach of fiduciary duty—a con man who lent his name to a Ponzi Scheme.

The plaintiffs accuse an investment fund called Laffer Frishberg Wallace Economic Opportunity Fund, of which Laffer was a principal, of fraudulently funneling investor dollars into a radio company called BizRadio that the firm's managers were tight with.


Laffer, it turns out, was a radio personality for the failing network at the same time his investment firm was funneling other people's money into the venture—along with his partner (and fellow defendant) Daniel Frishberg, he offered "top-level insights into the world-wide markets...using language and stories that everyone can understand and enjoy." Frishberg, the complaint notes, was the target a fraud lawsuit from the Securities and Exchange Commission in 2009.

Still, our entire establishment continues to act as though they truly believe that his Economic Doctrine was anything but another predatory financial scheme.  To this day one repeatedly hears from the political class that "cutting tax rates increases revenues" and not solely from one side of the aisle.  Unfortunately, the doctrine of "sovereign immunity" makes it illegal to sue the federal government for practicing predatory financial fraud on the entire nation, so it is unlikely that anyone will ever be held accountable for that much greater crime fostered by Laffer.

Originally posted to Hic Rhodus, Hic Salta! on Sat Jan 14, 2012 at 07:29 PM PST.

Also republished by The Amateur Left.

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