Poor Arthur Laffer. I bet he now has a Laffer-curve-like face because of the necessity to give back this penny. Or maybe not, since the penny already lost much of its value?
Source link: http://archive.mises.org/8635/supply-side-economics-vs-austrian-economics-just-before-recession/
Supply Side Economics vs. Austrian Economics just before recession
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I wonder if Art Lafer (sp?) will ever show his face again.
Peter Talks to Mortgage Bankers association
I’m afraid that Mr. Schiff will only accept gold for payment of the bet. Arthur Laffer is a joke!!
Is Laffer delusional? He is a spent force. Schiff missed opportunities to catch him out on all the technical errors he made though.
By the way, Peter Schiff does not subscribe to Austrian economics(from what I could tell). He may sound similar in certain ways, but I have never read or heard him state that he is an Austrian. He didn’t seem to sound like that on international trade deficits. He seems to think Americans buying more from non-Americans is something inherently bad for the American economy.
Gaurav,
Seeing that he was ron paul’s economic advisor and the reading list on his website includes murray rothbard and henry hazlitt, I would say he is pretty close.
So he says the “US economy has never been in better shape”, well great, lets skip the 700 billion dollar bailout then.
This would be hilarious if the consequences weren’t so serious. If CNBC and the like would be honest, they would stop inviting the jokers on the show — the current situation lays wide open the lies of these “experts.” It would be a good public service for them to review these on the air.
Wait, back to reality…
Here is what wikipedia says about Peter
@ Gaurav Ahuja
“He seems to think Americans buying more from non-Americans is something inherently bad for the American economy.”
In “Crashproof” Schiff expresses concerns about us becoming too dependent upon the manufactured goods of other countries, because he feels that as the middle class in developing countries continues to grow, fewer goods will be made available to us. Therefore, he feels that it’s in our best interest to keep producing manufactured goods.
How can he cite the trade deficit as a problem? All I’ve ever heard from Austrians is that the trade deficit is irrelevant.
See: Triffin dilemma.
This title is wrong. It should read, “Peter Schiff better supply sider than Art Laffer.” Laffer’s appeal to consumption as evidence of economic strength is pure demand side. Schiff’s point about saving and production is central to supply side.
I think he handled the 2 income family issue poorly. If both love their work then that’s one thing. Working to support consumption is another. Woman or man providing the income is not the issue. The reporter implied that he was sexist.
I’m anxious for a response to Keith’s question above. I too thought the trade deficit was irrelevant, just as is the trade deficit I have with the grocery store.
I’ve read “Crash Proof” as well, and his economics are 90% Austrian. He even goes so far as to quote Mises in the book. He is bent about the trade deficit, but he frames it in terms of dollars held by foreign entities, and how those dollars will eventually come flooding back into the U.S. as the prices of imports vs. exports swings back the other way. As domestic goods become cheaper, foreigners will start importing more of our cheap products, resulting in hyperinflation of the dollar.
One argument he makes, though, is that China, for instance, is spending all its resources servicing American consumer demand and not focusing on domestic demand. He claims that they are poorer for it. At the same time, though, he claims that we’re poorer for not exporting enough goods. You can’t have it both ways. Either it’s better to import more than you export, or you’re not. I suppose maybe he’s saying trade should be “balanced”, but there’s no reason in a free market that would or should ever happen.
Listening to Laffer reminded me of a quote:
“Positive, adj.: Mistaken at the top of one’s voice.”
–Ambrose Bierce
Wouldn’t trade need to be balanced at least in the long term average under a specie standard? The resulting gold flows under a net import or net export economy, would tend to adjust the price of the different origin of goods in a manner opposite to the current trade balance. Or am I missing something here?
That’s a good point, Stanley. It may very well be that imports and exports would tend toward a balance in terms of gold. Someone smarter than I will have to confirm that, though.
I agree with Stanley. Could it be that the trade deficits between 1600 and 1800, that Laffer was talking about, were due to the large scale immigration to the United States?
Trade deficits are just symptoms of underlying behavior. What matters is how they come to be.
Many railroads were built with British capital and British capital goods. America was borrowing to finance expansion with imported capital goods.
Now Americans are importing foreign capital to buy consumer goods.
Stanley Pinchak: “Wouldn’t trade need to be balanced at least in the long term average under a specie standard?â€
As gold left the country for imported goods, the money supply would fall, causing prices to fall. Remember that the amount of money in a country is totally irrelevant. Rapid changes in the amount of money is a different story. But mild changes in the amount of money will cause prices to adjust and commerce will continue as usual. However, there would be some tendency to equalization of trade because as prices fell in the US, our goods would become cheaper to foreigners and we would eventually export something. Paper money keeps our prices from falling and prevents this adjustment process.
In addition, if a country imports a good because it is cheaper than a domestically-produced one, then the cheaper imported good will increase wealth in the home country. The imported good will free up money that can be invested in new businesses or boost the sales of existing businesses.
Take oil as an example. If we were on a gold standard, would the US be richer or poorer importing over half our oil? We would be richer by far, because we can’t produce enough oil on our own, which would make oil very expensive if we didn’t import some. By importing oil, we save huge amounts on the purchase of oil. In turn, we refine oil and turn it into transportation services or plastic goods worth far more than the price of the oil.
The above assumes that all countries in the world are equally free and on a gold standard. If the US has greater freedom and a more dynamic economy than the rest of the world, as it did in the 1800′s, then other people in the world will want to invest their savings in the US and we’ll have a net increase in gold and the money supply will increase.
The bottom line is that a gold standard won’t necessarily cause balanced trade. It might if all countries were exactly alike. But if they differed much, the variables that need to be considered.
“With lower interest rates you can buy more. It’s great!”
What a tool.
“I’ll bet you a lot more than a penny!” Ha, so would I Peter.
I only want financial advice from Peter Schiff now. Boy, Laffer could not have been anymore wrong on his prediction. Furthmore, he could not answer the question, “When the Housing Boom goes away, what will happen?” He just says that it will be filled up by something else…… Well Laffer, what do we “fill it up with now?” This guy is an an idiot! If this subject was not so close to home as to what Schiff depicted, I might laugh right now……
Can someone point me in the direction of some literature on Austrian thought on supply-side economics?
Thank you in advance
Peter is always right
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