Fully equipped with feel-good jokes and self-deprecating humor, Arthur “Art” Laffer, economist and former economic adviser to President Reagan, spoke on campus Monday night.
Laffer is considered the “father of supply-side economics,” and is most well-known for the “Laffer Curve,” which can predict the ideal tax rate to maximize government tax revenue by modeling the relationship between the two.
His speech, “Trumponomics: An Economic Overview of America Today,” centered on the nation’s economic state under President Trump, a topic on which Laffer recently wrote about. Working with Stephen Moore, current economic advisor to president Trump, Laffer co-authored the book, “Trumponomics: Inside the America First Plan to Revive Our Economy.”
Sophomore Owen Macaulay chose to attend the speech after learning about him in school.
“After studying Laffer’s developments as a student, it was interesting to hear such a renowned economist give his thoughts about the current economic state of our country,” Macauley said
In between his story about fighting a kodiak bear and joking about his own height, he focused strongly on outlining the five pillars of prosperity: flat tax, spending restraint, sound money, good regulatory policy, and free trade. He considers the following pillars to be the fundamentals of economic success for any government, evidenced by the flourishing economy during the Trump administration.
The first pillar which he emphasized was the necessity of a low-rate, broad-base, flat tax. This, he said, creates the lowest incentive to avoid reporting income. The broad base leaves room for the lowest amount of loopholes, so there’s less places to put money aside from taxes. He praised the effort of the Trump administration specifically in regards to this pillar.
“It’s the best first term of any administration I’ve ever seen,” he said.
Although he thinks the greatest tax bill in history was President Reagan’s, which he worked on, it was technically created during Reagan’s second term.
Secondly, spending restraint is extremely important, Laffer said. Government spending is technically taxation since the government doesn’t create resources. This is where Trump is lacking.
“There’s been no change in government spending,” he said. “But with taxes, he’s done a great job.”
Other important pillars are having sound money, meaning an interest rate that isn’t too low or too high, and good regulatory policy, the latter of which Laffer said Trump has outdone himself.
“There’s no place that Trump has been better than in regulatory policy,” Laffer said. “This is the most amazing administration with energy de-regulation that I’ve seen.”
The fifth pillar is free trade, which is critical to prosperity, Laffer said. He views America’s free trade policy as a “work in progress.” Based off conversations with President Trump, he said he believes him to be a free trader, despite actions possibly indicating otherwise. Once again, he echoed his high opinion of the Trump Administration’s economic achievement.
“Never in such a short period of time has the administration accomplished so much, even trade policy,” Laffer said.
Despite opposition from many conservatives, even some outspoken Hillsdale professors, Laffer said Trump’s position does make sense. Many other countries have more protections and Trump’s tariffs are a way of getting their attention to bring them to the table for the ultimate purpose of a free trade world.
“He is a negotiator,” Laffer said. “I think he will be successful.”
Laffer ended on a glowing overview of President Trump’s economic accomplishments, stating that from a purely economic standpoint, no administration has ever done better. Focusing on the unemployment rate, growth rate, and tax revenue specifically, Laffer highlighted the Trump administration’s achievements with real-life examples of the tax plan benefits.
Sophomore Lindsey Mertz thought Laffer’s praise was surprisingly reassuring.
“His optimism about the U.S. economy is important for our generation to hear amongst negative voices crying out about U.S. debt leading to our destruction,” she said.
Laffer said he’s extraordinarily happy with how things are going, and he’s looking forward to see what else President Trump can do.
“I really believe the best is yet to come,” Laffer said.