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Laffer: Laughable As Always
R Davis spends a whole lot of words (and numbers) explaining why Arthur Laffer’s latest WSJ editorial is false and ridiculous, but those who think about data — at all — really only need to read one line. Laffer’s key error — which a high-school statistics student could spot — is to:
compare growth in GDP rates with government spending as a percent of GDP. He is testing for a relationship between two variables but expressing one of them (spending) in terms of the other (GDP).
So when Estonia or Ireland’s GDP drops, its government spending/GDP increases.
This is obvious proof that higher government spending causes lower GDP.
It’s hard to imagine that a well-educated person could not be aware of how specious this argument is. But I’m guessing that he really and truly does not realize it.
Cross-posted at Asymptosis.
2012-08-19 17:33:01
Source: http://www.angrybearblog.com/2012/08/laffer-laughable-as-always.html
Source:
He’s just following up with another demonstration of his skills, remember how he dismissed Peter Schiff’s theory about a collapse in 2007….oop. This clown and Krugman should be put in a ring with sticks to fight to the death for our amusement.