Out of the Ashes
John Kenneth Galbraith once noted that "Henceforth it should be the simple rule in all economic and monetary matters that anyone who has to explain failure has failed." 1 That at least some aspects of the 1980s experiments were properly recognized as failures is encouraging. That some of the failures have spawned proposals for a new generation of experiments is not.
It is worth remembering that the Laffer curve once provided the primary justification for slashing tax rates for wealthy income earners. As an economic principle it may never have been very good, but as a political argument it was invaluable. The Laffer curve provided a seemingly objective rationale for cutting the taxes of a small, already privileged group. Supporters of the tax cuts could defend themselves by claiming that the tax cuts were good for the entire economy, so good in fact that there would be no real loss of tax revenue. When accused of serving the interests of wealthy individuals and corporations, tax cutters could respond that their purpose was more altruistic--to help the economic development of the entire nation. If not for the Laffer curve, it would have been difficult to deny the charges that they were simply catering to the rich.
By now the Laffer curve has become something of a historical curiosity. While still included in many economic textbooks in the