The Laffer Curve

02/05/2008 8:27 pm
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Besides the standard Supply/Demand curves, I think the Laffer Curve is my favorite Economic diagram (screw you IS/LM). Anyway, here is a good video explanation of the Laffer Curve that dispels the some of the "myths" that surround it.


jeremy.jpgJeremy - No one's gay for Moleman
02/05/2008 @ 11:58:35 PM
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I should accompany my 10 cent MP3 argument with a laffer curve.

A = $0 B = $.10 just shy of c = $1
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newalex.jpgAlex - 3618 Posts
02/06/2008 @ 12:27:19 PM
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I watched this last night, then was going to make this comment, but somehow became distracted and couldn't remember what had been so clear in my head the moment before, so I just said nothing.

Edit: Just pretend that I left that comment here for awhile and came back and edited it later. Doesn't he pretty much say that credit type tax cuts generally don't encourage spending or investing? So why is the government planning this stupid xxx billion dollar rebate check to jump start the economy, when the country is already in the red?
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Alex edited this at 02/06/2008 12:30:10 pm
matt.jpgMatt - 3354 Posts
02/06/2008 @ 12:42:40 PM
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Alex Wrote - 02/06/2008 @ 12:27:19 PM
So why is the government planning this stupid xxx billion dollar rebate check to jump start the economy, when the country is already in the red?


Like most things with the Government, the appearance of doing something (whether it works or not) is better than the appearance of doing nothing.
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jon.jpgJon - 2847 Posts
02/06/2008 @ 12:53:03 PM
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Alex Wrote - 02/06/2008 @ 12:27:19 PM
So why is the government planning this stupid xxx billion dollar rebate check...


Is this some kind of pornographic rebate? Or is it whiskey?

I guess the joke would be, "the way this government spends money IS obscene! Am I right people? I mean, what's the opposite of progress? It's congress! Oh, and we'll NEED whiskey when we realize how little our check will buy us in this economy!"
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fry6beeu9.jpgJeremy - Broadcast in stunning 1080i
02/06/2008 @ 02:26:57 PM
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Alex Wrote - 02/06/2008 @ 12:27:19 PM
I watched this last night, then was going to make this comment, but somehow became distracted and couldn't remember what had been so clear in my head the moment before, so I just said nothing.


You were going to make my MP3 post, or you were going to make a post notifying us your intentions of leaving a post last night, last night?
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newalex.jpgAlex - 3618 Posts
02/06/2008 @ 05:41:13 PM
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Jeremy Wrote - 02/06/2008 @ 02:26:57 PM
Alex Wrote - 02/06/2008 @ 12:27:19 PM
I watched this last night, then was going to make this comment, but somehow became distracted and couldn't remember what had been so clear in my head the moment before, so I just said nothing.
You were going to make my MP3 post, or you were going to make a post notifying us your intentions of leaving a post last night, last night?


I was going to post what I eventually posted today last night, but last night when I was going to post it I forgot what I was going to post and then I remembered it today so I posted it.

But for the record, I do agree with your MP3 theory.
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flower .jpgPackOne - Push the little daisy's and make em come up.
02/06/2008 @ 07:42:41 PM
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I wanted to watch this video but my brain might explode.
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newalex.jpgAlex - 3618 Posts
02/06/2008 @ 08:20:40 PM
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The xxx is because I think it started out at like 140 billion and Democrats have upped it to 205 billion at latest count. Thankfully, it has failed to pass so far.
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avatar2345.jpgPackOne - Check yourself before you wriggity wreck yourself.
02/07/2008 @ 09:03:49 AM
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So I have been thinking about the Laffer Curve all night. I find myself having to reprimand me. People, including myself, walk around all day talking about how funny it is they suck at numbers and math. Most, like myself treat it as kind of a joke. This being said, you never hear anyone walk around laughing about how they suck at reading. It is time for me to at least try and learn what I can.
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jeremy.jpgJeremy - I hate our freedoms
02/07/2008 @ 10:57:08 AM
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People do the same thing with computers. It's very frustrating when people wear their "I'm Computer Illiterate!! LOLLZ" badges around with honor.

There's really nothing to the laffer curve. All it's basically showing is that just because you charge more doesn't mean you'll make more (between b and c), but if you charge too little you'll also make less than you could be (between a and b), and that there's a sweet spot where the increase in the number of people that will buy it makes up for not charging all that you could (c). It just works better in the tax example because there's a limit on how much you can tax (100%) where as you could charge $3 billion for a pencil, if you wanted.

His separate point about the laffer curve, that's specific to tax, was that the Government isn't necessarily out to find B (and maximize revenue) because as you move from a to b every bit you move correlates to a smaller and smaller increment of revenue increase, so taxing people an extra 5% may only translate to a revenue increase of %1, which might not be worth pissing us tax payers off.
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Jeremy screwed with this at 02/07/2008 11:15:57 am
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