Arthur B. Laffer at the FAES Campus

29/06/2012

Navacerrada (Madrid), 29.06.12.- Economist Arthur. B. Laffer, founder and president of Laffer Associates and former member of Reagan’s and Margaret Thatcher’s Economic Policy Advisory Boards, has participated today, Friday June 29, in the first day of the 2012 FAES Campus, where he has prescribed "Limiting expenses, minimum regulations and letting the system work”, because, according to him, “this is what will create employment”. “We are in a recession not in spite of public spending, but precisely because of public spending”, he assured.

In Laffer’s words, "Increasing public spending to boost economy doesn’t work”, as “for each payment made by the State, there’s a payer; for each person receiving resources, there’s another one paying for them, and that person is going to receive less incomes and spend less. That cascade in the opposite direction cancels out the effect of the stimulus sought by public spending”. “Those suggesting spending even more are wrong. Governments don’t create resources, they redistribute them”, the economist declared, adding that “cutting public spending is not austerity, it’s the complete opposite”.

During his address, Laffer has addressed the need of having a fiscal framework geared toward economic growth, entailing a tax reduction and counting with “minimum regulations”. “They’re necessary, but those regulations must not create collateral damage to economy. People must be left to grow by themselves”, he stressed before adding that “incentives matter: if you increase taxes in one place and cut them in another, people are going to leave for that second place. People move to where there’s prosperity. End employment also moves to those places”.

SCALABLE ECONOMY
The American economist, who regretted that “sometimes large economies confuse us”, assured that “if an economy is good it works just as well in a world with two people than in one with 300 000. Good economies are scalable”. “Once political inertia begins, everyone follows you”, he added.

With regard to the United States, Laffer considered that "today, we are going through the most polarized political situation in history in many, many years, and it is so in all aspects. In my opinion, that polarization is good because voters can choose”.