No Laffer: We Are On the Wrong Side of the Crony Curve

The Latest from Seton Motley | Less Government |
The Latest from Seton Motley | Less Government |
Big Trouble – with Big Gov and Big Biz

Familiar with the Laffer Curve?:

“The Laffer curve, a mound-shaped indicator, was designed to find the ‘ideal’ tax rate that would help the government, as well as the people it serves, prosper.

“The idea is credited to economist Dr. Arthur Laffer….

“The Laffer Curve is a tax theory suggesting an inverted U-shaped relationship between tax rates and the amount of tax revenue collected by governments.

“The ideal, or optimal, rate of taxation for an economy is the one that falls right at the top of the inverted U.

“The theory argues if tax rates are too high they will discourage taxed activities, like consumption and investment, while rates that are too low fail to generate sufficient revenue.”

Like anything that makes sense – the Laffer Curve is predicated upon human nature.

Taxation – is punishment.  It is the government taking something from you – when you engage in the taxed activity.

Humans will view low levels of taxation as annoying – but not debilitating enough to stop or change what they’re doing.

Crank it up too high – and human behavior starts changing.  And right quickly.

So too is it with anything government does to humans.

Low levels of government are annoying – but not debilitating enough to stop or change what they’re doing.

Crank it up too high – and human behavior starts changing.  And right quickly.

Businesses and government – are supposed to comprise a healthy adversarial relationship.

Business wants to do business.

Government is, optimally, supposed to apply light touch oversight – to ensure really bad things don’t happen.

However: Somewhere in the history of the United States – many decades ago – we passed our too-much-government, Laffer-esque tipping point.

Government grew itself to be WAY too large and WAY too powerful.

Its monstrous size began crowding out and destroying small businesses.  Simply by existing – and continuing to expand.

Big Businesses saw this – as an opportunity.

Big Biz swam behind Big Government – like remoras behind a Great White Shark.  Swallowing up the pieces of their smaller competitors – after Big Gov had murdered them.  Thereby becoming even bigger Big Businesses.

Big Gov became so big – it fundamentally transformed the US business model.

Gone was the pursuit of professional excellence.  Replaced by – the pursuit of lobbying excellence.

Big Biz decided: Why try to beat Big Gov – when you can join with it?

Gone was any semblance of the healthy adversarial relationship between government and business.

Now Big Biz lobbies for more and more and more Big Gov.  Because it benefits them.

And Big Gov gives Big Biz exactly what they want.  Because it benefits them.

The alarm has been raised about all of this – for a very long time.

How Big Business Uses Big Government To Kill Competition – July 7, 2021

Why Big Business and Big Government Haunt America – March 21, 2016

How Big Government and Big Business Stick It to Small U.S. – October 25, 2015

The Truth About Lobbying: 10 Ways Big Business Controls Government – May 12, 2014

How Big Business Uses Big Government To Kill Competition – December 14, 2011

The Rise of Big Business and the Growth of Government – August 19, 2009

Business and Government: Working Together in the Reset World – July 14, 2009

Big Business and Big Government – July/August 2006

But all of that – hasn’t gotten us anywhere.

Joe Biden and the New Era of Big Government – March 12, 2021

The New Era of Big Government: Biden Rewrites the Rules – July 12, 2023

Big Government Is Back. How Will We Pay for It? – September 5, 2023

All we get – are “new eras of big government.”  Government only and always expands.

It’s not a “new era” – so much as the “next era.”

The point at which we seem to have fully stopped worrying – and learned to love Big Gov-Big Biz crony fascism?

The point where we went over to the down side of the Crony Curve?

  1. The year of the global economic meltdown – thanks to the unholy alliance between Big Gov and the Big Banks.

“I’ve abandoned free market principles to save the free market system.”

George W. Bush

We’ve heard that sort of “logic” before.

“It became necessary to destroy the town to save it.”

Unidentified Army Major

Gone was the town.  Not saved – gone.

Gone also – finally, once and for all – was our free market system.  Not saved – gone.

In its place – the Big Gov-Big Biz crony business model that now dominates us.

The Size of the Bank Bailout: $29 Trillion

How Wall Street Captured Washington’s Effort to Rein in Big Banks

Presence and Influence in Lobbying: Evidence from Dodd-Frank

How Dodd-Frank Doubles Down on ‘Too Big to Fail’

Dodd-Frank Is Making Big Banks Bigger, Crippling Small Banks

Three Charts That Show How Dodd-Frank Is Killing Small Banks

Welcome to the Brave New World Order.

Where we are WAY past the point of no Crony Curve return.