Product Description

Arthur Laffer -- the father of supply-side economics and a member of President Reagan's Economic Policy Advisory Board -- joins economist Stephen Moore of The Wall Street Journal editorial board and investment advisor Peter J. Tanous to send Americans an urgent message: We risk losing the exceptional standard of living that has made us the envy of the rest of the world if the pro-growth policies of the last twenty-five years are reversed by a new president.

Since the early 1980s, the United States has experienced a wave of prosperity almost unprecedented in history in terms of wealth creation, new jobs, and improved living standards for all. Under the leadership of Presidents Ronald Reagan and Bill Clinton, Americans changed the incentive structure on taxes, inflation, and regulation, and as a result the economy roared back to life after the anti-growth, high-inflation 1970s.

Now the rest of the world is following the American economic growth model of lower tax rates, more economic freedom, and sound money. Paradoxically, one country is moving away from these growth policies and putting its prosperity at risk -- America.

On the eve of a critical presidential election, Laffer, Moore, and Tanous provide the factual information every American needs in order to understand exactly how we achieved the prosperity many people have come to take for granted, and explain how the policies of Democrats Barack Obama, Hillary Clinton, and Nancy Pelosi can cause America to lose its status as the world's growth and job creation machine.

The End of Prosperity is essential reading for all Americans who value our nation's free enterprise system and high standard of living, and want to know how to protect their own investments in the coming storm.

Product Details

• Amazon Sales Rank: #8321 in Books
• Published on: 2008-10-14
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 352 pages

Review
"At a time when economies around the world are going wobbly, this insightful and timely book reminds us of the principles and the policies which America will need to employ to restore stability and prosperity."-- Lady Thatcher , prime minister of the United Kingdom 1979-1990

"This book focuses on the greatest economic issues of our time. While I have very different views, it's through careful debate and full understanding that we can make progress. This book is a must-read." -- Joe Kennedy, former congressman from Massachusetts

"Fair warning! No one can say, 'No one told us this would happen.' Art Laffer, Steve Moore, and Peter Tanous have done just that with this brilliantly insightful book. Read it -- and act!" -- Steve Forbes

"Frankly, I think supply-side economics is snake oil. But you should know how three of its smartest proponents try to defend it in this influential and important book."-- Robert Reich

About the Author
Arthur B. Laffer, Ph.D. is the founder and chairman of Laffer Associates, an economic research and consulting firm.  A member of President Reagan's Economic Policy Advisory Board for both of his two terms, he invented the Laffer Curve and triggered a world-wide tax-cutting movement in the 1980s.  Dr. Laffer received a B.A. in economics from Yale University and received a MBA and Ph.D. in economics from Stanford University.

Excerpt. © Reprinted by permission. All rights reserved.

On the hope of our free nation rests the hope of all free nations.

-- John F. Kennedy

America: What Went Right

It was difficult for the three of us to write a book titled The End of Prosperity.

We're not doom and gloom people; we're natural optimists. And we're not part of the trendy set of intellectuals who like to trash our nation, blame America first for all the world's problems, or worst of all, predict with glee America's downfall as some kind of punishment for our alleged past environmental crimes, racism, financial mismanagement, greed, overconsumption, imperialism, or whatever the latest chic attack on the United States is.

By contrast, we do believe in the idea of American exceptionalism and that this nation is, in the words of our hero Ronald Reagan, "a shining city on a hill." The Gipper said it eloquently in his 1980 speech at the Republican National Convention in Detroit when he proclaimed that it was "divine providence that placed this land -- this island of freedom here as a refuge for all those people in the world who yearn to breathe freely."1 Yes, we certainly agree.

We're also well aware that American skeptics who have written over the last two or three decades about the end of the United States' economic might have gotten the story 180 degrees wrong. There've been dozens of wrongheaded books, many which became best sellers, from America: What Went Wrong? (Bartlett and Steele), to Bankruptcy 1995: The Coming Collapse of America and How to Stop It (Figgie and Swanson), to The Great Depression of 1990 (Ravi Batra), to The Rise and Fall of the Great Powers (Paul Kennedy), to The Day of Reckoning: The Consequences of American Economic Policy Under Reagan (Benjamin Friedman), all forecasting America's impending economic collapse. So much gloom. These pessimists were about as right as the record producers who turned down a contract with the Beatles in 1962 because in their famous assessment, "guitar groups are on the way out,"2 or the venture capitalists who rolled with laughter over the idea of a computer in every home, and then told Bill Gates to go take a hike.

Many of today's leading liberals who are advising Barack Obama and the Democrats in Congress are the same people who predicted in the late 1980s that Japan, with its sophisticated government-managed industrial policy economy, would take over the world in the 1990s and the early twenty-first century. Yes, those predictions were made at the early stages of one of the greatest and longest financial collapses in world history. Lester Thurow wrote after the Berlin Wall came down: "The Cold War is over. Japan won."3 The Nikkei Index stood at 38,000 in 1989 and fell to below 8,000 in 2003, an 80 percent decline.4 So in the 1990s while the U.S. stock market more than doubled, the Japanese stocks fell by about half.

Where the declinists on the left foresaw America's demise in the eighties and nineties and predicted a future that looked like the grim portrait of cities in movies like Blade Runner and Batman, we forecast growth and a cornucopia of financial opportunity and a coming burst of prosperity. We believed that Ronald Reagan had the right prescription for the malaise of the 1970s. Reagan focused like a guided missile on the big problems that had come to cripple the U.S. economy: rampant inflation, high tax rates, a crushing regulatory burden, and runaway government spending. Call the Reagan economic agenda Reaganomics, supply-side economics, or free market economics -- critics can even keep on calling it Voodoo or "trickle down" economics -- but what is undeniable is that the economy surged in the 1980s and 1990s as if injected with performance-enhancing steroids.

Movin' On Up

Anyone who followed the declinists' advice about selling America short lost a lot of money. After the Reagan tax cuts and the conquering of inflation in the early 1980s America's net worth -- or what we call America, Inc. -- climbed in real terms from $25 trillion in 1980 to $57 trillion in 2007.5 More wealth was created in the United States over the past twenty-five years than in the previous two hundred years. The economy in real terms is almost twice as large today as it was in the late 1970s. Or consider these income gains:

-Between 2001 and 2007 alone the number of Americans with a net worth of more than $1 million quadrupled from 2.1 million to 8.9 million, according to TNS Financial Services.

- In 1967 only one in 25 families earned an income of $100,000 or more in real income (in 2004 dollars), whereas now, almost one in four families do. The percentage of families with an income of more than $75,000 a year has more than tripled from 9 percent to almost 33 percent from 1967 to 2005.

- The percentage of families in all of the income groups between $5,000 and $50,000 has dropped by nineteen percentage points since 1967.

These figures confirm what we believe to be the most stunning economic accomplishment in America over the past quarter century: the trend of upward economic mobility in America. A poor family in 1979 was more likely to be rich by the early 1990s than to still be poor.7 This is the sign, not of a caste economic system, but of a meritocracy where people get ahead through hard work, saving, and smart investing. And moving up the ladder is the rule, not the exception, in America today.

There's a wonderful new video on Reason.tv called "Living Large" that can be viewed on YouTube. In it, comedian Drew Carey goes to a lake in California where people are relaxing on $80,000 twenty-seven-foot boats and goofing around on $25,000 jet skis that they have hitched to their $40,000 SUVs. Mr. Carey asks these boat owners what they do for a living. As it turns out, they aren't hedge fund managers. One is a gardener, another a truck driver, another an auto mechanic, and another a cop.

Today most of the poor own things that once were considered luxuries, such as washing machines, clothes dryers, refrigerators, microwaves, color TV sets, air conditioning, stereos, cell phones, and at least one car. Table 1-1 shows that, amazingly, a larger percentage of poor families own these consumer items today than the middle class did in 1970.

One of the big dividends of this technology age is how rapidly new inventions become affordable to the middle class. It took more than fifty years for electricity and radio to reach the average household, but newer inventions, such as cell phones, laptop computers, and color TVs, became affordable within a matter of a few years (see Figure 1-1). We are democratizing wealth in America, and new things that were once the exclusive purchases of the rich are now regarded by Americans of all income groups as not just necessities, but entitlements. Young people today can't even fathom a society without cell phones, iPods, laptops, DVD players, and the like. They think that to live without these things is to be living in a prehistoric age. But watch a movie from twenty years ago and you will laugh out loud seeing big clunky black machines that weighed as much as a brick, gave crackly service, and cost $4,200. Now cell phones are about forty-two dollars -- even disposable. And the cost of making calls has dropped dramatically, too.

Here's an even more amazing statistic: Americans in 2007 spent more than $1 billion just to change the answer tune on their cell phones.9 And yet Americans are still far and away the most generous citizens of the planet, giving more than $306 billion in 2007 to charity to help others, while 60 million Americans volunteer time for nonprofits, hospitals, churches, and other causes.

In the late 1990s Barbara Ehrenreich asked in the New York Times, "Is the Middle Class Doomed?" She then noted that "some economists have predicted that the middle class will disappear altogether, leaving the country torn, like many third world countries, between an affluent minority and throngs of the desperately poor."11 Here's the truth. The purchasing power of the median-income family, that is, families at the midpoint of the income continuum, rose to $54,061 in 2004, an $8,228 real increase since 1980.12 The middle class is not disappearing, Barbara, it is getting richer, as shown in Figure 1-2.

There's no question that the poor and even the middle class face real financial challenges -- paying for health care, college tuition, making mortgage payments in a downward spiral of housing values, and filling up the gas tank at the pump. But we always have to ask the question: compared to what? Today the poor generally have access to more modern goods, services, and technologies than the middle class did in the middle of the last century. As Nobel Prize-winning economic historian Robert Fogel wrote in 2004: "In every measure that we have bearing on the standard of living...the gains of the lower classes have been far greater than those experienced by the population as a whole."

A recent study by the Congressional Budget Office came to the eye-popping conclusion that from 1994 to 2004 Americans in the bottom 20 percent of income actually had the highest increase in incomes.14 Yes, you read correctly: The poor got richer faster than the rich did. A subsequent study by the Treasury Department found the same thing.15 When you track real families -- real people -- over time, you find that people who are poor at the start of the period you examine have the biggest subsequent gains in income. Amazingly, the richer a person is at any given point in time, the smaller the subsequent income gains. Those in the top 1 percent actually lose income over time. You won't read that in the New York Times, because the media treat facts like this as if they were closely guarded state secrets. And for the media, good news is practically a contradiction in terms when covering the American economy: If it's good, then it's not news. But no matter how you slice or dice the data, this has been a shared prosperity (see Table 1-2).

Today we are ...

Customer Reviews

Ignore economic deniers
The controversy around the Laffer curve is made by those who do not understand the fundamentals of economics: people respond to the incentives. Ask yourself this simple and easy question, would you work hard (or at all) if someone took out of your wallet $4 for every $10 yo earned? What about $5, $6 or more? The fact of the matter is the top 1% of income earners pay 40% of the taxes collect while the bottom 50% pay 3%.

The current economic conditions is bad, but it will get worse if money is stolen from a group of people in the name of so called "fairness". The Laffer curve allowed the world we live in today. It allowed the Bill Gates, Steve Jobs, and the Michael Dells of the world to make everyone's better. There would be no laptops, iPods, Amazon.coms if the courageous entrepreneurs in our economies were not allowed to reap what they sowed. People do not work so that they can pay the government. They work to improve themselves, and that is the point of this book.

This is a bi-partisan book, and a 'must read' for all who truly care about the future of America
(Note: I own and have READ all of this book) (...)
This is a bi-partisan book, and a 'must read' for all who truly care about the future of America.

Not often that I suffer that particular effect, but this book leaves me with an uncomfortable feeling. The future sounds a bit scary.
Very well written, with a wry sort of 'quietly despairing' humor that entertained me frequently. Good prose. Often dry and witty.
I will give you a short review first, and then a long review. Take your pick. That tells you perhaps I took the issues this book raises seriously. (Disclaimer: I don't want to upset anybody. Don't get mad. I'm just offering a working class grunt's opinion. I apologize for any perceived mockery of the Great Ones, the Federal Elite, who -of course- know what is best for me, and how best to spend my money for me.)

Short review:
Well written. Bang up to date. Touches intimately on political decisions and ATTITUDES, past and ongoing, that affect us all. Quite funny-sad-infuriating at times. Highly qualified writers/economists. You can argue if you want to that they are bone-headed wrong, dumb schmucks from the Rabid Right, but you can't deny they are shakers and movers. These three boys have been in the thick of it all for a long time. If you care about America, about people and their jobs and families, then -please- just for this one book, lay any and all prejudices and political bias to one side. Stop. Take a deep breath, and plow right on in. With an open mind.
Again, I'm not suggesting you should agree, but PLEASE, at least quietly consider the issues. They are of monumental importance to us real, live, breathing little human beings. If you know of a book that directly opposes this book's conclusions, I'd like to hear any suggestions...

Long review:
At issue, front and center, in this seminal work is the economy, and government intervention. Capitalism, free markets, laissez faire versus the Federal Government regulators, federal deficits, public works, taxation, monetary policies, etc. It asks searching questions.
When did it work? When did it not work? When was the economy sound? When not? Who damn well screwed it up? The greedy Rich? Left wing idealogues? Utopian reformers from Cloud Cuckoo land? Well meaning, sincere, but sadly misinformed politicians? Corrupt and lazy politicians, who couldn't (can't) be even BOTHERED to study economics, and who didn't (don't) give a damn, as long as they themselves were (are) all right, got (get) the votes, and got (get) re-elected? A gaggle of pompous Harvard trained politico career lawyers with a fee-feeble understanding of buh-basic economic principles? (okay, okay, I embellished that one a bit) Which President was the sharpest? Who was the absolute dumbest? How does the economy work? What keys on the economic piano should you hit, and when should you hit them? Can you achieve success just by hitting the right individual notes, or must you learn to play the right combination of notes, and hit the right economic recovery "chord"? How much harm can Mister Stoopid actually do? (A lot). Is uncontrolled Welfare undermining the American work ethic? Are we faced with "unintended consequences" from well meaning but naive policies? Or are we too thick skulled to read History, and therefore doomed to repeat the same boondoggling fiasco? Are massive public works, bail outs and federal spending the answer? Has Mr Obama seriously studied History? Economics? Has he considered the arguments in this book? Has he maybe even read this book? (I hope so) Has he chosen advisers who have a track record in the past of having been correct in their economic forecasts? Who are his economic advisers? Where do they stand on supply side economic theory? All of these issues and more, are carefully examined in this book.
To my delight, I discovered that this book was avowedly bi-partisan in many ways. Let me say that again: "this is a bi-partisan book." You can't just 'cop out', take the easy route, and avoid the undoubted serious cerebral effort of digesting this book, by conveniently plastering some 'right wing' label on it. It's not. Some of the other "reviewers" -obviously- did not take the trouble and make the effort to read it. One at least is vaguely honest, and right at the end of a rather long discourse, he tells us he only read the first chapter (!!), a few random pages, and relied on "Wikipedia" to fill in any gaps in his understanding. That seems to me a rejection of this books merits "in advance". Such a pity. This is a centrist book, that examines the issues, ("It's the economy, stupid!") and cuts right across party political lines. This isn't dogma. It's not faith. It's about the examination of historical events, past and ongoing. Some of it is factual, no debate. Some of it is interpretative, big debate. Great. Everybody involved. Both parties.
And that is another reason it should appeal to readers on ALL sides of the debate. You don't believe me?
Some examples: the authors cheerfully rain down fire on the "four stooges". Namely Presidents LBJ, Richard Nixon, Gerry Ford and Jimmy Carter. Two Democrats, two Republicans. Chapter 4 ("Honey, we shrunk the economy") (pages 61-83) goes into depth on their economic policies, and the results. This chapter pulls no punches, and soundly thrashes both Republican and Democrat economic policies. Chapter 4 alone contains lots and lots of thought challenging quotes, and you can agree or vehemently disagree, but I guarantee... it will get you thinking. I'll give you a sample below:
(page 65) "Two Democrats, two Republicans. Four presidents emitting one dimwitted economic policy after another in what was the largest assemblage of bipartisan ignorance ever. We'd say that from an economic policy perspective, it just doesn't get a lot worse than these four..."
(page 65) (on LBJ) "But the real economic poison pill was that for the first time in American history, at the same time we were spending more money for guns to win in Vietnam, LBJ unleashed a huge new spending barrage on butter, i.e. domestic programs. In 1965 LBJ launched the Great Society social welfare state "to end poverty in America". The grand failure of the welfare state would plague America for the next thirty years- not just in the $5.4 trillion in budget costs that were poured down this rat hole, according to the Heritage Foundation's cost estimate, but also in ill-designed programs that depreciated the value of work and family cohesion and created several generations of a permanent American underclass who were sucked into a cycle of welfare dependency. Poor families on welfare were pushed into 100 per cent plus effective tax rates, because they could lose more money in government benefits from working than they could earn on the job..."
(page 70) (on Richard Nixon) "To impose wage and price controls so that prices of goods and services could not rise exposed a fundamental lack of understanding of how the pricing system in a free market operates to allocate and place value on output..."
(page 71) (on Richard Nixon) "Next came Nixon's big spending proclivities - the budget ran wild during his tenure, much of this facilitated and urged by a spendthrift Congress. In 1970 the federal budget stood at $196 billion. By 1974 the budget had increased to $269 billion, an increase of almost 30 per cent. Nixon saw federal spending as stimulatory for the economy, and that is when he declared himself a Keynesian...."
(page 71) (on Richard Nixon) "This was a formal surrender in the fight to control government expenditures".
(page 73) (on Gerry Ford) "Ford's biggest failing was in misunderstanding how to combat inflation, which was still raging. Ford asked the nation in October 1975 to be "energy savers" and to wear the Whip Inflation Now (WIN) buttons to try and slay the inflation beast, as if inflation were a state of mind, rather than the result of monetary policy run amok".
(page 73) (on Carter) "....Jimmy Carter, who had run on an appealing anti-Washington, anti-big government,pro-balanced budget message. He was to be a new-era Democrat. It was a brilliantly crafted slogan for the times, yet once Carter was in the White House it became clear he had no idea how to lead the nation out of its deepening economic troubles.
(page 74) (on Carter) "Carter had promised to restrain the federal budget, but it stampeded on his watch...."
(page 74) (on Carter) "Lacking a core pillar of ideology, Carter proved to be a micromanager and a constant vacillator on policy. In his one term he launched seven major economic programs, none of which worked and some of which contradicted each other..."
(page 79) "It wasn't just high energy prices that flummoxed Jimmy Carter- but the rise in all prices seemed an irresistible force of nature during his presidency. He was a convert to the Phillips-Curve religion that high inflation had to be tolerated to put people to work, so even with the money supply rising by 11 per cent a year in 1977, he and his cadre of economists urged the Federal Reserve bank to lower interest rates and quicken the pace of the printing presses to push more dollars into the economy."

I hope these quotes show that the writers are not party biased, and that everybody gets a sock on the nose who they feel deserves it. (Oh, and by the way, Mr Laffer voted for Bill Clinton twice.) I hope also it suggests you cannot solve economic problems with good intentions, fine speeches, lofty ideals, massive spending, lots of free lunches. party political dogma, nailing the Rich, or by an extensive background in Law. It really is a must to have seriously read History, studied Economics, and to have listened (....) to alternative economic points of view. (Yes, how about... that Laffer curve thingie?)
Plenty of people have gone before, adamant that they knew best, unwilling to listen, dogmatic in their certainty, and been proven... dead wrong. And ordinary Americans have paid the price for this hubris, along with their families.
Here's two interesting quotes for you to test your own mindset:
(page 75) "The Journal advised: "It stands to reason that the US economy would benefit enormously if the rich paid more taxes. We have been arguing this, at least implicitly, for years. What we have not been able to get the politicians to understand, though, is that you can't get rich people to pay more in tax revenues by raising their tax rate".
Read it carefully.
(page 116) "But Reaganomics did create a rising tide that lifted nearly all boats."

Which of course, now, as of January 4th 2009, leads us to Mr Obama. He is a nice man. We all sincerely hope he will be a great President. And a sound, well read economist. Here's some quotes for you to mull over:
(page 78) "Like busing, nuclear-free zones, and Whip Inflation Now buttons, price controls should be viewed as one of those discredited 1970's experiments that deserves to be forever banished from public policy discussions. We despair that they are now being seriously debated in the current energy policy discussion in Washington. Barack Obama and many other leading Democrats favor a windfall profits tax on oil companies and anti-price-gouging laws. UGHH! The lessons of Carter's failures still haven't been learned."
That concerns some of us. But it might just be idle talk. Give the man a chance. He's good. Great orator. He'll fix it.
Maybe.
Fast rewind to page 9 ("The gathering economic storm") "The short answer is that we aren't just optimists, we are first and foremost realists. And we are now witnessing nearly all of the economic policy dials that were once turned toward growth being twisted back toward recession. The problem is not a crisis of the American Spirit or work ethic, or value system, or some inevitable decline due to complacency. It is that our politicians in both parties, but especially the liberal Democrats, are getting everything wrong - tax policy, regulatory policy, spending policy, trade policy. We call this the assault on growth. The political class seems to be almost intentionally steering the United States economy into the abyss - and, to borrow a phrase from P.J.O'Rourke, the American electorate, alas, seems ready and willing to hand them the keys and the bottle of whiskey to do it. Almost all of the catastrophic policy mistakes are being coated with good intentions....."
The book also relates an interview (pages 9 and 10) between Mr Obama and Charlie Gibson of ABC News.
You might like to read the interview. I'm not sure what to make of Mr Obama's odd comment "Well, that might happen, or it might not". There might be an innocent explanation. But it sure didn't fill me with confidence either.
The authors write: (page 10) "This amazing exchange left us scratching our heads and wondering whether this gifted orator who can fill stadiums with 70,000 or more adoring fans and followers and says that he is promoting 'The Audacity of Hope' has even the slightest clue about how economics works in the real world...."

I can't quote the whole book to you, and it would take many, many more quotes to run through the suggested economic remedies. But I hope... I have maybe set the stage and stirred your interest. Read this book. Please. And come visit with me some time on Writers Harbor. (org)

If you know of a book that is the polar opposite to this book, and refutes the contents, I'd like to hear a suggestion.
Peace. Enjoy the read.
PS: Please 'comment' constructively if you feel I am missing the point somewhere, or if you feel you can point me to further useful reading material to broaden my understanding of this time period, or to correct flawed reasoning - thanks...

The alternative solution
Laffer, Moore, and Tanous have written a book in defense of supply economics and the underlying Laffer curve.
Covering such topics as taxes, tariffs, green policy, they make a clear concise case for their solutions to create a healthy economy.
Utilizing a combination of historical data along with economic logic and common sense, they explode some common economic myths that are current being propagated.
They juxtapose the results from the current proposed solutions with their solutions to the current financial crisis by using historical government data.
To paraphrase the best line in the book that is relevant to a lot naysayers is, "They are using a false premises to come to an inappropriate conclusions."
A minor problem is their comparison of flat vs. fair tax. I did not think that they drew a sharp enough contrast between them.
If you are looking for a better solution to our current problems, this is the book to read.