The Laffer Curve, Part 2
3 Pages Posted: 2 Oct 2012
Date Written: September 3, 2012
Abstract
This article, the second of three, reviews the historical origins of the Laffer Curve from the Middle Ages through the 19th century. It begins with the work of Muslim philosopher Ibn Khaldun in the 14th century, whose work came to the attention of economist Robert Mundell in 1971. Mundell brought it to the attention of journalist Jude Wanniski of the Wall Street Journal. Ronald Reagan mentioned Khaldun by name on 11 different occasions as an influence on his thinking.
The article also discusses the long-lasting impact of essayist Jonathan Swift, who observed in 1728 that higher tariff rates often led to a decline in revenue. Adam Smith, David Hume, Alexander Hamilton, Jean-Baptiste Say and James Madison are just a few of those who cited Swift's observation in their discussions of tax policy.
Finally, the article reviews 19th century tariff history and notes that discussions of the revenue impact of changes in rates of duty often invoked Laffer Curve arguments.
Keywords: Laffer Curve, Ibn Khaldun, Ronald Reagan, Jonathan Swift, Robert Mundell, Jude Wanniski, John C. Calhoun
JEL Classification: H20
Suggested Citation: Suggested Citation