← Going Big! with Kevin Gentry
Going Big! with Kevin Gentry
Going Big with Art Laffer & Lord Matthew Elliott: Prosperity Through People and Policy
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- [00:01]
Kevin Gentry
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- [00:31]
Dr. Art Laffer
I was really flattered I would be replacing Jascha Heifetz, who had been a university professor there. You know, Jascha Heifetz. And it was really. And I sat there and thought about it and I said, you know, if I accept this, I will lose all the incentives I have from being afraid to fail. I will have a fail safe situation and within 20 years, I'll be a mewling, puking dummy walking around campus, plastering words all over. And I said, nope. And I quit the university to go out into the real world to where I could lose. And by the way, the first five years of my being in the real world were terrifying. I mean, they were. But it's the best training ground in the world. You need to be able to love success, but to be terrified of failure. And you need both incentives. And that was what I applied to myself day and night, is how can I take the risk and do it and make sure I do it correctly and balance.
- [01:31]
Podcast Host (Kevin Gentry)
Welcome to the Going Big Podcast. I'm your host, Kevin Gentry, and this is the place where we celebrate bold moves and big ideas. Each week, I sit down with inspiring leaders, entrepreneurs, and change makers who are making a significant impact in their careers and and in their communities.
- [01:51]
Kevin Gentry
Whether you're looking to level up your.
- [01:53]
Podcast Host (Kevin Gentry)
Leadership, pursue your passion, or just get inspired to take your next big leap, this is where those stories come to life. Now, if you're listening on iTunes, YouTube, or anywhere else you tune into podcasts, be sure to hit that subscribe button so you'll never miss an episode. Now let's dive in to what it means to truly go big.
- [02:14]
Kevin Gentry
If you could whisper one word to every citizen on Earth about their power to create prosperity, what would that word be? Well, ladies and gentlemen, we're going to tackle that today, and we're going to hear about that advice not from just some big thinkers, but from those who are really the architects of what's possible. We're welcoming Dr. Art Laffer, whose Laffer Curve reshape the entire global debate about taxes and incentives and growth. And we also have Lord Matthew Elliot, who led some of the most successful popular movements in modern British history. So, as you're about to hear, we're going to hear about what it is that motivates and drives prosperity. Now, Art Laffer and Lord Elliot have a brand new book just released. It's called Prosperity Through Growth Boosting Living Standards in an Age of Autocracy and Artificial Intelligence. It was just released. You can order a copy today. But to be clear, their goals are about something much deeper. It's a belief that growth isn't just an economic goal. It's a human calling. So this is the Going Big podcast and today we're going to talk about what it means to go big for an entire society. So here we are. Welcome. Dr. Art Laffer and Lord Matthew Elliot.
- [03:47]
Dr. Art Laffer
You're welcome. Pleasure.
- [03:48]
Kevin Gentry
All right, let's start where we began. I'm going to ask the first question to you, Dr. Laffer. If you could whisper one message to every citizen in the world about their power to create prosperity, what would that message be?
- [04:04]
Dr. Art Laffer
To me, the way prosperity originates is in the individuals and people. And what we had, let's say in the 19th century, we had a shortage of government. There were a lot of government functions that needed to be filled.
- [04:17]
Kevin Gentry
They were filled.
- [04:18]
Dr. Art Laffer
And we really came into the 20th century and now into the 21st century having experimented with ever larger governments. My suggestion would be, if you want prosperity on this planet, reduce government back, cut it back by about 80% and get to the government where it should be. And if you did that in taxes and spending and regulations and monetary policy and in trade, you could create an enormous prosperity in this planet in virtually every country. Government is just too, too large. We need government. We need it badly, but not this big a government.
- [04:54]
Kevin Gentry
Awesome. Well, we got a lot to talk about today because we can strike to the heart of the problem. But you all are very action oriented and have some solutions in your book and in your work, and we want to get to that as well. So, Lord Matthew Elliott, I'm going to move now to the second question I have for you. And it's very much related, though. If you strip away the numbers and the politics, what is at the heart of prosperity? What is the soul of prosperity?
- [05:21]
Lord Matthew Elliott
I think at the heart of our message is actually a key phrase which you almost used for the title of the book. And that phrase is incentives matter. And that's really the core of driving prosperity and driving growth. And we always try to remember that we get our wealth, we get our prosperity by the actions of individuals and companies generating all that wealth generating those jobs. It's not the government that creates our wealth, it's individuals who, companies.
- [05:53]
Kevin Gentry
Well, all right, so now let's strike a little bit more to the understanding the problem. So, Dr. Laffer, the size and scope of government, what is the role of government in the society today versus the role of the individual, the role of business to create prosperity. We've seen governments, movements and even individuals talk about change for a long time. Some of these people have been our heroes, they've talked about it. But ultimately many of them shrink away from being able to really drive the change. Why doesn't more change happen?
- [06:30]
Dr. Art Laffer
Well, I think the politicians really underestimate the difficulties they're going to have when they come into office. They get elected by throwing out one liners and cliches and slogans and all sorts of stuff like that. And then they get in there and see the behemoth that is government that they try to then handle and they underestimate the difficulty and the size of that and they start losing interest, losing faith, losing hope. And by the time they finish, they crash and become part of the problem themselves. Now, what they don't realize and which is true and which I hope we've made very clear in this book, is the simplicity of solutions is there to create prosperity. It is not as though it hasn't happened in the past. We had Ronald Reagan in the US to create enormous prosperity. We had John F. Kennedy and they had Lady Thatcher in the UK to create an enormous reversal in prosperity. You know, once you think all is lost, if you put in that extra 15 minutes, all of a sudden the sky's clear, the dust settles, the smoke's gone, and there you are with very simple, straightforward solutions is exactly what happens. And as Matthew said so eloquently, it's all about people and it's all about incentives. People respond to incentives. If you make something attractive, they'll do more of it. If you make something less attractive, repulsive, they'll do less of it. You know, that's all it is in here. And understanding that prosperity comes not from us fighting each other, it comes from us working together. You know, John F. Kennedy put it, and I'll stop here, but no American or no Brit is ever made better off by pulling a fellow American or a fellow Brit down. And we're all made better off if any one of us is made better off. And this is the line I used with Reagan in his first election run, is a rising tide. It raises all boats. This is not black against white old against young, male against female, rich against poor. This is. We're all in the tub together. And if we don't get it right, that tub becomes a conflict against each other rather than a pulling to create prosperity. If it works together, rich people should decide tax rates just as much as poor people should. Everyone should come to a consensus. And I could go on, but it really is incentives. Matthew. Sorry, no.
- [08:54]
Kevin Gentry
Hear, hear. As our British friends would say, Lord Matthew Elliot, you're coming to us from London. I can see the parliament building behind you and clearly the obvious streets of London with the red buses and the iconic taxis in the background. You've run some incredible efforts in the uk, including the Vote Leave campaign. You were the Chief Executive Officer of that Brexit. Why? I'll ask you the same question. From your experience there, is this a universal thing. Why isn't that bold leaders aren't able to achieve more.
- [09:35]
Lord Matthew Elliott
I think you really need to think big. To use the name of your podcast. And one thing we did with the book was to speak to many people, about 35 people who are senior economic decision makers within the UK and beyond. This included five prime ministers and nine chancellors. And the one message they had, these often had their political careers. Perhaps in the past, they wish they'd thought more long term. I think too often within modern day politics, you're thinking about what will the media hit be the next day, what will be on the Sunday shows that weekend, what will the next election campaign look like to get in? What you should be thinking about is what will I do when I'm in office within that parliamentary period? So thinking big and working back from there. So their message would be, that's our message too, would be thinking about, right, big picture, how do we make a country prosperous? How do you improve living standards? Work out that. And so in the book, the principles and the policies and then work backwards to where you are today. And thinking big is all about thinking long term.
- [10:44]
Dr. Art Laffer
Hear, hear.
- [10:45]
Kevin Gentry
Well, I appreciate your concentration on the thinking big concept. What's. I'll use an economic question, I guess. And first Lord ELLIOT and then Dr. Laffer, what is the hidden cost of not thinking and going big with respect to prosperity?
- [11:02]
Lord Matthew Elliott
We see it within the UK. If you go back to the year 2000, the turn of the millennium, roughly speaking, both UK and US GDP per capita were roughly the same. So equal living standards. Now within the US, each US citizen is on average 40% richer than the average UK citizen. And that's because of economic growth. That's because of the wrong Decisions made within the UK So what you see is over time in the economic sense, people becoming poorer. And we're seeing that today in the UK People fighting over a shrinking pie, essentially. And that's where a lot of the societal tensions and social tensions come from.
- [11:45]
Kevin Gentry
Dr. Laffer, you've been offering excellent economic advice to presidents in the United States and people around the world for a long time. I think you were the first chief economist of the White House Office of Management and Budget back in the day, and you certainly advised President Reagan as well. What to you is that hidden cost of not thinking and going big?
- [12:04]
Dr. Art Laffer
You know, I think Matthew said it perfectly. I don't want to take it. I mean, when he does these beautiful words in the English language, I don't want to spoil them up with Americanism. I mean, the word chancellor, you know, if you followed it with the correct second word, was just of the Exchequer. I mean, how cool is that? How cool is that? I mean, there he is and he's completely right. You know, you think micro. One of the things. Let me just add on to Matthew's comment, and it's just a minor add on. He's right about the GDP per per capita that he described now and how Britain has sunk. Do you realize that today Britain's real GDP per capita is less than the worst state in the US Less than Mississippi. I mean, wow, you know, these are big deals for an American. I mean, you've seen this decline and don't confuse that with a very successful US Economy. It's not been terribly successful. It's just that Britain has been a catastrophe. The country we all love and respect to as our ancestor, Great Britain, has had the greats snapped out of it. And we want to, Matthew and I and the two other co authors, Michael Hincey and Douglas McWilliams, want to put that grape back into Britain. And that's the dream.
- [13:19]
Kevin Gentry
Well, give us a little bit more of a global perspective, if you would. What is going on in Europe as well, Western Europe? Why is Eastern Europe doing somewhat better? What has happened? What happened in Chile, for example, in the past 30, 40 years or Singapore or some of these other countries that unleashed growth. And what happened like South Korea, another great example, versus, you know, what we thought were these dominant societies that are just killing themselves.
- [13:50]
Dr. Art Laffer
You know, I've been very involved in Chile. I was down there in the 70s with Sergio de Castro and Ralph Luders and all the Chicago boys. They were my students. We did the revolution down there with Pinochet, as you may know. And for 31, 32 years, it was the best performer there. All with what we're describing in the book Prosperity Through Growth. That's the exact same recipe that we're providing here proposing for Britain. If you look at what happened with Lady Thatcher, if you look what's going on in Europe, the reason Eastern Europe is doing so well is because they were treated so badly for so long that they know government doesn't work and that when government gets too large, it infringes on your freedom and becomes the bully, not the helper, you know, and the government that's large enough to give you everything is a government that's large enough to take everything from you. And that's what the Eastern Bloc is. Western Europe has not discovered that yet. They still think of government as the answer rather than the problem.
- [14:52]
Kevin Gentry
Well, okay, now we're going to shift a bit to tapping the what is possible still today. And you've already hinted at that with respect to your book and, and your comments. But Matthew, I'll ask you now a little bit more of a political question. Tell us about the importance of courage with respect to what you're arguing.
- [15:13]
Lord Matthew Elliott
I think courage is key. And this week within the uk, we're actually celebrating the centenary of Margaret Thatcher's birth. So it's a big celebration about that. And if you cast your mind back to the 1970s when she was the leader of the opposition over here, that was a period where the UK was known as the Sick man of Europe for not doing very well economically and also the huge amount of trade union strikes and the Winter of Discontent and Romish pileup in the streets. It was hugely bad time economically. And at the same time she was thinking of a better way for the UK and she was inspired by the ideas of Arthur Laffer and Milton Friedman and Friedrich Hayek and other great economists like that, to think of that better way. But at the same time, she was fighting against the Labour Party and the trade unions and even, it must be said, people within her own political party, within the Conservative Party, who were still very blinker, they couldn't see beyond today and they didn't have that ambition without going big. And what she was able to do is actually think we need that better way and then provide the leadership for the country. Because often when you look at some of the economic policies that we talk about within the book, sometimes they don't poll very well short term. And you need the leaders there to explain how by bringing in the policies, you then generate the growth that makes you everybody Better off. But you need that leadership there at that price requires courage as well.
- [16:46]
Kevin Gentry
Well, the world craves new leadership, that's obvious. But now let's turn a little bit differently though, with respect to Yul's involvement, both with the extraordinary Reagan prosperity from which until even very recently, until I would argue that President Biden's administration kind of really drove it into the ground, we enjoyed decades of prosperity of the United States thanks to many of Reagan's policies. Same with Thatcher. As you're saying, what are those universal principles that made that prosperity work so well?
- [17:19]
Lord Matthew Elliott
We've talked in the book. This is a brilliant first chapter by Dr. Laffer in terms of the North Star of economic growth. And within that North Star you have the five kingdoms of economics. You have the tax, spending, regulation, trade and money. And you need to get the policies right in all of them. It's not just enough to get it right in one. And what we do with the book is look at the principles of why you need low taxes, sound money, free trade, etc. Then we look at the history of it, particularly looking at UK and US and international economic history, to prove those principles right, to prove that if you get the policies right in those areas, you get faster economic growth and better living standards. And then what we do is apply those principles to the UK at the moment to come up with a practical plan that the champions of the Exchequer at the moment, Rachel Reeves, could implement this year to get Britain on a better growth trajectory.
- [18:18]
Dr. Art Laffer
Isn't that perfect? I mean, Kevin, you've got to admit, that was the perfect answer. I mean, I couldn't even. It just is not only sounds good, it is good. It's the right thing to do. It's what Reagan did, it's what Thatcher did when she was in. And it works. And these people, I would not use the word courage so much as I would dream. You know, Bobby Kennedy said it so beautifully. I see things that are happening and I ask myself why? And I imagine what could happen and I say, why not? And you know, that's the dream. And what Matthew just put is the dream is a low rate, broad based, flat tax, spending restraint, sound money, minimal regulations, free trade and get the hell out of the way. And the British people will be able to solve their own problems with the right framework. And that's the dream of all of us.
- [19:09]
Kevin Gentry
Well, you know, you referenced President Kennedy and of course he had that dream of getting a man on the moon by the end of the decade in the 1960s. And you needed that. That goal that objective, that North Star as Matthew, as you referenced, that we could all see and work toward. And you know, we have that expression today, a moonshot. A moonshot is that big, hairy, audacious goal that we can all work toward. Well, now I'm going to take it a little bit more personal to both of you all because I think this is important for us to all be really inspired by what you're doing today. If you wouldn't mind, tell us a little bit about in your own life where you saw that sort of thinking big, acting big, and courage was key. I don't, I don't know exactly how some of those policies came about that Dr. Laffer, you are part of. And Matthew, I know that you've taken some key leadership roles. Matthew, I'll let you start and then we'll let Dr. Laffer come in after you.
- [20:10]
Lord Matthew Elliott
Well, this will be a very minor story in comparison to Arthur's, but I remember going back about 22, 23 years now, and I'd been out at university for a little while working for an mp, and I basically had the idea of setting you up a taxpayer group within the uk. They were inspired by people like Grover Norquist in America and seeing the good they'd done with their groups in the us And I was there as a young researcher in my early twenties, thinking up how it could be applied to the uk. And I got offered a position as chief of staff to a very senior mp. And I was at that career trajectory. Where do I take the fork in the road with the taxpayers alliance or fork in the road with just being a sort of standard researcher, spad, chief of staff and what have you. And I took the step of actually setting up the taxpayers alliance. I'm pleased I did, because now the UK has a taxpayer group to actually talk about how you need to eliminate government waste, how you need low taxes. And I was very grateful that 20 years ago when we launched and had our first book out on the flat tax, that Arthur VAY kindly wrote the forward that flat tax book. So it's great to be collaborating again 20 years later on this book.
- [21:23]
Kevin Gentry
Well, to be fair, you know, the, the fact that the Tech Bears alliance is still around, something that you founded, is another nod to your effectiveness as a leader. All right, Dr. Laffer, how about you stepping out in courage? I mean, how do you know these ideas? How do you have the confidence that these ideas work to really recommend to a political leader, hey, you got to do this because it's good stuff is going to happen.
- [21:50]
Dr. Art Laffer
Well, the way, you know, they work is they've worked in the past. I mean, everyone just looks at the past. You asked me about where the greatest prosperity periods were. You get the period of Calvin Coolidge, you got the period of John F. Kennedy, you get the period of Ronald Reagan, you get the period of Donald TRUMP in the U.S. you get the period of Margaret Thatcher. You can go back. I mean, I don't know if, you know, we are cognizant all the time. You know, all this growth stuff started in Britain. There's a guy named Adam Smith over there who did some stuff, and there was some Industrial revolution, all of this stuff. And, you know, you can see exactly how all of that happened and got it all together. If you look at the Nobel laureates, the three recent ones selected by the Nobel committee, all of them are on, literally on what was it that created the economic growth of the great countries, what they call the hockey stick period there. And all of it was what came together with this wonderful confluence of all of these ideas in Great Britain that created the Industrial Revolution. Then it was launched. And we've seen it happen in microcosms there in Britain with Thatcher, you saw it with Coolidge, we saw it with Hari and Coolidge, you saw it with Kennedy, you saw it with Reagan. I mean, you've seen these things happen. If it worked in the past, every single time it's been implemented, there's a slight chance it'll work again. If we do it. And that's all we're doing, is we infer the future from the past and we look at what did and what didn't work. And when I look at people, I say, I could give a damn what your opinion is. I mean, I just could give a damn. And you should give a damn what my opinion is. This isn't about. This is about facts, not how we feel, not about opinions. This is about data. And that's what we do. In this book. We literally look at these periods that were successful and have, based upon that, recommended what will work in the future. If you put it in, and if you have the ability as, as Matthew says, to stick to it, go for it, we'll win. And Britain can be. It can be resurrected completely to be the world's leader again. Believe me, they have it within themselves to do it. And our job is just to lay that out on the table. And if they choose it, it's theirs. But it's not for lack of vision that the British people don't recreate prosperity. They've got this book and they now know how to do it and it's their turn. Go and get it done.
- [24:13]
Kevin Gentry
Well, you know, you're here it is 20, 25, we have so much data today. And you're right, if we just line this up on a piece of paper, a balance sheet, so to speak, it'd be so obvious, country by country. You look in the United States, you compare California and New York to Florida and Texas and there's no comparison. So let me ask you a question. You know, if you look at countries that have, that have enjoyed such tremendous prosperity, the assumption that it's about natural resources or something like that has been proven. I mean Singapore or the Netherlands back in the day or Great Britain, they did not have a situation like that. What in your judgment, looking around the world today, what other countries are poised to go big not just because they're rich, but because you think they're ready. There's an appetite to do the kind of stuff that you all are recommending.
- [25:06]
Lord Matthew Elliott
Well, you know, one country I visit a lot is Dubai and Dubai is in the news a lot in the uk. So a lot of Brits are going over there to work and people see it as being a very oil rich nation actually within the uae. It isn't compared to the others. What they're trying to do there is to create a country where they bring together lots of different people in a very creative, entrepreneurial way. And there are aspects of that society that could be questioned. But actually in terms of their vision of creating a very dynamic country with entrepreneurs creating money, creating wealth, bringing people together, it's definitely in there. That's inspiring. But I don't think we should be put off. That could be the UK as well. And we've still got. The analogy I have to use is about the state of the UK economy. There's a poll done before the Christmas asking the UK public if the UK economy was a car, what sort of car would it be? And they were saying it would be like a sort of slightly rusty, what we call a Robin Reliance, not a nice car within the uk. Actually I see the UK as being an old vintage sports car, slightly unloved, in the garage a bit too long, needs some looking after, needs a bit of de rusting, needs some tlc, needs the electronics upgrading, but actually the fundamentals there are still there. To be a great economy, to be a great country again. And hopefully with the book there was follow on campaigning. We'll get there.
- [26:34]
Kevin Gentry
Well, I'm glad for many obvious reasons you're not giving up on the UK and you're right, you think back, Dr. Leffert, you mentioned we remember the 1970s. Matthew might not, but you and I do. And both in Britain, but certainly in the United States, there was almost a general acceptance of the malaise. We're number two, we'll never be great again, etc. And we've done this before. So any country can, can come, come back from the abyss. So I want to turn it back. We're about to wrap up soon. But I want to turn it back to you again personally. Think back about in your, your own case where you, you thought big and you, you have to step out encouraged because this comes up a lot in this podcast. People want to know what how can they think about in their lives to act big. And again, we're going to wrap this up tied to this whole argument that you've been making, but with respect to your own life. Matthew, you mentioned the taxpayers alliance, but even with respect to leading Brexit or whatever, what was an example where if you could share, you had to step out in order to go big. And then Dr. Laffer, I'll let you come in after Matthew Great.
- [27:46]
Lord Matthew Elliott
Well, the taxpayer science is a key one, but then also setting up the Brexit campaign, which was many, many years in the making of, in setting up the coalitions behind that of business leaders, of thought, leaders of society in general. So that was a big effort. But I think we need to hear from Arthur on this because this year it's the 50th anniversary of the Laffer Curve. And the Laffer Curve has had such a big impact in terms of not only economic thinking, but also societies right across the world in terms they approach these. We need to hear the story behind the Laffer curve and from Dr. Laffer himself.
- [28:24]
Kevin Gentry
Well, Dr. Laffer, please. But before that, I just want to acknowledge Lord Matthew Elliot is exceptional at building coalitions and thinking through how to bring people together. Because you can't just win this just because you're right. You have to be effective and in the, in the efforts as well. But Dr. Laffer, what tell us about the Laffer curve that we've all known about all our lives or most of our lives.
- [28:51]
Dr. Art Laffer
It's such a simple thing. Everyone in microeconomics understands you can overprice a product and lose money. Everyone understands you can underprice a product and lose money. You know that there's a correct price for maximizing profits. Every micro economist use it. And the Laffer Curve is nothing other than that concept. It's really very simple. You can overtax an economy and lose ground, not get money under taxes. It's been in the economic literature for a thousand plus years. It's in the Mukodima by Ibn Khaldun. It's John Maynard Keynes has the greatest example. The only problem is macro. Economists didn't use it. And when we came into the 50s and 60s in the US everyone assumed that if you raise tax rates by 10% you're going to collect 10% more revenue. And all I did was bring this simple idea back into macroeconomics and it caught fire. Now just for the record, I didn't invent it, I didn't develop it, it's been around forever. It's not me. But I did use it and I did bring it back, but I also didn't name it. That was Jude Winiske of the Wall Street Journal. Taxes, revenues and the Laffer Curve. And I'm.
- [29:55]
Lord Matthew Elliott
What? What?
- [29:57]
Dr. Art Laffer
But I love it and I don't want to ever change it. It's been the greatest thrill ride for me I've ever had. But I did bring it back in. And once you start considering the feedback effect of taxes, of regulations, of sound money, of free trade of all these things, once you understand there's a dynamic context that leads to a much greater effect. Total consequence, as Matthew said it should be. Taxes have consequences and that's based on incentives. I mean, that's it. And that's, you know, I apply it to my own personal life. You, your question was what personal life change did I have ever. I was a professor. I was the Charles B. Thornton professor at usc. I think he was the highest paid professor at the University of. And they asked me to be the university professor, which is a single position and it's a lifetime appointment and it's, you know, you walk around and people bow and kiss you and all that stuff. And I, I was really flattered I would be replacing Yasha Heifetz who had been the university professor there, you know, Yasha Heifetz. And it was really. And I sat there and thought about it and I said, you know, if I accept this, I will lose all the incentives I have from being afraid to fail. I will have a fail safe situation and within 20 years I'll be a mewling, puking dummy walking around campus plastering words all over. And I said, nope. And I quit the university to go out into the real world to where I could lose. And by the way, the first five years of my being in the real world were Terrifying. I mean, they were. But it's the best training ground in the world. You need to be able to love success, but to be terrified of failure. And you need both incentives, and that was what I applied to myself day and night, is how can I take the risk and do it and make sure I do it correctly and balance it?
- [31:48]
Kevin Gentry
Well, those are the kind of insights, that's the kind of wisdom we love to hear on the Going Big podcast. So thank you for sharing that. On the Laffer curve. So the top of the curve is the optimal tax rate that generates the most revenue. And your argument was that if you reduce taxes, it would actually produce more revenue. What? Tell us you sketched it out on a napkin. What was all that about?
- [32:10]
Dr. Art Laffer
You know, that's a nice story. And no good story on earth should be denied embellishment, and that's exactly what that story is. As I sat there, the sun shone right through the clouds that hit on my napkin in the hotel with my classmate Dick Cheney, who was my classmate at Yale with Don Rumsfeld, my best friend at the time, and who was doing. And all of a sudden, this curve, this hand from God did that. No. You know, I've been teaching this for quite a while in classes there. It's a mathematical model. And I use the pedagogic divide of the curve to illustrate that there are two effects taxes have on revenues. One is the arithmetic effect. Very simply, the. If you raise tax rates, you collect more revenue per dollar of tax base, Period. That's the arithmetic effect. But there's the economic effect, which, if you raise tax rates, you make that activity less attractive and people will do less of that activity. These two effects always fight each other. They always do. And some instances, the arithmetic effect works. That's the bottom part of the curve. And some of these instances, the economic effect dominates. That's the top of the curve. You want to always be in the bottom of the curve. Always. In fact, you want to be way in the bottom. You don't want to maximize revenues. You want to maximize prosperity. And the tax revenues that come with that will be plenty sufficient for creating growth. And that takes us right back to the first question is, you know, this is how we can create it. We've got the plan for the people there in Britain. Here's what you do. If you want to be prosperous, go for it. We've given them the recipe of prosperity. They now need to literally put it in the oven and cook it and bring it back out and bring Britain back to prosperity.
- [33:57]
Kevin Gentry
Well, that is a bonus economic lesson from Professor Laffer. So thank you. In addition, on top of everything. All right, as we bring it to a close, I have two final questions. The first of the two is, and I'm going to start with you, Dr. Laffer. If anyone listening, whether they're a student, an aspiring entrepreneur, they want to go into politics, whatever it is, what should they start doing tomorrow to prepare to go big in their life, follow their.
- [34:27]
Dr. Art Laffer
Incentives, follow their dreams, do what they can. You know, life is a long journey, and you know, you prepare for the best prosperity in the best ways. You're going to hit obstacles, but dream for the dream. And I would say that's what people should really do and make sure that they. That they give themselves the proper tools to deal with it. And some people are born with disadvantages. They need to overcome those as well. And some people don't have the ability and the skills to fly to the moon, but they can fly to the clouds. And everyone should take his or her own hand and play it as best they can for the long term, the long run.
- [35:06]
Kevin Gentry
Well, Lord Matthew Elliot, you're still a young man, but still, what wisdom would you share?
- [35:11]
Lord Matthew Elliott
I would say don't be afraid to ask. You got to ask people for things. And if people say no, don't take it personally. Where I'm from in the UK is a place called Yorkshire, from Leeds. And there's a phrase called shy burns, getting out. And to translate that into English, English, it probably means shy. Children don't get anything. So you've got to ask. You've got to ask people things. And people more often than not, are willing to help you out.
- [35:39]
Dr. Art Laffer
And can I add to that just one thing?
- [35:41]
Kevin Gentry
Absolutely.
- [35:42]
Dr. Art Laffer
I just hope I'm not making an ask out of myself.
- [35:49]
Kevin Gentry
There's the laugher humor.
- [35:50]
Dr. Art Laffer
All right.
- [35:51]
Kevin Gentry
The laugher curve and the laughter humor. All right. Well, to final question is this. If you could put one sentence on a billboard in Westminster, in Washington, any place in the world, summing up what it means to go big and unlock prosperity, what would that sentence be? Lord Elliot, you get the first go, and then, Dr. Laffer, you get to close us out.
- [36:18]
Lord Matthew Elliott
Well, I'm going to talk about human flourishing. And often, as free marketers or people believers in free enterprise, we're accused of knowing the cost of everything and the value of nothing. But actually, the heart of what we talk about is actually creating a society that's really prosperous, actually helping individuals fulfill their potential and flourish. That means allowing people to set up great companies, invent great things and allowing people to create philanthropy that supports the arts and creativity. So actually the best way to get a really prospering society, a flourishing society, is actually through individual liberty and free enterprise.
- [36:57]
Dr. Art Laffer
Dr. Laffer, what I'd put on that billboard is if you tax people who work and you pay people who don't work, don't be surprised if you find a lot of people not working.
- [37:10]
Kevin Gentry
Well said. Well, Lord Matthew Elliot, Dr. Art Laffert, this has been a real treat today. Thanks for being part of the Going Big Podcast. Keep Going Big, ladies and gentlemen. Don't miss this book. Matthew, Give a final plug for it. Let us all know the title where we can all find it just by a quick search, but give a final plug for it.
- [37:32]
Lord Matthew Elliott
So the book is called Prosperity Through Growth and it's available on Amazon out in October and hopefully it'll be going.
- [37:41]
Kevin Gentry
Big and it refers and it offers practical things that the UK can do. But your plan is to offer practical lessons for any country in the world how they too can adopt and apply these universal principles to go big and enjoy prosperity.
- [37:54]
Lord Matthew Elliott
That's very true. Split into three parts. The first part is all about the principles of egoic growth and the North Star and the five kings of egoic growth. That's really crucial. That's universal right across the world. Then it has how to apply it to the UK economy. But again, there are lessons in that for all countries. Simpler flat taxes, for example, to the third section is the politics of it. What we learned from those prime ministers and chancellors about how to get growth. But again, these lessons in terms of long term planning not being buffeted by the short term, they could apply to any country across the world.
- [38:27]
Kevin Gentry
Well, thank you again and you guys, please keep going Big Kevin, thank you.
- [38:32]
Podcast Host (Kevin Gentry)
Thanks for tuning in to the Going Big Podcast. I hope today's conversation left you feeling energized and ready to tackle your biggest goals. Don't forget to subscribe and leave us a review on iTunes, YouTube or wherever you listen to podcasts. It really helps spread the word and it gets these inspiring stories out to more, more people. You can also find more content, resources and updates at our website goingbigpodcast.com Remember, the only limits are the ones you don't challenge, the limits that you impose on yourself. Keep pushing, keep growing and above all, keep going big. See you next time on the Going Big Podcast.
- [39:15]
Kevin Gentry
Well, thanks again for joining us for another episode of the Going Big Podcast. I hope you were inspired to think big, big and to go big as a result of hearing these sorts of motivating conversations. And one more note about our sponsor for today, Zephie. Be sure to check out zefie.com register and find out how you can be one of more than 50,000 nonprofits that are taking advantage of this service that delivers 100% of an online donor's contribution directly to your important cause. No more fees. No more hassles. Check it out and we'll look forward to seeing you again on the next episode of the Going Big Podcast.