Merryn Talks Money: Art Laffer Has a Prescription for Britain’s Economic Woes

Podcast: Merryn Talks Money
Host: Merryn Somerset Webb (Bloomberg)
Guest: Arthur Laffer (Economist, originator of the Laffer Curve)
Date: October 29, 2025

Episode Overview

In this lively and wide-ranging discussion, Merryn Somerset Webb interviews Arthur Laffer, legendary American economist and father of supply-side economics. The conversation explores Laffer’s central ideas around tax policy, why he believes the UK is on the wrong path, and how the Laffer Curve is both common sense and grounded in data. Together, they examine Britain’s economic malaise, discuss real-world examples from Reagan, Thatcher, and Trump, and touch on the future of money, cryptocurrencies, and what policies could restore national prosperity. Laffer’s optimism and wit, along with Merryn’s probing questions, make for a thought-provoking episode.

Key Discussion Points and Insights

The Laffer Curve: Definition, Misconceptions, and Impact

• The Concept: Laffer asserts that beyond a certain point, raising tax rates actually reduces government revenue by shrinking the tax base.
• Origins and Naming:
  • Laffer did not invent the concept, but “the curve” and its visual representation.
  • "By the way, I also didn't name it the Laffer Curve. That was Jude Waniski of the Wall Street Journal who did. And again, I love the name." (Arthur Laffer, 03:32)
• Historical Data: Decades of US and global tax data show high top rates reduce economic performance and revenues from the rich, while lower rates boost both.
  • "Every single time we raise the highest tax rate on the top 1% of income earners. Three things happened: The economy underperformed. Tax revenues from the rich... dropped. And the poor got hammered. Every time we've cut tax rates... the economy has outperformed... and the poor have found jobs..." (Arthur Laffer, 05:44)
• On “Virtue Signaling” vs. Data-Driven Policy:
  • Laffer is frustrated that politicians use tax changes to signal virtue rather than help growth or the poor.
  • "It's wrong because these are real people, Marin. They're people with children and lives and happiness. You're destroying their futures." (Arthur Laffer, 09:34)

The UK’s Economic Malaise & Art’s Prescription

• Diagnosis: Britain has been declining in growth, revenues, and living standards due to disincentives in tax, regulatory, monetary, and trade policies.
• On Politicians: Both main parties are criticized for “virtue signaling” and ignoring proven economic facts.
  • "They want a virtue signal. I'm for the poor. I'm going to raise tax on the rich. That's the elephant in the living room." (Arthur Laffer, 08:04)
• Welfare Trap: Welfare systems often disincentivize work, according to Laffer and Merryn.
  • "You do have an incentive problem with welfare systems across the world." (Merryn Somerset Webb, 17:23)
• Old Success Stories: Laffer repeatedly refers to positive results from lowering top tax rates under Thatcher and Reagan—with both economic growth and poverty reduction.

How to Fix It: Simpler, Flatter, Broader Taxes

• Flat Tax Vision:
  • “I'd have the lowest possible tax rate on the broadest possible tax base... no deductions, exemptions, exclusions or credits...”
    (Arthur Laffer, 10:40)
  • Example: In the US, “we could replace every tax...with...13% flat rate.” (Arthur Laffer, 11:36)
• On Accountants and Complexity: Laffer jokes that his tax reform would put lawyers and accountants out of work, but insists this would benefit society.
  • "All of that stuff just disappears. I mean, it's just amazing how high we can fly with those wings." (Arthur Laffer, 12:11)

Transitioning Out of Crisis

• It’s Possible: Laffer argues transitions to better systems can happen faster than people think if politicians prepare public and factional buy-in.
  • "What I would like to see done in Britain... you can make these tax codes revenue neutral so there is no fear of losing revenues. And all you have is upside." (Arthur Laffer, 14:19)
• Political Lessons: Success depends on consensus-building, not imposing “reform from above.” The failure of Liz Truss is contrasted with how Reagan built coalitions.
  • "If you do your groundwork well politically... you build up this consensus, and then put the bill in and make them co authors. It's amazing how far you can go if you give other people credit." (Arthur Laffer, 19:06)

Taxes: Which Ones Could Be Higher?

• On Land Value Tax: Laffer is critical of wealth and land taxes, arguing they suppress asset values and are extremely distortionary.
  • "Wealth taxes are extraordinarily bad... every 1% increase in property tax rate... reduces property values by about 12.5%." (Arthur Laffer, 24:40)
• Favors Simplicity: Advocates for eliminating “little diddly taxes” and focusing on a small number of principal taxes.

Beyond Tax: Spending, Regulation, Monetary & Trade Policy

• Government Spending: Less is better; needs aligning with economic growth.
• Monetary Policy: Laffer criticizes central bank unaccountability and proposes stablecoins and crypto as positive innovations for monetary stability.
  • "The bank of England should not be independent. Who gets blamed for inflation in Britain? The government does not the bank of England." (Arthur Laffer, 28:16)
• Trade Policy: Deeply pro–free trade, though allows for “negotiated protectionism” when necessary for national security or diplomacy.
  • "No matter how much I believe in free trade, I would not sell nuclear weapons to Kim Jong Un. I'm just not going to do it." (Arthur Laffer, 30:02)
  • Praises Trump’s use of trade as negotiation, not simple protectionism.
    • “That's the brilliance of Donald Trump's negotiation. Now, is it all moving it towards free trade? No, it isn't. But if it's moving war, God, I'd do that.” (Arthur Laffer, 32:57)

The Future of Money, Cryptocurrencies, and Portfolio Construction

• On Crypto and Blockchain: Laffer sees private currencies and blockchain as the future, given government mismanagement of fiat. Excited about efficiency gains of crypto for transaction costs.
  • “I see cryptocurrencies as being a private solution to a government problem.” (Arthur Laffer, 36:28)
• Portfolio Advice: “It’s 100% in equities. Not all US, but a lot of them are.” (Arthur Laffer, 38:38)
• Optimism about Innovation: Praises advances in genetics, healthcare, and technology—shares personal story about his daughter’s cancer recovery due to immunotherapy.

Notable Quotes & Memorable Moments

• On Laffer’s Curve and Virtue Signaling:

  • “It's wrong because these are real people, Marin. They're people with children and lives and happiness. You're destroying their futures.” (Arthur Laffer, 09:34)

• On Policy and Political Hurdles:

  • "If you do your groundwork well politically... you build up this consensus, and then put the bill in and make them co authors. It's amazing how far you can go if you give other people credit." (Arthur Laffer, 19:06)

• On Free Trade and Realism:

  • "No matter how much I believe in free trade, I would not sell nuclear weapons to Kim Jong Un. I'm just not going to do it. All right. There's a limit right there." (Arthur Laffer, 30:02)

• On Tax Simplicity:

  • "All of that stuff just disappears. I mean, it's just amazing how high we can fly with those wings." (Arthur Laffer, 12:11)

• On Crypto as a Solution:

  • "I see cryptocurrencies as being a private solution to a government problem. They are trying to circumvent the bad currencies that have been put into place since 1913 and going to drive them out." (Arthur Laffer, 36:28)

• On Optimism and Humanity:

  • "The older I get, the more I love life. And I'm not afraid of dying. I know it's going to happen... but I figured out how I want to die, Marin. I want to die the exact same way my uncle did, peacefully, in his sleep, not like the three passengers in the car he was driving." (Arthur Laffer, 41:06)

Timestamps for Key Segments

• Introduction and Laffer’s Background: 02:05 – 03:01
• What is the Laffer Curve?: 03:05 – 05:15
• Empirical Evidence and Political Ignorance: 05:15 – 09:28
• UK Tax Policy and Virtue Signaling: 09:28 – 10:14
• What Would a Good Tax System Look Like? Flat Tax Vision: 10:14 – 12:11
• Transitioning to Better Policy & Lessons from Thatcher/Reagan: 14:19 – 16:15
• On Welfare Traps and Disincentives: 17:23 – 18:06
• Liz Truss, Markets, and the Political Challenge: 18:06 – 21:33
• On Raising Land or Wealth Taxes: 23:46 – 26:08
• Regulation, Spending, Monetary Policy, and Crypto Solutions: 27:07 – 29:01
• Trade Policy Realities & Negotiation: 29:03 – 33:42
• Portfolio and Future of Wealth: 36:17 – 39:06
• Personal Optimism and Life Lessons: 39:06 – 41:19
• Closing Thoughts on UK and Historical Context: 43:58 – 46:08

Tone and Style

The episode is energetic, candid, and optimistic—Laffer combines deep economic conviction with a playful, sometimes self-deprecating wit. Merryn is probing but amiable, often agreeing while steering the conversation through skepticism and nuance. The mood is hopeful, with frequent asides about history, politics, innovation, and personal stories, keeping complex topics accessible and at times entertaining.

Takeaway

Arthur Laffer delivers a resounding call for tax simplicity, broad-based growth, and accountability in government—backed by history and data—but insists that optimism, clarity, and consensus-building are just as important. His model is clear: prosperity comes from productive incentives, not punitive complexity. For a post-crisis Britain, his prescription is radical but rooted in proven supply-side successes, with a dash of humor and faith in human ingenuity.