Rick Perry Toasts Arthur Laffer, Roasts California


Above: Arthur Laffer (left) and Gov. Rick Perry

If you listen to Texas conservatives, California is a dilapidated hellscape that’s rapidly plunged into Third World status, like Bangladesh with more plastic surgeons.

At a get-together convened by the Texas Public Policy Foundation today, Gov. Rick Perry joined legendary conservative economics guru Arthur Laffer in yet another in a long list of bids to wrest control of the national consciousness from that great nemesis of our greater state — California.

Chuck DeVore, a six-year member of the California State Assembly who moved to Texas and joined TPPF in 2012, introduced Laffer, the supply-side sensei who gave to the conservative movement in the 1970s the gift of the Laffer Curve, reportedly drawn-up on a napkin.

Laffer imprinted on the Reagan revolution the argument that economic vitality and tax revenues could be grown by cutting tax rates. Laffer’s theory and its implications are hotly contested, and  many mainstream economists don’t subscribe to his interpretation of the curve.

DeVore was effusive in his praise for Laffer — he credited the economist with helping to wreck the Soviet Union. But he wasn’t the only one. Laffer related that he’d had breakfast with gubernatorial candidate Greg Abbott, and that the two were in perfect sync. Rick Perry, too. “I cannot say that there’s anyone I respect any more than Arthur Laffer,” Perry said in his opening remarks.

Last time Laffer made waves in the state, it was for less auspicious reasons. Since the end of the Reagan years, Laffer’s been getting paid for lending his name to some highly dubious business propositions. In 1990, Laffer received a fee for touting a “multi-level marketing scheme” called FundAmerica — the founder of which was charged in Florida for running a pyramid scheme. Laffer was one of several involved who were hit with a $150 million class-action lawsuit. In 2002, Forbes criticized Laffer for lending his name to Casmyn Corp, which mined gold in Zambia and Zimbabwe before imploding in catastrophic and outlandish fashion.

In 2004, he was sued for his endorsement of Qualmag, a San Diego company attempting to develop a “batteryless power supply capable of operating on static energy.” Investors said the firm was predestined to be a flop — and Laffer settled. Then, last year, 52 Texas investors sued an investment fund associated with Laffer, the Laffer Frishberg Wallace Economic Opportunity Fund, for allegedly funneling money into Biz Radio, a company also tied to Laffer, “with no hope of reasonable return.” Investors claim the company was a Ponzi scheme.

At the event today, Laffer spent much of his time comparing the economic vibrancy of California to Texas, noting that one alternate method of calculating poverty rates puts California at the top of the list. That, combined with the Golden State’s high cost of living and highly-paid public employees, proved the efficacy of the ‘Texas Model.’

California has been a mess, for a whole host of reasons, many of them relating to the awkward and convoluted way the state is governed — a bastardized kind of direct democracy — a subject that received much attention from The Economist in 2011. Many of the obstacles California homeowners and businesses face seem unreasonable — but Laffer also touted several metrics that seemed to muddle his case.

California, Laffer bemoaned, “pays educators 20 percent more than Texas.” Social workers, he said, “make over $56,000 a year. In Texas it’s $37,000 — a 53 percent difference.” It’s certainly Laffer’s right to argue that it’s better for teachers to be paid less, but it might not be the winning argument he thinks.

Perry preferred to paint with a broad brush, pointing to recent high-profile features of Texas’ rapid economic expansion.

“How many people, just a short 10 years ago, would have said, the United States Grand Prix would be in Texas?” he asked the crowd enthusiastically, referring to the Formula 1 race in Austin this weekend.

That wasn’t all Perry was taking credit for.

“There’s a reason they’re building a new performing arts facility in San Antonio, Texas, right now. There’s a reason that in Fort Worth, they built a new museum of modern art,” he said. “That Dallas has build two new performing arts facilities in the last 10 years. The American Film Institute’s headquarters is in Dallas now.

“It didn’t happen by accident. It’s because of policies we’ve put in place in the state.

“I think the debate’s over,” Perry said. “The proof is in the pudding. Texas wins.”

California wasn’t the only blue state to garner the speakers’ derision, though. Laffer slammed the administration of former New Jersey Gov. Jon Corzine, who he said he had once taught.

“Full disclosure: He was a C student,” he said. “And he may not have earned the C.”

To which Perry replied: “What’s wrong with being a C student?”

In closing, TPPF President Brooke Rollins offered the consolation of the free market to Californians. As if she was talking about a relapsed drug addict to unsympathetic friends, she intoned to the crowd: “We want California to do well.” If all those Angelenos just decide they want to get clean, “prosperity is around the corner.”

It’s worth getting the Californian perspective in this. Governor Jerry Brown famously called Perry’s efforts to woo companies to Texas “barely a fart.” Brown, who’s been increasingly praised for able leadership and California’s own changing fortunes, recently passed a budget that restored cuts to education — and even began paying down the state’s debt. The economy is coming back, and the Golden State even has its own version of Texas’ Rainy Day Fund.

But other Californians don’t take too kindly to naked derision, either. Subjecting Texas to other metrics, the editorial board of the Sacramento Bee responded to Perry’s consistent criticism this February by bemoaning Texas’ “high dropout rate, lack of health insurance coverage and economic disparities,” its status as “a state that is last in mental health expenditures and workers’ compensation coverage, first in the number of executions, first in the number of uninsured, first in the amount of carbon dioxide emitted and first in the amount of toxic chemicals released into water.”

“Texas can be better and wants to be better,” the editorial concluded. “Californians should help it out.”