To paraphrase Tom Wolfe, people really don’t read the morning newspaper, they slip into it like a warm bath. Too true, Tom! Imagine doing as I was the other day, when flipping through the digital archives, finding March 20, 1994, I slipped into that great public bath of yesteryear, that vat, that spa, that regional physiotherapy tank, that White Sulfur Springs, that Marienbad, that River Jordan, that Ganges that is—that was—the Sunday New York Times. There I was, submerged, weightless, in the tepid depths of the thing, when suddenly, something extraordinary happened.
I noticed something!
Why, it is even happening in our states!
Yet another clam-broth-colored current had begun to roll over me, a screed against the tobacco industry, it was—these were the days, 1994, when everyone was piling on Big Tobacco—when I was jerked alert by the following passage that is a quotation from a Philip Morris executive:
“We have the best partners in the world: the governments. In a lot of countries, it’s incredibly important to the whole welfare state that we sell our products to collect taxes. When you sit with a finance minister…to discuss taxation, he’s much cruder about the financial analysis than we are. He asks, ‘How much can I put up the tax, to make sure that demand is not going to go down so much that my net intake goes down?’ Amazing. So matter how you look at the cigarette business, it’s incredibly predictable [and] extremely secure.”
You might say, my God, man, you forsook your blissful coma over a mere swell in the sea of words? A business type droning on about policy and strategy in the Old Gray Lady of her late heyday?
But I knew what I was looking at. I welled up with the feeling that lifelong agents monitoring rogue states have when, after years of reading code, they are suddenly struck by the Aha! phenomenon, when a particular something comes across the teletype, namely a discovery of a secret passage of text, among legions of verbosity, that gives the game away.
All these years I had thought, as the credulous public is supposed to, that raising tax rates brings in more revenue, and that cutting rates brings in less—that the Laffer curve, in a word, is crank economics, that it is nonsense. “Mob Lawyers,” one blogger once called defenders of this kind of logic. But here I found a very captain of industry, quoted acceptingly in our paper of record, saying that the very success of the tobacco juggernaut owes to getting governments hooked on the tax revenue! And once governments have that kind of skin in the game, their opposition to the Laffer curve idea vanishes like night into day.
Not raise a tax rate and get more sales and revenues, you ninny, but raise a tax and get less!