Arthur Laffer Family Economics

February 24, 2014

“What was your secret?”

Cheri and I live in close proximity to our kids. Some would say, “close knit family;” that’s probably a good description, both relationally and geographically. “Best of friends” captures the nature of our current experience. Both of our daughters are married to great guys, and – over a family dinner last week – our firstborn commented, after two hours at the table (the grandkiddos had already migrated to the other room), “not many families have six adults having this much fun together.”

We’re all at the same church, but Cheri and I aren’t very visible there. We were highly engaged there for years; today, our respective ministry activities are happening outside the church and around the world. On Sundays, we’re in the seats we frequent… and watching the next generation – our next generation – in action.

They’re still getting kudos. Little kids get trophies and ribbons for exemplary performance; grown-ups get compliments when they do well. Our daughters do well, and they earn applause for their efforts. When asked, “who was your greatest influence?” they often mention their parents. “Honored” doesn’t begin to explain the reaction we feel, when word trickles back to us…

In preparation for my role in a conference coming up next weekend, I was asked to lead a breakout on family leadership, for business leaders. Professionals regularly pass along secrets for successful enterprise life; they don’t have as many chances to explore the nuances of successful family life. Thoughtful people – watching family interactions, over the course of years – will ask the question: What was your secret?

Arthur Laffer is an economist – educated at Stanford, academically active in the past at USC and Pepperdine – who is often remembered for his part on Ronald Reagan’s Economic Policy Advisory Board in the early ‘80’s, and credited as one of the chief architects of the economic turnaround that occurred during Reagan’s two terms. During that time, I became fascinated with his ability to restate economic theory in terms that resonated with the less sophisticated (folks like… me).

The Laffer Doctrine – often called “Supply Side” or “Trickle Down” economics – was simply stated: whatever you want to encourage, you subsidize; whatever you want to discourage, you tax.

On Reagan’s watch, the trend line for the American economy reversed course, from a downward spiral to a strong upward climb. Simple wisdom was put into practice as policy, both domestically and internationally (“trust, but verify”). America worked…

I remember being in the audience – at a lecture, at the University of California/Irvine – when Arthur Laffer spoke. He shared his economic concepts… but I heard him as a dad. Reagan was working on tearing down the Berlin Wall and rebuilding a struggling marketplace; I had two daughters at home who were not yet 10, and knew I was in over my head. Laffer wasn’t pretending to be James Dobson, but I focused on my family, and took home truth.

We knew what we wanted the girls to do, but we were in the trial-and-error phase of parenting: we didn’t know, yet, the best ways to get them in alignment. It wasn’t a parenting workshop at UCI, but that’s what I extracted: a philosophy for parenting that made sense, for me.

Whatever you want to encourage, you subsidize; whatever you want to discourage, you tax. If that worked in a country with 225 million people (1980 census), would it work in a family of four?

The field test at our house has confirmed the concept: it works. I’ll build a workshop around it next Saturday, in Scottsdale; we’ve built a family around it for 30 years, in Orange County.

“I am setting before you today a blessing and a curse – the blessing if you obey the commands of the Lord your God…; the curse if you disobey…” (Deuteronomy 11:26-28)

Bob Shank