Recently, The Tennessean interviewed Arthur Laffer and ask a few pointed questions about the state of the Nashville economy, here are his answers:
Q) Is Middle Tennessee resistant to a recession because we didn’t have the real estate boom and then bust that other states have seen, California for instance?
A) “I was on the Governor’s Council of Economic Advisors with (Arnold) Schwarzenegger out there. I love him dearly … he’s a great guy. But when he decided to turn to the dark side, I said: “I’m getting out of here. I’m not going to watch. I’m not going to be in a collapse.”
California went from being the third-fastest growing state in the country to No. 29. So, at the age of 66 in 2006 I packed up and moved my company, my business and my family, everything here to Nashville Tennessee – a place I’d never been before. That’s not a trivial thing to do at my age.
California is like a Super Nova sending off solar systems to neighboring states. Revenues in the state are falling through the floor and housing prices are collapsing … all the other taxes collected are dropping like a stone. They are going to ruin that state beyond belief.
Q) And what’s in store for the Nashville area, for Tennessee?
A) This is all leading up to the answer to your question. Middle Tennessee is going to do great. It’s spectacular. Tennessee will skate through with no big problems. You didn’t have the big runs; you didn’t have the big falls. You didn’t do the stupid things that California has done.
Gov. (Phil) Bredesen … this guy, I met with him and talked physics with him. What a cool guy. He understands the whole process. I love it here.”
As an economic adviser under President Reagan in the 1980s, newly minted Nashville resident Arthur Laffer helped shape supply-side economic theory. Arthur Laffer is best know for the Laffer Curve, a curve illustrating tax elasticity which asserts that in certain situations, a decrease in tax rates could result in an increase in tax revenues.
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