Forbes® Best Business Mistakes: How Today's Top Business Leaders Turned Missteps into Success

Chapter 29. ARTHUR LAFFER

One of Time magazine's "Greatest Minds of the 20th Century"

Member of President Reagan's Economic Policy Advisory Board

Popularized the Laffer curve and supply-side economics

Arthur Laffer tends to stir things up wherever he goes—and he does it with a smile. When I spoke with him, he had just gotten off the air with MSNBC, talking about—what else?—economics and politics.

When I saw him, he was grinning. "I don't think I gave them exactly what they wanted," he chuckled. "At one point they wanted me to bash Clinton, but I supported Clinton!"

Indeed he did, and that stirred up a lot of Republicans who always thought he was one of them. After all, didn't he help write Proposition 13, the late-1970s populist voter initiative in California that limited how high property taxes could rise in the Golden State?

Didn't he promote the so-called Laffer curve and supply-side economics, which held that reducing federal taxes spurs economic growth and increases federal revenues? Didn't President Ronald Reagan's belief in that theory give him a driving argument to drastically cut tax rates for most Americans and American businesses in the early 1980s? Wasn't he literally a Reagan economic adviser, for goodness' sake?

Yep. That's the guy. Then how could he stand up for Clinton? "For one thing," he says, "he cut a lot of government spending as a share of GDP and brought us into surplus. And he cut capital gains taxes."

Of course, Laffer's support of Clinton may have had something ...