Towards the end of 1974, President Ford’s deputy chief of staff, Dick Cheney, went for lunch at the Two Continents restaurant round the corner from the White House. He was there to meet conservative economists who had a message for the new president. Among them was Art Laffer with a paper napkin. After trying a more abstract presentation, Professor Laffer drew a curve on the serviette.

It was all pretty simple, he told Cheney, starting to draw. If your tax rate was 0 per cent then the government would have no revenue. But it was also true that if your tax rate was 100 per cent, you wouldn’t raise any revenue either, because no one would bother to make any taxable income.

Voila — the