May 4, 2009

PUT ME IN COACH:

Jack Kemp, 1935-2009 (David P. Goldman, May 4, 2009, First Things)

Jack’s coach in matters of economics was a flamboyant Wall Street Journal editorialist, Jude Wanniski. In 1975, Jude published the first manifesto of what later become known as supply-side economics in Irving Kristol’s ideas journal, The Public Interest. Shortly afterward he met Kemp, then representing Buffalo in the House of Representatives after a decade as the star player for the Buffalo Bills. The rest is history. It was a marriage made in that low but solid heaven known as American politics. A devout Catholic, Jude was convinced that God had chosen him to bring prosperity to the oppressed masses of 1970s of America. Jack bragged that he had taken more showers with black guys than anyone in the U.S. Congress and, as a professional athlete, was the Republican least tainted by racism.

What attracted Jack Kemp to supply-side economics was the promise of advancement for ordinary people. At the end of a long cycle of economic expansion, it is easy to forget how it all began. Jack had been associated with future President Reagan since 1969, when he worked on the California governor’s staff in Sacramento. As a U.S. Congressman representing a working-class constituency in the traditionally Democratic city of Buffalo, Jack got elected on his sports-hero credentials. He passionately believed in individual opportunity and free markets, and he needed an argument to take to the union rank-and-file who made up the bulk of his district’s voters. Supply-side economics, the premise that tax cuts and corresponding regulatory reform would unleash the creative energies of Americans, persuaded him, and he became its great missionary.

The transmission of ideas in the Reagan Revolution was one of the stranger developments in intellectual history. Robert Mundell, the Canadian economist who in 1999 would win the Nobel Prize, had already been chief economist of the International Monetary Fund and was teaching at the University of Chicago. Arthur Laffer (whose famous “Laffer Curve” would summarize supply-side economics) was Mundell’s colleague at Chicago. Mundell is an authentic genius who sported shoulder length prematurely gray hair, with Siamese-cat blue eyes that had an unnerving way of fixing on his conversation partner. The professionals in economics shunned him because his views were so novel as to threaten all their settled opinions.

Laffer translated Mundell’s insights into terms that Jude Wanniski could understand, and Jude then explained it all to Kemp. Through this game of telephone, there emerged the 1981 Kemp-Roth Tax Cuts, one of the few really decisive turning points in American economic history. And it was accomplished entirely outside the usual channels of policy transmission. There were no Wall Street gurus, no strings pulled by investment banks, no academic consensus, only a broken-down actor, a broken-down quarterback, an outsider of an economist, and a newsman with pronounced messianic tendencies.

Knowing the story in detail is one of the empirical observations that led me to conclude that there is a special providence for the United States.



Posted by Orrin Judd at May 4, 2009 12:51 PM
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