How Economic Crackpots Devoured American Politics

CONSERVATIVES and Republicans keep hoping that liberals will actually admit that supply-side economics works, that is that low tax rates and limited government is the best prescription for prosperity.

But liberals just don’t want to accept of grace and love, spurning the offer of friendship made by Sir Walter Blunt to Harry Percy in Henry IV Part One.

In fact Jonathan Chait, Senior Editor of The New Republic has just published a book rejecting the whole supply-side deal. It’s called The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics, and it argues that Arthur Laffer (of the curve) was a lightweight, Jude Wanniski (of the Wall Street Journal edit page) was a crackpot, and George Gilder (of Wealth and Poverty) was a blind (and misogynistic) enthusiast.

Well, enough with pulling our punches, let’s get Chait’s own words from anexcept to The Big Con from The New Republic.

American politics has been hijacked by a tiny coterie of right-wing economic extremists, some of them ideological zealots, others merely greedy, a few of them possibly insane.

To add to the fun, Chait and Grover Norquist, president of Americans for Tax Reform, have been trading barbs in the online New Republic:

Of course, Chait is right. Arthur Laffer is no Milton Friedman; Jude Wanniski was weird, and George Gilder enjoys bucking the liberal consensus. And it’s true that the advocates for supply-side economics oversold their product. That’s what advocates usually do.

The big question is whether liberals are ready to concede that they ought to back off, just a little,their philosophy of governance by program and subsidy and endlessly mucking around with the tax code.

That is really the argument of supply-side economics. It says that you can use government to reward your supporters and punish your opponents: politics as usual. Boys will be boys.

But you ought to understand that when you erect confiscatory tax rates and huge subsidies that you distort the economy and reduce the prosperity of ordinary Americans.

You ought to confront, for instance, that when you send huge amounts of money to the poor it reduces their work effort and it devastates their families. And that is not just an economic issue. It is a moral issue.

And it is true. Supply-side economics devoured American Politics—at least as liberals had known it.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures

German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate.
F.S.C. Northrop, The Meeting of East and West

Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action

Churches

[In the] higher Christian churches� they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Living Law

The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital

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