Supply-side squabbles

SUPPLY-SIDE SQUABBLES

THE THING about supply-siders is that they don't get along. Jammed into their little movement is a dazzling array of zealots, geniuses, egotists, and malcontents. Robert Mundell, the intellectual godfather of the movement, is a longhaired professor with a passion for painting, eccentricity, and intellectual purity. Jude Wanniski, the so-called bomb-thrower, reported to his first job with Dow Jones & Company in a silver Buick Riviera convertible, wearing mirrored sunglasses and a gold lame sports coat, with his wife, a former Las Vegas showgirl, in tow. Arthur Laffer is as charming and dazzling a man as you'd ever want to meet, but he's been known to lash out at his allies, most recently Jack Kemp. Paul Craig Roberts, probably not a man who goes around reciting Stevie Wonder lyrics, relates to people on "a purely intellectual basis," according to his closest friends. He is critical, downbeat, and driven. Supplement that group with George Gilder, Alan Reynolds, Norman Ture, Irving Kristol, Warren Brookes, Jack Kemp, Lew Lehrman, Robert Bartley, and others. "You are talking about people with egos, and people with egos don't get along with one another," says economic columnist Brookes. "But it takes a big ego to be a political figure, a thinker, and a leader."

It also takes competitive fire. These supply-siders are like intellectual entrepreneurs, competing for glory and influence, all the while acknowledging that the success of each creates more demand for the writings of the group.

"Basically, everyone thinks he invented supply side, and he hates all the others who think they were the one," says economic consultant and supply-side political ally John Rutledge. A lot of people do say they discovered the ideas. Robert Mundell and Art Laffer make a pretty good case, but then so does Philip Bradley, a Harvard economist nobody has heard of, who was writing supply-side-like monographs in 1943.

What Mundell and Laffer have that loners like Bradley did not have is the press. "I almost think that Art Laffer consciously modeled himself of Keynes's career," says supply-side journalist Peter Brimelow, a senior editor at Forbes. "People forget that Keynes himself was as much a journalist as anything else."

But Laffer's cause might still be unknown if it hadn't been adopted by an even more gifted journalist. Jude Wanniski. "Wanniski really seized the different elements of supply side and put them together, in much the same way Procter and Gamble packages a new kind of toothpaste," sayd Ned Scharff, author of Worldly Power: The Making of the Wall Street Journal. "Had that not happened there never would have been a supply-side movement." Wanniski himself talks about spending hours and hours at a New York bar arbitrating a series of debates between Mundell and Laffer on the shape of supply-side economics.

Wanniski did most of his work at the Wall Street Journal under the tutelage of another journalist/intellectual, Robert Bartley. Bartley encourages his individual writers to serve as point men on specific issues. Their job is to poke at controversial and unexplored bushes to see what comes out. Wanniski poked around the supply-side bush and eventually persuaded Bartley himself that the theories were genuine.

Supply side is largely a journalists' movement. "It is comparable to the 1848 revolution in France where all the major political parties were associated with magazines," says Brimelow. As I was interviewing people for this article, I was shocked to find a near consensus around the proposition that journalists and private consultants have more freedom than academics. "I've spent some years in the universities," says Rutledge, "and there what you do is 99.9 per cent determined by the editors of the major economic journals. If the five biggest economic journals don't want to publish work in a given field, you might as well pack up your tent."

"There's more of a danger of academics' following the crowd with the intent to do what's fashionable," says Northwestern's distinguished professor Jacob Eisner. "What is not fashionable doesn't get you very far."

In private consulting or in journalism, on the other hand, there is no small group of journal editors or elite department heads to determine what a person can publish. Editors rarely censor journalists on fine economic points. In consulting, there are so many thousands of potential clients in the world that a consultant can pretty much say what he wants, and, as long as it yields results, he can still be assured of a niche in the marketplace.

So it was journalists, with the analytic support of private consultants, who were free to substantiate the original Mundellian supply-side insights. Characteristically, the movement's most recognizable feature is not an economic theorum, but a journalistic device--the Laffer curve. Jude Wanniski seized upon the Laffer curve as an easy way to communicate the fundamentals of incentive-based fiscal policies. The curve itself is about as innovative and remarkable as the sundial. Montesquieu knew that at certain points you could lower tax rates and increase revenues, as did Adam Smith, as did John Maynard Keynes. It is, as Herb Stein says, not true, but a truism.