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:

• Chait
• Norquist
• Chait
• Norquist
• Chait

 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.