- The Washington Times - Tuesday, September 13, 2005

An era ended Aug. 30 when Jude Wanniski, who did more than anyone else to popularize supply-side economics, died at age 69.

I met Jude in early 1977 after I went to work for Jack Kemp. Jude was a Wall Street Journal editorial writer but also much more than that. He was an entrepreneur in the purest sense — an entrepreneur of ideas.

The obituaries said Jude coined the term “supply-side economics.” This is not exactly correct. The late economist Herb Stein came up with the term “supply-side fiscalists” to deride those, like Jude, who thought it a good idea to cut taxes even in the midst of massive budget deficits and double-digit inflation. But just as Karl Marx coined the term “capitalist” to attack those who favored the free market, supply-siders adopted their opponent’s term to describe themselves.

Jude may have converted “supply-side fiscalists” into “supply-side economics.” But that was not his most significant achievement. Jude’s real achievement was to recognize the importance of and political potential for the ideas that underlay supply-side economics. The originator — at least in the modern sense — was economist Robert Mundell, later a winner of the Nobel Prize in economics, who first articulated them in 1971.

At the time, stagflation was the world’s biggest problem. Most economists said the most important thing to fix this scourge of inflation and slow growth was to reduce the budget deficit — by raising taxes if necessary.

Mr. Mundell said this was nonsense. Inflation had nothing to do with budget deficits, he said, but was due solely to a Federal Reserve easy money policy. Growth was slow primarily because of excessive tax rates. So raising taxes to balance the budget was worse than doing nothing; it would worsen the problem.

Arthur Laffer was a colleague of Mr. Mundell’s at the University of Chicago. In 1974, Mr. Laffer organized an American Enterprise Institute conference at which Mr. Mundell explained his tight-money-and-tax-cuts prescription for stagflation. Jude was in the audience and immediately recognized its significance. He wrote it up in a Wall Street Journal article on Dec. 11, 1974.

Typically, Jude was not content simply to report a new idea. He proselytized for it. He was responsible for bringing supply-side economics to the attention of Bob Bartley, then editorial page editor of the Wall Street Journal; Irving Kristol, a New York University professor affiliated with AEI; and Mr. Kemp, then a congressman from Buffalo, N.Y.

Mr. Bartley made the Journal editorial page the most important U.S. voice for supply-side economics. Mr. Kristol arranged for Jude to spend a year at AEI, where he wrote the first book on supply-side economics, “The Way the World Works,” published in 1978. Mr. Kemp introduced the first legislation embodying supply-side ideas and after became its best-known advocate.

Jude also tried to enlist President Gerald Ford as an ally and even arranged meetings with Dick Cheney and Donald Rumsfeld, high-level officials in the Ford administration. And in 1978, Jude helped get Jeff Bell to run for the Senate from New Jersey on a supply-side platform. When Mr. Bell knocked off long-time Sen. Clifford Case in the Republican primary, it was an important indication of the political potential of supply-side economics.

Jude was so enthusiastic about Mr. Bell’s campaign a Wall Street Journal executive caught him handing out campaign literature at a New Jersey train station. He was told either to curb his political activities or find a new job. Jude left the Journal and became an independent economic consultant.

I worked for Jude’s company for a while in the 1980s. I always suspected many clients hired him less for investment advice than to support his supply-side evangelism. They knew Jude didn’t just write about things like cutting the capital-gains tax. He was buttonholing congressmen and senators to enact it.

Unfortunately, Jude put the same effort into advocating some bad ideas as good ones. In recent years, he became convinced Saddam Hussein was innocent of the charges against him, making him look ridiculous even to those who opposed the Iraq war as strongly as he did. Jude also maintained a close relationship with Louis Farrakhan of the National of Islam, despite Mr. Farrakhan’s frequent anti-Semitic ravings.

In the end, Jude will be remembered as someone who saw a good idea in supply-side economics and what to do with it. I liken him to Ray Kroc, who knew a good idea when he saw the McDonald Brothers restaurant in San Bernardino, Calif., and built it into the first fast-food chain. It’s too bad Jude didn’t quit while he was ahead.

Bruce Bartlett is senior fellow with the National Center for Policy Analysis and a nationally syndicated columnist.


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