Benko: The Rise And Fall And Rise Again of Supply-Side Economics?

by Ralph Benko, Contributing Author: A long time ago, in a galaxy far, far away, the American dream was going to hell in a handbasket. I speak, of course, of 1980, a time that seems as remote to the elite imagination as those of the days of America's founding. The news then was dominated by "the misery index" measuring high unemployment and double-digit inflation.

Our economic predicament was worse than today and the mood was famously, as associated with the feckless President Carter, one of “malaise.” All of the conventional policy prescriptions were proving ineffectual at turning it around. Nobody in power seemed to know where to turn.

Until … Rep. Jack Kemp, a fairly junior member of the House of Representatives, gathered around himself a group of “econoclasts,” to use the witty neologism of economic historian (and fellow Forbes columnist) Brian Domitrovic, who came to call themselves the “supply side.” Their core insight was simple. Rather than rely on a policy of high tax rates and a weak dollar, move toward a policy of low tax rates and a strong dollar. The late Jude Wanniski called it “the Mundell-Laffer Hypothesis.” And it was derided by the policy elites as “Voodoo Economics.”

Ronald Reagan, campaigning for the presidential nomination, took up this prescription and defended it against continuous ridicule by President Carter. And he won and implemented a major portion of the supply side agenda. This led to the creation of 19.4 million new jobs and put America, and then the world, on the road to creating prosperity unprecedented in history. As it happens, 20 million jobs again is just about exactly what America is now short.

This job creation did not occur by accident, or without great effort and courage and planning. Last week, the Manhattan Institute, the Wall Street Journal and the Reagan Library, with the generous underwriting of the Donald and Paula Smith Foundation, gathered together, for the first time since the Reagan years, almost all of the key surviving architects of Reaganomics as part of the Reagan Centennial celebration.

It was more, far more, than a retrospective. The gathering was entitled “Supply-Side Economics: From the Reagan Era to Today.” The architects of Reaganomics reviewed what their work achieved and addressed “Supply Side Today: The Agenda for Growth.”

The theme of the gatherings and panels was to review the key principles of economic growth initiated by President Reagan: low tax rates on a broad economic base, sound monetary policy, free trade and sensible regulatory policy.

It was these principles that unleashed a wave of economic growth in the United States, and, adopted by much of the rest of the world, initiated an era of unprecedented world prosperity. The Great Recession and Punk Recovery we are undergoing result from the erosion of the policy pillars of Reaganomics.

Among those presenting at the two conference panels were Jeffrey Bell, policy director of the American Principles Project and former Reagan aide, and Lewis E. Lehrman, American Principles Project advisory board member, chairman of the Lehrman Institute, Gold Commissioner and financier/philanthropist. (This writer, himself a cadet member of the early Supply Side team and a junior Reagan White House official, has professional associations with both.)

Panelists also included former Reagan official and TV commentator Larry Kudlow; and former Federal Reserve Gov. Larry Lindsey in a panel with Lehrman moderated by CNBC’s Maria Bartiroma; and Brian Domitrovic (the definitive economic historian of that era) and Art Laffer, with Jeffrey Bell, in a panel moderated by Fox Business Network’s David Asman. Add in Steve Forbes and Paul Gigot and gathered together were most of the blossom of Supply Side economics.

The opening speaker, Steve Forbes, through the bulk of the panelists, Bell, Domitrovic, Lehrman, and Kudlow, advocated the completion of Reagan’s agenda by adopting a modern gold standard, a point endorsed by participants Arthur Laffer and Lawrence Lindsey. Prof. Mundell alone, in a colloquy with Wall Street Journal editor Paul Gigot, focused on the foreign exchange rate of the dollar rather than advocating a restoration of the gold standard.

The ingathering of the chieftains of the Supply Side tribes at this historic moment was not valedictory. Perhaps it will prove Providential. Republican presidential hopefuls are beginning to formulate their policy agendas. The House GOP Majority needs a growth agenda. This gathering provides a vivid reminder and revival of the way the world works.

The legacy of Reaganomics is not a dead letter. It is the vital recipe. And the Manhattan Institute, the Wall Street Journal and, of course, Reagan himself, whose legacy the Library stewards, were at the heart of the original Reagan Revolution. Thanks to the conveners of this gathering, the principles of how to create 20 million good new jobs — and the principal architects of Reaganomics — are clearly visible again.

Click here, here and here, and then, Ms. and Mr. Candidate (or you, Mr. President!), and GOP House leaders, call Manhattan Institute president Lawrence Mone and ask for introductions to those who will guide you on how to get the job done.

Let those who aspire to lead America again out of the wilderness take note. Herein lies the formula — proven in what Lehrman calls “the laboratory of history” — needed to restore American and world prosperity and bring us all to heights of new greatness.
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Ralph Benko is a senior economics advisor to The American Principles Project and author of The Websters’ Dictionary: How to Use the Web to Transform the World. He is working on a new book, called "A Golden Age: the political consequences of the peace."This article which first appeared in the Forbes was submitted to the ARRA News Service editor for reprint by contributing author Ralph Benko

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Tags: Ralph Benko, Supply-Side, Economics, Jack Kemp, Ronald Reagan, Manhattan Institute, the Wall Street Journal, Reagan Library, Brian Domitrovic, Jeffrey Bell, Lewis E. Lehrman, Art Laffer To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!