Feast of the Wingnuts

By

This piece is adapted from Jonathan Chait's book, The Big Con: The
True Story of How Washington Got Hoodwinked and Hijacked by Crackpot
Economics, which will be published on September 12 by Houghton
Mifflin.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. The scope of their
triumph is breathtaking. Over the course of the last three decades,
they have moved from the right-wing fringe to the commanding
heights of the national agenda. Notions that would have been
laughed at a generation ago--that cutting taxes for the very rich is
the best response to any and every economic circumstance or that it
is perfectly appropriate to turn the most rapacious and
self-interested elements of the business lobby into essentially an
arm of the federal government--are now so pervasive, they barely
attract any notice.

The result has been a slowmotion disaster. Income inequality has
approached levels normally associated with Third World oligarchies,
not healthy Western democracies. The federal government has grown
so encrusted with business lobbyists that it can no longer meet the
great public challenges of our time. Not even many conservative
voters or intellectuals find the result congenial. Government is no
smaller--it is simply more debt-ridden and more beholden to wealthy
elites.

It was not always this way. A generation ago, Republican economics
was relentlessly sober. Republicans concerned themselves with such
ills as deficits, inflation, and excessive spending. They did not
care very much about cutting taxes, and (as in the case of such GOP
presidents as Herbert Hoover and Gerald Ford) they were quite
willing to raise taxes in order to balance the budget. While many
of them were wealthy and close to business, the leaders of business
themselves had a strong sense of social responsibility that
transcended their class interests. By temperament, such men were
cautious rather than utopian.

Over the last three decades, however, such Republicans have passed
almost completely from the scene, at least in Washington, to be
replaced by, essentially, a cult.

All sects have their founding myths, many of them involving
circumstances quite mundane. The cult in question generally traces
its political origins to a meeting in Washington in late 1974
between Arthur Laffer, an economist; Jude Wanniski, an editorial
page writer for The Wall Street Journal; and Dick Cheney,
then-deputy assistant to President Ford. Wanniski, an eccentric and
highly excitable man, had until the previous few years no training
in economics whatsoever, but he had taken Laffer's tutelage.

His choice of mentor was certainly unconventional. Laffer had been
on the economics faculty at the University of Chicago since 1967.
In 1970, his mentor, George Shultz, brought him to Washington to
serve as a staffer in the Office of Management and Budget. Laffer
quickly suffered a bout with infamy when he made a wildly
unconventional calculation about the size of the 1971 Gross
National Product, which was far more optimistic than estimates
elsewhere. When it was discovered that Laffer had used just four
indicators to arrive at his figure-- most economists used hundreds
if not thousands of inputs--he became a Washington laughingstock.
Indeed, he turned out to be horribly wrong. Laffer left the
government in disgrace and faced the scorn of his former academic
colleagues yet stayed in touch with Wanniski, whom he had met in
Washington, and continued to tutor him in economics.

Starting in 1972, Wanniski came to believe that Laffer had developed
a blinding new insight that turned established economic wisdom on
its head. Wanniski and Laffer believed it was possible to
simultaneously expand the economy and tamp down inflation by
cutting taxes, especially the high tax rates faced by upper-income
earners. Respectable economists-- not least among them conservative
ones--considered this laughable. Wanniski, though, was ever more
certain of its truth. He promoted this radical new doctrine through
his perch on The Wall Street Journal editorial page and in a major
article for The Public Interest, a journal published by the
neoconservative godfather Irving Kristol. Yet Wanniski's new
doctrine, later to be called supply-side economics, had failed to
win much of a following beyond a tiny circle of adherents.

That fateful night, Wanniski and Laffer were laboring with little
success to explain the new theory to Cheney. Laffer pulled out a
cocktail napkin and drew a parabola-shaped curve on it. The premise
of the curve was simple. If the government sets a tax rate of zero,
it will receive no revenue. And, if the government sets a tax rate
of 100 percent, the government will also receive zero tax revenue,
since nobody will have any reason to earn any income. Between these
two points--zero taxes and zero revenue, 100 percent taxes and zero
revenue--Laffer's curve drew an arc. The arc suggested that at
higher levels of taxation, reducing the tax rate would produce more
revenue for the government.

At that moment, there were a few points that Cheney might have made
in response. First, he could have noted that the Laffer Curve was
not, strictly speaking, correct. Yes, a zero tax rate would
obviously produce zero revenue, but the assumption that a
100-percent tax rate would also produce zero revenue was, just as
obviously, false. Surely Cheney was familiar with communist states
such as the Soviet Union, with its 100 percent tax rate. The Soviet
revenue scheme may not have represented the cutting edge in
economic efficiency, but it nonetheless managed to collect enough
revenue to maintain an enormous military, enslave Eastern Europe,
fund ambitious projects such as Sputnik, and so on. Second, Cheney
could have pointed out that, even if the Laffer Curve was correct
in theory, there was no evidence that the U.S. income tax was on
the downward slope of the curve--that is, that rates were then high
enough that tax cuts would produce higher revenue.

But Cheney did not say either of these things. Perhaps, in
retrospect, this was due to something deep in Cheney's character
that makes him unusually susceptible to theories or purported data
that confirm his own ideological predilections. (You can almost
picture Donald Rumsfeld, years later, scrawling a diagram for
Cheney on a cocktail napkin showing that only a small number of
troops would be needed to occupy Iraq.) In any event, Cheney
apparently found the Laffer Curve a revelation, for it presented in
a simple, easily digestible form the messianic power of tax cuts.

The significance of the evening was not the conversion of Cheney but
the creation of a powerful symbol that could spread the word of
supply-side economics. If you try to discuss economic theory with
most politicians, their eyes will glaze over. But the Curve
explained it all. There in that sloping parabola was the magical
promise of that elusive politician's nirvana, a cost- free path to
prosperity: lower taxes, higher revenues. It was beautiful,
irresistible.

With astonishing speed, the message of the Laffer Curve spread
through the ranks of conservatives and Republicans. Wanniski
evangelized tirelessly on behalf of this new doctrine, both on the
Journal's editorial pages and in person. As an example of the
latter, one day in 1976, he wandered by the office of a young
representative named Jack Kemp. He asked to talk to Kemp for 15
minutes, but he wound up expounding on the supply-side gospel to the
former NFL quarterback for the rest of the day, through dinner, and
late into the night. "He took to it like a blotter," Wanniski later
recalled. "I was exhausted and ecstatic. I had finally found an
elected representative of the people who was as fanatical as I
was."

Adherents of supply-side economics tend to describe the spread of
their creed in quasi-religious terms. Irving Kristol subsequently
wrote in a memoir, "It was Jude [Wanniski] who introduced me to
Jack Kemp, a young congressman and a recent convert. It was Jack
Kemp who, almost single-handed, converted Ronald Reagan to
supply-side economics." The theological language is fitting because
supply-side economics is not merely an economic program. It's a
totalistic ideology. The core principle is that economic
performance hinges almost entirely on how much incentive investors
and entrepreneurs have to attain more wealth, and this incentive in
turn hinges almost entirely on their tax rate. Therefore, cutting
taxes-- especially those of the rich, who carry out the decisive
entrepreneurial role in the economy--is always a good idea.

But what, you may ask, about deficits, the old Republican bugaboo?
Supplysiders argue either that tax cuts will produce enough growth
to wipe out deficits or that deficits simply don't matter. When
Reagan first adopted supply- side economics, even many Republicans
considered it lunacy. ("Voodoo economics, " George H. W. Bush
famously called it.) Today, though, the core beliefs of the
supply-siders are not even subject to question among Republicans.
Every major conservative opinion outlet promotes supply-side
economics. Since Bush's heresy of acceding to a small tax hike in
1990, deviation from the supply-side creed has become unthinkable
for any Republican with national aspirations.

The full capitulation of the old fiscal conservatives was probably
best exemplified by Bob Dole, the crusty old Kansan once thought
synonymous with the traditional Midwestern conservatism of the GOP.
Early on, Dole had openly scorned the supply-siders. "People who
advocate only cutting taxes live in a dream world," he said in
1982. "We Republicans have been around awhile. We don't have to
march in lockstep with the supply-siders." By the time he had risen
high enough in the party to gain its presidential nomination, Dole
had no choice but to embrace the Laffer Curve. He chose Jack Kemp,
an original supply- side evangelist, as his running mate and made a
15 percent tax cut the centerpiece of his campaign.

George W. Bush's fidelity to taxcutting runs even deeper. He took as
his chief economic adviser Larry Lindsey, a fervent supply-sider
whose book, The Growth Experiment, defended Reagan's tax cuts. He
picked as his running mate yet another original supply-sider in
Cheney, who summed up the new consensus by declaring (according to
the former treasury secretary, Paul O'Neill), "Reagan proved
deficits don't matter." Bush has poured every ounce of his
political capital into cutting taxes, having signed four tax cuts
during his administration; when fully phased in, they will reduce
federal revenues by about

$400 billion a year. Bush and his staff repeatedly tout tax cuts as
an all- purpose cure. Bush can endorse even the most radical
supply-side claims--"the deficit would have been bigger without the
tax-relief package," he asserts regularly--without raising
eyebrows. So deeply entrenched is the devotion to supply-side
theory that, even in the face of large deficits and a protracted
war, not a single Republican of any standing has dared broach the
possibility of rolling back some of Bush's tax cuts. As Robert
Bartley, The Wall Street Journal's editorial page editor, boasted,
"Economists still ridicule the Laffer Curve, but policymakers pay
it careful heed."

Like most crank doctrines, supplyside economics has at its core a
central insight that does have a ring of plausibility. The
government can't simply raise tax rates as high as it wants without
some adverse consequences. And there have been periods in American
history when, nearly any contemporary economist would agree, top
tax rates were too high, such as the several decades after World
War II. And there are justifiable conservative arguments to be made
on behalf of reducing tax rates and government spending. But what
sets the supply-siders apart from sensible economists is their
sheer monomania. You could plausibly argue that, say, Reagan's tax
cuts contributed around the margins to the economic growth of the
1980s. But the supply-siders believe that, if it were not for
Reagan's tax cuts, the economic malaise of the late '70s would have
continued indefinitely. They believe that economic history is a
function of tax rates--they insisted that Bill Clinton's
upper-bracket tax hike must cause a recession (whoops), and they
believe that the present economy is a boom not merely enhanced but
brought about by the Bush tax cuts.

It doesn't take a great deal of expertise to see how implausible
this sort of analysis is. All you need is a cursory bit of history.
From 1947 to 1973, the U.S. economy grew at a rate of nearly 4
percent a year--a massive boom, fueling rapid growth in living
standards across the board. During most of that period, from 1947
until 1964, the highest tax rate hovered around 91 percent. For the
rest of the time, it was still a hefty 70 percent. Yet the economy
flourished anyway. None of this is to say that those high tax rates
caused the postwar boom. On the contrary, the economy probably
expanded despite, rather than because of, those high rates. Almost
no contemporary economist would endorse jacking up rates that high
again. But the point is that, whatever negative effect such high
tax rates have, it's relatively minor. Which necessarily means that
whatever effects today's tax rates have, they're even more minor.

This can be seen with some very simple arithmetic. As just noted,
Truman, Eisenhower, and Kennedy taxpayers in the top bracket had to
pay a 91 percent rate. That meant that, if they were contemplating,
say, a new investment, they would be able to keep just nine cents
of every dollar they earned, a stiff disincentive. When that rate
dropped down to 70 percent, our top earner could now keep 30 cents
of every new dollar. That more than tripled the profitability of
any new dollar--a 233 percent increase, to be exact. That's a hefty
incentive boost. In 1981, the top tax rate was cut again to 50
percent. The profit on every new dollar therefore rose from 30 to
50 cents, a 67 percent increase. In 1986, the top rate dropped
again, from 50 to 28 percent. The profit on every dollar rose from
50 to 72 cents, a 44 percent increase. Note that the marginal
improvement of every new tax cut is less than that of the previous
one. But we're still talking about large numbers. Increasing the
profitability of a new investment even by 44 percent is nothing to
sneeze at.

But then George Bush raised the top rate to 31 percent in 1990. This
meant that, instead of taking home 72 cents on every new dollar
earned, those in the top bracket had to settle for 69 cents. That's
a drop of about 4 percent-- peanuts, compared to the scale of
previous changes. Yet supply-siders reacted hysterically. National
Review, to offer one example, noted fearfully that, in the wake of
this small tax hike, the dollar had fallen against the yen and the
German mark. "It seems," its editors concluded, "that capital is
flowing out of the United States to nations where 'from each
according to his ability, to each according to his need' has lost
its allure."

Here is where a bit of historical perspective helps. If such a
piddling tax increase could really wreck such havoc on the economy,
how is it possible that the economy grew so rapidly with top tax
rates of 70 and 91 percent? The answer is, it's not. It's not even
close to possible. All this is to say that the supply-siders have
taken the germ of a decent point--that marginal tax rates
matter--and stretched it, beyond all plausibility, into a
monocausal explanation of the world.

Aside from popular articles in places like the Journal's editorial
page, two classic tomes defined the tenets of supply-side
economics: Wanniski's The Way the World Works and George Gilder's
1981 manifesto, Wealth and Poverty. Both have had enormous
influence, and both capture the feverish grandiosity that is the
hallmark of the Laffer Curve acolytes. Here is what makes the rise
of supply-side ideology even more baffling. One might expect that a
radical ideology that successfully passed itself off as a
sophisticated new doctrine would at least have the benefit of
smooth, reassuring, intellectual front men, men whose very bearing
could attest to the new doctrine's eminent good sense and
mainstream bona fides. Yet, if you look at its two most eminent
authors, good sense is not the impression you get. Let me put this
delicately. No, on second thought, let me put it straightforwardly:
They are deranged.

Gilder was not an economist when he wrote Wealth and Poverty. Until
then, he was known primarily for having written a pair of
anti-feminist tracts, and his notoriety derived mainly from his
penchant for making comments such as "There is no such thing as a
reasonably intelligent feminist." Wealth and Poverty, though,
launched him as an eminent defender of supply-side economics just
as adherents of the new creed had been catapulted into power.
Gilder articulated the new philosophy of the Reagan era in
admirably straightforward fashion. "To help the poor and middle
classes," he wrote, "one must cut the taxes of the rich."

In reflecting the new prestige Republicans wished to see afforded
the rich, Gilder defended capitalists as not merely necessary or
even heroic but altruistic. "Like gifts, capitalist investments are
made without a predetermined return," he wrote. In fact, while
capitalists may not be sure of their exact return, they do expect
to make more than they put in, which makes an investment unlike a
gift in a fairly crucial way. Yet there was enough of an audience
for such sentiments that Gilder's book sold more than a million
copies. President Reagan handed the book to friends, and advisers
such as David Stockman hailed its "Promethean" insight. Wealth and
Poverty, reported The New York Times, "has been embraced by
Washington with a warmth not seen since the Kennedys adopted John
Kenneth Galbraith."

From the beginning, Gilder betrayed signs of erratic thought, and
not merely in his misogyny. In a 1981 interview with The Washington
Post, he declared, "ESP is important to me. I learned that it
absolutely exists. A roommate and I were sharing an apartment, and
another man in the building was a psychic. He taught me how to do
it." In the mid-'80s, Gilder's career took an abrupt turn. He
became fascinated with microprocessors and took time off to learn
the physics of the new technology. This led him, by the mid-'90s,
to stake out a position as the most wild-eyed of the technology
utopians who flourished during that period, and he ended up
publishing a newsletter that offered stock tips. Some of his
pronouncements were obviously crazy even at the time. These would
include his advice to short Microsoft stock in 1997, his claim that
Global Crossing (now bankrupt) "will change the world economy," and
general techno- giddiness, such as his claim that, because of
online learning, within five years "the most deprived ghetto child
in the most benighted project will gain educational opportunities
exceeding those of today's suburban preppy."

In the fevered stock bubble of the 1990s, though, some of Gilder's
prognostications seemed to pan out, at least for a while, and, at
its peak, his newsletter attracted a subscription base worth

$20 million, making him fabulously rich. In 2000, Gilder used some
of his lucre to purchase the American Spectator, a monthly
conservative magazine best known for investigating the details of
President Clinton's personal indiscretions, both real and imagined.
Gilder turned the Spectator into a shrine to Gilderism, a fusion of
supply-side utopianism and techno-utopianism. He installed his
cousin as editor and ran both a lengthy excerpt as well as a
favorable review of his own book.

The crowning touch of Gilder's ownership was a lengthy interview
with himself in the June 2001 issue. Among other musings on display
were Gilder's familiar ruminations on feminism: "Christie Whitman
is an upper-class American woman ... almost none of them have any
comprehension of the environment. Almost all of them are averse to
science and technology and baffled by it." His financial success
seemed to have propelled Gilder to even greater heights of hubris,
his Promethean insights greeted by his employees with awed
deference:

TAS: In the late 1970s and early '80s, you led the intellectual
debate on sexual issues from the conservative side. In the 1980s
your book Wealth and Poverty transformed the way people thought
about capitalism. And then you wandered off to study transistors.
Why did you do that?

Gilder: I thought I had won those debates. Whenever I actively
debated anybody, they didn't have any interesting arguments
anymore, so I thought I should learn something I didn't know
about.

In presenting the interview with their boss, the Spectator's editors
promised: "An equally wide-ranging talk with George will be an
annual event." Alas, it never recurred. As the tech bubble burst,
Gilder and his investors found their wealth spiraling downward.
Despite Gilder's frantic reassurances-- "Your current qualms will
seem insignificant," he promised in late 2000--his subscribers
deserted him. In 2002, he confessed to Wired magazine that he was
broke and had a lien against his home. "Most subscribers came in at
the top of the market," Gilder later explained, "So the modal
experience of the Gilder Technology Newsletter subscriber was to
lose virtually all of his money. That stigma has been very hard to
overcome."

Nonetheless, Gilder soldiers on. Today, he champions the theory of
intelligent design. Once again, he can see the truth that has eluded
all the so- called experts. Who could have foreseen such a tragic
downfall? Actually, there was one man visionary enough to presage
Gilder's fate: Gilder himself. In Wealth and Poverty, one of
Gilder's arguments for more sympathetic treatment of the rich held
that "the vast majority of America's fortunes are dissipated within
two generations. ... In a partial sense, a rich man resembles a
gambler betting against the house." This is a terribly inapt
description of the American economy. (It is the rare homeless
shelter that caters to descendants of the Rockefeller or Morgan
family fortunes.) But it turned out to be a precise description of
Gilder's own fortune. Wealth and poverty, indeed.

As influential as Gilder and his book were, they were not nearly as
influential in legitimating supply-side theory as Wanniski or his
book. This isn't terribly reassuring, though, because Wanniski (who
died in 2005) made Gilder look like the model of sobriety. The
literary and intellectual style of The Way the World Works is
immediately familiar to anybody who has ever sorted submissions at
a political magazine. It is the manifesto of the misunderstood
autodidact--an essay purporting to have interpreted history in a
completely novel and completely correct way, or to have discovered
the key to eternal prosperity and world peace, or some equally
sweeping claim. The Way the World Works fits precisely into this
category, except that, rather than being scrawled longhand on
sheaves of notebook paper and mass-mailed to journalists, it was
underwritten by the American Enterprise Institute, has been
published in four editions, and features introductions attesting to
its genius from such luminaries as Bartley and the columnist and
ubiquitous pundit Robert Novak.

For supply-side evangelists, there is almost nothing that their
theory cannot explain. For instance, in his book, Wanniski uses the
Laffer Curve as a model for all of human development, beginning
with young babies: "Even the infant learns to both act and think on
the margin when small changes in behavior result in identifiable
'price changes.'" Parents, too, must abide by the Curve:

The parent who does not understand that there are two tax rates that
yield the same revenue is a poor political leader in the family
unit, and should not be surprised if the prohibitively taxed infant
rebels in one way or another-- becoming an incorrigible terror
(revolutionary) or withdrawing into himself (the only form of
emigration open to a child).

This thought produces a footnote: "The wise ruler will never
surround his adversaries with 'no-nos.'" Wanniski then runs through
a number of historical rulers wise and unwise, concluding with his
observation that "Kennedy's determination to box in Cuba, which
included plans to assassinate Fidel Castro, left Castro no avenue
but the assassination of Kennedy."

Apparently, nothing in human history defies Wanniski's attempts to
involve the Laffer Curve. He goes on to write: "When Hitler came to
power in 1933, fascinated with Mussolini's syndicalist style,
he--like Roosevelt--left tax rates where he found them." Can you
see where this is going? Yes: "Although he left the explicit tax
rates high, [Germany] did chip away at the domestic and
international wedges. The economy expanded, but in so distorted a
fashion that it compressed the tension between agriculture and
industry into an explosive problem that Hitler sought to solve
through Lebensraum, or conquest [sic]." You, dear reader, may have
thought that Nazi ideology led to the invasion of Poland, but,
thanks to Wanniski, you can see that the underlying cause turns out
to have been high taxes. (It is amazing that Bill Clinton's tax
hike did not lead him to invade Canada.)

Republicans did not find these obvious signs of wingnuttery
troubling. Indeed, Wanniski's book hastened his astonishingly rapid
rise. Five years before he wrote his book, Wanniski knew nothing
about economics. Within a few years, he had formulated a new creed
and sold it to a series of powerful opinion leaders and
politicians. By 1977, the Republican National Committee formally
called for an across-the-board tax cut modeled on the one proposed
by Wanniski's closest disciple, Kemp. The next year, Congress
enacted a capital gains tax cut that he lobbied for in the halls of
the Capitol and championed in the Journal's columns.

Two years after the publication of his book, Wanniski found himself
advising Ronald Reagan, who ran for president on ideas Wanniski had
devised. But, in time, the same qualities that made him such an
effective evangelist for supply- side economics--his
gregariousness, his naivete, his absolute faith in his own
correctness, and his ability to persuade others of the same--did him
in. Wanniski gave an interview in 1980 about the battle for
Reagan's mind among his advisers, all but openly saying that the
candidate was a creature of his staff. This brought about his quick
expulsion from the inner circle. In 1995, fearing that the
supply-side agenda was stagnating, Wanniski came up with the idea
of persuading Steve Forbes, the millionaire publisher and Laffer
Curve devotee, to run for president. After Wanniski lashed out at
the Christian Coalition strategist Ralph Reed, though, he became a
liability to the campaign he had created and was shut out. The next
year, after the GOP nominee Bob Dole named his acolyte Jack Kemp to
share his ticket, Wanniski again won a place of influence.

It was around this time that Wanniski's nuttiness began manifesting
itself in ways that even conservatives could recognize. Wanniski
began meeting with and defending Louis Farrakhan, the head of the
Nation of Islam, explaining, "I expressed my belief that Jewish
leaders fear he could lead the black electorate away from the
Democratic Party and into opposition of support for Israel." And
Farrakhan is far from the only unsavory character Wanniski embraced.
He likened Slobodan Miloevi to Abraham Lincoln. He met with the
lunatic conspiracy theorist and convicted felon Lyndon LaRouche and
hired a number of his followers at his economic consulting firm.
("[T]hey're not trained in demand- model economics," he explained
to BusinessWeek with undeniable logic.) And Wanniski championed
Saddam Hussein, even to the point of denying that the late Iraqi
dictator had ever used chemical weapons against the Kurds. ("There
is no possibility that Saddam gassed his own people," he wrote.)

Such statements, combined with his erratic behavior, eventually made
Wanniski an outcast within the GOP. His expulsion from the party's
good graces was consecrated, in a sense, by a series of short
editorial items in the conservative Weekly Standard in the
mid-'90s, ridiculing his nutty views on Farrakhan and Iraq. But,
while Wanniski himself is remembered as a nut by most
conservatives, his primary doctrine has lost none of its influence.
The Standard continues to publish editorials saying such things as
"the supply-side Laffer Curve has worked." So Wanniski is now
viewed as a nut on all matters save the very thing that is the font
from which all his nuttiness springs. His personal influence has
never been lower, but his ideological influence has never been
greater. "It is no exaggeration to say that the recent history of
the United States would have been far different were it not for Jude
Wanniski," wrote Novak. The scary thing is that he's right.

In February 2006, the conservative journal Policy Review published
an essay that was shockingly heretical, though perhaps
unintentionally so. In it, Carles Boix of the University of Chicago
argued that there is a link between democracy and economic
equality:

In an unequal society, the majority resents its diminished status.
It harbors the expectation of employing elections to drastically
overturn its condition. In turn, the wealthy minority fears the
outcome that may follow from free elections and the assertion of
majority rule. As a result, it resorts to authoritarian
institutions to guarantee its social and economic advantage.

Of the many taboos that prevail among conservatives, the one
forbidding any serious discussion of inequality is perhaps the
strictest. Any forthright examination of this topic will lead one
quickly to the realization that American society has been spreading
apart rapidly for three decades and that Republican economic
policies have without a doubt contributed mightily to this gulf. So
conservatives usually ignore the subject of inequality, except
perhaps to minimize its scale or importance.

Why, then, did Policy Review, which is published by the staunchly
conservative Hoover Institution, open its pages to such apostasy?
Well, it didn't intend to. Boix's essay (which was brilliant and
widely discussed) concerned the inculcation of democracy abroad and
did not deal directly with the United States. And the circumstances
Boix envisioned--mainly, developing countries attempting a
transition to democracy--are different from those in an advanced
democracy. Americans, fortunately, do not have to worry about
kleptocrats, political violence, and massive vote fraud.

But, while Boix's theory may be less applicable to the United States
than it is to the Third World, it is still somewhat true. Indeed,
this theory offers an uncannily precise description of what has
happened in American politics over the last 30 years. The business
lobbyists have turned the Republican Party into a kind of machine
dedicated unwaveringly to protecting and expanding the wealth of
the very rich. As it has pursued this goal ever more
single-mindedly, the right has by necessity grown ever more hostile
to majoritarian decision-making for the obvious reason that it's
hard to enlist the public behind an agenda designed to benefit a
tiny minority. The old ways of conducting politics have broken down
in the face of this onslaught. The mores of the old Washington
establishment--the assumption of some basic intellectual goodwill on
both sides, the focus on character over substance, the belief in
compromise--all developed during an era when there were few
ideological differences between the parties. The old ways may have
done a decent job of safeguarding the national interest when the
great moderate consensus prevailed, but they have proven unequal to
the challenge of a more ideological time.

All this has happened at the same time as a massive increase in
income inequality, which is exactly what Boix's theory would
predict. In the same essay, Boix marvels at the fortunes amassed by
autocratic ruling elites throughout history:

Rulers such as the Bourbons, the Tudors, or the Sauds seize an
important part of their subjects' assets. For example, at the death
of Augustus (14 a.d.), the top 1/10,000 of the Roman Empire's
households received 1 percent of all income. In Mughal India around
1600 a.d., the top 1/10,000th received 5 percent of all income.

Presumably, readers looking at these numbers are supposed to gape in
astonishment at the sheer inequity of those autocratic regimes. But
the numbers are less astonishing when you compare them to those in
the contemporary United States, which Boix does not. As of 2004,
the top one-ten-thousandth of Americans earned over 3 percent of
the national income--a somewhat smaller share than that earned by
the Mughal elite but several times higher than that enjoyed by the
wealthiest Romans.

Meanwhile, the gap between Americans and Mughals is closing rapidly.
Since the late '70s, the share of national income going to the top
1 percent has doubled. The share of the top 0.1 percent has
tripled, and the share of the top 0.01 percent has quadrupled. This
gulf was widened precisely at the same time that the right, growing
ever more plutocratic and suspicious of popular demands, was
battering away at the culture of American democracy. Many people
have looked at the depredations of the Bush era--the bizarre cult
of personality, the anti-intellectual demagoguery, the incessant
flouting of norms, the prostrate media--as the product of the
president's character, or Karl Rove's machinations. But it is, in
the main, the consequence of a cult-like fringe taking control of a
political party and using it to wage class warfare on behalf of a
tiny minority.

Loading Related Articles...
Article Tools
SHARE YOUR THOUGHTS

You must be a subscriber to post comments. Subscribe today.