Prophet Motive

by Jonathan Chait | March 31, 1997

Jude Wanniski, who does not bother with the pretense of false modesty, calls himself "the most influential political economist of the last generation." He's right, too. This is a man who single-handedly transformed the discombobulated murmurings of a fringe sect into the central idea of modern economic conservatism. The idea was called supply-side economics, and it was, not very long ago, considered antithetical to every principle of conservative economic theory. Wanniski's pet idea gave Republicans, and conservatives, what they had been lacking for fifty years: a taxing policy that could compete in popularity with the Democrats' vote-getting spending policy. Supply-side theory may not make fiscal sense, but it certainly has worked politically: people naturally appreciate a theory that validates not paying taxes. For this, one would think that conservatives owe Wanniski a lifetime of thanks and honor. 

And yet here is the strange thing. Intellectually triumphant, Wanniski finds himself now personally forsaken. His fellow conservatives want no part of him. They regard him as an embarrassment. When they speak of him at all, it is to question his sanity. The Weekly Standard, edited by Republican strategist Bill Kristol (who in a 1993 National Review article described Wanniski as one of "our leaders on economic thinking"), has in the last year published a profile and seven short items devoted to ridiculing the former leader. Having embraced the essence of Jude Wanniski's nutty economic theory, the Republican Party has now concluded that Wanniski is... a nut.

"Now, what does 'nut' mean?" asks Wanniski, emitting a low cackle. "Thomas Edison was a nut, Leibniz was a nut, Galileo was a nut, so forth and so on. Everybody who comes with a new idea to the conventional wisdom, comes with an idea that's so far outside the main-stream, that's considered nutty." There is a deeply satisfied note in Wanniski's voice as he says this. He takes the charge of nuttism as a sign of his worth, proof that he is, as he has so many times explained so patiently to so many people, absolutely right in all that he says.

The point at which conservatives began thinking, or at least saying, that one of their great thinkers was operating with a few cards shy of a deck is easy to pinpoint. It was when evidence began emerging that the great thinker had fallen in love with Louis Farrakhan. The first sign occurred during the 1996 presidential campaign, when Jack Kemp, Wanniski's most important and faithful disciple, offered some kind words for the Million Man March.Outraged party officials quickly traced this sentiment to Wanniski. (It wasn't difficult; virtually every political sentiment Kemp has ever had first belonged to Wanniski.) In a campaign postmortem column, George Will pronounced the conservative establishment's new judgment on Wanniski: "crackpot adviser."

The way Wanniski sees it, communion with a man most Republicans and conservatives regard as a racist, anti-Semitic hatemonger was a logical outcome of supply-side theory. Since supply-side economics helps most those at the bottom, Wanniski believes, its natural constituency is not the wealthy but the poor. Thus, Farrakhan, a representative of society's dispossessed, was an appropriate, even inevitable, target for conversion. Wanniski began his charm offensive in 1995 with a barrage of phone calls and faxes to officials at the Nation of Islam. He kept it up, and up, and up—that is theWanniski way: never one fax when ten will do. Wanniski worked the Nation of Islam hierarchy as he had once worked the Reagan hierarchy. Finally, last December, Wanniski won a meeting with the great man himself, at his "palatial" home. He subsequently described the meeting in one of the memoranda he blast-faxes on a nearly daily basis to clients, pols and journalists.

Over dinner ("soup, fish and vegetables and an apple pudding dessert"), Wanniski wrote, he and Farrakhan had hashed out Jews, conspiracy theory and taxes for more than five hours. "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," Wanniski recounted. In the first two hours, Wanniski and Farrakhan began to find their way toward a meeting of the minds.

Farrakhan, as less admiring observers than Wanniski have noticed, has a tendency to see the world in terms of ugly and crackpotish conspiracies generally involving Jews, money and white evil. Wanniski says he made Farrakhan see these in a new light. "The longer I'm talking," Wanniski told me, "the more he is seeing that what he thought was a conspiracy turns out to be just a problem of economic theory." And the really beautiful thing was that the problem of economic theory, it turned out, was society's failure to embrace supply-side ideology. A synthesis of two great philosophies: The White Man Is Keeping Us Down With The Capital Gains Tax.

Wanniski says he spent three hours giving Farrakhan the rough outline of supply-side thought. "My supply-side perspective on the history of the twentieth century was one he had never heard before," the memo reported, "and he drank it in as if he had just come upon an oasis in a desert."

When Wanniski recalls the dawning realization that it all fit together—the gold standard, the Laffer Curve, the Jews, Karl Marx, the Federal Reserve—he relates it in a tone of rushed urgency appropriate to recounting a great historical event (to be fair, Wanniski relates every scene involving Wanniski in tones appropriate to recounting a great historical event). 

"Elijah Muhammed—who was, I guess, the guy who started all this theory in the Nation of Islam—had warned in the 1960s about the United States going off the gold standard," Wanniski told me. "There is throughout the history of the world going back millennia, when governments break their pledges of keeping the money as good as gold, the people who suffer the most are the poor people. And so even in the Million Man March, even in the beginning years, Farrakhan was talking about the Federal Reserve being part of the problems of the black community. So that when we're sitting down finally talking, and I'm putting all this together for Farrakhan, he's seeing that it's not a conspiracy of people smoking long, black cigars trying to figure out how to keep the black guys in their place, he's seeing that it is really a struggle that has gone on from the beginning of time between old money and new money. And then [I told him] of the paper I wrote called 'Karl Marx Revisited,' saying that there's not only Karl Marx... [Marx and] Ludwig von Mises are making the same arguments from different sides of the political spectrum on how the people of wealth use their political power to prevent people from climbing up from below. They use the tax system. So, he's saying, 'Gosh, I have to learn this. I'm not familiar with any of this.'"

Since then, the relationship between the two men of numbers (those who heard Farrakhan's Million Man speech will perhaps recall his very, very complete explanation of the significance of the number 19, not to mention 55 and 9) has blossomed. The affair reached its apogee two weeks ago, when Farrakhan joined House Budget Committee Chairman John Kasich, the columnists Rowland Evans and Robert Novak, and other political figures speaking at Wanniski's annual client conference in Boca Raton, Florida. There Farrakhan made good on his desire to master the mysteries of the supply-side faith. "Even at the conference, he saw me standing outside at the newsstand, during one of the breaks, and he said to me, 'Tell me, what is this you're talking about—static analysis and dynamic analysis?'" It was a request akin to asking a Scientologist to explain dianetics.

Wanniski recalls the way he told it: "'Imagine you're selling ice cream, and the ice cream cones are a dollar each, and you sell ten ice cream cones, and now you've got ten dollars. Now you decide you're going to make more money, you're going to charge $1,000 for each cone. Well, you sell ten of them, you have $10,000. That's static analysis.' I said, 'Dynamic analysis, you quickly see that no one buys an ice cream cone, and you get nothing. Behavior changes.' So—ah!—he understands this immediately. So Senator [John] Ashcroft, the next day he comes in, and he's yelling about how we've got to find some way to get more dynamic analysis and the whole room bursts into applause, and I look down and here's Farrakhan clapping the loudest."

By now, Wanniski regards Farrakhan as well on his way down the road to Damascus: "He is as close to a Cato libertarian as you can find." On the other, somewhat more touchy front—the Jews—the verdict is less clear. For his part, though, Wanniski has met Farrakhan more than halfway on the Jewish question. Wanniski explained Farrakhan's position sympathetically in a recent Internet posting: "What you see is a media image based on his complaints about Jewish political leaders who are trying to destroy the Nation of Islam, out of concern that Farrakhan's political power is a threat to the state of Israel."

And, in a recent memo to the editor of TNR., Wanniski analyzed the racial divide in America thus: "Farrakhan has every reason to be disturbed at being on that inferior side of the divide. On the white side, there is of course little doubt that pound for pound American Jews are the most powerful and influential of all segments of our society—in every professional field of endeavor. In addition, their history asserts a claim of superiority that has made Jews of all people the most resistant to inter-marriage with non-Jews, even to this day. Why is it any surprise that there is now tension between the largest bloc of people at the bottom of the power pyramid and the smallest bloc of the rich and the powerful?" Wannifski is unwilling even to question Farrakhan's manifestly loopy and incoherent theories of numerology. "[O]ther religions, including Christianity, are big on numbers too," he wrote. "Friday the 13th is unlucky because of Good Friday and the 13th man at the Last Supper. The divinity is three persons in one. Etc." Nor is he willing to concede that Farrakhan should renounce those aspects of the Nation of Islam's catechism and his own utterances that whites and Jews find offensive: "If you base your hostile position on the grounds that Farrakhan must renounce this, that and the other stuff that has appeared over the years, you don't allow Farrakhan room to maneuver his followers. The wise, old Jewish leaders that I'm working with tell me they understand that, for every inch that Farrakhan moves, he has to get something in return. We are trying to move mountains."

The deliciousness of all this is that Wanniski has always been a bit of—whatever you want to call it—a nut, a crank, a crackpot, a flake. And it was precisely this quality that gave him his strength. There is no courage of conviction quite like that of the fruit loop. Many Republicans embrace supply-side theory for the cover it affords them in doling out tax breaks to upper-class constituents and financial backers. Wanniski never harbored an ounce of such cynicism. He has always been impelled by a nearly monomaniacal conviction that his ideas are absolutely right and absolutely moral.

When Wall Street Journal editorial page editor Robert Bartley hired him in 1972, Wanniski had already undertaken an informal series of tutoring lessons with a young right-wing economist in the Office of Management and Budget named Arthur Laffer. Laffer entranced Wanniski with his notion that a tax cut could cure the inflation of the mid-1970s and actually raise government revenues. Mainstream economic thinking across the spectrum rejected this possibility. Before supply-side economics, conservatives differentiated themselves from liberals mainly by their suspicion of deficits. During the Great Depression Herbert Hoover enacted a tax increase. Gerald Ford proposed one as late as 1974. The classic conservative position is known today as the sensible center. Laffer's theory defined a new position on the right, ultimately revolutionizing the terms of economic debate.

At the time, though, Laffer didn't grasp this. He had nothing more than a disparate set of unconventional observations, gleaned in part from another renegade academic named Robert Mundell. Wanniski recognized the implications of Laffer's idea. It meant the agonizing trade-offs that consumed economics—restraint versus stimulus, inflation versus unemployment—simply did not exist. Poverty and malaise owed their existence not to any underlying economic weakness but to the simple ignorance of the nation's political and economic leaders. If they could be made to understand Laffer's revelation, prosperity beckoned'. "At that moment," Wanniski later recalled, "I became a true zealot."

Wanniski converted Bartley first. The two, along with Laffer and Mundell, held regular dinner meetings to synthesize the new theory. Neoconservative godfather Irving Kristol prodded Wanniski to set out his views in his quarterly journal, The Public Interest. Bartley and Wanniski pounded away on the Journal's pages. These forums allowed the true believers to reinforce each other without criticism or peer review from nettlesome skeptics. This intellectual insulation, a hallmark of crankism, fostered the overbearing certainty that characterizes the supply-siders.

Only such a cloistered environment could have yielded so confident a manifesto as Wanniski's subsequent The Way the World Works, whose funding Irving Kristol arranged. The book has a modest aim. It reinterprets human history as a function of tax rates.

Wanniski's editorial writing job metamorphosed into an evangelical mission. He spent his days stalking the halls of Congress, collaring anyone who would listen. During one legendary dinner he instructed Laffer to scribble on a cocktail napkin a curve purporting to demonstrate that lower taxes would reduce the budget deficit. Wanniski's tireless evangelism was infectious, particularly among those whose lives had been hitherto unencumbered by ideas. One day, Wanniski wandered into the office of Congressman Jack Kemp, an ex-quarterback with national ambitions but little—beyond past football glories—to offer the blue-collar district that had narrowly elected him. The two spoke all afternoon and long into the night, and Wanniski had his first really important political disciple.

And Wanniski's zeal paid off in policy terms, too. He helped engineer the Kemp-Roth tax cut, a bill that narrowly failed in Congress but later won the backing of Ronald Reagan's 1980 presidential campaign and was signed into law in 1981.

Even while churning out supportive editorials, Wanniski worked the Hill on Kemp's behalf. Congressmen complained to the Journal's news staff thatWanniski had threatened editorial censure if they voted no. The dual role infuriated the newsies. The Journal's then-executive editor Warren Phillips, warned Wanniski to desist his political activities. He didn't. At a commuter train station in New Jersey, Wanniski handed out pamphlets endorsing the candidacy of another of his proteges, Jeff Bell, for the United States Senate. One of the commuters, Phillips's deputy, Ray Shaw, saw him. That ended Wanniski's tenure at the Journal. The incident was quintessentially Wanniskiesque, demonstrating his naivete and commitment. Even after ascending to one of journalism's most powerful perches, writing a book and advising powerful congressmen, Wanniski was willing to risk his job to engage in the classic democratic act of pamphleteering.

The pattern has repeated itself throughout his career. The same gregarious, forthright certitude that propels Wanniski into the corridors of power betrays and banishes him later. After a brief stint advising Ronald Reagan in 1980, Wanniski could not help but elucidate to the press—in a straight interview, not anonymous leaking—the importance of keeping the candidate's mind free of the doubts whispered by non-supply-side advisers, and of course Wanniski's own role in this struggle. Reagan's furious staff quickly cast him out. By 1996, with Kemp not running for president, Wanniskihad maneuvered himself nearly entirely out of influence. He had managed a short, weak interest in Bob Dole, but Dole was not a zealot's man; Wanniski deserted him for publicly questioning tax cutting in 1995. The brief candidacy of supply-side publishing heir Steve Forbes provided a last gasp of power in (more or less) mainstream politics, with Wanniski joyfully propagandizing on Forbes's behalf. Wanniski not only devised the Forbes candidacy; politically speaking, he devised Forbes himself. Every thought to which Forbes gave breath had been hatched in Wanniski's mind. But Wanniski's old penchant for the impolitic did him in fairly soon. After Wanniski responded to Christian Coalition attacks on Forbes with a broadside against Ralph Reed—political suicide in the Republican primaries—campaign manager Bill Dal Col repudiated Wanniski and shut him out of the headquarters.

Once Dole added Kemp to the ticket and endorsed a tax cut, Wanniski happily joined his old pupil's camp. But the campaign blamed Wanniski for continuing friction between the two candidates. Kemp refused to perform the customary vice presidential role of pit bull, lest it distract from his tax-cut proselytizing; why quibble over FBI files when you've discovered the key to eternal bliss? During the convention, Kemp resisted touting the tax cut's individual savings. He didn't want to reduce a noble idea to tawdry vote-buying. For the pragmatists, of course, vote-buying was the point.

The cynicism of Wanniski's Republican allies has always made his standing within the party fragile. Twenty years after publishing Wanniski, Irving Kristol confessed in The Public Interest that his support for supply-side economics had no bearing in conviction: "The task, as I saw it, was to create...a Republican majority—so political effectiveness was the priority, not the accounting deficiencies of government." Kristol's son, Bill, began tormentingWanniski in the Standard only after founding a small outfit called Project for the Republican Future. Bill Kristol, like Wanniski, devoted himself to faxing advice to powerful Republicans. But, while Wanniski rambled on about monetary policy and the evils of taxing capital gains, Kristol's faxes focused on tactics to the complete exclusion of moral considerations. One memo famously urged the GOP to reject a health care bill "sight unseen" on the grounds that successful reform would help Democrats. Kristol, in short, would not be caught dead pamphleting train commuters in New Jersey.

Wanniski's systematic alienation from the party professionals during the last election has brought him perilously close to political oblivion. Virtually no politician besides Kemp takes him seriously any longer. If Kemp becomes president, Wanniski will be the most powerful man in America who is not president. But if, as seems fairly likely, Kemp does not become president, Wanniski will suffer the indignities heaped upon less fortunate cranks, those whose fevered missives to politicians and journalists procure impersonal letters penned by snickering interns.

Such a fate doesn't faze Wanniski; nothing can shake his cheerful conviction that he is absolutely right about absolutely everything, and that one day the world will see that. Interviewing Wanniski for this article, I asked him about his relationship with the right-wing conspiratorialist Lyndon LaRouche. Most people in politics would play down that sort of acquaintanceship. Wanniski happily detailed his efforts to settle his differences with LaRouche through a series of dinner meetings, monomaniac a monomaniac. "The Laffer Curve essentially is what differentiated us," he reports. In other words, the two failed to reach agreement on just one issue, a question on which LaRouche was actually less crazy than Wanniski.

Wanniski is so blessedly, nuttily, sure of himself that he can afford to forgive his critics with a blanket magnanimity that others in politics could only envy. Shortly before this article was written, a Wanniski memo to the editor came in over the fax machine. It seemed clear, the memo said, that the article's author had already "made up his mind before he called to develop a Farrakhan-LaRouche-Wanniski fruitcake story." Never mind, though,Wanniski wrote: "I want you to know in advance that I forgive you both for whatever polemics are produced at TNR."

And, in the end, the great joke is that Wanniski's not crazy to act this way. Wanniski is right about his place in history. After all, his theories continue to influence even those Republicans who think he's off his rocker. Wanniski's nemesis, the Standard, defended Dole's supply-side tax cut by relying on the theories Wanniski pioneered. The Republican Party, today harbors no forthright opposition to supply-side tax cutting—just varying degrees of fervor. The only countervailing force on the right, budget balancing, itself derives from Wanniski: if the supply-siders hadn't done to the federal deficit in the late 1970s and early 1980s what they did, the budget hawks of the 1990s would have no reason to exist. The only two economic ideas that matter today both owe their existence to a man who his own party now acknowledges to be a nut. But it's too late. The nut's won.

This article originally ran in the March 31, 1997, issue of the magazine.

Source URL: http://www.newrepublic.com//article/politics/93919/prophet-motive