To: Russian President-Elect Vladimir Putin
From: Jude Wanniski
Re: Planning Your Economic Agenda
Because you are so busy, Mr. President-elect, I thought it might help if I brought the following ideas penned by Jack Kemp to your attention. He wrote them for his new Copley syndicated column, which appeared yesterday, April 19, in The Washington Times. Mr. Kemp -- who I'm sure you recall was the Republican vice-presidential nominee in 1996, on the ticket headed by former Senate Majority Leader Robert Dole of Kansas -- had throughout his career in politics been the leader of the growth wing of the Republican Party. He and I have been associated as "supply-siders" since we first met each other in 1976, by which is meant an approach to economics that focuses on how goods are best supplied or produced in an economy, as opposed to how they are best "demanded," another way of saying consumed. We have followed your country's attempts to convert from a command economy to market socialism very closely, as the Gorbachev government invited me through your central bank to visit Moscow in September 1989, to present ideas on how to best make the conversion. The trip was arranged by the Minister for Politics and Economics of the USSR Embassy in Washington, Gueorgui Markossov, who is now associated with your government in Moscow and through whom I will pass this memo. Mr. Kemp makes it clear, as I did at the time, that the "shock therapy" plan which both Chairman Gorbachev and President Yeltsin employed would wreak havoc on your economy and split the federation into little pieces. Every prediction I made at the time came to pass -- as Mr. Markossov will testify.
I also will tell you honestly, Mr. President-elect, that while our supply-side ideas were rejected at the time in favor of the "shock therapy" supported by the U.S. government and the International Monetary Fund, the greatest support I got in my losing effort to be helpful came from members of the Communist Party in Moscow. They uniformly desired a return to a market socialism of the kind the USSR had experimented with in the 1920's, before the Great Depression, and they understood that before anything else could be done, the ruble had to be fixed to gold. This is because a market system requires a reliable unit of account to be efficient. Once a market economy is rolling, you can leave the gold anchor and hope to manage a fiat currency effectively with smart monetary and fiscal policies. Mr. Kemp is absolutely correct, though, in suggesting you put together the wise tax programs now being contemplated for the first time with a ruble linked to gold. Again, Mr. Markossov has learned the mechanisms over the years and would be helpful in working them through in a way that fits your national economy. Every nation has different economic conditions that require variations when reforms are undertaken. I have been to Moscow several times at the invitation of both the USSR and Russian governments and would be happy to do so again if I might be of assistance to you. My paternal grandfather came to the United States from the Ukraine more than a hundred years ago. My maternal grandparents came here from Lithuania immediately after the first world war, after stopping in Scotland during the war. My grandfathers and father were coalminers all.