Bob Novak on "The Way the World Works"
Jude Wanniski
May 27, 2005


Memo To: Website Browsers, Fans, Clients
From: Jude Wanniski
Re: His 1998 Introduction to TWTWW

Six years ago, on the publication of the 4th edition of "The Way the World Works," I wrote this memo to thank Bob Novak for writing the introduction. I happened to re-read it last week for the first time since it ran July 30, 1998 and thought it worth a re-run, especially for those of you who are thinking of registering for the Supply Side University summer session.

* * * * *

When Alfred Regnery several months ago said he would be happy to publish a 4th edition of my book, "The Way the World Works," on the 20th anniversary of its first publication in 1978, he suggested a new introduction -- one that would look back over the intervening years and comment on the influence this book has had. I decided to ask Bob Novak, easily one of the three or four most influential political journalists in the country during this period, and one of my best political friends. Bob Bartley, my old boss at The Wall Street Journal editorial page, wrote the introduction to the 3rd edition published in 1989, which is included in this new Regnery edition. I was delighted when Novak instantly agreed to give it a 20-year look and I was overwhelmed by his generosity when I read what he had to say. Regnery called to say there are very few introductions that sell books, but he thought this one would. I hope so! This new edition is now hot off the presses, just as the last printing has been depleted. It includes a new preface I've written. But here's Novak:


By Robert D. Novak

On a Saturday in the early spring of 1978, I was in California to write a column about Proposition 13, which when approved by the state's voters would sharply reduce property taxes. I scheduled a visit with one of the few academic economists supporting it, Professor Arthur Laffer of the University of Southern California.

What was supposed to be a one-hour meeting at Laffer's suburban Los Angeles home stretched out to most of the day. In responding to my arguments against Prop. 13, the ebullient Laffer led me on a fascinating tour through the then unknown topography of supply-side economics. I was fairly amazed. But, Laffer said, one cannot really appreciate what I'm saying until you pick up a copy of a book called "The Way The World Works" by Jude Wanniski.

I thought I vaguely knew Wanniski as a political columnist for the now defunct National Observer (though, in fact, I had him mixed up with another reporter for the same newspaper). As for his book, its publication was news to me -- that's how little press and review coverage it received. When I returned to Washington, I asked my staff to get the book, but I had the title wrong. They returned from the library with something called How The World Works, which was a children's book about how people work at jobs like carpentry, plumbing, etc.

When I finally secured Wanniski's book, I was enthralled. Remember this was 1978, in the midst of Jimmy Carter's malaise when low growth, double-digit interest rates, double-digit inflation and high unemployment were widely perceived as permanently blighted fixtures of American and global economics.

Wanniski, employing brilliantly simple analogies, made clear to me things I had imagined but not understood. Two books have shaped my mature philosophy of politics and government: "Witness" by Whittaker Chambers and "The Way The World Works." As a young U.S. Army second lieutenant in 1953, my view toward the struggle for survival of the West against the Communist behemoth was shaped by Witness. Exactly 25 years later, my encounter with Wanniski's book opened to me the road to the survival of capitalism. These are, in my opinion, the two most influential pieces of political writing of the post-World War II era. Both have been instrumental in the global revival of conservatism, for very different reasons. Although Witness has inspired thousands to persevere in the struggle against an unspeakable Godless tyranny, it cannot be claimed that Ronald Reagan relied on it to forge his victory over Communism. In contrast, President Reagan's economic strategy that formed the basis of the current prosperity can hardly be imagined without the new ground ploughed by "The Way The World Works."

While Chambers despaired of the West's struggle against Communism, Wanniski was infused with optimism. Writing in 1978 when U.S. leaders feared not only for their economic system but for the outcome of world struggle, Wanniski's globe-spanning epilogue to the first edition breathed hope and confidence about the fate of the Communist experiment. Two decades later, he can claim a major share of the credit for the revitalized American economy that was integral to winning the Cold War.

People who imagine me to be an early recruit in the supply-side legions might be surprised to learn now that I did not become an acolyte until 1978. The conventional wisdom then was that only irresponsible demagogues wanted to cut taxes while it was the essence of good citizenship to want governments to extract more revenue from their citizens. After the final debate of the forlorn presidential campaign in 1976, my column chided both Gerald Ford and Jimmy Carter for failing to courageously demand higher taxes. A few months before the favorable vote in California on Prop. 13, the only public figure I knew who supported it was Reagan aide Lyn Nofziger (and his comment to me was off the record). Milton Friedman was opposed, and even Ronald Reagan was a late adherent.

But Laffer supported Prop. 13, and so did his friend Wanniski 3,000 miles away in New York. Wanniski clearly was concerned with much more than California property taxes. His essay "The Mundell-Laffer Hypothesis-a New View of the World Economy," appearing in the Spring 1975 issue of "The Public Interest," really launched the supply-side movement by introducing to general readers the teaching of Laffer and Robert Mundell (a Canadian professor of economics at Columbia University referred to by Wanniski and Laffer as the best economist in the world).

In 1976, Wanniski began his partnership with a then unknown Congressman from Buffalo, N.Y., named Jack Kemp that has persisted through ups and downs for more than 20 years with profound consequences. Kemp, relying on Wanniski as his guide and mentor, was instrumental in establishing tax reduction as the policy of the Republican National Committee on September 30, 1977 -- the very day that Wanniski completed this book.

Reagan's aides were concerned that Kemp, pressed by Wanniski, would challenge Reagan for the 1980 presidential nomination. Consequently, Kemp was brought aboard the Reagan campaign, which endorsed the Kemp-Roth tax reduction as the economic keystone of the Reagan presidency. 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. And without his economic renaissance, President Reagan's victory over the Soviet Union and Communism is hard to conceive.

There was a brief interlude in the mid-1980s when "supply-side" was an encomium rather than a pejorative. To paraphrase Richard Nixon's confessed acceptance of Keynesianism, politicians a dozen years ago were, in effect, saying: "We are all supply-siders." But the liberal establishment's bias for big government has scapegoated Reagan tax cuts for all economic mishaps.

Nobody except for Wanniski, me and few others call themselves supply-siders today.

It is a mixed climate after 20 years. Although politicians do not publicly proclaim the need for higher taxes, they sneak through revenue boosts. Republicans at least publicly prefer tax cuts but don't do much about it. The Mundell-Laffer-Wanniski call for a gold standard has fallen on deaf ears. So, this fourth 20th anniversary publication of "The Way The World Works" is welcome to remind us just what supply-side really is all about. It is much more than taxes, but faith in the considered judgment of people combining as voters. "The electorate, being wiser than any individual in the society, is society's most precious resource," writes Wanniski. "It is the job of the politician to try to divine what it is the electorate wants." From that simple origin, he ranges across time and distance to describe the way the world really does work.

Arcane mysteries of monetary policy and international currency fluctuation are laid bare. His analysis of how the Smoot-Hawley Tariff triggered the stock market crash of 1929 and the Great Depression, still fiercely contested, is spectacular for its originality. His study of the coincidence of high marginal tax rates and economic stagnation in the Third World is the heart of the supply-side case.

How did a journalist learn so much about economics? That question is asked, not without sneering condescension, by professional economists. Like the Scot preacher Adam Smith, Wanniski is self-taught. When he joined The Wall Street Journal's editorial page in February, 1972, he was "as oblivious as almost everyone else in the world to the economic events that loomed over the horizon." The same spirit that impelled Wanniski as a young reporter in Las Vegas to learn to count cards and beat the casinos at blackjack has led him to cast a fresh glimpse at economic theory without being bound down by the conventions and restrictions of orthodoxy.

His world view is by no means restricted to economics. There is scarcely any area of human endeavor that does not excite his interest.

His abortive association with Bob Dole prior to the disastrous 1996 campaign for president was probably doomed from the start but it fell victim to a basic misunderstanding. Dole thought he was getting a badly-needed economics adviser; he found in Wanniski somebody who wanted to press on him foreign policy, Congressional tactics and campaign strategy. Undoubtedly, Dole would have been better off had he taken his advice.

Wanniski, I believe, is a genius and as such is not always the easiest person to deal with. And deal with people he does, because he is no cloistered journalist, much less an ivory tower economist. He is an activist who has sought, with spectacular success, to implement his views as policy. Then an unknown journalist, in 1978 he offered this book "in the belief that the world's political leaders will find it of compelling usefulness in diagnosing and treating the maladies of the global polity." Enough of them did to alter the course of the world.

The subsequent 20 years have seen Wanniski knocking on the doors of power and finding them locked. After providing for Reagan the supply-side secret that unlocked his election, he was barred by his high command. In 1996, he talked Steve Forbes into running for president and then was kept out of his campaign. That summer, when his old comrade-in-arms Kemp was named as Dole's running mate, Wanniski was banned from the campaign's inner circle. A briefing by Wanniski prior to the lamentable debate with Al Gore could have averted catastrophe.

Why do politicians and government officials flinch from this man with such insights and such imagination? Mainly, I think, because he is antithetical to the bureaucratic mind. His vigorous advocacy is the opposite of predictable, stereotyped thought. He is no ideologue and, therefore, not dependable in following conservative dogma, much less the Republican Party line.

Wanniski is open to absolutely everybody sensible enough to embrace supply-side doctrine. He has had the welcome mat out (with a poor record of acceptance) for Jerry Brown, Bill Bradley, Mario Cuomo, Charlie Rangel and Bill Clinton. He is not trying to win elections for the Republicans, but seeking a better America.

Extending this outlook still further, Wanniski has defended some of the most unpopular people on the planet and suffered bitter attacks for it. He has seen redeeming qualities in Richard Nixon, Ferdinand Marcos, Ngo Dinh Diem, Roberto D'Aubuisson, Saddam Hussein, Augusto Pinochet, Fidel Castro, Raoul Cedras, and Michael Milken, among others. He has scandalized old friends by embracing Louis Farrakhan. St. Jude was the patron of hopeless cases, and Jude Wanniski is the last kid on the block to join the lynch mob.

He has also been my friend for 20 years, a friendship preserved because I think that, unlike others, I do not try to change his mind. I have found over the years that what might seem his most implausible positions, like defending the old Soviet Union on grounds that what would surely follow might be worse, do not look so implausible with the passage of time.

Nobody else, I believe, has accomplished what Jude Wanniski has without institutional sponsorship, without a formal political or financial power and with merely will and brainpower. Armed with just a desk, a telephone and an electric typewriter (now a computer), he has not only described but also changed the way the world works. If the doors of power are locked, his ideas have penetrated nevertheless.

He is by no means content with what he has accomplished. This new edition is a vehicle for his unfinished agenda. He is still about the business of creating wealth in the spirit of the Good Shepherd. He writes in his new preface that he cannot let "lie dormant" his God-given gifts, and I can safely predict that he shall not.

Washington, D.C.