Memo To: Robert L. Bartley, Editor, WSJournal
From: Jude Wanniski
Re: Robert Barro, "Supply-sider"
My assumption is that you did not read Bob Barro's op-ed before it was published on the editorial page today, entitled "Bob Dole, Supply-Sider." Barro may be the best of the Keynesian economists at Harvard, but he is still a demand-side economist and has only a foggy idea of what supply-side economics is all about. It is absolutely outrageous that he could say of the Dole tax plan: "The 15% tax cut represents a return to the Reagan approach of using revenue starvation to force government downsizing." This is the crap that David Stockman sold to the Atlantic Monthly via Bill Greider, which led to his being "taken to the woodshed" by President Reagan. Why do we have to read such nonsense on the Journal's editorial page, which was the cradle of supply-side economics? Yes, Barro says nice things about "supply-side economics" in a general sense, but when he is permitted to define it to suit his own tastes, he totally undermines the integrity of the idea. He denounces "the narrow concentration on aggregate demand in the standard Keynesian macroeconomic model," but he himself remains in that analytical framework when he sets as his goal "a consumption-based [tax] setup in which all saving is exempted from taxation." Savings and consumption are primary concepts in the Keynesian model, not in the supply (production) model. If we wind up winning the Reagan Revolution on the second trip around, with Bob Dole in the White House, it saddens me to think we might have made no progress at all in establishing the true philosophy that underpins the ideas you and I first brought to global attention.
Maybe what we should do, instead of complaining about the myriad misinterpretations of the idea, would be to run a basic primer on what supply-side is about, and what it isn't. It makes me laugh to read the silliness written about it in most of the print media, but when it shows up on the page, it begins to hurt.