Stephen

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September 17, 2007

In ‘The Big Con,’ Jonathan Chait Exposes the Lie of Supply-Side Economics

How did an economic philosophy with little basis in fact, with little credibility from either professional or academic economists, and with little support from the general public, become an article of faith in a major political party, and eventually the law of the land? One of Washington’s smartest journalists looks at that question in an engaging and entertaining new book.

In “The Big Con: The True Story of How Washington got Hoodwinked and Hijacked by Crackpot Economics,” longtime New Republic writer Jonathan Chait traces the history of the supply-side economics movement, from a goofball theory by a couple of conservative movement gadflies in the 1970s to its eventual implementation.

How did it happen? Republicans, in the Bush era, eventually realized that having the support of the corporate class was what mattered, and regardless of what else they did in power, they would continue to have that support so long as they got a tax cut every year.

It all fits the Republicans’ current ethos, which is essentially to say to blue-collar conservatives, “Hey, we know you’re not rich, but someday, maybe, you will be. So, we’re going to cut taxes on the richest of the rich, and maybe someday, you’ll get to partake in that. In the meantime, feel free to have nothing but resentment for rich people – but only if they’re lawyers, movie stars or liberal politicians.”

Supply-side economics – also known as “Reaganomics,” “trickle-down economics,” “voodoo economics” and numerous other derisive terms – is not to be confused with such other, generally conservative positions such as laissez-faire economics, or “fiscal conservatism.” It’s the idea that no matter the economic circumstance, the ideal solution is always another tax cut.

Chait makes all sorts of fascinating points about this state of affairs. Perhaps the best part of all is a chapter about the conservative veneration of Ronald Reagan, and the assumption among people of the right today that any conservative who questions the idea of tax cuts is “betraying Reagan’s legacy.”

As Chait points out, not even Reagan lived up to the “Reagan legacy.” Yes, the Gipper passed a huge tax cut soon after taking office in 1981 – but subsequently raised taxes numerous other times throughout his presidency. If a Republican today were to run on Reagan’s actual record and, upon his election, enact Reagan’s policies, most conservatives would likely call him a closet liberal, if not an outright traitor, and defeat him decisively.

Republicans today may treat Reagan as a deity, but that doesn’t mean they actually remember what he actually did in office. Sean Hannity, numerous times, has said something along the lines of “if Reagan were alive today, he would never allow Iran to acquire nuclear weapons.” Reagan’s actual administration, of course, sold arms to Iran, a gambit overseen by Hannity crony Oliver North.

The first half of the book traces the history of the supply-side movement, its spread, and its eventual implementation, first under Ronald Reagan, and later – even more egregiously – under the current President Bush. The second half pulls back from economics and makes general observations about the last decade of American politics.

There’s certainly nothing wrong with the book’s second half – after all, Chait is right about most of what he says – but the first half is so strong and so original that one wishes Chait had stuck with the economic arguments for the entire book. This is likely a case of the author, writing his first book, trying to get many of the observations gleaned from a decade of Washington work into it, regardless of its correspondence with the book’s overall thesis.

A common theme in the book’s second half is a distrust of bipartisanship and centrism, since the conservative movement is dedicated towards total domination of politics, while there is no corresponding “liberal movement,” because both “liberal” institutions (the media, think tanks, etc.) feel the need to embrace bipartisanship.

It’s a surprising theory coming from Chait because he has, if anything, often been a hated man in the left-leaning blogosphere, branded a sellout and a crypto-conservative, mostly because of his initial support for the Iraq war, some not-so-nice things he’s written about the netroots and his association with The New Republic, which the blogging left considers part of the right. This, even though Chait authored a piece in 2003 that began with the phrase “I hate President George W. Bush.”

Because it provides a fascinating look at macroeconomics, an issue criminally ignored in most media debates about politics, Chait’s book is highly recommended.

© 2007 North Star Writers Group. May not be republished without permission.

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