Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity

One day in December 1974, while dining with some prominent officials from the Ford Administration, economist Arthur Laffer sketched his now-famous "Laffer Curve" on a napkin to illustrate the idea that, at some point, lowering taxes could actually increase tax revenues. By retelling lore and providing lively anecdotes and insights like this one, Brian Domitrovic introduces the major characters, the "econoclasts," who were instrumental in the ascendency of supply-side economics in the modern era: economists, journalists, and politicians. In addition to Laffer, these include Robert Mundell, ultimately a Nobel economist; Robert Bartley, Wall Street Journal editorial-page editor; Jude Wanniski, a reporter whose book, The Way the World Works: How Economists Fail and Succeed, spurred the supply-side movement; U.S. Representative Jack Kemp, the former pro football player who championed supply-side theory and won passage of legislation putting the theory into practice; and more. Domitrovic provides a well-researched and detailed account of the political struggle to assert supply-side policies in the late 1970s and early `80s. He tells about how, by the time Ronald Reagan became president, proponents of supply-side economics had succeeded in the marketplace of ideas to such an extent that even Congressional Democrats were largely in favor of providing tax cuts to spur economic activity. Domitrovic speculates on how, if the Carter Administration had not been so whetted to an objective of creating tax "fairness"--an objective that had no constituency--and had been more sympathetic to providing tax "relief"--which is what most Americans cared about--there might not have been a groundswell of support for Reagan's candidacy. Of course, Carter's policies served only to exacerbate the stagflation that had characterized the American life in the 1970s. When Reagan and his supply-side advisers got to Washington, they applied the "policy mix" of stable money and tax cuts (a.k.a. "Reaganomics"), which is, as Domitrovic explains, the secret to escaping stagflation. Still, it took time for the policy mix to have an effect, because people had become so accustomed to the stagflation paradigm and were therefore so skittish about moving into the real economy. By 1983, he explains, with inflation low and returns and investment increasing, tension had built to such a point that the recession of 1981-82 could not last. Indeed, the asset-shifting that started at that time was to continue, nearly unabated, for two decades. In light of the recent economic crisis and some uninformed observers' attempts to blame Reaganomics, Domitrovic suggests that revisiting the policy prescriptions that brought the United States economy out of the economic crisis of the 1970s, rather than hearkening back to the Great Depression, would be instructional. He provides a plan of action for the Obama Administration that he says would allow Obama to emulate John F. Kennedy, who appli

One can argue that history is essentially the study of heroes and villains. Heroism and villainry are often personified in the forms of living, breathing people like Winston Churchill (hero) or Adolf Hitler (villain). Malignant evil can also be embodied in a school of thought (Marxism) just as heroic virtue can be portrayed through a simple idea (the golden rule). Timelines and milestones are an interesting part of the study of history, but only to the extent that they chronicle or earmark the doings of a hero (or villain). Brian Domitrovic's new book, Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperty, is a perfect chronicle of heroism in both personal and idea form. For supply-side economics has surely been a champion for liberty in our lives, and the men who developed it and ultimately implemented it are the textbook definition of heroes. Yes, Econoclasts is a history book, and a monumentally important one at that I am not tired of biographical material on Ronald Reagan, and I have been deeply moved by much of what is already out there. Reagan, who guided our country out of the misery of the 1970's and into the "morning in America" of the 1980's is not lacking in historical rememberances (and deservedly so). However, some of the key individuals behind his economic operation are the furthest thing from household names. Domitrovic takes the economic thought leaders (Mundell, Laffer, Simon, Rutledge, etc.), the conveyors of the message (Bartley, Wanninski, Novak), and the political leaders who championed the cause legislatively (most notably, Jack Kemp and William Steiger), and unpacks their entire story in this fascinating chronicle of the economic school of thought that quite literally changed the world. In its simplest form, supply-side economics was the ultimate rebuttal to the Keynesian malaise of the 1970's. Supply-siders believe that most modern economic woes have been created by the combination of government mistakes monetarily (the weak medium of exchange they create thoroughly excessive printing of the U.S. dollar) and fiscally (the stunting of economic growth caused through excessive taxation on capital and investment). The supply-siders prescribed the remedy to the stagflation brought about by the 1970's (beginning with the woeful policies of Richard Nixon and carried on through Ford and Carter). And unlike so many of their co-belligerents in the cause of freedom economics (especially the Austrians), the "supply-siders were dedicated to, and good at, getting things done in practice." I really would prefer that every single person I know read this book. But since I doubt that will happen, a few key tenets of supply-side economics are worthy of review. It is incomprehensible to us today that 70%, and 80%, and even 90% marginal tax rates were ever part of American life. The idea that any argument ever had to be made against confiscating $8 of the last $10 a given person made seems surreal t

A fascinating, well-researched book that details the history and players behind the supply-side movement that greatly influenced economic policy during the Reagan years. There have been numerous books written by authors who played major roles in the movement such as Robert Bartley, Jude Wanniski, Paul Craig Roberts, and Bruce Bartlett, but until now nothing truly exploring the actual history behind it. Although the intellectual roots of supply-side economics are well-established, it appears that today's politicians and policymakers ignore the "policy mix" of lower taxes and sound money that led to the incredible run of prosperity experienced from 1982-2007. Econoclasts is a timely book reminding us that the principals of supply-side economics can once again help pull the country out from under its current economic woes.

This is superb history even though not an exciting read. Any one who wants to be an educated voter should read it. particularly if they didn't live through it as an adult