Many prominent free-market thought leaders are loudly objecting to the proposed extension of federal unemployment benefits. They point out that some of the recipients receive more from a modest unemployment check than from working. My comrades-in-conservative-arms claim fear of a moral hazard that discourages people from working. They fear this could inhibit the recovery upon which they believe President Trump’s re-election depends.
Yet for many workers, there is no work. Tweak the benefit? Perhaps. Balking, wholesale, at the extension of the benefit would be bad policy and bad politics. And, let it be said, “laissez-faire,” yes, Supply-Side, no.
Being miserly tarnishes the conservative brand. It conjures up one of the tarter provisions of William F. Buckley’s mission statement for the National Review: “Radical conservatives in this country have an interesting time of it, for when they are not being suppressed or mutilated by the liberals, they are being ignored or humiliated by a great many of those of the well-fed Right whose ignorance and amorality have never been exaggerated for the same reason that one cannot exaggerate infinity.”
My colleagues’ stance also brings to mind another classic, Charles Dickens’ ‘A Christmas Carol.’ Per Matthew Caruchet writing for The Economic Opportunity Institute, “When he was 12 years old in 1824, Charles Dickens worked 10-hour days in a rat-infested shoe-polish factory for six shillings a week. That’s the equivalent of £30.68 or $41.06 in 2017 currency. It was all the money he had to get by. His father, mother, and five siblings aged 2-11 were in prison because the family was in debt. ... Needless to say, Charles Dickens grew to hate the system and rail against it in his works."
‘A Christmas Carol’ isn’t anti-capitalist. It is anti-miserliness, pro-benefactor. These are two entirely different states of affluence. The institutions “for” the poor Scrooge vaunted to his charitable solicitors were designed to punish and kill off paupers. That’s utterly contrary to capitalism. Adam Smith defined it as that “which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people.”
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The original Supply-Side quarterback Representative Jack Kemp used to refer to himself as a “bleeding-heart conservative.” He designed his policy propositions for the general welfare, leaning toward workers and the poor. Kemp emulated Jack Kennedy, whose ethos was, “A rising tide lifts all boats.”
Good solid working-class Democrats such as Dan Rostenkowski, Bill Bradley and Dick Gephardt embraced equitable economic growth policy (although not quite Supply-Side rhetoric). One United States Senator from Delaware who you may have heard of, Joe Biden, voted for the 1981 Reagan tax rate cut that cut the top rate from 70 percent to 50 percent. He voted to reduce the top marginal rate from 50 percent to 28 percent.
Good Democrats, by reducing marginal tax rates further and faster than even Kemp proposed, out-Reaganed Reagan, paving the way to sizzling job creation and upward mobility for workers. For which, let it be noted, Biden has, rhetorically, repented of but has not been absolved by the hard-shell democratic socialists.
That said, for the benefit of those then unborn, let us note that the original Supply-Side was never designed to privilege capital over labor, creditors over debtors. Let us note that voting for across-the-board reduction of tax rates is far more classic “Supply-Side” than the cutting of corporate tax rates, such as President Trump delivered.
Back in Supply-Side’s heyday, Jude Wanniski, Kemp’s premier economic swami (and a self-described lifelong “Marxian”) famously proposed what he called the “Two Santa Claus Theory.” He urged Republicans to advocate policies (tax rate cuts and monetary stability) to create equitable prosperity. He weaned the GOP from its propensity to inflict, in the name of rectitude, gratuitous suffering on those struggling to subsist.
Wanniski in National Observer, 1976: “Either way, of course, they (the Republicans) embrace the role of Scrooge, playing into the hands of the Democrats, who know the first rule of successful politics is Never Shoot Santa Claus. … They were not always so dumb. The GOP’s heyday was in the 1920s, when, acting on the advice of Treasury Secretary Andrew Mellon … the Republicans cut tax rates no less than five times. Mellon, the embodiment of the Republican Santa Claus, argued that a cut in tax rates would provide business an incentive to expand, increase prosperity, expand the tax base … .”
The GOP, confronted by Wanniski, like Scrooge after encountering the three Christmas ghosts, transformed from skinflint to benefactor. America flourished, with real GDP more than tripling over time. The GOP flourished politically when it displayed the Kempian quintessence of true capitalism, generosity to workers. And then, it didn’t.
The political and moral benefits of generosity appear lost in the mists of time. Regression to mean? Mean seems like the apt word here.
Memo to my fellow free-market champions:
Never shoot Santa Claus.
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Ralph Benko, who founded the Prosperity Caucus in 1986, an ongoing monthly gathering of Supply-Side economists, is the coauthor, with William Collier, Jr., of The Capitalist Manifestoand co-founder and chairman of The Capitalist League.
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