Hey Jude

Date: Fri, 01 Nov 1996 12:04:41 -0500
To: Backtalk@mojones.com
From: “Paul R. Krugman”
Subject: Hey Jude

Jude Wanniski is an important figure. He was one of the founders of supply-side economics, and is currently its most celebrated guru. Moreover, he is inseparable from Jack Kemp, who may yet become President one day. It is important that the ideas and character of such an influential man be well understood. So we should be grateful that Mr. Wanniski has provided us with such a revealing self-portrait.

There are three issues to address in Wanniski’s letter. First is his assertion that contrary to general opinion the last 30 years have been a terrible time to be rich and a great time to be poor. Second is his attack on my qualifications and character. Finally, there is the question of what Wanniski’s letter says about him and those who rely on his wisdom.

On wealth and poverty: I knew that Wanniski believed in the gold standard. I did not know that he regards gold as the only valid measure of purchasing power, independent of what useful objects that gold can buy. Over the past 30 years the rich have become able to afford to live in much bigger houses, drive or be driven in much fancier cars, take much more lavish vacations, and hire many more servants. Nonetheless Wanniski insists that they have suffered because the Dow Jones has not kept up with the price of gold. Somehow, I have trouble feeling their pain. (Incidentally, Wanniski tries to make the case that we have not become a less equal society by reminding us of the inequalities of the Gilded Age. Yes, and Louis XIV was pretty rich too. What this has to do with my point that the middle-class society we had a generation ago is now disappearing escapes me).

Meanwhile, the poor have become “fat and happy”, because they know that they will receive $35,000 in Medicare benefits each year, “paid for by the rich, who are the nation’s producers”. Actually, Medicare is paid for with payroll deductions, which means that most of the burden falls on the middle class. The current Medicare expenditure per retiree is less than $6,000 – where did that $35,000 number come from? And not every poor person is entitled to Medicare for the “rest of his life”; children, who are 40 percent of the poor, will have to wait a while before the checks start coming. Details, details.

About me: I have some professional advice for Wanniski. If you plan to engage in character assassination, it pays to do some homework. With modern technology, it’s quite easy. All I had to do was type in “jude wanniski” and click the mouse to get all kinds of interesting information, from stories about the unrelenting efforts of Jack Kemp to give Wanniski a central role in the Dole campaign to the fact that Wanniski’s consulting firm employs followers of cultist Lyndon LaRouche. Might I suggest that Wanniski type in “paul krugman” and see what he gets? He might be surprised.

Anyway, Wanniski asserts that I “plagiarize” myself, writing that the rich are getting richer and the poor poorer (actually, he can’t even bring himself to say it – even when quoting my alleged nonsense he says that the poor are getting richer) “hundreds of times”. As my mother used to say, “I’ve told you a million times – don’t exaggerate!” I have written a few things about growing inequality. But none of the articles in Foreign Affairs or The New York Times Magazine that he so bitterly cites were on that subject. My most recent book was on international trade, not income distribution, and it got a very favorable review in that sleazy liberal publication The Wall Street Journal. Oh, and by the way: I don’t usually boast about such things, but businessmen in various parts of the world pay me reasonably large fees to talk to them about trade, economic growth, exchange rates, and monetary policy. I mention this only because Wanniski seems anxious to see me “starve to death”, and I would like to warn him that the prospect is not imminent.

As I said, we should be grateful to Wanniski for writing this letter, which tells us all that we need to know about his ideas, and more than we wanted to know about his character. The interesting question is what all this says about those who trust in him – above all, about Jack Kemp.

After all, the one thing that even Kemp’s opponents always say is that he is an agreeable person – that he is not one of those angry, paranoid, everyone-who-disagrees-with-me-is-an-idiot-or-corrupt, the-liberal-media-are-conspiring-against-us types. So we may well ask: what’s a nice guy like Kemp doing with a guru like this?