May 17, 1992
The Seven Fat Years and How to do it Again
by Robert Bartley
BRIAN LAMB: Robert L. Bartley, author of "The Seven Fat Years and How To Do It Again," what is this book all about?
ROBERT BARTLEY: This book is about the seven fat years from 1983 to 1990. We had a big economic boom in this country and have almost forgotten it by now.
LAMB: Where did you get the title?
BARTLEY: The title comes from the Book of Genesis; the seven fat years that the pharaoh dreamed about, and Joseph interpreted his dream saying that they were going to have seven fat years followed by seven lean years.
LAMB: Do you think that's what we're going to have?
BARTLEY: Well, I hope not. I hope that we can generate a little optimism in this society, partly by remembering what we did during the seven fat years. I think there is a danger of seven lean years if we get into kind of a self-realizing pessimism. That's basically what I'm warning against.
LAMB: We've had lots of books written in the last couple of years, and a tremendous number of them say they were great years -- but you're saying they were great years, and you make no apologies.
BARTLEY: Well, that we can do it again. The main thing is that there is nothing predestined about seven lean years. We can go out and apply some of the lessons we learned during the '80s and create prosperity. Maybe we can do it a little better this time. I think there were some mistakes. But I don't think that is what most of the books have been saying. Most of the books have been saying that it was a terrible time, but in fact we grew the economy by a third over these years that I'm writing about. The average disposable income went up by 20 percent. We won the Cold War. Not a bad record.
LAMB: Let me ask you a question that struck me as I read this book. Bob Bartley is the editor of the Wall Street Journal, has access to the editorial page that goes into close to 2 million homes or people in the United States. Why write a book when you could have written seven articles that appeared day after day in the Wall Street Journal and get the same point across?
BARTLEY: The book, of course, draws very heavily on the editorials that I wrote going clear back to the middle-1970s. But it's a different thing if you can get it all together in one place rather than in little snippets day by day, and I hope that it will provide a record that people can consult if they want to understand the continuity of what went on.
LAMB: Most of the Wall Street Journal editorial page or views have to do with supply-side economics.
BARTLEY: Oh, quite a bit. We are generally credited with inventing supply-side economics or at least spreading the word out or popularizing it, really, starting well before Ronald Reagan -- starting in the middle of the 1970s, really. As I explain in the book, the terminology may be a little misleading. None of us at the time thought that supply-side economics was something new on the face of the earth. We thought it was kind of standard pre-Keynesian kind of economics that applied better to the conditions of the 1970s and 1980s than the Keynesianism that was being taught in the universities at that time.
LAMB: I want to get back to that, but I want to ask you, you have a chapter called "Man from Mars." What is that all about?
BARTLEY: Well, I have this man from Mars kind of opening the book. I call it the paradox of the '80s. The man from Mars lands in Kankakee and starts wandering around. He looks at all of the parking lots full of cars shipped all the way from Japan, and goes into the record stores that now have music videos by Madonna and Milli Vanilli. The kids have $100 sneakers, but everybody he listens to and all the book titles he reads say that the nation is declining, that we have enormous problems. We have the S&L, for example, mutated into the eggplant that ate Kankakee, Tampa and Los Angeles. He's trying to figure out what's going on here, so he has a little hand-held data boy and starts to punch into it to get the statistics for these years and finds, as I said, the economy grew by a third, the average disposable income grew by a fifth -- the whole face of the society was remade, really. In 1980, if I recall correctly -- I have it in the book exactly -- something like 2 percent of the homes had VCRs. That whole industry, all those video shops, were all created in the 1980s and particularly after the boom started in '83.
LAMB: Why are people, then, so down on that period?
BARTLEY: I think that the biggest reason is that rapid progress is unsettling. I have a chapter in that talking about the fact that Thomas Malthus wrote about his very deeply pessimistic economics just at the outset of the industrial revolution when mankind was making this tremendous leap. Well, these leaps of progress cause rapid change, and in rapid change there are always people who lose. The United Auto Workers, for example, lost out, lost a lot of jobs, because of the rising Japanese industry, in this case. A lot of chief executive officers lost jobs when their firms were merged or taken over, and they had to go out and create new lives for themselves. This is a real problem. Reaction comes, then, when we want to stop all this upset and all this tumult and all this change, and there is kind of a societal reaction to slow things down. But you find that when you try to do that, then the whole economy slows down. That, I think, is the paradox. The same thing happened in the 1930s, in a way -- a reaction to the 1920s.
LAMB: Michael One, what is it?
BARTLEY: Oh, Michael One is a restaurant with very good porter-house steaks down in the Wall Street area, a few steps from the American Stock Exchange. We used to hold seminars there. Bob Mundell is an economist at Columbia University, and Art Laffer, famous now by the Laffer curve, and Jude Wanniski, who was on my staff at the Wall Street Journal, and myself and a few other people used to gather there for dinner and talk, generally, about economics. Out of this came supply-side economics or a view of the modern economy that I think explains pretty well what happened as we resolved the economic crisis of the 1970s and started the seven fat years.
LAMB: When did you start having these seminars at Michael One?
BARTLEY: I think it was probably in '74.
LAMB: Who is Arthur Laffer?
BARTLEY: Arthur Laffer is now a consulting economist. He was an academic economist at the University of Chicago and at the University of Southern California. During this period he achieved some sort of fame with the Laffer curve, which said that when taxes get too high they start to bring in lower revenues rather than higher revenues. Yes, there is the Laffer curve, as you see, drawn on a napkin. It's part of the lore that it was first drawn on a napkin in a restaurant here in Washington.
LAMB: This restaurant is in New York.
BARTLEY: Michael One is in New York, but this one was the Two Continents Restaurant in Washington.
LAMB: And the folklore of the Laffer curve napkin, you've discussed in your book, that there are several opinions on where he actually wrote this down.
BARTLEY: Yes.
LAMB: What is that folklore?
BARTLEY: Yes, that's right. Well, Jude Wanniski has reported that he drew it for Dick Cheney, who was then deputy White House chief of staff, in the conversation the three of them had at the Two Continents Restaurant. Unfortunately, neither Laffer nor Cheney remembers this, and this has led to some dispute about where it was originally drawn. As I say in the book, I believe Wanniski. He is a good journalist, and it's the kind of thing that a journalist would remember.
LAMB: Who is Jude Wanniski?
BARTLEY: Jude Wanniski is a fellow that worked for me during these years. He now has his own firm. He was actually my first hire after I took over the editorial page at the Wall Street Journal in 1972. He had been a newspaperman in Las Vegas and Alaska. Originally from Brooklyn, a very brilliant character who really got us all together -- Laffer and Mundell and myself -- during these years, and then wrote a book about it modestly called "The Way the World Works," which was one of the bibles of the supply-side movement in the late 1970s. Then he left the Journal in '78 and struck out on his own and has met a payroll ever since. |
