LAMB: You say that he was your second choice as the number two hire that you wanted to make when you became editor in '72. Who was the first?
BARTLEY: The first was George Will who was then an aide to a Colorado senator. No one knew him very well, but I got to know him when I lived in Washington for a year. I was told at lunch one day that I was going to take over the editorial page of the Wall Street Journal, and the next morning I was in George's living room trying to hire him. It didn't work out -- probably better for him, maybe not so good for me.
LAMB: This is your 20th year as editor of the Wall Street Journal.
BARTLEY: Yes, the title has changed, but I've been running the editorial page ever since 1972.
LAMB: What is the title now?
BARTLEY: The title is editor and vice president now.
LAMB: There are lots of names, and the reason I wrote a bunch of them down is because I wanted you to talk about the impact of people on something like this. We've talked about Jude Wanniski and Arthur Laffer. Herb Stein -- what role did he play?
BARTLEY: Herb Stein named supply-side economics. He has been mostly against it throughout his career, but he named it at one resort at one conference talking about the supply-side fiscalist, which he'd said included, maybe, two economists. But then most of the people in the room wanted to enroll in what he was describing, and Wanniski then dropped the fiscalist and just kept supply-side economics, and that's what it became.
LAMB: This is a small thing, but I think I remember your saying that he named it at the Homestead in Virginia.
BARTLEY: Yes, that's correct.
LAMB: The reason I mention that is that last weekend in the New York Times, front page, Sunday lead story, Homestead, Va. It was a story about trade with Third World countries and how our trade was up. It quoted a whole bunch of American businessmen. Is Homestead, Va., and these places like Michael One where a lot of this policy is developed?
BARTLEY: Well, the Homestead is a famous resort hotel there in Virginia that's host to a lot of different conferences. I didn't happen to read that story, but I presume this is a conference that discussed that particular issue.
LAMB: I guess what I'm getting at is that you name a lot of people here, and you name a location where you all had these conversations. Is that the way American policy is developed?
BARTLEY: I suppose it is. I never really thought about that very much, but I think that a lot of it now is being developed in informal groups and think tanks; maybe less in universities than actually used to be the case because we've had this proliferation of think tanks in very high-powered places, really, starting with Brookings and including AEI and Heritage and a whole host of others that, I think, really do the policy-oriented kind of thinking these days, much more than the universities.
LAMB: Other names -- Norman Ture. You mention him in the Michael One chapter. Who is he?
BARTLEY: Norman Ture is an economist in Washington. He ran his own consulting firm in these years and does again now. He was under-secretary of the Treasury under Reagan and the force for tax cuts. He's a very rigorous economist, and I think did the best job of developing the notion that if you change tax rates you change incentives, and that you have to look at this from what is called microeconomics; that is, from the individual consumer or firm, and that your management of the macroeconomy has to be built on firm microeconomic views.
LAMB: Before I mention some more names, if you could do a couple of things right now that would impact this economy, name them.
BARTLEY: I would cut the capital gains tax. That would be the first one.
LAMB: How far?
BARTLEY: As far as I could. I mean, I would not be averse to eliminating it if I thought that were politically feasible. If you look across the world, most places have very minimal and some have none in terms of taxes on capital gains. The income was taxed when you first earned it, and then if you invest it should you be taxed again if you invest it successfully, is the issue.
LAMB: What do you say to those who say it will only help the rich?
BARTLEY: I'm not too concerned about that. You can debate who the rich are and who it helps, but I think that my primary interest is that it helps the people who want to get rich; that is, in particular the entrepreneurs which I think are the absolute key to the economy these days. You can retrace the history. The capital gains tax was cut in 1978 -- the Steiger Amendment it was called, which I discuss in the book. Very shortly thereafter there was a great profusion in the venture capital industry and the start of a lot of new firms. The 1980s is just an amazing record of firms started by college dropouts and illegal immigrants and so on. The most notable are the software firms, in particular Microsoft which in 1980 was just a couple of guys who happened to land a contract and now is maybe the most valuable piece of industrial property in the United States after only 12 years.
LAMB: Could I interrupt to go back to the 1978 Steiger Amendment. William Steiger, a Republican from Wisconsin, who is now dead. He died at the age of 40 from a heart attack.
BARTLEY: That's right.
LAMB: Was he a member of the Ways and Means Committee?
BARTLEY: Yes.
LAMB: How could a Republican get an amendment like this passed?
BARTLEY: It's quite an amazing thing that that could happen, particular since it was passed over the very bitter opposition of the Carter White House. I think the answer is that the time was ripe; that people recognized that something was very deeply wrong with the economy and with the tax policies, and he managed to sell enough Democrats on his idea that it actually passed. But I think there was an underlying change in the national mood. I mean, 1978 was also the year of Proposition 13 in California. It was kind of a gathering mood, I think, of which the Steiger Amendment was part.
LAMB: What did Prop 13 do in California?
BARTLEY: Oh, Prop 13 very severely limited the property taxes in California. It was passed by Howard Jarvis as an initiative; that is, they petitioned it onto the ballot and then passed it over the objections of the state's political leaders.
LAMB: Have you reviewed the impact of that 14 years later or whatever?
BARTLEY: I can't say that I have in any real careful way, but, of course, California did have a big boom over most of those 14 years, and now recently they have raised taxes again and are a troubled economy.
LAMB: What else would you do? Cut the capital gains tax. Number two, what would you do?
BARTLEY: I would try to do what I could to make credit available to small businesses. I think this has been a particular problem over the last couple of years. I noticed at the Journal we had a story here the other day about how loans to small businesses are starting to pick up, and I think that's a very healthy kind of thing. I noticed the Securities and Exchange Commission also has proposals to encourage these kinds of loans by allowing banks to sell packages of them the way they do for mortgages. I think it's a very constructive proposal. In a way this is kind of reinventing the junk bond. The junk bond, in its early years at least, was a marvelous capital-raising device for small businesses and provided a lot of the start-up capital for various businesses.
LAMB: While we're on it, Michael Milken.
BARTLEY: Michael Milken, I think, is a very complicated character who will take us some years yet to digest and come to some kind of a perspective on. Obviously, he committed some crimes. He pled guilty to crimes, I think, somewhat gratuitously. He did not need to get involved in some of these deals. He didn't need to deal with Ivan Boesky. At the same time, he also did a lot of good for a lot of rising businesses. He really was a very creative person in financing for start-up businesses. I think a lot of his problems arose when junk bonds then became used as a takeover device against large corporations, and this made him exceedingly unpopular with very influential figures in American business.
LAMB: One of your colleagues, although not in the same section, James Stewart has been here as a guest on "Booknotes," and he has a best-selling book "Den of Thieves." Would you explain the difference between where Jim Stewart works in the Wall Street Journal and where you work.
BARTLEY: Jim is page one editor -- a very talented editor. Page one is part of the news department. I'm in the opinion department. As editor of the Wall Street Journal I run the editorials, the op-ed material, the articles on the editorial page, the leisure/arts coverage and art set-up, plus the editorial pages of our two foreign editions in Hong Kong and Brussels. The news department is a different empire -- a much larger one, but, I think, not as much fun.
LAMB: Let me ask you, though, about how that works. Who runs the front page, overall, that part of the paper? Who is in charge? Who is your equal?
BARTLEY: Norman Pearlstine, the executive editor, and also Paul Steiger, the managing editor, are the two executives who run the news departments. Both Norman and I report at the same level. We both basically report to the chairman of Dow Jones.
LAMB: If Norman Pearlstine has something he wants on your editorial page and you don't want it there, does it go there?
BARTLEY: No. It seldom comes up in exactly that way, but if Norman has something he wants on the editorial page, he probably has a reason for it and I'd be very unlikely to say no, I think.
LAMB: What about the reverse of that? What if you wanted a story written that you wanted on the front page?
BARTLEY: I wouldn't ordinarily do that or do anything about that. If I had a story that I wanted written, I'd probably go write it on my pages rather than give it to them. You know, I might make a suggestion sometime of a story, and then they would either follow it up or not. But I wouldn't pressure them or get out of sorts if they didn't see the story the same way I did.
LAMB: Why I'm kind of getting at is, on the James Stewart book where he comes down hard on Ivan Boesky and Mike Milken and Dennis Levine and others -- I haven't heard that much talk, but some talk about how on your editorial page you've defended Mike Milken a lot more than that, and was there a difference of opinion between you and the James Stewarts of the Wall Street Journal about Mike Milken?
BARTLEY: Oh, I think so, yes.
LAMB: How strong a difference?
BARTLEY: I think in a way it's narrowing some. If you read the epilogue to Jim's book, you find that, well, he thinks that insider trading ought to be defined. In other words, there is no definition of this crime that's supposedly so heinous. He goes through the fact that most of the Giuliani prosecutions were overturned.
LAMB: Who was Giuliani?
BARTLEY: Giuliani was the U. S. attorney in New York who was bringing these insider trading cases under the RICO law; that is, a racketeering law. He won a number of cases, but then a long series of them were overturned by the appellate judges on one ground or another. Of course, it didn't help Milken because he already agreed to plead guilty and the first of the reversals happened shortly after he agreed to his plea.
LAMB: One more question on the Journal. If someone reads a front-page piece or if they read the editorial page piece, are they looking at two different philosophies?
BARTLEY: It certainly could happen. I wouldn't want to suggest that the front page has only one philosophy. I mean, they cover the news in various kinds of ways. But there certainly have been instances in which they have different views on the editorial page and page one or the Washington page. This basically reflects the fact that we on the editorial page do our own reporting. That means that we have a set of sources, and the newsmen reporting it may have a different set of sources. Really, in that kind of position you have no alternative but to go with your own sources, so you get differences arising in that way. It may be a little unseemly sometimes, but I don't think the reader suffers, because he gets both perspectives.
LAMB: Again, you have three pages -- the editorial page, the op-ed page and the arts and leisure.
BARTLEY: That's right.
LAMB: Back to the restaurant, Michael One. Another name that comes up in the context of that is Lew Lehrman and Paul Craig Roberts. Who was Lew Lehrman, and why does his name come in?
BARTLEY: Lew Lehrman was a very successful executive with the Right Aide Corporation who then retired after he and his colleagues had built the corporation. He came to New York and set up the Lehrman Institute, which was kind of another public policy think shop. He ran that for a number of years, at which we'd have little seminars in the afternoon on both foreign policy and economic policy. Then after a point, Lew ran for governor of New York, and lost by a couple hundred thousand votes to Mario Cuomo.
LAMB: Where is he today?
BARTLEY: He's back in the think tank as of today, as well as, I think, being a very highly successful investor. Craig Roberts was a Capitol Hill staffer and a Ph.D. economist. He worked for Kemp for a while. He actually wrote the Kemp-Roth tax cut bill, or at least if you had to name a single author of it at the staff level it would certainly be Craig. When Wanniski left, I hired Craig for a year to come up to New York and kind of keep the ball rolling. He wrote a column for us at the Journal, he wrote some editorials, then came back to Washington and then was hired in to the Reagan administration as assistant secretary of the Treasury. A very powerful force for these ideas. He is now again in the think tank business here in Washington.
LAMB: The University of Chicago.
BARTLEY: The University of Chicago Department of Economics has been kind of a traditional home of classical economics all through the Keynesian era. They had a number of very distinguished professors. The most notable in our lifetime has been Milton Friedman, and Milton Friedman basically carried the classical economics idea -- of course, he was also a very skillful advocate -- and with him and with that tradition it's gathered together a lot of very ardent free-market types in its Department of Economics and, to some extent, in its business school. Laffer and Mundell were both there at different stages of their careers.
LAMB: How do you characterize Milton Friedman today in your eyes? Is he a guru of supply-side economists?
BARTLEY: Milton is in kind of a curious position. In many ways he is, and he would agree with us about nine out of ten things. I have a little section in there quoting some bank economists saying, "I used to be a monetarist," as I used to be a monetarist. But I have come to the conclusion that this kind of money supply isn't the be-all and end-all of economics. The second thing that Milton would disagree with myself and my friends about is that he's still an ardent proponent of floating exchange rates. That's something I think would be better of to get rid of, if we got back to something like the Bretton Woods international monetary system. Those things we disagree about. We would agree that government spending is the best measure of the government's impact on the economy rather than, for example, the deficit. We would agree that it's much better to let the markets work, that it's not too good an idea for the federal government to try and fine-tune the economy -- to juggle it around this way and that. Those very important things he would be a guru or a sympathizer of this group, but he has his own particular philosophy that he has his own personal stamp on that is a little different from where we are.
LAMB: Let me go back to a number of things that you said, and maybe some quick definitions would help us. What is a monetarist?
BARTLEY: A monetarist is basically a follower of Milton Friedman. They emphasize the very great importance of what we call the money supply.
LAMB: Is that like M-1 and M-2?
BARTLEY: M-1 and M-2, etc., which is under the control, more or less, of the Federal Reserve System. In other words, the Federal Reserve can control at least bank reserves, and then those bank reserves are loaned out and become M-1 or M-2.
LAMB: What are you talking about when you say Bretton Woods?
BARTLEY: Bretton Woods is a resort hotel in New Hampshire where in 1944 the Allied powers negotiated an international monetary arrangement; that is, they said, "Okay, when the war is over we're going to have to get the world economy straightened out," and they came up with some arrangements on exchange rates and they created the World Bank and the International Monetary Fund. Not at Bretton Woods, I don't think, but in conjunction with that you had the general agreement on tariffs and trade to cut tariffs around the world.
LAMB: GATT.
BARTLEY: That's GATT, yes. And this arrangement with opening of the world markets and stable exchange rates basically pegged to the dollar, which then had a relationship to gold, led to an amazing time in the world economy. There was really a golden era between about 1950, when all these arrangements were in place, and 1973. You can see things kind of break in '73. That period from '50 to '73 was really the greatest growth period of this century, both in the industrial economies and in the developing economies.
LAMB: By the way, pegging off your book, the seven fat years are '83 to '90?
BARTLEY: Yes.
LAMB: How important are these years in history?
BARTLEY: They're awfully important in history in terms of the geo-politics. I mean, this is when the Cold War was over, and I think that if we handle things right now, we may be entering an entirely new era. We've had a pretty ghastly century, with two world wars and the Great Depression and then followed by the Cold War. I hope that the breaching of the Berlin Wall 1989 may usher in an entirely new and much more hopeful era. We also have enormous technological progress going on at the moment. I call it the second industrial revolution. We've had atomic energy, we've had the splitting of the gene, we've had probably most important the invention of the transistor and now the micro-chip. It's changing the entire texture of the economy from an industrial economy into an information economy. This should be very good for us. Between the second industrial revolution and the end of this world war confrontation should allow us, if we kind of get things right, to expect a much more hopeful era than we've grown up in. |
