Well, I read the entire Kudlow article over the weekend. I have to say, there are so many distortions or outright falsehoods in it that it just amazes me, since I have always thought Kudlow was a reasonably smart man. It would be too much to go through the entire article, so I will just point to a couple of bloopers or distortions.
1. "For 76 years, from 1820 to 1896, prices were stable and inflation was non-existent. I mentioned Mr. Gladstone, my favorite Prime Minister from that period, who contributed to that situation in England. In the United States, except during the Civil War, the case was the same. Our inflation rate was zero during that period."
This is like saying a manic depressive is stable on average, as the manic periods and the depressive periods cancel each other out. There were a number of financial panics, depressions, recessions, bouts of inflation and deflation throughout the 19th (and early 20th) century. That is why the Fed was created in the first place. But it is true that there was enormous growth overall in the US then. Hard for there not to be, with all of the land that we emptied of its previous inhabitants, the abundance of natural resources and the steady immigration.
2. On the one hand, Kudlow keeps talking as though ideas like reducing taxes, free trade, reducing tariffs, deregulation were "Reagan's" inspiration, and he is somehow solely responsible for them, and anyone who now espouses any of these tenets as "following in his footsteps". On the other hand, he points to people like Gladstone and Coolidge as leaders who did the same things (funny he should use Gladstone as an example of one his "favorite" leaders; the man had a private sex life that would have made Clinton blush, but the media and opposition of the day never made an issue of it). He also ignores the fact at various points in the past Democrats have done exactly the same things in this country, indeed as I said in an earlier post Carter started some of the same trends that Reagan continued, and that Kudlow says are "Reagan's" ideas. What is certainly true about it is that there were a few people in the Reagan Administration who were far more ideologically extreme about these things than Democrats ever were. But it is also true that they were more ideologically extreme than most Republicans ever were. Kudlow ignores the fact that during the Reagan years, there was plenty of backtracking on free trade and deregulation especially by mainstream Republicans, including Reagan himself (see Stockman's book again, especially on auto quotas). Kudlow says that Clinton is following in Reagan's footsteps; well, Stockman relates that not only were all of Reagan's speeches written for him, but that before each speech, a handler would drop flat rubber "feet" on the stage leading to and from the podium, which showed Reagan where he should walk to enter and exit. Reagan was following in other people's footsteps. He was always a genial, grandfatherly tool.
3. He says that the deficit increased not because of the defense buildup but because of the decrease in inflation, which occurred more quickly than they had forecast. Well, that is just an amazingly ingenuous argument. First of all, as Stockman details, Stockman and his group (of which Kudlow was a member) made a mistake when they first drafted their budget numbers, and actually gave the military even more money than they had requested, a fact that somehow the military managed to overlook when they reviewed the numbers. Second, even after Stockman realized the mistake, others in the administration didn't want to hear about it and correct it. Third, when the administration was drafting its budget for the "out years", figuring out what the consequences would be for this buildup, they made the deficit numbers come out acceptably low by deliberately assuming higher inflation rates in those years than Stockman thought was reasonable. They actually began with the numbers that they wanted, and worked backward to find out what inflation rate they needed in order to make them come out OK. The whole exercise was dishonest in advance. (That too is a slight distortion, but read the book for the whole story; it's much closer to the truth than Kudlow's glib comments on the matter.) Stockman and others eventually went along with it (1) in order to get their budget passed (the deficits would have been too large for Congress otherwise), and (2) they felt that if their worst fears came to pass and we got a huge deficit, then it would cripple the government in the long run and they would eventually get what they wanted anyway, a reduced government, since it wouldn't be able to afford to do anything with the huge debt. It turned out that their "worst fears" for the deficit were exceeded. As I recall, I think that back in 81-82, they were expecting $120-140 million deficits for a few years, in their honest, private moments. As it turned out, of course, they were more than twice that for a longer period of time.
Enough. I repeat, go read The Triumph of Politics." (BTW, it is subtitled "The Inside Story of the Reagan Administration".) To me, at least, it has the ring of truth.
Regards,
Sam |
