Freeman

ARTICLE

A Reviewers Notebook: Revolution

SEPTEMBER 01, 1988 by JOHN CHAMBERLAIN

Martin anderson, who is now a senior fellow of the Hoover Institution in California, worked for Ronald Reagan for more than seven years. He went through three presidential campaigns with Reagan, traveled with him to two Republican conventions, and spent considerable time in the White House helping to formulate the policy that has resulted in the so-called supply-side tax cuts. He knew Reagan as Larry Speakes, Don Regan, and Michael Deaver never knew him.

His book about the Reagan years, Revolution (New York: Harcourt Brace Jovanovich, 467 pp., $19.95), takes long views. Anderson did not approve of the Iran-Contra episode, which had American arms going to the Ayatollah, with profits to the Contras, but he thinks Reagan was the victim here of bad advice from William Casey, who was suffering from a brain tumor that made him an unreliable counselor.

In the long view, says Anderson, the Iran-Contra business will not bulk very large. The Reagan revolution, as Anderson sees it, must make allowance for occasional mistakes of judgment. What counts is the movement itself. It transcends personalities. What Anderson calls the “new capitalism” will continue to grow no matter who wins office in the 1988 elections.

Looking back over the past quarter century, Anderson asks what it is that links Barry Goldwater, Richard Nixon, and Ronald Reagan together. “What,” he writes, “threw them high on the rocky beach of American politics? . . . Was their power due to their overwhelming personalities, to personal characteristics that will never be duplicated? Or was it due to something independent of any one person, to intellectual and political currents that produced first Goldwater, then Nixon, then Reagan?”

Anderson answers his own rhetorical questions by indirection. Barry Goldwater’s smile, Richard Nixon’s jabbing forefinger, and Ronald Reagan’s friendly wave of the arm were hardly causative factors. “So far,” says Anderson, “no one has attributed the move toward capitalism in China, and the Soviet Union, and New Zealand, and in dozens of other countries throughout the world, to the rise of these three personalities.”

An intellectual revolution, says Anderson, has occurred worldwide. There may be a lull in America after Reagan’s retirement in 1989, but “Communism, socialism, and any other form of dictator statism have proven to be intellectually bankrupt. The only vibrant, thriving political philosophy with a sound intellectual base remaining is capitalism . . . . Only when and if there is a seismic shift to the left in the intellectual world will we see a reversal of the political changes we are now witnessing.”

Anderson thinks it is important to emphasize that Ronald Reagan majored in economics at Eureka College in Illinois before the onset of the depression of the Thirties. “The economics he was taught,” says Anderson, “was the old classical variety, straight from the works of Adam Smith, Alfred Marshall, Irving Fisher, Eugen Boehm-Bawerk, David Ricardo, and Jean Baptiste Say. John Maynard Keynes had not yet written the General Theory. Few complicated mathematical models were used for the exposition of economic theory; instead, the old economics relied on words, using the English language to explain basic principles.”

Anderson himself relied on words when he undertook to formulate policy for Reagan in August of 1979. He was not impressed with the idea that there was a necessary trade-off between inflation and unemployment. The problem as he saw it was to reduce inflation and stimulate economic growth without, as he says, “having an economic bellyache.” Economic growth would follow if Federal taxes were reduced from a point so high that it stifled the incentives for individuals to earn, save, and invest.

Anderson advocated a program of three years’ duration of across-the-board tax cuts, especially in the higher, incentive-destroying marginal rates. The Kemp-Roth tax cut legislation was in accord with Anderson’s advice to Reagan. Just to touch all bases, Reagan listened to a total of 74 economic advisers during the 1980 campaign. “Reaganomics,” says Anderson, “came directly out of the heart of the Republican economic establishment of the United States. It represented the thinking of some of the best economic minds in the world.”

The proof of the pudding is, of course, in the eating. During the five years between November 1982 and October 1987, says Anderson, “more wealth and services were produced than in any like period in history. There were 59 straight months of uninterrupted economic growth . . . Over 13 million new jobs were created . . . By the end of 1987 the United States was producing about seven and one-half times more every year than it produced the last year John F. Kennedy was President . . . the U.S. economy is now an economic colossus of such size and scope that wehave no effective way to describe its power and reach.”

Yet Martin Anderson concedes that the Federal deficits we have been running are too high. The trade deficit is worrisome, and too many Federal regulations remain unreformed. Reagan, he says, cannot expect credit for a perfection that is still elusive.

An Economic Bill of Rights

As far back as 1984, Anderson wrote an Economic Bill of Rights in which he called for a single amendment to the Constitution with five sections. One, he would limit the amount the federal government can spend. Two, he would require that the Federal budget be balanced. Three, he would prohibit wage and price controls. Four, he would give a line-item veto power to the President. And Five, he would require a two-thirds vote of Congress on all major spending bills.

Such a five-fold Constitutional amendment will obviously have to wait in an election year. But 31 states have endorsed the basic idea of the amendment, and it will surely be a prime subject for argument under either a Bush or a Dukakis regime.

Anderson’s book got little of the publicity that went to Don Regan’s. Anderson’s own references to Don Regan are hardly flattering. “The thing that most disturbed me,” he writes, “was the whispered word from one of my colleagues that Donald Regan donated a substantial amount of money to President Carter’s campaign in 1980 as well as to Reagan’s. Anybody who could contemplate supporting the economic policies of both Carter and Reagan earned a skeptical eye for at least a while.”

Despite the emperor-wears-no-clothes revelations of Don Regan, Larry Speakes, and Michael Deaver, Anderson is certain that what Reagan and his comrades have done “is to shape America’s policy agenda well into the twenty-first century. The prospects are nil for sharply progressive tax rates and big new social welfare programs.”

Even though “Revolution” may be too strong a word to invoke here, the Reagan years at least represent a divide.

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September 1988

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