A man’s great ideas live on after he’s gone

We are saddened at the loss of economist Jude Wanniski, who on Aug. 29 died suddenly of a heart attack at age 69 in New Jersey.

A journalist, he started out in the 1960s with the Las Vegas Review-Journal and the now-defunct National Observer.
In 1972, he became an editorial writer at The Wall Street Journal, a perch from which he advanced his free-market ideas with enthusiasm.

In 1978 he formed his own economic consulting firm, Polyconomics, which he headed until his death.

Using the term he coined, “supply-side economics,” Wanniski based his views on the economic theories of Robert Mundell, a Nobel economics laureate, and Arthur Laffer, an economist in the Nixon and Ford administrationsin the 1970s and today head of Laffer Associates in San Diego.

The basic idea is that, when tax rates are too high, they discourage economic activity so much that tax revenues fall.
This is shown in the famous Laffer Curve that Laffer drew on a napkin at a meeting in 1974 that included Wanniski and Dick Cheney, then-President Ford’s deputy chief of staff and who is now the vice president.

“The Curve simply showed that, as tax rates rose, they would increase revenues to the government,” Wanniski explained on his website.

“However, at a certain point the producers (suppliers) of goods and services would have so much of their output taken by the government that they could no longer remain in business … and the government would experience a decline in revenues.”

Under supply-side theory, all political and economic policies should emphasize not consumption, as in Keynesianism and other theories, but making production easier through lower taxes, tariffs and regulations.

Wanniski was a key policy adviser to President Reagan’s 1980 campaign, a campaign which highlighted supply-side tax cuts.

Since the Reagan tax cuts were enacted in 1981, the country has had strong economic growth continuously but for two minor recessions, in the early 1990s (after a tax increase) and early 2000s (after the dot-com bust).

The top income-tax rate has been halved to 35 percent today from 70 percent in 1980.

One simple validation of Wanniski’s theories is that no one, even Democrats, wants to bring back 70 percent tax rates.

Supply-side policy has become almost dogma among Republicans, displacing the old “root canal” Republicanism in which the main thing supposedly needed was to reduce deficits by gouging taxpayers.

Wanniski was tireless in promoting tax cuts not only in America, but abroad, pointing out how exorbitantly high taxes were impoverishing most African nations’ economies and propelling Mexico’s poor to find their fortunes in the more tax-friendly United States.

In addition to his website, the best summary of Wanniski’s ideas is his 1978 book, “The Way the World Works.”

He will be missed.

His ideas, however, continue to live on all around us.