An American Renaissance: A Strategy for the 1980s
The professional athlete in politics isn’t the same as a gladiator the emperor put in the Senate, but there is enough residual, last-century snobbism in us to squirm at the play-for-pay chaps getting into high places. It’s well enough to have the Throwin’ Samoan open up a ribs joint, if he ever does, or Broadway Joe pitch perfume on TV, which he does all the time, but, by God, the only first team player to reach the White House was Jerry Ford, and one of the few things to be said in the Kennedy boys’ favor is that none of them was good enough for the football varsity.
Nevertheless, you’d never know that Bill Bradley, the Senator from New Jersey, played basketball for money. In like manner, it would be a mistake to dismiss Jack Kemp, the Republican Congressman from Hamburg, New York, because it was as a professional football player that he first built up a reputation among the electorate. Kemp may soon become the leading political figure in American conservatism.
With Phil Crane’s campaign for the presidential nomination having fallen on hard times, thanks to gossip about the Illinois Republican congressman’s family and sectarian feuding among his right-wing constituency, the baton will pass to Kemp, faute de mieux, should anything happen to Ronald Reagan, a man who has been able to outlive his dubious beginnings in show business. The smallest stroke or sign of enfeeblement will finish the sixty-eight-year-old Reagan as a presidential possibility and leave forty-four-year-old Kemp as the best known and most plausible right-wing figure.
Whether or not his party will turn to him is conjecture, but the large body of opinion he speaks for is significantly different from that of the Jerry Fords and John Connallys. Nor is this simply a dispute between right and further right. The people in the Kemp camp reject the Fords and Connallys as “statists,” which is the Republican version of the Democrats who believe in using government power to intervene in the private sector. The Connallys and the Fords do it on behalf of big business, the Democrats perhaps on behalf of the poor, the black, etc., but either way, the important segment of Republicanism which might be denominated quasi-libertarian doesn’t like the idea.
They can identify with the entrepreneurial America that Kemp grew up with and that taught him incentive incites hard work, which breeds growth and success:
Before I was born, my father had sold seed to the farmers in our area of Southern California, and then after a number of years started a motorcycle sales business with my uncle. During the Depression, when, I suspect, motorcycle sales were not at their peak, my father and uncle wisely decided to branch out. They began a “same-day” service that delivered packages by motorcycle. In a few years this sideline of theirs had grown to the point that the motorcycles had to be replaced by a new mode of transportation that could carry more packages…an early lesson in—whether I knew the phrase then or not—what was meant by a “capital investment.” In our family it was a new truck…. And as I got older and saw that small family business my father and uncle had started twenty years before put me and my three brothers through college, you can be certain my admiration increased.
This experience, plus his success as a paid athlete, all combine to make Kemp an ideal and sincere spokesman for an updated version of “rural toryism,” as Theodore Roosevelt described the social and economic vision of William Howard Taft. So the “American Renaissance” that Congressman Kemp and those who agree with him argue for is the reconstruction of the country to provide maximum economic opportunity within a late twentieth-century setting.
To do this he wants to cut both income and capital gains taxes by fully as much as one third. He points out that the country bounded out of the severe recession of the early Twenties after Harding started cutting taxes, and much the same thing happened in the early Sixties after the Kennedy tax reductions. Nor would such lowering of the tax rates also lower government revenues, thereby forcing Washington into taking steps that increase inflation. Lower taxes will produce more tax yield, he argues, because the size of the incomes and the volume of business to be taxed would be so much greater. Something like that did happen in the past, and if you think America and the world is as it was twenty years ago, then you may want to lobby for the congressman’s proposal.
The cornerstone of Kemp’s argument is something conservatives are excited about these days: The Laffer Curve. Named for the professor who invented it, the Laffer Curve purports to show that high marginal tax rates kill off the incentive to work hard or invest capital. Kemp, or his ghostwriter, explains the professor’s curve with clarity:
The Laffer Curve restates the common-sense notion of diminishing returns. At some point, additional taxes so discourage the activity being taxed, such as working or investing, that they yield less revenue rather than more. There are, after all, two rates that yield the same amount of revenue: high tax rates on low production, or low rates on high production. A tax rate of 100 percent, for example, earns the same revenue as a zero tax rate—nothing…. There is, however, at any one time, some rate that allows the government maximum revenue and yet does not discourage maximum production.
What that rate may be is, as they say in Mr. Kemp’s sport, a judgment call. And, as all diligent students of Max Weber will attest, never an easy one to make. Some people are like Bavarian peasants who aspire to a certain income, a certain standard of living only, and have no interest in more money, no matter how easily got. There’s no way of knowing it, short of lowering the rates, but the congressman is probably correct in thinking that lower taxes will inspire some people to work harder and invest more. The same results might also be realized merely by changing the tax laws so they discourage malinvestments in wacky cattle schemes or Florida condominiums.
The objection here is that, like many others, Kemp defines Homo economicus by looking into the mirror. Striving middle-class grubbers like the congressman doubtless will react to lowering the marginal tax in just the way he describes; whether that will shoot the economy on the right trajectory to hit the big cornucopia is a question, but it is at least arguable. Cutting taxes may stimulate some economic growth, but that this is going to solve all or most of our serious problems like welfare is mildly preposterous, unless the recipients all subscribe to the Protestant ethic or are distant members of the Kemp family.
Conceding that “a typical family on welfare” will suffer an income reduction if it gets off the public teat and goes to work, he writes, “But it runs against human nature to actively contemplate a lifetime on the dole, and I can’t recall ever meeting anyone who seriously expressed that preference. It’s human nature to want more, and when individuals who are on a $120 weekly dole see a real opportunity ladder that could take them to income levels several times that amount, they will make the decision to try, even though at first they will not be better off financially.” Apparently the Laffer Curve lesson fails to hold for the poor. If the comparison is right, the rich are motivated to work by more money but the poor are happy to be paid with self-respect.
But in these matters, the congressman is so out of it he approvingly quotes his conservative colleague Senator Orrin Hatch of Utah on blacks and political economy: “This is a new slavery worse than the old. I cannot imagine a worse humiliation than to be freed, given civil rights, and then told: ‘Don’t worry, the government will look after you.’ Leaders in the black community have realized that blacks have been placed in a new position of dependency.” They also realize, given the disaster of affirmative action in private sector employment in the past fifteen years, that “the new slavery” of government dependence is an ineluctable necessity.
In back of every school of economics there is a metaphysics. Mr. Kemp’s is the story of Eden. In the beginning there was a stateless economy created by a free market divinity, which provided a job for every earnest and diligent seeker, and a healthy sufficiency, laced with a tad of luxury, for every honest and energetic worker. Enter government, offering the apple of discord by altering the balance of nature to give more to some who don’t work at the expense of others who do. Because men and women listened to the evil promises of government, there came poverty, inflation, unemployment, and the strife of special interest groups.
The bargaining and conflicting alliances of special interest groups the congressman labels “coalition politics.” To regain Eden, he would have “consensus politics” instead. “A rising tide lifts all boats,” our retired quarterback recalls John Kennedy as saying, after which he writes, “The United States has not had a President since John F. Kennedy who really tried to practice consensus politics instead of coalition politics, who kept an eye out for ways to raise all boats, to even things out from the bottom up.”
Jerry Ford’s generation of Republicans long ago posthumously inducted Harry Truman into their party, and now it appears younger Republicans will similarly favor John Kennedy. The first is honored for standing up to the Russians, the second for championing economic growth. However, when Kennedy cut taxes to stimulate growth, he had inherited the Eisenhower administration’s next to zero inflation rate. If inflation is too many dollars chasing too few goods, then Mr. Kemp’s tax-stimulated growth burst should, or so he hopes, take care of that, cranking out enough additional goods to give those extra dollars more merchandise to chase.
Not even he claims his surge in growth can compensate for the inflation rates of the last year or so. For that he recommends a change in monetary policy—printing fewer dollars—and the way he wants to ensure the government doesn’t go back on its promise to moderate the speed of its printing presses to 55 miles per hour is to return to the gold standard.
Like the idea of cutting taxes in the middle of an inflation, the return to the gold standard isn’t quite as goofy as it may at first sound. What Kemp has in mind is that the Treasury will promise to buy gold at so much an ounce, whatever the going market price as expressed in dollars at the time of the readoption of the gold standard. Then, according to this view, if the price of gold in dollars subsequently rises, it will be regarded as a signal that the Treasury has been printing too many greenbacks again, just as we would suspect that it is printing too few if holders of gold began trading in their coin and bullion for paper dollars.
The idea is to keep the purchasing power of the dollar as nearly even as possible by measuring it against the standard of a commodity whose price is relatively steady because its supply is relatively steady. There have been gold inflations in history, periods when large quantities of the metal suddenly came on the market and depressed the price of the stuff, but they have been rare enough to make gold plausible as a stable standard for measuring the value of the dollar. Other commodities—platinum, rubies, or perhaps even rutabagas—might also serve but gold is convenient and it has the weight of tradition behind it.
Kemp is certainly correct. A return to the gold standard would end inflation, but with a slam which would pitch many of the passengers on the ship of state forward into the bulkheads. Millions of personal as well as business decisions have been predicated on continuing inflation, that is borrowing dear dollars now in anticipation of paying off the loan later with cheap ones. For people in that precarious a situation, those who are mortgage poor, who have sunk their savings in any number of collectibles which are supposed to keep their value, any of the million and one poor man’s speculations in which people have risked their money in order to save their savings, a return to a “normal” sound dollar could wreck them.
That is why a soft landing back to monetary control, using a less tribal instrument than the gold standard, is recommended by others, equally conservative but less religious about it than Mr. Kemp. His gold standard will end inflation too fast and too hard, but, nevertheless, in drawing attention to the government’s endemic printing of money, he is saying things that liberals and lefties might listen to. Having a stable currency is just as important under any form of socialism as it is under any form of capitalism. Inflation creates chaos and makes planning either by the state or by private entities maddeningly difficult.
What the congressman doesn’t deal with is the possible objections to a stable dollar emanating from the right. If the dollar is to be made whole again, the government can’t pay its bills by promiscuously printing money, which means it will have to raise taxes to pay for the new weapons that Mr. Kemp and so many others are insisting on. For you can be sure they want more missiles to intimidate the Russians, and they are committed to a stupefying jump in cannon buying to do it. Either that or health, education and welfare will have to be cut, which is exactly what Mr. Kemp, by way of proving his non-Neanderthal status, tells us elsewhere in the book he isn’t going to do until his new prosperity withers away the need for such programs. Conservative support for a sound dollar will be tested to the limit when it is grasped that a new tax increase will have to be voted for each new atomic aircraft carrier. It is for similar reasons that the craftier sort of conservatives have joined the liberals in opposing the constitutional amendment which would prohibit deficit spending. No debt, no war unless one is prepared to tax to the point of redistributing the wealth, something two generations of liberals have unfairly been accused of having done.
The Kemp renaissance is more properly an attempted restoration. If it worked for Kennedy, if it worked for Coolidge, surely it will work now. So, when Kemp speaks of growth, he means just that—growth and nothing but growth. No change—but isn’t that impossible without the abundant energy supplies we enjoyed in past times? So he proposes a policy which does not admit of there being an energy shortage or even the possibility of an energy shortage: “The history of energy abounds with…doomsday forecasts. There was great concern in fifteenth-century Britain that the island would soon run out of firewood, yet Robin Hood’s forests are still intact…. There is no energy crisis, no imminent exhaustion of oil and gas even within this country, much less throughout the entire world. The whole notion is a grand deception, a massive fraud. What we have is not a sudden disappearance of natural resources, but a monumental calamity of government regulation.”
This is the kind of crazy talk which gets an otherwise rational, albeit mistaken, conservative a reputation as a fringy sort of fellow. “A grand deception, a massive fraud,” is it? Then who are the deceivers, who the perpetrators of fraud? He never says. Nor does he face the fact that it is not only his left, pro-government finagling adversaries who fear we’re scraping the bottom of the oil well.
People in his own camp doubt that lifting price controls is the answer. “For the first time, the nation’s declining oil supply is not responding to the remedy of higher prices and increased drilling, even though it has been applied in massive doses,” quoth Business Week, July 30. “The number of wells drilled each year has about doubled since 1973 to 50,000. Yet for all their frenetic drilling, oilmen have found little new US oil; the 1.8 billion bbl average yearly discovery rate since 1975 is actually below the 1973 level of 2.6 billion.”
Academicians are saying the same thing. Geophysicist Owen Phillips writes, “The first half billion feet of drilling in the United States yielded discoveries of ninety-five billion barrels of oil; the next, twenty-four billion; and the next, only seventeen billion, a dramatic indication of the diminishing return as the search for new oil continues, is intensified, and becomes increasingly expensive.”*
This is a sobering risk to take with our country on the basis of little more than a theologically ascriptive belief that an unplanned and unregulated free market will draw oil out of the rocks. It is true, as Mr. Kemp writes, that since 1900 there have been three or four brief periods when it was incorrectly predicted that America was running out of oil. It is also true, as Mr. Kemp does not write, that in recent years the opposite has been true, that a series of claims have been made about the extent of our oil reserves which have not been borne out. This is not the only example of artful omission in his book, but it may be the most important, because, if the petroleum age is about to be over, so is his vision of letting Father Adam, Smith that is, use his unseen hands to deal the fuel cards.
This is not a Monopoly game, and we’re not battling for Boardwalk or scoring random debate points, which makes some of the things Mr. Kemp says either frivolous or cynical. Take your pick with “actions in the name of ‘environmental concern’ pose a greater potential threat to safety and the environment than would orderly development of domestic energy…. By prohibiting surface mining of low-sulphur Western coal (despite provisions to repair any damage to the land), we have forced more men down into dangerous mines.” This lately-found interest in coal miner safety serves only to discredit everything he has to say on the subject, which was debatable enough to begin with.
Over all, this new-generation champion of old-time conservatism has given us a political platform containing ideas which are intelligent and sensible, some of which the rest of us may want to borrow. On a larger scale, however, America had a chance to join Mr. Kemp’s church in 1912 when William Howard Taft ran for re-election in a three-way race against two statist interventionists, Wilson and Roosevelt. Against Wilson’s New Freedom and Roosevelt’s New Nationalism, Taft’s old-time religion finished third. It would be the same today.
The Last Chance Energy Book, by Owen Phillips (Johns Hopkins University Press, 1979), p. 43.↩
The Last Chance Energy Book, by Owen Phillips (Johns Hopkins University Press, 1979), p. 43.↩