Joe Biden, supply-sider? Disorienting? You bet!
The meaning of supply-side economics has become scrambled since the original “bleeding-heart-conservative” Jack Kemp left the building.
In the beginning, “supply-side economics” was coined by journalist Jude Wanniski on a cue from his economist Alan Reynolds who took it from Herb Stein’s “supply-side fiscalists.” The Establishment ridiculed supply-side, which nonetheless doubled American’s per capita real net worth and drove the Dow from 814 to 34,000+.
The Republican Establishment, specifically George Herbert Walker Bush, memorably derided it as “voodoo economics.” The Democratic Establishment oddly called it “trickle-down,” a taunt coined by Will Rogers to ridicule the supply-siders’ nemesis, Herbert Hoover.
Forty years later the Washington Post editorial board amended “trickle down” to “spill over,” as in “whose benefits spill over to society as a whole.” I still prefer the phrase used by supply-side progenitor John F. Kennedy, “rising tide,” as in “a rising tide lifts all the boats.”
Sen. Biden voted in favor of the Kemp/Reagan/Rostenkowski/Bradley/Gephardt bills cutting the top income tax rate from 70% to 28%, closing loopholes of value mainly to the wealthy. Unlike the more recent initiatives of George W. Bush and Donald Trump the supply-side tax rate cuts were across-the-board, cutting rates for workers as well as for investors (and not incidentally dropping mortgage rates from around 18% to, eventually, around 3%).
Like Kemp, Biden clearly is committed to being at least as generous to us Gilligans and Mary Annes as to the Thurston Howell IIIs and Loveys. Kemp was especially enthusiastic to help people of color prosper (for which he was awarded the Presidential Medal of Freedom by Obama). That’s the flag that I, myself an O.G. supply-sider, salute.
After Kemp, some ambitious people calling themselves supply-siders reoriented it toward tax cuts for the already prosperous. If privileging the Thurstons and Loveys had generated equitable prosperity for us Gilligans and Mary Annes, OK. But it didn’t. For all of the enthusiasm of Trump’s cheerleading squad his administration had, per Benzinga, “by far the lowest average U.S. GDP growth rate of any of the last seven U.S. presidents.” Oops.
Yes, Trumpitarians, Bummer. I feel you. Yet facts are stubborn things.
Joe Biden, admittedly, is not a 200-proof pure “white lightning” supply-sider. He has advocated some terrible policies like repealing the step-up in basis at death. I contend that a feint, one which he knew would never pass. Biden looks like a splendid 114-proof supply-sider to me.
The proof in the supply-side pudding may be found in Biden’s July 9th executive order. Biden’s supply-side grand slam?
“Today’s historic Executive Order established a whole-of-government effort to promote competition in the American economy. The Order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy. Once implemented, these initiatives will result in concrete improvements to people’s lives.
“Among other things, they will: Make it easier to change jobs and help raise wages by banning or limiting non-compete agreements. ...”
Why is this a big supply-side deal?
As TechCrunch noted a few years ago:
“Silicon Valley is the world’s most magical mixing chamber for these two simple ingredients, home to the most exciting, creative and valuable companies on the planet. … How did Silicon Valley become the world’s leading innovation economy? The reasons are many, but one of the least celebrated and most fundamental drivers of that success is an obscure-but-powerful legal provision passed into law back in 1872. In that year, the California Civil Code was amended to include the following language: ‘Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.’”
And as Vox.com put it,
“The fact that any employee can quit and start his or her own rival firm is a key reason for Silicon Valley’s success over the last half century. And it’s made possible by an unusual characteristic of California law: Courts there refuse to enforce contracts that limit employee mobility.
“This rule has helped to cement Silicon Valley’s role as the nation’s capital for high-tech innovation. It ensures that powerful incumbents can never keep good ideas bottled up inside their walls. Ideas naturally flow to whichever company can best put them to use.”
Forbidding non-compete clauses is a major, crucial, ingredient of equitable prosperity. With Joe Biden putting out a full court press to share that prosperity secret sauce with all Americans, he looks like he’s injecting the most powerful equitable prosperity policy mix to hit America since Jack Kemp and Ronald Reagan. Go Joe!
Joe Biden, supply-sider? Yes, I’m sentimentally attached to the supply-side brand. That said, to minimize confusion, maybe let’s just call Joe Biden a Jack Kennedy 2.0 “rising-tider” instead.
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply-Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $88T. Read Ralph Benko's reports — More Here.
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