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Biggs on Finance, Economics, and the Stock Market: Barton's Market Chronicles from the Morgan Stanley Years by Barton Biggs

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Section 2A: Economics and Policy

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The Evolution of the Supply Side

January 5, 1981

I believe the supply-side, neoconservative creed is the most important socioeconomic idea of this generation. Neoconservatism should be, if given the chance, the salvation and redemption of both capitalism and democracy. It could turn the world and reverse the trend toward stagflation and socialism, just as Keynesian demand economics and the New Deal swung the West away from depression, deflation, and totalitarianism a half century ago.

However, as an economic theory, acceptance of the supply-side creed has been retarded by a lack of intellectual respectability. One of the movement's seminal thinkers, Robert Mundell, has had problems. Another, the irrepressible Art Laffer, arouses skepticism among his fellow economists, mostly because they think he is too glib, too witty to be profound. Their Boswell, the deeply committed Jude Wanniski, is disparaged as being “just a journalist,” and Jack Kemp is dismissed as a “shallow jock.” The establishment Keynesian economists with their PhDs and pipes can't believe this motley assortment of two disreputable professors, a journalist, and an old quarterback can have created a new economic religion.

Little of this contempt should be taken seriously, nor is it surprising. Last week in reading about John Maynard Keynes in Ronald Steel's fine new biography of Walter ...

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