BOOK WORLD/FEBRUARY 26,1984
THE SUPPLY-SIDE REVOLUTION: An Insider's Account of Policymaking in Washington. By Paul Craig Roberts. Harvard University Press. 327 pp. $18.50</br></br>THIS is a surprisingly interesting book, and one that needed to be written. I say surprising, because like most professionals in the world of finance I am skeptical about the writings of most economists. There are wonderful exceptions, thank heaven, but in general they share with other manipulators of abstractions, including investment advisers, a preference for mathematical models and desk analysis over direct observation: shoe leather. One thinks of RabelaisÛª tale about the furious argument that convulsed the Sorbonne over the number of teeth in the head of a horse. The Aristotelians had one theory, the followers of Pliny another; the disciples of Saint Jerome anathematized all rivals. Finally, of course, some naif confounded the Schoolmen by actually peering inside the beastÛªs mouth. These days, thanks to paperback sales and the lecture circuit, a theoretician can make a small fortune by working up a theory, giving it a snappy new name, and pushing it like a breakfast food: The Greening of America, Megatrends, or whatever. But that doesnÛªt make it any more valid.</br></br>Anyway, hereÛªs a book by a modem Candide, who goes to work for President Reagan convinced that the president is right about two things: first, that you increase output by lowering disincentives; and second, that you collect more tax by not raising the rates so high that people will do almost anything to avoid paying them. (Roberts points out that the IRSÛªs own figures show that as the top rates are lowered, the rich pay more tax, both in total dollars and relative to the poor.)</br></br>Both observation and common sense teach us these simple principles, or should. It seems scarcely necessary to coin a special name for themÛÓÛÏsupply-side,Û ÛÏKemp-Roth,Û ÛÏReaganomics,Û or whateverÛÓany more than one should need to call earning an honest living ÛÏthe work ethic,Û but there it is. In any event, Roberts becomes a Treasury official to help the president carry out these ideas, and soon discovers that in addition to the swarms of special interests on the other side demanding higher spending and tax, right within the administration itself powerful factions are waging subtle warfare to defeat the presidentÛªs objectives.</br></br>The Supply-Side Revolution describes some of the authorÛªs battles with both sets of antagonists. It is easy for one outside of government to understand what inspires representatives of specific groupsÛÓthe elderly, veterans, or whomeverÛÓto fight spending cuts affecting their constituency. Indeed, much of American politics now consists of identifying such a clientele, rounding them up into a politically influential mass, and presenting oneself as their last hope.