Political Realignment Jude Wanniski July 26, 1996

[In our July 24 daily message, we ran an op-ed essay that Jude Wanniski wrote for The Washington Times on why the reform party may be necessary to bring about a long overdue political realignment in America — in which one party becomes the party of corporate capitalism, the other the party of entrepreneurial capitalism. David Howe of Gilder, Gagnon, Howe & Co., a Polyconomics client, questioned the argument on the grounds that both political parties are necessarily establishment parties, and the entrepreneur is always an outsider, attempting to break into the establishment.]

Memo To: David Howe
From: Jude Wanniski
Re: Political realignment

You are right in that it is unreasonable to imagine one major party in a two-party system representing the outsiders, the other the insiders. Both the Democratic Party and the Republican Party must ultimately represent the nation as a whole, including all outsiders and all insiders. Every institution, from the family unit on up, has to have competing sides in all debates involving the investment of jointly held resources. The yin and the yang, is how the Chinese put it. There has to be a bias in one party toward the entrepreneur, those in society who aspire to achieve a higher potential, with the other party biased in favor of those who have achieved most of the potential in their allotted time on earth, and wish to preserve what they have achieved. The former are risk takers, seeking capital gains. The latter are risk-averse, defending gains already achieved. Felix Rohatyn may have put it a better way than I did in my op-ed. He told me that we need one party to represent the bond market and one to represent the stock market, and that the problem now is that both parties represent the bond market.

Through most of our history, both parties were more in tune with the aspirations of entrepreneurs because we were still on the way up as a nation. The GOP got off track when it elected Hoover in 1928, representing the interests of mature enterprise that wished to protect itself from the inroads of competition — from abroad. The Smoot-Hawley Tariff Act was the dismal result. Coolidge was the last GOP President to represent a party biased toward the entrepreneur — until Reagan arrived in 1980, a man whose humble origins were in the Democratic Party. John F. Kennedy was the only Democratic President of our time to tilt toward entrepreneurs, risk-takers. Both the GOP and the Democratic Party are now owned lock, stock and barrel by the entrenched corporate interests, because of the pressures brought about by the interplay of campaign finance and the 83-year-old tax code.

In any event, the point you raised is a good one. I have been saying for years that we really need a revolutionary to come from outside the establishment, to cut through the tax code and start fresh ~ which was really the promise of early Perot in 1992. If we could start fresh, the Reform Party would disappear, and the two major establishment parties would be able to conduct the nation's business without the inevitability of gridlock.