Naive Globalism? Jude Wanniski March 17, 1998

Memo To: Robert Kuttner, Editor, The American Prospect
From: Jude Wanniski
Re: Your March/April issue: "Globalism Bites Back"

Congratulations! After 20 years of resisting the appeals of supply-siders who have been decrying the economic terrorism of the International Monetary Fund, you have now joined us as comrades in arms. Yes, I know you hate to admit we have been right all along, but once you get over that, we should finally be able to join intellectual and political forces to overthrow the Evil Empire, as I have been calling the IMF since the end of the Cold War. There are still several points you make in your exemplary introduction to your March/April issue with which I am not fully in agreement, but the central theme is in our ballpark: Corporate capitalism that reaches its tentacles around the globe in search of easy profits is the kind of trickle-down capitalism that gave us the Great Depression. This is the kind we associate with Herbert Hoover and the malefactors of great wealth. It has to be confronted with the kind of bottom-up, entrepreneurial capitalism that supply-siders associate with Calvin Coolidge, John F. Kennedy and Ronald Reagan.

In his 1979 book, An American Renaissance, Jack Kemp devoted a chapter to the idea of "Exporting the American Dream" as an alternative to exporting capital in search of cheap labor and importing cheap labor through open immigration policies. That is, instead of using our political clout in the international arena to keep the developing world under our heel, we should be generous in our advice to the poor on how they can become rich by organizing themselves politically and economically the way we did as a developing nation 200 years ago. Not with the high taxes and devalued currencies peddled by the IMF gangsters, but with low tax rates and sound money. Here is Kemp in 1979 singing the song you have now taken up:

In Latin America as well, personal tax rates are extremely high in most nations, although the top rates are usually encountered at slightly higher income levels than in Asia or Africa. Thus the same opportunity exists throughout the entire Third World to generate a higher level of economic efficiency and personal well-being, simply by slashing away at tax rates now so high they mine little or no government revenue but bury hope.

These incredible barriers to expansion present a moral imperative: The United States has a responsibility to undo the damage of its counsel over the past quarter century. Resistance will come from the usual quarters, the economists and bankers and financiers who arranged the Third World's financial calamity. The International Monetary Fund, the headquarters and club for this group, and the major bulwark of resistance, continues even now to spread the gospel that austerity and currency devaluations are the keys to success.

You seem to count yourself a "Gephardt Democrat" in your essay, but you obviously went to press before the House Minority Leader decided to change sides on the issue of IMF funding. He was under great pressure, no doubt, from Bob Rubin, of Goldman, Sachs and the U.S. Treasury department. In the end, Bob, you have no political horse for 2000. I'd thought Dick Gephardt might be able to step forward and snatch the nomination away from the Vice President, but not if he so easily bends to the pressures of the Political Establishment. He really has to resign as Minority Leader and devote himself to the cause you advocate if he stands a chance of winning the nomination. Otherwise, I will be writing you again before too long, suggesting you throw in with us, with Jack Kemp. If Al Gore is the Democratic nominee, Kemp will easily win the Reagan blue-collar Democrats and a good piece of the minority vote. Instead of the top-down corporate imperialism we now practice, we can usher in an era of dynamic, progressive populism that sweeps the planet.