The Seven Fat Years: And How to Do It Again, by Robert L. Bartley, New York: The Free Press, 347 pages, $22.95
Robert Bartley must feel like a man who shows up at a solemn funeral in a white tuxedo. While most of the American intelligentsia has been busy saying last rites over the supply-side ideas of the 1980s, Bartley's new book, The Seven Fat Years, is a celebration of the prosperity those ideas generated. His book is thus the ultimate in politically incorrect speech. These days, defending the "decade of greed and selfishness" just isn't done in polite company—and certainly not in print.
Not surprisingly, The Seven Fat Years hasn't received glowing reviews from the Washington press corps. As John Judis, who reviewed the book for The Washington Post, noted with scorn and incredulity: "Bartley actually seeks to repeat rather than repudiate the '80s. He just doesn't understand what's been happening." Judis and other such critics are the same pundits who hysterically warned in 1980 that a Reagan presidency would mean thermonuclear war and that his tax cuts would lead to raging inflation and steady economic decline.
Bartley's book also has not yet surged to the top of the New York Times bestseller list, nor is it likely to. Those exalted positions are already cluttered with gloomy chronicles of the 1980s. "What we are seeing in the books that are now selling," says Linda Grey, president of Bantam Books, "is a turnaround from the decade of greed to the denigration of greed."
This explains the endless litany of chart-toppers in recent years with titles such as The Politics of Rich and Poor, America: What Went Wrong, The Day of Reckoning, and Sleepwalking Through the 1980s. My personal favorite is Barbara Ehrenreich's The Worst Years of Our Lives: An Outsider's View of the 1980s. (I don't know, Barbara; you seemed to do all right!) When reading such titles, one has to wonder: Are these people talking about Ethiopia or the United States?
Alas, there is one huge distinction between Bartley's book and all the 1980s-bashing mega-sellers listed above: Bartley's book is nonfiction. In fact, one of the central virtues of The Seven Fat Years is that Bartley systematically unmasks every tired myth of the evil and avaricious 1980s. For example:
• No, the poor did not grow poorer. In fact, Census Bureau data show that from 1981 to 1989 the income of the poorest fifth of Americans rose by 5.6 percent. In the pre-Reagan era of 1973–1981 the poorest fifth's income fell by 15 percent.
• No, this was not an era of unprecedented greed and selfishness. Bartley reports that "charitable giving grew at 5.1 percent in the 1980s, compared with a rate of 3.5 percent over the previous 25 years. Giving increased faster than jewelry purchases, beauty parlor and health club spending and consumer debt."
• No, the deficit was not a result of Reagan tax cuts. Tax revenues were twice as high in 1989 as in 1980. This was a real increase of roughly $350 billion. Unfortunately, real federal spending climbed by about $500 billion in the Reagan years.
• No, America did not suffer a loss of competitiveness. In the 1980s, America added 18 million new jobs-more than Japan, Germany, and France combined. U.S. manufacturing employment and output expanded at a healthy pace, as did U.S. exports. Real GNP grew by 30 percent and median family income grew by 11 percent.
As Bartley puts it, during the seven fat years—November 1982 through July 1990, to be precise—the United States experienced "a wave of sustained growth, a dynamic outburst of entrepreneurial creativity…and a reassertion of American optimism." And the revolution transcended our borders. On a global scale, during the seven fat years, American-style democratic capitalism flourished in every corner of the globe. Meanwhile, almost every nation in the industrialized world followed America's 1981 lead by chopping marginal tax rates. The leaders of other nations have shown that they don't believe the supply-side revolution in the United States was a tragic mistake.
What makes Robert Bartley's account of the seven fat years so uniquely informative is that he himself played such a vital role in laying the intellectual groundwork for the supply-side ideas—low marginal tax rates, free trade, deregulation, and sound money—that Ronald Reagan embraced and then implemented. As the editorial page editor of The Wall Street Journal, Bartley was one of the most influential of the small contingent of supply-siders who burst on to the policy scene in the mid-1970s and permanently changed the way the world thinks about macroeconomics.
It isn't stretching things to say that without the almost-daily drumbeat of editorial advice from Bartley and the brain trust of influential supply-side writers he assembled at the Journal—including Paul Craig Roberts, Art Laffer, and Jude Wanniski—the supply-side revolution would never have occurred. Bartley's Wall Street Journal was the conscience of the Reagan administration, and it tried—too often in vain—to ensure that Reagan officials kept the faith.
The most entertaining chapters of The Seven Fat Years are those in which Bartley describes firsthand the genesis of supply-side economic ideas. Bartley chronicles the economic-strategy-session dinners in the late 1970s—with Laffer, Wanniski, et al.—at Michael 1 restaurant in Manhattan. Bartley assures us that: "The Michael 1 seminars did not arise from accidents of personality. They were a product of their time; their roots lay in the economic and intellectual turmoil of the 1970s. For as stagflation of the 1970s had upset the political universe, so it had overturned intellectual orthodoxy."
Whether you agree or disagree with the policies that Bartley, Laffer, and his accomplices espoused, you can't deny that they successfully staged a revolution in macroeconomic policy making. They overturned the neo-Keynesian orthodoxy and replaced it with what became known as Reaganomics.
An obvious question is: If Bartley is right about the "explosion of growth" these ideas and policies unleashed, then why all the grim faces and why the furious Orwellian rewriting of history? Part of the answer is that Americans, and especially the Washington elite, seem to be suffering from a severe case of historical amnesia. "Memory is often merciful," Bartley writes. "We have repressed the 1970s," which he labels "The Malaise Decade."
He is right. No one seems to remember that when Reagan was sworn into office, inflation was raging ahead at a double-digit annual pace, mortgage interest rates had topped 20 percent, there were Soviets marching in Afghanistan, America was at the mercy of OPEC, and roughly one of 10 Americans was out of work.
Within two years, the combination of Paul Volker's slamming the brakes on the money supply at the Federal Reserve and Reagan's income-tax rate cuts, argues Bartlett, had cut the inflation rate in half, lifted the nation out of a miserable recession, and laid the foundation for the longest peacetime economic expansion in history. By the end of the decade, there were no more Soviets, and there was no OPEC to speak of.
Yet on college campuses, in the halls of Congress, and within the media these points are mere trifles compared with the "unfairness" of the economic expansion and, of course, the surge in the dreaded deficit. (There was nothing quite like watching liberal Keynesians running around in the 1980s like Chicken Littles, denouncing Reagan for running up "ruinous deficits.")
Indeed, one of the favorite ploys that the revisionists use to denounce Reaganomics is to examine economic statistics from the late 1970s to the late 1980s. The Congressional Budget Office, for example, earlier this year issued a widely cited report entitled Falling Behind: The Growing Income Gap in America. The main thrust of the study was that "families in the lowest 40 percent of the income distribution actually had lower real incomes in 1989 than in 1979." The study conveniently lumps in the last two years of the Carter administration with the Reagan years.
What the data really show is that between 1979 and 1981—the Jimmy Carter years—family incomes plummeted by 9 percent. Between 1982 and 1989 family incomes rose 12 percent. In other words, the left has painted a bleak picture of the Reagan era by lumping it together with Carter's truly miserable performance.
Another reason for the 1980s bashing is that Americans cannot seem to stand the thought of prosperity or progress. Maybe it's our Puritan heritage. Just as the slow-growth 1990s are blamed on the excesses of the productive 1980s, Bartley notes, the media and politicians once insisted that the Roaring '20s, a previous gilded age, caused the Great Depression.
Bartley also notes that the media can't seem to resist vilifying successful businessmen. Carnegie, Morgan, Mellon, and Vanderbilt were not successful entrepreneurs, builders of railroads, banks, and steel companies, the historians tell us. Rather, they were "robber barons," whose business empires were established "only in the name of uncontrolled appetite for private profits."
Now, the modern-day empire builders, the Michael Milkens of the world, whose ventures created hundreds of thousands of jobs, are vilified for getting fabulously rich. Their fall from grace is cause for joyous celebration. But as Bartley quite rightly reminds us, with the crumbling of the Berlin Wall, "the world now understands that as an organizing principle, the alternative to self interest is terror." His only lament is that the era in which terror was finally vanquished is called "a decade of greed."
The main shortcoming of The Seven Fat Years is that too often its cheerleading for the 1980s glosses over the important policy mistakes of those years. Bartley continues to dismiss the startling rise in the budget deficit as mostly an irrelevancy. But the deficit is important—if only because it is a symptom of the utter failure of the Reaganites to restrain government with the same zeal that they had for cutting taxes.
When Reagan took office, federal spending was 24 percent of GDP. It fell to 22 percent in 1986, the midpoint of the fat years, but it is now up to 25 percent of GDP under George Bush. Some revolution! This rise in government is the primary reason why the fat years ended so abruptly, yet Bartley has little to say about this spending epidemic. This is a general fault of almost all supply-siders—they're soft on spending. Witness the budget build up at HUD under supply-side quarterback Jack Kemp.
Despite its flaws, The Seven Fat Years is an excellent book, though not the best on Reaganomics. (That distinction goes to Paul Craig Roberts's Supply Side Economics.) Bartley has made a valuable contribution to the debate over the consequences of the Reagan revolution. After reading this book, one can't help feeling that it is not Bartley but his critics who must have been sleepwalking through the 1980s.
Stephen Moore is director of fiscal-policy studies at the Cato Institute.