Larry Kudlow is well known to CNBC viewers as a proponent of supply side economics. His credentials are impeccable: He was Director of OMB during the Reagan years, and his long running program, The Kudlow Report, has been for years a CNBC staple. He is the quintessential supply sider, as he will readily admit.
Kudlow has an engaging style. He doesn't make absolutist pronouncements, and his speech is peppered with phrases that admit his fallibility. He is very far from being a RWNJ; his conservatism is very civil and he even agrees with Chris Hayes on a number of points. I admire the man, though I disagree with him on many issues. If we replaced every Tea Party senator and representative with a Kudlow style Republican, we would have a functioning government instead of the mess we are stuck with.
Listen to his exchange with Chris Hayes below the fold, beginning at about 2:45
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Having praised Kudlow's style and personality, I strongly disagree with his conclusions. He is firmly wedded to supply side ideology, and interprets events to support that ideology.
He asserts that business leaders are holding back because they "know darned well" that the government will tax them in order to cover the budget deficit. Now, put yourself in the place of a businessman who sees a business opportunity to make money. Is he going to hold back because of some hypothetical future tax that might reduce his profit? I don't think so. Apple Corporation also didn't think so when they spent billions to develop the iPhone and iPad and successfully brought them to market.
Kudlow knows that there are hundreds of billions (trillions?) of dollars on the sideline just waiting for the right opportunity, and he has the hypothesis that it remains on the sideline because of the uncertainty regarding tax policy, government regulation, and (of course) Obamacare. I submit that his hypothesis is just a way of propping up his supply side ideology. He must find some reason that this money is staying on the sideline, because he cannot bring himself to question the fundamental assumptions of supply side economics.
I am not here to argue for "demand side economics". I don't think there is any way to encapsulate economics in a two word phrase. Economics is chaotic in the James Gleick sense.
Government is in the business of doing that which increases the well-being of its citizens. It was not constituted to prove the superiority of this or that economic theory. This is where Larry Kudlow's ideology breaks down. If we reflect on the Preamble to our Constitution (I don't provide a link, because I know you can all recite it), it says nothing about economic theory.
I contend that we should retain what has worked well, and reject that which has worked poorly. For example, we should keep Social Security and Medicare, because they have demonstrably increased the well-being of tens of millions of Americans. We should reject tax policies that favor the rich, because those policies have arguably led to the worst recession in over 80 years. It's not about ideology; it's about results.
Larry Kudlow's ideology is what we are up against. Kudlow himself is sincere and I do not demonize him. But we Democrats and progressives must keep this lesson in mind: results trump ideology.