role in the events he describes) givesna concise but thorough account of supply-sidentheory and practice.nAlthough it is a radical departurenfrom conventional economic wisdom,nthe supply-side doctrine has eminentlynrespectable roots. In effect it is Say’snlaw rediscovered. Jean-Baptiste Say, thengreat 19th-century French economist,nheld that government ought to encouragenproduction instead of consumption,nsince the former not only created thengoods and articles of commerce but gavenworkers the means with which to purchasenthem. This principle was laternreduced to the catch-phrase, “Supplyncreates its own demand.”nSay’s law dominated economic thinkingnand policy-making for over a century,nuntil it was “refuted” by JohnnMaynard Keynes. The Great Depressionnhad struck and was widely (andnerroneously) blamed on “overproduction.”nActually, what had happened wasnthat a sudden contraction in the moneynsupply had pricked the balloon of 1920’snprosperity. The classical response wouldnhave been deflation—allowing wagesnand prices to fall to appropriate levelsn—but Keynes gave the politicians annirresistible alternative.nSay had never presumed that overproductionncould not occur in one ornseveral segments of a nation’s economy;nhis view was rather that overproductionncould not occur in all segments at once.nKeynes, however, argued that the Depressionndisproved Say’s law, and thatnthe answer to overproduction was forngovernment to stimulate demandnthrough deficit spending. Not surprisingly,nthe politicians agreed. As W. H.nHutt, a venerable survivor of this period,nhas said: “The classical economistsnwere prescribing castor oil fornthe patient, while the Keynesians werenprescribing champagne.”nKeynes himself did not entirely slipnhis classical moorings, and he livednlong enough to have qualms about thenuses to which the politicians began tonput his theories. Had he lived longernstill, he would have been horrified.nKeynesian economics became the vehiclenfor smashing every restraint onngovernment spending. In the UnitednStates, “spend and elect” became thenmainstay of the Democratic Party. Duringnthe last quarter-century, when thenDemocrats enjoyed uninterrupted controlnof both houses of Congress, theynpushed this policy to its outer limits.nBy creating numerous “open-ended entitlements”n(liberal transfer paymentsnfor which millions of Americans easilynqualified), the Democrats ensured thatnfederal spending would rise. By increasingnspending, they also ensured that inflationnwould force taxpayers into highernbrackets. By making increases automatic,nthrough cost-of-living adjustmentsnand other budget trip wires, theynensured that spending and taxes wouldnBusiness as UsualnHere is the description for a wondrousnitem in the Christmas edition of HarrietnCarter Distinctive Gifts . . . , a mailorder-housencatalogue from NorthnWales, Pennsylvania:nPIN-UP PALS-MALE CENTER­nFOLD PLAYING CARDS providenloads of laughs for the broad-minded.nEach card features a differentnnude male model in a charminglyncoy pose (53 poses in all, countingnthe joker). Isn’t it about time wengot even, girls, with all our pin-upnogling men.’ Lovely, demure lacenprint design on the backs of thenstandard deck.nnnLIBERAL CULTUREnrise inexorably, without them havingnto incur the opprobrium of voting forneither.nWhat gave the game away, ofncourse, was the cumulative effect thatnthese gimmicks had on the economy.nPeople at the lower income levels foundnthat it was not only easier to go on welfarenthan to work, it was actually morenprofitable. People at the higher incomenlevels found that they had more incentivento put their money into tax sheltersnthan into productive investments.nMiddle-income people, the hardest hitnof all, frantically acquired real estate,nengaged in barter or joined the undergroundneconomy. Beating the tax/inflationnsqueeze became a national mania.nWith the recession of 1974-75, thenThis is not the only solicitation of ancharmingly coy nature amidst countlessnofferings of musical dolls, thimble figurinesnand festive Christmas plates. Anbroadminded eye will fall upon a “shapelyntoothbrush and razor set” whose handlesnfeature various female convexitiesnand are named, respectively, Sexy Sallynand Sexy Raquel (“blades not included”)nwhich “will spark any man’s interest inngrooming.” Then there is somethingncalled “Penthouse Peek-A-Boo TemperaturenPet,” with which one can “tellnthe temperature by simply peekingnthrough the young damsel’s play suit”nthat is supposed to adorn executives’ndesks. The catalog carries a portrait ofnMs. Harriet Carter, the female entrepreneurnwho seems neither to noticensome contradictions in her offerings, nornto reflect on the respectability of herntrade. She looks wholesome, middlenclass, and she sports a winsome, toothy,nall-American smile. In a letter to prospectivencustomers, she calls her giftsn”fine.” We disagree. Some may be fine,nbut others are just plain vulgar, dirtynand farcically advertised. Dnmmmma^^mmmm^^nIVoTember/December 1981n