It is not hard to find a list of the many, stupid ways Larry Kudlow has been wrong about major economic calls in the past quarter century. He has a childlike faith in the power of tax cuts and is a committed Republican partisan, both of which drive him to say consistently outlandish things. He celebrated the dot-com bubble heights of the stock market as a triumph of Reaganomics, denied the existence of a housing bubble during the George W. Bush years, insisted the Great Recession was not a recession, claimed Barack Obama’s stimulus package would usher in raging inflation, and so on.
Such unflagging technocratic incompetence makes Kudlow ― a former Bear Stearns economist better known as a CNBC personality ― an excellent fit for the bumbling Donald Trump administration. But Kudlow shares an even deeper spiritual connection with elite Republicans embarrassed by their party’s current standard-bearer: He worships wealth. And more than any other policy idea or political principle, public reverence for the rich has been the central organizing concept of the Republican Party from Barry Goldwater through Trump. Kudlow’s nomination to serve as the next director of the National Economic Council is an efficient distillation of a half-century of conservative thinking.
Kudlow is not, as he and some of his fiercest critics insist, a “supply-side” economist who believes tax cuts cure all ills. For Kudlow, tax cuts are merely instrumental. They are “the key to prosperity and freedom,” as he subtitled one of his books, because they are a simple, sure-fire way to elevate stock values.
Kudlow believes the stock market to be the ultimate measure of human progress. His economic commentary and analysis typically reduces all of social existence to one simple quantitative metric, enabling him to ignore or even celebrate every other accompanying evil. This is most explicitly stated in his semi-infamous 2002 National Review column urging Bush to invade Iraq. “The shock therapy of decisive war will elevate the stock market by a couple-thousand points,” Kudlow declared.
During the Cold War, such straightforward enthusiasm for war profiteering would have been laughed off as Leninist propaganda (Lenin believed imperialism to be the last phase of capitalism before its inevitable collapse). But Kudlow was perfectly sincere. He saw the stock market as a “manifestation of the pained expressions on our faces” and wanted a “small war” to “revive the American spirit.”
Kudlow expressed similar sentiments about the Bill Clinton presidency. When Clinton raised taxes on the highest-earning households in 1993, Kudlow called it a ”wet blanket″ that would impede growth. By the end of the Clinton presidency, however, he was declaring the previous eight years an economic victory … for Ronald Reagan. This was revealed not by looking at economic growth, or unemployment or wage levels, but by a quick glance at the stock market. According to Kudlow, the Clinton-era prosperity had really started much earlier ― the Gipper had ushered in an 18-year bull market on Wall Street. And for once, Kudlow missed an opportunity to score partisan points against Clinton. The Democratic president’s welfare reform doubled severe poverty in America, and the low unemployment of the late 1990s was built on a stock market bubble.
The stock market, of course, is not a measure of national prosperity. It doesn’t tell us very much about the financial health of individual companies, much less how families are making ends meet. It is only incidentally related to the way corporations raise capital, which is why the high priest of Enlightenment economics, Adam Smith, had nothing to say about it. But the stock market is a pretty good way to gauge how the wealthiest Americans are doing day to day. Over 85 percent of all stock market wealth is owned by the richest 10 percent of households. When the market goes up, those people get richer. When it goes down, the opposite happens. And Kudlow is quite open about his belief that rich people are the best people.
“Wealthy folks have no need to steal or engage in corruption,” Kudlow wrote in December 2016. “Their business success demonstrates that they know how to achieve goals.”
While wealth comes from personal excellence, poverty “is caused by family breakup,” Kudlow told the Conservative Political Action Conference in 2016. “The problem is American values, traditional American values, and the decline of the culture of family and marriage.”
Economists often talk as if they are merely scientific experts analyzing cold, statistical certainties. While there are some numerical truths to be accessed in economic data-mining, economists are first and foremost warriors in the realm of political ideas. They use money and numbers to tell ideological stories about politics and values. So Kudlow deserves some credit for being open about the roots of his economic faith. He thinks the rich are better than you.