Mises Daily Articles
A Tribute to Jack Kemp
Despite having written some tough criticisms of Jack Kemp over the years, having even called him a socialist when he was running the Department of Housing and Urban Development (1989–1993) under the first Bush administration, I've always had a soft spot for him. His death is really a tragedy and all the more so that it was not even widely remarked upon in Republican ranks. He was a major intellectual force in his day, and his sympathies with genuine liberalism of the old school made him attractive, at some level, to libertarians, if only because we understood each others' language.
My impression is that the party machine decided to eat him after being a VP on a losing presidential ticket in 1996 and then coming out against the Iraq war in 2002. The way it works with these people is that you are deemed a rising star and courted insofar as you say the right things and can be useful in bringing power to the party, but once you lose an election or say something contrary to the party line, your ideas and your person are forgotten. It is a live-by-the-sword/die-by-the-sword situation, so in a political-party sense Jack Kemp was long gone.
In this world, no matter how firm your credentials, no matter how much capital you have built up over the years, no matter how much press you have received in the past, once you start saying things outside the mainstream, or the mainstream shifts below your feet, you are suddenly a nonperson. The short attention span of the American public reinforces this routine.
But back in the day, Jack Kemp was the man of ideas, a former football star who poured over the writings of both the Austrians and the supply-siders. Many of his idea were rooted in good thoughts about society and government. He was consistently against tax increases. He was deeply suspicious about the old-style model of the welfare state. It was his conviction that the bureaucratized welfare state had kept people dependent in the same way as the socialist state in Russia and Eastern Europe. He proclaimed the failure of socialism loudly and often. He knew that the key to lifting people up from poverty was free enterprise, and he had great faith in the capacity of economic growth to do wonderful things for society.
He was one of the few politicians in the last quarter of the 20th century who was interested in the monetary question. He was an open advocate of the gold standard, though not in a form that would actually make the dollar sound. Still, he knew that the secret to sound money was reforming the fiat paper dollar in a way that would root it to something real and lasting.
In all these ways, he stood way above the run-of-the-mill Republicans of the second Bush era, who cared nothing about serious ideas and did all they could to spend and wage war and otherwise whip up a jingoistic hysteria. His ideas-driven agenda seemed quaint in a period in which the only new idea was a kind of raw anti-intellectualism rooted in fear of swarthy foreigners and an embrace and celebration of imperial glory.
With all these right ideas, where did Kemp go wrong? His errors were those of the supply-siders but they became all the more brazen in his populist hands. He was right to celebrate economic growth, but he raised it to a first principle — not a result of the free economy (and contingent on the choices people make within the free economy) but something that government itself could bring about with the right policies.
There was a mystical quality imputed to the force of economic growth. It would generate enough tax revenue to cover deficits, to the point that government would never need to cut the budget. To say otherwise was to indulge in "root-canal economics." Tax cuts were one way to stimulate growth but Kemp and his friends loved growth so much that they were willing to push it via the printing press. Thus did they develop an inadvertent Keynesian-style aversion to high interest rates and instead constantly egged on the Fed to pump more money.
How does this square with his advocacy of the gold standard? The supply-side version was not a real gold standard with direct dollar convertibility at home or abroad. It was at best a gold-exchange standard like Bretton Woods; in practice, however, it became a "gold price rule" that the Fed was to follow in the management of its monetary policy. If the price of gold fell, that was seen as proof that the Fed was too tight and should inflate more. That's how Kemp's gold views strangely mutated into an inflationist agenda. (For more on the Supply-Side monetary agenda, see the fantastic critique by Hans Sennholz in Money and Freedom.)
Now to the matter of free enterprise. If a community didn't have it, he figured it was up to the federal government to provide it. That's how "enterprise zones" came about. These were areas of a community slated for special legal treatment that would permit people to start businesses. They included tax breaks and subsidies to give them a kick. But the problem is that this would only work provided the neighboring community maintained higher taxes and lacked such subsidies. At best, this ended up being an expensive (to the taxpayers) way to shift wealth geographically.
A parallel error occurred in his mind on the idea of ownership. He thought that individuals, not the government, should be the owners of things. Good so far. But something got confused. If people didn't own things, he would attempt to give things to them (at the expense of others). If someone was a worker, he wanted them to be an owner of the business, forgetting that not everyone wants to bear the risk of entrepreneurship and not everyone wants to be or should be the owner of the enterprise. The wage earner is also an owner of his or her labor and wages, and what's wrong with that?
If someone rented, he wanted them to own a house by any means possible, and in some ways, this policy he promoted at HUD led to the housing boom and bust. He made it a national priority to give everyone a home by any means. Combined with his monetary views, this meant reckless lending to make this possible. It also meant government spending, since we don't have to worry about that either due to the magic of economic growth and its capacity for balancing budgets. This is how this free enterpriser came to preside over the largest increase in the budget of the Department of Housing and Urban Development in its history.
To watch all of this taking place was sad on many levels. This was a person who had read Mises and Hayek, and even Benjamin Anderson, and believed in the idea of freedom. His mistake was in thinking that freedom was something that was granted by the right configuration of government policy, not something that exists in the absence of government policy. Naïvely did he choose the arena of politics to work out his intellectual passions but this political world was not kind to him, no matter how kind he was to it.
When he was at his height, I enjoyed several personable exchanges with him on the subjects of monetary policy and economics generally. I found him smart, curious, open, and learned beyond the norm for politicians. He had a streak of independence about him, so it didn't surprise me that he found the antiforeigner jingoistic turn of the GOP — with its celebration of bombs and soldiers as the key to freedom — to be too much to take.
"The only way to oppose a bad idea is to replace it with a good idea," he always said. His own ideas were 75% there but it was his intellectual errors that made him less effective than he might have been. At least he cared about ideas, and believed that they would light the path of the future. In some ways, his memory alone serves as a standing rebuke to the current political moment in which our pathetic choices have been reduced to glamour socialism versus populist saber rattling. In this way, Kemp is the light.