American Abundance

by Lawrence Kudlow - published by American Heritage, l997

A Book Review by Father John McCloskey

Lawrence Kudlow is one of our leading political economists. His first book American Abundance is a collection of his writings on economic policy and politics over the last five years of prosperity. Along with other supply-side economic writers such as George Gilder and Jude Wanniski, he presents a positive approach to the field. What all three have in common, for different reasons, is a generally optimistic view of our economic future, a strong confidence in the power of the common people, and an equally strong distrust of political elites and the welfare state.

Try this on for size for unbridled optimism:

On the eve of the 21st century the United States finds itself in a long wave of prosperity that began 15 years ago and could conceivably continue without serious interruption until 2020 or 2030. Stock prices are higher, economic growth is faster, both inflation and unemployment are lower, technological change is more pervasive, the dollar is stronger, social conditions are more hopeful, the public spirit is more confident and the nation's future is brighter than anyone thought possible fifteen or twenty years ago when pessimism and anxiety were the dominant strains in American life.

This viewpoint leads him to an argument which is appealing but at the same time problematic and incomplete. He believes that this economic prosperity is producing a moral prosperity in our country. There is something to this in that people who enjoy a certain decent standard of living may be less likely to rob, maim, or kill for their sustenance. For example, he argues that the recent drop-off in crime is related to the long wave of U.S. prosperity begun in l982: "American abundance is taking hold in the moral, or behavioral conduct, dimension, as well as in the commercial sphere." He agrees with various other observers from Adam Smith to William Bennett that "work is its own virtue" and that the "last quarter century has taught politicians a hard and humbling lesson: there are real limits to what the state can do, particularly when it comes to imparting virtue and forming character." Kudlow states that "one of the greatest economic decisions of this century was the Congress's 1996 decision to disentitle welfare, and to create strict time limits and tough work rules."

In addition, he tries to make the case for a "Fourth Great Awakening" quoting approvingly Robert W. Fogel, the University of Chicago economist : "The new religious revival is fueled by a revulsion in the corruption of contemporary society. It is a rebellion against preoccupation with material acquisition and sexual debauchery; against indulgence in alcohol, tobacco, gambling, and drugs; against gluttony; against financial greed and against all other forms of self-indulgence that titillate the senses and destroy the soul." Sorry, Larry, but I just don't buy that argument. Look at our films, literature, art, music, advertising, television, and national leadership. The stock market, standard of living, and employment may never been higher in the U.S., but morale and personal morality have never been lower as evidenced by virtually every index of family and marital life. A true religious renewal, as opposed to a revival, must be based on dogma and authority and not on "enthusiasm." The current ups and downs of the movement Promise Keepers may serve as an example.

Perhaps it would be fairer and more accurate to say that there are increasingly two Americas. One group in America is made up of Bible Christians and faithful Catholics who possess standards and convictions based on the natural law, the Bible, and the teaching authority of the Catholic Church and strive to live accordingly. The other group in America, whatever its religious affiliation, does not believe in a normative moral truth or in a God to whom they are accountable in this life and in the next according to their actions here. These are cultures in irreconcilable conflict, the culture of life and truth versus the culture of death. One claims the truth; the other claims there is no truth. Over time, one or the other must prevail. As Whittaker Chambers put it, "Economics is not the central problem of our age, Faith is."

The "economics" encyclical of John Paul II Centesimus Annus says it best: "A given culture reveals its overall understanding of life through the choices it makes in production and consumption.... It is here the phenomenon of consumerism arises. If a direct appeal is made to human instincts–while ignoring in various ways the reality of the person as intelligent and free–then consumer attitudes and lifestyles can be created which are objectively improper and often damaging to the person's physical and spiritual health.... It is not wrong to want to live better; what is wrong is a style of life which is presumed to be better when it is directed towards 'having' rather than 'being,' and which wants to have more, not in order to be more, but in order to spend life in enjoyment as an end in itself." In another part of the encyclical the Pope clearly endorses a free market system as the best of the alternatives for the good of the human person and the family but harbors no illusions as to its ability to overcome original sin in its various manifestations.

Kudlow has a varied background in government, Wall Street, and political journalism. He was under-secretary of the Office of Management and Budget under Ronald Reagan, one of the original supply-siders of the Eighties. After completing his time in Washington he was the chief economist for the powerhouse financial firm of Bear, Stearns on Wall Street, and then became the economic editor for the leading conservative bi-weekly National Review. Presently he is chief economist for the American Skandia Company in Connecticut. Kudlow had a well-publicized bout with cocaine addiction for which he takes full responsibility in a scorchingly honest lengthy preface. He acknowledges his dependence on God and his many loyal friends for his continuing recovery from the depths of a near death experience. His writings reflect a person who believes deeply in the possibility of reform and, indeed, resurrection.

Kudlow has a prose style that makes his writing accessible to the layman and shows a deep knowledge of history that reminds one of the greatest economic writer of all, the nineteenth-century Englishman Walter Bagehot. Combined with his inside knowledge of how the economic and political world works, he provides an unmatched insight into current economic events. Old economic news is rarely interesting, but Kudlow makes it so. He is an increasingly important economic voice who effortlessly switches back and forth from the field of policy making to print and visual journalism. In the future he may well be an important moral voice. Kudlow is a recent Catholic convert who no doubt is deepening his study of the social teachings of the Church. I hope that in the future his thought may reflect the insights of Leo XIII and John Paul II as well as Adam Smith, Hayek, and Schumpeter.

A country that strives to live according to the natural law will not produce a perfect economic system, but it will produce a society where people are free to "be" and give more for God, others, and themselves. He almost got it right in this, his first book. Only true moral prosperity can produce a just and lasting economic abundance, but not the other way around.

First appeared in Crisis Magazine in the June 1998 issue.