Remembering JFK

Source: Forbes

I was in the parking lot of the C-J building at the University of Georgia when I heard. I had given the President my first vote as a new 18-year old freshman three years earlier, following the lead of my dad who said that the democrats were for the little man. He considered himself a little man in that context. That was the extent of my political indoctrination before college. I spent that Thanksgiving break at home glued to the television. I saw John-John’s salute live on TV.

President Kennedy’s charisma and speaking ability wore well. He set the standard for Presidential eloquence that hasn’t been met since. Another strong memory was of the Cuban missile crisis, which played out on the TV at my fraternity house.

As a sophomore I took a money and banking course taught by James Waller, a Colonial Sanders lookalike. That course and Professor Waller’s continuing influence determined my future direction. Professor Waller started recommending me to tutor other students in money and banking. He insisted I take his upper level course in monetary policy. He also insisted that I go to graduate school, preferably at Virginia or North Carolina, where he had close like-minded friends. He attended my wedding to the prettiest girl in his money and banking class.

On the first day of that class, Professor Waller asked the class if we knew the way to (Kennedy’s) New Frontier. We didn’t. He said you go to Harvard and turn left. There were numerous jabs like that that I no longer remember. But the one I do remember was his critique of President Kennedy’s “Ask not” speech. “Ask not what your country can do for you; ask what you can do for your country.”

That line had already become the most famous quote from Kennedy’s Inaugural Address, and it summarized his political philosophy nicely. I had never heard it criticized or questioned before, but Professor Waller wasn’t bashful in his attack on it.

He said that Kennedy had it exactly backwards. The government was supposed to serve the people. In a democracy, the people were not supposed to serve the government. As an earlier eloquent president put it, “Government of the people, by the people, for the people, shall not perish from the earth.”

I was not totally converted to the view that Kennedy’s ask-not line was a bad line. I took Professor Waller’s point on substance, but, after all, it was just a line in a speech, and it flowed really well. Give the guy a break. However, from that point on I became more careful about falling for fancy talk.

It wasn’t personal. It wasn’t about President Kennedy the man. It was a matter of left versus right. The New Frontier was from the left and Professor Waller was of the right. In economic policy terms, it came down to Harvard on one side and the University of Chicago on the other side, featuring Milton Friedman and other “Chicago boys.” More to the point in that money and banking class, the dichotomy was between (Keynesian) fiscal policy on the one hand and Classical (monetarist) monetary policy on the other.

In graduate school, I also had monetary theory and policy classes from Richard Timberlake, a student of Milton Friedman’s at Chicago. He called Friedman “the fastest gun in the west,” referring, in part, to Friedman’s debating skills. The whole fiscal versus monetary policy debate was actually debated with Friedman on the right side and Walter Heller, Chairman of Kennedy’s Council of Economic Advisors, on the other. They turned it into a little book.

It is ironic in this historical perspective that President Kennedy, whose advisors tended to be traditional Keynesians, is credited today for a successful supply-side tax cut that stimulated the economy greatly. In proposed marginal income tax reductions in his 1963 state of the union address. His initial plan was to cut the top marginal rate from 91 percent to 65 percent, a reduction in the bottom rate from 20 percent to 14 percent, and a reduction in the corporate rate from 52 percent to 47 percent. This proposal failed in 1963, but in February 1964, President Johnson succeeded. The top rate went done to 70 percent rather than 65 percent and the corporate rate declined to 48 percent rather than 47 percent. It is hard to imagine tax revenue not increasing with the rate reductions beginning at such lofty levels. There must be a natural law somewhere that would keep the government from taking more than half its citizens income. A reduction from 91 percent to “only” 70 percent? What were they thinking?

The supply-side conservatives have embraced the Kennedy legacy, largely because of these tax-rate reductions.

I still think the “ask not” quote was a pretty good quote, despite my embrace of the opposite as a governing philosophy. Thankfully, the truth was in the tax pudding.

As for what happened in Dallas 50 years ago, what an awful, awful waste.