Jude Wanniski, a Wall Street Journal associate editor in the 1970s, who coined the phrase "Supply-Side Economics", and then wrote an eminently readable (and modestly-titled) book on the subject, The Way The World Works, died of a heart attack yesterday at age 69.

As the late Robert Bartley of the Journal (who released a very good book of his own on the subject) wrote in 1989:

In 1970 Keynesianism ruled, and we faced a decade of stagflation. But we're all supply-siders now, thanks in part to dinners at Michael I, and even George Bush has embraced voodoo economics.

The policy that came to be known as "Reaganomics" started more than two years before the election of Ronald Reagan. At least for me, the new era dawned on April 20, 1978. On that morning, a Wall Street Journal article on the House Ways and Means Committee's doubts about the Carter Administration tax proposals included the following paragraphs:

A major cause for worry on the part of liberals and the Administration is a proposal by Representative William Steiger (R., Wis.) to reduce the tax on capital gains. Representative Steiger claims to be close to the 19 votes he needs to win approval for his amendment from the 37-member committee….

Representative Steiger's amendment would roll back the maximum rate on capital gains — for both individuals and corporations — to 25 per cent, the top rate in effect prior to the Tax Reform Act of 1969.

While Representative Steiger argues that this tax cut would stimulate enough business activity and tax revenue to pay for itself, committee sources estimate the net annual revenue loss to the Treasury at between $ 2 billion and $ 3 billion.

Electrified by this news, I started my working day with a call to Jude Wanniski, who happened to be in Washington. Read this, I suggested, and, naturally, drop everything and go talk to Steiger. This, I said, may be what we've been looking for, the reason for the sudden surge in the stock market. For by then, these issues had been explored for innumerable hours at the Michael I restaurant and the Lehrman Institute by Jude, the already notable Canadian economist Robert Mundell, former OMB Chief Economist Arthur Laffer, and a few others.

Jude returned from Washington and produced a seminal editorial, "Stupendous Steiger" (April 26, 1978), asserting that the quiet, young, slightly built congressman from Wisconsin had "shaken the earth," that his amendment was "not one tax provision among many, but the cutting edge of an important intellectual and financial breakthrough." As he wrote, I got a call from Warren Phillips, chairman of Dow Jones & Co., publisher of the Journal. He said he had run into Jude while walking through the editorial-page office, that Jude had virtually grabbed him by the lapels and excitedly exclaimed that the market had bottomed, the market had bottomed. What's going on, Warren asked? Jude's a little overexcited, I explained, but watch.

Whatever the wear and tear on Warren's lapels, Jude was right, more or less. The Dow Jones average had been falling steadily since a few weeks before the Carter presidential victory, hitting a low of 742 on February 28, and hovering just above that figure into April. It turned up as Representative Steiger gathered his votes, climbing over 900 as the tax bill moved toward passage. The 1978 lows withstood two later tests as inflation was wrung out of the system, and the real stock-market boom started in 1983, with the first net tax cuts of the Reagan era.

At this remove, it's hard even to recall the pre-Reagan economic landscape. Do you remember the gasoline lines? How about Jimmy Carter's $ 50 rebate? Or his voluntary wage and price controls? Or even before that, Jerry Ford's WIN buttons, Whip Inflation Now?

National Review listed The Way The World Works as one of their top 100 non-fiction books of the 20th century. But as as Jonah Goldberg writes, Wanniski's post-Journal legacy is, to say the least, a mixed bag:

For those interested in the sociology of the right, we should be in for some fascinating footwork from various quarters trying to deal with Wanniski's legacy as an economist and his later infatuation with Farakhan and the like. As someone who received more than a few tongue-lashing emails from the man about Iraq and Israel, I'm keen to see how the Wall Street Journal handles the whole thing.