Chwialkowska, Luiza, “The global economist at home: From his Tuscan castle, Canadian Robert Mundell is changing world economies,” The Ottawa Citizen, Saturday, July 25, 1998, pp. B1–B4.
What you make of Robert Mundell’s Italian retreat depends on where you stand on tax cuts, Ronald Reagan, and a common currency for Europe.
In The Seven Fat Years, Robert Bartley’s book celebrating the economic policies of Reagan, the conservative editor of The Wall Street Journal described the Palazzo Mundell as “a castle” kept by an economist of “international renown.” In Peddling Prosperity, an attack on the “decade of greed,” left-wing MIT economist Paul Krugman derided the place as a “crumbling half-habitable villa” where a brilliant but eccentric economist holds suspicious conferences “outside the regular round of academic meetings.”
Robert Mundell is one of the most influential economists alive, and also one of the most controversial. White-haired, blue-eyed, and tanned, Mr. Mundell stands on the balcony of his palazzo and, looking out into the countryside, waits to be proven correct—again. In the 1980s, his ideas shaped America’s economic policy. Now, Europe is next.
Hollywood, of course, had to come see the place for itself.
The script of the Oscar-winning film, The English Patient, required a war-ravaged but ravishing villa where Ralph Fiennes could die, whispering his adulterous desert tale to Juliette Binoche, as she nursed him with morphine, Kipling, and plums from the villa’s mine-laden garden. The film’s location scouts were dispatched into the Italian countryside, high into the lush hills northeast of Siena to seek out the Palazzo Mundell.
They wound their way up to the village of Santa Colomba, along skinny roads that slither like Tuscan vipers through sunflower fields, past roving gangs of sheep, and over an ancient lake reclaimed by 18th-century dukes into a military meadow where young recruits still learn to hold their first weapons of war.
The five-storey limestone palazzo rises like a fortress, casting a 500-year-old shadow over the village church and the squat houses of its 85 parishioners. The bone-coloured façade is worn by sun and wind. Its sculpted saints have lost their heads—to gravity or decay or bullets. The baroque chapel, once lavishly decorated by the Bishop of Siena, is in ruins, its florid art dragged away by thieves.
But history still lingers in the vast rooms. Masters of this hilltop have been men of conviction and controversy. Each left his mark on the palazzo and, for better or for worse, on the world. It is a place where Robert Mundell, the intellectual force behind Reaganomics, and an architect of European Monetary Union, feels at home.
Here the Sienese tyrant Pandolfo “Il Magnifico” Petrucci plotted the princely assassinations that inspired Machiavelli to remark with admiration, “He has not enemies of great importance as they are either killed or reconciled.”
Mussolini’s coat of arms is tattooed al fresco onto the cold stone of the entrance loggia, announcing his authority. Elsewhere, it seems as though il duce had roused the Sienes masters from their graves and enlisted their paintbrushes in his cause. A signals corps trained here during the war and communications equipment is the subject of one room’s fresco.
Another wall painting shows an armoured tank, a third, a square-jawed soldier, his helmet emblazoned with the erect flame of the Fascisti. One wall bears the painted exhortation: “Order is the indispensable condition for the army to exist and perform in any time or place.”
In the highest room of the palazzo, conquering Allied troops left behind the graffiti of victors: “Everyone is happy” reads one scrawl.
A few of the 65 rooms that wrap around a central courtyard are dark and bare, their floors threatening to crumble down onto rooms below.
One set of stairs has almost disappeared into thin air, each step ground to dust over the years, under the weight of sacks of grain dragged down from the attic.
But unlike Michael Ondaatje’s fictional Villa San Girolamo where “there seemed to be little demarcation between damaged building and the burned and shelled remnants of the earth,” the Palazzo Mundell survived very much intact.
In 1992, Architectural Digest gushed about this enduring architectural achievement of Baldassare Peruzzi—colleague of Bramante, the architect to Pope Julius II—who had begun to build the villa in Santa Colomba in the early 1500s just as the pontiff was engaging Michelangelo to decorate the Sistine Chapel.
“Peruzzi’s Roman career is not apparent as much in the Villa’s handsome Renaissance façade as in its interior—in its great hall and the impressive apartments of state on the piano nobile and, most notably, in the stunningly beautiful spiral staircase that rises through the entire height of the building.”
“There is only one prototype for a staircase of this splendour and originality,” said the magazine. “The one that Bramante had begun a few years earlier for Julius II at the Belvedere Palace in the Vatican.”
Not finding the ruins they needed among the antique-filled living quarters or the art-lined guest wing, the studio scouts soldiered further on into Tuscany. Had they stayed, however, their movies might have been different. Had Juliette Binoche crept down into the vast library of the Palazzo Mundell to forage among the mess of books, papers, and journals that give Mr. Mundell’s “Hiroshima Room” its nickname, she would have found a story as dramatic as the ones she read from her patient’s desert-worn copy of Herodotus.
Mr. Mundell’s is the story of a revolution carried out, and another one in the making. Eighteen years ago, a controversial experiment in economic policy took the United States from stagnant inflationary chaos under Jimmy Carter to a period of giddy prosperity that Ronald Reagan proudly dubbed “Morning in America.” Drastic income tax cuts, especially for earners in the highest brackets, coupled with tight monetary policy to check inflation—a controversial cocktail known as the “Mundell Mix”—were introduced to spur the U.S. economy to new heights.
Whether they helped or hurt, these pro-business policies and the free-market rhetoric that surrounded them defined the Reagan era as quintessentially American. “Supply-side economics” was Yankee freedom-loving swagger—or, if you prefer, all-American capitalist greed.
As the Land of the Free by and large escaped the recessions that hit Europe, and now Asia, there was a sense that the American entrepreneurial free-market spirit had prevailed over the bureaucratic and statist tendencies of the rest of the world, including Canada, where taxes are higher and social policies more generous.
But Mr. Reagan’s supply-side revolution was invented by a Canadian. A Canadian army brat from Kingston who keeps an apartment in New York, a palazzo near Siena, and who is not yet through changing the world.
Like America in the 1980s, Europe is verging on a defining moment.
And once again, Robert Mundell has his fingerprints all over it.
For the past forty years, he has been dissecting the regional forces that have been pulling Canada apart since Confederation, and reassembling them into an argument for the unification of Europe under a common currency. Next year, the European Monetary Union he prophesied will come to pass.
“Of course, Bob had the great advantage of being Canadian,” declared Nobel Laureate Paul Samuelson to a group of elite economists who gathered at the head-quarters of the International Monetary Fund in Washington, D.C. to roast Robert Mundell on his 65th birthday.
“Cold weather and bad cooking confer an unbeatable advantage on Canadian economists. Bob Solow has even whispered to me his suspicion that the Scottish Adam Smith, who was kidnapped by gypsies at the age of six, when returned to his family, (he) was (replaced with) a Canadian in disguise.”
Cold weather and bad cooking aside, the Canadian experience gave Mr. Mundell a very particular point of view, one that let him ask questions that no one else was asking, and to reach insights that defined his career and altered the course of economics.
“You have created modern open-economy macroeconomics and have taught us that there is no other one! In our generation there is only one man who can rightly say that without his contributions, international macroeconomics would not have existed. That man is you! My generation of economists owe you all that we know,” gushed Jacob Frenkel, governor of the Bank of Israel in an inscription on a book assessing the impact of Mundell’s currency theories.
The central preoccupation of Mr. Mundell’s career has been the “open economy”—a country whose GDP depends in large part on foreign trade. The subject was a low priority for American economists in the 1950s, when Mr. Mundell was embarking on his graduate career south of the border, in an economy that did most of its trading with itself.
Canada’s reliance on trade, its vulnerability to changes in the international monetary system, and the economic disparities and political clashes between its regions, inspired the ideas of Robert Mundell.
Mr. Mundell was born in Kingston, the son of a warrant officer in the Canadian Army. In first grade, he moved to Latimer, Ont[ario]. “If you tell me you’ve heard of Latimer, I won’t believe you,” he says of the town he remembers as “a school, a church, and a cheese factory.”
He and his three brothers grew up on a four-acre farm. Theirs was a closed economy. “We had chickens, a cow, and pigs, so we weren’t affected by the war rationing,” recalls Mr. Mundell.
Every morning, his father, William Campbell Mundell, climbed into a 1926 Dodge and commuted 16 kilometres to the Royal Military College in Kingston. A member of the Order of the British Empire, the elder Mundell was born in 1895 in Glasgow, came to Canada as a child, and fought with the Royal Canadian Dragoons in 1914. At the end of the war, he came to farm in Ontario with Robert Mundell’s mother, Lila Teresa Hamilton, who read voraciously, loved to sing, and never finished high school.
She was the last descendant in a line of the brilliant Hamilton family and, in a strange portent of her son’s future preoccupations, inherited a castle. A castle she had to give up, recalls Mr. Mundell, because it would have cost a fortune in back taxes.
When his father retired, the Mundells moved to Maple Ridge, B.C.—a move that would mark Mr. Mundell for the rest of his life. He found “a cult of rugged individuality” in B.C., as well as a sense of being on the furthest fringes of Canadian decision-making, an experience of regionalism he would later translate into celebrated economic theory.
But as the family packed into their new trailer and set out to cross the continent, Mr. Mundell had only one thing on his mind.
“The one thing we were distraught about, my brother Bill and I, was that we would have to give up playing hockey. Outside Vancouver, B.C. wasn’t really hockey country,” he says.
While the family settled into their new home, the post-war turmoil that reined in the international monetary system began to hypnotize the gifted high school senior with a flair for mathematics.
The rebuilding of Europe and Japan had been carried out largely with American materials and equipment and the war-torn countries had amassed major trade deficits with the U.S. By devaluing their currencies from their fixed levels against the U.S. dollar, European countries hoped to make their exports more competitive.
In 1949, Britain devalued the pound sterling by 30 per cent, leading other European countries in further devaluations and drawing Mr. Mundell into the mysteries of international monetary economics.
“I asked my high school teacher what the devaluation meant, and he gave me such a contorted and hopeless explanation that it piqued my curiosity,” he recalls. “The newspapers carried such a jumbled discussion.”
Mr. Mundell enrolled in economics and Slavonic studies at [the] University of British Columbia which, he says, “had many pluses and some defects. It taught older traditions of economics,” he explains.
“Older traditions” meant ideas predating John Maynard Keynes, the Englishman who revolutionized economics by showing that governments could spend their way out of the Great Depression: that every dollar spent by the government had a “multiplier effect” that could create jobs.
“We are all Keynesians now,” declared Richard Nixon in 1971.
Robert Mundell would prove him wrong.
Luckily for Mr. Mundell, U.B.C. hadn’t yet caught up with Keynes when Mr. Mundell arrived in 195.
“I got a pretty good grounding at U.B.C. in economic theory but none at all in Keynesian theory—which was probably an advantage,” he recalls.
His grounding in classical pre-Keynesian economics helped him stay skeptical when he won a scholarship to the University of Washington, where he studied under a student-of-a-student of Keynes. At the Massachusetts Institute of Technology, his graduate career took off.
“I believe the record will show that Bob exhausted our curriculum and pocketed his Ph.D. in record time,” said Paul Samuelson of Mr. Mundell’s time a M.I.T.
After travelling in Europe and studying at the London School of Economics, Mr. Mundell came to the University of Chicago in 1956 as a post-doctoral fellow in political economy.
At Chicago, intellectual giant Milton Friedman was leading his historic assault on Mr. Keynes. Mr. Friedman’s pro-market ideas appealed to Mr. Mundell, but he didn’t agree with Mr. Friedman on the issues that had drawn him into economics in the first place: exchange rates.
Mr. Friedman’s monetarists advocated flexible exchange rates as a free-market alternative to fixed exchange rates. Freeing exchange rates, they argued, would allow each country to control its own money supply—the key tool in the monetarist kit. The central bank could manipulate the money supply to control domestic inflation.
But the skeptical graduate student from B.C. didn’t buy into the Chicago orthodoxy. Canada had devalued the dollar at the same time as the pound in 1949. Realizing they had made a mistake, and not knowing where to re[-]peg, Canada floated the exchange rate in 1950, the first among OECD countries to do so. Mr. Mundell felt his home country had made a grave mistake.
He says he looked at exchange rates from the point of view of Canada, “a small country relative to the United States,” and from the perspective of B.C., “a small province relative to the rest of Canada.”
If Canada could benefit from a flexible exchange rate, as the monetarists argued, wouldn’t B.C. benefit even more?
“It occurred to me that if the case for flexible exchange rates held for the United States and Canada, it should also hold for any of the regions within these two multi-regional countries,” explains Mr. Mundell. “But to have flexible exchange rates between regions of the same country, it would be necessary to have more than one currency.”
“Were there not costs associated with creating additional currencies?” he asked himself. “Why not give every province its own currency? Or every city? Or every person for that matter,” he remembers thinking.
In 1957, he returned to teach at the University of British Columbia, where he began to think seriously about the relationship between regions and countries in the context of monetary systems. He presented a paper at a faculty seminar on exchange rates and regional problems in which he theorized that if the pro-floating argument was right, it would apply to B.C. and the other regions of Canada rather than to Canada itself.
“The Canadian dollar, which uniquely among the currencies of the Group of Ten countries was then floating, had not helped Canada escape the U.S. business cycle; in any case, it was aimed at the stability of the heartland economy of Ontario and lower Quebec, and not at the peripheral regions in the west, the north, and the Maritimes,” he wrote last year in an IMF retrospective on his theories.
He was not proposing an independent currency for B.C. But he was refuting the arguments for flexible exchange rates and creating a ground-breaking theory called “Optimum Currency Area Theory,” which has framed subsequent discussion of European Monetary Union.
In it, he argued that a depreciation of a currency in a multi-regional country can help one region to the detriment of the others. He imagined the U.S. and Canada divided into east and west, with the west producing lumber, and the east, cars. An increase in productivity among car-makers would cause an excess supply of cars, and demand for lumber. The immediate result would be unemployment in the east and inflation in the west. The central bank would be torn between contracting the money supply to relieve inflation in the west, or expanding to help relieve unemployment in the east. A change in the U.S.-Canada north-south exchange rate would affect the regions in opposite directions.
If flexible currencies were to be effective in this case, each region would have to have its own.
“Flexible exchange rates will not help solve British regional unemployment problems in Wales or Scotland, or Italian problems in the Mezzogiorno, or U.S. problems in the Appalachians, or German problems east of the Elbe, or Canadian problems in the Maritimes,” he wrote last March in a series of articles commissioned by the Wall Street Journal.
“The optimum currency area is a region,” were his revelatory words in 1961.
Thirty-seven years later, Europe agreed.
Throughout the 1960s, Mr. Mundell attended conferences all over Europe and in 1969 was asked by the European Community to design possible plans for currency unification.
“The big problem was how to prevent the International Monetary System from cracking up,” he recalls of the 1960s, when he developed his currency theories.
As the Bretton Woods system teetered and tottered, he deduced that it was time to buy a castle.
“I thought the IMS would break down and lead to inflation. So I believed the best investment would be property,” he recalls.
On the advice of a colleague’s wife, a Sienese Countess named Pilu, Mr. Mundell bought the Palazzo Santa Colomba from the Catholic Church in 1969 for the grand sum of $10,000.
There was no electricity, water, or furniture when he came. He since invested more than $100,000 and has come every summer since 1969.
This year he is on paternity leave, spending a year at the palazzo with his longtime girlfriend Valerie Natsios, and their eight-month-old son, Nicholas.
The daughter of American diplomats, Ms. Natsios was born in Athens, and grew up in Vietnam, Paris, Korea, Argentina, and Iran before she settled in New York, where she met Mr. Mundell at a New Year’s Eve party in 1994.
Here background is in fine arts, a passion of Mr. Mundell’s, but she weighs in on economic disputes if they happen to touch on the palazzo.
“I was so angry when Krugman’s book came out,” she says of Peddling Prosperity. “He’s never been here. Everyone who comes knows it’s an ‘I believe in magic’ place.”
The magic is never more visible than during the annual Fourth of July birthday party for Bismarck and Attila, Mr. Mundell’s twin German shepherds.
Some 30 guests arrive on a warm Italian evening to feast on pork roasted in an oven within the palazzo wall, and to drink copious amounts of local Chianti. A lantern-lit table is set in the palazzo’s inner courtyard. Candles descend along the curving steps.
A friendly thoroughbred named Joker, and an Arabian quarter-horse named Princess Kima mingle with the crowd.
English and Italian conversations range from economics to painting to the World Cup, and back again. “To be a great economist, one must be a great painter,” says one guest. “And Bob is both.”
Mr. Mundell has painted since the 1960s, leaning toward an abstract style.
He is as interested in the arts and humanities, as in the complex mathematical structures on which economics in built. He worries that some economists have lost sight of history and society in their analyses.
“Up until the ’30s, economics was on the same level as political science. Then it became a mathematical science with big benefits and big costs,” says Mr. Mundell. “The biggest cost was that it drove from economics people who had big instincts about the real world but were not prepared to see it in mathematical terms.”
In 1994, thieves made away with his valuable collection of Renaissance paintings, and took a number of his own canvasses while they were at it. “I was flattered,” he grins over his wine.
Though he splits most of his time between New York and Europe, Mr. Mundell has remained a Canadian citizen.
“I have never been ambitious about becoming part of the U.S. government,” he explains.
He didn’t need to. Never an official advisor to Mr. Reagan, Mr. Mundell imposed his tax-cut agenda on the administration nonetheless.
“Supply-side economics started in Canada. When I went back in 1971, I was invited to Ottawa to give a speech. I brought up the idea of the inflation tax bracket creep. Canada indexed its tax rates in 1973—eight years before the U.S. When I came to the U.S. I had already had influence of supply-side economics in Canada.”
Supply-side economics is the idea that substantial cuts in corporate and income taxes would pay for themselves by stimulating extra economic activity that could be taxed. Tax cuts had always been thought to cause budget deficits. No one considered that taxes might be discouraging production.
“That’s what was new about supply-side economics,” says Mr. Mundell. “(Before,) taxes were considered free goods. The government could put rates wherever and it would not make a difference.
“I was pushing and modeling the orthodox ideas,” says Mr. Mundell. “I developed models of the adjustment process that weren’t all that different from what great economists of the past—Hume, Smith, Ricardo, Marshall—had been thinking.”
“Other people had imperfect models of bizarre ideas.”
Supply-side economics began while the world economy was plagued by inflation and stagnation—twin evils that were not supposed to go together. Inflation was traditionally seen as the price to be paid for full employment.
“As stagflation of the 1970s had upset the political universe, so it had overturned intellectual orthodoxy,” wrote Robert
Bartley in The Seven Fat Years.
“I came to Columbia in the spring of 1974,” says Mr. Mundell. “In May or June we had a conference at the American Enterprise Institute organized by (American economist) Arthur Laffer. At that point, I met (journalist) Jude Wanniski.”
Mr. Laffer and Mr. Wanniski would popularize Mr. Mundell’s ideas.
“The three of us started the meetings that led to the movement to revolutionize the economic system in the United States,” says Mr. Mundell. “We met at a restaurant called Michael 1.”
“Michael 1 is a restaurant for Wall Street wannabees,” wrote Mr. Bartley.
“Nestled on Trinity Place 30 steps south of the American Stock Exchange, it draws the financial world’s young and maybe rising. You can settle into the tufted leather armchairs, lean back with a drink or pitch forward into a porterhouse, look out over brown wood panels, brown Mexican tile on pedestals bathed in indirect lighting, and virtually see the deals of future years.”
Here, Messrs. Mundell, Laffer, and Bartley decided—as Bartley later declared in the editorial pages of the Journal—that Mr. Keynes was dead.
“I provided the ideas for supply-side economics, but Laffer, (former U.S. vice-presidential candidate Jack) Kemp, Wanniski got them around,” says Mr. Mundell. “Kemp forced them into the public area with the Kemp-Roth bill.”
Some say that it was here that Art Laffer first drew his infamous squiggle on the what is possibly the world’s most notorious cocktail napkin.
The “Laffer curve” [i]s a line showing a hypothetical relationship between tax rates and tax revenue. It is the shape of an arch, like the ones that lead from Mr. Mundell’s loggia to the inner courtyard of the palazzo. Up to the peak, raising tax rates raises revenue, but after a certain point, tax rates become so high that they choke off production. At that point, a cut in tax rates will actually boost revenue. This is the point that the men at Michael 1 thought the U.S. economy had reached.
They convinced Ronald Reagan to cut taxes in 1981 and again in 1986.
Mr. Mundell recalls drawing that curve many times before Mr. Laffer made it a household word. But the fact that his name isn’t attached to it doesn’t bother Mr. Mundell.
“I’m glad they called it the Laffer curve,” he says. “I’ve got lots of curves of my own.”
Indeed, a perusal of any international economics textbook proves that he does. The most famous of them is the Mundell-Fleming model: a description of the effects of fiscal and monetary policy under floating versus fixed exchange rates.
“The Mundell-Fleming paradigm confers the only kind of immortality a scholar could want or have,” said Paul Samuelson.
Despite his academic achievements, Mr. Mundell has been painted as an outsider by his critics, especially Keynesian economists who considered the Reagan tax cuts a contributor to American debt.
He has been considered eccentric, even nutty. For many years, he wore his hair long and spoke in a low mumble. He began to hold his own conferences at the palazzo. Some economists wondered if he had fallen off the face of the earth.
When he set off to teach at the University of Waterloo in 1971, American colleagues declared he had gone “off into obscurity.”
“There’s a sense in which anyone who is outside the New England liberal establishment is an outsider,” counters Mundell.
“So I had long hair,” he shrugs. “So what?”
History, he says, has proven him correct.
“Supply-side ideas have prevailed,” he says. “Top rates were rolled back, but then put back to 38 per cent under Bush and Clinton. So it has been two steps forward and one step back.”
The healthy U.S. economy has Ronald Reagan to thank, he says.
The Clinton expansion is still riding on the tax cuts of the 1980s. Clinton will take credit for it, but there’s nothing he’s done to make it happen. There’s been almost no economic policy. He’s been following the right policy—steady as she goes.”
If growth subsides, he expects renewed pressure for tax cuts.
At a conference last year in Claremont, California, Mr. Mundell was looking for a bit of vindication from his colleagues.
In Mr. Mundell’s mind, even the rise of left-of-centre leaders around the world is an affirmation of conservative economics.
“What’s needed now are policies that are right of centre, and the only people who can implement right-of-centre policies are left-of-centre politicians,” he reasons. “From (Italian Prime Minister Romano) Prodi to Clinton to Chrétien to (French Prime Minister Lionel) Jospin, despite the rhetoric, you’re getting right-of-centre policies. The same way it took Nixon to open up to China.”
He is also confident that all the Euro-skeptics among his colleagues will be proven wrong.
“There is a great hatred and a fear of Europe in the U.S.,” he says. “(American economists) have written all these long articles about how it is going to collapse, cause a civil war, and problems for the U.S.”
In another conference poll, participants were asked to assign a probability that the European Monetary Union would commence as scheduled on Jan. 1, 1999.
“One year ago, hardly half believed that it would go ahead,” he recalls. The average prediction among the group of elite economists was only 53.5 per cent. The biggest skeptics were Rose and Milton Friedman, predicting 15 and 19 per cent, respectively. Mundell, the most optimistic, gave the EMU an 80 per cent probability of happening.
A year later, the founding countries committed themselves formally to carrying out the plan on schedule.
Siena is perhaps an odd perch for one of the world’s foremost advocates of a united Europe.
A hilltop medieval town of only about 60,000 people, Siena is a miniature concentration of the identity and pride that has torn Europe apart for centuries.
The Sienese consider themselves citizens of their neighbourhood, or contrada, first, citizens of their city, second. If a pregnant woman could not give birth in her contrada, her husband traditionally brought the earth from his neighbourhood and placed it under her during labour, so the baby would belong to his neighbourhood.
Every year, the contradas hold an ancient, ritual horse race around their town square, the campo. Called the palio, the Sienese take this race as seriously as countries take their wars.
On this particular summer afternoon, the palio has just ended. But Mundell missed it. He was away at a conference in Dubrovnik, a port town on the southernmost tip of the sliver of Croatia that runs along the edge of the Adriatic, cutting Bosnia-Hercegovina from the sea.
Last year, he founded the Zagreb Journal of Economics. Now he’s speaking at conferences, preaching to economists from emerging economies about the dangers of  high taxes and “prima donna central bankers.”
In recent years, Yugoslavia has symbolized the great hope behind a united Europe, and the impotence of a divided Europe when it came to stopping the Yugoslav conflict. The ancient divisions show how much Mr. Mundell and his fellow Euro-enthusiasts have to counter if they are to defy history and unite Europe.
But hubris is Mr. Mundell’s strong point. Not only will Europe unite, he says, but it will eventually embrace his supply-side ideas. They will have no choice but to cut taxes, he says.
He believes in supply-side-economics with the fervor of an early Christian, brushing of critics who deride the disciples of supply-side economics as “a tiny sect.”
“Maybe it is just a tiny sect,” he says of the movement. “But how many Christians were there before Jesus Christ? How many Jews were there before Moses? How many people believed in electricity before Edison?
“If one person believes he is right, everyone else in the world may be wrong,” says Mr. Mundell. “The issue in economics is, does it work?”
1 Mundell won the Nobel himself in 1999.]