Gold advocates and sympathizers from the deep past include Copernicus and Newton, George Washington, Alexander Hamilton, Thomas Jefferson, John Witherspoon, John Marshall and Tom Paine, among many other American founders; and, from the less distant past, such important thinkers as Carl Menger, Ludwig von Mises and Jacques Rueff, as well as revered political leaders such as Ronald Reagan and Jack Kemp.
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The American, and world, economy continues to teeter. Monetary reform is receiving some freshly respectful looks both here and abroad. Chatham House, the Royal Institute of International Affairs, in London has convened a task force to “re-assess the advantages and weaknesses of the current fiat currency monetary system and explore the possibility of a new role for gold.” The Street’s Alix Steel observed last month, in “4 Ways a Gold Standard Can Work,” that “A gold standard isn’t for the gold bugs and crackpots. It’s a viable money system that could save countries with runaway spending.”
Prof. Roubini, the gold standard no longer can be viewed by the capable as a refuge for lunatics and hacks. Thoughtful policy analysts will do well to consider monetary reform options, very much including the gold standard, on the merits, rather than reflexively, and sooner rather than later.
But the bigger theme is the need for the U.S. and the world to return to the free-market, free-trade, entrepreneurial, supply-side, tax-incentive model of growth with stable money. That model worked during the Coolidge-Mellon 1920s, the JFK 1960s, the Reagan 1980s, and the Clinton 1990s.
If nothing else, a new Republican Congress must message clearly that the U.S. will stop the recent leftward economic lurch. It’s not hard to pinpoint what’s gone wrong, propose positive solutions, and argue that the economic ship can be righted fast.
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So let me optimistically argue that the slow-growth economy can be rescued and the fiscal and monetary mistakes can be reversed. Lower tax rates, less spending, deregulation, and a sound dollar will do it. The GOP can make this case — and right away.
And if the Sandinista Democrats would read a little history, they’d see I’m arguing for the JFK model of growth — which was the forebear of Ronald Reagan’s supply-side revolution.
It can be done.
Also, Larry Kudlow interviewed Jeff Bell this morning on his national radio show. Listen to the interview here:
Hillary Clinton has zero ability credibly to run to the left of Elizabeth Warren. Witness: she tried to backpedal her claim that businesses don’t create jobs. As noted in Newser, she stated
“I short-handed this point the other day, so let me be absolutely clear about what I’ve been saying for a couple of decades.” She adds that a strong economy is based on businesses and corporations creating ‘good-paying jobs,’ not on corporations getting tax breaks while outsourcing jobs and “stash[ing] their profits overseas.”
This is a very lame “clarification.” She thereby managed to antagonize both her party’s activist base and its moderate wing.
The ripple effect of the president’s tax hikes is swamping take-home pay.
The high corporate tax rate is also holding the economy back. Twenty years ago the U.S. rate was about at the international average, but now we are about 15 percentage points above the rate of most of our competitors and nearly three times higher than countries like Ireland. The American Enterprise Institute has found that “a 1% increase in corporate tax rates is associated with nearly a 1% drop in wage rates” because when corporations invest less here at home, worker productivity suffers.
Mr. Obama’s investment tax hike was designed to soak the rich. But it is the middle class who have taken a bath. Republicans should be telling American wage-earners that the best way to increase their take-home pay is to repeal Mr. Obama’s tax hikes and chop the corporate tax rate to the international average, so more and better jobs are created on these shores, not abroad.
Hillary Clinton is getting deservedly attacked for her imbecilic statement at a Democratic political gathering in Massachusetts on Friday about business and jobs.
“Don’t let anybody tell you that, ah, you know, it’s corporations and businesses that create jobs,” she preached, to loud applause. “You know that old theory, trickle-down economics. That has been tried, that has failed. It has failed rather spectacularly.”
It may not be too surprising that Hillary can’t connect the dots that it takes an employer to create an employee to create wages and salaries.
That’s how some 150 million Americans get paid every week. Ms. Clinton has made her millions in the cattle futures market, as a government employee and giving speeches for fees of $250,000 a pop. Nice work if you can get it. The rest of us mere mortals need a paycheck.
The Democrats most emphatically are presenting a shrill “income inequality” campaign theme. As Democratic rock-star progressive Senator Elizabeth Warren (D-Mass) put it, in campaigning for the re-election of her progressive Democratic colleague Al Franken (D-Mn) “The game is rigged, and the Republicans rigged it.” Not to be outdone, Hillary Clinton recently declaimed “Don’t let anybody tell you it’s corporations and businesses create jobs….” Forgive my incredulity, which seems shared by a lot of us voters.
The proposed Democratic remedy? Mandatory minimum wages and “gender equality.”
Newspeak for government, rather than the market, determining wages.
The left elegantly is engaging in an attempt at reframing of the ambient degradation of economic (and social) mobility. There is plenty of blame to go around for economic sogginess. That said, the degradation mostly is an outcome of favored Democratic policies.
So-called “income inequality” is a tale to be pinned on the Donkey, not Pachyderm. Historical analysis strongly suggests that this, in its current degenerate form, came out of the lamp rubbed by Lyndon Johnson’s closing of the London gold pool and the Nixon Shock’s application of progressive-advocated policies such as wage-price controls and a tariff. These proved, of course, briefly popular and soon truly catastrophic.
The closed gold window is the sole lingering aftershock of the Nixon Shock. Whether or not money supply is calculable money demand inherently is not. Thus technocratic management of monetary policy by the Federal Reserve has proven debilitating to the economy. “Income inequality” correlates with the repudiation (by both Johnson and Nixon) of Bretton Woods and its replacement by technocratic discretionary Fed monetary policy.
Harding appointed Mellon as Treasury secretary, and Mellon adroitly rescheduled the debt; Harding and Mellon also passed a round of tax cuts. Harding was not a “naysayer” by temperament. He disliked using the veto on his old Senate colleagues. He appointed friends, rather than professionals, to key posts. Their corruption tainted his reforms and aborted them.
Few reckoned that Coolidge could continue or complete what Harding had started. Voters figured Coolidge was a lame duck, “the accident of an accident.” The real Republican candidate would emerge in 1924. Coolidge’s colleagues in Washington didn’t expect much either: “Coolidge had little about him that was regal,” recalled George Wharton Pepper, a senator of Pennsylvania.
Still, Coolidge pushed forward where Harding had hesitated. He and Mellon sought and received several more rounds of tax cuts, bringing the top marginal income tax rate down to 25 percent, a level even lower than Reagan’s. In his years observing railroads, Mellon had noted that when you cut the toll for a rail line, you might get more business. An owner charged, as Mellon put it, “what the traffic will bear.”
Mellon thought the same principle might apply to tax rates. Perhaps lower rates would permit more business activity and therefore bring higher revenues. Today we call this philosophy “supply-side economics.”