Dear Monetary Policy Observer,
Below is an excerpt from the latest Forbes column by APIA's Senior Financial Advisor, Ralph Benko. While it covers several facets of the currency reform movement (from Kevin Brady's Sound Dollar Act to Romney's senior economic advisor Glenn Hubbard) the main point of the article is to tie the issue of good (stable) currency into the debate over class conflict and income stagnation that has roiled the 2012 race. We hope you find this material of interest.
American Principles In Action
2012: Good Money And Jobs vs. Easy Money And Stagnation
The 2012 presidential election is shaping up to include an argument over opportunity versus equality. The American economy has been stagnant for a decade. Income for working men has been stagnant (or even contracting) for 40 years. Why?
40 years ago is when America started abdicating its classical high-growth monetary policy, the gold standard. We abandoned good money to chase after a chimerical improvement of easy money — ostensibly to promote job growth. But as 40 years of wage stagnation has shown, easy money has failed.
Now the GOP, which was complicit in the abdication of a good money policy, is beginning to change its tune. Both in Congress and in the presidential race monetary policy is shaping up as a potentially important political battleground. Since a good monetary policy is a crucial element of growth, thus job creation, a fight over good money could decide elections.
With the fizzling out of Occupy Wall Street there has been a dying down of the rhetoric about income inequality. Class warfare doesn’t resonate strongly in America. As Pew’s Andrew Kohut wrote last January in the New York Times,
“…while Americans are hearing more and more about class conflict, there is little indication that they are increasingly divided along these lines. People don’t necessarily want to take money from the wealthy; they just want a better chance to get rich themselves. They care about policies that give everyone a fair shot — a distinction that candidates in both parties should understand as they head into the 2012 campaigns.
“While a December Gallup poll found few respondents wanting the government to attempt to reduce the income gap between rich and poor, 70 percent said it was important for the government to increase opportunities for people to get ahead. What the public wants is not a war on the rich but more policies that promote opportunity.”
Voters are eager for “policies that promote opportunity.” America is very much dedicated both to equality and to the pursuit of happiness. Toqueville observed in Democracy In America Volume I, Part 1, chapter 3:
“There is in fact a manly and legitimate passion for equality that incites men to want to be strong and esteemed. This passion tends to elevate the small to the rank of the great. But in the human heart a depraved taste for equality is also found that leads the weak to want to bring the strong down to their level and that reduces men to preferring equality in servitude to inequality in liberty. Not that peoples whose social state is democratic naturally scorn liberty; on the contrary, they have an instinctive taste for it. But liberty is not the principal and constant object of their desire; what they love with undying love is equality; they rush toward liberty by rapid impulses and sudden efforts, and if they miss the goal, they resign themselves; but without equality nothing can satisfy them, and rather than lose it, they would agree to perish.”
There are more sinister social elements. A war brews on the Left on how best to use civic restlessness stemming from stagnation to promote, and direct, civil unrest and direct it against the “rich.” This is unlikely to resonate, because the real issue is one of equity, not equality. Are the rewards proportionate to merit, effort, and just plain luck? Or is the deck stacked against working people?
There are grounds to suspect a stacked deck, and that the subterfuge lies in the subversion of our money itself. Easy money is a sure recipe for stagnation. Good money is based on good rules. (There is a strong argument to be made that defining the dollar as a fixed weight of gold is the best and most time-tested rule.) So if the left tries to “bring the strong down” … the right can make the fight about opportunity by promoting good money, preferably gold money.