From The WSJ, Art Laffer and Stephen Moore argue states without income taxes are economically healthier.
At Forbes, Steve Forbes urges Mitt Romney to defend free markets vigorously. In The WSJ, Mark Spitznagel explains how the Fed enriches the top 1%. On The Kudlow Report, David Malpass analyzes the slow recovery:
At Forbes, Peter Ferrara analyzes progressive economic fallacies. In The WSJ, Stephen Moore reports a Florida Tea Party dust up. From The Manhattan Institute, Diana Furchtgott-Roth explains that raising investment taxes will result in less investment and push capital overseas. At NRO, Larry Kudlow highlights the slow 2.5% growth rate. The NY Sunapplauds the Shadow Open Market Committee. At The Mises Institute, Frank Shostak doubts that Ben Bernanke saved the economy from another depression. From The Peterson Institute, C. Fred Bergsten argues for a lower dollar, tax increases (though not on businesses or incomes), and trade barriers on China unless it raises the yuan. Around 1:06, he suggests President Nixon’s 1971 import surcharge to “rebalance” world exchange rates was a success:
The Examinerreports US Rep. Eric Cantor (VA) citing supply-side economics in support of his small business tax cut bill. At The American, Steve Hayward doubts the instability of the oil-to-gold ratio.
From Forbes, Brian Domitrovic highlights Donald Devine’s spending cuts during the Reagan era.
At The WSJ, Holman Jenkins diagnoses inequality obsession. In The WSJ, Stephen Moore notes the Senate vote on the Republican small business tax bill. On The Kudlow Report, Sen. Kay Bailey-Hutchison (TX) debates the plan:
The WSJexplains that yuan convertibility will require substantial financial liberalization in China.
From the Peterson Institute for International Economics, Nicholas Lardy argues that with its current account surplus down and its currency higher, there’s no cause to press China to raise the yuan further. And on the downside, The Washington Postreports PIIE chief Fred Bergsten making common cause with Occupy Wall Street. On TGSN, Ralph Benko highlights a pro-gold article by Princeton scholar and one-time Ben Bernanke collaborator Harold James. At The American, James Pethokoukis critiques arguments that the US should return to 1950s tax rates. From First Trust, Brian Wesbury suggests big government doesn’t make one any more secure from life’s risks. In The WSJ, US Trade Rep. Ron Kirk notes rising export of US services.
From The NY Sun, Lewis Lehrman encourages Mitt Romney and Rick Santorum to join the sound dollar alliance.
The Washington Postreports the role of leading supply-siders in the Gingrich campaign. The NY Sunnotes Mitt Romney’s resistance to gold in monetary policy. In Forbes, Ken Repoza quotes Paul Hoffmeister on Ron Paul and monetary policy. On The Kudlow Report, Stephen Moore discusses rising government benefits:
In The Washington Times, James Bacon analyzes Fed policy and finds himself in agreement with Ron Paul. From The Cayman Financial Review, former El Salvadoran Minister of Finance Manuel Hinds argues for a return to gold. On TGSN, Ralph Benko reports the FDR cabinet debate over devaluing the dollar. At Asia Times, David Goldman notes Egypt is down to $10 billion in reserves. From TGSN, Benko countersThe Washington Post’s Ezra Klein on gold-linked money. On Kudlow, James Pethokoukis discusses the economy’s weak recovery:
On International Liberty, Dan Mitchell responds to the State of the Union’s tax analysis. In National Journal, Grover Norquist predicts a crisis if President Obama is re-elected and doesn’t extend the Bush tax cuts. MarketWatch notes weak dollar advocate C. Fred Bergsten of the Peterson Institute for International Economics will step down as director at year’s end. At The American, James Pethokoukis explains that US economic growth is way off. On CNBC, Bruce Bartlett advocates revenue-neutral tax reform with a focus on corporate tax reform:
At The WSJ, Niall Ferguson argues the euro has been flawed since its inception. The WSJnotes the Fed’s recommitment to loose money. From First Trust, Brian Wesbury suggests monetary policy remains too loose. In The WSJ, George Melloan analyzes the recent Japanese trade deficit. At Business Insider, Dean Baker argues supply-side economics doesn’t work. From Op-ed News, journalist Robert Parry critiques supply-side economics.
From Forbes, Chris Barth reports David Malpass argues the dollar should rise due to tighter money, not the falling euro.
In Bloomberg, Amity Shlaes challenges Paul Krugman on fiscal austerity.
A reader comments: Amity Schlaes pens an austerity-can-lead-to-growth op-ed, dismissing Paul Krugman's call for more Keynesian spending, but commits a startling error:
...There is evidence that austerity did lead to growth in the past, and that it did not cause fascism. These examples may be less known, but they suggest that austerity can bring recovery faster than spending can.
A strong example in U.S. history is the recession of the early 1920s. Responding to a downturn, the federal government didn't spend; it cut itself in half. Recovery followed so rapidly few people even remember that recession.
Brian Domitrovic has written how there was virtual consensus between Presidents Wilson's and Harding's money men on reducing top marginal rates before the election, so how could Shlaes forget Mellon’s tax cutting agenda that kicked off the Roaring Twenties? The Revenue Act of 1921 brought the top marginal tax rate down to 58% in 1922 from 73%, and with subsequent reductions, Mellon was able to get that top tax rate down to 25% by 1925. The austerity of the 1920s did not take place without efforts to foster economic growth. In this, Shlaes was sloppy.
On NRO, Larry Kudlow reports Senate Minority Leader Mitch McConnell (KY) pushing for the Keystone Pipeline in exchange for the payroll tax cut.
On The Kudlow Report, Steve Forbes discussesNational Review’s editorial opposing Newt Gingrich:
From Forbes, Louis Woodhill argues pro-growth policies explain Gingrich’s rise.
At The American, James Pethokoukis suggests Gingrich’s Iowa lead is softening.
In The American Spectator, Ben Stein predicts President Gingrich and Vice President Huntsman.
At The WSJ, Dan Henninger portrays Gingrich as Mitt Romney’s sparring partner, toughening the former governor up to debate President Obama.
On NRO, Elise Jordan sees Jon Huntsman failing to capitalize on recent opportunities.
At Forbes, Jerry Bowyer highlights the role of interest rates to functional economic and financial systems.
From First Trust, Brian Wesbury predicts unemployment will be down to 8% by Election Day.
On The WSJ, Steve Cortes argues the Chinese economic model won’t work in the long run:
In The WSJ, conservative Keynesian Martin Feldstein pans the Eurozone economic deal.
On C-SPAN, PIIE’s C. Fred Bergsten – Keynesian and key intellectual driver of the 1970s dollar devaluation and subsequent Great Inflation – argues more American jobs will come from rebalancing world trade by lowering the dollar’s exchange rate to a competitive level (around minute 13).
From Forbes, Bret Swanson surveys the compelling opinions of University of Chicago economist John Cochrane.
AT TGSN, Ralph Benko recounts the dollar standard’s three political disorders (here, here and here).
On The Kudlow Report, Art Laffer discusses the producer price index’s surge:
At RCM, John Tamny advises Japan to avoid bad economics as it strives to recover.
In The Journal, James Grant reviews Douglas Irwin’s book on Smoot-Hawley.
From Bloomberg, Caroline Baum notes Bastiat’s counter to Keynesian ideas about government projects creating prosperity.
From Mises.org, David Stockman unleashes on the 2008 bailout and the dollar standard:
Viewed more broadly, the carnage on Wall Street in September 2008 was the inevitable crash of a 40-year financial bubble spawned by the Fed after Nixon closed the gold window in August 1971. As time passed, the Fed's market-rigging and money-printing actions had become increasingly destructive — leaving the banking system ever more unstable and populated with a growing bevy of Too Big to Fail institutions.
The 1984 rescue of Continental Illinois; the 1994 Mexican peso crisis bailouts; the Fed's 1998 life-support operation for LTCM — were all just steps along the way to the fall of 2008.
Then, faced with the collapse of their own handiwork, Washington panicked and joined the Fed in unleashing an indiscriminate bailout capitalism that has now thoroughly corrupted the halls of government, even as it has become a debilitating blight on the free market.
In The WSJ, Newt Gingrich and Peter Ferrara advocate making the Bush tax rates permanent.
At The Journal, Stephen Moore reports congressional conservatives are unsatisfied with the pace of spending cuts.
On the Peter Peterson funded Fiscal Times, James C. Cooper cites weak dollar advocate Fred Bergsten (of the Peterson Institute for International Economics) calling for dollar depreciation to boost exports. The irony is, the biggest barrier to US exports is the dollar standard Bergsten helped create in the 1970s.
At Mises.org, Frank Shostak argues economic growth doesn’t cause inflation.
In a bellwether WSJ column, Karl Rove argues Republicans can’t succeed without a pro-growth/supply-side message.
At Forbes, Louis Woodhill suggests the Fed’s combination of quantitative easing plus paying interest on reserves is causing commodity inflation even while housing, labor and car prices are falling.
On The Kudlow Report, David Goldman debates the dollar and inflation:
At Politico, Steve Forbes compares current policies on energy and the environment to the Carter era.
In Business Week, David Malpass argues spending cuts will attract foreign capital and thereby increase employment.
On Forbes, Jerry Bowyer notes that without devaluation the U.S. might be near default.
Bloomberg’s Caroline Baum suggests Keynesian economics is stuck in the Dark Ages.
Also on Bloomberg, David Malpass analyzes the Fed’s impact on the world economy.
In The WSJ, Keynesian (and gold standard critic) Barry Eichengreen echoes weak dollar guru Fred Bergsten in predicting the end of the dollar’s reign in favor of a three currency world.
From the archive, Brian Domitrovic comments on Eichengreen’s Golden Fetters.
On The Freeman, Howard Baetjer Jr. rebuts claims that inflation has non-monetary roots.
Notes: First, we are travelling this week, so updates will be less frequent than usual. Sorry for the inconvenience.
Second, apologies to Art Laffer for our negative reaction to his line, reported by The NYT, in HBO’s recent "Reagan" documentary. Now that we’ve seen his remark in context we realize The Times’ Alessandra Stanley misunderstood his words. Laffer clearly was mocking the false narrative concerning “trickle-down economics,” not describing it himself. --------------------------------
At NRO, Shannen Coffin critiques HBO’s “Reagan.” My own two cents: the documentary’s main purpose is to discredit supply-side economics by casting it in overwhelmingly negative terms.
On Forbes, Brian Domitrovic makes the essential point that Reagan, not Paul Volcker, conquered inflation in the early 1980s.
On The Kudlow Report, Larry interviews U.S. Rep. Ron Paul (TX) about the dollar and the Federal Reserve:
On RCM, John Tamny notes that currency devaluation doesn’t fundamentally alter the terms of trade. At Forbes, Charles Kadlec links Egypt’s revolt to the dollar’s falling value.
Weak dollar lobbyist Fred Bergsten of the Peterson Institute for International Economics happily reports China is in the midst of a substantial yuan revaluation.
On The Kudlow Report, Stephen Moore discusses the Obama Administration’s proposal to raise unemployment taxes:
Also at Forbes, Jerry Bowyer sees commodity wealth as a curse for most nations.
The NYTreports that in austerity-riven, stagflationary Britain, the central bank chief is the fall guy. (Surprise!)
Cato’s Dan Mitchell responds to the President’s recent statement that he hasn’t raised taxes.
An important factoid: The President’s fiscal commission based its recent deficit report (p. 10) – and its alarming diagnosis of “fiscal cancer” – on CBO's budget analysis (p. 28), which, according to Louis Woodhill, assumes annual GDP growth of 2.16% for the next 75 years.
Yet, as Woodhill notes, average growth over the past 75 years was 3.73% per annum. If the U.S. grew at that rate going forward, CBO's more pessimistic budget scenario balances in 2052 with no spending cuts or tax increases.
This isn't to say we shouldn’t cut government waste and bloat. We should.
But, in the middle of painfully high unemployment, shouldn’t conservatives be ringing alarm bells mainly over slow long-run growth? Restoring rapid growth through the proven formula (sound money + lower tax rates) would help the jobless and improve the budget – a win/win – and would move the right beyond the zero-sum austerity debate.
Update: This item has been reworked for clarity. ----------------
At RCM, Joseph Calhoun argues the malaise is rooted in bad economic policy.
In The WSJ, likely presidential candidate U.S. Rep. Mike Pence (IN) proposes to repeal the Fed’s full employment mandate.
On Bloomberg TV, Keynesian C. Fred Bergsten of the Peterson Institute for International Economics, calls China a currency manipulator for keeping the yuan stable, and advocates the U.S. buy Chinese currency.
At Café Hayek, Don Boudreaux explains that Chinese trade doesn’t diminish good jobs in the U.S.
On The Kudlow Report, Larry discusses rising oil and other commodities:
The WSJ’s David Wessell reports on a new paper suggesting low Fed interest rates caused the housing bubble.
On Asia Times, David Goldman suggests we have symptoms of deflation and inflation because:
When the Fed prints money, investors flee to other currencies, and foreign central banks intervene and buy dollars which they invest in Treasuries. It has precisely the same effect as the Fed’s own buying of bonds — yields fall. This increases the risk of future inflation so the market buys hedges against it (and you should, too).
The WSJ editorial board warns Democrats and Republicans against scapegoating China.
On CNBC, Paul Krugman calls China “the bad guy” in the currency war, and advocates for trillions in additional quantitative easing:
Reuters reports increased unemployment and inflation.
At Conscience of a Liberal, Krugman makes a convincing argument that the scariest part of debt-to-GDP analysis is the weak GDP:
At Forbes, Rich Karlgaard applauds Greg Mankiw’s recent tax analysis.
On The Kudlow Report, Stephen Moore analyzes the President’s NYT contrition:
Seeker Blog discusses Douglas Irwin’s recent paper, “Did France Cause the Great Depression?”
From 1997, Jude Wanniski argues the Great Depression was solely a fiscal crisis.
From June, John Tamny suggests there was a deflationary component in the 1920s.
At Bloomberg, AEI’s Kevin Hassett challenges C. Fred Bergsten’s case for revaluing the yuan.
NRO’s editorial board explains the flaws in forcing China to revalue.
On CNBC, Song Seng Wun discusses China’s pledge to buy Greek debt and help stabilize the euro:
In The WSJ, Donald Luskin notes the twin threats of a currency-induced trade war and rising tax rates.
On his blog, China basher Paul Krugman claims mutual currency devaluation accomplishes little.
At Café Hayek, Don Boudreaux notes that if China’s currency is undervalued, it amounts to subsidy to American consumers.
On Daily Markets, Mark Perry suggests worker productivity, not the yuan’s price, is why manufacturing jobs declined. (H/T: Café Hayek)
The NYTreports corporations are borrowing cheap but refraining from spending until the economy improves: At The Sacramento Bee, Robert Higgs of the Independent Institute posits the recession isn’t rooted in declining demand.
Sure, consumer spending accounts for approximately 70 percent of America's gross domestic product, and increases in consumer spending would provide the economy with an immediate boost. But a drop in consumer spending is not what ails the economy. In fact, as a percentage of GDP, consumer spending actually increased during the downturn, the Commerce Department's Bureau of Economic Analysis reports - from approximately 69.2 percent of GDP in the fourth quarter (October-December) of 2007 to approximately 71 percent of GDP in the April-June quarter of 2009.
So the conventional wisdom - that a sharp decline in consumer spending caused the economy's downturn - is wrong.
What did cause the downturn? The answer is: a sharp decline in private investment.
At Forbes, John Tamny argues saving – deferred consumption – is the root of economic progress. On CNBC, Dan Mitchell debates tax rates.
Also in The Journal, Jeffrey Collins reviews a new Adam Smith biography.
Smith constructed his masterpiece on a few ingenious insights into the workings of a commercial economy. Where his contemporaries calculated national wealth in terms of gold or agricultural output, Smith measured "opulence" by the flow of consumable goods. The division of labor would accelerate the production of goods, he argued, and render manufacture ever more efficient. The division of labor itself was best determined by markets of self-interested individuals. Markets, in turn, operated best when freed of regulation and interference, thus allowing the value and price of both commodities and labor to align themselves.
