Wednesday update: The WSJ on Canada's conservatives; Rasmussen on Ryan's budget; Goldman on the marker sell off.

The WSJ applauds the conservative victory in Canada.

Enter the Harper government in 2006. It made tax cuts, a strong national defense and rationalizing government its priorities. And it made good on those promises. On January 1, 2008 Canada's general sales tax fell to 5% from 7%. Mr. Harper has also cut the federal corporate tax rate, which is now 16.5% and is scheduled to fall to 15% in 2012. (Add in provincial corporate rates of about 10%.) The U.S. federal rate alone is 35%.

Canada avoided America's housing mania and meltdown, but as our biggest trading partner it shared some of our economic pain. Conservative policy—low taxes and a willingness to allow the exploitation of rich oil and mineral deposits—has been a life saver for a small economy heavily integrated with the U.S. Its GDP grew by 3.3% last year, compared to America's 2.9%, and it now takes $1.05 to buy a Canadian dollar.

Republican-leaning Rasmussen reports growing public opposition to the Ryan budget plan.

At NRO, Henry Olsen notes Republicans may be losing blue collar voters in Wisconsin.

On The Kudlow Report, David Goldman discusses the market sell off:




At NRO, Ramesh Ponnuru reports Gov. Mitch Daniels (IN) refusal to accept that tax cuts are a solution to the deficit.

From The Washington Times, Richard Rahn says tax hikes will slow growth and worsen the deficit.
On Forbes, Bill Frezza predicts rising inflation will lead to a return to the gold standard.

At Kudlow, Stephen Moore debates the debt ceiling:




At RCM, Brian Wesbury suggests the Bernanke Fed has caused commodity inflation but is still mostly impervious to political oversight.

On COAL, Paul Krugman argues the dollar’s decline is not a problem:



On Human Events, Newt Gingrich advocates that Washington focus on jobs and prosperity.

Cato’s Dan Mitchell features a video opposing tax increases:


From The Daily Caller, Ike Brannon argues the Ryan plan’s most significant benefit is its tax reforms.

The WSJ reports Mexico has bought 100 tons of gold.

From the Center for Financial Privacy and Human Rights, J. Bradley Jansen mentions Robert Mundell in discussing a transition to sound money.

Weekend update: Lewis on the stability of gold-backed currency; Domitrovic on the fiat dollar; Tamny discusses the dollar.

From Forbes, Nathan Lewis clarifies that the gold standard’s purpose is to create a currency that is stable in value.

On IBD, Brian Domitrovic argues the fiat dollar has allowed the U.S. fiscal and current account deficits.

The WSJ notes the failure of the President’s Keynesian policies.

IBD contrasts the Reagan recovery with the current one.

On The Kudlow Report, John Tamny discusses the dollar’s fall:




At Forbes, Tamny reports on one wealthy American who is “shrugging.”

From The Washington Post, George Will confirms that tax rates impact business decisions.

In The NYT, Roger Lowenstein defends the current monetary system.

The Times of India reports nations moving into dollar alternatives.

At Forbes, Bill Flax criticizes Ben Bernanke for continuing QE2.

On This Week with Christiane Amanpour, Jack Kemp-protégé U.S. Rep. Paul Ryan (WI) predicts debt – not growth and jobs – will be the focus of the 2012 election:




NPR’s Robert Smith attempts to rebut the claim that the rich flee high tax states.

On Forbes, Bret Swanson praises Mitch Daniels’ management style.

The NYT profiles Gary North, whose Christian Economics includes support for the gold standard.

Supply-side conference report.

Today we attended a New York conference on President Reagan’s supply-side economics record sponsored by The Manhattan Institute, The Wall Street Journal, and the Ronald Reagan Presidential Foundation.

The event included an inspiring speech by Steve Forbes, a panel featuring Brian Domitrovic, Jeff Bell and Art Laffer, another panel featuring Larry Kudlow, Lew Lehrman and Larry Lindsey, and a closing discussion between Paul Gigot and Robert Mundell.

It was a tremendous event, and a pleasure to interact with so many supply-side luminaries (a few of whom say they read this blog). The WSJ will post video of the event at some point, which we’ll link to.

Regarding substance, here are a few notes:

• Lindsey predicted the end of fiat money by the end of the decade. He also observed that congressional Democrats lost the House because they lost seniors. He believes Nancy Pelosi plans to win them back in 2012 by aggressively attacking GOP proposals to cut entitlement costs.
• Kudlow disputed that the budget deficit represents a “red menace” (Indiana Gov. Mitch Daniels’ description), arguing slow growth was the bigger threat. He noted that one can almost plot the rise of American power in recent decades with gold coming down, and its decline with gold’s rise.
• Lehrman explained that the U.S. will never get fiscal deficits under control without monetary reform through a convertible dollar, because the world sells us its goods, then uses the dollars to buy up our debt.
• Laffer was typically optimistic, saying supply-siders are still winning the tax cut argument and that the rate of growth over the next three decades will exceed the 1980s and ‘90s.
• Prof. Mundell argued the route to stronger U.S. growth is making the Bush tax cuts permanent and cutting the corporate tax rate to 15 percent. Explaining his view that exchange rates – set by the U.S. Treasury not the Federal Reserve – transmit inflation and deflation to the domestic economy, he suggested the biggest threat to recovery isn’t inflation but a significant rise in the dollar against the euro later this year. Such a rise would cut off the already-weak expansion and magnify America’s debt crisis.

Thursday round up.

At Forbes, Jerry Bowyer highlights China’s weaknesses.

On Cafe Hayek, Don Boudreaux rebuts China currency manipulation charges.

The XtraNormal bears argue China manipulates its currency which steals American jobs.



The WSJ clarifies that China has many problems and that a burst of Reaganite growth would restore American confidence.

China remains an underdeveloped country, its economy barely one-third the size of America's. Its leaders live in fear of peasant revolts, ethnic separatists, underground religious movements, political dissidents and the free flow of information. Its economy remains profoundly hobbled by corruption, inefficient state-owned enterprises and an immature banking system.

There is no genuine rule of law and its regulatory environment has become increasingly unpredictable for foreign investors and local entrepreneurs. It suffers from an aging population and environmental damage Americans wouldn't tolerate. Its greatest comparative advantage—cheap labor—is under strain from rising domestic wages and competition from places like Vietnam and Bangladesh.

Above all, China suffers from an absence of self-correcting mechanisms, beginning at the top with its authoritarian political system. And while it can trumpet achievements like a stealth fighter or bullet trains—some based on pilfered designs—it has a harder time adjusting to failure, much less admitting to it.

From Foreign Policy, Daniel W. Drezner explains that China isn’t beating the U.S.

On The Kudlow Report, Gov. Mitch Daniels (IN) shows sound policy instincts regarding China and pro-growth policies, but omits the dollar from his analysis:



At Conscience of a Liberal, Paul Krugman praises the Bush era’s dollar decline.

On his blog, Brad DeLong quotes Krugman citing Milton Friedman in favor of currency devaluation.

In The WSJ, Joseph Sternberg suggests China won’t "rebalance" toward consumption anytime soon.

China needs to reallocate capital and labor on a massive scale to orient itself toward producing goods and services that Chinese consumers want to consume. This will require major banking changes, especially improving access to credit for the small and medium-sized enterprises that make a modern consumption-driven economy tick. Both regulation and habit will get in the way.

The regulation involves interest rates: Government manages both deposit and lending rates in a way that guarantees banks a wide spread. This was intended to help banks earn themselves out of an earlier generation of nonperforming loans at the expense of households, which earn lower rates on savings deposits. And the policy could prove especially necessary if 2009's credit binge results in huge piles of bad debts.

On Lew Rockwell, "Norm" claims Bill Kristol’s recent support for monetary reform is “another neocon trick, like supply-side economics.”