Tuesday summary: McGurn on Reagan's prospects in early 1980; Kadlec on the housing bubble; Bernstein on "trickle-down" economics.

From The WSJ, Bill McGurn argues Ronald Reagan looked like a sure-loser at this point in the 1980 campaign.

In The WSJ, Stephen Moore reports Rick Santorum’s argument that he is stronger than Mitt Romney in purple states.

In Forbes, Charles Kadlec suggests government policy, not lack of regulation, caused the housing bubble.

On The Kudlow Report, progressive Jared Bernstein argues Romney will repeat the trickle-down policies that led to recent years’ economic problems:



From Alhambra Partners, Joe Calhoun rebuts Ben Bernanke’s claim that the economy’s performance is not his fault.

On The Street, Ralph Benko defends the gold standard from columnist Gary Weiss.

At TGSN, Ralph Benko features Alan Greenspan’s never-published testimony from the 1981 US Gold Commission.

Stateline reports Art Laffer’s success convincing states to reduce tax rates.

From the C-SPAN archive, US Rep. Jack Kemp (NY) announces his 1987 bid for President. Alan Reynolds comments, “Watch it and compare the current candidates to see what we have lost.”

In The NYT, Bruce Bartlett argues (correctly, IMO) that class warfare sentiment rises when, in recession, conservatives argue for cutting programs for the poor while refusing to raise tax rates on the wealthy. (Of course, the right answer isn’t raising taxes.)

Tuesday round up.

On Forbes, Jeff Bell and Rich Danker make a strong case for the economic and political viability of a gold-backed dollar.

Yet most sympathetic politicians, policymakers and academics shy away from embracing gold. A common refrain is lack of voter knowledge, and there is some truth to this. In focus groups of Democrats and Republicans that we observed over the summer in Cincinnati, most participants had come of age after Bretton Woods and therefore had no living memory of gold playing a central role in monetary policy. But they did comprehend the gold standard when it was explained to them (a third session in Cincinnati with Tea Party activists elicited surprising levels of historical knowledge and support).

Even if they have never heard of the price-specie-flow mechanism, voters have an increasing sense of how the gold standard works because there is an intuitive association of gold with money. A system that last fully operated before World War I is more transparent and understandable than the monetary regime we live under today, dictated by central bankers making policy according to their macroeconomic preoccupations. The monetary authorities themselves do not understand the impact of their decisions on the wider world, where foreign central banks recycle excess reserves into U.S. dollar-denominated debt that artificially boosts asset prices and generates recurring bubbles below the radar of inflation.

At Alhambra Investments, Joe Calhoun sees economic negatives outweighing positives, unless spending and the tax system are reformed.

On The Kudlow Report, former Atlanta Fed President William Ford explains that rising interest rates could render the U.S. central bank insolvent:



Apropos my recent article, The Washington Times reports on President Obama’s meeting with President Sarkozy of France to discuss the dollar and the euro.

Mr. Sarkozy repeatedly has warned of the dangers to international firms posed by disparities between the euro and the dollar, and has suggested that reliance on the dollar as the world's sole reserve currency exacerbated the financial crisis.

The French leader has called for "updating" the global monetary order — something he's now pursuing as he holds the revolving presidencies of the Group of Eight and the Group of 20 nations. But, at least in his public comments alongside Mr. Obama, he avoided pointed rhetoric challenging the dollar's status.

"I've always been a great friend, a tremendous friend of the United States, and I know how important a role the Unites States plays in the world, how important the U.S. dollar is as the world's No. 1 currency," Mr. Sarkozy told reporters following an Oval Office meeting with Mr. Obama.

At the International Economic Law and Policy blog, Simon Lester reports on papers by John Williamson of the Peterson Institute, and conservative Keynesian Martin Feldstein of Harvard, on how to deal with trade imbalances (here and here).

The WSJ editorializes on a new study illustrating why trade deficit fears are overblown.

From The WSJ, former Fed Chairman Alan Greenspan advocates higher taxes and denies any mistakes in monetary policy during his tenure:



Cato’s Dan Mitchell suggests taxpayers will flee tax Illinois’s tax increases.

At Foreign Affairs, Columbia’s Robert C. Lieberman argues government policy favors the rich getting richer.

Wednesday round up.

The President’s deficit commission recommends spending cuts along with lower tax rates and elimination of deductions.

From August, Louis Woodhill exposes the commission’s low growth assumptions.

On The Kudlow Report, Don Luskin comments on how to play loose money and fiscal austerity:




At Forbes, Brian Wesbury and Robert Stein argue against quantitative easing.

In The FT, Alan Greenspan doubts the wisdom of a weaker dollar.

The WSJ editorializes in favor of trade liberalization to improve global imbalances.

A country's trade balance is simply an accounting identity that by definition matches the flow of goods and capital. Some countries export goods (a trade surplus) and also export capital to help other countries pay for those goods (a capital deficit). Others import goods (a trade deficit) while importing the capital with which to buy them (a capital surplus). Japan and Germany fall in the first category, the U.S. and India in the second. Either is perfectly normal.

The real problem is that for several decades many economies, especially in East Asia, have attempted to thwart these natural flows by running both trade and capital surpluses, and thus accumulating extraordinary levels of foreign currency reserves. Japan has done this for so many years that it is running a capital account deficit even as it sits on an enormous pile of U.S. Treasurys. China and South Korea do the same today.

This is where freer trade becomes so important. Trade barriers have long been a central policy tool for governments trying to keep their economies oriented toward exports. Trade barriers raise domestic prices by depriving consumers of the benefits of competition, while also artificially limiting their consumption options. Meanwhile, consumers and businesses aren't sending as much capital overseas to pay for imported goods.

On The NY Sun, Seth Lipsky defends Robert Zoellick from critics.

Cato’s Dan Mitchell worries the Fed is turning the dollar into a joke.

At NRO, Larry Kudlow links to Dan Mitchell’s latest video opposing tax increases:




In The Washington Examiner, Ralph Benko suggests ways to help the economy.

Thursday items.

The NY Sun rolls its eyes at Alan Greenspan's recent remarks that gold is the canary in the currency coal mine.

At Investor's Business Daily, Cato's Alan Reynolds analyzes Keynesian spending vs supply-side tax cuts.

The WSJ's Dan Henninger sees spending as the election's main issue.

At The Kudlow Report, Larry examines Japan's currency fluctuations.

At The WSJ, a collection of conservative Keynesians and monetarists offer a mixed agenda for economic growth (cutting spending and entitlements, freezing regulations, and maintaining current tax rates). Most problematic is the fifth point, which calls for a Taylor Rule-style monetary policy rather than a commodity price rule.

The WSJ reports on Treasury Secretary Tim Geithner's call for a higher yuan at a House hearing.

At The Money Illusion, Scott Sumner points out that currency revaluations don't necessarily improve trade deficits.

Steve Forbes discusses successful investment strategies of the past decade.

A note on David Malpass's Senate race: Earlier this week, supply-sider Malpass lost his Republican primary bid for the U.S. Senate in New York. While I followed the campaign from afar, I can't help but note that Malpass seemed to cast himself most clearly as a spending hawk, rather than focusing his campaign on tax cutting, sound money and economic growth. Running as a budget cutter, Malpass was one of the crowd rather than a standout candidate for growth; an odd strategy.

Weekend edition.

Editors note: we're trying a new layout to improve readability. Constructive feedback welcome.

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John Tamny explains China's currency policy.

Henry Meers Jr. suggests the economy's problems stem from the unstable dollar.

David Goldman argues the Fed's potential deflation response is misguided.

The WSJ editorial board comments on the latest GDP numbers.

In The NYT, David Stockman critiques supply-side economics mixing Neo-Keynesian trade and fiscal deficit ideas with classical hard money ideas.

Meanwhile, Stockman's former boss Peter Peterson, is spending $1 billion to replace supply-side with balanced budget economics.

Conservative Keynesian Alan Greenspan denies that tax cuts can raise revenues and calls for reduced spending.

Monday update.

Larry Kudlow discusses the economy on C-SPAN’s Morning Journal.

John Tamny is bullish on America despite poor recent leadership.

At Investors Business Daily, Art Laffer warns of cap and trade's economic impact.

A commodity analyst considers Rober Mundell's euro and gold predictions.

Kevin Hassett worries about the death tax.

Bruce Bartlett lists policy mistakes made by President George W. Bush, but omits the weak and unstable dollar.

In The WSJ, Keynesian Alan Blinder supports higher taxes and increased unemployment spending.

At NRO, Veronique de Rugy refutes Blinder.

White House economics chief Larry Summers defends current policy.

At NRO, Kevin Williamson argues Republicans aren't serious enough about spending cuts.

J.D. Fosters explains why Alan Greenspan is wrong to support increased taxes.

Friday update.

In The WSJ, Don Luskin worries we may repeat Great Depression-era policies (full article here).

In The Washington Post, Amity Schlaes warns against repeating past economic errors.

From the archives, Austrian economist Friedrich Hayek discusses Keynes' monetary views.

Keynesian C. Fred Bergsten argues global trade imbalances and insufficient U.S. savings are the root of our economic problems. Related charts here.

The IMF advises the U.S. to cut spending and raise taxes.

Alan Greenspan sees a pause in the economic recovery.

Liberal political strategist Bob Shrum frames the debate between liberal stimulus and conservative austerity.

Paul Krugman hopes the Federal Reserve will do more to stimulate the economy.

The Calgary Herald cites Robert Mundell's advice to cut the U.S. corporation tax.

At AEI, floating currency proponent John H. Makin forecasts deflation coming.

Friday items.

Larry Kudlow gives this blog a hat tip in his discussion of Mundell's strong dollar theory.

Heritage argues against spending increases, saying, "Excessive spending--not low revenues--accounts for 92% of deficits by 2014 and 100% by 2017."

Still, in a time of high unemployment, wouldn't it be best to start addressing deficits by increasing employment and GDP growth?

John Tamny thinks Gates and Buffett should promote growth over charity.

Paul Krugman worries that austerity will produce crisis.

In The WSJ, Prof. Douglas A. Irwin restates Jude Wanniski's thesis that Smoot-Hawley caused the Great Depression.

Alan Greenspan, who is not a supply-sider, worries about deficits.