Weekend edition: Domitrovic on Friedman; Luskin on the 2013 tax cliff; Moore on Keynesianism.

From Liberty Law, Brian Domitrovic explains the damaging impact of Milton Friedman’s opposition to the gold standard and floating exchange rates.

In The WSJ, Don Luskin highlights the negative incentive effect of 2013’s tax rate increases.

On The Kudlow Report, Stephen Moore debates Keynesian economics:



The WSJ reports the decline in labor force participation to 1981’s level.

At The American, James Pethokoukis suggests the true unemployment rate is 11.1%.

IBD explains that unemployment is substantially higher than the official number.

In The WSJ, Holman Jenkins argues the best solution for the eurozone crisis is for Germany and other strong economies to withdraw and establish a new currency:

Can we admit now the simple lesson is against excessive debt? Don't be impressed by those who protest that Spain and Ireland were brought down by private-sector extravagance. If we've learned anything, in a debt crisis the distinction between public and private disappears. Too, a closer look shows the Irish state an intimate participant in Ireland's housing boom, collecting 40% of the price of every new home in taxes. In Spain, regional governments owned or controlled the lenders that financed the construction binge.

A fixed exchange rate system is an especially unforgiving environment for a welfare state that destroys its ability to create wealth. But the universal lesson is: Don't be a welfare state that destroys its ability to create wealth.

In Forbes, Peter Ferrara argues Mitt Romney’s economic platform is practical versus the President’s extremism.

At The American, Pethokoukis refutes Paul Krugman’s claim that wealth inequality contributed to the credit boom.

On International Liberty, Dan Mitchell notes an example of the Laffer Curve at work.

At Forbes, Nathan Lewis examines how to modernize Social Security.

From Bloomberg, James Grant discusses the Fed and markets:



In The NY Review of Books, Paul Krugman advocates higher deficits and inflation.

Wednesday summary: Domitrovic on Don Devine; Jenkins on inequality; PIIE's Lardy on the yuan.

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 WSJ explains 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 Post reports 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.

Weekend edition: Reynolds, Ferrara and Jenkins on the President's budget and tax proposal; Bell on social issues; Weber on the GOP's message.

Editor's note: Spotty coverage last week and this due to personal travel. Will be back on track later this week.
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From Creators syndicate, Alan Reynolds critiques the President’s budget proposal.

At Forbes, Peter Ferrara suggests the President’s budget will damage the economy.

In The WSJ, Holman Jenkins advises Mitt Romney to take up the President’s challenge on the taxes paid by the wealthy.

The WSJ profiles Jeff Bell who argues social issues are vital to the conservative coalition.

On The Kudlow Report, former US Rep. Vin Weber (MN) discusses the GOP’s messaging problem:



On NRO, Larry Kudlow notes Ways & Means Chairman Dave Camp’s going after Treasury Sec. Tim Geithner on tax policy.

In Reason, Tim Cavanaugh counters Geithner’s tax increase advocacy.

At The American, Aparna Mathur notes the effect of higher taxes on capital flows.

From American Thinker, Ralph Benko advocates a gold commission.

In Forbes, Bill Bonner critiques The NYT’s coverage of a possible return to gold-linked money.

At Monetary Choice, Dave Doctor rebuts Keynesian Dean Baker’s defense of the Federal Reserve.

The NY Sun suggests Sarah Palin would be a better World Bank president than Hillary Clinton.

From Bloomberg, Gregory DL Morris recounts the history of the Federal Reserve’s founding.

From last month’s Texas Public Policy Foundation conclave, Art Laffer debates Keynesian Jared Bernstein:




At The American, James Pethokoukis outlines arguments for the President’s opponents even if the economy is recovering.

In The WSJ, Michael Boskin suggests government is a poor investor.

USA Today links the recession to slow population growth from births and immigration.

Wednesday items: Newt proposes gold commission; Domitrovic on Romney at Bain; Jenkins on the financial meltdown.

Big news: The Weekly Standard reports Newt Gingrich advocates a gold commission:



The WSJ argues Mitt Romney should use news of his 15% tax rate to argue for fundamental tax reform.

At Forbes, Brian Domitrovic explains the economic context of Romney’s work at Bain Capital.

On The Kudlow Report, James Pethokoukis discusses Gingrich’s rise in the polls:



At RCM, John Tamny suggests Ben Bernanke was right in 2006 for wanting the Federal Reserve to let the mortgage market unwind.

In The WSJ, Holman Jenkins examines the causes of the 2008-09 financial meltdown, but omits Robert Mundell’s claim that the rapid 30% dollar appreciation in summer 2008 was the central factor.

On The Daily Beast, David Frum defends the 15% capital gains rate.

Futureofcapitalism rebuts The NYT on the capital gains tax rate.

On The Mike Rosen Show, Cato’s Alan Reynolds critiques Ronald McKinnon’s call for a wealth tax.



At IBD, Walter Williams notes the inequality of wealth creation as opposed to income.

From Fox News, David Pietrusza cites Calvin Coolidge on marginal tax rates:

If we had a tax whereby on the first working day the Government took 5 per cent of your wages, on the second day 10 per cent, on the third day 20 per cent, on the fourth day 30 per cent, on the fifth day 50 per cent, and on the sixth day 60 per cent, how many of you would continue to work on the last two days of the week?

From Alhambra Partner, Joe Calhoun worries at bullish sentiments.

At TGSN, Ralph Benko argues mismanagement of the gold standard led to the Great Depression.

On NRO, Jim Manzi considers how to cut marginal tax rates on the poor.

In The WSJ, actor Rick Moranis satirizes modern economic theories.

Wednesday round up: Stoll, Bolduc and Costa on Gingrich; Jenkins on Romney; CNN reports the euro falling below $1.30.

From The NY Sun, Ira Stoll suggests Newt Gingrich has surged in part because his tax policies are superior to Mitt Romney’s.

In The WSJ, Holman Jenkins Jr. argues the nation needs a problem solver like Romney.

At NRO, Brian Bolduc reports that Gingrich saw supply-side economics' political potential early, but wasn’t deeply interested in the economic details.

On The Kudlow Report, Robert Costa discusses US Rep. Paul Ryan's (WI) critique of Gingrich for not edorsing unpopular entitlement reforms:



CNN notes the euro falling below $1.30.

The WSJ highlights the rise of regulation under the current administration.

At Forbes, Bill Flax argues pending tax increases and regulation are strangling business.

In IBD, Jim Gilmore proposes interesting pro-growth ideas but omits dollar stability.

On CNBC, John Carney cites Jude Wanniski’s view that budget deficits should be considered relative to the total size of the economy.

From First Trust, Brian Wesbury and Robert Stein see the economy improving and doubt the Fed will enact QE3.

On CNN, Stephen Moore argues unemployment benefits go on too long:



At The Freeman, the late great Julian Simon supports immigration.

In The Washington Post, Charles Lane highlights conservative Keynesian Martin Feldstein’s long-standing opposition to the euro.

From the archive, Feldstein advocates dollar “competitiveness” via a lower exchange rate.

Wednesday summary: The gold/oil ratio suggests a correction; The WSJ opposes QE3; Jenkins advocates breaking up the eurozone.

Nasdaq reports gold passed $1,800 today, while oil hit $82, a 21:1 ratio. This divergence from the historical 15:1 relationship suggests a substantial correction one way or the other. Assuming a dollar upswing, gold would need to fall to near $1,200 to reestablish the normal relationship, reigniting the deflationary concerns emanating from the euro/dollar exchange rate foreseen by supply-side guru Robert Mundell. Fear of a sharp dollar rise may explain the market’s positive response yesterday to Goldman-Sachs’ report that Fed Chairman Bernanke was preparing a third round of quantitative easing. When Reuters clarified this morning that the report was speculation rather than inside information, markets tanked. (On this last point, hat tip to Rush Limbaugh.)

The WSJ opposes QE3 as positive wealth effects likely will be offset by negative income effects due to higher commodity prices.

On The Kudlow Report, David Malpass analyzes the health of banks and the economy:




In The Telegraph (UK), Garry White notes the August 15 anniversary of the Nixon dollar shock.

At TGSN, Kathleen Packard reports on President Nixon's decision to close the gold window 40-years ago. (Continued here, here and here.)

At an NRO symposium on the debt downgrade, former Kemp staffer John Mueller suggests demographics caused the market to peak a decade ago and that debt and currency issues will be solved by a return to the gold standard.

In The WSJ, Holman Jenkins, Jr. advises Europe’s solvent nations to leave the eurozone.

The euro was a noble idea—actually two noble ideas, one of which made sense: that a common currency might be a force for competitive adjustment across Europe. Alas the noble idea that captivated Europe's elites and was sold to the man in the street was a different one: The euro would solve "the German problem," never mind that "the German problem" had already been solved by the invention of nuclear weapons.

Hans-Olaf Henkel, as reputable a German business spokesman as you can find, a former head of IBM Germany, a former leader of his country's main business federation, once fervently supported the euro but now calls on Germany and its solvent neighbors to exit the euro system in favor of a new currency (a Deutsche mark in all but name).

In The WSJ, former Fed Governor Kevin Warsh and former Gov. Jeb Bush (TX) advocate a new grand strategy focused on long-run growth, but omit currency reform from their analysis.

From First Trust, Brian Wesbury and Robert Stein see reason for optimism on the economy.

At Forbes, CEI's Wayne Crews argues the logic of Say’s Law refutes Keynesian demand-side analysis.

On Squawk Box, US Rep. Ron Paul (TX) predicts the end of the dollar standard and links currency to violence in England, protests in Israel, and revolutions in the Arab world:




The WSJ suggests hooliganism and weak policing, not commodity prices and economic austerity, caused the British riots.

From Tax Notes, Bruce Bartlett examines revenues lost from the Reagan tax cuts (click the download box).

At Yahoo Finance, Nobel Laureate Joseph Stiglitz promotes more Keynesian spending stimulus:

Weekend edition: Mundell on a stronger dollar; Lewis, Jenkins, Forbes on the euro; Toomey on fast growth.

From Korea’s JoongAng Daily, Robert Mundell expresses concern about a stronger dollar and calls for a stable euro/dollar exchange rate.

On Forbes, Nathan Lewis argues the Eurozone’s economic problems shouldn’t undermine the euro.

In The WSJ, Holman W. Jenkins, Jr. suggests the euro is working as it should:

Those who say if only Greece still had its own currency, so much pain would have been avoidable, exaggerate. Under no possible currency regime would Greece have been able to go on forever borrowing money from foreigners to live beyond its means or its willingness to work. The same is true to lesser degree of other troubled European economies, including Portugal and Spain.

All along, the challenge of the euro was the challenge that undid the gold standard—to make "the law of one price" prevail across multiple countries in the age of interest group democracy. "One price" in one country works—Americans will pick up and move 3,000 miles for a job, but even in America, not without pain.

Yet the nostalgia for a Europe of independent currencies is mostly nostalgia for an illusory shortcut—even more so as services, rather than tradable goods, become the overwhelming source of employment in modern economies. Greece, with its sun and history, has every potential to make a happy, privileged existence inside the euro zone. Today's growth gap between Europe's north and south, which some say proves the unwisdom of a common monetary policy, is hardly organic—it's the product of their common mistake in loading too much debt on unreformed southern economies in giddy expectation of euro-based prosperity.

At RCM, Joe Calhoun says Paul Krugman is right that defaulting on debt can be healthy.

On Yahoo Finance, Steve Forbes addresses Greece’s debt problems:



The WSJ editorial board argues the dollar’s decline has been good for wealthier, heavily invested Americans but terrible for blue collar workers and the middle class.

The WSJ reports Sen. Richard Shelby (AL) will urge Fed Chairman Bernanke to adopt and explicit inflation target.

From IBTimes (UK), Gabriel Mueller compares the dollar and gold price of the 1970s to the present (h/t: Ralph Benko).

At RCP, U.S. Sen. Pat Toomey (PA) supports Tim Pawlenty’s economic growth proposal.

RCP: Tim Pawlenty has come out with what many consider to be a very pro-growth economic plan. Would you support Pawlenty's plan?

Toomey: I haven't had a chance to break down and study every element of his plan, but I am very enthusiastic about the fact that he has made economic growth -- encouraging that growth through tax reform, lowering the top marginal rates, and the abolition of the tax on capital gains -- that he has made it the centerpiece of his campaign is very constructive and very good news. A very important part of our message needs to be our ability to restore economic growth and job creation. Now, [Pawlenty] has established a very ambitious goal of 5 percent economic growth.

RCP: Do you think that's a reasonable goal?

Toomey: If we had really dramatic tax reform, if we got our fiscal house in order, if we reform the big entitlement programs, if we rein in the regulators, and if we expand trade, I think it is entirely possible. You could average that. We could have a wave of innovation and investment that could very well produce something like that and it's a good goal to have.

From The WSJ, Stephen Moore analyzes the weak recovery.

On Bloomberg, Caroline Baum suggests unstable tax policy is damaging the economy.

At Slate, Annie Lowrey acknowledges that some tax cuts do pay for themselves.

On The Kudlow Report, Stephen Moore and James Pethokoukis debate the economy and debt:




In The American Spectator, G. Tracy Mehan, III, wonders why we would raise taxes now.

At Forbes, Peter Ferrara recommends health care reforms that would achieve much of Obamacare’s aims without job-killing mandates.

On TNR, Jonathan Chait cites Bruce Bartlett arguing Republican claims about tax hikes’ negative impact is overstated.

At American Thinker, Henry Oliner defends supply-side economics.

Wednesday round up: Feiler and Bell on the unrestrained Fed; Woodhill on growth vs austerity; Goldman on gold and silver.

From The WSJ, Sean Feiler and Jeff Bell advocate gold as the only credible means to discipline the Federal Reserve.

At Forbes, Louis Woodhill counters John Mauldin’s deleveraging mania with a call for higher growth.

On The Kudlow Report, David Goldman discusses gold and silver prices:



In The WSJ, Holman Jenkins, Jr. suggests governments will cope with debt through austerity and inflation.

At Future of Capitalism, Ira Stoll wishes the Ryan tax plan made deeper cuts to corporate and individual tax rates.

On COAL, Paul Krugman argues a significant portion of the Ryan budget plan cuts spending on seniors and the poor to fund lower tax rates on corporations and top earners:



From The Hoover Institution, Kip Hagopian notes the inequities of the progressive tax system.

On TGSN, Ralph Benko reports a good article on the gold standard from the Economic History Association.

At National Review, Ramesh Ponnuru argues the Fed was right to enact QE2.

The NYT reports progress on the Colombia trade agreement.

Weekend round up.

On RCM, John Tamny argues lower housing prices are good for the economy.

Also on RCM, Larry Kudlow advocates pro-growth tactics to improve the employment picture.

From The Heritage Foundation, Steve Forbes makes the moral case for capitalism:





The NY Sun advocates an audit of Federal Reserve bail outs.

In The WSJ, John Fund reports the Americans prefer spending cuts to tax increases by 59% to 30%.

The Huffington Post reports just how grim the unemployment data really is:



At The San Francisco Chronicle, Lisa Smith summarizes the Laffer Curve.

From AEI’s The American, Donald Losman rejects deflation predictions, citing rising gold.

Also in The Journal, Holman Jenkins notes weakening support for the euro among former supporters.

Even faced with maximal turmoil, Europeans are still trying to have it both ways. The bailout to-ing and fro-ing by European authorities is conditioned largely on their unwillingness to choose between conflicting goals—on one hand, a continent of competitive and open economies; on the other hand, a "social model" that cushions established interest groups and voting blocs from the stress of competition.

A very different approach to managing the current crisis is imaginable. Put the European Central Bank in charge of printing liquidity to prop up the continent's banks. (Right now it's printing liquidity to prop up governments, which are propping up the banks.) Let badly indebted governments go into default and negotiate more manageable terms with their creditors (mostly banks). Let politicians in these countries invest their limited political capital in promoting growth rather than austerity. Let them cut taxes and deregulate their labor markets.

This would certainly sound preferable to voters than job-killing tax hikes and spending cuts to appease far-off German taxpayers who are being dragooned into refinancing their insupportable debts. The most encompassing description of Europe's problem, after all, is the one not mentioned enough: a shortage of growth.