Thursday items: Malpass on the rising dollar; Shlaes on austerity; Forbes on NR's opposition to Newt.

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 discusses National 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).

Wednesday summary: Domitrovic reviews Lehrman; Mundell on currency instability; Paul on the Fed.

From Forbes, Brian Domitrovic reviews Lew Lehrman’s The True Gold Standard.

At TGSN, Ralph Benko notes The Royal Institute of International Affairs interest in the gold standard.

The People’s Daily (China) reports on a speech about currency instability and exchange rates by supply-side economics founder Robert Mundell.

On The Kudlow Report, US Rep. Ron Paul (TX) argues the Fed is still engaged in quantitative easing:

 

At The Weekly Standard, Charles Wolf, Jr. suggests the Keynesian model is wrong in theory.

From First Trust, Brian Wesbury examines the positive parts of the economy.

In The WSJ, Gerald P. O’Driscoll notes the financial links between the US and EU.

At The Washington Times, US Rep. Steve Stivers recommends reform of Dodd-Frank.

On Kudlow, US Reps. Jim Jordan (OH) and Charlie Rangel (NY) debate the economy and taxes:

 

From reader S. Rao:

I listened through Herman Cain and Rich Lowrie's presentations at AEI earlier this week and wanted to point out some Jude Wanniski influences in Lowrie's presentation. Video of the AEI Panel including Lowrie, here: (click on "A Panel Discussion . . .")

(at 26:35): Lowrie distinguishes the incidence and burden of a tax. Wanniski noted the same but in the capital gains context.

(at 32:54): Lowrie notes that the capital gains tax is a wall between those who have ideas and those with money. See the Wanniski-Laffer wedge model, here.

(at 33:29): Lowrie notes that productivity depends on the ratio of capital to labor. Wanniski used the analogy of a thick soup "Think of a pot of soup that has mixed in it labor and capital. If we add more capital, and stir it up, the soup becomes thicker, with a higher capital/labor ratio."

(at 36:24): In the context of the poverty portion of the 9-9-9 plan, Lowrie says it is obvious that to have general growth we "can't leave anyone behind"; and, in reverse, to address poverty, we must address general growth. A comparable point was made by Wanniski about Reagan in 1980. As President Reagan said in the "Good Shepherd" television commercial: "Those who have the least will gain the most. If we put incentives back into society, everyone will gain. We have to move ahead. But we can't leave anyone behind."