Posted by on March 17, 2021 10:15 am
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Categories: Taxes

Ralph Benko, a High Priest of Voodoo Economics, performing Voodoo Economic Ritual.

 

By Ralph Benko

 

Let’s pause today to raise a pint to the Teen Titans, to leprechauns, to gold and to the gold standard’s key to equitable prosperity. Yikes, this just in! Turns out that, reportedly, the Teen Titans are neo-Keynesians!  And here I had always thought them to be the good guys!  Yet in a 2017 episode, endlessly rerun, they maniacally thwarted a worldwide return to the gold standard proposed by one of their leaders, Beast Boy, transformed into a leprechaun!

 

I learned of this alarming turn of events from Ike Brannon, no gold standard advocate. Ike is the secretary-for-life of the Prosperity Caucus. That’s the premier monthly gathering for beer and pizza (temporarily virtual) of free market economists which I founded in 1986.

 

Now, just in case you, like everybody else, have in all the policy carnage of this century forgotten, “supply-side economics” was what propelled the Dow from 814 on that day in November 1979 that Reagan officially declared his presidential candidacy to its current exalted state.

 

Supply-side just about doubled America’s real GDP from then to now, all while dragging close to a billion people, worldwide, out of abject poverty. We supply-siders, its beleaguered proponents, were called Voodoo Economists by the Republican regulars. We were called irresponsible maniacs by the Democrats’ Neo-Keynesian establishment.  And yet, prosperity prevailed!

 

Ike recently reached out to me to inform me that that according to his daughter Zeren, his Distinguished-Third-Grader-in-Residence, in the 16th episode of the fourth season episode of her favorite TV show, Teen Titans, summarized at its Fan Wiki:

 

The Teen Titans are planning to catch a leprechaun, because they heard a leprechaun gives three wishes with the phrase “Fiddle de dee, tell me your wishes three.” Instead, they catch Robin. They force him to change into a leprechaun so they can get their wishes. He then tells them why he doesn’t want to be a leprechaun. Beast Boy wishes to be a leprechaun. He becomes a leprechaun and then he sings Livin’ that Leprechaun Life. Then Beast Boy wants to steal their cereals and then he cobbles their shoes. Then, He becomes obsessed with gold and then he attempts to change the economy. …  On the way home, Robin remarks to Beast Boy that they can discuss the advantages of floating exchangement (sic). Meanwhile, the rest of the Titans decide to stay in the safe, while paying attention to the gold inside, as the safe door closes shut, and the lock turns itself, as the episode ends.

 

Whiskey Tango Foxtrot!

 

As it happens, in the early 21st century I spent close to a decade as a professional gold standard advocate publishing hundreds of thousands of words in the elite financial and political press and hundreds of blogs at the Lehrman Institute’s then-website thegoldstandardnow.org. My content from that is currently available, although not yet spiffily formatted, here (and ever so slowly being duplicated over at Medium as The Lore and Lure of Gold).

 

I well recall how, in one of my many forays up Capitol Hill, the Republican Study Committee executive director, Paul Teller, heard out my case for gold and said to me, with a bemused look, “Benko, you’re the first person I’ve encountered in my ten years on Capitol Hill pushing the gold standard who is not insane.” To be sure, Paul may have been overly generous in his assessment of my sanity. Nevertheless, due in part to his superb politesse and in part to his impeccable policy chops, we’ve remained on affable terms ever since.

 

Forgotten by all but us few remaining supply-side O.G.’s (“Original Gangsters,” for those of you not up on the current slang) — who preceded the gold-agnostic Ike and his cohort by over a decade — the gold standard was foundational to supply-side economics.  The supply-side’s “charter document,” as it were, The Mundell-Laffer Hypothesis, by Jude Wanniski, published in The Spring 1975 issue of Daniel Bell and Irving Kristol’s influential Public Interest, was almost entirely about monetary stability, presumptively based in gold convertibility. Marginal tax rate cutting was only ever-so-briefly mentioned. What would come to be known as “the Laffer Curve” was contained in footnote 4, on page 49.

 

And let it not be neglected the Nobel Prize in Economics acceptance speech, “A Reconsideration of the Twentieth Century” by Prof. Robert Mundell–the O.O.G. of supply-side—was largely devoted to an appreciation of the gold standard.

 

Even more forgotten, now, was the fierce struggle inside Kemp’s brain trust between those, primarily Jude Wanniski, who wished to merely target the price of gold rather than implement the real thing. Jude lost that argument to Kemp’s advisor, my own revered mentor, Lewis E. Lehrman, and to Lehrman’s other protégé, Kemp staffer John Mueller. Lehrman, himself the protégé of Jacque Rueff, was committed to restoring the authentic classical gold standard. That requires the dollar to be defined by and legally convertible into a fixed weight of gold and is a big part of what originally made America great. Kemp’s Gold Standard Act of 1984, co-sponsored by the young Newt Gingrich among others, adopted the historically-proven classical model.  And was never enacted.

 

In the event, the fight for an across-the-board income tax rate cut, dropping the top rate from 70% to 28% with overwhelmingly bipartisan enthusiasm, was dramatically fought out on Page One Above The Fold. Vanquishing inflation was delegated to Fed Chairman Paul Volcker (who, ironically, had been part of the Nixon team that ended the gold standard). Volcker managed to slay the inflation dragon by expedients not, at least not explicitly, involving gold. (Volcker’s successor, Chairman Alan Greenspan, revealed many years later that the prosperous “golden years” of his tenure were firmly guided by gold.)

 

The sustainability of policy depends in great measure on the attendant political theatrics. Tax rate cuts benefited from that. Gold did not. Despite gold’s long and distinguished track record of contributing to economic growth and equitable prosperity the gold standard remains outside the Overton Window of economic policy.  Indeed, most of its “gold bug” proponents, with their half century’s vain anticipation of imminent monetary doom, are probably more damaging to its prospects than are gold’s Neo-Keynesian detractors.

 

The dogs bark but the caravan moves on.  And yet perhaps there can be just a wee crack in the Overton Window on this, Saint Patrick’s Day, a monetary Brigadoon to be celebrated with impunity, preferably over a pint of stout.  So, Begorrah!, let me berate those feckless Teen Titans for their Neo-Keynesian attachment to floating “exchangement”!

 

On this holy day let me draw to your attention this tale first published in 1888 by D. R. McAnally, Jr. from Irish Wonders, regarding one Michael O’Dougherty.

 

“He was afther lookin’ for wan nigh a year, fur he wanted to get married an’ hadn’t anny money, so he thought the aisiest was to ketch a Luricawne. So he was lookin’ an’ watchin’ an’ the fellys makin’ fun av him all the time. Wan night he was comin’ back afore day from a wake he’d been at, an’ on the way home he laid undher the hidge an’ shlept awhile, thin riz an’ walked on. So as he was walkin’, he seen a Luricawne in the grass be the road a-mendin’ his brogues. So he shlipped up an’ got him fast enough, an’ thin made him tell him where was his goold. The Luricawne tuk him to nigh the place in the break o’ the hills an’ was goin’ fur to show him, when all at wanst Mike heard the most outprobrious scraich over the head av him that ‘ud make the hairs av ye shtand up like a mad cat’s tail.

 

“‘The saints defind me,’ says he, ‘phat’s that?’ an’ he looked up from the Luricawne that he was carryin’ in his arrums. That minnit the little attomy wint out av his sight, fur he looked away from it an’ it was gone, but he heard it laugh when it wint an’ he niver got the goold but died poor, as me father knows, an’ he a boy when it happened.”

 

Supply-side economics, a stable dollar and low tax rates, had a really great run from the ‘80s to the end of the 20th century. Economic growth, under Reagan and Clinton, was robust and equitable. America prospered.

 

Until it didn’t. (That said, a tip of the hat to Secretary Yellen for her fine job as Fed Chair).

 

Economic growth has been punk for the past 20 years. Sluggish growth under Presidents George W. Bush and Barack Obama followed by a spectacular boom-and-even-more-spectacular-bust roller coaster under President Trump. (“The Boss” would have done well deferring, rather than dictating, to his faithful NEC chairman Larry Kudlow, the only supply-side O.G. inside Trump’s White House.)

 

As we heft a pint of stout on this day dedicated to the memory of he who banished the snakes from Ireland, I stand with Beast Boy to remind all and sundry of the fate of Michael O’Dougherty, who niver got the goold but died poor. And to cheekily advise White House advisor Cedric Richmond that to overcome political gridlock (as the O.G. supply-siders did) and improve the lot of America’s workers (as the O.G. supply-siders did) all  President Biden needs to do is reach down deep into his wonderful Irish roots … and claim the pot of gold awaiting him there.

 

Call me Beast Boy for I only am escaped alone to tell thee. 

 

The saints defend me!

 


Ralph Benko is the co-author of The Capitalist Manifesto, author of The Ten Commandments of Capitalismco-author of Redefining the Future of the Economy, and co-founder and chairman of The Capitalist League.