US: What The Left Fails To Grasp Is That Gold Equals Jobs – by Ralph Benko
Ronald Reagan and Bill Clinton — both governing from the center right — repeatedly were pilloried by the left as plutocratic tools. And both presided over vibrant creation of many millions of new jobs, the very kind of jobs that are eluding America under President Barack Obama. The left’s conflation of free market advocacy with plutocracy is at the root of prejudicing millions of workers and would-be workers. Memo to Thomas: Nobody hates a plutocrat with greater intensity than a free market advocate. Not even you.
Frank writes in the July issue of Harper’s Magazine on the emergence of the gold standard as an issue of the day. “We realize that yet another eccentricity of the right-wing fringe has moved into the mainstream of American life,” he says. There is a fascinating discussion to be had on the reinstitution of the gold standard and its power to generate jobs. Instead, Frank’s dogmatism appears to have him mired in the discourse of the 20th, and even 19th, century.
Frank is yet another big name on the left to note and deplore the powerful uprising in favor of restoring the gold standard. His column echoes Paul Krugman’s July 6 New York Times blog post, “The Armageddon Caucus“: “Gold bugs have taken over the GOP.” It also follows Think Progress‘ June 9 report by Marie Diamond that “the Obama years have seen the lowest inflation in 30 years, but Tea Party groups are determined to make returning to the gold standard a litmus test for GOP presidential candidates. And it looks like they’re succeeding.” The Roosevelt Institute’s Mike Konczal wrote on April 27, “Conservatives are organizing against a full employment mandate and rallying around the gold standard wing of their party.”
So … kudos to these public intellectuals for noticing the populist movement to restore gold. The way they describe it, however, is completely unrecognizable. Frank and his compatriots treat the gold standard as a slightly ludicrous (and possibly alarmist) anachronism and as a tool by which the wealthy oppress workers. This critique is itself an anachronism. The “ox carts,” “social dystopian” and “Daddy Warbucks” narrative bears no resemblance to what actually is under discussion — and shows little recognition of what is at stake.
It would be deeply unfortunate to reflexively polarize gold, which is not inherently “right-wing.” Milton Friedman was a staunch opponent of the gold standard. Michael Kinsley, not so long ago, wrote intelligently and sympathetically about the gold standard. It’s a pragmatic policy. Among many other figures of probity Nobel Laureate (and intellectual father of the euro, long time economics advisor to the government of the People’s Republic of China) Robert Mundell recently praised it.
Frank quotes future Fed chairman Ben Bernanke as critiquing the gold standard, but omits Bernanke’s at least equally fulsome praise of it: “The gold standard appeared to be highly successful from about 1870 to the beginning of World War I in 1914. During the so-called classical gold standard period, international trade and capital flows expanded markedly, and central banks experienced relatively few problems ensuring that their currencies retained their legal value.”
Frank also makes due reference to Keynes’s indictment of the gold standard as a “barbarous relic.” But he doesn’t take it beyond its bumper sticker version. Lord Robert Skidelsky, one of the great Keynesian scholars living, wrote last year in the Financial Times: ”Keynes’s famous dismissal of the gold standard as a “barbarous relic” does not quite capture his opinion of the metal, which he thought would be useful as a constitutional monarch but disastrous as a despot.”
It is not clear that Frank understands the difference. Keynes was a “man of expedients,” no dogmatist, and it is easy to imagine him appalled at his own legacy being converted into dogma. Keynes again: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
With unemployment stuck over 9% — after trillions in deficit spending — this would be a most unbecoming, and counterproductive, time for the left to take refuge in dogma.
Yet, instead of one of the leading current proponents of gold Frank puts forward … Howard Ruff. Ruff, a borderline survivalist, never enjoyed policy influence. Even the pop culture standing he had diminished to almost nothing 30 years ago. Frank makes him an important paladin for the growing consensus for gold: “Howard Ruff, one of the great figures in the history of disaster investing, delineated this school of thought quite succinctly in his 1979 bestseller, How to Prosper During the Coming Bad Years. “It eventually becomes the objective of politicians in all paper money economies to get rid of the gold standard and establish ‘fiat money,’” Ruff wrote…. In Ruff’s view, these glad-handing hacks will always take the path of least resistance, doling out benefits to everyone, rescuing the banks, and running their infernal printing presses to pay for it.”
This columnist already has taken to task the New York Times and the Wall Street Journal for lagging Forbes.com and RealClearMarkets.com and failing to keep up with how the discourse on gold has progressed away from what the Journal‘s Zuckerman and Cui called “a haven for those with bleak economic outlooks or dystopian views of society….”Harper’s Magazine lags at least as badly.
If the left wishes to engage in an authentic debate, rather than propaganda exercises, an apt choice would be not Howard Ruff but Jacques Rueff. Professor Rueff was an elegant figure, privy counselor to Charles de Gaulle in the creation of the “French Economic Miracle,” co-author of the Rueff-Pinay Plan, member of the Académie Française. Rueff’s distinctions are covered by a recent biography, The Monetary Conservative by Christopher S. Chivvis, reviewed by John Tamny.
Tamny observes: “As for the Keynesian approach to economics that is all the rage among economic bureaucrats the world over, the author suggests that Rueff’s aversion was visceral. As Chivvis noted, ‘To Rueff, Keynesianism was a disease, a drug politicians used to placate the masses.’ Certainly true, yet much like other statist attempts at unreality prove, eventually the masses wake up (as they are now) to the greater reality that governments can only give to individuals what they’ve taken from them first.”
The late Jacques Rueff’s American protégé is American financier and philanthropist, and Reagan Gold Commissioner, Lewis E. Lehrman whose nonprofit Institute’s website this writer professionally serves as editor (where Rueff is named in memoriam). Rueff’s name has been mentioned with respect this month by Dr. Judy Shelton in an important and widely noted piece in the European Wall Street Journal, “Lagarde’s Golden Opportunity,” and by savant and author James Grant, writing in the Washington Post.
The “Rueffian Synthesis” long upheld by Lehrman, its eminence grise, is very much central to the contemporary leading advocates of gold, such as the American Principles Project (with whom this writer also is professionally associated) chaired by Sean Fieler. None of these advocates, nor leading populist groups such as the Iowa Tea Party, remotely are dystopian. They trend optimistic. There is a really interesting conversation going on. The conversation would become even more interesting if Mr. Frank and other progressives would manage to elude what he calls “gold’s brainfogging power” and lend their weight to supporting the pro-jobs, pro-worker gold standard today’s leading gold advocacy groups support.
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