With the pending loss of Whirlpool and the recent struggles of the Air National Guard’s 188th Fighter Wing, Fort Smith has seen its share of turmoil. But according to Steve Forbes, chairman and editor-in-chief of Forbes Media, the city, and the country, can pick up steam again.
Forbes told The City Wire following his Wednesday (Feb. 8) address at the Fort Smith Chamber of Commerce annual meeting, “On the local level, you’ve got to get the barriers removed for people to come in. It may not always be manufacturing you attract, but businesses like a good environment, and getting the word out is important.”
Forbes added that the private sector is “how you make things happen in this country.”
The barriers to growth Forbes referred to were the primary forces behind his address, in which the former Republican U.S. Presidential candidate highlighted “three key numbers”: 3.3, 1.8, and 3.3.
“Three-point-three percent is the rate this economy grew annually from the end of World War II through most of the Sixties. Then, in the Seventies, a tough decade, we only grew at 1.8 percent and Western Europe caught up to us. In the Eighties, we saw another 3.3 percent, and with the financial crisis of 2007, we’re back to 1.8 again. Why?” Forbes said.
Forbes said the four barriers he feels are responsible for impeding the country’s economic growth: the Federal Reserve’s penchant for “printing money,” government overspending, an overly complicated tax code, and “rampant” regulation.
“With the Reagan reforms, we had the largest economy in the world and we were growing faster than anywhere else in the world. Now in 2012 we’re doing a little better than we were in 2007, but we’ve got the car maybe up to 40 miles per hour on the superhighway when we should be going 70 to 75.”
Forbes told attendees he believed there was “no reason we can’t get back to a vigorous economy,” and scoffed at the notion that slow U.S. economic growth is the “new normal,” referring to it instead as the “new abnormal.”
THE BIG ENABLERS
Forbes joked with the audience that if one wanted to achieve elbow room on a crowded coach flight or wanted to get out of a bad date, “just start discussing monetary policy.”
“It’s deadly and dull and the most boring subject in the world,” Forbes said. But, “it has enormous impact and importance, probably the most importance on the current economic climate.”
Forbes blamed the Federal Reserve for “printing too much money” and compared the practice to “a magnificent vehicle.”
“Without sufficient fuel, you’ll stall the engine. With too much, you’ll flood it. The right amount gives you the chance to move ahead. Since the start of the last decade, they’ve printed too much money, artificially lowered interest rates and weakened the dollar. And a weak dollar means a weak recovery,” Forbes said.
Forbes continued: “If printing money worked, then Zimbabwe or Argentina would own the world today. You create the money. Not the government.”
Forbes also blamed the Federal Reserve for the burst of the housing bubble, noting “that could not have happened if the Fed hadn’t printed the money. But no one is pointing the finger at the Federal Reserve, who are the big enablers on this thing.”
“Long story short: as long as Ben Bernanke continues on this course, this country will continue to struggle. Prediction: given the distortions we’ve had, in the next 5 years, we’ll get something relinking the dollar to G-O-L-D. And we’ll start to see capital markets reflect real things again. We’ll get it done. This (crisis) is an aberration. We’ve got to get steady money and a gold based dollar again,” Forbes said.
It’s encouraging to see the Republicans put forth a jobs bill, but — confound it — the measure as outlined by Senators Portman, DeMint, Paul, Jordan, and McCain is missing an essential element. This is sound money, the lack of which is emerging as a central cause of America’s current travail. The failure of the GOP jobs bill to address this point is all the more troubling, because leaders like Messr. DeMint and Dr. Paul understand so clearly the monetary issue, as they made clear when, earlier this year, they introduced a bill known as the Sound Money Promotion Act, which this newspaper was the first to endorse.
The new GOP jobs bill gives excellent legislative shape to the fiscal facet of job creation. It abjures the Keynesian approach of borrowing and spending our way to prosperity. If such a strategy ever made any sense (we don’t see it, but some do), it certainly doesn’t make sense in an economy with near zero interest rates, a collapsing dollar, and budget deficits and government debt already at astounding levels. Instead, the new bill offers restraint on spending, reduction of tax rates, an end to prohibitions on drilling for oil, the promotion of free trade, the repeal of growth-inhibiting regulations, and liberation from Obamacare.
There is nowhere left to hide. America’s governing elites begin to internalize the magnitude of their failure to generate jobs. CBO now predicts worse than 8% unemployment until 2014. America begins to engage, seriously, with the implications of the faltering dollar and reconsider the appeal of the gold standard. From The New Yorker to The National Interest to The Washington Monthly to The Nixon Foundation, thoughts turn to gold.
The New Yorker’s August 29 Market Watch, by Talk of the Town deputy editor Nick Paumgarten, celebrated the 40th anniversary of the abandonment of gold and the experiment begun with the paper dollar standard. The tone? “Don’t let the door hit you, Paper Dollar, Jr., on the way out.”
The “average life expectancy for a fiat currency is twenty-seven years; so, by that measure, the greenback has had a good run.” Bye-bye, fiat dollar. Hello, gold?
This may be less surprising than it appears. In 2000 The New Yorker’s erudite John Cassidy praised Hayek as the economist of the 20th Century, coupled with words of praise for Hayek’s mentor, the pro-gold von Mises. The New Yorker: decennial beacon of sanity?
Meanwhile, at The National Interest‘s September-October issue, Barry Eichengreen provides a lengthy, thoughtful, and perplexed, “A Critique of Pure Gold.” Eichengreen is one of the most respected students of the status of the dollar, author of the Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System, as well, of course, of Golden Fetters: The Gold Standard and the Great Depression. He observes:
How to create tens of millions of jobs, good jobs? Much hinges on the answer to this question.
Long gone are the golden Reagan-Clinton years that saw almost 40 million new positions created. In the decade since Clinton left office America created a paltry 3 million under George W. Bush, and Barack Obama recently was scored as having the worst job creation for a first period in office of any president since 1890, excepting Hoover.
The Permanent Government seems confused about what to say, much less do, to turn this around. The Insipid Recovery’s threat to turn into a Double Dip is starting to concentrate the mind of the political class wonderfully. D.C., where our tax dollars go to die, finally is beginning to focus on the right question: How to create jobs?
There are two theories. Progressives believe that the answer lies in government job creation (stimulus, bailouts, “shovel-ready” public works). Supply-siders believe that the answer lies exclusively in human action, entrepreneurs and businesspeople, and that the government needs to get its boot off our necks. Watch Fight of the Century for a wonderful rap version of the debate — between Keynes and Hayek — produced by John Papola and Russ Roberts.
President Obama, cheered on by the elites, relied on the power of government to create jobs … and failed. Reagan and Clinton relied on the free market. They were attacked as tools of the plutocrats for doing so yet delivered the goods: massive job growth.
What’s the matter with Thomas Frank? This question was posed and answered a few years ago in The New York Sun’s review of Frank’s The Wrecking Crew. “Mr. Frank’s point about contemporary conservative politics is straightforward and dogmatic,” writes the Sun. “It lives and breathes to support American plutocracy.”
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.