In a noteworthy essay in the Financial Times entitled “West needs to go back to capitalist basics”, Dr. Mahathir Mohamad forthrightly observes that:
“A new “Bretton Woods” should be convened with adequate representation from the poor countries. It should consider a trading currency based on gold, against which all other currencies should be valued. The fluctuation of the price of gold would be minimal. Business would be exposed to less uncertainty. Governments should fix the exchange rate based on gold or economic performances.”
Dr. Mohamad’s call in this and certain other respects so closely mirrors the prescription contained in the new book by Reagan Gold Commissioner Lewis E. Lehrman (with whose eponymous institute this columnist professionally is associated), The True Gold Standard as to be positively uncanny.
As its longest serving prime minister, Dr. Mohamad instituted policies that transformed Malaysia from an impoverished, third world country, to a first class, modern nation. The policies of the Mohamad administration produced long stretches of 9% annual growth, setting a climate in which Malaysians could prosper and making Malaysia known as one of the “tiger cub economies.” Dr. Mohamed oversaw policies that dramatically reduced poverty and, a sure sign of the free market at work, reduced income disparities.
Of perhaps even greater notability was Dr. Mohamad’s facing down the IMF during the catastrophic Asian meltdown in 1998. He defied the global institution and, instead, linked the Malaysian ringgit to the dollar. This, in part, enabled Malaysia to recover more quickly than its neighbors. Whatever political and social disputes one may have with him, Mohamad’s credibility as to economic policy simply cannot be disputed. And a call for gold can be surprising only to those unfamiliar with the glory of the civilization that Dr. Mohamad reflects.