A New Public Philosophy

The Presidential election was a political avalanche. There are many ways to interpret it, but the significance of the vote is unequivocal. President Reagan clearly has a mandate to change the direction of public policy in America. It is true that much of the vote was an anti-Carter vote. It is also true that the House of Representatives remains in Democratic hands. But the Senate is a Republican body today for the first time since the early Eisenhower years (1954). And in any event the House of Representatives may wind up in the hands of a coalition of Republicans and moderate-to-conservative Democrats, all of whom may be interested in a change of direction in public policy. Whether this will be a desirable outcome will depend on one's philosophical point of view.

The Reagan victory was no surprise to some thoughtful analysts of the trend of public policy in America. The old public philosophy, born during the 1930's, had begun to tire during the 1960's and was exhausted in the late 1970's. For two generations the nation had been governed by a world view and public institutions which originated during the worst period in our nation's economic history, the Great Depression. I think it is fair to say that Franklin D. Roosevelt's "New Deal" was a profound American social and legislative response to the catastrophe of unemployment and deflation in the 1930's. Out of this suffering came the Roosevelt coalition which gave us a set of liberal-big government, social-democratic values which have endured almost to this very day.

However, as early as 1964, fundamental questions about the New Deal consensus made their way into the debate over public policy. The Republican Party, following in the successful wake of the Democratic Party, at first tried to practice moderate liberalism. But it, too, had become a New Deal Party. As a result of this change, the Republican Party became a battleground between those who wanted to move beyond the New Deal, the conservative reformers — and those who wanted to manage the welfare state, the liberal, Northeastern Republicans. The victors in this struggle for leadership of the Republican Party were the conservatives from the West, the Midwest and the resurgent Republican parties of the South. Their first candidate was Barry Goldwater in 1964. As we know, Lyndon B. Johnson campaigned against Barry Goldwater as a warmonger and a reactionary — and defeated him. The irony of the next four years, as President Johnson escalated the war in Vietnam and ignited the fires of inflation and social conflict, was lost on very few Democrats.

Then came the Nixon years. A Republican and Democratic coalition of moderate and conservative public philosophers and legislators came together during this period to re-organize and manage more efficiently the New Deal heri­tage — but not to change it. Pat Moynihan of Harvard called this experiment Tory Democracy. Evoking Prime Minister Disraeli of England and his clever words, Moynihan called upon the Republicans (the "Tories") to "dish" the Demo­crats, (the "Whigs"), by co-opting the welfare state of the liberals. The exper­iment failed. The catastrophe of peacetime price and wage controls, inflation, and Watergate engulfed the Nixon Administration before it was able to fulfill any of its electoral mandates. In spite of the astonishing Nixon electoral vic­tory in 1972, there were some who would argue that President Nixon was neither temperamentally nor philosophically convinced that New Deal economic and social institutions, the status quo, needed to be reformed. It was Nixon, we should remember, who said that, "We are all Keynesians now." John Maynard Keynes, an English liberal economist, was one of the chief inspirations of the economic policies prevailing in America during the era of Democratic Party hegemony.

Jimmy Carter's election in 1976 suggested that the liberal Democratic New Deal Coalition was intact, that its public philosophy still prevailed, and that little fear of reform from the right was justified or likely. Many insouciant liberals did not perceive the gradual change in American attitudes toward the welfare state, huge and growing government spending, the depreciation of the dollar, and the assault on many of our social institutions such as family, faith, and work. Those liberals were setting themselves up for a great political shock — what will be recorded by historians as one of the great tremors of American political history.

That tremor is the Reagan victory. Confounding the early conventional wisdom that he was too conservative to win, Reagan swept the field in the pri­maries, just as, in spite of the early skepticism of the self-appointed experts about his competence and intelligence, he decisively swept all before him in the general election.

What does it all mean? The election results mean that we are about to witness a conservative experiment which holds great promise and much risk for Americans from every walk of life. If it succeeds, then we could very easily look back on this period as the forging of a new and productive coalition in American politics — to replace permanently the Roosevelt coalition put together over 40 years ago. As depression was the forging block of the Roosevelt coalition, inflation has tempered the steel of the new coalition. The Reagan coalition is essentially a middle-class coalition of working people. These Americans now believe in less government intervention and spending, fewer government subsidies and programs, diminished government regulation of the private and public lives of every aspect of human affairs.

In economic matters the new public philosophy would entail an effort to restore stability to our currency, budgetary equilibrium in the Federal govern­ment, and financial order to the economics of our public sector. Thus would a new balance between private and public life ensue. Such a balance would weigh heavily in favor of private institutions, private initiative, private values and private economic activities. A stable currency, a balanced budget and a sub­stantial reform of the tax code could once again restore incentive and hope to the work place and to the factories and main streets of America. The reduction of tax rates on labor and saving, a sound monetary policy, and a reduction in the size of our government would release the government-suppressed energies of our people. The reform of our economic institutions and the restoration of incentives could remobilize savings into capital investment, so that once again we could successfully compete in world markets against Japan, Germany and many other countries who are now our peers or our masters.

It is also possible that this experiment in conservative reform could fail. It is possible that four years from now, inflation may continue to rage — the government to have grown even larger in size relative to the private sector.

Indeed, it may even be that the tax burden upon Americans will be higher in 1984 than it is today. I, for one, do not believe in such a disappointing outcome. Many cynics do. If the cynics are right, the conservative reform movement now sweeping America may very well lose the initiative which it has won at the polls in 1980. If the conservative reform movement, now evoking a new sense of hope and possibility throughout our land, were to fail, social and economic conditions in 1984 could lead to even more drastic and radical alternatives.

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The Most Important Thing Holding Up the US Dollar

by Ron Paul

Today’s economic conditions reflect a fiat monetary system held together by many tricks and luck over the past 40 years. The world has been awash in paper money since removal of the last vestige of the gold standard by Richard Nixon when he buried the Bretton Woods agreement — the gold exchange standard — on August 15, 1971.

Since then we’ve been on a worldwide paper dollar standard. Quite possibly we are seeing the beginning of the end of that system. If so, tough times are ahead for the United States and the world economy.

Yellen’s Missing Jobs

March 31, 2014

The new Federal Reserve chairman, Janet Yellen, gave a policy speech today at Chicago, where, in a startling gesture, she mentioned three working individuals by name — Jermaine Brownlee, Vicki Lira, and Doreen Poole. They lost their jobs the Great Recession and have been struggling ever since. It was a refreshing, even affecting demarche by Mrs. Yellen, who has made a return to full employment a public priority. She underscored her sincerity by telephoning Mr. Brownlee and Ms. Lira and Ms. Poole before delivering her speech.

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The Rueffian SynthesisJohn D. Mueller

Publisher's Note: Originally released in June/July of 1991, this detailed report discusses Jacques Rueff's economic theories and applies them to modern economic events.

By John D. Mueller

Who Was Jacques Rueff?

... Trained in science and mathematics at the Ecole Polytechnique, Rueff devoted his first theoretical work to showing that the same scientific method applies to “moral” or “social” sciences like economics as to the physical sciences (Des Sciences Physiques aux Sciences Morales, 1922). In both cases, he pointed out, individual acts can be “indeterminate,” but the pattern of large numbers of individual acts can be predicted as a matter of probability. And so in economics no less than physics, as he later wrote, “A scientific theory is considered correct only if it makes forecasting possible.”

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Excerpts From:


by Lewis E. Lehrman

"Forerunners of man lived upon the planet several million years ago. But the unique, modern, social order of man – civilization – emerged only four to five thousand years ago. Historical and archaeological evidence suggests that the institution of money evolved coterminously with civilization. From the standpoint of the 100,000-year history of Homo sapiens, civilization and money are but young and fragile reeds. Today their very existence is threatened by financial disorder."

Learn More

 

Captain America, Report for Duty!

Kathleen Packard  |  Apr 14, 2014
“Captain America: The Winter Soldier” is now out – just when it finally turning to spring. The movie set a record for an April release at $96 million on its opening weekend – showing that Captain America is still good box-office, at least when fighting a Soviet agent. Chris Evans faces...

Losing La Dolce Vita

Kathleen Packard  |  Apr 11, 2014
France and Italy are Swimming against the tide of European austerity – while the tide of unemployment continues to swamp their efforts to shake off their economic recessions. The Wall Street Journal reported that French President Francois “Hollande’s renewed bid to steer the European crisis response away from austerity could reopen...
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Jacques Rueff, a key figure in European economic circles from the 1930s until the 1970s, was, first and foremost, an...
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Eichengreen (2012, p 128) writes of “gold's inherent price volatility” making it unsuitable to “provide a basis for...
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Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

The Gold Standard Now
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Sean Fieler, James Grant,
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In Memoriam
Professor Jacques Rueff
(1896-1978)

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