INSIGHTS: MONEY INTERESTS EVERYONE, SO WILL IN MONEY WE TRUST
Guest Columnists: Steve Forbes, Chairman and Editor-in-Chief, Forbes Media and author, including the recently released book In Money We Trust.
A ruler is always 12 inches long, a pound always weighs 16 ounces. So then why does the value of our money – an instrument of measurement as crucially important as any other – fluctuate with the whims of government appointees?
That’s one of the fundamental questions my new public television documentary explores. In Money We Trust? examines the long, fascinating story of money and monetary policy. It explains how, when done right, monetary policy decisions can bring about positive social change, improve people’s lives, and constructively shape our world. And, when done wrong, they can tear economies down and throw societies into chaos.
Money is nothing more than a measurement of value. When money is trustworthy, when its value is stable, we flourish. This has been true since ancient times, when the first forms of money revolutionized human existence. It enabled people to freely trade in all kinds of goods, not just barter a thing they had made for another product someone else had produced. It created cities, built nations, and supported global explorations. Money was even the driving force behind the creation of philosophy, when Greek thinkers began to assemble and exchange ideas on the fringes of city markets made possible by the new concept of money.
Throughout history, societies and economies have been the most productive when the value of money was stable, usually tied to a specific value in precious metals, typically silver and most importantly gold. This remains true in modern times, with our periods of greatest economic growth coming in tandem with a gold-based dollar. That’s no coincidence. When President Nixon in 1971 took the poorly thought out, politically motivated step of moving the U.S. off the gold standard, it set the stage for many of our present day economic problems – including the financial collapse and housing crisis of 2008.
In Money We Trust? is jargon free. Scholarly discussions of monetary philosophies and policies can sometimes become eye-glazingly pedantic, but this documentary focuses on the rich human tale of money and society. It explains in simple language how our money policies have brought about successes as triumphant as the Italian renaissance and failures as horrible as Hitler and World War II.
In Money We Trust? also holds a message for the future. It comes at an important time, as the Federal Reserve will undoubtedly be making headlines soon with what they choose to do, or not do, with interest rates. It is high time for the Fed, and everyone else, to learn the lesson history has repeatedly tried to teach us – attempting to guide an economy by manipulating the value of its money is as senseless and futile as trying to control obesity by manipulating the bathroom scale.
Even if the subject of monetary policy does not normally get your heart racing, I hope you’ll give In Money We Trust? a try. It’s being aired on many PBS stations, and you can also find it anytime at inmoneywetrust.org. The dollar bills in your wallet may never look the same to you again.
ON THE ECONOMY: IT’S NOT EASY BEING GREEN
John Dunham, Managing Partner, John Dunham & Associates
It’s not easy bein’ green. It seems you blend in with so many other ordinary things. And people tend to pass you over ’cause you’re not standin’ out like flashy sparkles on the water, or stars in the sky. So sang Kermit the Frog, or, well Jim Henson, in the 1970 song written by Joe Raposo, and covered by everyone from Frank Sinatra, to Don Henley to Cee Lo Green.
And it still is not easy being Green, just ask freshman Congresswoman Alexandria Ocasio-Cortez (D-NY). She is the public face of a proposal called the Green New Deal, a hodgepodge of well-worn Democrat Party policy ideas wrapped inthe cover of environmentalism (see the blog post Green is the Colour for a discussion of the environmental policies included in the legislation).
While many on the other side of the aisle have focused on this proposal as a way to decry the socialist tilt among the Democrats, the fact is that there is very little socialism actually in the bill. (For a discussion of Socialism see the March 2016 Manifesto) Rather it is more a list of often contradictory measures geared to create talking point stargeted at various favored constituencies. In effect, the Green New Deal is more of a package of Populist Party proposals from the late 1800s rather than a socialist manifesto.
Populist movements are mass mobilizations of ordinary people, generally encouraged by a charismatic leader, taking some sort of us versus themstance. Populism does not necessarily have to be authoritarian but does tend toward that style of politics. Populist leaders (think Eugene Debbs, Donald Trump, Hugo Chavez, Fidel Castro, Mao, Joe McCarthy) tend to stir up anger, float conspiracy theories, encourage the distrust of (so-called) experts, promote nationalism and demonize outsiders. The United States regularly goes through bouts of populism. In fact populism vs. elitism was at the core of the constitutional debates between Alexander Hamilton and the Federalists and Thomas Jefferson and the Democrats.
The first truly populist presidential administration was that of Andrew Jackson (note that President Trump has a painting of Jackson hung conspicuously next to his desk in the oval office). Jackson’s populism was a backlash against the increasing power of the Federal government, and harkened back to Jefferson’s idea of a country made up of independent farmers. Jackson rallied against the elites that held sway over the electoral college and won the Presidency through the votes of a mass electorate. Jackson’s populism dominated American politics until the Civil War and the Industrial revolution which helped the Republican Party (which represented urban workers) gain control.
The current crop of Democrat Populists is more similar to the Populist Party of the late 1890s. Farmers had long pushed for higher inflation as a way to reduce their debts. The Greenback Party was organized through local Grange Halls and ran candidates through much of the post-Civil War period. Following one of the country’s worst recessions in 1890, farmers needed money to help make it through the downturn, but a deflationary spiral was reducing the money supply. Populists called for an expansion of silver coinage (in effect a bout of inflation) to help debtors while reducing the value of bank loans.
During the 1896 campaign, former Nebraska Congressman William Jennings Bryan, delivered a speech filled with political hellfire at the Democrat Party convention and captured the party’s nomination. While Bryan ran as a Democrat, he was also backed by the Populist Party which was founded in 1892 as an offshoot of the Greenback Party. The Populists supported the banning of strikebreakers, the introduction of referenda, shortened work days, nationalization of the railroads and Temperance. For the Populists “the people” were small, independent farmers while the “elite” were the bankers and politicians of the northeast.
Populism was again on display in the 2016 presidential election with both Bernie Sanders and Donald Trump, running on anti-establishment platforms in the Democratic and Republican parties, respectively. With Mr. Trump’s victory, populism became the de facto mantle of the Republican Party, and the reaction to his presidency has emboldened populists on the Democratic side of the aisle. The Green New Deal is a merging of populism with traditional Democrat Party platform planks and zealous environmentalism. However, the real heart of the Green New Deal harkens back to the populism of the late 1890s.
Inflation: The economic goal of 1890s populism was to push up inflation. This would benefit farmers over the elite eastern bankers. Inflation is also a buried part of the Green New Deal. For example: Meeting 100 percent of the power demand in the United States through clean, renewable, and zero-emission energy sources; upgrading all existing buildings in the United States and building new buildings to achieve maximum energy efficiency, and the development of high-speed rail; and particularly government provision of nationalized health care, housing and a guaranteed high-paying job will all be extremely expensive and paid for with borrowing. This will stoke massive inflation.
Unionization: Rural populists partnered with the union movement to gain access to urban voters. The modern populists continue this tradition by ensuring that the Green New Deal mobilization creates high-quality union jobs that pay prevailing wages, strengthens the right of all workers to organize, unionize, and collectively bargain; strengthens labor, workplace health and safety, antidiscrimination, and wage and hour standards; and enacts and enforces trade rules, procurement standards, and border adjustments with strong labor and environmental protections.
Supporting Farmers: The 1890s populists were a rural based movement. While the Democrat Party now has an urban base, the Green New Deal continues the history of populism by supporting family farming; by investing in sustainable farming and land use practices; and by building a more sustainable food system that ensures universal access to healthy food.
Creating an Us vs. Them Mentality: All populist movements require a campaign against some group of antagonists. These could be anything from bankers to foreigners, to Jews to negros, to communists. The proponents of the Green New Deal also do this, but with a twist. Rather than directly attack an antagonist, they promote positive discrimination for favored groups. This is done by creating laws that directly support certain groups of people referred to as “frontline and vulnerable communities”.
It is also interesting to note that another populist movement of the 1890s was the Socialist Party of America. One of it founding members, Eugene Debbs, was also a founding member of the Industrial Workers of the World (IWW). The Socialist Party platform was similar to that of the Populist Party; however, it was more dominated by trade unionists and urban intellectuals. The Green New Deal also harkens back to this movement through:
Internationalization: Socialism was always an international movement. Che Guevara was a Mexican national who was a leader of the Cuban revolution, and died trying to bring socialism to Bolivia. The Green New Deal is also international and calls for the promotion of the international exchange of technology, expertise, products, funding, and services, with the aim of making the United States the international leader on climate action, and to help other countries achieve a Green New Deal.
Nationalization: The Green New Deal also mirrors 1890s populism in its penchant towards nationalization. The proposal states that the Green New Deal will provide and leverage, in a way that ensures that the public receives appropriate ownership stakes and returns on investment; it also calls for investments to build wealth and community ownership particularly in frontline and vulnerable communities, and deindustrialized communities.
Interestingly, the Populist and Socialist parties in the United States were undermined by the two Presidents Roosevelt, in particular Franklin Roosevelt who sponsored the actual New Deal. Both trustbusting and the safety net provisions of the 1930’s undermined the parts of the capitalist machinery that tended to encourage socialist beliefs. While the recent growth of technology monopolies is a huge step backwards, they have not created the conditions that led to socialist and populist movements in the past. That said, populism has always had a place in American political debate, and today it is as strong as ever. Its not easy being green, but today’s populists are standing out like flashy sparkles on the water, or stars in the sky.