This is the second half of my discussion with libertarian academic Dr. Jeffrey Miron. The first part of our conversation is available here.
Story by Joseph Ford Cotto
Casebook for Use With Macroeconomics.
For those of us who did not major in macro-anything -- even if we have a science degree -- it does not get any more boring than this.
Who would imagine, then, that the fellow who wrote said book in 1992 went on to dominate the libertarian sphere of academia. He did not do it from the fringe as Murray Rothbard did. No, this man went all the way to Harvard University.
To survive as a libertarian at the home base of political correctness, chic radicalism, and all-around self-righteous pretension, you must not only have keen intelligence, but a thick skin.
Thankfully, Dr. Jeffrey Miron has both.
A senior fellow at the Cato Institute, he has argued for matters ranging from comprehensive drug legalization to preventing 2008's now-infamous Wall Street bailout. In 2010, he literally wrote the book on libertarianism -- its apt title being Libertarianism, from A to Z.
"Miron has published more than 25 articles in refereed journals and 50 op-eds in the Boston Herald, Boston Business Journal, Boston Globe, CNN.com, nytimes.com, forbes.com, and other outlets," The Washington Post said of him during 2011.
Miron is also, as you might imagine, an interesting person to speak with. He and I recently conversed about various topics of importance to American society. Part of our discussion is included below.
Joseph Ford Cotto: Some claim that the surest way for America to enjoy monetary stability is a return to the gold standard. Do you believe that, given current socioeconomic affairs, this is a viable option?
Dr. Jeffrey Miron: A return to the gold standard is unlikely; few mainstream economists regard it as a desirable system. The evidence is more nuanced: the U.S. and U.K. both thrived under the pre-WWI gold standard.
But even then, the gold standard in no way guaranteed stability: once WWI broke out, and government expenditure boomed, most countries abandoned gold. Whenever government expenditure is large and volatile, monetary policy is also likely to be large a volatile. The cure is lower, more stable expenditure; not simply adopting the “right” monetary system.
Cotto: Many have heard about the fair tax, but fewer know much about it. In a summary sense, what are your views on the concept?
Miron: The fair tax is essentially a flat tax consumption rather than on income.
A consumption tax has an important advantage over an income tax: it does not discourage savings.
And a flat tax has efficiency advantages over having many rates.
1) A crucial problem with our tax system is all the complicated deductions, exemptions, credits, etc. Having a flat consumption tax does not necessarily get rid of all this stuff. And, we could eliminate those from current system without changing to flat/consumption.
2) And, the main problem for the American Economy is large and growing expenditure. Reforming the tax system does not address this.
Cotto: The Donald Trump Administration promises many changes to federal politics. Do you believe that his economic proposals, generally speaking, will bring typical Americans higher wages?
Miron: No. Reductions in excessive or misguide regulation, or a better tax system, can make the economy more productive; that might improve wages in some sectors / professions (but some of that improved efficiency might instead accrue to owners of capital).
But worse, trade restrictions may end up having disastrous effects on the economy, especially if they generate a trade war.
And many Trump ideas sound more like crony capitalism than true capitalism, which will tend to hurt labor relative to capital. Business people tend to think the capitalism is good because it helps capitalists (i.e., themselves). The right view is that true capitalism hurts capitalists – by subjecting them to vigorous competition – and thereby helps consumers.
Cotto: A few years ago, certain political forecasters claimed that the future of America's center-right belongs to libertarians. Since the 2012 presidential election, protectionism has surged in both major parties. Now, in the age of Trump, libertarianism's once-ascendant nature seems a distant memory. Would you say that libertarian Republican politics have any serious potential under Trump?
Miron: I think libertarians still have, and will always have, a vital place in politics by endorsing policies that promote freedom. Right now those issues have taken a back burner, but they will return as the electorate understands that only giving people more freedom can actually deliver a thriving economic as well as social justicie.
Cotto: During the years ahead, do you see America playing a larger or smaller role in the global economy?
Miron: Hard to say. On the one hand, the path of our policies is making us less productive, which should shrink our role. On the other hand, many other countries are doing even worse. So, we may continue our large role by being “less bad” on policy than most other countries.