Sunday, July 14, 2019

Interview: Cato's George Selgin on whether Donald Trump will make a better monetary policy

Editor's note: This interview was originally published in April 2017.

This is the second of three articles spanning my discussion with George Selgin. The first and second pieces are available. 
Story by Joseph Ford Cotto
Libertarianism has seen better days.
A few years ago, certain political forecasters claimed that the future of America's center-right belongs to libertarians. Since the 2012 presidential election, however, protectionism surged -- not only in the GOP, but among Democratic ranks as well. Now, amid the age of Donald Trump, libertarianism's once-ascendant nature seems a distant memory.
"I fear that the classical liberal/libertarian idea and ideal will be seriously tarnished by the policies and politics of the Trump Administration," Dr. Richard Ebeling, one of our time's greatest Austrian School thinkers, recently told me.
He continued: "Virtually all of Trump’s proposed policies involve a continuation or an intensification of government involvement in social and economic life. He acts as the all-knowing government central planner when he calls in business executives and tells them where to invest and what products they should make to 'create jobs.' He undermines respect for and protection of essential civil liberties when he ridicules the freedom of the press and their way of reporting on his administration’s actions and his words."

Ebeling went on to state his worry "that with the assistance of the mainstream media the Trump Administration’s anti-freedom policies will tarnish the real case for a free society and a free market. That is, people who want lower taxes and fewer regulations on business will be identified as the people who also believe in torture, discrimination against immigrants, violations of civil liberties, and the instigation of trade wars because of aggressive nationalist attitudes."
Much, though certainly not all, of libertarian philosophy hones in on fiscal policy. Understanding the value system of economic libertarianism is not a simple undertaking, though often is presented as such by ideological opponents.
It is ironic that one of our time's foremost authorities on the finances of personal liberty does not refer to himself as 'libertarian.' Rather, he forsakes labels entirely -- along with movements -- and speaks his mind issue-to-issue.
Dr. George Selgin "is a senior fellow and director of the Center for Monetary and Financial Alternatives at the Cato Institute and Professor Emeritus of Economics at the University of Georgia," his biography at the former explains. "[The Doctor's] research covers a broad range of topics within the field of monetary economics, including monetary history, macroeconomic theory, and the history of monetary thought. He is the author of The Theory of Free Banking(Rowman & Littlefield,  1988); Bank Deregulation and Monetary Order (Routledge, 1996); Less Than Zero: The Case for a Falling Price Level in a Growing Economy (The Institute of Economic Affairs, 1997); and, most recently, Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage(University  of Michigan Press, 2008). 
"Selgin is one of the founders, along with Kevin Dowd and Lawrence H. White, of the Modern Free Banking School, which draws its inspiration from the writings of F. A. Hayek on denationalization of money and choice in currency. Selgin has written for numerous scholarly journals, including the British Numismatic Journal; the Economic Journal; the Economic History Review; the Journal of Economic Literature; and the Journal of Money, Credit, and Banking; and for popular outlets such as the Christian Science Monitor, the Financial Times, and the Wall Street Journal, among others. 
"Selgin retired from the University of Georgia to join Cato in September 2014. He has also taught at George Mason University, the University of Hong Kong, and West Virginia University. He holds a BA in economics and zoology from Drew University, and a PhD in economics from New York University." 
Selgin recently chatted with me about many issues concerning the American economy. Some of our conversation is included below.

Joseph Ford Cotto: Is there a negative relationship between high income taxes and the value of American currency?

Dr. George Selgin: No; at least nothing obvious.

Cotto: The Donald Trump Administration promises many changes to federal politics. Do you believe that his economic proposals, generally speaking, will create a better monetary policy?

Selgin: Trump has so far made no concrete proposals concerning monetary policy as such.  His other proposals have no direct bearing either on how that policy will be conducted, or on how likely it is to be conducted properly.  (Of course Trump’s policies will change conditions in a way that can influence the ideal monetary policy stance, but that’s another matter.)  Eventually Trump will appoint new members to the Fed Board of Governors.  That is of course will have some a bearing on monetary policy; but as it isn’t clear who the new appointees will be, it’s impossible to say just how.

Cotto: More than anything else, what should be done to ensure the short-term stability of America's money supply?

Selgin: The Fed needs to devote itself to the single, clear objective of maintaining a stable overall flow of spending.  Some economists call this “nominal GNP” targeting.