Thursday, August 1, 2019

Interview: Walter Block does not care about Chinese currency manipulation, backs a return to the gold standard

Editor's note: This article was originally published on January 25, 2017.

This is the fourth article in a six-part series featuring the views of Walter Block. The firstsecond, and third pieces are available on-line.

Story by Joseph Ford Cotto

Does time really change people?

Folks older and, presumably, wiser than myself have claimed as much. This idea sure sounds nice; like the sort of thing one might expect to find on a greeting card from disowned family, the type of sermon which can be anticipated from the pastor who wants to please his flock (donations do not pay themselves, you know), or the kind of shtick a forsaken housewife believes when her unfaithful husband claims that – this time – he really has turned a new leaf.

Color me unconvinced.

I believe that people have a certain personality type, determined mainly by genetic factors, and this is set in stone at a young age. My perspective is not based on sentiment, but the cold, hard facts of cognitive science.

Unlike personality, situations may change rapidly. As the tide turns, different sides of the same individual are unveiled. This creates the illusion that someone really has altered his or her life in a meaningful way. When the foam and fuzz of sentimentality are wiped away, however, it is nothing more than situational adaptation.

So, what does any of this mean for monetary policy? More than you might think.

The valuation of any currency is relative to the actions of individuals. When the fiat system used to determine the worth of American money enters the picture, human behavior becomes far more important. Without an anchor such as gold or platinum, and only a promise that our currency is valued at a certain level, things are – shall we say – always on pins and needles.

If people do not change with time, then what happens when more folks with certain personality types have children? Seeing as nature produces things in abundance, and the more intelligent and/or highly educated are less likely than others to reproduce, America could very well have a fiscal landslide – let alone cliff – on its horizon.

As if this nightmare scenario was not, well, nightmarish enough, foreign agents have made it their mission to attack America’s monetary stability without even leaving their own home base.

China is notorious for its currency manipulation schemes. Beyond this, however, it not only owns a tremendous amount of our national debt, but accounts for much of our trade deficit as well. How might America level the playing field in the near future?

“I don’t see any need to level any playing fields,” Dr. Walter Block tells me. He is the Harold E. Wirth Eminent Scholar Endowed Chair in Economics – how is that for an accomplished title? – at Loyola University New Orleans’s J.A. Butt School of Business.

Block is also the author of Defending the Undefendable, a bestseller from 1976 which conservative journo Marcus Epstein said portrays “pimps, drug dealers, blackmailers, corrupt policemen, and loan sharks as 'economic heroes'.” In more flattering terms, John Stossel claimed it introduced him “to the beauties of libertarianism. It explains that so much of what is assumed to be evil – is not.”

As Block is an Austrian School economist with solid anarcho-capitalist cred, not to mention a senior fellow at the Ludwig von Mises Institute, and an uncompromising individualist, it is unlikely that he cares about what the peanut gallery has to say concerning his philosophy.

“If we are worried about monetary matters, as we well should be, I think the remedy is in terms of not monitoring the Fed, but getting rid of it, and embracing the gold standard once again,” Block continues. “Then, all such problems will disappear.”

Getting back to more strictly domestic matters, some claim that the surest way for America to enjoy monetary stability is a return to the gold standard. Given current socioeconomic affairs, this is a viable option?

“Yes, yes, yes,” Block declares. “Well, to be technical, libertarians do not favor the gold standard, per se. Rather, we support free enterprise money. That is, the commodity, whatever it is, that the market participants choose as a trade intermediary. When we were free to choose, a century or more ago, we chose gold (and sometimes silver). This time, who knows? Maybe it will be platinum, or silver or copper, or even bitcoin. I use ‘gold’ as a sort of shorthand for free enterprise money, whatever it is.”

It would strain credulity to claim that a return to the gold standard is an easy undertaking. 

Nevertheless, if concerned citizens want the value of their money to remain stable – protected from risks both abroad and at home – they should remember that the gold standard did not become known as the gold standard for nothing.

This is to skirt the question of which tax is a fair one or the ever-rancorous debate over whether Donald Trump’s economic proposals will bring higher wages to average Americans. These timely topics are saved for tomorrow.