Wednesday, June 7, 2017

"The Ronald Reagan of France”

Yesterday’s Wall Street Journal carried an interesting piece about President Emmanuel Macron of France, comparing him — at least on the charismamometer — with U.S. President Ronald Reagan.  As the article by Walter Russell Mead of the Hudson Institute stated, “[Macron] is approaching the job like a French Ronald Reagan. . . . Reagan presented himself as a heroic and transformational leader.  This is what Mr. Macron has been doing.”  (“Has France Found Its Ronald Reagan?” The Wall Street Journal, 06/06/17, A15.)
President Emmanuel Macron of France
According to Mead, Macron faces two major problems, “[a]side” (of course) “from the usual scandals already swirling around the new administration.”  These are, one, fixing the French economy, and, two, getting the European Union back on track after Brexit.  Both are tall orders individually, and the combination could well defeat even a French Ronald Reagan.
. . . unless he takes a page from the American Ronald Reagan’s book and gets behind a “Homestead Act” that would extend Abraham Lincoln’s 1862 land-based initiative to all other forms of capital, i.e., commerce and industry — not neglecting land and infrastructure, either.
As Reagan said in a speech to Young Americans for Freedom on July 20, 1974 while still Governor of California, “Over a hundred years ago Abraham Lincoln signed the Homestead Act.  There was wide distribution of land and they didn’t confiscate anyone’s privately owned land. . . . We need an industrial Homestead Act.”  Nor did he neglect it while President of the United States.  As he said in a letter on June 22, 1981 to Governor Pierre S. du Pont IV on the signing of HB 31 to encourage the broadening of the base of capital ownership among people of the State of Delaware,
Governor Pierre du Pont IV signing HB 31
I have long believed that the widespread distribution of private property ownership is essential to the preservation of individual liberty, to the strength of our competitive free enterprise economy, and to our republican form of government. . . . [W]e must work to create the conditions for expanding the ownership of the nation’s wealth, so that all Americans may have their fair chance to become true proprietors of their country. . . . Our national task today is to restore the conditions for economic recovery, without which our prosperity and our national security cannot be assured. We must restrain the headlong growth of the Federal budget; enact multi-year across-the-board tax reductions to spur new job-creating investment and productivity; roll back the tangle of regulations which needlessly hamper enterprise; and cleave to a sound monetary policy which preserves the strength of the American dollar. But even as we act boldly to achieve these goals, we must work to create the conditions for expanding the ownership of the nation’s wealth, so that all Americans may have their fair chance to become true proprietors of their country.
Nor did Reagan stop there.  As he declared in a speech on foreign policy presented to the American Legion on February 22, 1983, “Our economic assistance must be carefully targeted, and must make maximum use of the energy and efforts of the private sector. . . . Economic freedom is the world’s mightiest engine for abundance and social justice. . . . Developing countries need to be encouraged to experiment with a growing variety of arrangements for profit sharing and expanded capital ownership.”
Senator Long and Reagan after accepting the Task Force Report
The highpoint, however, came in 1987 with CESJ’s Presidential Task Force on Project Economic Justice.  On August 3 of that year, Regan made a speech to the Task Force, noting “I’ve long believed one of the mainsprings of our own liberty has been the widespread ownership of property among our people and the expectation that anyone’s child, even from the humblest of families, could grow up to own a business or corporation.”  Three years later Reagan mentioned ownership-expanding techniques in an address given during his visit to the Gdansk Shipyard in Poland in September 1990.
What all this leads us to is the possibility that Macron can solve both of his major problems with the same solution.
First off, any program of economic revitalization doesn’t start with trying to figure out how many jobs you need to create, how much more debt the government can take on before starting to implode, or how to screw the other guy or country.  No, it starts with a currency reform and an overhaul of the tax system — in other words, where the money comes from and how government gets funded.
Charlemagne reformed the currency in the Carolingian Renaissance
Of the two, monetary reform is the main thing.  You can hold off on taxes for a while (but not too long), but you had better get the currency in order as a prerequisite to everything.  Every program of economic revitalization and political stabilization in history that worked has started by establishing and maintaining a sound currency.  Solon of Athens, Charlemagne, Henry II of England, — the list could go on for quite a while.
So, Step One for Macron is to reform the Euro, transforming it from an application of failed Keynesian Modern Monetary Theory, to an elastic, asset-backed, standard, uniform, and stable reserve currency . . . and that means relaunching the European Union on a much more sound financial foundation.  Neither France alone, nor even France and Germany, can do it by themselves.  Everybody must go along with the currency reform, or it won’t work.
Pope Saint John Paul II commending CESJ for its work
How to persuade others is, fortunately for us, Macron’s problem, not ours.  How to transform the Euro is, even more fortunately, child’s play compared to getting all the other countries to go along with the reform.  Very briefly, the European Central Bank must shift from backing the currency with government debt, to backing it with private sector hard assets.  That’s what commercial and mercantile banks and central banks were invented to do, anyway.
It is somewhat tedious to describe, however, so here we’ll just say it not only can be done, it has been done, and done successfully — until the politicians took over and cranked up the printing presses again.  The Federal Reserve operated in this way for two years before the politicians decided to finance entry into World War I by borrowing and issuing government debt instead of raising taxes.
What we’re concerned with here is Step Two — taking tax reform as Step One-and-a-Half.  Macron needs to have the legislature implement an aggressive program of expanded capital ownership.  The goal would be to make every child, woman, and man in France and, soon after, the European Union an owner of capital on a tax-deferred basis up to a level of capital self-sufficiency, so that everyone gains an income from capital as well as (or instead of) labor.  Funding for this?  See Step One.  It’s what commercial, mercantile, and central banks were invented to do. . . .
So, yes, Macron can not only be the “French Ronald Reagan,” he can do what Reagan was never able to do: build enough political support to implement something along the lines of a Capital Homestead Act.  If Macron does that, future generations of grateful Europeans and Americans might well be calling Reagan “the Macron of America” . . .

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