I wrote at Forbes in 2014, "Great Britain, and the world, hardly could be better served than by, in due course, elevating [Kwasi] Kwarteng to the Exchequer."
Now, UK Prime Minister Liz Truss has tapped Kwasi Kwarteng for that very job.
Welcome Prime Minister Liz Truss and Chancellor Kwarteng, Britain’s equivalent to U.S. treasury secretary. We few remaining O.G. Supply Siders celebrate the ascension of the first worthy successors to Reagan and Kemp to offices powerful enough to reboot the policies that made America equitably prosperous under Reagan and Clinton.
Those policies that generated equitable prosperity were attacked as "voodoo economics" by the Establishment’s George H.W. Bush.
Yet they worked great in practice, putting America on course to doubling its real per capita GDP from adoption to now.
Their updated equivalent will work in the UK too, as Kwarteng shows he well knows. Across the pond, my counterpart scriveners are focused on the dire economic problems that Britain faces. It’s a true crisis.
Thousands of small businesses, such as pubs, are threatened with closure by energy prices as much as quintupling. Lucky for Merrie Old England, Kwarteng is equipped to handle the crisis with short term borrowing.
Keynes, who shrewdly noted, in his Tract on Monetary Reform, "in the long run we’re all dead," elsewhere called Kwarteng’s sort the "one man in a million."
Keynes, in his The Economic Consequences of the Peace, wrote: "There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Bad monetary policy as a key perp? Not hyperbole.
Liaquat Ahamed traced the cause of the Great Depression to feckless monetary policy in his Pulitzer Prize winning The Lords of Finance.
But wait. There’s more.
One recalls how Churchill, when himself Exchequer, was persuaded (against the advice of John Maynard Keynes, who rudely but aptly called this move "imbecile" ) to restore the value of the pound to pre-war parity causing a massive depression that nearly ended Churchill’s political career.
It was widely seen, by Churchill among others, as a massive blunder.
Kwarteng knows his way around economic, including monetary, policy as demonstrated by his magisterial, "War and Gold: A 500-Year History of Empires, Adventures, and Debt."
Kwarteng is no gold bug, yet he appreciates the power of good money.
He brings a welcome pragmatism grounded in history, including an appreciation of the need for monetary authorities to maintain the currency’s stability as a unit of account and a store of value.
Sound like something only a small (or private) group would understand? It’s not.
The pound sterling is at poorest level relative to the dollar (the world’s reserve currency) in 37 years. This is one of the roots of rising prices in England.
Kwarteng is well equipped to understand this … and to do the right thing (after a bit of the requisite amount of politically requisite legerdemain).
Spoiler alert. A happy ending beckons.
Germany, after World War II, was a bombed-out ruin. Most "experts" thought that the German economy would be irrecoverable for generations.
Germany’s woes and prospects, in 1946, were vastly worse than Great Britain’s today.
Along came the ordoliberal (socially conscious capitalist) Ludwig Erhard with the power to impose the key reforms of good (rather than soggy) money, no price controls, sensible regulation and modest tax rates.
The rest, as they say, is history.
Erhard lit the candle of the Wirtschaftswunder, the the Miracle on the Rhine.
Per David R. Henderson at Econlib: "The effect on the West German economy was electric. Wallich wrote, "The spirit of the country changed overnight. The gray, hungry, dead-looking figures wandering about the streets in their everlasting search for food came to life. . . . "
As the great French economic advisor to de Gaulle, Jacques Rueff, observed [as recorded by Erhard himself]:
"Only an eye-witness can give an account of the sudden effect which currency reform had on the size of stocks and the wealth of goods on display. Shops filled up with goods from one day to the next; the factories began to work.
"On the eve of currency reform, the Germans were aimlessly wandering about their towns in search of a few additional items of food.
"A day later they thought of nothing but producing them. One day apathy was mirrored on their faces while on the next a whole nation looked hopefully into the future."
The power of stable money, no rationing, sensible regulation and low, broad-based, tax rates to restore equitable prosperity is well known. Kwarteng assuredly knows them.
Expect a British version of Wirtschaftswunder, a Miracle on the Thames.
Farewell, Elizabeth II.
Welcome Liz Truss and Kwasi Kwarteng.
God Save the King.
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply-Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $94T. Read Ralph Benko's reports — More Here.
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