Bartley's Medal

Wall Street Journal ^ | December 4, 2003 | Editorial

[OESY]

We hope our readers will allow us a moment of pride and gratitude today as we extend our heartiest congratulations to Wall Street Journal columnist and Editor Emeritus Robert Bartley, who was awarded the Presidential Medal of Freedom yesterday by President Bush.

[ClearCase_guy]

I have no use for Cronkite, Rather, Jennings, Koppel or Brokaw.

But Bartley? He really is one of the great journalists of the 20th Century.

[sarcasm]

In Bartley's own words: "I think the nation-state is finished."

[sarcasm]

Does the Global Economy Need a Global Currency?
By Robert L. Bartley
The Wall Street Journal
June 30, 2003

SANTA COLOMBA, Italy--At this rural crossroads a short cab ride outside Siena's medieval gates, the question of the day is: "Does the Global Economy Need a Global Currency?"

"Yes," declares former Federal Reserve Chairman Paul Volcker, adding that the 15 or so onlookers here are maybe half the people in the world willing to entertain the question seriously. They include former Israeli central bank head Jacob Frenkel, former Argentine Finance Minister Domingo Cavallo and currency-board champion Steve Hanke. They've been gathered by Nobel Prize economist Robert Mundell for his 10th Santa Colomba Conference.

The first conference was held in 1971, three weeks after President Nixon's Aug. 15 announcement severing the link between the dollar and gold and breaking up the Bretton Woods international monetary system. This was also two years after young Professor Mundell spent $20,000 to buy the five-story limestone castle once owned by Pandolfo "Il Magnifico" Petrucci, who ruled Siena from 1487 until his death in 1512. Filled with endless shelves of books, it's now Palazzo Mundell, home and personal conference center for a man who's influenced the world not by Petrucci's notorious treachery and violence, but by the force of ideas. Mundell ideas motivated both the Reagan administration economic policies in the U.S. and the advent of the euro on this side of the Atlantic.

And if the euro can replace the franc, mark and lira, why can't a new world currency merge the dollar, euro and yen? The euro's recent recovery against the dollar almost certainly establishes its credibility as a permanent currency. While major eurozone economies remain troubled, practically no one so far is blaming the European Central Bank.

This suggests success for the grandest reform of all, a supra-national central bank. The ECB Executive Board and Governing Council could yet become political targets, of course, especially if much-discussed deflation actually sets in. But even with strikes in Germany and France, few politicians seek a way out in a little more inflation or currency depreciation; few complain about the loss of "monetary sovereignty."

World money, with a world central bank, seems a next logical step. The small band of dreamers decamped to the hills of Tuscany has always been skeptical of prevailing wisdom that the answer to all exchange-rate problems is "float." The euro was introduced at $1.18 to the dollar on Jan. 1, 1999, floated to below 83 cents in October 2000, and floated back to $1.18 this spring. In four years, that is, down 31% and back up 44%, with no obvious economic fundamentals to explain the float, er, gyrations.

In theory such monetary gyrations will disturb the real economy, and for whatever reason the years 1999-2003 have indeed been peculiar ones, with a tech-stock "bubble," a stock-market crash and a grudging world recovery. Over this time, too, U.S. monetary policy has tended toward the hyperactive, with the Fed tightening in 1999, easing dramatically in 2001 and just now cutting its open-market interest rate to an all-time low.

It's not easy to tease out the skein of causation connecting these events, but we do know from history that changes in the international monetary order have powerful effects, economic and often political. The Bretton Woods system of fixed exchange rates provided an international monetary stability that helped rebuild the world after World War II, for example. Its breakdown led to a decade of world inflation, an "energy crisis" and war in the Middle East.

With the advent of the euro, the world has evolved a system of currency blocs. The dollar and euro zones are perhaps each large enough not to be overwhelmed by currency changes--or at least, say, to delay the inflationary impact of the recent decline in the dollar. But around the world small and open economies--Argentina, for example--suffer profound economic and political shocks when the two currencies in which they trade gyrate by 30% or 40%.

For such nations in particular, the Mundell view stresses that floating exchange rates, recently a standard prescription of the International Monetary Fund, are not a policy but the lack of a policy. Under fixed rates, the central bank of a small nation devotes monetary policy to targeting the exchange rate with a larger neighbor; this is a policy. But a "float" simply takes away the anchor; for a policy you need another target--historically the price of gold, more recently some measure of the domestic inflation rate.

Under the second Bush administration, the United States has set out to establish itself as a positive force for order in the world, but it has been uninterested in the non-military side of world power, in particular the monetary leadership exercised so successfully by the U.S. during Bretton Woods or Great Britain during the 19th century. A world money would be an extraordinary boon to international stability.

When the U.S. gets ready to seize world leadership, Bob Mundell has a plan, based on the euro and looking toward the year 2040. To wit, all currencies convertible into an international money, the dey (dollar, euro, yen) or perhaps the intor. The supply of this currency under supervision of an international board; monetary gains from its issue split along IMF quotas.

As the Palazzo Mundell finale, he gave a banquet suitable for "Il Magnifico," with a suckling pig turning on an open spit and diners seated at a table guarded by twin suits of armor. He'll take his latest Santa Colomba conclusions to the IMF meeting in Dubai in September. Could it happen that his ideas will reach beyond a few dreamers in Tuscany to the real world? Well, with supply-side tax cuts and the euro, I've seen it happen twice before.

Mr. Bartley is editor emeritus of The Wall Street Journal. His column appears Mondays in the Journal and on OpinionJournal.com.
Copyright 2003 Dow Jones & Company, Inc. All Rights Reserved.

[Finalapproach29er]

Open borders traitor to the constitution.

[pittsburgh gop guy]

Bartley is great - one of the reasons I subscribe to the WSJ.

And a stark contrast to most of the hippy and fellow-travelers that Clinton gave the Medal of Freedom to.

[presidio9]

But Bartley? He really is one of the great journalists of the 20th Century.

I am a big fan of Bartley and his economic views. That being said, the fact that he never fired Al Hunt will always be a black mark for him in my book.

[ClearCase_guy]

I can't argue with that!

[OESY]

BRAVO FOR BOB BARTLEY (NY POST Editorial, December 6, 2003)

President Bush announced Wednesday that he was conferring the Presidential Medal of Freedom - the highest award given to a civilian - on Robert Bartley of The Wall Street Journal.

The prize is well-deserved.

Bartley served for 29 years as the Journal's editorial page editor. During that time, he and his staff forcefully - and successfully - challenged the political status quo, particularly on tax, spending and regulatory policy.

In the late 1970s, under Bartley's guidance, the Journal's opinion section became a key intellectual launching pad for conservative ideas.

An unswerving advocate of the free market, Bartley helped introduce to the Journal's readers "supply-side" economic philosophy.

Leaders like then-Rep. Jack Kemp (R-Buffalo) absorbed then-radical ideas of across-the-board tax cuts as a way to stimulate the economy.

Presidential candidate Ronald Reagan did the same.

The passage of the Reagan tax cuts in 1981 ushered in what Bartley later termed (in a book title, no less) "the seven fat years" of the 1980s.

In the '90s, the Journal's editorial pages featured a lively, vociferous criticism of the Clinton administration, identifying in its earliest days the characteristic deceptive behavior that culminated with the first impeachment trial of an elected president.

Bartley retired as editorial page editor two years ago, but remains at the Journal as a provocative and engaging columnist.

In his statement conferring the Presidential Medal of Freedom on Bartley, Bush describes his writings as having "profound insights, passionate convictions, a commitment to democratic principles and an unyielding optimism in America."

Bob Bartley helped push forward an intellectual revolution that brought about remarkable change within the United States and around the world as well.

Bravo.