Commentary

Gold Standard, Lower Marginal Tax, and Other Ways to Revive COVID-Era Economy

By Colton Grace | October 26, 2020 | 11:43am EDT
A dollar sign is featured on a black background. (Photo credit: YouTube/Javier Velasco Barrero)
A dollar sign is featured on a black background. (Photo credit: YouTube/Javier Velasco Barrero)

When the pandemic and subsequent shutdowns hit, services such as Amazon, UberEats, and DoorDash served almost as the backbone of society and kept many businesses from complete collapse. Furthermore, the American embrace of a free and largely unfettered Internet kept these services available while our friends in Europe suffered widespread slowdowns and outages. 

In his latest masterpiece, "The Ten Commandments of Capitalism," former Reagan Administration official Ralph Benko lays out the roadmap to unleashing the fruits of capitalism through a series of commonsense economic reforms that will help supercharge our recovery and serve as a bulwark against future downturns. 

According to Benko’s First Commandment of Capitalism, we must begin the revitalization of our economy by reducing the government’s take. 

The top marginal tax rate was cut to 39.6% in 2017, but it is time to cut the rate further – back to Reagan’s 28%.

Slashing taxes has historically been a bipartisan solution to boost economic growth. When President Ronald Reagan dropped the top rate to 28%, he unleashed a whirlwind of prosperity. As Benko points out: “the economy grew by almost one-third…in 1984 alone, real economic growth boomed by 6.8%, the highest in 50 years. Nearly 20 million new jobs were created during the recovery, increasing U.S. civilian employment by almost 20%." 

But simply cutting the tax rate is not enough, politicians in Washington must furthermore abide by the Second Commandment: pledging not to raise taxes or eliminate tax deductions.

As was written 2,000 years ago by Lao Tzu: 

"“Why do the people starve? It is because those at the top eat too much, and taxes are too high."

This ancient maxim holds true today. Much wealth is either taken by the government or wasted trying to come up with new ways to prevent it from going to the government. Why not instead incentivize this wealth to be put towards prosperity and raising our way out of this pandemic?  

Instead, some are seriously proposing repealing previous tax cuts, thereby raising taxes on the American people in the middle of a global pandemic. This would be foolish. 

So, now we have lessened the take to government and put more wealth in the hands of the American people. What next? We must stop the federal government from spending us into an early grave, as was the mantra of my old boss, former South Carolina Governor and Congressman Mark Sanford. 

We can accomplish this by making politicians operate by the same legal requirement of 46 out of 50 states that have passed a balanced budget amendment, the Seventh Commandment of Capitalism.

As an example of this tenet, Benko points to the Baltic state of Latvia, which suffered the worst recession in Europe amid the Financial Crisis. After facing a 24% drop in GDP between 2007 and 2009, the country slashed spending across the board. By 2011, it had one of the fastest-growing economies in Europe. No family can prosper while living outside of its means; the same holds true for a nation. 

With taxes reduced and the budget balanced, we must now bring stability into the fold. In accordance with the Sixth Commandment, we must stabilize our monetary policy by setting the value of the dollar to a fixed weight of gold. 

To quote the storied economist Lewis E. Lehrman, the “a dollar convertible to gold would provide the necessary Federal Reserve discipline to secure the long-term value of middle income savings and to backstop the drive for a balanced budget."

In other words, a return to the Gold Standard could very well be the shot in the arm our economy needs not just to recover from this pandemic, but truly become one of the most prosperous economies on the globe. The Gold Standard generated prosperity for centuries, while fiat currency has resulted in instability and decimation of middle-class savings.    

Finally, the COVID-19 pandemic has also made the fight for justice more apparent than any time in recent memory. While discussing potential economic fixes for our condition, we cannot fail to consider the Eight Commandment of Capitalism: ending civil asset forfeiture.

Over the last two decades, the federal government has stolen close to $40 billion in assets from Americans – disproportionately from members of poor and minority communities – many of whom were never charged with a crime. This is highway robbery and an affront to liberty and justice.

One sure-fire way to ensure we never achieve universal opulence is by continuing to allow governments to steal wealth away from its people, whether that be in the form of taxation or outright theft that hides behind a convoluted Supreme Court decision. 

Policies such as these have historically led to some of the most prosperous times, not just in America but across the globe. It’s time to put the time-tested, bipartisan ideas, tenants of capitalism – as revealed by Benko’s excellent new book – into action and brighten our beacon as Reagan’s shining city on a hill.  

Colton Grace is a communications consultant and former aid to Congressman Mark Sanford.

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