Path: bloom-picayune.mit.edu!enterpoop.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.natrev From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: FROM THE EDITOR Date: Wed, 25 Nov 92 12:17:28 EST Message-ID: Lines: 83 FROM THE EDITOR Shadows before Them There can be few more agreeable positions in life than that of President- elect. The sitting President is still responsible for what happens, particu- larly if it is unpleasant, but any really important decisions have to be cleared with the incoming Chief Executive. The results are foreordained. If a policy looks likely to incur unpopular- ity, Mr. Clinton will assume an expression of great seriousness and point out that he cannot intrude on Mr. Bush's prerogatives. If there are goodies to be doled out, however, he will associate himself with the decision. And if, like GATT, it contains both kicks and kindnesses, then it will be en- tirely suited to Mr. Clinton's practiced equivocation. Otherwise, he can go to lunches, dinners, and parties at Pamela Harri- man's, with occasional excursions to the ghetto to show that his heart is in the right place. And since he has done nothing and so offended no one, he gets a warm reception. Meanwhile, however, in Wodehouse's immortal phrase: Fate, in the background, is quietly slipping lead into the boxing glove. He has to be- come President eventually. And the fun comes to an end. One of the advantages of a change of government -- admittedly, I'm whis- tling to keep my spirits up -- is that it enables a reconsideration of poli- cies. Even as Mr. Clinton has been eating and drinking to the applause of Georgetown, the longstanding policy of encouraging exchange-rate ''sta- bility'' has been looking shaky. The European system of fixed exchange rates has been in more or less permanent crisis since ''Black Wednesday,'' when the British pound left the system. A few days before we went to press, the Spanish peseta and the Portuguese escudo were devalued by 6 per cent. The Danish krone and the Irish punt are now judged vulnerable. And even the French franc is beginning to look iffy -- only a few days after the Financial Times ran an admiring article on how the French monetary authorities had finally tamed the speculators. Heigh ho. Milton Friedman predicted just such turbulence (NR, June 11, 1990) when he pointed out that a system of fixed exchange rates offers neither the flexibility of floating rates nor the unalterable certainty of a single currency. It therefore invites speculators to make easy money by placing a one-way bet against weak currencies. In this case, they have made (and the central bankers have lost) billions by betting against a number of weak currencies in quick succession. Another far-sighted prophet on this one is Professor Alan Walters, who, as Mrs. Thatcher's economic advisor, firmly opposed British participation in the European Exchange Rate Mechanism. But he at least seems to have achieved due recognition. When he boarded the Concorde the other day, he got a round of applause from the assorted millionaires. It would be nice to think that this lesson had also registered with Mr. Clinton and, perhaps more important, with his economic advisors such as Robert Reich. But since a policy of floating rates doesn't need the constant supervision of politicians and government advisors, that is probably a for- lorn hope. It has been brought to my attention (i.e., I've had a number of irritable telephone calls) that the cartoon caption on our last cover was obscured in some cases by the address sticker. The words were those of the original Peter Arno cartoon, which has the defeated boxer saying plaintively to his hard-faced manager: ''All of a sud- den you stop saying 'we.''' In Nick Garland's pastiche, of course, this was George Bush addressing James Baker. It was a very good joke, and I apologize to those subscribers who were deprived of it. -- JOHN O'SULLIVAN This article is copyright 1992 National Review. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM