Updated: May 3, 2013 12:14PM
Originally published: August 7, 2001
This Memorial Day weekend is the perfect time to think about what we memorialize. The holiday originally started out as “Decoration Day,” to honor those who served the country in war. These days, for many people the three-day weekend serves as the official start of summer - a chance to launch the boat, bring out the picnic basket and play baseball.
But for those of us who watch the financial system, there should be a different approach to the holiday. This is the perfect time to “memorialize” those basic requirements for our free enterprise system to continue to succeed and prosper: a sound currency, the rule of law, fiscal discipline and a reasonable tax structure.
Those principles are worth thinking about this Memorial Day, as the dollar falls sharply against most currencies, as our national debt soars, taxes rise, and as our financial authorities continue to create money and credit at an unprecedented pace.
It is worth thinking about as our free markets bend to the will of government - with the executive branch deciding who is qualified to be CEO, how much top executives should be paid and how their corporate governance should be organized.
It is worth thinking about when we see government put pressure on corporate America, publicly bullying the bankrupt Chrysler’s lenders to give up their preferred debtor status and accede to equity ownership by unions.
It is worth remembering as we see mounting plans to impose taxes to pay for the solutions to our overwhelming financial problems.
Patriotism, not politics
These are not political issues that should be used to divide us. These are problems around which our leaders must unite. It’s not a case of Democrat vs. Republican. And we must remind our politicians of that when they speak patriotically and wave the flag this holiday.
After all, it was President John F. Kennedy - a Democrat - who supported huge tax cuts saying: “Paradoxically, the way to increase tax revenues is to cut tax rates.” Kennedy cut the top tax rate from 91 percent to 70 percent!
America has prospered through history because we adhere to the rule of law, a sound currency, sound fiscal policy and reasonable taxes. Memorialize that.
Corporate America, and in particular the financial services industry, has much to explain. It is impossible to defend the most egregious business practices and corporate governance of the last decade. But we must be careful not to swing to the opposite extreme.
If we demand protection from business, shouldn’t we also demand protection from government?
Immediate solutions, lasting consequences
It’s tempting to bend our principles to find quick solutions. Certainly, there are huge problems facing our country - and not all are financial. The practical consequences of our decisions will impact the future we build for our children.
It’s always tempting to make the “practical” decision that yields immediate results - especially when the “principled” choice involves pain. Ultimately the cost of abandoning our basic American economic principles will be far greater - and eventually we will pay that cost.
The process is starting already.
While Americans might enjoy a holiday of picnics, baseball and relaxation, the world markets make no such distinction. They are selling the American dollar simply because they worry Americans no longer remember the importance of those basic tenets of free markets that always have created economic growth.
It’s important to take a moment this holiday - to remember. That’s the Savage Truth.
Terry Savage is a registered investment adviser. Distributed by Creators Syndicate.