If you read Slashdot frequently, you’ll find that in the midst of the Windows bashing and Me > You flame fests, the name of Ron Paul is often mentioned in hushed tones as the
Republican Libertarian messiah who will rescue Amerika America from The Great Satan (aka George W. Bush). From reading the comments of the barely literate masses, you’d think that Ron Paul inspires more interest than Natalie Portman, naked and petrified. His die-had partisans wet themselves off the fact that he raised $4 million off the internet. Combining that with the $4 million he raised in “meatspace,” that puts him on par with Joe Biden, and behind Chris Dodd and Bill Richardson in the fund raising race. Real impressive, Ron… you’re running neck-a-neck with three candidates who combine for less than 10% of likely primary voters. I’m impressed… NOT!
If I may for a moment piggy-back on the elitist sentiments often displayed by my colleagues, the “masses,” much like Mr. Paul’s partisans, who are rumored to groan “Brains!” during campaign rallies, are dead wrong. Ron Paul, though he has some attractive viewpoints, like being against the war in Iraq (though this is because he’s a rank isolationist, excuse me, noninterventionist) and pro-life (because even children in the womb have a right to property), Ron Paul firmly falls in to the ranks of the bat-shit insane. For those who’ve drunk the libertarian Kool-Aid, I’d like to convict Mr. Paul, not on so-called libertarian positions as espoused by the crazies, but on his own words and positions. “Real Libertarians” might not believe X, Y or Z, but Mr. Paul does, and a just condemnation will be his.
Libertarianism, as a philosophy stands behind the oppression of the weak by the strong in the name of private property. The classic libertarian position on the environment falls along the lines — “It’s my f#@*ing property and I’ll do with it as I please.” Mr. Paul states his opposition to any sort of environmental protection law such as when he proposed a bill to repeal the clean water act. But Mr. Paul, unlike many of his libertarian counterparts, has left the pre-Sumerian age, and realized that what I do with my property can cause environmental harm to someone else’s. Thus, Mr. Paul, inherently distrustful of the evils of Big Government[TM] proposes his solution, which I quote: “If your property is being damaged, you have every right to sue the polluter.” That’s right, the answer to evil Big Government[TM] environmental law is lawyers, lots and lots of lawyers. Forget our elected representatives in Congress, the correct people to decide on the cost of the damage you cause to me by your polluting ways are the unelected judges in the judiciary. Mr. Paul’s stinging critiques of the UN and NAFTA for being “unelected” start to ring hollow. Imagine the look in the eyes of John Edwards’ trial lawyer buddies should this bit of Ron Paul insanity to come to pass — they’ll be seeing big, big, big bucks from all the litigation. Forget an honest day’s work, in Mr. Paul’s America, being an ambulance-chasing lawyer is the way to make it big… and you can help the environment too.
The Gold Standard
Mr. Paul’s long-standing dislike of the federal reserve is well noted in his diatribe on the gold standard. Mr. Paul rants about the evils of so-called “fiat currency” and sees the only solution in the gold standard. Unfortunately for Mr. Paul, all of his fancy education has left him educated stupid on the issue. There are two fundamental problems with Mr. Paul’s logic: a fundamental misunderstanding of currency exchange and a fundamental misunderstanding of the value of gold.
First, we must understand that money is subject to the same laws of economics as anything else, from soup to nuts. This means that if more people want to sell dollars than want to buy dollars, the price of dollars go down. This is why the current account balance is one of the two major contributors to the underlying value of a currency. The United States has a large negative current account balance, aka we import much more than we export. The importers want to sell dollars, to buy the local currencies where they produce goods, while exporters want to buy dollars and get rid of the local currencies where they sell goods. Since there’s more importing and exporting, more people want to sell dollars than buy them. This means that the price of the US dollar decreases. This problem is (in the long term) self-correcting (imports cost more and exports cost less) but that doesn’t mean a negative current-account balance won’t wreck havoc in the short term.
The second major contributor to the underlying value of a currency is the money supply. The more money there is, the less it’s worth in a certain sense. This “cheapening” of money can be crudely approximated using the inflation rate (more sophisticated measures, like M1 are available, but for our purposes today, inflation suffices). If the money supply is being printed to the point of worthlessness (like Robert Mugabe‘s Zimbabwe), inflation number should be high. In the US inflation numbers are low (and have been in the 1-5% range since the early 1980’s). This means that the money supply, about the Fed’s control of which Mr. Paul complains constantly, isn’t the cause of the weakness of the US Dollar. The cause is the current account balance, which the Fed has no control over.
Second, Mr. Paul’s understanding of gold is fundamentally flawed. Unlike wheat (which is edible), gold has almost no inherent value to a human person. Barring a few uses in high-end electronics, gold is exclusively used in jewelry. Translation: We don’t really need gold, we want it because it is pretty. It has a high value because the demand for pretty exceeds the supply of it. If I could perform alchemy and turn lead into gold, gold would be worthless. This means that the big difference between gold and a “fiat currency” like the dollar is in supply. Neither has any (meaningful) intrinsic value. The scarier problem with gold is who control’s the supply. Unlike the Fed, which is part of the US gov’t, the supply of gold is controlled by mining companies, like Anglo-American, historically the gold arm of the DeBeers cartel. In Mr. Paul’s opinion, allowing a foreign cartel to control America’s money supply is the superior choice for America. This seems to clash mightily with Mr. Paul’s
isolationist non-interventionist tendencies. But Mr. Paul doesn’t need to double-think this one, because he hasn’t bothered to think things through in the first place. History is pretty damning. If you look at the 1850’s the gold rush in America (which then had a gold/silver standard) caused a 30% increase in wholesale prices in five years. A switch to a strict gold standard in the “Crime of 1873” lead to a depression so great its like would not be seen again until 1932. But Mr. Paul’s short-sighted version of history neglects both of these calamities.
I could go on and on about Mr. Paul being a few cards short of 52, if you catch my drift, but these sites have done the job pretty well. My favorite gems from Mr. Paul’s legislative record include trying to ban flag burning (what a libertarian proposal!) and abolishing basically every form of federal tax (which would allow us to pay for our military, how exactly?). All told, Mr. Paul is the latest example of the sorry mental state of America’s Libertarian movement. It’s a shame they have to take civil liberties down with them.