Wednesday, August 17, 2011

I Heart Ron Paul

Old Hop has never quite been the blog that I wanted it to be. It began at the end of 2008 as a replacement for my old blog, Rublev’s Dog (a play on Pavlov’s dog with a religious twist) that had taken some tangents of its own. At the height of my blogging frenzy (which has died down in recent months due to demands at work) Rublev’s Dog became a platform for sharing my support for presidential candidate Ron Paul in 2007. It was Paul’s candidacy and his eerie prescience about the real estate meltdown (real property being my field of work) that led me to more deeply investigate the Austrian school of economics and its theory of the business-credit cycle.

Paul’s candidacy excited me like none other in my lifetime. As a teenager I was a sworn “Reagan Republican,” but only because the Gipper had been my dad’s candidate. I realized into his presidency that, while we all felt substantially better about being Americans than we had throughout the scandal-ridden and stagflated ‘70s, the fact remained that Reagan did not deliver on his promise of a smaller government. In fact it grew exponentially under his watch. By the time Bush I and Clinton came on the scene I was deep into theological reflection and had become a political non-participant. The roaring ‘90s passed me by. I was oblivious to the seeds of economic destruction that had been sown by Reagan’s choice for Federal Reserve chairman, Alan Greenspan.

To understand that a bit better, we have to go back to the event, 40 years ago this week, that tilled the economic soil for Greenspan’s pernicious monetary seeds. It was Richard Nixon’s autocratic decision on August 15, 1971 to untie the U.S. dollar to gold, closing of the convertibility of dollars to gold, which gave the green flag to our central bank to print up money. And it was Nixon’s coup that provoked Ron Paul, a Duke-educated obstetrician and spare-time student of Austrian economics, to launch his own political career.

Congressman Paul predicted as early as 2001, in the wake of Greenspan’s money-pumping, that an unsustainable housing bubble would ensue with disastrous consequences. I did not hear the Texas congressman’s speech until years later; but I sat at my desk between 2002 and 2006 watching sale prices for homes soar to dizzying heights.

The bubble burst in 2007. Countrywide Mortgage, a subsidiary of our local giant Bank of America, went belly-up. The good doctor from Lake Jackson, Texas had been right all along. I was spellbound. Suddenly, everything Ron Paul had been preaching about, from monetary policy to the unconstitutional, unwinnable and unsustainable wars in the Middle East, began to make perfect sense. As I stated above, he became the most exciting presidential candidate of my lifetime.

When he was ignored by the media and laughed off the stage other mainstream Republican candidates, I became embittered again with the political process. My rantings on Rublev’s Dog gave way to this blog, where I intended to write at leisure on whatever struck my fancy. But the political and economic consciousness remained – informed by writers and thinkers from history who had inspired Ron Paul or laid some of the intellectual groundwork for his political career. In congress, Paul had been a reincarnation of John Randolph of Roanoke, voting against every bill and proposal not substantiated by an originalist reading of the Constitution. As a presidential candidate he was as committed to sound money and non-intervention as Stephen Grover Cleveland, the last true libertarian in the Oval Office.

To understand why Ron Paul’s chances of being elected president are 1 divided by infinity, we must look in Hans Hoppe’s book, Democracy: The God that Failed. Democratic government is a system of legal plunder, pitting interests that can out-clamor others for favors from the political class in exchange for votes. Democracy, it turns out, is the people’s way of trying to overcome the first law of economics – that you cannot have something for nothing. But everyone believes, with an almost religious fervor, that “their” government can provide jobs, welfare, education, healthcare, social security, ad infinitum by the magic of fiat. It seldom occurs to the common folk that resources are eventually starved, capital is destroyed, and the economic pie shrinks (Greece is an excellent example of the failure of social welfare democracy). What the government cannot raise in taxes it borrows. The central bank finances the sovereign debt and in so doing lowers the rate of interest – the ratio of money borrowed to money saved – to a sub-market figure. This in turn causes the misallocation of resources, leading to a temporary boom (or “bubble”).

America has had a phony, debt-driven economy since at least the mid 1960’s. Johnson’s Vietnam War and the “war on poverty” led to hefty money-printing by the Fed, which led Nixon to unhinge the dollar from gold. Within a year (1972) the U.S. began down a decade-long road of price inflation and job loss. Paul Volcker, appointed Fed chairman near the end of Jimmy Carter’s presidency, took the bold and necessary step of allowing interest rates to rise toward the market rate – a rare instance of the central bank doing the right thing. While the correction was painful it was momentary, and by the middle of his first term Reagan was reaping the undeserved benefits of Volcker’s austerity (it is questionable whether “supply-side” economics had as much to do with the recovery, though it did encourage the business sector for a time). Whatever good Reagan might have done was undone by his build-up of the U.S. military to the role of globo-cop and the appointment of Greenspan, who would preside over a steady increase in money printing and dollar devaluation. Since 1971, the dollar has lost 82% of its purchasing power. Real wages have netted a zero percent increase since that time, and the new norm includes two- or more income households with substantial personal debt.

So, is America now ready to listen to Ron Paul? To a point, maybe; but it is certainly not willing to let go of [unaffordable and unfunded] social welfare entitlements.

The Economist did a poll of Americans in late 2010 in which respondents were asked which in a list of spending categories they would cut. The only one that a majority of Americans would cut was foreign aid, which amounts to a fraction of one percent of the federal budget. In no other area did even 30 percent of Americans say they wanted cuts. That means default. What else could it mean?

The politicians are not defying public opinion. They are reflecting it. With the unfunded liabilities of Social Security and Medicare in excess of twice the GDP of the entire world, this has to end badly.
(Thomas Woods, in an interview with the Harvard Political Review)
His anti-war, anti-military-industrial complex stance doesn’t play well to that part of the populace whose favorite slogan is “support the troops!” Moreover, unlike the great orator Randolph, Paul is a rambling public speaker. While the texts of his congressional speeches are quite good, his debate appearances display an off-the-cuff, ill-preparedness and frustrating tendency to wade into arcane details that get lost on prospective voters. His ardent acolytes understand where he is coming from; but the chair-squirming head-scratchers of the “sound bite” generation quickly lose attentiveness.

So, no; Paul probably doesn’t stand a snowball’s chance. Once the GOP establishment successfully shoves him aside yet again, and that other Texan Rick Perry emerges as the darling of the flag-waving, God-and-country-country-and-God evangelical right, I will retreat once more into democracy-hating cynicism.

In national politics, in America, rarely do the best and most honest(with their philosophy and integrity) reach the top. By the time all the political favors are paid off and their positions compromised, once a politician gets into power, he or she is nothing but a puppet of the powers behind the throne that helped to get that person into office. Ron Paul is different. So different, that his policies would be the only thing that could save America from going over the cliff. At this time, early on, Ron Paul is either being ignored or left out on the margins. (a reader comment at The American Conservative)
Regardless, in the meantime I say, Ron Paul for President.

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