April 28, 2008

Various writers have argued for the private production of security, showing how the state, with its territorial monopoly of protection, seriously harms the lives and property of those it claims to protect.  The result of the state’s imposition of collectivized security has drastically increased the cost of protection while heightening our exposure to danger.  In the name of protecting us, the state has milked the economy and all but destroyed the dollar, while waging an unremitting war on personal freedom.  

In his essay, “The Private Production of Defense,” Hans-Hermann Hoppe provides an alternative to the state approach, elaborating on how the free market could provide defense services without infringing private property or personal liberty.  To implement his insights he recommends we  

withdraw [our] consent and willing cooperation from the state and [promote] its delegitimization in public opinion so as to persuade others to do the same.  

Hoppe’s essay is consistent with the Non-Aggression Principle.  As I understand him, he regards the state per se as criminal, as an institutionalized aggressor posturing as our protector.  

Given that one accepts this stateless idea of freedom, how should one assess the political philosophy of Ron Paul?  

There are two broad views:  

1. 1.  Paul’s support of the Constitution means he supports the state; therefore, he is not a freedom fighter and his core values are no different in principle from Clinton’s, Obama’s, or McCain’s.  Or,
   

2. 2.  Paul is perhaps the first candidate in American history to run on a major party platform who opposes the distinguishing feature of the state – i.e., coercion – and is, from that standpoint, a courageous freedom fighter.

In other words, is Ron Paul’s approach fundamentally flawed or is he trying to move us closer to the libertarian ideal of non-aggression?  

In this article, I review in some detail Paul’s philosophy as he presents it in his recently released book, The Revolution: a Manifesto, with the hope that readers will be motivated to study the book itself to decide whether he is freedom’s friend or foe.  

False Choices of American Politics  

"If they can get you asking the wrong questions, they don't have to worry about the answers," Thomas Pynchon wrote in Gravity’s Rainbow.  In 2008 America , almost all the political questions are wrong; they present false choices, Paul contends.   

Should we launch preemptive wars against this country or that one?  Should every American neighborhood live under this social policy or that one?  Should a third of our income be taken away by an income tax or a national sales tax?  The shared assumptions behind these questions . . . are never cast in doubt, or even raised.

He continues:

The supposedly conservative candidate tells us about “waste” in government, and ticks off $10 million in frivolous pork-barrel projects that outrage him . . .  All right, so that’s 0.00045 percent of the federal budget dealt with; what does he propose to do with the other 99.99955 percent . . .?  Not a word. [p. 2]

            Neither is Paul impressed with the liberal Left.  “Although they posture as critical thinkers,” he writes, “their confidence in government is inexcusably naive, based as it is on civics-textbook platitudes that bear absolutely zero resemblance to realty.”  [p. 3]  

And the news networks?  It’s little wonder they’d “rather focus on $400 haircuts than matters of substance.  There are no matters of substance.” [p. 4]

Paul didn’t think he had a sizable constituency for his campaign when he reluctantly decided to run for president.  Then on November 5, 2007 his campaign raised over $4 million online in one day, and on December 16, the anniversary of the Boston Tea Party, it broke that record by raising over $6 million.  His message of freedom was waiting to be heard -- and supported.  And who are his supporters?  They’re a broad mix -- Republicans, Democrats, freethinkers, whites, blacks, Hispanics, homeschoolers.  The list goes on and on.  

They are attracted to his campaign because of his message “of freedom and individual rights.”  [p. 5]  

The Foreign Policy of the Founding Fathers  

Founders such as Washington and Jefferson, and a little later John Quincy Adams, counseled trade and diplomacy in foreign affairs but no political entanglements.  Needless to say, their advice is ignored today because, it is said, “we no longer live in their times.”  Does that mean we should give up the First Amendment, too? Paul asks.  “How about the rest of the Bill of Rights? . . . If anything, today’s more complex world cries out for the moral clarity of a noninterventionist foreign policy.” [p. 10]  

But taking sides with the Founders draws the charge of “isolationist.”  Isn’t that reason enough to dismiss their advice?  No, says Paul.  “The real isolationists are those who isolate their country in the court of world opinion by pursuing needless belligerence and war that have nothing to do with legitimate national security concerns.” [p. 11]  

But what about 9/11?  Didn’t that “change everything”?  

Once again, the right questions were not being raised.  What motivated the attacks?  “Looking for motives is not making excuses,” Paul says.  “Detectives always look for the motive behind crime, but no one thinks they are looking to excuse murder.”  

Paul refers to the study of Michael Scheuer, a conservative and former chief of the CIA ’s Osama bin Laden Unit at the Counterterrorist Center, who said the attacks had “everything to do with what [the government does in the Islamic world].” [p. 15]  When our government bombs other people and supports police states in their countries, why is it unreasonable to expect revenge?  The CIA calls it blowback -- “the unintended consequences of military intervention.”  

Iran ’s Ayatollah Khomeini tried and failed to instigate an anti-Western campaign based on the moral degeneracy of American culture.  Bin Laden, Scheuer said, dismissed Khomeini’s approach and focused instead on specific issues for which there was widespread agreement among Muslims.  And as Paul said in a press conference last year, “they all agree they hate U.S. foreign policy.” [p. 18]  

Paul also discusses the issue of suicide bombers and references the study of Robert Pape, who collected a database of all 462 suicide terrorist attacks between 1980 and 2004.   Between 1995 and 2004, two-thirds of the attacks came from countries with U.S. troop presence.  Al Qaeda terrorists were twice as likely to come from a radical Islamic country, and 10 times as likely to come from a country where U.S. troops are stationed. [p. 20]  

Until the U.S. invasion in 2003, Iraq had never had a suicide terrorist attack in its entire history.  “Predictably enough, al Qaeda recruitment has exploded since the invasion of Iraq ,” Paul writes. [p. 21]  

And what about the U.S. media?  Were they asking the right questions about Iraq ?  “The American media were so derelict in their duty during the Iraq war that one watchdog group actually offered a $1,000 reward for any reporter who would ask the administration a challenging question about prewar intelligence.” [p. 26]  

Paul opposes all foreign aid, and this includes aid to Israel .  “I also favor discontinuing foreign aid to governments that are actual or potential enemies of Israel , which taken together receive much more American aid than Israel does.” [p. 34]  Foreign aid especially in Africa has been a disaster, where it delays sound economic reforms and encourages wastefulness and statism.  “Moreover, since the aid has to be spent on products made by American corporations, it is really just a form of corporate welfare, which I can never support.”  [p. 34]  

He stresses how costly our foreign policy is, and not just in the terrible human cost of lost and damaged lives.  The bill for our foreign presence is bringing us close to bankruptcy, by which he means the dollar will be destroyed.  

“What’s remarkable about this year’s [2008] military budget,” wrote one military analyst, “is that it’s the largest budget since World War II, but, of course, we’re not fighting World War II.” [p. 36]

            It would be a step forward, Paul says, if we could even debate the foreign policy we have now.  The debates we do see or read about are  

always framed in terms of which kind of interventionist strategy our government should pursue.  The possibility that we should avoid bleeding ourselves dry in endless foreign meddling is not raised.  For heaven’s sake, what kind of debate is it in which all sides agree that America needs troops in 130 countries? [p. 38]  

Economic Freedom  

His message is straightforward: Right now everybody plunders everybody else through the medium of government.  Let’s stop stealing.  

He cites the example of sugar industry lobbyists buying favor with Congress to impose sugar import quotas, resulting in higher prices for American consumers.  This is a modest example of theft, but  

[multiply this] example by about a million, to account for the countless other predatory schemes that special interests have imposed on our economy, and you have some idea of the impact of legal plunder. [p. 73]

            How does a small sector of the economy get policies enacted that benefit only them and harm the rest of us?   The answer lies with the idea of concentrated benefits, dispersion of costs.  The sugar industry can afford to hire professional lobbyists to bribe the right people in Congress, because the benefit to the industry is so great.  The cost to the rest of us is dispersed and too small to justify efforts to resist it.  

Are all interventions bad?  Some Americans believe there would be no arts without the National Endowment for the Arts, which was created in 1965.  In 2006, the government requested $121 million for the NEA, but “private donations to the arts totaled $2.5 billion that year, dwarfing the NEA budget.” [Emphasis in original]  

But aren’t interventions done for the benefit of the poor and middle class?  Certainly, public schools are said to be an intervention on their behalf.  John Chubb of the Brookings Institute learned, after repeated stonewalling, that New York City has 6,000 bureaucrats employed to administer the city’s public schools.  The number of administrators for the private Catholic schools, which have one-fifth the enrollment of the public schools, is 26.  

Like the draft, the income tax implies that government owns you.  Paul cites Robert Nozick, who asks how the income tax differs from forced labor.  Paul wants to abolish the income tax and replace it with nothing. Even without an income tax, government revenue from other taxes would be enough to fund its 1997 budget.  

Before the income tax, Americans were resentful of the high tariffs that protected American industry and cost them more as consumers.  Politicians sold the public this solution: We’ll lower the tariffs and impose an income tax.  Consumer goods will be cheaper, and the income tax will apply only to the rich.  

Of course, that didn’t happen.  Not only did World War I sweep more people under the income tax and push rates through the roof, by the 1920s tariffs were raised again.  The “people wound up getting the worst of both worlds.” [p. 80]  

Entitlements such as Medicare and Social Security are headed for bankruptcy.  “If present trends continue, by 2040 the entire federal budget will be consumed by [these two programs].”  We simply don’t have the resources to fund these programs, Paul says.  We should get rid of them, but do so gradually, paying for them by scaling back our overseas commitments, which would also streamline our military and make it more efficient. [p. 83]  

Without the “safety net” of the state’s welfare programs, people would be far more likely to extend a helping hand to the less fortunate, which is what actually happened in the days before government dependency.  As a physician, Paul always offered cut-rate or free services to those who could not afford care, as did most other doctors.  Hospitals did the same.  Then laws and regulations “made offering free care cost prohibitive.”  He observes:  

We have lost our belief that freedom works, because we no longer have the imagination to conceive of how a free people might solve its problems without introducing threats of violence -- which is what government solutions ultimately amount to.  [p. 85]

           Economic freedom at home, freedom to trade abroad are the keys to prosperity.  

Money: The Forbidden Issue in American Politics  

As with foreign policy, there is no meaningful debate about money.  We’re told that to fix any market crisis, all that’s needed is a little Fed tinkering and all will be right with the economy again. 

According to the Constitution, Congress is responsible for maintaining the value of the dollar by making only gold and silver legal tender and by not emitting bills of credit (what we call paper money today).  

But since August 15, 1971 the only money we have is the government’s paper money.  And it’s not Congress but its creation, the Federal Reserve, that’s in charge of maintaining the dollar’s value.  The Fed’s other mandate is to keep the economy robust without undue inflation or high unemployment.   

How does the Fed accomplish these feats?  It regulates what’s called the Federal Funds Rate, which is the interest rates commercial banks charge one another for overnight borrowing.  By law, banks have to maintain a certain amount of money in reserve.  If a bank’s reserves fall below the legal requirement, it seeks to borrow the difference from another commercial bank.  The interest rate it pays for the borrowed funds is the Federal Funds Rate.  

The Fed can accommodate the borrowing process by buying bonds from the banks.  The banks get more money, which is reflected in a lower Federal Funds Rate.  

Here’s the critical question: Where does the Fed get the money to buy the bonds?  Answer: It creates the money out of thin air by writing checks on itself and giving them to the banks.  “If that sounds fishy, then you understand it just fine,” Paul writes. [p. 141]  

The only problem is, it doesn’t work.  When the Fed creates money, it creates havoc.  Not only does it decrease the value of the dollar, making people poorer, it sets in motion a phony prosperity that “sows the seeds for hard times down the road.” [p. 142]  

But don’t incomes rise when the Fed creates money?  Not right away.  The politically connected get the Fed’s new money, who buy goods at current prices.  As the new money is spent and circulates, prices tend to rise -- well before the new money reaches most people.  The average person ends up paying higher prices while still earning the same income.  

Centrist Daniel Webster railed against paper money, saying it was the most effective way to cheat the laboring classes.  He was right.  

So how has the Fed managed the value of the dollar?  The answer is painfully obvious to most Americans, but Paul provides some figures.  A $100 item in 1913 would cost $2,014.81 in 2006.  Or looking at it another way, a $100 item in 2006 cost $4.96 in 1913. [p. 149]  So much for the dollar as a store of value.  

How well did gold do during its reign as money?  Even under the government-managed gold standard, a $100 item in 1820 dropped to $63.02 by 1913, the year Congress passed the Federal Reserve Act.  

The Fed’s massive inflation under Greenspan pushed home prices up 45 percent between 1998 and 2005.  The former Fed chairman used to boast that Fed policy helped many more people buy homes.  He’s no longer boasting.  

No one publicly questions the Fed’s purpose.  By creating money out of thin air, it has ruined countless Americans, yet criticizing it is “not found along the spectrum of allowable opinion.” [p. 154]  But there are some beautiful exceptions.  

As a first step to restoring monetary health, Paul recommends decriminalizing competition.  Americans should not be prevented from using precious metals as a medium of exchange.  Sales and capital gains taxes on precious metals should be instantly repealed, as well.  

The Revolution  

Ron Paul not only believes in the power of freedom, he is the only candidate I’ve heard explicitly oppose the philosophy of statism.  And if we can go by a man’s record, we have to believe he means it.  To get us moving in the right direction, he offers a few recommendations, some of which are:  

1.   We need to abandon our role as the world’s policeman.

2.   We need to transition out of our long-term entitlements, funding them from the money saved from our bloated overseas presence.

3.   Young people should have the right to opt out of Social Security.  Current Social Security recipients could be paid by curtailing overseas expenditures.

4.   We need to freeze the budgets of every federal cabinet department, most of which are unconstitutional.  We don’t have the resources for them.  Using forced labor to support them is not morally acceptable.

5.   We don’t need a Department of Education.  Paul finds it insulting that it still exists.  “If I truly opposed learning and knowledge, I would propose tripling [the Department’s] budget.”

6.   The more we live within our means, the less the poor and middle class would suffer from inflation, since the Fed would not be under pressure to monetize debt.

7.   We need to restore monetary freedom, allowing Americans to conduct business with gold and silver.

8.   The president should order that no resources be used for the prosecution of medical marijuana patients.   He should refuse to violate habeas corpus, refuse to detain anyone indefinitely without legal counsel.

9.   The president should refuse to issue unconstitutional executive orders.  He should issue executive orders repealing those that previous presidents issued.

10. In foreign policy the president should bring the troops home in a matter of months, not years.  He should order the navy to back off the shores of Iran and make it clear we have no intention of attacking that country.  Paul would expect oil prices to drop, and the value of the dollar to rise, from these measures alone.

11.  Americans should be free to trade with and travel to Cuba .  

And libertarians should exercise the freedom they have and devour Paul’s book.  It is an arsenal of intellectual ammunition in our war against coercion.