by Ron Paul
Accepting the principle of free markets, sound money, and private property and recognizing that the welfare-warfare state is incompatible with our Constitution would go a long way to solving our economic crisis. This would require debunking all Keynesian economic false assumptions and understanding how significant a role the central bank plays in facilitating the authoritarian approach of government.
The grand safety net that many believe the government can provide is a policy failure that has caused millions to believe they would be taken care of no matter the circumstances. It is now evident that all government promises are suspect, and millions of Americans realize that they better take charge of their future and not blindly depend on federal government promises.
We have for years papered over the many mistakes made by false promises and an economy manipulated by spending and artificially low interest rates. Sadly, the reality of our shrinking wealth is becoming more and more evident by the day. Here are some of those misconceptions that are now causing a great deal of hardship to the average American citizen.
Everyone can own their own house with the help of a subprime mortgage and assistance from a government housing program.
Unemployment insurance can provide income indefinitely for those out of work.
Education is free.
Medical care is a right.
Bank deposits are safe (but what about the value of the money?) because the FDIC and the insured loans will always be there to protect the depositors.
“Capital” is unlimited because it’s provided by the Federal Reserve, and it does not require savings.
Insurance—flood, mortgage, medical—can be provided by government at lower than market rates while forgetting that once the government provides this service, it’s no longer insurance but rather a welfare benefit.
The GDP can be increased by government spending with borrowed or newly created money.
Deficits are good—no need to worry.
The Plunge Protection Team—the President’s Working Group on Financial Markets—can prevent a stock market crash. It is designed to keep Wall Street going and keep the investments going. (The President’s Working Group was established by Ronald Reagan in 1987 by executive order to stop rapid market corrections.)
Government regulations make markets safe—SEC, Sarbanes-Oxley, new reforms (Dodd-Frank reform legislation)—even though they only add more moral hazard and increased costs with higher consumer prices.
Oil well drilling and coal mining are safe because government grants licenses and leases and inspects operations while removing this responsibility from business and labor.
Governments are capable of managing public land and natural resources.
OSHA can provide worker safety, and EPA protects our environment with no need to be concerned about cost.
Welfare programs help the poor, yet corporate welfare and foreign welfare get far greater benefits.
The fact that the poor suffer first with an economic downturn, with loss of homes, jobs, and standard of living, is ignored.
Social Security will always be there (until the baby boomers retire and the dollar loses its value).
Taxes are okay if they are made to be “fair.”
DEA, FDA, and the Consumer Protection Agency keep citizens safe.
Licensing guarantees quality and protects consumers and patients.
Only government can manage the highway “industry,” yet more than 3,000 individuals die every month in accidents.
The dedication of the Washington political class to government management is not isolated to one party alone. Most conservatives in Congress don’t think of themselves as supporters of Keynesian economics. But in truth, most are strong advocates of a special kind of “military” Keynesianism while being critical of liberal Keynesian politics of taxing, spending, and regulating the domestic economy. This involves another kind of stimulus of spending money on the military-industrial complex rather than purely domestic sectors like schools and infrastructure.
Most conservatives, along with many liberal and moderates, support militarism and world occupation, which makes it convenient to believe that military spending is a “patriotic” jobs program. They want to protect freedom and create jobs—great politics, especially if the jobs end up in certain members’ districts.
Think of the clichés that conservatives use to push their own form of big government. They say that want to protect our oil, remake the Middle East, make the world safe for democracy, get rid of the bad guys, fight cold wars and hot wars, fight the global war on terrorism, stop radical Islam, arrest the supposed danger of North Korea, all while condemning big government. Incidentally, these programs are all about providing jobs for one’s congressional district.
I constantly heard the jobs argument to get support for military spending. Major weapons systems are built in many different states, and congressional districts garner the votes required to build even those weapons that serve no benefit to our security. Instead, military buildup contributes to our economic insecurity.
Military Keynesianism supported by both conservatives and liberals has led to an obscene amount of taxpayer dollars being spent, now surpassing the military spending of all other nations combined. And the politicians feel good about it. They can tout their “conservativism” even while spending as never before. We face zero threat from any country invading the United States, yet we never stop the massive spending on weapons. The military culture has made us the largest arms merchant of the world, and of all history.
Having so many weapons, especially those offensive in nature, only encourages the deeply flawed and immoral policy of “preventive war,” which is really just another phrase for aggression. Since World War II, in many of the conflicts around the world, U.S. weapons have been used on both sides, and not infrequently, against us.
Military Keynesianism is every bit as harmful as domestic Keynesianism. Yes, some jobs are created to build bombs and missiles, but only at the expense of other jobs that would make more productive use of capital. Manufacturing and blowing up missiles and bombs cannot raise the standard of living of American citizens—it’s an economic negative: more debt and no benefits to American citizens.
The destruction that our weapons causes always requires that American taxpayers pay for rebuilding the infrastructure we destroyed in the land we occupied. We cannot become wealthier with this system—only poorer, which we’re now discovering.
Military Keynesianism invites mercantilist policies. Frequently, our armies follow corporate investments around the world, and have for more than a hundred years. General Smedley Butler dramatically explained in “War Is a Racket” how for thirty-three years he was deceived into serving American corporate interests. It’s no secret that many believe we’re in the Middle East to protect “our” oil. When the Gulf War broke out, President Bush stated that our need to rout the Iraqis out of Kuwait was to protect “our” oil and protect American jobs.
There’s something about military Keynesianism that I dislike even more than domestic economic Keynesianism. Too many times, I’ve seen how the conservative agenda of cutting government gets overtaken by this ideological attachment to unlimited military spending. It’s been happening for decades. It was precisely this uncritical attitude that conservatives have toward military spending that diverted the so-called Reagan revolution. Even under Democratic administrations, the Republicans fear pushing too hard for domestic spending cuts; they worry about political retaliation that would also gut military spending, and they cannot stand for that.
Military Keynesianism is justified by our foreign policy of occupation and nation building and preventive war. Innocent people die, property is destroyed, and the world is made a more dangerous place. Running up the deficits with welfare spending at home certainly does not make our economy stronger, nor do the poor benefit in the long run, but at least it’s not based on promoting violence for various and sundry reasons and risking escalation of the small wars for wh
ich the authorities are always planning.
Higgs, Robert. 2006. Depression, War, and Cold War: Studies in Political Economy. New York: Oxford University Press.
Mises, Ludwig von. [1919] 2009. Nation, State, and Economy. Indianapolis: Liberty Fund.
Woods, Thomas. 2009. Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. Washington, DC: Regnery Publishing.
LOBBYING
I have on frequent occasions heard it expressed by both friends and foes that we must crack down on the lobbyists who “run the country.” Sounds like a reasonable suggestion, but how we deal with this problem is crucial. The power that lobbyists have is a reflection of the system that has evolved in both local and national governments. It’s a significant symptom, but it’s not a disease in itself.
Lobbying is protected by the First Amendment’s admonition that “the Congress shall make no laws respecting… the right of the people… to petition the government.” “Petitioning” is a legitimate right and should be used in a positive way. Certainly, proponents of gun ownership, right to life, low taxes, and sound money—any cause, really—deserve the right to petition the Congress at will.
But what about the hundreds of millions of dollars being spent to control the government’s handouts and privileges granted to the special interests? Drug companies, organized medicine, insurance companies, the military-industrial complex, foreign lobbyists, and on and on have a vital stake in their lobbying efforts and their money does indeed influence votes in Congress. The question, then, is if they have a right to petition, how can the abuse be eliminated?
The ideal answer is that if we had a Congress dedicated to influencing only those things explicitly authorized in the Constitution, there would be very little up for auction by the politicians, thus there would be little incentive to spend big lobbying bucks to gain special benefits. It should be no more complicated that the enforcement of any law.
But human nature being as it is, the day that a republic is born is the first day nibbling away at the law of the Constitution and the law of morality begins. Certainly, the railroads and public works proponents were aggressive lobbyists well before the twentieth century. A properly sized government would solve most of the problems dealing with immoral and outrageous lobbyists’ power. There would be less on the table to purchase.
Yet what are the odds that the federal government is about to shrink to its proper size and not be overwhelmingly involved in every domestic and international economic transaction? That’s not going to happen anytime soon. This fact puts pressure on many well-meaning citizens and congressmen who would like to curtail the power of government and regulate the buying and selling of votes to satisfy the powerful at the expense of the weak and unrepresented.
Some argue that this is a reason for term limits. Though I have voted for and supported term limits, I have never held the belief that they would solve much of anything. Besides, strict term limits would require an amendment to the Constitution, and that’s not going to happen. Term limits, whether voluntary or mandated, provide no guarantee that the replacements will do a better job. In fact, it could go the other way and create incentives for new politicians to take as much as they can, hand out as much as they can, while they are able.
With voluntary term limits now less popular than ever, the principled members stick to their promises and those less principled ignore their pledges to serve a certain length of time. The few I saw leave after their self-imposed limits were not replaced with anyone dedicated to reform and to strictly following the Constitution. Nothing of substance was achieved and something was lost by these voluntary term limits.
The only option we have under today’s conditions of runaway government is to send to Washington only representatives who will have the character to resist the temptation to blend in with the crowd. There is tremendous pressure on new members on their arrival to be “team players,” with the promise of committee assignments and rewards for their districts, and to accept the well-entrenched notion that idealism is not well received in Washington, especially by one’s party’s leadership. This is especially true if the President and the congressional leadership are members of your party.
After all, we are told, they were voted in to “do a job.” And what is that job? It is not to refuse favors, reject vote trading, turn down government money, and make government leaner. On the contrary, the ethos of Washington is that the job of the elected politician is to serve the company that employs them, and that company is government. They are told that they should serve the system or get another job. Very few new politicians can reject this logic and rationale. They want to be successful and earn the respect of their new colleagues. This means playing along and doing an ever better job of this as time goes on.
If members ignored these pressures and stood firm, the lobbyists’ money would buy nothing and be wasted. This would kill the incentive to buy favoritism. One would think that it should not be that difficult to find men and women willing to resist the pressure of their peers. But it is. No one likes to experience the derision of their colleagues. No one wants to be thought of as a person doing a “bad job” at the only thing that Washington does well, which is redistributing wealth and accumulating power unto itself.
In placing in office individuals favorable to their cause, those who have so much to gain materially are too often more aggressive than those more complacent individuals content to be left alone.
The only solution for this is for the disenfranchised to awaken and fight the good fight to send better people to Washington. This requires a heroic political effort but must be accompanied with an educational revolution that convinces the masses that their interests are best served by providing liberty and sound economic policies rather than largesse.
Quite possibly the revolt as expressed in the Tea Party movement is a sign that the disenfranchised are angry enough over the bailouts that their political action will bring about changes in Washington, with better people and placing proper pressure on those already there to break the grip that the special interests lobbyists have over the system.
The imminent bankruptcy will, in a positive manner, assist in this effort to reform the system. Once it’s recognized that demanding more from a government that is failing to fulfill its promises is futile, the process unwinds and the people will be forced to become more self-reliant.
Under those conditions, we have an opportunity to emphasize that protection of liberty is our most important goal. Flowing from this will be a greater prosperity more fairly distributed than the unfair system we now have that rewards the rich who buy power in Washington at the expense of the middle class. Legislating control over those who petition Congress, that is, the lobbyists, serves no benefit and would undermine the rights of those individuals who want to lobby the government for a proper redress of grievances.
MARRIAGE
Most Americans do not question the requirement to obtain a license to get married. As in just about everything else, this requirement generates unnecessary problems and heated disagreements. If the government was not involved there would be no discussion or controversy over the definition of marriage. Why should the government give permission to two individuals for them to call themselves married? In a free society, something that we do not truly enjoy, all voluntary and consensual agreements would be recognized. If disputes arose, the courts could be involved as in any other civil dispute.
But look at where we are today, constantly fighting over the definition and legality of marriage. Under our system, the federal government was granted no authority over this issue. Many Americans would even amend the Constitution to deal with the argument by defining marriage. This attempt only exacerbates the emotionally charged debate on both sides.
I’d like to settle the debate by turning it into a First Amendment issue: the right of free speech. Everyone can have his or her own definition of what marriage means, and if an agre
ement or contract is reached by the participants, it will qualify as a civil contract if desired.
The supercharged emotions are on both extremes of the issue, because neither extreme accepts the principles of a free society. One side is all too willing to have the state use the law to force a narrow definition of marriage on everyone without a hint of tolerance. The other side—a minority opinion—wants the law to help them gain social acceptance even though this is impossible for law to achieve. Those who seek social acceptance of gay marriage are also motivated by the desire to force government and private entities to provide spousal benefits. When dealing with government benefits, this becomes an economic redistribution issue—a problem that would not be found in a truly free society.
When it comes to forcing “equal” treatment in hiring or receiving insurance benefits, that problem should be solved by voluntary agreement—just as voluntary agreement provides the tolerance and understanding for those who chose lifestyles and alternative definitions of marriage. You can’t accept one without the other.
Even without a truly free society—since I don’t see it on the horizon soon—if what government provided had real Social Security accounts that could be passed on to family survivors, individuals could name whomever they wanted to be their beneficiary, just as with private insurance. It seems, though, that the Social Security system will never be a sound government-run insurance program, so choice in designating beneficiaries under today’s circumstances is nothing more than expanding a welfare program.
The definition of marriage is what divides so many. Why not tolerate everybody’s definition as long as neither side uses force to impose its views on the other? Problem solved! It doesn’t happen because of the lack of tolerance on both sides. One side wants a narrow definition for all, and the other side wants a broad definition that demands full acceptance by those who choose not to subsidize or socialize with people with whom they are uncomfortable.