Loose Change on the Gold Standard

I admit it, I have been a bit hung up on the gold standard lately--largely through reading Steil and Hinds' thought-provoking book, who make it clear that the case against the gold standard is not nearly as complete as its opponents seem to believe, and that the case for it is stronger than I might have guessed. In the end, I am not persuaded, for one ineluctable reason, and that is: the gold standard is vulnerable to exactly the same defect that its proponents see in paper money--namely that politicians may ultimately betray it. Even assuming that a gold standard is self-executing (though apparently it isn't), and assuming that it does not crimp growth (my guess is that it does crimp growth, although the evidence does seem somewhat equivocal), even assuming that politicians will corrupt a paper standard (they will, and do, all the time)--still, assuming all these points, we are stuck with the fact that politicians who adopt a gold standard may also abandon it, and the abandonment may (sic) lead to disruptions as severe or more severe than anything you get from the corruption of paper money.

I am savoring, however a couple of apparent contradictions in discussions of the gold standard--one deep-seated, the other more transitory.

First, deep-seated. It's my experience that gold standard advocates are also, to a considerable extent, strong nationalists--fierce, some would say paranoid, protectors of national sovereignty. Yet one thing you can unambiguously say about a paper standard is that it is an assertion of sovereignty--that it is a refusal to let others control the nation's money. This being true, it seems that the embrace of a gold standard is the ultimate surrender of sovereignty--the surrender of control over money to somebody, somewhere (the gnomes of Zurich?) whose identity we cannot discern and whose behavior we therefore cannot possibly control.

More transitory--I follow with interest the campaign of Ron Paul and others to get an "audit" of the Federal Reserve. Opponents of the audit seem to fear, inter alia, that an audit would be a camel's nose under the tent--a preliminary foray directed at destroying the independence of integrity of the Fed. Cf., link. On the face of things, this would appear to be a plausible concern. Yet it is puzzling. Proponents of the audit for the most part seem to be those (like Paul) who argue that the Fed fails to control the integrity of the money supply. Yet isn't this exactly the reason why we should fear the nose under the tent--the fear that greater Congressional inquiry control meddling will corrupt the very integrity of money that the Fed is supposed to protect?

Roosevelt: Not Enough Like Mussolini

There seems to be a bit of blog buzz over the BBC documentary which rehashes the story of the coup plot against Franklin Roosevelt and in particular, the part that Prescott (“grandpa”) Bush may have played in it. I haven’t a lot to add except to marvel over how a story like this—which has, after all, been around for quite a while—takes on legs as if new.

But I will offer one addendum that maybe nobody else has picked up on yet. That is: the standard criticism of Roosevelt today is that he was given to all kinds of batty and ill-considered forms of market intervention like, in particular, the National Recovery Administration (which, so far as I know, nobody alive defends today). IOW, he should have been more like Ron Paul.

But even a cursory skim of the coup story will show that the coup plotters had a diametrically different agenda. Indeed, their complaint about Roosevelt was that he should have been more like Mussolini.

Now, if you are looking for batty and ill-considered interventionist schemes, I should think that Mussolini’s Italy is exactly the first place you would want to look (Hitler is a poor second: in execution, some of his schemes were actually efficient). So; the wingnut line of the 30s is just about 180 degrees out from the wingnut line of today.

Fn.: Whether Ron Paul is, in fact, in any way remotely like Ron Paul, is a question I leave for another day. I mention him only because any mention of "Ron Paul" gooses my blog hits.

Reference: A Google Blog Search for “BBC Roosevelt Prescott Bush Mussolini” at 9:05 pm pst tonight yielded 170 hits.

Ron Paul, Authoritarian

I'm glad Morbo got around to doing the work I was too lazy to do (link), demonstrating that "libertarian" Ron Paul has--well, has the same authoritarian tendencies most active, political libertarians turn out to have. Libertarianism is almost universally attractive at first look, even though it turns out to be incoherent on careful scrutiny. But the practical fact is, most people active in politics who call themselves "libertarians" turn out to want life pretty much as it is, only without National Public Radio. Still might be amusing to get him into the Democratic debates, though (link).

Fn. Yes, I know NPR doesn't get much public money; that's part of my point.

Invite Ron Paul to the Next Dem Debate

Here’s the way Rep. Ron Paul describes himself at his Congressional website:

Congressman Ron Paul of Texas enjoys a national reputation as the premier advocate for liberty in politics today. Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on commodity-backed currency (link).

In case you hadn’t noticed, he is also a Republican candidate for president. Without knowing a huge amount about him, I tend to think he is a bit of a nutter: whenever anybody uses the phrase “commodity-backed currency,” I tend to start asking myself when we will break for lunch. But even if it is over the top, Paul’s kind of libertarianism persists because it appeals to some widely-held basic instincts: free choice, individual responsibility, getting the government out of your hair.

If you know about Paul at all, the chances are it is because he got his 15 minutes of fame during the Republican codpiece festival in South Carolina debate. The Economist explains:

During the debate Ron Paul, a feisty libertarian from Texas who stands no chance at all, suggested that Middle Eastern terrorists attacked America “because we've been over there; we've been bombing Iraq for ten years.” Mr Giuliani fired back: “That's an extraordinary statement...that we invited the attack because we were attacking Iraq. I don't think I've heard that before, and I've heard some pretty absurd explanations for September 11th.” The conservative audience erupted in approval (link)

Now the Michigan Republican State Chairman wants to ban him from future Republican debates. He said:

[Paul’s] statement on why the terrorists attacked America is so out of the mainstream geo-political thought in the west and is increasingly becoming a distraction versus a supplement to the debate…(link)

Hm. If Paul is “out of the mainstream,” then so are Jerry Falwell, Pat Roberson or Dinesh D’Souza (link). So much for the big tent.

But let Republicans have that fight. I want to talk about the libertarian Paul. My point is that the snoopy big-spending authoritarian Republicans obviously have no use for this guy. So, invite him to the next Democratic debate. Of course he isn’t going to be their nominee any more than he is the Republicans'. But his ideas are far more likely to get a respectful hearing among Democrats than they are among the people who want to push him out. Indeed, as Bruce Bartlett (and others) have often pointed out, if you are looking for fealty to libertarian principles, you are more likely to find them in a Clinton (either one) Administration than with anything else on offer (link, link)

Welcome, Ron. We can install you in a safe house in Vermont, and we can probably even find a (private-sector) job for your wife, and good (private) schools for the kids.