Ron Paul

A friend of mine sent me the video from Ron Paul's CPAC speech with the subject "Preaching to the Choir!" He then noted that at 16:20, Dr. Paul says that "government should never be able to do anything you can't do." There are definitely worse things in politics than Ron Paul. I don't agree with him on everything, and he's certainly not a bad guy to have keeping an eye on the Fed.

However, I don't completely agree with the sentiment that "government should never be able to do anything you can't do." After all, governments are instituted among men (and women!) precisely to take care of things that we can't do ourselves, like infrastructure, national security, and a slightly less biased justice system than we would have if we had some sort of blood-feud system like we see in less, ahem, progressive nations. There are certain things that government is "allowed" to do that we as citizens cannot. Some of these things, such as the proper use of eminent domain, or punishment of criminals, are indeed probably only valid in the context of the "public" holding some priority over the private citizen. Frankly, I don't think we want too much building of roads over people's property without a clear definition of the public interest; otherwise it would be a violation of property rights. Criminals are another case of this. For as much as we all love Charles Bronson, I think we can generally agree that vigilante justice is not an optimal situation for society, even for those criminals who "needed killin'." Indeed, it is precisely when government fails to do what we expect it to do that vigilantism arises. This is not the proper functioning of limited government; it is anarchy and ultimately leads to a less free population.

On the other hand, there are things the state does that perhaps it shouldn't be allowed to do, and to be fair, I think this is more what the good doctor is referring to. If you run up a massive debt and then coerce money from people, you're considered a shakedown artist. If the state does it, it's known as winning the future. If Bernie Madoff promises to pay pensions with money he gets from people who think that money will still be around for their retirement, he dies in jail; if the state does the same thing, we call it Social Security and build its founder a memorial.

So I think Dr. Paul needs to be a little careful when he paints with so broad a brush. Certainly, I see no philosophical reason other than a symbolism of unity for a monopoly on the money supply; those folded-up portraits in our pockets are everyday reminders of our collective identity as Americans. (N.B. Obviously, one of the goals of the €uro has been to facilitate this same feeling of common enterprise in Europe. The jury is still out on how this experiment is going.) Perhaps that is a partially valid justification for this monopoly. And a single currency certainly facilitates ease of trade by reducing transaction costs substantially. At the same time, precisely because Dr. Paul recognizes that the state (and the Federal Reserve) has the ability to intervene in the markets by using monetary policy, it has a huge advantage over private individuals in capital markets; moreover, these interventions inevitably create winners and losers, as inflation is quite simply a tax on those who prudently save their money, and reward those who are already in debt. This is a perverse logic, and Dr. Paul is correct to point out that it is unfair that the state can do this.