I have a question.
Why does Ron Paul, or by extension any libertarian who finds his political platform congenial, have such a fixation on the gold standard? This is an arena of political and economic thought that I’ve never really read about in detail, save for a bit of literature on the gold standard’s impact on industrialization in South Africa. I read this speech and it’s kind of like reading about someone earnestly praising the properties of phlogiston. Gold doesn’t have any “real value” that stands apart from a historically derived and basically customary view of it as valuable, any more than cowrie shells do.
When did this become a fixation? Is Paul fairly representative of party libertarians in the U.S. on this point?
I suppose, reasoning from first principles, that libertarians fetishize money much as they do private property. Just as they want people to react angrily to the slightest taxes as an imposition on private property, they want people to see money as precious, inviolate, and any monetary policy (from kings adding base metals, to free silver, to Federal Reserve operations) as “debasing” this holy instrument.
Gold is a good focus for their fetishization as it has cultural value. If you can get it into the culture that money has to be fixed on gold, you’ve basically annihilated monetary policy all the way down to the conceptual level. It lets them set an ideal battle-line: which anything whatsoever beyond a permanent invariant gold standard is improper “social engineering.” In essence, it spits in the face of the New Deal much the same way that their usual rejection of government activity beyond defense and night-watchmanship does.
Don’t know if it’s representative, though.
I think it’s more an objection to government control over currency than an obsession with gold itself. Gold and gold-backed currency are the major examples (at least the ones people think of) of currency not subject to the manipulation that Paul objects to, so that’s the flag that gets waved.
I guess it’s the “customary view of it as valuable” that gives dollars value, too. But we explicitly let government manipulate dollars, where we wouldn’t (maybe couldn’t) for gold.
But presumably someone out there is trying to think of better ideas.
But it’s kind of nuts to argue that gold wasn’t subject to manipulation. On some level, that’s why there were gold rushes in the 19th and early 20th Century. Economies whose currency value was pegged to gold needed to keep gold valuable even when lots more of it came onto the market, so government bought the stuff and stockpiled it. That isn’t something that the magic gnomes of the perfectly free market were doing invisibly and naturally: it was manipulation of value by states according to policy.
Oh, certainly. From as long as there has been gold as currency, there has been manipulation of it. So the gold standard is a matter of deliberate policy, not market constraints. But they take gold as a proxy for that age’s hard-money policies.
It’s a bit of a Krugman style strawman argument since few libertarians or economic conservatives advocate a gold standard or other “world currency”. Many more advocate a Hayekian competition among money issuers, as we have now but with more fiscal restraint.
There are gold bugs, but they aren’t representative of any political group.
One anecdote told about libertarians is that they will never govern because they don’t agree on anything and can’t stand one another. They are only semi-viable when they are in the minority and have the excesses of left and right authoritarians to drive them together. . . sort of.
back40 and David are both right. There’s a historic objection to FDR’s taking the US *off* the gold standard in the way he did (outlawing private ownership of gold and prohibiting enforcement of existing contracts in gold terms), and to Nixon’s intentionally inflationary closing of the gold window. There was an older generation of libertarianish folks who generalized from these that gold = currency not subject to deliberate inflationary state manipulation, paper legal tender = such manipulation.
But most libertarians now don’t advocate a return to gold; they [we] want either currency competition (Austrians) or a relatively non-discretionary monetary rule (Milton Friedman, Alan Greenspan). But Ron Paul’s spent thirty years building a few quirky national constituencies– not only libertarians but also gold bugs. He’s very loyal to the gold bugs, and vice versa.
Ron Paul: Funded by Anglo-American, in a Cunning Conspiracy to Raise Gold Prices!
You heard it here first.
I’ve got a lot of puzzlers about Ron Paul’s so-called libertarianism. He’s pro-life, and that certainly seems like an imposition of state over personal liberty. And on a number of other issues, like gay marriage, he seems to think they may certainly be defined and regulated by the states, just not the federal government. So it’s not a pure, anti-government-intrusion form of libertarianism. As far as I can tell, he’s more accurately defined as an anti-federalist.
Prof. Burke: I think commenters here have hit the major points, but the defense of ‘the gold standard’ is really an argument that government discretion in monetary policy should be kept to a minimum. This belief is in some rough form held by basically everybody these days: most central banks follow some sort of inflation- or exchange-rate targeting, which is much more like a Gold Standard policy than like the adjust-everything-to-the-minute policies of the seventies (I wrote an essay on this a long time ago, here). So in some sense we can claim this as at least a partial victory. But there are portions of the libertarian movement that want to straightjacket government monetary policy as much as possible. I’ve rather sympathetic to them; the linked essay is my argument for why the gold standard won’t achieve that, even though I think it’s somewhat desirable.
Jacobtlevy: agreed. A large part of the hostility to fiat currency is that the gold regime that preceeded it was seen as basically stable, and the fiat currency regime was, at least at first, deliberately unstable. What a lot of commenters missed is that we went off the gold standard because of a depression that fundamentally happened because the gold standard is as manipulable and vulnerable as any other currency system.
Daddy Democrat: I think Ron Paul would define himself as a federalist, not an anti-federalist. That is, he wants to reserve some powers to the states, rather than consistently punting them up to the national government (federalism is the doctrine that some powers should reside at each level, not that they should all be held by the national government). As for the specifics: Libertarianism can’t really give a good answer pro- or anti-abortion, at least not without some other axioms. If you believe that a six-week fetus has all the rights of an adult human being, or even a child, there’s a pretty good case that abortion should be illegal under libertarian postulates. On the libertarian fora I hang out on, abortion is one of the topics that most consistently sparks acrimony among the libertarian regulars (as opposed to between the regulars and our left- or right-wing guests). Gay marriage is more complicated; I’ll just say that I think any sort of government-sponsored privileges for a certain lifestyle are suspect, but if we’re handing them out to subsidize some favored activity (like childrearing) we shouldn’t hand them out to people not behaving in that activity. Which isn’t to say that the current regime does a good job of that, or is even colorably fair. But there’s certainly room to say that each state should negotiate its own approach to marriage law.
The Texas Republican platform has been tossed around the blogosphere from time to time. It, too, calls for a return to a gold standard. I take talk about a gold standard as a reliable indicator of right-wing wackiness. When it became an indicator or wackitude is an interesting question. Is it all part of hatin on Roosevelt a mere three-quarters of a century after his first election?
Also, Tim is quite right about phlogiston and cowrie shells. All money is fiat money.
jadagul: on federalist. A poor choice of label on my part. I was thinking Federalist along the lines of Hamilton and Washington, but the Federalist Party was probably perverting the term. Essentially, I was aiming at the concept of being in favor of a strong national government (which, confusingly enough, we call the federal government. But then, that term has itself been co-opted or framed by libertarians and conservatives.
So scratch my previous label. Instead, I’ll just call him a Texan.
My point was that Paul’s solutions don’t avoid government intervention, he merely wishes to limit federal government intervention. That’s a strain of libertarianism, I guess, but from an individual’s perspective, curtailment of my personal freedom is such regardless of which group of people is enforcing it.
Daddy Democrat: agreed. One of those perpetual arguments in libertarian circles is, “If a community wants to curtail its own liberty, to what extent should it be allowed to do so?” There are sort of three stock answers. The first is the radical ancap style response that no one can limit anyone’s liberty anywhere: if I want to buy a projector and a public wallface and show hardcore pornography videos in public 24/7, that’s my right. Though I find that position attractive in some ways, it has some problems, isn’t really practical, and wouldn’t be implemented if it did. Once you’ve discarded that, there are two other ways to go.
The first is to say that there are fundamental liberties that can’t be infringed anywhere, and should be protected at all levels. Thus the federal government should intervene to protect (abortion rights/contraceptive sales/the right to smoke/gun rights/pederasty). Those who hold this position split in what they want done with non-protected behavior; the classic federalist answer is that all decisions should be made at the lowest possible level, but not all libertarians are federalists and a few of this school would support national policies in many fields (either it’s protected nationally or it’s forbidden nationally).
The other position is more heavily local (Nozick quasi-endorses this in the last section of Anarchy, State, and Utopia). This position holds that a small enough community can make basically whatever restrictions it wants, as long as the right of exit is protected. So if Nowheresville Utah wants to pass laws legalizing polygamy, outlawing pornography and fornication, and requiring every woman to have three kids by the time she’s thirty, that’s okay—if you don’t like those rules, you shouldn’t live there. Similarly, if Hippietown California wants to provide subsidized marijuana, allow public orgies, and show kiddie porn on broadcast TV between episodes of Dora the Explorer, that’s okay too. If you don’t like it, don’t live there. More reasonably, this view legitimizes obscenity restrcitions, zoning laws, etc. as long as they’re local.
I find option 2 a lot more persuasive than option 3, for two reasons. First, I find the idea that my community could be voted out from under me; if I buy a house, it’s not really fair to then have the rules change on me so that I have to move out again (with the market value of the house probably lower). Second, a large part of the reason I’m libertarian is that I think freedom is just a better situation; if the entire country is blanketed with authoriatian restrictions that stifle intellectual and physical development, it’s not really a comfort that 99% of the people prefer it that way. On the other hand, the other 1% could potentially get some really cool Galt’s Gulch action going on.
But Paul’s position could be more defensible: the president doesn’t have to have a position on what local law should be. If Paul wants to create more freedom at the national level, it doesn’t bother me that he would create less freedom in some hypothetical world where he’s a local administrator. All the better reason to vote him into Washington, where he’ll do good.
To “understand” Ron Paul, you have to keep in mind his longstanding connections with the John Birch Society. That’s the genesis of his rants against “collectivism”.
I think the idea is that while governments can manipulate the supply of gold, they can’t just produce gold from thin air, as they can print paper money, and this supposedly prevents governments from deliberately inflating the currency beyond a certain point. Of course, nowadays actual currency — paper money and coins — is a very small component of the total “money supply,” so the idea is pretty much obsolete, unless you’re really scared of Weimar-style hyperinflation.
Even if specie were something other than fiat money, governments that wanted to inflate would change (surrepetitiously or not) the amount of a given metal in the coinage of the realm. European history, just for example, is probably chock full of examples.