In a Republican primary race largely consisting of slick suits and sweater-vested cultural reactionaries, Ron Paul is by far the most interesting candidate to have emerged from the fray. He campaigns without any expectation of winning the nomination.
Instead, he runs to increase the visibility of his own unique political philosophy.
The tremendous interest that he has garnered this primary season, particularly among college students, shows that there is a clear and growing appeal for his kind of thinking, an appeal that breaks through traditional divides of left and right wing.
What exactly is this message that some find so appealing, others terrifying? The trouble with answering that question is that it’s hard to discern a candidate’s message from press coverage. News commentators dismiss Dr. Paul with a knowing smile, but their glib comments demonstrate a complete unfamiliarity with his ideology. Some outlets take his growing stature more seriously. As a matter of fact, it was through a Time magazine article that I became acquainted with his ideas – so it goes both ways. But regardless of Paul’s treatment by the media, libertarian thinking is a growing movement in America, and it behooves the educated reader to at least be familiar with its basic tenets.
All of Ron Paul’s economic ideas, from lowering taxes to abolishing the Federal Reserve and returning to a gold standard, stem from an intellectual tradition known as the “Austrian School” of economics. Most academic economists dismiss this school out of hand, but this is hardly a reason for everyone to do so. The different traditions diverge in the very assumptions they begin with, ensuring their proponents will always disagree.
Austrian economists espouse a “subjective theory” of value – neither money, nor goods, nor services have any inherent value but rather have different values that individuals impute upon them according to their needs and desires. Because in every voluntary exchange the buyer values the goods bought more than his or her money spent, and vice versa, every voluntary exchange is said to increase subjective value for both parties.
It follows that any government restrictions upon voluntary exchange necessarily inhibit the growth of subjective value (the fulfillment of the wants and needs of individuals). It is this view that gives rise to the tremendous importance Dr. Paul and other libertarians place upon free markets.
A corollary to this view is that taxation should be as minimal as possible. In taking funds away from their use in voluntary exchanges, taxes place those funds in the hands of the government. By definition, the government cannot increase subjective value, since it can’t know the wants and needs of every individual.
Furthermore, because government acts by coercion, it operates outside of the system of voluntary exchange and achieves whatever ends it seeks far less efficiently than private actors. Therefore, the government’s only end should be improvements that facilitate commerce, national defense and protecting the rights of individuals from illegal intrusion.
Currency is understood as the means by which voluntary exchange takes place – the medium that facilitates commerce. Devaluation of currency by the government, therefore, is an indirect tax.
When the Federal Reserve expands the circulation of money, the value of currency held by individuals necessarily decreases. For this reason, libertarians call for a return to currency exchangeable for gold. In such a system, currency is backed by something which has value in itself, instead of being merely paper. Since the government cannot mine gold at will, it prevents the government from inflating and manipulating the currency.
Libertarian philosophy places an emphasis on means rather than ends. It renews the ideals of classical liberalism by stressing that the government doesn’t know the goal of human existence, and it shouldn’t tell individuals how to lead their lives. Instead, this philosophy seeks to ensure the health of the system that is best suited to individuals seeking whatever ends they see fit: the free and voluntary exchange of unimpeded commerce.
We have countless examples from history of the great lengths to which individuals have gone, exposing themselves to financial risk and mortal danger, in order to circumvent the meddling of the government. We saw this during Prohibition in the 1920s, and the same thing today with the costly and disastrous “war on drugs.” Billions are spent, drug users are incarcerated and people still find ways to make and use drugs.
The libertarian view is that if these funds hadn’t been spent to try and prevent a phenomenon that would be happening anyway, they would have generated genuine value back in the hands of taxpayers.
Objections to libertarianism tend to focus on its refusal to protect more than property rights. But should these so-called rights be codified in law in the first place?
Take the example of the right of same-sex couples to marry. The left generally wants to enshrine such a right in law, while the right seeks to prevent it with a constitutional amendment. This eternal butting of heads could be overcome by the simple acknowledgement that it’s not the government’s role to define such an intimate bond as marriage. Why do couples feel they need the acknowledgement of their love by the government, anyhow? If it’s for legal or tax purposes, these exceptions shouldn’t exist, since they’re an imposition of morality by the government.
We need to get away from the idea that we can impose our own morality upon others and that the government is the arena for this to happen. This, more than anything else, is what threatens to tear this country apart, when we derive so much economic benefit from being a big, diverse, unified nation. Morality is the domain of individuals and communities – not the government.
Dr. Paul’s views stem from a primarily economic viewpoint, but there are important philosophical dimensions to libertarianism as well. It is the difference between trying to codify every aspect of life to make it safe and fair and trying to embrace the freedom of the unknown future that has made America such a wonderful and ennobling place to live. It is the idea that government exists to perpetuate life and liberty, not to define the form liberty takes.
It requires a tremendous leap of faith to resist the urge to meddle in the economy, but the momentous lesson of Austrian economics, borne out of countless disasters of the 20th century, is that the more governments try to direct economies towards a certain end, the more they destroy the very mechanisms by which prosperity and agency are generated: voluntary exchange.
Gavin Beeker is a Collegian columnist. He can be reached at [email protected].
Brian • Apr 9, 2012 at 1:17 am
Sam: First you said Austrian theory is based on the assumption that “people engage in transactions because they value what they recieve greater than what they give up,” and then you said that “you and I don’t know why other people do what they do, and we would be remiss to coerce them.” Those two arguments are mutually exclusive. Either (1) people engage in transactions because they value what they receive greater than what they give up, in which case we DO know why people do things, or (2) we DON’T know why people do things. You can’t have it both ways.
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Austrian theory ignores the fact that when I choose between alternatives A and B, I might hate both of them and I might really wish I could take alternative C – which is not currently available but could be made available by the government. For example, I might choose to work in a sweatshop if the alternative is to starve to death. An Austrian will therefore say that the sweatshop is good. But a real economist will ask, why are those two my only alternatives? Why can’t we make different options available?
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Nikhil: I don’t think “freedom=unethical chaos,” I think the libertarian idea of “freedom” is not really freedom at all and it is not something I would ever want. Libertarian “freedom” always comes with a price tag: you can do the things you want, but only if you can afford them. So, in practice, it’s freedom for the rich, and servitude for the poor.
Brian • Apr 9, 2012 at 1:07 am
Braadwijk, let me ask you a simple question: Do you believe that it is ever possible for the free market to lead to an outcome which is bad and therefore must be changed? If your answer is “no,” then you’ve just proved my point: libertarians think the free market is good by definition and it can never do any wrong. All of that nonsense about the proper meaning of the word “subjective” is just meant to obscure this simple truth. Neither you nor any of the other libertarians posting here have admitted that the free market can ever do something wrong. You’re just trying to dance around the issue so that people don’t notice what you actually believe.
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Also, not that it matters, but I was born in the 1980s. If anyone is going to run this country for our generation, it will be you and the other fanatical capitalists trying to drag us back to the 19th century.
Nikhil • Apr 6, 2012 at 2:48 pm
Great from Braadwijk. I think people would do better to understand Harrison Searles’ and other libertarians’ arguments before condemning them. I’m not a libertarian but it’s ridiculous to assume that freedom=unethical chaos.
reason • Apr 2, 2012 at 10:39 am
Great article. Although Ron Paul isn’t an absolute manifestation of the libertarian philosophy, he’s the best thing we have right now. The media marginalizes him, the GOP marginalizes him, yet it’s hard to find someone who doesn’t know who he is. He’s enthusiastic and so are his supporters. He’s made me excited to vote for once! He’s getting the libertarian message out there. I agree, the GOP is toast unless they can embrace the libertarian philosophy. In fact, I would argue that there are more libertarians than conservatives out there. Most of them just don’t vote because they don’t have a viable party (the LP is pretty pedestrian, but our political system favors two parties).
Also, check out Gary Johnson. He’s much more of a libertarian than Ron and recently left the GOP for the LP. If Ron decides not to run an independent campaign after the GOP nomination then Johnson has my vote.
Rob Alexander • Mar 15, 2012 at 1:13 pm
Austrian Economics is popular with people who understand TANSTAAFL – “there ain’t no such thing as a free lunch”. Everything else is an academic’s scheme to get something for nothing – the main reason why academics dismiss it. It’s also the only theory that doesn’t assume human societies work like insect societies, which we don’t – we’re not a hive or pack species, we are highly individual in our goals and desires.
No one claims the market is always “right”, but it is “right” far more often than central planners, who are *always* influenced by an agenda and a small-window view of the effects of their forced policies, and when the market is “wrong” it tends to be wrong in a way that avoids large scale long term or far reaching consequences, as opposed to government central planning screwups which tend to screw us all forever.
Jayyyyy • Mar 15, 2012 at 10:55 am
great article, this was shared by Judge Napolitano on Facebook if you didn’t know
Braadwijk • Mar 15, 2012 at 10:06 am
Brian still has no idea what the term “subjective” value actually means. Anyone notice he’s still making the assumption of what is good or bad for individuals based on outcomes he is incapable of judging? He ignores the role that ethics play in libertarian economics, and there is most certainly such a thing as ethics when it comes to free and open commerce. Libertarianism argues that government should exist to protect our individual liberties, whether we are acting in our personal lives or economically. In the event of “bad” outcomes, the government should exist to protect our individual interests in the matter and provide a system for unbiased adjudication so that people who are truly wronged can seek justice. A free market system is not merely one of the ends justifying the means so that every outcome is a good outcome. We’ve had decades of that mentality, and it’s tearing this country to pieces.
I am going to make an assumption here, however, and say that I’m willing to bet Brian is a Baby Boomer because he dismisses libertarianism as being something popular among college kids. Did you ever take the time to think why it might be popular among college students? In addition to noticing virtually everything Ron Paul was talking about in the late 90’s – mid 2000’s has come to pass, we’re the ones stuck paying for your generation’s debts. We will never have the economic opportunities you did. Our country will be one that is poorer and less free because your generation couldn’t take responsibility for its debts and the problems it created believing that government could give people everything they ever needed. Even the students in the welfare states of Europe are beginning to discover this philosophy because they see the same problems on the horizon. The Boomers had more than 30 years to leave this country a better place than they found it, and they left it a mess. There will be a real reality check when we start assuming positions of power in professional life if you guys don’t step aside and start taking responsibility for how badly you managed yourselves.
Steven L • Mar 15, 2012 at 10:01 am
Nice to see there are still a few islands of reaon in the Happy Valley! Thanks for the piece.
Steve L., BA English 1993
Mark Smith • Mar 15, 2012 at 9:30 am
Excellent job! Thanks.
David O. • Mar 15, 2012 at 9:28 am
“So you think that money is the root of all evil?” said Franciso D’Anconia. “Have you ever asked what is the root of money? Money is a tool of exchange, which cant exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take if from you by force.” – Ayn Rand. Rand is polarizing to the highest degree, but it sure does seem to me that she had these ideas a long time ago. I love this article because it does admit the sad fact that Ron Paul will not be the next president, but gosh, do we need to listen to his ideas now more than ever! Plus, he is a little less abrasive than Rand 😉
sam • Mar 15, 2012 at 9:09 am
BRIAN:
It has nothing to do with being happy. Clearly you have not studied Austrian theory; it has never been suggested that every transaction by definition makes a person happy. It merely makes the point that people engage in transactions because they value what they recieve greater than what they give up.
You work at a crappy job because you value whatever you get from it more than the alternative: sitting around with nothing. It doesn’t have to make you happy. Although many people do take jobs they wouldn’t otherwise take, in order to be happy. The point is, you and I don’t know why other people do what they do, and we would be remiss to coerce them.
Further, no Austrian would suggest that every transaction is “good”. Austrian theory is value-free; one examines human action without imposing moral judgements. If you choose to buy crack, that’s obviously bad in the estimation of most people. No Austrian would deny the physical consequences, or even the economic consequences.
Austrian theory is not just “popular with college kids”. It’s also popular with economists, university professors, businessmen, people in the sciences, and anyone who just wants to understand what the hell is going on. Welcome.
Ranuu • Mar 14, 2012 at 9:25 pm
I’m currently in the middle of “Libertarianism: A Primer” by David Boaz. My interest in the political re-emergence of Libertarianism was, like most people these days, Ron Paul’s burst of popularity in the mid 2000s. Somehow, everything he said came true, whether that be predicting the 9/11 attacks in 1999, or the economic crisis in 2002.
Following his apparent psychic nature to the Libertarian movement itself, I found out why he knew; the Libertarians understand human nature and governmental trends far better than any other political group. Not because they are smarter, but because they study it.
And that’s why I decided to read the book. This article is a very good summary of the first few chapters, and a great overview of the rest of the book as well.
I would recommend anyone who’s interested in more to get the book mentioned above, as well as “Declaration of Independents” and “The Revolution: A Manifesto” by Ron Paul himself.
Great article.
Melissa • Mar 14, 2012 at 11:47 am
Wonderful article. Thank you!
hmm • Mar 14, 2012 at 11:25 am
ed. people like YOU… searles, etc
hmm • Mar 14, 2012 at 11:24 am
what is so “free” about a free market? free markets are what gave us slave labor, child labor and etc in the 19th century and in other parts of the world these abuses, as well as widespread ecological damage and other social ill effects, are all perpetuated by the market system. you can’t just pretend that the economy is political; nothing is MORE political than the economy since it determines how people survive from day to day and it’s a context we weren’t give a choice about.
can’t really express my disgust enough about these greedy, sociopathic rants. like ron paul when asked about an unemployed man in a coma, people like us would let everyone else die in the street just so you can keep your share.
Sean • Mar 14, 2012 at 5:45 am
Great, concise article. Good work. Libertarianism is the future of the GOP, or else the GOP has no future.
ral • Mar 14, 2012 at 3:38 am
Thanks for the article.
For info on people using voluntary Libertarian tools on similar and other issues, please see http://www.Libertarian-International.org
, the non-partisan Libertarian International Organization……
Brian • Mar 14, 2012 at 12:05 am
This is what happens when you fail to think for yourself and accept a ridiculous theory just because it’s popular with college kids. Libertarianism is absurd in general, but Ron Paul’s “Austrian School” is particularly stupid and rightfully scorned by the vast majority of economists.
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Think about it for a second. The theory of subjective value says that every time any kind of market exchange happens, both buyer and seller “increase their subjective value”. So every time someone buys or sells something, that makes them happier and better off. No exceptions. Everything you ever bought was good for you and made you happy. Every time you sell something, you are happy to be rid of it. Every job everyone gets is a job that makes them happy (remember, the act of being hired is a market transaction too).
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In other words, everything that happens in the free market is always good by definition! This is the STARTING POINT of the theory. Once you see that, you realize why “academic economists” laugh at the so-called Austrian School. The Austrian School ASSUMES that free market capitalism can do no wrong. It literally defines a “good outcome” as “whatever free markets produce”. So of course they’re going to oppose all government intervention and activity. If you assume that free markets are always perfect, then, naturally, anything that is not a free market is either unnecessary or harmful.
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The entire “Austrian School” can be summed up in one sentence: “I declare that markets are always right.”
Anonymous • Mar 13, 2012 at 11:43 pm
Excellent article. While many are lost in division and arguing about this or that polarizing issue, all should heed the call to understand that if the nation collapses under the weight of debt and mismanagement no other issue will matter anymore. We must get our financial house in order and do so immediately. Failing to do so will bring inevitable calamity.
The “Founding Fathers” were scholars of history and created the system of government that they did, with the specific rules that they chose to impose, in an effort to help us avoid the mistakes of the past. We must not fail in our duty to ourselves and our posterity.