James Leroy Wilson's blog

Friday, December 21, 2007

Dividing Lines

For decades we have talked about liberal and conservative as if there was a profound difference in their views of the market. The underlying premise is that conservatives were economic libertarians and liberals stood for government intervention. The liberals would talk about the naivete of those believing the "free market" would bring about prosperity and justice for all, and the back and forth went on as if there was a serious philosophical disagreement.

I doubt that is really the case. For the difference of opinion came within the same premises and context: the Federal Reserve, fiat money, and fractional-reserve banking. That is: central government-authorized regulation of money, money existing as paper only whose value depends on the people's faith in the government rather than on a precious metal or other commodity, and the ability of banks to lend out money they don't have. And the liberal side of the argument has a point.

Prosperity can and does exist in such an environment, because people can still innovate and satisfy customers. But while individuals can act in their "rational self-interest," they are really unable to make informed economic decisions. That's because they don't know how much the Fed will loosen credit and inflate the money supply from one month to the next. And that promotes short-term thinking to get-as-much-as-you-can, quarterly-bottom-line thinking. And that encourages greed, corruption, creative accounting, etc.

How can there be economic freedom if there isn't a free market in money? We aren't free, we are just at the mercy of the federal government and the Federal Reserve. If freedom doesn't work in money, why would it work anywhere else? I think this is the real ideological dividing line, and it's no wonder that many "libertarians" who don't believe in a free market in money do not support Ron Paul, whereas he is attracting some left-populists who want to get rid of the Fed.

I think the Ron Paul Revolution is based on a) foreign interventionism, b) restoring the first 8 Amendments of the Bill of Rights, and c) the money question. All other philosophical (what is the proper role of government?), moral, cultural, and economic questions fall by the wayside, because they can't be resolved if these three aren't.

1 comment:

  1. The political spectrum in the US runs from M-N, and A-L and O-Z aren't even acknowledged as options.