With the economy still struggling, the lawmaker's libertarian views are getting serious attention. In particular, Ron Paul (pictured left) is a disciple of Ludwig von Mises, an Austrian theorist born at the end of the 19th century who contended that government intervention in an economy would fail because free markets were better at allocating resources and fueling growth. Having lived through Germany's devastating hyperinflation in the early 1920s, which helped pave the way for Hitler, Mises wrote long before the Great Depression that over-generous credit policies would encourage excessive borrowing, creating a boom and then a bust. Mises' ideas became central to what is known as the Austrian School of economics, which emphasized tight controls on credit and money supply, a strategy that discouraged financial ups and downs but tended to slow growth. By 1940, when Mises arrived in America, most Western economists had embraced the competing theories of Britain's John Maynard Keynes, who called for government to stimulate the economy by spending on infrastructure and cutting interest rates. Obama has largely followed the Keynesian script, as President George W. Bush did when the economic crisis broke. Paul's once-lonely espousal of the Austrian School's ideas has gotten new impetus from conservative economists and Republican political strategists. "A lot of good ideas were shoved aside because of the Depression and the rise of the Keynesian view of the world," said George Selgin, an economics professor at the University of Georgia. – LA Times
Dominant Social Theme: The Congressman gets write ups, sort of …
Free-Market Analysis: This article is more a reflection of Austrian economics and free-market thinking than Ron Paul. However, we don't think Ron Paul will mind since he traces his inspiration back to the Austrian fathers such as Ludwig von Mises and would modestly hold that nothing of what he believes is especially original – it can all be found in what came before.
Having said that, we believe Ron Paul is the most significant force in today's politics simply because no one EVER, that we know of in Western politics, has had his level of clarity and understanding about free-markets and Austrian economics. His knowledge is of the profoundest sort, and the idea that he has espoused such ideas within an American political context continues to astound.
In any event, let us return to von Mises. The idea in the 21st century that a major American newspaper could be discussing the ideas of von Mises is startling to say the least. It is hard to recall the obloquy and near-total news blackout of von Mises in the 20th century. One got the idea that the mainstream media and its enablers would not be satisfied until the very name of Mises was blotted out of economic history books. But that could not happen.
In fact, the reverse has taken place. Von Mises and the Austrian school are probably more widespread and talked-about today than ever before. The buzz around Mises and the Austrian school has probably eclipsed the socialist John Maynard Keynes. There doesn't seem much prospect of these trends reversing any time soon as they are being driven by younger people – who appreciate the timeliness and logic of the approach. Mises, in fact, and those purveying the ideas of the Austrian economic school during his time and today are building on a conversational tradition that goes back substantively about 400 years and actually thousands of years if you include its more general antecedents.
In its current most fundamental incarnation, the Austrian school would bring into question any involvement of government in the private sector for two reasons. First, the government itself is a creation of force and at root abjures voluntary cooperation. Second, use of government, because of its use of force (and thus lack of competition), inevitably obscures price signals that the free-market would otherwise send. Thus, the Austrian School is also known as the free-market school for its logical conclusion that the best government is the one that governs least – and that it is perfectly possible that government ought not to be involved in any substantive economic activity.
The other fundamental principle of the Austrian school is the one that Mises defined called "human action." With this brilliant concept, which was actually a gathering together of prior strands of Austrian thought, Mises proved that social animation, culture, survival and even "progress" comes from the individual not the state. In doing so, Mises blew up the entire rationale for state action and planning, which is one reason he has earned the undying enmity of those who constantly wish to conflate individual action with state efforts.
If one understands the ramifications of human action as Mises espoused it, then one is drawn to the conclusion that nothing the state does, no projections, no planning, no industrialized partnerships can ever succeed for long because they do not take into account the variability of individual human action itself. The state may plan for this or that catastrophe, but individuals are planning as well, and their plans may well collide with state planning and sooner or later supersede it.
There are other ramifications to the ideas of free-market economics and human action. Once one understands that any state involvement in the private market will inevitably fail (giving rise to a queue, a shortage, rationing etc.) then we begin to realize that many of the promotions of the power elite are based on fundamental economic illiteracy – and count on the economic illiteracy of those they're aimed at.
There is for instance the myth of the Banker Jew, and of money-grubbing and devious Jews generally. In its most vicious incarnations, Jews are blamed for 9/11, for Western wars, for "bankster" central banking and other disasters of modern society. But in fact, absent government involvement, Jews (even Zionists) would not be capable of accomplishing any of these nefarious objectives. The problem is not Jews, or even Zionists, therefore, if one accepts free-marketing thinking, but individuals (who may be Jewish or Zionist) who utilize government power (and public/private central banking) for their own enrichment and power. To the degree that Israel is a theocracy, the problems are compounded and the strategies become realizable. In any event, the use of government levers to achieve individual private ends – commercial (or even religious) — is called MERCANTILISM, the realizing of private goals for individuals or small groups through public means.
We see the same sort of promotion evident in the increasingly popular phrase "Islamofascism." The idea here is that Islam is somehow more predisposed to fascism than other religions. Yet free-market thinking tells us that Islam (absent government interference) is no different than any other religion. Even if Islam were the worst and most violent religion in the world, until it is married to government power, the religion itself will not prove anymore abusive than any other (which is to say systemically peaceful). In fact, in Turkey, Islam has subsisted without seemingly great difficulty in a secular state for many decades now.
There is the myth of "banksters" – often under discussion in these pages. In fact, absent government involvement – mercantilism – there is nothing wrong with a "bankster" or banking of even the most aggressive sort. The free-market itself would sort through the most horrid of these practices in short order were government not involved. It is precisely because the free-market would make a hash of today's abusive banking, worldwide, that those involved in global banking have turned to government to ensure their monopoly power. Absent, government coercion, even the bankster monopoly would not long survive – nor even its gold manipulation.
And then there is the power elite itself – a staple in these pages along with the promotions that the power elite utilizes to cement its power and wealth. There is nothing, in fact, wrong with having an elite – it is an unstoppable fact of human existence. What is "wrong" however – in the sense that it is ruinous for society, for free-markets and for human progress – is the use of levers of government authority to perpetuate power elite perogatives and the promotions it proposes. The power elite is not satisfied in promoting various fear-based schemes. It then seeks to cement the response to these schemes into law and to profit from them. This is where the mercantilist damage occurs.
Human nature is variable. There is plenty of evil in the world. Fortunately, free-market thinking provides us with a clear perspective of what we need to watch out for – and how global promotions work and why. There is nothing intrinsically wrong with trying to "rule the world" or generating a fear-based promotional campaign. The problem comes from using GOVERNMENT levers (and force) to ensure the fruition of your hitherto private action. That's where the damage is done. Until then, until government is involved, nothing is taking place that cannot be easily rectified. It is a simple process of withdrawing one's participation (or in some cases where private violence is being employed, setting up appropriate private remedies). There is no such thing, for instance, as a private monopoly – monopoly power is inherently a government-based operation. In a private market, if people are not satisfied with a product or service they can walk away from it, and often do. Look at GM, even despite its government involvement.
Having written the above to clarify just how financial and commercial abuse evolves in the marketplace with the help of government, we are also willing (unlike some of our brethren) to take a step back and suggest that in real life we not make the perfect the enemy of the good. By that we mean at least in the short term there may be quasi-government-based solutions, especially monetary solutions – such as some that Brownians propose – that can provide immediate, short-term relief at a time when there seems no other way out. Philosophically, we are not aligned with such solutions, as we have written many times, because we think that government-oriented solutions (and government almost always implies force and the obliteration of competition and price information) inevitably fail sooner or later for the reasons mentioned above. However, in times such as these, one could conceivably make a case for expediency as well as philosophical purity.