There's a few things I agree on with Ron Paul. The biggest is being financially responsible and not being the world's policeman. The War in Iraq was a big mistake. I honestly felt that way about 6 months after it started. I am just not sure about the immediate pullout.
To put in a flat tax on sales makes sense. The only problem is the loop hole on no tax on sales on the internet, unless you are in the same state as the vendor. Close that loophole and it could work well.
Typical logical failure. You address the disadvantages of "letting the market take care of everything" i.e. market failure, and say this means govt intervention is necessary. Why did you not also consider the disadvantages of government intervention? You also did not address the advantages of the free market vs the advantages of government. So out of 2 alternatives, with pros and cons for each, you only addressed one out of four of the types of consequences. You also talk of empirical testing, but where is the empirical testing of the comparative outcomes of government control of the economy versus the free market? Is it the superb performance of state-run industries perhaps? The successes of East German socialism versus West German capitalism in the post-WWII period? N Korea vs S Korea? The wonderful efficiency of socialised medicine? The great success of price controls in ensuring plentiful supply of a product at bargain prices? The superb benefits of massive trade barriers? Pareto optimality is a theoretical construct - I would like to see your empirical evidence that any government legislation that has actually been passed in the real world has brought about this supposedly optimal condition. You cannot make a choice between two alternatives by examining the cons of one, and ignoring the cons of the other; and ignoring the pros of both. You must assess the pros and cons of both possibilities before arriving at a decision. A good analogy is government selection: according to your logic, one could say that democracy is flawed because often bad candidates win. Thefore dictatorship is necessary to fix the problems caused by electing a bad candidate. And in fact many people have concluded this throughout history, and acted on it. What have been the results? Pretty terrible - the success rate for dictatorship as a system of government is just atrocious, even if we ignore the ethical problems with it. Democracy despite its (correctible) flaws has proven far superior. Why did your logic not work? Because it would have only looked at the disadvantages of democracy - not the pros & cons of democracy and the pros and cons of dictatorship. So - look at the pros and cons of government control over the economy, compare it to free market economies, look at the historical track record, and only then are you qualified to speak on this matter. And since you are tossing out economic concepts like Pareto efficiency, you might also want to read up on the economics of government decision making (including the incentives facing policy makers). It is not pretty reading, I can assure you. Government intervention economics for most of history has blithely assumed that the government will interfere only to "correct" "market failure". This is like assuming soldiers will always uphold law and order, and that generals will always defend the interest of national security and never interfere in politics. Instead, what you find is that when government is allowed to address "market failure", what happens is that everyone with money and poor ethics lobbies government for handouts, subsidies, protections etc, none of which are even economically efficient, let alone morally justifiable. That's the problem with making the government effectively above the law, and giving it carte blanche to indulge in socio-economic engineering. Read Bastiat's "The Law" for further treatment of this subject. Successful cases of government intervention to correct market failure are in any case notoriously rare. This is not exactly what advocates of government intervention had in mind, with their dreams of wise, impartial philosopher-king economists in charge of policy. You also ignore (what don't you ignore? lol) the ethical considerations. Pretty much all government regulation of free markets requires either confiscating people's property through violent force, or imprisoning them in caged & locked rooms. To justify that, there have to be some pretty compelling reasons. Not achieving theoretical Pareto optimality, a term which has no moral content whatsoever, is hardly sufficient to justify such a flagrant violation of people's human rights. That is the kind of logic which led China to turf millions of citizens out of their ancestral lands, destroying their homes to make way for a dam project. Two people exchanging goods in a free, open and consenting transaction are not criminals - yet any attempt by the government to prevent that transaction requires treating them as such. Finally, you did not compare Ron Paul to the alternatives. This betrays your whole way of thinking - you think that one imperfection in anything is sufficient to dismiss it. But we are not compared one flawed approach or person to a perfect alternative. We are comparing multiple candidates, all of whom have flaws. Our job is not to find the perfect candidate, but the one whose flaws are least objectionable. We are not trying to find the perfect system of government, but the one which does the least harm.
The US income tax at the top bracket went from 0% to over 70% in less than 2 decades. There is no reason that income tax can't go from its current level to zero over a similar timeframe. If people vote for Ron Paul or anyone with ideas like him, then that is a real possibility, not pie in the sky. As an example, look at Russia. Putin slashed the income tax rate overnight to 13%. This was a significant contributor to the massive economic boom which followed. Tax receipts actually increased. All that is required is to abolish all military spending dedicated to making the US the world's policeman (this would also have the benefit of answering all the people complaining about US imperialism), and abolish all welfare programs for able-bodied adults capable of doing an honest day's work to support themselves. That would slash government spending and allow the abolition of the income tax. An easily enforced sales tax, along with small taxes on foreign trade, selling of US citizenship for say $100k per head, would all be practical, realistic, and beneficial policies.
I agree with faure. Cutten, you focus on faure's point that there is a need for government intervention while missing his overall point of Ron Paul's viability as a candidate, in my opinion. Asset backed dollars or the re-establishing the gold standard is impossible in todays economic climate. There is a reason that every country in the world has fiat mandated currency and the reason is the current world economy has globalized by adding enormous pools of labor allowing inflation and interest rates to stay low, therefore allowing the rapid increase of liquidity only possible by fiat currency. Things like government spending and even extremely aggressive foreign policy are products of this too. There is no pressing need for the government to reduce spending because treasury rates are so low that borrowing is not a problem. In my opinion, there is a misconception among the public that the government and the president are in direct control over the direction of the economy and the country. It's only true in theory, but in reality the president is following the invisible hand of global market forces. Like faure said, Ron Paul is directly pandering to people's utopian fantasies. But in reality he will basically wipe out all middle class subsidies (elimination of the dept. of education for one). He will never get the nomination because his policy stances are far too extreme.
All lies. Absence of a Central Bank in Panama Results in Fiscal Stability By James Newcomb Published: 2007-05-01 20:03 ARTICLE SYNOPSIS: Panama has no central bank, and no means of creating money out of nothing to meet the government's operating costs. The result is an incredibly stable economy. It can be done! COMMENTARY: The Republic of Panama, after being forced to accept fiat currency from Colombia in the late 1800's, included this stipulation in their Constitution when they gained independence in 1903: "There will be no forced fiat paper currency in the Republic. Thus, any individual can reject any note that he may deem untrustworthy." That sounds so sound and refreshing, yet so foreign to Americans whose livelihood is dependent upon the actions of the Federal Reserve System. In the year 1913, the United States Congress passed, and President Wilson signed into law, the Federal Reserve Act. Prior to this historic legislation, the United States economy was governed more or less by the gold standard. In other words, the supply of gold dictated how much banks could lend, how much people could borrow and how much the government could spend. Since 1913, with a policy of creating "fiat" money, i.e. printing more money than there is gold to back it up, the Fed has been responsible for a severe depression and countless recessions. It has also financed two great wars and many smaller skirmishes and "conflicts." On several occasions, the Fed has bailed out private banks that had made risky and irresponsible loans that could not be repaid. As a result of the Fed's intervention in the economy since 1913, inflation has been a way of life. The Dollar is worth less than 10% of what it was worth then â all the while we are told that the people running the Fed are "doing their best" to control the damage. Human intervention in the economy is necessary, we are told. The economy being left on its own would bring about disastrous consequences. Meanwhile, in Panama, we see a completely different picture. In a land where creating fiat money is illegal, financial stability is the norm. It definitely could be better, as there is no precious metal in storage. However, the country sells products to American firms, and the US Dollars they receive in return is their money supply, which is similar to the principle that the gold standard promotes. Since they are not allowed to print their own money, their economy is entirely dependent on the amount of goods they can produce and sell. And finally, there is no central bank operated by the government. All banks are privately owned, thus creating competition between them and promoting ethical banking practices. While officials at the Fed tell us how evil a market-driven economy is, they continue to decimate our purchasing power by financing America's wars and international wars via loans made by the International Monetary Fund and the World Bank. These two organizations are funded in large part by the Federal Reserve. It is no wonder that many consider the Fed to be the greatest contributor to the evils we currently suffer in America. (For a thorough look at the Federal Reserve, we recommend you read The Creature from Jekyll Island.) In order to see a balanced, market-driven economy, we do not need to look prior to 1913, nor do we need to make up a story as to how it would work in theory. We just need to look south a bit, and see how well it works in Panama, and then ask ourselves, "If it works there, why wouldn't it work here?" http://www.jbs.org/node/3707
I never said a Gold standard would not work. My point is fiat currency best caters to the inherent tendency of wanting to consume more. Besides a bunch of people on the fringe. It's agreed that inflation has stayed low in recent years despite rapidly expanding money supply. It is agreed that Americans in aggregate have never been richer, lived longer and have never worked less. So what is the problem that Ron Paul is supposed to solve? Why is there such a strong grassroots support for RP? In my opinion, there are no real pressing problems facing americans, the iraq war has no direct financial consequences and excuse my callousness but the human cost of the war is low as well, not enough to have a direct impact on the everyday person. I think that support for RP in a product of peoples fantasies of gaining more control over the government, wanting to feel special but not actually accomplish anything. RP feeds that.
Funny, I did not know that a CENTRAL BANK equates to market forces. Pure nonsense, if you actually do some research on the man, the abolishment of the IRS is actually secondary to his main goal, which is the abolishment of the Federal Reserve. IRS is a symptom, not the problem. He won't get the nomination because he threatens the most powerful people in the world (none of which are government officials). His biggest success will be educating as many people as he can about what is really going on. However, neither you or faure fall in that category.
You really believe that the central bank is the main force behind the secular downtrend of inflation since the 70s? The entrance of China and India into the global economy, the introduction of China into the WTO, the establishment of the yuan-dollar peg.. All that seems to be lost among ET'ers who assign god-like abilities to greenspan and bernanke.