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Matt Stoller: Why Ron Paul Challenges Liberals

Discussion in 'BBS Hangout: Debate & Discussion' started by Hightop, Dec 29, 2011.

  1. Hightop

    Hightop Member

    Oct 15, 2011
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    By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller.

    The most perplexing character in Congress, ideologically speaking, is Ron Paul. This is a guy who exists in the Republican Party as a staunch opponent of American empire and big finance. His ideas on the Federal Reserve have taken some hold recently, and he has taken powerful runs at the Presidency on the obscure topic of monetary policy. He doesn’t play by standard political rules, so while old newsletters bearing his name showcase obvious white supremacy, he is also the only prominent politician, let alone Presidential candidate, saying that the drug war has racist origins. You cannot honestly look at this figure without acknowledging both elements, as well as his opposition to war, the Federal government, and the Federal Reserve. And as I’ve drilled into Paul’s ideas, his ideas forced me to acknowledge some deep contradictions in American liberalism (pointed out years ago by Christopher Laesch) and what is a long-standing, disturbing, and unacknowledged affinity liberals have with centralized war financing. So while I have my views of Ron Paul, I believe that the anger he inspires comes not from his positions, but from the tensions that modern American liberals bear within their own worldview.

    My perspective of Paul comes from working with his staff in 2009-2010 on issues of war and the Federal Reserve. Paul was one of my then-boss Alan Grayson’s key allies in Congress on these issues, though on most issues of course he and Paul were diametrically opposed. How Paul operated his office was different than most Republicans, and Democrats. An old Congressional hand once told me, and then drilled into my head, that every Congressional office is motivated by three overlapping forces – policy, politics, and procedure. And this is true as far as it goes. An obscure redistricting of two Democrats into one district that will take place in three years could be the motivating horse-trade in a decision about whether an important amendment makes it to the floor, or a possible opening of a highly coveted committee slot on Appropriations due to a retirement might cause a policy breach among leadership. Depending on committee rules, a Sub-Committee chairman might have to get permission from a ranking member or Committee Chairman to issue a subpoena, sometimes he might not, and sometimes he doesn’t even have to tell his political opposition about it. Congress is endlessly complex, because complexity can be a useful tool in wielding power without scrutiny. And every office has a different informal matrix, so you have to approach each of them differently.

    Paul’s office was dedicated, first and foremost, to his political principles, and his work with his grassroots base reflects that. Politics and procedure simply didn’t matter to him. My main contact in Paul’s office even had his voicemail set up with special instructions for those calling about HR 1207, which was the number of the House bill to audit the Federal Reserve. But it wasn’t just the Fed audit – any competent liberal Democratic staffer in Congress can tell you that Paul will work with anyone who seeks his ends of rolling back American Empire and its reach into foreign countries, auditing the Federal Reserve, and stopping the drug war.

    Paul is deeply conservative, of course, and there are reasons he believes in those end goals that have nothing to do with creating a more socially just and equitable society. But then, when considering questions about Ron Paul, you have to ask yourself whether you prefer a libertarian who will tell you upfront about his opposition to civil rights statutes, or authoritarian Democratic leaders who will expand healthcare to children and then aggressively enforce a racist war on drugs and shield multi-trillion dollar transactions from public scrutiny. I can see merits in both approaches, and of course, neither is ideal. Perhaps it’s worthy to argue that lives saved by presumed expanded health care coverage in 2013 are worth the lives lost in the drug war. It is potentially a tough calculation (depending on whether you think coverage will in fact expand in 2013). When I worked with Paul’s staff, they pursued our joint end goals with vigor and principle, and because of their work, we got to force central banking practices into a more public and democratic light.

    But this obscures the real question, of why Paul disdains the Fed (and implicitly, why liberals do not), and the relationship between the Federal Reserve and American empire. If you go back and look at some of libertarian allies, like Fox News’s Judge Napolitano, they will answer that question for you. Napolitano hates, absolutely hates, Abraham Lincoln. He sometimes slyly refers to Lincoln as America’s first dictator. Libertarians also detest Woodrow Wilson, and Franklin Delano Roosevelt.

    What connects all three of these Presidents is one thing – big ass wars, and specifically, war financing. If you think today’s deficits are bad, well, Abraham Lincoln financed the Civil War pretty much entirely by money printing and debt creation, taking America off the gold standard. He oversaw the founding of the nation’s first national financial regulator, the Office of the Comptroller of the Currency, which chartered national banks and forced them to hold government debt to back currency they issued. The dollar then became the national currency, and Lincoln didn’t even back those dollars by gold (and gold is written into the Constitution). This financing of the Civil War was upheld in a series of cases over the Legal Tender Act of 1862. Prior to Lincoln, it was these United States. Afterwards, it was the United States. Lincoln fought the Civil War and centralized authority in the Federal government to do it, freeing slaves and transforming America into one nation.

    Libertarians claim that they dislike Lincoln because he centralized authority in the Federal government. Of course, there is a long reconstructed white supremacist strain that hates Lincoln because he was an explicitly anti-racist President, and they hate the centralized authority and financing power that freed the slaves and turned America increasingly into more racially equitable society. This strain can be exploited by the creditor class, who also disliked how slavery – which they saw as a property right rather than a labor and human rights issue – was destroyed by state power. History, of course, has a nasty way of mocking us about long-held fights we thought were over. The conflict between labor/human rights and property rights continues today. Or as Carl Fox said in the movie Wall Street, “The only difference between the Pyramids and the Empire State Building is the Egyptians didn’t allow unions.” Without even getting into globalization, prison labor legally makes body armor, as well as products for victoria’s Secret, Starbucks, and Microsoft. State centralized power can prioritize labor rights over property rights, and for this reason, creditors are wary of it.

    On to Woodrow Wilson. Wilson signed the highly controversial Federal Reserve Act in 1913; originally, the Federal Reserve system was supposed to discount commercial and agricultural paper. Government bonds were not really considered part of the system’s mandate. But what happened the next year? Yes, World War I. And Wilson, who ran on the slogan “he kept us out of war” in 1916, started a long tradition of antiwar Democratic Presidents who took America to war (drawing the ire of among others Helen Keller, but garnering the support of union leader Sam Gompers who argued it was a “people’s war”). Wilson also implemented a wide variety of highly repressive authoritarian measures, including the Palmer Raids, the Espionage Act of 1917, and the use of modern PR techniques by government agencies. For good measure, Wilson was an unreconstructed white supremacist (even a bit out there for the time) and sent many antiwar opponents to jail. In the monetary arena, Wilson’s new Federal Reserve system began discounting government bonds. Like Lincoln, he had set up a tremendous war financing vehicle to centralize capital flows and therefore, political authority. In many ways, Wilson set up the rudiments of America’s police state, and did so arguably to help a transatlantic Anglo-American banking elite. Here, one can argue that libertarians are wary of centralized financing and political authority for liberal reasons – the ACLU was founded after the Palmer raids.

    And finally, we come to Franklin Delano Roosevelt. Roosevelt’s Fed is a bit more complex, because he did centralize monetary authority using wartime emergency powers, but he did so in peacetime. FDR abrogated gold clause contracts, seized the domestic supply of gold, and devalued the currency. He constrained banks with aggressive regulation and seizures of insolvent banks, saving depositors with the Reconstruction Finance Corporation. He also used the RFC to set up much of what we know today as the Federal government, including early versions of disaster relief, small business lending, massive bridge and railroad building, the FHA, Fannie Mae, and state and local aid. Eventually, the government used this mechanism to finance college and housing for veterans with the GI Bill. Since veterans were much of the population right after World War II, effectively this was the first ever near-national safety net. FDR also fused the liberal and union establishments with the corporate world, creating the hybrid “military-industrial” complex that is with us to this day (see Alan Brinkley’s “End of Reform” for a good treatment of this process).

    Later, this New Deal financing apparatus was used to finance the munitions industry and America’s role in World War II. At one point, the RFC owned eight war material producing subsidiaries, including the synthetic rubber industry. Importantly, FDR had the Fed working for him. The Fed kept interest rates pegged at an interest rate set by Treasury, and used reserve requirements to manage inflation. This led to a dramatic drop in inequality, and unemployment sank to 1% during World War II. In 1951, the Fed, buttressed by what Tom Ferguson calls “conservative Keynesian” corporate leaders, broke free of this arrangement, under the Treasury-Fed Accord, leading to the postwar monetary order. That accord is where the vaunted “Federal Reserve Independence” came from.

    Now, if you’re a libertarian, and you believe that centralized power is dangerous, then it’s obvious that state control over finance and mass mobilization of social resources for warfare or other ends are two sides of the same coin. If you fear social spending, you could also be persuaded to believe that any financing mechanism for mass social spending is problematic. Creditors might just dislike the possibility of any state power centers that could challenge their hegemony and privilege labor/human rights over their property rights, though they do support captive state systems they control. If you are a white supremacist, centralized power can easily be viewed as a threat to racial homogeny, since historically it has acted as such in the past. But if you are against war, or you believe that a centralized state is likely to act in an unjust or repressive manner (as it also has in the past), then war financing is a reasonable target.

    Modern liberalism is a mixture of two elements. One is a support of Federal power – what came out of the late 1930s, World War II, and the civil rights era where a social safety net and warfare were financed by Wall Street, the Federal Reserve and the RFC, and human rights were enforced by a Federal government, unions, and a cadre of corporate, journalistic and technocratic experts (and cheap oil made the whole system run.) America mobilized militarily for national priorities, be they war-like or social in nature. And two, it originates from the anti-war sentiment of the Vietnam era, with its distrust of centralized authority mobilizing national resources for what were perceived to be immoral priorities. When you throw in the recent financial crisis, the corruption of big finance, the increasing militarization of society, Iraq and Afghanistan, and the collapse of the moral authority of the technocrats, you have a big problem. Liberalism doesn’t really exist much within the Democratic Party so much anymore, but it also has a profound challenge insofar as the rudiments of liberalism going back to the 1930s don’t work.

    This is why Ron Paul can critique the Federal Reserve and American empire, and why liberals have essentially no answer to his ideas, arguing instead over Paul having character defects. Ron Paul’s stance should be seen as a challenge to better create a coherent structural critique of the American political order. It’s quite obvious that there isn’t one coming from the left, otherwise the figure challenging the war on drugs and American empire wouldn’t be in the Republican primary as the libertarian candidate. To get there, liberals must grapple with big finance and war, two topics that are difficult to handle in any but a glib manner that separates us from our actual traditional and problematic affinity for both. War financing has a specific tradition in American culture, but there is no guarantee war financing must continue the way it has. And there’s no reason to assume that centralized power will act in a more just manner these days, that we will see continuity with the historical experience of the New Deal and Civil Rights Era. The liberal alliance with the mechanics of mass mobilizing warfare, which should be pretty obvious when seen in this light, is deep-rooted.

    What we’re seeing on the left is this conflict played out, whether it is big slow centralized unions supporting problematic policies, protest movements that cannot be institutionalized in any useful structure, or a completely hollow liberal intellectual apparatus arguing for increasing the power of corporations through the Federal government to enact their agenda. Now of course, Ron Paul pandered to racists, and there is no doubt that this is a legitimate political issue in the Presidential race. But the intellectual challenge that Ron Paul presents ultimately has nothing to do with him, and everything to do with contradictions within modern liberalism.
  2. pgabriel

    pgabriel Educated Negro

    Dec 6, 2002
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    Why Democrats don't care about ron paul. he's a unique guy who will never win a higher office.

    its not because he is independent it is because he is extreme
  3. Rashmon

    Rashmon Contributing Member

    Jun 2, 2000
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    How does he feel about NASA?
  4. DonnyMost

    DonnyMost not wrong
    Supporting Member

    May 18, 2003
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    It's like you're not even trying to hide the fact that you're rtsy/shovelface/select/meowgi.
  5. Dave_78

    Dave_78 Member

    Oct 12, 2006
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    All the liberals I know just make fun of the guy because he is a joke to most folks outside of his own fans. Certainly not worth the laughs that the Cain Train was but still enough to get a few chuckles when watching him nearly brought to tears of frustration by a female reporter.
  6. kpsta

    kpsta Contributing Member

    Sep 2, 2001
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    No, he pretty much just ignores the posts that call him out for the fraud that he is. "Unique" posters would actually put forth some effort to defend themselves.
  7. Dubious

    Dubious Contributing Member

    Jun 18, 2001
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    "Paul is deeply conservative"

    We need to agree on some terms here, I don't think someone who wants to change everything from the way it is would be called conservative.

    A radical conservative would be an oxymoron.
  8. Northside Storm

    Northside Storm Contributing Member

    Dec 24, 2007
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    Insofar as the author claims "there’s no reason to assume that centralized power will act in a more just manner these days, that we will see continuity with the historical experience of the New Deal and Civil Rights Era", I see the same strain of incredulity that defines libertarians who are predisposed to question power just because it exists. He can at least acknowledge the great impact and efficiency government intervention has brought to the table (which has helped define the 20th century), in somewhat leveling the play-field with discrimination, in implementing compulsory education, and child labour laws, and in allowing the people to express themselves freely, and to organize themselves to counter the tyranny of capital in the free market. So he's not one of the people who "oh, how I wish we could step back to 1850, it'd be like Mad Men but even cooler for us rich white anglo-saxon people!"

    Instead, his argument is that we cannot trust centralized power, because, well, it exists, even if the good outweighs the bad. Pros-the greatest era of prosperity mankind has ever known. Cons-The United States was able to spend a lot to win the Civil War, WW1 and WW2.

    good luck selling that.

    As for the central premise of the article, liberals can distrust the "free market" and the government, to differing degrees. You can trust the government to provide social services, but not have the power to kill everyone in sight. Thus an advocate of social programs might not like military programs; however, in the belief that government nominally elected to represent the interests of their people (no matter how shoddily this is done) are more responsive to stakeholders than a board of directors appointed explicitly for the privileged few who have majority stakes in corporations, one can see why the pros of social protection outweigh the cons of potential governmental abuse. That balance is fragile, but in no way represents a contradiction of any kind. Ron Paul and his campaign positions do not alienate liberals because they represent "an inherent contradiction" in their own beliefs. They alienate modern liberals because of their extreme, and naive, unwavering belief in the "free market", an institution most modern liberals have grown to distrust to some degree, and rightfully so. History has shown the damage a "pure" free market can cause.
    #8 Northside Storm, Dec 29, 2011
    Last edited: Dec 29, 2011
    1 person likes this.
  9. bigtexxx

    bigtexxx Contributing Member

    Jun 12, 2002
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  10. glynch

    glynch Contributing Member

    Dec 1, 2000
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    I'll leave his sort of wierd emphasis on the presidencies of Lincoln, wilson and rosevelt. I mainly object to the unsupported declarations in the second half.

    It is a nice tactic to link the social safety net and warfare, both hated by libertarians. Sorry, guy but Wall Street and the Fed don't finance the safety net and for the most part don't favor it except to the extent it keeps the masses supportive of the existing capitalist system.

    I assume the author is in favor of human rights despite the hated Federal government and the hated unions.

    Well it is true America in general can be mobliized for war or social reasons.

    At least here he accepts that not all "liberals" as he defines them care about something other than mobilizing the government for war.

    Well, yeah. Of course that great libertarian Alan Greenspan and other libertarian economic theories had a lot to do with the financial crisis.

    He has failed to prove his declaration. I think it would be more accurate to say that American conservatism which is more militaristic than liberalism and supportive with libertarians of such deregulation as Glass-Segal repeal does not work.

    Liberals like Denis Kucinich and others have long challenged the Fed. I think Ron's Paul continence of racism is sort of different than a "character defect" and frankly I think in general his character is fairly good.


    Again many liberals take the same position as Paul on drugs and empire but those that do are not as popular or well funded because in addition to drug wars and empire they also challenge unregulated markets and capitalism the essence of the elite , which Ron Paul actually promotes.


    Let's have a bake sale or telethon to support the military. I think a better way is to defund it to the point that it can defend the country, but not run around trying to be the worlds police man or seize other countries resources.

    Good to acknowlege at least once the good that central power has done, but that is not an argument for eliminating it when there is much to extend civil rights and sorry, guy the safety net to make it at least equal to other rich countries which have a better standard of life for the great majority.

    Granted some liberals are in alliance with conservatives who have made militarism one of their main tenants.

    Another shot at unions.

    Granted if we got rid of government then corporations could not use it to enact their agenda, but this is an argument for citizens to take back government to reignin corporations, not let them run wild without regulation as libertarians propose in their yearing for a land of small businessmen and little govenment.
    It is interesting to see the author knock liberalism over and over to the extent it panders to conservatism wrt to warfare and corporate boot licking, but never knock conservatism. Perhaps this explains the continual going in and out of the GOP by the "libertarians" and their heroes the Kochs and Ron Paul
    #10 glynch, Dec 29, 2011
    Last edited: Dec 29, 2011
  11. Dairy Ashford

    Dairy Ashford Member

    May 20, 2002
    Likes Received:
    I think the term reactionary conservative covers this.

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