The Dismal Science

This is Part IV of a series of posts looking at  The Revolution: A Manifesto, by Dr. Ron Paul.

•  Part I 
• Part II 
• Part III

I promised I would write about Ron Paul's economics approach, but I'm having a hard time finding the angle I'm looking for. It seems we don't have the vocabulary yet to express where I think we are in the evolution of economics. I've written before about this new kind of "free market" that we seem to be developing:

Instead of manufacturing, sales and service are our bread and butter. Marketing, transportation, and information; these are what the U.S. really thrives on, now. Look at our most successful companies, like Google. They "manufacture" a product which they give away for free, and yet their value has continued to rise...

Anyone with a ~$500 set-up can record, polish, and release an album of songs, and can set up a shop online to sell (or give away) their recordings... [several artists] have offered free downloads of their music, and toured "on demand", making money from shows that were sold out before they were booked, and from selling CDs and DVDs online - again, directly to their niche market.

In a way, we have become more purely Capitalist... and at the same time, with the means of production (almost) freely available to everyone, we have also become more purely Communist (without the purges and bread lines). So what gives? What do we call ourselves in an age where you make a profit from giving your stuff away?

-"It's Not Capitalism Any More - But What IS It?", November 22, 2009

Even money isn't really the "coin of the realm" any more. What is money, after all, but a digital record on a computer of a value that has been mutually agreed upon? What was our last decade of supposed "wealth creation" but a gigantic inflation of that value, which failed when enough of us stopped trusting that it was real?

The coin of the realm - the thing that drives our lives and determines our worth to each other - is information. Not just any information, but information that can be trusted. If you think about it, trust is the only thing that has any real value any more; if you don't believe you will get a return on your investment or be rewarded with a safe and comfortable retirement, you won't invest and you won't remain loyal to one company. If you don't believe that your government will protect you and the world in which you make your livelihood, you won't support it.

I don't claim to be very knowledgeable about economics. I understand a lot of the same "basic common sense" things that most of you understand: supply & demand, and interest, and return on investment. But I also understand that there are a lot of concepts that seem to work counter-intuitively. Insurance seems like a bad idea, gambling on whether the money I give to the company will ever benefit me; yet it's the only investment we made that survived the collapse last year. It's tempting to believe Dr. Paul's claim that getting rid of the intrusive and ineffective government will improve our lives, and yet without the government, all of our "free and unfettered" businesses would have dissolved along with their imaginary wealth, taking the rest of us with them.

But again, I don't think we have the vocabulary to describe what is really happening to our world. We talk about Government and Markets, Corporations and Individuals, "special interests" and "activist groups" as if they are not all the same thing: groups of people trying to get by, get along, or get one over. We all fit into those same groups in some fashion, and no matter how innocent or virtuous we try to pretend we are, we all try to balance our own welfare and that of our fellow humans according to whatever beliefs we identify with most strongly. (Some of us even include non-humans in that balance.)

Dr. Paul spends a lot of time trying to identify with a group of people we Americans call our "Founding Fathers." In passages too numerous and generic to quote here, he calls upon all of us to trust in their mutual vision for this country. He calls on us to protect our freedom and liberty, as those founders would have done. Freedom from what to do what, he would leave up to you to figure out, which plays into the American conceit that as long as you leave me alone, whatever you do is your choice. But these Founding Fathers didn't have a unified approach to things, either.

As Sarah Vowell discusses in her exploration of the Puritans who founded Massachusetts Bay Colony, The Wordy Shipmates, there were a lot of contradictions involved in the founding of our country. The Puritans were a people who believed strongly in personal integrity, industry (in the original sense), and morality - but also in self-sacrifice and the common good. Check out this passage describing a government built on their ideals:

"The body politic is formed by a voluntary association of individuals: it is a social compact, by which the whole people covenants with each citizen, and each citizen with the whole people, that all shall be governed by certain laws for the common good."

That passage is an enigmatic encapsulation of what America is all about. It sums up exactly what I was trying to describe in my earlier post on government, and depending on how you read him, that social compact is either the summation or antithesis of Dr. Paul's entire life of public service. Any American running for public office builds on that idea, whether advancing it or demonizing it. It unifies and divides us, all in one sentence, and that self-contradiction is what makes our country so beautiful and frustrating all at once.

It was written by John Adams in the Constitution of the Commonwealth of Massachusetts.

Reading Dr. Paul's book, I can appreciate his criticism of our government. We've drifted away from John Adams's ideal, whether from the idea of "voluntary association" or from the idea of "common good" - our systems and institutions have been corrupted by the worst impulses of the free market. But I don't trust his solution: to remove Government from the equation.

When you have a government that looks like the one Adams described, it is the extension of the will of the people it governs to operate in everyone's best interests. The reason we don't have that is because of apathy and neglect from the voting public; the participants who ought to be controlling the government. Dr. Paul should be calling for more involvement IN government, not freedom FROM government.

That is where the Founding Fathers agreed. They wanted to claim more direct control over their own lives and affairs, not throw away control altogether. Our government is supposed to be an extension of our own self-control; it is supposed to reflect our will and our desire for integrity, industry, and personal responsibility. I suspect that the reason we are all so unhappy with it is that it is doing just that.

As for economic theories, I think the new coin of the realm - information and trust - will move us in the direction we need to go. In that sense, Dr. Paul is right; no government body can dictate that trust or earn it through corruption or political wrangling. But that will mean we need figure out better ways to determine who and what to trust. Perhaps that will mean less Government, but it will definitely mean smarter government - and a voluntary involvement in the common good.