Rep. Paul is often right for the wrong reasons

There aren’t many people who can claim to be better off now than they were before the economic collapse. But Congressman Ron Paul might be one of them—an indirect beneficiary of the government’s failures. He’s not likely to admit to this fact publicly, but, at least in political terms, Ron Paul is enjoying his heyday.

Rep. Paul is serious about ending the Fed. Photo published under a creative commons license courtesy of flickr user Gage Skidmore.

The complete revolution in Paul’s political fortunes is captured in his placement at Republican debates. Watch any of the presidential debates from 2007-2008 and you’ll likely find Paul at one of the outside podiums. His libertarian convictions took him in politically unpopular directions and made him a fringe candidate in the Republican Party.

Consider the congressman’s stance on two important issues. He argued for many years against a federal provision banning gay marriage and has consistently opposed the wars in Iraq and Afghanistan. For many years, the majority of Republicans voters found these positions unappealing.

However, this time around things have been different. In the past two debates Paul has been placed right next to “front-runner” Rick Perry—an action necessitated by the fact that Paul polls at a solid 3rd place in mainstream national surveys. In August, the congressman was barely beaten by Michelle Bachmann in the Iowa Straw Poll.

At the same time, public support for many of Paul’s ideas has increased measurably among Republicans and the broader electorate. People have turned against the wars in Afghanistan and Iraq, though not exactly because these conflicts are viewed as an unnecessary use of federal power. Similarly, polling indicates that there has been a shift against a federal amendment banning gay marriage.

Yet, Paul’s candidacy is weaker than his poll numbers suggest. While his ideology, a belief in extremely limited government, has gained some support, it is still overwhelmingly rejected. Americans have begun to support many of Paul’s stances, but not for his reasons.

Consider the issue Paul is most vocal about: the elimination of the Federal Reserve. It would be misleading to point to the rising unpopularity of the Federal Reserve as evidence that Americans are ready to see the institution shuttered, or, more broadly, that Americans are demanding significantly curtailed federal power.

Rather, Americans are discontented with recent economic performance and the Fed is a convenient scapegoat. Many people question whether the Federal Reserve is really committed to solving our economic problems given the three year stagnation. It’s also probable that the public been exposed to pundits—from Fox News to the Wall Street Journal—who have been claiming that aggressive action by the Fed will lead to uncontrollable inflation. The reality of course is that the Fed has been doing pretty much everything it can in the political climate, and inflation remains at historically low levels.

The conflicting perspectives on the role of the federal government in the economy can be seen here at Georgetown. A week ago the Professor of an introductory economics class polled his students on a few relevant economic questions. He asked whether the Federal Reserve should: (a) continue with programs like Quantitative Easing and act aggressively to reduce unemployment, (b) hold interest rates where they are but not take any further unconventional actions, or (c) shift focus to keeping inflation low. A plurality of students chose c. Those choosing a were the smallest group.

However, if the average person interpreted this as a growing public consensus against aggressive action by the federal government they would be wrong. Moments later the teacher asked students to identify what type of economic policies they would support in the coming years. An solid majority (57%) answered “Keynesian policies”. “Classical policies” and “Monetarist/rule based policies” both failed to garner even half as many votes.

The idea that the government should have a role in promoting a fair and productive economy is hardly dead, nor is it even seriously in danger. But hard times have made people dissatisfied with their government and pessimistic about its capacity to change things. If we could foster a political climate that led to aggressive action against the economic malaise, everyone would be better off. Which brings me back to Congressman Paul. He would be back at one of the side podiums, often arguing for good things, but almost always for the wrong reasons.