Benjamin Studebaker

One of the big problems in our election coverage is the tendency for journalists to focus on descriptive questions (who will be president?) rather than normative ones (who should be president?). This is understandable, given journalism’s focus on objectivity, but the result is that we often spend much more time talking about whether a candidate is electable than we do about whether or not the candidate would actually do a good job. Voters need to know which candidates support policies that will help them and those they care about–they don’t need to know which candidates pundits think are likely to prevail. So my response is to continue my Candidate Evaluations series, which considers a candidate’s background, policy history, and explicit statements to determine whether or not the candidate would actually be any good at being president. Previously, I did Ted Cruz. Today, I tackle Rand Paul, who declared his intent to run earlier this week.

This is Rand Paul:

There are two key things that stick out about Rand Paul’s background:

1. He is a medical doctor who has never majored in or received a degree in any field directly related to politics.
2. His father is Ron Paul, the well-known libertarian who also did not major in or receive a degree in any field directly related to politics.

This means that Ron Paul is a political autodidact. To what extent Rand’s views are his own or a more direct reflection of what his father taught him is hard to say. But what’s important to recognize here is that these guys have never had their libertarian ideas subjected to the kind of scrutiny people who majored in political science or economics likely would have received. They have had no formal guidance.

This is especially crucial because the Pauls subscribe to a particular strand of economic theory that is rejected by mainstream economics, even by most conservative economists–the Austrian School. They read folks like Murray Rothbard, Friedrich Hayek, and Ludwig von Mises. The Austrian School has many tenets, but perhaps the most important one is the idea that individuals always know their own needs better than the central government does, and that the economy operates best when individuals are fully allowed to make use of this knowledge. As a result, the Austrian School rejects any attempt by the government to make economic policy of any kind–this means opposition to redistribution, to the welfare state, to regulation, to stimulus, to taxation, to fiscal and monetary policy in general. As far as the Austrian School is concerned, the government should return all the money it possibly can to the people and then get completely out of the way. This is so reactionary that Milton Friedman, the patron saint of right-leaning economists, accused the Austrians of doing “a great deal of harm”:

I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.

Mainstream economics rejects the Austrian School because there are many cases where it is clear that individual rational action can conflict with what is good for society as a whole, and that government policy can and often does guide individuals toward more pro-social decisions through policy. Here are a couple examples:

The Babysitting Co-op

Economist Paul Krugman often tells a little story about a babysitting co-op. In the babysitting co-op, a group of people agreed to babysit for one another’s kids, eliminating the need to pay cash to external babysitters. In theory, this allowed all of the couples to leave the house more often while reducing their costs. But what if one couple in the babysitting co-op tried to take advantage of everyone else, constantly going out while trying to shirk their duty to babysit other people’s kids? There needed to be a system to ensure everyone does their fair share. Babysitting co-ops often solve this problem by issuing coupons entitling the bearer to one hour of babysitting time. To leave your kids with another couple for some number of hours, you have to give that couple an equivalent number of coupons.

The trouble is that the co-ops often did not issue a large enough number of coupons. Many couples would try to save up their babysitting coupons so that they would have enough for an emergency situation, and with a small number of coupons it was hard for every couple to be able to save up enough to feel comfortable. Because couples were anxious about running out of coupons, they went out less often, and this made it harder for other couples to build up their reserve of coupons. So they too got more anxious and went out less often, and pretty soon no one was going out and no one was babysitting. The solution was to issue more coupons to the couples. By giving the couples more coupons, each couple felt less anxious about running out, so usage increased and the co-op was able to serve its intended purpose. It’s important to note that no one couple could have rectified this problem by changing its behavior individually–the only was to solve the problem was for the central administration to issue more coupons.

The babysitting co-op story plays out on a larger scale whenever we have a recession. In 2008, defaults on housing loans caused many banks to suddenly realize that their assets were junk and that they had much less money than they previously thought they had. As a result, they tried to save money by reducing the amount of money they lent out, and this made it difficult for businesses and firms to get access to credit. Unable to raise more money through the credit markets, firms dealt with money shortages by trying to save money–mostly by reducing employment and cutting wages. This took money out of the hands of consumers, and consumers dealt with the money shortage by trying to save money. This reduced sales for businesses and firms, causing them to try to save even more money by cutting wages and employment further, and so on in a vicious cycle. In this scenario, it makes sense for each individual actor to try to save money, but the aggregate consequences are disastrous for all the individuals participating. Governments can break the saving cycle by injecting cash into the economy, giving firms, workers, and consumers a sense of financial security and allowing them to spend comfortably. Sometimes this means stimulus spending, sometimes it means the Federal Reserve lowers the interest rate or prints more money. But in all of these cases, only the government can break the cycle, and it can only break the cycle by taking good data on what is going on in the economy and making collective decisions based on that data. Additionally, only the state could have reduced the risk of recession in the first place by regulating lending effectively and preventing borrowers and lenders from getting into trouble.

Expensive Projects

There are many things that we are glad to have individually that it would be very hard for us to have if we had to go about doing them privately because of the immense costs involved. Things like NASA, the interstate highways, the military, and so on. The government can acquire more resources than private companies because of its coercive taxation power, and because it doesn’t need to pay shareholders it can invest in long-term projects that private companies could not make a profit doing. Even large private companies with big budgets just don’t have the resources or the ability to take short-term losses that the government has, and this means that many cool things are not economically possible without the government.

Matters of Justice

Our economic decisions also have a significant impact on our life opportunities and outcomes. Compared to affluent parents, lower class parents do not have the same resources available to help their children get the opportunities they need to succeed in life. Many charities try to rectify injustice, but they suffer from the expensive projects problem–it’s just very difficult to assemble the resources necessary without the government’s coercive powers. If we want to ensure that every child has equal access to education, healthcare, and other basic goods, we need the state to intervene and redistribute.

In all of these cases, individuals run into trouble because they don’t have enough resources to solve the problem and because it’s difficult to use the market or charities to get those resources. In too many cases, only coercion allows any one actor to assemble the required resources to solve the problem, and the only organization that is permitted to use coercion is the state, which famously has a monopoly on the legitimate use of force. While not every decision can or should be made by the central government, it’s clear that the central government has a bigger role to play than the Austrian School admits, and for that reason the Austrian School is totally marginalized in contemporary academia.

The Pauls are part of a deeply marginalized and discredited line of economic thought. They are committed to using their political influence to implement economic policies associated with this line of thought, policies that would do catastrophic damage and prevent us from solving the various kinds of problems that require state action. Not only should Rand Paul not be president, but Rand Paul is probably the most reactionary and least qualified major candidate likely to declare.

Now, it should be pointed out that at various points, Rand Paul has attempted to widen his appeal by making overtures to more mainstream republicans. Indeed, this is the principal difference between Rand and Ron–Rand sometimes puts political expedience ahead of his ideology. Nonetheless, his affinity for the Austrian School indicates that Rand Paul is likely trying to be a Trojan horse for this ideology. He will push it as far as he believes the public will allow, and he will obfuscate his position where necessary to manipulate the public into supporting seemingly arcane or obtuse economic policies whose consequences are in reality quite devastating for everyday Americans. For these reasons, I do not think any of the overtures Rand Paul has made to mainstream republicans are genuine and that he is not to be trusted–he’s an extremely cynical figure who will contradict himself and, when accused of so doing, he will obfuscate and question-dodge.

Now, there are many people–particularly young people–who find the Pauls sympathetic on social or foreign policy issues. It must be understood that in almost all of these cases the Paul view is reducible to an Austrian School view transported to a different context. The Pauls oppose military interventions or want to decriminalize marijuana not because they have any special insight into these issues as matters of policy but because they are blindly and ideologically against coercion in all forms for all (or very nearly all) purposes. This means that they will inevitably sometimes be on the correct side of some issues–there are many cases in which coercion is inappropriate or counterproductive. But because the Pauls are against coercion writ large rather than on a case by case basis governed by some set of sophisticated principles, they are totally incapable of distinguishing appropriate and inappropriate uses of coercion. This makes them inflexible statesmen and unimaginative policymakers.

Think of it this way–the Pauls are like doctors that prescribe the same drug to all their patients, regardless of the symptoms or circumstances. Once in a while the drug happens to cure the patient, but this is dumb luck and not to the credit of the physician. In the meantime, most of the patients get no help at all, and quite a few die.

My Conclusion:

A vote for Rand Paul is a vote for political malpractice. As a statesman, he’s clearly a quack, and as president, he would be a total disaster.

If I had to pick a candidate from the major ones that have declared so far (Ted Cruz and Rand Paul), I would pick Cruz and it’s not even close. That’s how bad our choice is right now.