Review: Ron Paul vs. Paul Krugman

Ron Paul and Paul Krugman

Jeremy R. Hammond, Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis (2012).

The reader does not have to be highly knowledgeable about the world of economic theory to understand Ron Paul vs. Paul Krugman. Clearly written, and with an obvious and well supported perspective, the short work highlights some of the aspects of all the political discussions about free markets, government intervention, and how certain authorities—essentially Krugman in this study—are quite willing to change their words to suit their own purposes. Krugman’s main purpose appears to be to avoid accepting any blame for the financial mess that the U.S. and thus the world is currently immersed in.

Ron Paul vs. Paul Krugman

I am not a fan of economics, as the people I normally associate with economics do not appear to be the brightest intellects in the land, and often seemingly lack common sense. This discussion, by leaving out much of the economic jargon, presents a clear case that Ron Paul has it right and has been consistent, and still is consistent, with his views and advocacy for true free market action.

Free Markets?

There is one big point of emphasis that is made obvious in this comparison of the two protagonists’ positions. It is in the discussion of free markets and what is indicated is the truth of the current U.S. and global economic system: that it is decidedly not a free market system.

For all the pundits’ exhortations, for all the political rhetoric, for all the wars for freedom and democracy attached to free markets, it is in essence all a lie. As presented here, not a lie in that free markets cannot work, but a lie in the sense that they simply do not exist in the world today, and probably never truly have.

The central point under discussion here is the control by the government through its institutional affiliates of the interest rates. For Krugman, the simplified argument amounted to keeping the interest rates low in order to spur spending, and if that did not work, then lower the rates some more, and so on. Accompanying this intervention were and are the assurances given by the government—both rhetorically and in real financial support—that the financial institutions would be bailed out if the economy turned against them. For those with large amounts of unspent money, this would give license to deal with all kinds of risky financial behaviors.

For Ron Paul, his arguments were consistent and have been proven correct. Interest rates, subject to the market and its hopefully balanced demands for spending and saving, for building wealth and saving for the purchases of real goods that build the wealth, should not be held artificially low. Instead they should be allowed to rise and fall as the demands of saving and spending rise and fall.

Current Election Cycle

Hammond quotes both figures extensively, comparing their words from one time to another time. In Paul Krugman’s case, it is a long series of changing his story, in one part to avoid responsibility for his part in the financial downturn, and for the other part—it is hard to ascertain—in order to sound like he still knows what is best, or what he is doing is correct. The differences between what he said at one time and says at a later date are numerous and obviously contradictory, and Hammond has no trouble juxtaposing Krugman’s waffling rhetoric.

Ron Paul on the other hand is consistent with his message: we do not have free markets and we need to get to them. By controlling the interest rate and controlling and assisting the institutions with rules and bailouts, the free market cannot operate as it should, and by holding the interest rate near zero, we are only setting the economy up for an even bigger downturn in the future.

At this point, I can see why Ron Paul will not be the Republican nominee for president—he makes too much sense and the big money boys do not want him taking away their taxpayer financed cash cow. For this very reason he has been sidelined by the corporate media, who initially were distinct and clear in their derision of his efforts. Through the seemingly unending U.S. electoral process of the GOP primaries, he has remained steady to his word and his beliefs while essentially being ignored by those in power who enable the eventual winner.

There are few differences between the various U.S. presidents. Before they even make it to the final election run, they have been vetted by the establishment as either suitable to be ‘leader’ or have been sidelined through scandal and exposed ineptitude, or in Ron Paul’s case, by ignoring him.

Not There Yet

Jeremy Hammond makes it very clear that free markets are what we do not have. His arguments along with Ron Paul’s consistent correct view of what the market manipulations will result in—economic disaster—make the theoretical free market idea appealing. My problem still remains with the reality of what exists today, without much likelihood that it will change in the near future. All the current politicians in the developed countries are extolling the virtues of free markets while trying to corral them behind institutional bailouts, nonsensical policies, and the rhetoric of democracy and freedom coming at the end of a gun barrel or missile or two.

Read Ron Paul vs. Paul Krugman for a clear understanding of their positions. Ron Paul’s free market position does away with the institutional supports, the fixed near zero interest rates, and the foreign wars that support the economy. It would be great to try.

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Jim Miles

Jim Miles is a Canadian educator and a regular contributor/columnist of opinion pieces and book reviews for The Palestine Chronicle. Miles' work is ilso presented globally through other alternative websites and news publications. 

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  • Ron Paul 2012

    Outstanding article! Ron Paul would be a real president not a phony puppet president.

  • Daniel in Louisiana

    Bravo, sir.

  • Karen in Kansas

    Let’s give Ron Paul a go, shall we America!

  • Ron Paul or Bust

    Ron Paul has been right about issues since the 1970s and americans are barely catching on . Krugman is full of himself and attacks Ron Paul endlessly with rhetoric and false information. Its interesting that Krugman still has a job.

  • Jo Jo

    Would it not be astounding to promote honest currency with Ron Paul’s leadership?

    No one but Ron Paul 2012

  • Cam

    If you want to see an example of wasted taxpayers dollars, just look at the recent GSA (General Services Administration) scandal. Spending ten of thousand of dollars on lavish trips using taxpayer money. They got caught, I imagine many government employees have not. It is easy to spend other people’s money. Liberals want government to tax more in order to improve the country; it doesn’t work because people in general are out for themselves.

    • JohnL

      Slight correction: it wasn’t tens of thousands — it was $822,751

  • Frank Nelson

    Ron Paul for U.S. President. Deport Paul Krugman and gang of cons. Ron Paul for U.S. President!

  • mark hayes

    Wake up America. Stop watching television. Google Ron Paul.

  • Barbara Zganiacz

    An excellent analysis.

    Can we still save America against fools who perpetuate falsehood about pretty much everything??

  • Great article! If Ron Paul was to become the US president, the World would be a much better place. Because of what he has done so far, it already is. For liberty, greetings from Hong Kong!

  • jodi

    thank you for a well written article and un-b iased view of what we (Paulbots) already know, Ron Paul is/was/and will be the best candidate for POTUS! The Revolution is here, be apart of it or get outta the way!!!

    Ron Paul 2012!!!

  • PatRedstone

    I ordered the book to read on Kindle for only $4.99

  • Vive le Resistance

    Ron Paul supporters are not Paul-bots they’re the truest Patriots. They will fight and just like the 1770’s will push the country towards a glorious non-violent revolution. It’s the establishment that will try to make it violent… they’ll stop at nothing to discredit any threatening cause.

    RON PAUL 2012!!!!!

  • EddieM

    The artcile says Economists lack common sense. But they don’t lack common sense. The problem is that they just don’t care. Their goal is to continue the central bank scam for as long as possible. And technically, they have done a good job. The whole thing is going to crash like a house of cards eventually, but the Economists feel like they won, because of how long they have stretched it out. Thats why its upsetting to see Americans talk bad about free market advocators. Because those types of Economists could make a ton of money from the central bank scam if they wanted, yet they care too much about the people of the country, and the country itself.

  • Albert Meyer

    Great article.

    Voters who want wars, torture, assassinations, “humanitarian” bombings in oil rich countries, indefinite detentions, drone attacks that kill the innocent, erosion of civil liberties, domestic war on the people (drug war), out-of-control debt and spending, graft and greed, crony capitalism, pandering to special interests, bailouts, more of the same, must NOT vote for Ron Paul.

    Voters who want peace, a humane foreign policy, restoration of civil liberties, an end to the war on drugs, sound money, balanced budgets, honesty, integrity and transparency in government, and a President wholly committed to Constitutional government can vote for Ron Paul.

    Ain’t that difficult a choice.

  • Albert Meyer

    With respect to the Nobel laureate, but if government spending were the cure we would be drowning in job vacancies today. Instead, we are drowning in government debt.

    Job Creation 101

    Take a hundred million dollars from taxpayers and give it to the government. The government will spend it, and in the process, sustain and create jobs. How many? Let’s say, [A].

    Allow taxpayers to retain the one hundred million dollars. They will invest and spend it, and in the process, sustain and create jobs. How many? Let’s say, [B].

    If [A]>[B], then we should give government virtually all of our hard earned wages. The Soviet Union was run on the basis that [A]>[B]. Case closed.

    As [B]>[A], as is always the case, we must only give so much of our hard-earned wages to government as are needed to support essential services, both at Federal and State level. (Shrinking the size of government at Federal level, only to expand it at State level accomplishes nothing.)

    Side note: When the government borrows money, it might create jobs, but the impact is temporary and illusionary, because future tax revenues applied to interest payments and debt redemption will hamper job growth. Deficit spending, especially on a sustained basis, is highly immoral, but by the time our children and grandchildren come to recognize the immorality of the debt burden that they have inherited, it will be too late. The culprits will be dead and buried. Their only legacy: mountains of debt.

    Now for an example, to illustrate the point, but I am not going to mention the name of this country. In the past, when I have mentioned the name, people without any proper rebuttals, always drag up some irrelevant fact about the country’s social policies or whatnot.

    This country became independent about 45 years ago, at which time it had per capita income of $600, below that of Guatemala. The country’s economy grew on average at 9% p.a. since then. Today, it is the 4th wealthiest country in the world on a per capita basis, with GDP per capita of approximately $50,000 – no need to debate welfare or entitlement programs in such an economic environment. The country has no natural resources. Government spending is equal to about 12.5% of GDP. The highest individual tax rate is 20% and the corporate tax rate is 18%, but many US corporations have relocated their manufacturing facilities to this country and, consequently, enjoy a tax holiday. The unemployment rate is below 4%. The government runs a budget surplus. Its leaders are the highest paid politicians in the world – now that’s an incentive for the likes of Gingrich and Santorum.

    Job Creation 101: Limited government and low taxes.

  • A Puzzle…

    Norway – is fourth by Wikipedia
    Bermuda by the CIA Factbook.
    Bermuda by IndexMundi
    Norway by (IMF reference)

    Bermuda is not independent….but Norway has been for more than 45 years…..

  • jay tea

    Ron Paul will be the nominee and the President….