Monday, September 28, 2009

Ron Paul vs. Bernanke vs. Reason vs. Friedman

It’s delightful to see Ron Paul’s book End the Fed in the top ten on the New York Times bestseller list.  I have to confess I thought criticism of the Federal Reserve, while warranted, was probably one of Paul’s fringiest issues back when his presidential campaign started in 2007, but now it looks like one of the his most mainstream and relevant.

What’s a bit weirder — and ought to cause more division among libertarians — is the fact that Paul, like a recent article from Reason by Penn Bullock, faults Fed chairman Ben Bernanke not for being in thrall to pro-spending Keynes but for being in thrall to money-printing Milton Friedman, of all people — since Friedman argued that an overly tight monetary policy may have worsened the Crash that led to the Great Depression.  We certainly aren’t repeating that mistake now.

(An economist friend of mine swears Friedman would have been skeptical of any attempts to hastily alter Fed policy to cope with short-term crises, but Friedman may nonetheless inadvertently have contributed to the current establishment view that we can print our way out of disaster after all.  Perhaps he is a “father of global misery,” as the left likes to say.)

Adding to the odd mixing of the usual teams, Bruce Bartlett and some other free-marketeers have been sympathetically reevaluating John Maynard Keynes (now of all times!), arguing that aside from his spend-in-a-downturn philosophy, he was actually quite the limited-government buff, seeing little role for government in normal economic times.  Meanwhile, Jeffrey Friedman, no relation to Milton, has been sparring with usually market-friendly Richard Posner over whether Posner has become too pro-Keynes (a fear shared by economist Don Boudreaux).  These are confusing times, plainly, and perhaps we should be as wary of mapping simple ideology onto them as some of us were of letting ideologues (of any stripe) deduce proper foreign policy from basic principles after 9/11.


On the bright side, the current bailouts, for all their evils, have produced reactions that for the most part suggest that, regardless of practice, we all sort of know in theory that free markets have by now won the everyday microeconomic battle — and that the main remaining struggle is convincing people that markets can handle big systemic problems, whether financial or climatological.  I think they can and that government just makes it harder for them to do so — but a bit more on that (and on Jeffrey Friedman’s view of the question) in a few days, during my October “Month of Utopia” blog entries.

And if a whole month of Utopia sounds unconservative, well, perhaps the financial crisis is a good reminder that even on fiscal matters I am in some sense radical — rather than passively accepting that the existing order and institutions are can’t-fail works of timeless genius, as they sometimes turn out not to be.

On a far simpler libertarian note, though, here’s a heartwarming story from Richmond, VA about a libertarian strip club owner sparring with Obama supporters, and you have to love his sheer lack of diplomacy — and use of the word “ignoramus” — a tactic Americans may be ready for, and for which libertarians are well suited, after too many years of sugarcoated bullshit.

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