Ron Paul Exclusive: Who’s Regulating Washington?July 13, 2011
“I want the government to live up to their promises.”
It’s a short statement, and a simple one — but coming from Congressman and Presidential hopeful Rep. Ron Paul, it’s a definition of a movement. The doctor from Texas attracts a tremendous, highly engaged and often passionate following, but there are many who find that they have a hard time figuring out where he fits into the current “status quo” political debate. A debate which so often rewards those who can spit out soundbites versus those who want to engage and wrestle with the fundamental questions regarding the direction of our country.
This is especially true with the mainstream media, which has a difficult time covering much beyond the “horse race” elements of politics. How often do we hear discussions about freedom and personal liberty and the role of government and governance in our daily lives? Whether or not currency manipulation and financial interventionism are dragging down our economy? Whether regulation is ever appropriate in a free society, and if so, who decides who does the regulating?
These are all serious questions that Rep. Paul has attempted to shine a light on. The debate, he says, is critical.
“We lose our liberties and we lose our prosperity and all of a sudden, we’ve become a debtor nation and we’re indebted to a country that we had ridiculed for years and a bunch of communists in China. What are they doing? They’re working hard, saving their money; they’re buying up natural resources in Afghanistan. At the same time, we get poorer and we are in these endless wars, and it’s all due I think to a flawed philosophy of government and the importance of individual freedom,” says Rep. Paul.
“Individuals can’t use force against their neighbor in order to mold their behavior. The government shouldn’t be able to use force either, and the same way in economics. So it’s this rejection of the use of force and just protecting individual rights, which are so important. Politically, you can’t sell that; that’s theoretical. The only way it is sold is when it is known to the general population that it’s in their best interest to argue the case for a free society than to argue the case for big government,” says Rep. Paul.
He doesn’t think that anyone in government will start a real debate about structural problems in our economy, but is satisfied that we have begun to make some progress. “I wouldn’t wait for the politicians to really initiate it; they’re going to always be putting their finger up to the wind. And see – we have to change the direction of the wind. And I think we’re making a little bit of progress, you know, from my viewpoint, whether it’s economics or foreign policy or monetary policy. I feel like maybe they’re paying a little bit of attention,” says Rep. Paul.
The job isn’t done, though. “We have drifted because we had so much prosperity, but we can’t drift forever. We can’t live on borrowed money and printed money forever. So that’s why I’m delighted that they’re coming to this view that maybe, just maybe the founders were on the right track,” he says.
Dylan: Welcome to Episode 63 of Radio Free Dylan. Today, we are privileged to have Congressman Dr. Ron Paul from the State of Texas, as you may well know; he is also a contender for the Presidency of the United States in this upcoming election. Congressman Paul’s views, unlike many of our political leaders, tend to be very consistent, tend to be based on a very foundational set of values then applies those values to a broad set of circumstances. He obviously attracts a tremendous following, and at the same time, there are many, particularly in the mainstream media and elsewhere, who frequently find that they have a hard time figuring out where he fits into the current status quo political debate. And I, for one, believe that what America needs right now is an actual debate about its structure, not that I know the answers, but I know that not debating structure is disastrous; it’s like not debating cancer when you know you’ve got it are not dealing with it, and we do.
And we can fix it, and I believe that Dr. Paul is one of the few politicians in America who is prepared to have that debate and has the resolve and the compassion to engage in it in a way that is respectful of how dire some of the problems are, and at the same time how solvable they all are. After all, we did free the slaves, have women suffrage, and fly to the moon, so I have to imagine we can break up some banks if we have to. With no further ado, I’d like to welcome Congressman Paul. How are you, sir?
Ron Paul: I’m doing fine. Thank you for having me.
Dylan: Give me a sense of what drives you. In other words, when you look to evaluate a political problem, what are the touchstones or the values for you that help you form an opinion?
Ron Paul: Well, many years ago, I came to the conclusion that the freer a society is, whether it’s for social reasons, economic reasons, or international reasons, the better off we will be. And when I see encroachment, when I see foreign policy going awry, and when I see economies going down, or the government overbearing on our personal liberties, then I say what we have lost is principle that individual liberty is very, very important, which was important to our founders and put into our Constitution, and that we have given up on that and we’ve been too anxious or too ready to accept the idea that, “Well, maybe we don’t have to take care of ourselves; maybe the government will always be there and tell us what to do and protect us at the airport and protect us from any economic crisis, and that they will take care and make sure we will never be hurt because we will invade other countries and make sure that even if they’re thinking about it, we’re going to take care of them.”
So that is where I come from and I think that what makes me comfortable, it’s not me inventing something new, it’s sort of talking about it and refining what we were introduced to a couple hundred years ago. I see that these ideas are rather new ideas historically, you know, hundreds of years old not thousands of years, and that we had a great chance, we’ve had a great opportunity, and unfortunately, I think that we have slipped away from that and that’s why I think we’re facing so many serious problems.
Dylan: And the kneejerk response to those who you make uncomfortable when you reach to your conclusion, which is that we need to deal with the dysfunction in the government, is that people interpret that as you deciding or you advocating that the entire federal government should be abolished, that we shouldn’t have a central government of any kind. I’ve always felt like that’s not a fair interpretation of the point you’re trying to make; it’s almost a convenient way to diminish the point that you’re making, and I’d be interested to hear your thoughts on what you do envision as the role of some sort of collective body of law as an influence over fairness and freedom.
Ron Paul: Yeah, and they’d like to put certain labels on it—like if I don’t want to fight wars carelessly, they say, “Oh, you’re an isolationist, you don’t even want to talk to anybody in the world. If you don’t want more regulations, then you want anarchy,” and they twist around and put different labels on it. No, I don’t advocate anarchy. I think the outline that we had was pretty darn good, and we always have a chance it by amending our Constitution. But so far, you know, we haven’t done a very good job living up to those principles that were given us, so I think that is the main problem that we just have to understand it. But when people say, you know, sometimes, and it’s probably even come up on your show and occasionally when we talk about regulations, and we may, even though you and I have a fair amount of agreement on looking at some of these problems, you might want more regulations than I want. And then if somebody’s not fair to me and they’ll say, “Oh, you want no regulations whatsoever. You’re going to let the Capitalists run over us. You’ll let the banks run over us,” and they’ll twist it. And yet when I say I don’t think these regulations have done a very good job, whether it was during the – you know, all the regulations put on in the depression and then Sarbanes-Oxley and now, the new regulations, it doesn’t seem to work. But it isn’t that I don’t want regulations, I want regulations that are actually more severe. I want regulations by the rules of property, you know, bankruptcies to occur don’t pay off the people who have been ripping us off through a financial system, the banking system. So I want them to go bankrupt, that’s a regulation. I want people to live up to their promises. I want people to, if they have a contract, they fulfill this contract. I want the government to live up to their promises. I want if the Constitution says they’re not allowed to emit bills of credit and create them out of think air, I don’t want them to do it. So I want regulations, but I think we’ve regulated our individual activities, economic and personal, and we forgot about regulating the government. I think we should be regulating the Federal Reserves and the bureaucrats because we’ve allowed ourselves with this careless thinking to see what is happening at our airports, and symbolically it’s horrible. You know, just think of this 95-year-old lady in a wheelchair being forced to get undressed. I mean, I’ve been saying that if we accept that and we’re not annoyed by it and we don’t want to change it, I think we’re in bad shape. And that is where I think we are right now, but hopefully we can rally enough people to have some very positive changes.
Dylan: Yeah, there’s no question, the American people clearly want the debate that you’re trying to have and a few other folks. It just seems that they have yet to be able to find a location or a forum to actually have it. But I want to talk for a second further about regulation and the way that you just framed the conversation. And it seems that there’s a distinction between regulations where one group of people gets together and sets a bunch of rules for everybody else—if everybody just does what I want them to do, everything will be fine—you do this, you do this, this one can do this, this one can do this. And then there are other sets of rules that say “I don’t know what the best thing to do is or what the right thing to do is,” but I do know that are certain fundamental rules, like you can’t invent your own money, like you have to, if you want to make it, you actually have to produce anything, something. There are certain basic intentions of capitalism, if capitalism is to manifest the highest potential for human capital, there are certain things that help and to encourage that as basic rules, transparency, choice, etc., and there’s other things that hinder that. How did we end up in a world where regulations are specific – all these specific thousands of pages of rules as opposed to really a few pages of principles?
Ron Paul: Well, I think it’s this whole principle that we believe that the government knows how to write every little detail rather than these broad principles. I spoke in broad principles about private property and contracts and found money and facing up to the reality of bankruptcy and not getting any special privileges. When people who are well-intentioned and want the same thing I want, they say we have to regulate these banks, we have – they don’t say regulate the Feds, regulate the banks so they don’t get these privileges and thinking the regulation takes it, so it’s an entirely different way to achieve what we want. So the well-intentioned – let’s say you have in our federal government, which never originally intended and is not directly authorized in our Constitution, let’s say you want to have regulations like the FDA. Well, generally what happens is the people in the drug companies, they have a lot of influence over the FDA. If you have bank regulations, somehow or another, they’re going to get very much involved, and they become the regulators and they regulate maybe the big companies against the small companies. Then you say, “Well, we have to regulate these big corporations; they’re making too much money,” but do they go after the military industrial complex and say, “Well, you’re ripping the people off because we don’t need all these weapon systems.” We do this – well, and some of them literally believe in what we call military Keynesism. "Well, even if we don’t need these bombers, they’re old-fashion, but we’ll create good jobs." They use this language. So even though the people who strongly endorse regulations that need more, I think they’re misled because they don’t realize who ends up controlling and becoming the regulators.
Dylan: Why do you always come back to the banking system? Why is that such a central part of the dysfunction that you see in this country right now?
Ron Paul: Because the monetary unit is used in everything that we do. It’s not like – you know, oil’s important, but it’s not everything. Farming is important, but it’s not everything. But everything we do, every measurement, every economic measure, not only domestically but internationally, it’s the monetary unit, the dollar, that is key, and we have created this monstrous of a bubble, dollar bubble and bond bubble that is worldwide. It’s never happened before like this. And therefore, if we don’t understand the monetary issue, we really can’t deal with the depression/recessions that we get because if you don’t understand monetary, you don’t understand how we got here. If you don’t understand how we got here, you don’t know what the treatment is. So I approach it almost as a physician—you’ve got to make the right diagnosis. And if you don’t even bother making the diagnosis and you keep saying, “Well, we’re having the trouble,” and you accept the principle that, “Well, we’re in trouble because people aren’t spending enough money, there’s not enough debt and there’s not enough regulations, and what we need is to print more money,” precisely what we’ve been doing for three, four year and we’ve had no results and they seem surprised. So this is why I think the key to the business cycle is understanding monetary policy. I do not accept the idea that free markets create the business cycle. There will be cycles in a free market, but they won’t be monolithic; it won’t involve a whole economy. But every commodity and every service might go through their individual cycles because, you know, if somebody’s making money, more people come in, that drives prices down, but that’s the functioning of the market. That’s part of free markets, but that doesn’t explain why you have maybe 30 years of the building up of the bubble and the pyramiding of debt and a psychology that perpetuates this and everybody they’re wealthy and secure forever, then all of a sudden you end up with a 10 or 15 or 20 year period of trying to correct these mistakes, as right now Japan’s going through, as what we had to go through in the 30s and early 40s, correct and liquidate all the debt. And we’re trying to figure it out right now, but so far, we have very few in Washington who understand anything about the need to liquidate bad debt and the malinvestment, they’re doing everything conceivable to profit up and try to get prices to stay up instead of clearing the market.
Dylan: Why is that?
Ron Paul: Because so many in Washington have been educated in the same educational system. I think the most symbolic statement could be what Nixon said when he said – when he took us off the gold standard and put on tariffs and wage and price controls. We’re all Keynesians now. You know, the Keynesian system of economics is what all of us were exposed to and still are exposed to that government is necessary to intervene, so we don’t have socialism, but we have interventionism, which means they try to manage the economy. So we have central economic planning somewhat different than true socialism, and instead of fixing the prices of everything, we just fix the price of money, the supply of money and the price of money and the interest rates, where the distortions from. There’s probably not an economist in the government or in the country now that—maybe there are a few—that advocate price controls, you know, wage and price controls. I think, you know, most of the economists say, “No, that was disastrous in 1970s; we don’t want to do that,” but they don’t think for a minute that maybe there is a problem in our monetary system because we’re practicing this central economic planning.
But I think it’s an educational problem, but this is where I see great progress. And I’ve talked at a lot of university campuses and the young people are breaking loose from the stereotypes of what we’ve been taught because the young people are desperate. They see what they’re getting and they know that there’s going to be no money in the bank and they have to work hard, if they can get a job and take care of all the entitlement systems, so they are looking at a different system of economics. And the internet is fantastic, so I see great progress out of Washington, but we have a way to go before we have serious influence on the economic policy in Washington.
Dylan: What of those that would argue that their perception or their interpretation of your political philosophy is one that leaves the poorest and the weakest in society with no resources?
Ron Paul: Well, yeah, and that’s thrown out at us own time, but if you look at where we are today as a consequence of the rejections of my ideas, we have – the poorer are growing by leaps and bounds. I saw a statistic the other day, and I assume it’s fairly correct, that we have one million less good jobs in this last decade than we had 10 years ago and we have 30 million new people. So if there’s no medical care for people, you know, if we’re broke, how are we going to pay for these entitlements? If they can’t get a job, how can this system that cares for the poor, where they say I don’t care about the poor, how can they defend this position?
So I would say that – well, in my own mind, I’m convinced that the most compassionate society is one where you have maximum amount of freedom, where you have maximum amount of production, and more fairly distributed when the politicians distribute it. When do you allow the politicians to say, “Well, we’re going to take care of the very poor, make sure they all have a house?” So we have easy money and housing programs and who made the money, the people that were in the derivatives and in the mortgage business and housing business and the building, they rip us off and they get bankrupt, they go bust, we bail them out, and how did they help the poor people? The poor people are who lost their mortgages and they lost their jobs and now they’ve lost their homes. So the evidence is so overwhelming on the side of free markets compared to the so-called compassionate conservatism of government taking care of us all the time, yet I never once challenge people who say that, you know, that what they care about.
But, you know, I see it as lack of confidence that a free society can work, and I have confidence that it will work. I mean, our whole system in this country, when you think of the great universities and the great hospitals—most of our hospitals in the Houston area are still names after churches, and great universities were started by voluntary organizations and churches, but now it’s totally controlled by government. And it hasn’t been good for us. We lose our liberties and we lose our prosperity and all of a sudden, we’ve become a debtor nation and we’re indebted to a country that we had ridiculed for years and a bunch of communists in China. What are they doing? They’re working hard, saving their money; they’re buying up natural resources in Afghanistan. At the same time, we get poorer and we are in these endless wars, and it’s all due I think to a flawed philosophy of government and the importance of individual freedom.
Dylan: When you use words like “the free market”, when you use words like “freedom," cynics interpret that as – they say, “Yeah, okay, well free to allow the rich people to pay off politicians to steal,” or “a free market that’s actually a rigged market because it allows special interests to alter the price of credit or alter the price of fuel through subsidy or tax code or alter the price of food, all through this sort of relationship between large business and government.” I understand and agree in principle with what you’re saying in regard to the value of that freedom and the merit of that marketplace. However, that marketplace, in my view, has been so corrupted that the free market has actually been tarnished by the perpetuation of a rigged market, and I wonder how you get over that.
Ron Paul: Well, it’s very difficult because that’s the political question and that’s the job of individuals like myself to explain it well enough to make sure they know I’m not talking about propping up the special interests. But because I approach it this way, I’m able to work with some progressives, a person like Bernie Sanders, and we wouldn’t have the same conclusion about what we ultimately do for its medical care, but he and I both understand how what we have today serves the interest of the insurance companies and the drug companies and so many other corporations. Anytime a corporation gets a direct benefit from government, I don’t call that free market; it’s a distorted market. Mises talked about this, the great Austrian economist, and he said that although it’s not called socialism because you get more and more of this special interest government that if you allow it to grow, it will become a socialist type system but it wouldn’t be old-fashion socialism, it would be more fascism where the corporations and governments are in bed together. But that’s distinctly different than what I’m talking about.
You know, I condemn the profiteers for say building weapons we don’t need versus the people who are smart enough to know how to make a cell phone and bring the price down in spite of the fact that we have a lot of inflation around, so that’s the magnificence of the market. So we have this still going on, and that’s what allows us to survive, but the problem we’re facing is we’re coming to an end because that system has undermined our true productivity and we’ve been consuming our wealth, we’ve lost our good jobs, and we’re trying to sort this out who the bad guys and who the good guys are. But I think your question is a key question, is an important political question. If I can and others who agree with me can explain the difference, yeah, they’ll put everything in the same basket and say that free markets means anybody who gets benefit from government, we have to protect them. See, I believe in free markets for farming, but I don’t believe in these subsidies that were supposed to help the little farmer; they ended up helping the corporate farmers. So that’s why, you know, a little bit of help for poor people who have fallen through the cracks is then allowed to be used to help the big corporations, so even those who are most dedicated to helping the poor actually establish a system where the welfare go to the rich and the poor suffer the consequences.
Dylan: If you were to look at the presidential race this year, how does America get the structural debate that, at least in my opinion, it is clear that the President and the Democrats want to avoid, and quite candidly, with the exception of yourself, maybe Gary Johnson, maybe John Huntsman, you might know better than me about some of the other contenders, a lot of the GOP hopefuls also seem quite happy to avoid engaging in the base structural debate that is sort of foundational to the nature of the conversation you and I are having, at a time when America is desperate for that exact debate?
Ron Paul: The candidates and the politicians never volunteer for controversy because all they’re looking for is to satisfy a majority so that they can get re-elected, so they don’t want controversy. So it can’t come from that; it has to come from people like you who can ask questions and you have a podium. So it has to be the educators and the editorial writers, and it has to be the philosophers. They have to drive it and force people into – force the candidates eventually to address it. In a token way, I hope I contributed this, you know, with the dealing with the Federal Reserve.
Dylan: Surely you have.
Ron Paul: And nobody said – you know, how many other candidates said, “The Federal Reserve is a great political issue.” They didn’t do that. But because it was a good issue and now a very important issue, the coalition now, everybody from Bernie Sanders to myself, we believe in transparency. So bringing people together on the issue of transparency is important, but I think it’s education because we worked hard with various groups to educate the electorate and they’re the ones who got the majority, the large majority in the House to pass that Bill in the House of Representatives, so it was a philosophic and educational activity outside of Washington, and I think it was a healthy debate even though we still have a long way to go. But I know you agree that we at least have gotten their attention and we know a little bit more about the Fed than we did two or three years ago even.
Dylan: Well, my primary mission ever since I left CNBC has been entirely to try to force the having of these conversations, not because I believe that I know the answer to all of them, but because I know that there’s no way we’ll solve them if we don’t even talk about them.
Ron Paul: Boy, that’s a good point. You’re absolutely right.
Dylan: All of us in our hearts, in our identities, in our souls, in our families, in our relationships, prefer to view ourselves as honorable and decent people who are well-intentioned and seek to be productive and creative in our relationship with other people in the day. Sometimes we achieve that, sometimes we don't; there’s a lot of variance. If you were to look at your role as a leader, not just a political leader, but a thought leader and an American, as a Texan, what would you want – what should I be thinking about? What should we all be thinking about as we prepare to go into a critical period of political debate in America?
Ron Paul: Well, the general theory is similar to what we started off with in the discussion that we have to know what liberty means and where our liberties come from and know they don’t come from our government, they come in a natural, our God-given ways, the way our country started. Then one has to reject the notion that if you want to improve society individual behavior or economic behavior and a moral behavior, that nobody can use force. You can’t initiate force against anybody, whether it’s another country or an individual, if they’re not disturbing anybody except themselves but you want to change their ways, you can’t – individuals can’t use force against their neighbor in order to mold their behavior. The government shouldn’t be able to use force either, and the same way in economics. So it’s this rejection of the use of force and just protecting individual rights, which are so important. Politically, you can’t sell that; that’s theoretical. The only way it is sold is when it is known to the general population that it’s in their best interest to argue the case for a free society than to argue the case for big government.
And I think today it’s easier to get people’s attention on that issue because the government is failing, and I think that’s why young people realize it, why a lot of young people are interested in what I’m doing because they’re inheriting a mess, and I think they know about it and I think they feel like they’re getting stuck whether it’s to fight endless wars or all these entitlement payments and not even sure if they’re going to get a job.
So I think it’s right for this debate, discussion in that you’re asking for. But I wouldn’t wait for the politicians to really initiate it; they’re going to always be putting their finger up to the wind. And see, we have to change the direction of the wind. And I think we’re making a little bit of progress, you know, from my viewpoint, whether it’s economics or foreign policy or monetary policy. I feel like, you know, maybe they’re paying a little bit of attention.
Dylan: Do you feel like the debate is coming to you?
Ron Paul: I think in some ways, and I don’t say to me personally as much as to those individuals who before me were my teachers about what free society looks like, and I think, once again, we’re renewing an interest in that we had a pretty good start a few hundred years ago and we did very, very well, but our last hundred years has not been good. But we have drifted because we had so much prosperity, but we can’t drift forever. We can’t live on borrowed money and printed money forever. So that’s why I’m delighted that they’re coming to this view that maybe, just maybe the founders were on the right track. I certainly believe they were, but I believe that there’s a lot of improvements that we can make, even things like the monetary system. We had the gold standard, but there are a lot of flaws with our system before, and there’s no reason why we can’t look at new ideas like competing currencies and baskets of currencies and let the markets help tell us what to do. So there’s no reason why we can’t advance our knowledge about how markets and how freedom is supposed to work, and hopefully more and more people will be open to this.
Dylan: I certainly believe that they are, and I believe it’s part of the reason why you’re winning as much support as you are in your current campaign. And, quite honestly, I believe, and I can see it in the data relative to the media ratings of the type of rhetoric that somebody like myself offers up, there is a receptivity and a desire for a real debate on war, on banks, and on what the meaning of liberty and the role of government is in human life, and you are a true leader in that regard, Congressman. I can’t thank you enough for giving us such a substantial chunk of time to truly get a better understanding. And once again, I just thank you and look forward to talking to you next time.
Ron Paul: Thank you, Dylan. It was good to be with you.
Dylan: All right, Congressman Ron Paul from Texas. Talk to you next time on Radio Free Dylan.