The High Cost of Gold

One of more important Paultard campaigns this past year was their call to return to the gold standard. Oh sure, there were always a few would scoff and insist that Ron Paul wasn't really advocating for a "gold standard," but their clarification on the matter usually amounted to saying that "Monster Island isn't actually an island -- it's actually a Peninsula!" Well, maybe so, but it wasn't the "island" part that concerned me.

Now, we could go over the fact that the gold standard doesn't actually solve any of the problems that Paultards claim that it will, or the fact that the current system grants us with economic flexibility. Instead, I'm going to target one of Ron Paul's more naive claims, his insistence that "there will always be enough gold so long as no one interferes with the free market mechanism." Apparently, Ron Paul believes that the invisible hand can create gold from thin air, so long as the market is there to demand it, like villagers in "Black & White" who pray to the player for grain. Unfortunately, Ron Paul neglects one critical fact: Gold mining is expensive. Not just in raw dollars, but also in terms of the human and environmental toll.

The Paultards look at a hunk of gold, and all they see is a glittering rock. They don't really put much thought in how it got there, like a person who loves eating meat, but who doesn't want to know the conditions that the animal was raised in. A recent article from Spiegel online reports the some of following hard truths associated with their beloved metal:

• Mining enough gold for just one wedding ring produces about 20 tons worth of waste.
• There are no proper environmental standards, nor do miners consider the rights of local restaurants. For example, in Guatamala, mines have been set up in areas which the residents consider sacred.
• Goldmines use an estimated 182,000 tons of cyanide a year, effectively destroying the land. Further, the toxic waste poisons the ground water and rivers, and in Indonesia, it is dumped directly into the Ocean. In fact, these substances are so toxic that we are still dealing with the effects of waste products left behind by the Ancient Roman Empire.
• Mining operations tend to only employ a few people, and local residents rarely see the benefits to their economy.

Meanwhile, in Mozambique, the high price on gold has encouraged a hefty rise of slave labor, prostitution, and disease. Drinkable water is also becoming scarce as a result of pollution. The temperatures reach below freezing levels at night, causing workers to freeze to death. And all this for a few grams of gold dust, scattered throughout the Earth.

The problems in the gold industry combines two things that makes libertarianism what it is: A love for gold, and a hatred of regulation. The problem is bad enough right now, when gold is primarily used for the sake of technology and jewelry. But what happens if we increase the demand for gold even further, by forcing people to exchange in gold currencies for all transactions in general? Returning to the gold standard under a libertarian system would cause the price to skyrocket even further, causing people to harvest as much gold as possible for as little cost as possible, environmental and social concerns be damned.

This is also the main reason why Ron Paul's solution of returning to the gold standard to end the oil crisis doesn't work. He's not actually increasing the supply of oil at all, he's simply matching one hard to extract finite resource to another hard to extract finite resource, in the hopes that two wrongs can make a right. It's sort of like having a diet plan that hopes to bring a 500 pound man to average body mass, not by asking him to lose weight, but by forcing everyone else to become fatter.