Every time we suggested dropping Ron Paul from the national debates, his supporters would go nuts. They claimed in the one instance where he did get dropped, the January 3rd debate just before Iowa, that a grand conspiracy existed to keep his message from the people and to stop the 4% revolution. They demanded boycotts of Fox and of the Iowa GOP. Paul himself complained bitterly about his exclusion, and not without some justification.
Now that Paul's focus has returned to his own Congressional race, he seems much less enthusiastic about debates. After declining to hold a debate with his primary challenger, Chris Peden, Paul got asked yesterday about this seeming hypocrisy at a town-hall meeting in his district. Check out Paul's predictably hysterical response:
Like I said before, I do not endorse Chris Peden, a candidate who might actually be competent at pushing through the GOP Agenda. However, a loss for Ron Paul would be highly amusing. The Paultards campaigned for months and months on a platform of "change." Well, be careful what you wish for.
REP. PAUL: I'll be glad to answer that question because it's something I talk about all the time and it's a very important question. The Wall Street Journal yesterday had a very good chart that explains this. If you look at the price of oil in the last 10 years, if you look at it in terms of dollars, it went up 350 percent. If you look at it in Euros, it went up about 200 percent. If you look at it in the price of gold, it stayed flat. It's the inflation, it's the printing of money, it's the destruction of the value of the dollar.
This is a follow-up to yesterday's post, where Ron Paul managed misdiagnose American health care costs by blaming inflation. This time, Ron Paul manages to misdiagnose the oil crisis, by failing back on his old talking point.
If the issue was inflation, then the sudden increase to oil prices would have been the result of an sudden increase to to our checkbooks, which simply hasn't happened. No, the real problem is basic supply and demand. There isn't enough oil out there for everyone, which means that prices will have to rise in order to separate the people who can afford it from the people who can't. It's a natural, free market response that Ron Paul of all people should be aware of.
Ron Paul attempts to prove his point by citing price increases in other nations, but he ignores a few things: The fact that these nations have different supply/demand structures, the fact that these nations already had much higher gas prices to begin with due to taxes, and the fact that these nations aren't on the gold standard either. Further, his statements on the gold standard ignores the fact that gold would be just as scarce as oil. While the same amount of gold currency might purchase the same amount of oil, it's not like you would have a steady supply of gold currency as income, because there simply wouldn't be enough of it to go around.
Ron Paul is capitalizing on the fact that there is a lot of negative sentiment regarding oil prices, and he's attempting to blame it on his favorite scapegoat. Unfortunately, it's like watching Pat Robertson trying to blame Hurricane Katrina on Ellen Degeneres, or other comparisons that I wouldn't be able to make without invoking the wrath of Godwin. The only real solution is to either radically increase the supply of oil, which seems unlikely, or to significantly reduce demand, which would require increased mileage standards and alternative energies.
As a final note, I suggest everyone read Megan McArdle'sblog post from last December, which covers the same subject: "Ron Paul's supporters see the might of his common sense slashing through the doubletalk of the financial solons. I see a really, really smart economist responding to Ron Paul the same way you react to Cousin Mildred when she corners you after Christmas dinner to complain about the flouridation of the water supply."
REP. PAUL: There is an inflationary factor. We can't afford it. We do have good medical care, but the costs are so high now that our people in this country are actually going to India and getting their heart surgery done. They pay the plane ticket, the hospital, and the hotel and they get it for half price. So it's inflation.
But if you don't understand how inflation comes, we can't solve this problem. It comes from deficit financing with this war-mongering foreign policy we have.
(8:20 in)
In the past, Ron Paul has shown that he fundamentally doesn't understand the basic nature of inflation. But in the New Hampshire debate, Ron Paul reveals that he doesn't even understand his own arguments. Ron Paul usually rallies against inflation because of the fact that it has caused the value of fiat currency to decline, especially compared to the fiat currency in other nations. The Paultards will take this argument and run with it, insisting that the US dollar is "monopoly monopoly" that will soon become worthless.
So how does this argument against inflation apply to his example regarding India? It doesn't. The person who flies to India for a surgery isn't paying for the surgery in backed currency gold bullion. He isn't getting a job in Indian tech support to earn Indian backed currency until he has enough money for an Indian surgery. No, the person is taking the American dollars that he earned from his American job, and spending that money in a different nation. The money is adjusted for inflation, and it's adjusted for the currency exchange.
The fact that his money goes twice as far in India compared to how far it does in America isn't a sign that our dollar is weak. Quite the contrary. It's a sign that our dollar is relatively strong. Now, perhaps Ron Paul could try argue that while our dollar may be strong compared to India, it isn't as strong as it should be, and so the difference should be even greater. But that's not the argument that he was trying to make.
Ron Paul is making the argument that if people in India can perform surgeries for half as much money, then so should we. And maybe we should. But this isn't a problem with a problem with inflation. Remember, Cuba is another nation where surgery is much cheaper than in the US, and yet I doubt that Ron Paul would ask us to model our monetary system after Cuba. Ron Paul may be a doctor, but he's a doctor who likes to misdiagnose our economy based on his own personal biases, rather then finding the actual problems.
