You all should know who Ron Paul is and know what he stands for, so I will get to it. I will restrict my comments to an important subset of his economic positions.
First, there is some agreement. Ron Paul believes that if government is to be a necessary evil, better to devolve its powers to state and local governments. Ron Paul is right that state and local governments can be better trusted with public funds than the federal government. These governments tend to use the funds for investment, usually to finance long-term capital projects, often with relatively diffuse social benefits. The federal government uses debt financing as a policy tool to manipulate macroeconomic indicators. I hate to sound particularistic, but the problem is the mainstream economics has become so abstract that the practice has the property I would call spectrality. It is spectral in the sense that practitioners judge economic outcomes based on indicators that have little to do with the actual economic experiences of real people. If a county or country, or a state or city, has increasing output, has relatively high rates of return on private investment, liquid financials and eased capital mobility, then economists are going to say the place has a great economic outlook. This is even if the place is a banana republic with a privileged class of hyper-rich and a general populace living in squalor. So the contemporary liberal fascination with toying with macroeconomic indicators is not ultimately salutary. Modern liberals—those in the New Deal welfare state era--actually did some good for flesh-and-blood human beings. Contemporary liberalism is a departure toward spectrality on that score.
The problem with devolved federalism comes from the power relationships between both the polity and the demos and the corporation and its corporate form. The Founders, with some exceptions like Alexander Hamilton, believed that delimitation of national government powers was a check against tyranny and a way to ensure individual liberty which they equated with property rights to a significant degree. But this was before major concentrations of private power existed. Now these centers of private power not only exist but are networked to act in concert—all over the world. Making the national government small enough to drown in a bathtub means making the national people impotent against the powers of corporations. I concede that public institutions differ from private institutions in that the government possesses legitimate coercive power while corporations do not. But if the rightists succeed and destroying the capacity of the government to provide welfare for its people, then corporations will have a virtual coercive power because individual survival will be totally contingent upon securing or maintaining wealth and resources through transacting with private corporations, which have limited liability and yet have been defined as legal citizens.
Ron Paul also resists the growth of government a la rightist intellectuals by arguing that government growth, specifically the growth of a socialist state, will lead to tyranny. The challenge to government administration posed by notable rightist thought, the examples being Friedman and Hayek, is to create the public perception that government reduces individual freedoms and individual choices in a progressive manner. In some historical examples, the progressive substitution of governmental choice for individual choice was factual. However, as a theoretical matter it has not been demonstrated, to my knowledge, that it is an analytic truth that regulation has the scope, or that government regulators have the institutional capacity, to substitute all or even most individual freedoms and choices for public or governmental purposes. This is in fact an example of the informal logical fallacy known as the slippery slope fallacy. The slippery slope is an example of fallacious reasoning which asserts that a single or a few steps in some direction will ineluctably lead to some end which does not necessarily follow from those steps. Some regulation of the private sphere will not lead to total government domination of the private sphere in all cases. An analytic claim to the contrary is wrong as a universal statement and only needs a single counter-example to be proven wrong. Can you think of a counter-example were a few instances of government regulation did not over time lead to government domination of the private sphere? Regulation of the financial industry from the 1940s to the 1990s is an example. So on this count Ron Paul is clearly wrong.
As a bit of an aside (though perhaps a lengthy one), one of the most maddening arguments that I have heard from rightists, Republicans and libertarians alike (though I’m not sure I can attribute it as such to Ron Paul--someone may prove me wrong on this), is that government expenditures are harmful because they crowd out private investment, and government should not engage in social transfer payments or “redistribution” because it is socialism and capitalism if the best path to prosperity, so government shouldn’t spend money. I think this is an example of question begging. Let me explain why I think that. There are two kinds of expenditures in government spending (this excludes tax expenditures which are not always formally considered government spending): exhaustive expenditures and non-exhaustive expenditure. Exhaustive expenditures consume resources and represent a drain on private spending. Non-exhaustive expenditures merely transfer resources and do not drain resources from the private economy. Interestingly, Republicans typically do not have a problem with redistribution through tax expenditures.
So, let’s restructure the argument. I don’t think I am erecting a man of straw here, but I may be. First, say that free market capitalism, where free market capitalism is a system of private enterprise, is the best path to individual prosperity and is superior to socialism and government should ensure capitalism for these reasons. Second, non-exhaustive expenditures are not permissible because they are socialism, which is inferior to capitalism. Third, government should not interfere with private enterprise because private enterprise is the best path to prosperity. Fourth, exhaustive expenditures are not impermissible outright, but government should not make exhaustive expenditures except in certain instances (primarily national defense) because they interfere with private enterprise. We know that government can only commit either exhaustive or not exhaustive expenditures. Therefore, government spending should be limited.
There is really no information in this argument other than what is assumed, either directly or by implication, in the first statement, except for the definitions of government spending. So, I think that rightists just assume what they set out to prove, that government spending is socialist or anti-capitalist and that it is therefore bad. They have made normative commitments and the arguments against public spending flow from them. But you have to accept the commitments to accept the argument. There is nothing substantive between the assumptions and the conclusion. You are not compelled to exclusively either reject at least one premise or accept the conclusion. If you accept the axiom then you have accepted every premise. You have to just take their position on good faith in the ideology, which I refuse to do. Give me at least one good reason for believing it.