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Source link: http://archive.mises.org/7564/david-frum-im-smarter-than-ron-paul/

David Frum: I’m Smarter Than Ron Paul

December 19, 2007 by

Ron Paul “is best known for his vehemently isolationist foreign policy views,” says David Frum, an adviser to another presidential candidate. (So free trade, diplomacy, and opposition to sanctions and embargoes make you an “isolationist” — funny that Richard Cobden was called “the International Man” for holding exactly the same views.) Just as bad, according to Frum the Keynes lover, is that Paul’s “core supporters also thrill to his self-taught monetary views, which amount to a rejection of everything taught by modern economists from Alfred Marshall to Milton Friedman.”

Geez, even Ronald Reagan had nice things to say about Ludwig von Mises. I wonder how much Mises Frum has read, or what he can tell us about Austrian business cycle theory. Oh, wait, I already know the answer.

{ 33 comments }

Steve Hogan December 19, 2007 at 11:29 am

I’ve read some of David Frum’s ramblings (usually with a barf bag at the ready). It’s okay to be incorrect in one’s findings and still put forth a cogent argument. He fails even here. The man is a neocon hack.

And for a rank amateur in economics to be criticizing Dr. Paul is pretty laughable. It reminds me of McCain during a debate lecturing Paul about not having read The Wealth of Nations. It’s akin to a junior high bench warmer giving Michael Jordan tips on basketball.

Parrotocracy December 19, 2007 at 11:41 am

“First they ignore you, then they ridicule you, then they fight you, then you win.” Gandhi

TweedleFrum is guilty on all three counts.

Thanks for the post Prof. Woods.

Brent December 19, 2007 at 12:12 pm

Pols will be pols.

You better be careful, Mr. Woods. =) Next, Frum will be giving you history lessons on Catholic liturgy.

Franklin Harris December 19, 2007 at 3:01 pm

The worst part is that I suspect Frum has read (some) Mises, which mean he knows better but doesn’t care. There was a time 15 years ago when Frum actually spoke positively about getting rid of government agencies “root and branch.” But love of war always trumps all else with neocons.

Martin December 19, 2007 at 3:22 pm

‘Conservatives’ like Frum like Keynes? Give it a few years, they’ll be whooping for Karl Marx. What an ass. Frum has always been an expert at whooping up nonsense.

Bob December 19, 2007 at 3:38 pm

Frum is a parrot and nothing more. He isn’t smart enough to form an opinion, only to regurgitate the crap that comes out of Washington. If Washington said people in poverty are doing well because many are obese..he would agree and use his degree in retardation to back it up. Frum is a lazy loser, blind by stupidity and arrogance.

Kevin Houston December 19, 2007 at 4:30 pm

Thank you for this.

It reminds me of the scene in the Woody Allen movie where some blow hard is in line spouting off on something he doesn’t know anything about and Woody pulls the man himself from behind a soda mahcine, and he says “I heard what you said about me; you know nothing of my work.”

It’s about time someone put Frum in his place.

Later.

lester December 19, 2007 at 5:11 pm

yeah Pauls book on the gold standard is nothing but self taught homespun ramblings. with tons of data and facts but still, it’s just a delusional old guy who thinks he knows something about something. unlike david frum aka Bush era neo con #473.

rjljr2 December 19, 2007 at 8:33 pm

Read some of the other stuff that Frum has written. He has no credibility, and this Bush apologist is not worth further consideration. But form your own judgment.

David December 19, 2007 at 8:44 pm

We shouldn’t be all that surprised that Frum is so hostile towards Dr. Paul economic views. According to Wikipedia he is a member of the Pigou club. Take a look at the list of members: http://en.wikipedia.org/wiki/Pigou_Club

Mick Russom December 20, 2007 at 2:01 am

If you want the standard of living you are used to to exist, and you to be paid in real money, vote for Ron Paul.

If you do not, well, the 1900′s are filled with examples on what a faltering currency and war does to countries.

Matt Shannon December 20, 2007 at 10:28 am

Good post Prof. Woods.

Frum’s Keynesianism is always masked by his devotion to Milton Friedman. Thus, I’m sure he supports the Congress approving $70 billion Wednesday for military operations in Iraq and Afghanistan and the House’s 272-142 (hmmm, I wonder how Dr. Paul voted) vote to give the president a $555 billion catchall spending bill that combines the war money with money for 14 Cabinet departments.

So much for being a “conservative.”

It reminds of that old line from Joseph Goebbels:
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

BTW, have you had a chance to read Prof Gutzman’s Virginia’s American Revolution?

Steven Smith December 20, 2007 at 11:32 am

All I want to know is, why is it these allegedly smart, sophistocated & other wise lofty people such as Frum insist they know what is best for every one, get their way, always produce disastrous results & never pay any sort of explicit penalty for the damage they do–much whereof is of a compound & cumulate nature? & get away with self righteously making the next, bigger & ultimately ever more pernicious case for further meddling, regulation, interference, dominance & destruction & harassment & punishment of normal self respecting people who protest–even to the point of exempting their intelligence insulting propaganda from logical criticizm! If what they do & how they do it are so preferable to “simplistic”, “resentment driven”, “authoritarian psychology based”, “crass”, “private property exalting”, “gold standard fixated” & “monotonous” natural right arguments I would think by now they would have evolved a CONVINCING counter & refutation to isolationism, strict constitutionalism, checks & balances, free trade, state rights, laisser faire capitalism, asset versus debt based money, American republicanism with its ingenious combination of democracy & aristocracy, mass gun ownership, intelligent dis-trust of central executivism & other marks of old rightism instead of the slurs, deprecations & insults whereto Frum & ilk are so fast to descend. I first began to hear this abuse in 1966 as a kindergartener when it was directed against respectable citizens out-raged over minority mis-behavior in the name of civil rights & it got intolerable by 1968 when George Wallace ran for president; by 1970 when domestic communist agitators got 4 people shot at the Kent state university here in Ohio the ensuing up roar by those who presumed to know what is best for society would have inclined a dis-interested person to think the last thing that can be done in the teeth of seditious assembly is re-impose order & arrest militants! ever since I have received all such offencive news in light of my physical safety, I would not hesitate to dent a Frum’s head if I thought my welfare demanded it. These elite jerks are playing with our very LIVES & if you think their incivility to Ron Paul is the worst they can do to us think again!

William Flax December 20, 2007 at 11:42 am

David Frum has become one of the bad intellectual jokes of the early 21st Century. From self-promoter at Yale to his role as a posturing poseur early with the Bush Administration, to being a self-proclaimed expert on “Democracy” in the Third World, he has continued to seek attention; but your admonishment requiring civility restricts my analysis of the full measure of the man. However, perhaps I may be permitted a touch of humor, still under the banner of civility:

A few years ago, we launched the Send David Frum To Haiti promotion at the Return Of The Gods Web Site. For more information on the notion that David Frum might be the man to save the Clinton experiment with Haiti:


Send David Frum To Haiti Project
.

William Flax

Anthony Flood December 20, 2007 at 12:59 pm

Note to Kevin Houston: The scene is from _Annie Hall_. The movie-line blowhard is spouting off about communications theorist Marshall McLuhan. Woody tells the guy he doesn’t know what he’s talking about and proves it by producing McLuhan himself. He’s the one who says, “You know nothing of my work.” For the transcript of this part of the screenplay, go here: http://www.onthemedia.org/yore/transcripts/transcripts_041604_mcluhan.html Woody’s memorable line in this scene is: “Boy, if life were only like this.”

Glenn Holzer December 20, 2007 at 6:22 pm

Frum –

Dollars to doughnuts says he’s just another CFR propagandist. In fact, it’s getting to be that almost all the talking heads we see on the tube are professional apologists for the state who are in, or drooling to get in, the club. Now that Mises has bestowed the before unknown unto me, Murray’s “Wall Street, Banks & American Foreign Policy”, it has become so easy to see the fakers behind their common good curtains of deception.

For me, Frum’s on say, the level of a Krugman. Probably knows the real truth, but the greed easily allows the knowing darting eyed lie. Does anyone want to slap that half a sissy more than I do? Hey, you know, just because everyone is stalking him and wills him bodily harm doesn’t mean he shouldn’t be paranoid, they are, and they do!

Trouble is that 3/4ths+ of Americans don’t know any better, just as was my case. I was sure the Dems were socialist evil incarnate until I learned how party is meaningless when they are equally controlled. They only alternate between their veils of welfare and warfare, hand in hand, an illusion that always plays to the state’s benefit.

Damn!! If I’d only known of Austrians as a teen in the 60′s!

Too soon old – too late schmart? NEVER too late schmart! ALWAYS too soon old!

Christian December 20, 2007 at 8:07 pm

Being self-taught is now used as an insult? I have always thought that being self-taught in something was a good thing. I guess I have a lot to learn – not by myself, of course.

T Edward December 22, 2007 at 9:42 pm

How many American voters understand how our (and most of the world’s) fiat monetary system works? Fewer than 1% I think. What Paul objects to is that over time, unbacked, debt-based money steadily loses value even if the Fed does its job well, presumably because over time more debt is entered into (how money is created) than is retired. When debt is retired, the money that was created with the initiation of a loan ceases to exist when it is paid off. For example our federal govt borrows money faster than it retires it’s debt, steadily increasing the money supply and the potential for inflation. But if the economy expands commesurately with the money supply, in theory it should not result in inflation, but the empirical evidence is that in fact, inflation in the economy has steadily increased over time, such that the dollar is worth only a fraction its worth a few decades ago.

On the other hand, a debt-based money regime, when managed skillfully (if that is possible), allows the fed to push interest rates down to stimulate the economy (by increasing available money) or push rates up when they believe a cooling off is appropriate to dampen inflation; this is believed to somewhat dampen the pain of natural economic cyles. With totally hard money and no elasticity in the money supply, I am not clear how a monetary authority could have any control whatsoever over stimulation/dampening of economic activity. Fiat money is credited with saving us from extreme booms and busts. Perhaps Ron Paul will provide insight on why presumed rigidity in the money supply is superior to having the ability to stimulate and dampen money supply.

As far as the Fed “creating money out of nothing” and charging interest on it, gaining a stranglehold on “all the money”, it does not work that way. Money lending is a leveraged business, and that is why money can be created through lending. The Fed and member commercial banks provide “loans” with only a small amount of reserve (money) (about 1/12 I think) but the interest charged by the banks is not “free money” for them, it goes to cover overhead and provide a profit. The interest charged to the federal government on money loaned to it by the Fed, after being applied to the costs of running the Fed, is in fact paid back to the US Treasury. So I don’t believe the Federal Reserve System is quite the evil cabal envisioned by conspiracy works like “the Creature from Jekyll Island”..

For me then there is no question of a conspiracty in an evil bank cabal; the question is, would the US be better off with hard money and the consequent inflexible money supply, but no inflation, while losing the ability to tweak the heat or coolness of the economy by changing interest rates.

Parrotocracy December 23, 2007 at 12:17 am

T Edward,

Let us start with an Austrian definition, not the Chicago School loophole you might be entertaining. Inflation is the increase in money supply; whereas the upward movement of prices is a consequence of this increase. The major tool the Fed uses to “heat” or “cool” the economy is inflation/deflation in the Austrian sense. Yet, any move in the supply of money, whether done by the Feds, or created by their ‘competition’ printing “dollars” down in the hidden basement under Eddy’s Garage, affects the purchasing power of the dollar or monetary unit. The Fed, then, is taxing people when inflating. Further, it is a transfer of wealth unbeknownst to, and out of the control of, the great unwashed.

Time is a key factor here. Ceteris paribus is the perception in the market, but the money supply has actually, artificially and clandestinely increased. The first spenders of this dough exercise a privilege- representing the transfer of wealth. Distortions following the initial inflationary action are part of a whole series of consequences, i.e. spiraling prices and malinvestment, as people downstream adjust to more nominal money chasing the same number of goods/services. Those farthest away from the Fed money factory, in temporal positioning, are victimized the most in this theft.

Of course, ‘relative’ is a key word in this process. For even in the case where productivity gains seem to cancel out inflationary consequences, folks were still robbed. It would be natural for the purchasing power of the unit to rise with productivity. This is a sign that the social division of labor is working, and efficiently at that. With productivity gains in a free market, even the least well-off may purchase more with the same two pennies. When the Fed claims that everything is OK due to interest rate manipulation keeping pace with productivity it is either mistaken or lying.

There are many more angles to cover here, and not just from your comment. Why free-market commodity-backed banking could still have inflation/deflation, but less volatile and with milder consequences, is one example.

It should be clear that the Fed can only ‘rob Peter to pay Paul’, and in doing so, sets off a whole host of increasingly immoral calamities in time.

TLWP Sam December 23, 2007 at 1:19 am

Aw come on Parrot. Those who create the paper money get the immediate spending power. Yet those who mine gold get the immediate spending power in a gold currency society. It could be argued the only honest increase in spending power go to those who actually produce something useful, such as a farmer who eats first and then takes the food surplus to market. Currently is it estimated that gold mining increases the gold stock by 2 to 3% per year. And yet it said if gold became money once again it’d be more valuable and create even more incentive for miners to chase more gold.

T Edward December 23, 2007 at 3:01 am

How many know that even consumer loans can increase the money supply? When the Fed lowers the interest rate to stimulate the demand for credit, not even the Fed can know how much people will borrow, (that is, how much new money will be created), because they can’t know in advance how the market will respond to the lower rates.

The private sector borrowing money for productive projects is a good thing. Real wealth can be added to the economy because of loans, people hired, etc. all this in exchange for a temporary increase in the money supply. The only bad thing I can see about the fiat system is the ability of government to spend beyond its means, and thus inflate the currency. If there were no government waste and overspending, and if the Fed is always skilled enough at guaging when or when not to increase the demand for credit via adjusting the interest rate, I believe that the fiat system would not be any problem whatsoever. It is only the extreme unlikelihood of ever being able to keep the government’s hands out of the cookie jar that I believe makes Ron Paul call for abolishing the Fed. Furthermore goverment-caused debasement of the currency is a hidden tax simply because the public does not understand what money is or how it is born and dies in the lending and repayment of loans. We cannot trust the goverment, what’s new? Borrowing, and more borrowing by the government, never catching up, is the real culprit in long-term inflation, not fiat money. The fiat system’s only weakness is that men, who man governments, are ‘sinners’ who have amply demonstrated that they can’t resist temptation. Hard money is unforgiving and inflexible, and it seems to be the only way to make the sinners obey virtue.

I am not sure though how a country stimulates itself out of recession or depression with a gold standard or other hard money. You can put added borrowing power in the hands of all the population quickly through the banks, with fiat money, which can promote economic recovery, not so with hard money.

The private sector, generally, pays borrowed money back unlike the government, who has let their total debt grow with each passing year.

Inquisitor December 23, 2007 at 7:49 am

T Edward, have you read Mises’ “The Theory of Money and Credit” (http://mises.org/books/Theory_Money_Credit/Contents.aspx)? Have you studied Austrian arguments on commodity money and free banking?

TWLP Sam: “Aw come on Parrot. Those who create the paper money get the immediate spending power. Yet those who mine gold get the immediate spending power in a gold currency society. It could be argued the only honest increase in spending power go to those who actually produce something useful, such as a farmer who eats first and then takes the food surplus to market. Currently is it estimated that gold mining increases the gold stock by 2 to 3% per year. And yet it said if gold became money once again it’d be more valuable and create even more incentive for miners to chase more gold.”

How many more times does this argument have to be addressed? This is not the first time you’ve brought it up, and you have not responded to criticisms by others on this site to the argument, so I am not sure why you repeat it.

Inquisitor December 23, 2007 at 7:54 am

Huerta de Soto’s Money, Bank Credit and Economic cycles is also reputedly excellent:

http://mises.org/store/Money-Bank-Credit-and-Economic-Cycles-P290C0.aspx

TLWP Sam December 23, 2007 at 10:11 am

You say gold doesn’t cause inflation because a lot of people tend to hoard gold thereby reduce the market gold such that people who want to buy gold have to bid up the price to the fewer and fewer people who are willing to sell gold? But conversely how many average schmoes in times past could actually stockpile gold if they wanted to? How many peasant actually owned any gold? Or more likely did they have some small silver holdings for hard times. Nowadays most people either own gold or could own gold if they could justify to themselves the expense of bothering. Most of the gold (some 75% according to Wiki) in existence came from 20th century disproving the goldbug wishful thinking that gold mining is preserve of idyllic weirdos with metal detectors and pans. Then again maybe platinum should be preferred over gold since it’s a lot rarer.

T Edward December 23, 2007 at 5:27 pm

Inquisitor, I confess to not having read Mises’ “The Theory of Money and Credit”, I do wish I had a smart summation of the 400+ page book. My money education began about ten years ago when I read ‘Creature from Jekyl Island’ followed by some Federal Reserve informational brochures. I concluded that ‘Creature’ was mostly a conspiracy tale but it did help me finally understand, I think, how fiat money works.

fundamentalist December 23, 2007 at 9:10 pm

T Edward: “For me then there is no question of a conspiracty in an evil bank cabal; the question is, would the US be better off with hard money and the consequent inflexible money supply, but no inflation, while losing the ability to tweak the heat or coolness of the economy by changing interest rates.”

That is the real question. You should check out “A History of Interest Rates” by Sidney Homer, or maybe Rothbard’s history of the Great Depression. History is the key to answering that question. With a little research, I think you’ll find that interest rates, and hence the economy, were much less volatile under the gold standard. Nothing like the Great Depression or the high inflation of the 1970′s ever happened under a gold standard. Yes, we made impressive progress in the 20th century with fiat money and the Fed, but how much better could we have done without the two disasters mentioned? How much wealthier might we be had we enjoyed the stability of the gold standard?

fundamentalist December 23, 2007 at 9:23 pm

T Edward: “I am not sure though how a country stimulates itself out of recession or depression with a gold standard or other hard money. You can put added borrowing power in the hands of all the population quickly through the banks, with fiat money, which can promote economic recovery, not so with hard money.”

The idea that the economy needs the Fed to promote economic recovery in a recession is a myth invented by Keynes and promoted by socialists to increase governmental control of the economy. Mises, Hayek and Rothbard all emphasized that the economy needs no stimulus. Monetary pumping by the Fed causes recessions. If the Fed will stop trying to rescue the economy, a free market has built in mechanisms to restart it. Mises, Hayek and Rothbard’s styles can be a little dense for today, so I recommend people start with something like Mark Skousen’s “Structure of Production.”

As someone from a Keynesian/neo-classical background, I have to tell you that you’ve got a lot of un-learning to do before you can appreciate Austrian econ. It’s a lot like the Simon and Garfunkel song Kodachrome: “When I think back on all the crap I learned in high school, it’s a wonder I can think at all.” (My apologies to the younger people who don’t know how Simon and Garfunkel were.)

TLWP Sam December 24, 2007 at 12:14 am

Bah humbag! “Nothing like the Great Depression happened under the gold standard”? I presume you mean to say “in a idyllic 100% reserve, easily redeemable gold, gold standard. Harsh recessions and depressions were rather commoon in the 1800s. Not to mention U.S. ‘fiat currency’ would theoretically began in 1971.

fundamentalist December 24, 2007 at 5:05 pm

TLWP:”I presume you mean to say “in a idyllic 100% reserve, easily redeemable gold, gold standard. Harsh recessions and depressions were rather commoon in the 1800s.”

Of course we had recessions under the gold standard. As long as you have fractional reserve banking you’ll have business cycles. But the historical record is clear: the 20th century witnessed greater volatility in interest rates than the 19th century, and nothing like the Great Depression occurred in the 19th century. Neither did the 19th century ever endure stagflation as we had in the 1970′s.

Timothy Kelly December 27, 2007 at 9:14 am

A 100 percent gold standard would not create a heaven on earth, but it would allow for genuine long term economic growth and promote international trade and world peace. Gold would also promote responsible banking policies. If fractional reserve banking were prohibited the economy would be spared the boom bust cycles that for some reason always seem to catch people unawares. It is no coincidence that the relatively peaceful and prosperous 19th century was also the age of the international gold standard. Even the wars that occurred during that era were more civilized (with the exception of the American Civil War). During the Franco-Prussian War of 1870 the officers of the invading German army paid French hotel owners specie for their rooms.

Don Vonbraunsberg September 10, 2010 at 4:00 pm

Found out

Anonymous May 16, 2011 at 9:52 am

What a difference just a few years can make. Today, Frum has marginalized himself with his big government economic views and Ron Paul’s most serious opposition in his 3rd presidential campaign are Mitt Romney and Newt Gingrich (an unrepentant supporter of forcing people to buy health insurance and an unrepentant believer in man-made global warming). Time has not been kind to intellectual dinosaurs like Frum.

iPod Touch November 21, 2011 at 5:07 am

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