No King's Mantle for Ron Paul

01/16/2012 10:56 am EST


Igor Greenwald

Chief Investment Strategist, MLP Profits

The Republican presidential candidate has no business sidling up to Martin Luther King Jr., who was not in any way, shape, or form a libertarian, writes senior editor Igor Greenwald.

On Martin Luther King Jr. Day, let’s consider the views of one of the presidential candidates who counts the Rev. King among his heroes—Rep. Ron Paul.

When asked in a recent New Hampshire debate about racist comments that appeared decades ago in financial newsletters owned by Paul, the Texas congressman brought up the slain civil rights leader, praising the “peaceful civil disobedience” practiced by King as a “libertarian principle.”

This isn’t about Paul’s views on race. I take his disavowals of the bigotry displayed in the newsletters by his associates at face value. Moreover, Paul is right to criticize the harsher treatment meted out to minorities by the criminal justice system, and in particular by its drug laws.

None of which should overshadow Paul’s attempt to hijack the civil rights movement on behalf of libertarianism.

The 47% of the New Hampshire primary voters under 30 who voted for Paul may not know any better, or they may not care. But there’s no denying the fact that one of the key goals of the civil rights protesters was marshaling in novel and unprecedented ways the power of the federal government—which Paul would drastically downsize—to right wrongs at the state and local level.

Calling the civil rights campaigners libertarians is completely disingenuous—they wanted federal government to use all its might against injustices perpetrated by local racists.

Such willful distortions of history are a product of Paul’s biggest blind spot: his belief that government is an implacable foe of individual liberty, despite ample evidence to the contrary from the civil rights era and other periods of American history.

In the economic arena, the willful ignorance translates into hostility to regulation, including oversight of banks. “I don’t think we need regulators,” Paul said a year ago. “The market is a great regulator, and we’ve lost understanding and confidence that the market is probably a much stricter regulator.”

Paul’s views on this owe nothing to Martin Luther King and everything to former Federal Reserve Chairman Alan Greenspan, who also trusted the financial industry to self-police out of an enlightened self-interest.

We know how that turned out. Turns out, markets are not inherently the level playing fields Paul imagines. Turns out market participants routinely try to exploit their informational, political, and financial advantages to profit at the expense of others less endowed.

There’s simply no room in the libertarian worldview for such shenanigans. To admit that market malefactors and manipulators are a dime a dozen (the Hunt Brothers, Ivan Boesky, Salomon Brothers, and the list goes on and on) would be to admit a role for government regulation, and then how would one distinguish oneself from Barack Obama?

More recently, Greenspan’s laissez-faire ideology produced the epic mortgage fraud that inflated the housing bubble, and those who primarily blame the government’s preference for home ownership are simply ignoring how market-driven demand for yield drove Wall Street salesmen to push subprime originations.

Want more evidence that markets aren’t the meritocratic arenas Paul imagines? Consider the career of Jeffrey Verschleiser, the Goldman Sachs (GS) executive who mocked that notion while making tens of millions on dubious transactions as head of mortgage securitizations for Bear Stearns.

As Rolling Stone writer Matt Taibbi chronicles, Verschleiser knowingly sold drek to clients, cheated them out of rightful compensation on the subsequent putbacks, and then went on to make millions more by shorting the shares of insurers dumb enough to stand behind his handiwork. For his efforts, Verschleiser is now in an even cushier position and engaged in conspicuous displays of wealth.

But, hey, Bear Stearns went under, so I guess the system worked the way Paul thinks it should.

  By clicking submit, you agree to our privacy policy & terms of service.

Related Articles on MARKETS

Keyword Image
FOMC Recap: Doves on Parade!
03/21/2019 9:27 am EST

Even relative to the market’s dovish expectations, the FOMC came off as worried about the U.S....

Keyword Image
2 Ways to Bet on BDCs
03/21/2019 5:00 am EST

Business development companies (BDCs) lend money to private companies in the form of fixed and varia...