Ron Paul speaks on economy, smaller government

By Josh Rutenberg     2/12/09 6:00pm

Republican Representative for Texas Ron Paul spoke to Rice students last week to share his personal opinion on the state of the economy and discuss how to restore the United States back to a responsible fiscal system. "The system we have today has failed," he said.

Paul, a two-time presidential candidate, decided to become involved in politics after President Richard Nixon took the United States off the gold standard in 1971. Since then, United States currency has operated on the fiat system, where the value of the money is based solely on faith in government to back the value of the currency.

In 1974, Paul became convinced that the Austrian School of Economics, a system that encourages laissez-faire economic governance, was the appropriate way to run a national economy. Concerned with rapid U.S. inflation from the fiat system and a foreign policy he believed was building an empire at the expense of future generations, Paul ran for the U.S. House of Representatives in 1976 and won.

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Recent developments in the U.S. economy have shifted Paul back to his original focus on restructuring American fiscal policy.

"The important thing to recognize is that [the old system] has ended," Paul said. "We are in an economic crisis, and we are embarking on a course that will destroy the dollar."

Paul claims that, for years, the United States depended on other countries, with the greatest U.S. export being the dollar. In addition, Paul asserts that the Constitution does not permit the current fiat system, backing only gold- and silver-based currency.

Paul said that his ideal role of government would be a small one that interferes less in the day-to-day lives of ordinary people.

"Washington believes people are dumb, and that the government needs to take care of them," Paul said. "What we really need is a better understanding of how freedom works."

He also warned students not to panic in times of crisis, and he criticized the Patriot Act, which he called a hasty action.

"Americans were terrified; we allowed the government to do whatever was necessary, to spend as needed," Paul said.

Lovett College freshman Rachel Alexander said she did not think a hands-off government would be a good idea.

"If the government doesn't have some restriction on businesses, larger businesses may become corrupt and smaller businesses may suffer," she said.

Paul said he sees an easy solution to solving America's economic troubles but a public reluctant to accept the consequences. By sticking to only policies that a limited interpretation of the Constitution would permit and enduring a few years of tough times, Paul believes the U.S. economy could be back on track in a matter of years.

"If we don't change our ways, this go-round will be a lot worse," Paul said. "So many in your age group know what's going on. It isn't difficult for us to reverse our trends, and I come to you with a sense of optimism.

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