| Dr. Ron Paul has published a new book this year, | | | | must inflate the money supply, taxes increase during |
| entitled "Pillars of Prosperity: Free Markets, Honest | | | | wartime, and deficits skyrocket. But even in the |
| Money, Private Property," which contains an | | | | waging of the war, all of these extra funds get sent |
| extensive compilation of his thoughts on economics | | | | overseas, which creates the desire for certain |
| and presents an excellent opportunity for a special | | | | segments of the US economy for protectionist |
| book review. This the first installment of a longer | | | | policies and tariffs. The government also grows |
| review of the entire book, the full review of which | | | | during war, with a corresponding loss of civil liberties |
| will examine each individual part of the book and | | | | for the people. |
| present a summary of the positions and arguments | | | | But sanctions, even when they do not lead directly |
| presented, which have been woefully | | | | to war, have extremely negative effects on the |
| underrepresented to most Americans. "Part 7 - | | | | economies of both countries who are parties to the |
| International Affairs" is discussed here. | | | | sanctions. In addition to costing jobs and hurting the |
| This section is really a continuation of the previous | | | | people of the nations, sanctions also cause the |
| discussions on free trade and managed trade by the | | | | people to back dictatorial leaders who would not |
| international bureaucrats. Instead of a more general | | | | have popular support if sanctions were not imposed. |
| overview of what free trade consists of, Ron Paul | | | | As well, they hurt American businesses that have |
| spends more time looking at specific institutions and | | | | markets closed to them by government fiat, not by |
| policies that undermine trade, such as the | | | | the working of the free market. |
| International Monetary Fund, World Bank, World | | | | Besides the US government's involvement in this |
| Trade Organization the American practice of giving | | | | whole charade, there are a host of |
| direct foreign aid to other countries, deservedly or | | | | extra-government agencies who also participate. The |
| not. He has consistently argued that US foreign policy | | | | World Trade Organization, despite its stated benefits, |
| is often a choice between countries obeying the US | | | | does not promote free trade and it attacks |
| government and receiving generous aid packages, or | | | | American sovereignty. According to Paul, membership |
| becoming the target of economic sanctions and war. | | | | in the organization is illegal, as the government is |
| The practice of giving out American taxpayer money | | | | bound by WTO decisions and obligated to change |
| to foreign nations has been a complete failure, | | | | laws that the WTO panels deem necessary. Likewise, |
| according to Paul. Although it is meant to prop up | | | | the Export-Import Bank subsidizes the main |
| socialist governments or to be used in the support of | | | | competitors of American business, with China |
| their economies, the aid only promotes the status | | | | receiving more aid than any other country. The World |
| quo, while taking money from poor Americans to | | | | Bank, as well, promotes state-run corporate |
| give to the rich elite in poor, Third World Nations. This | | | | capitalism by lending money to Third World dictators |
| helps neither Americans nor people living in foreign | | | | who steal the money, run off, and leave the people |
| countries. | | | | to pay the bills, which they are frequently unable to |
| Not surprisingly, though, the entire concept of foreign | | | | do. |
| aid is sold to Americans as helping them, as well as | | | | However, it is the International Monetary Fund that |
| helping poor people in poor countries. For example, | | | | draws most of Paul's ire in this part of the book. Just |
| Plan Colombia and its successors have been sold | | | | a few of the ills of the system he mentions include |
| throughout the years to the American people as | | | | the IMF's promotion of worldwide inflation, foreign aid |
| fighting the "War on Drugs" and the "War on Terror." | | | | to insolvent nations, and the fact that membership in |
| In fact, though, the real purpose is to provide a | | | | the Fund specifically forbids countries from linking |
| subsidy to the Colombian government and US oil | | | | their currency to gold. Although its stated purpose |
| companies to protect their pipelines from damage in | | | | was to provide reserves to solve international |
| the civil war that has been going on in the country | | | | payment problems, the IMF instead creates liquidity |
| for decades. | | | | throughout the world, facilitating a transfer of wealth |
| Foreign aid also helps these poor countries cover up | | | | in the form of subsidies to Third World socialists and |
| the weaknesses in their economies and weakens the | | | | First World banks. As Paul states, "By creating added |
| American economy. Paul writes that "foreign | | | | liquidity, the IMF can indeed redistribute wealth, but it |
| government welfare, and there is no better name for | | | | cannot create new wealth." |
| it, takes money out of the productive sectors of the | | | | Thus, billions of dollars from the IMF goes to large |
| economy - the paychecks of middle-class Americans | | | | international banks and when the loans to the poor |
| - to reward economic mismanagement and political | | | | nations go bad, the American taxpayer is left with |
| corruption." The foreign governments are able to put | | | | the bill. According to Paul, "the IMF forces American |
| the aid money in sectors that would not be able to | | | | taxpayers to subsidize large, multinational corporations |
| compete in a free market, and this fosters | | | | and underwrite economic destruction around the |
| corporatism. Businesses can ally themselves with the | | | | globe." This is despite the fact that the institution has |
| government and receive the international welfare | | | | over 100 million ounces of gold on reserve and no |
| from the US politicians. This obviously leads to the | | | | reason to burden taxpayers; when their programs go |
| political corruption that is endemic in Third World | | | | under water, the bureaucrats appeal to the US |
| nations that receive foreign aid, with families and | | | | government for more money to bail out the banks |
| cronies of the leaders setting up shell businesses and | | | | that made the bad loans. |
| absconding with the aid money. | | | | But this possibility of receiving a bailout courtesy of |
| Even though most countries do not benefit from US | | | | the American people goes a long way to creating the |
| foreign aid, refusing to do as the government | | | | moral hazards that make the collapses a certainty. |
| instructs results in even more serious consequences, | | | | Banks know there will be no consequences for their |
| usually in the form of economic sanctions, such as | | | | poor lending decisions, so they keep investing in bad |
| are on Cuba and Iran and were on Iraq during the | | | | sectors of poor economies, and the recipient |
| 1990's. As he states, "Congress passes legislation | | | | countries of IMF funds end up with huge amounts of |
| calling for regime change, sanctions are imposed, and | | | | unserviceable debt. These very conditions were seen |
| eventually we are told that only an attack will solve | | | | in the failure in Argentina and the 1997 Asia crisis, |
| the problem." According to Paul, this act is just one | | | | when numerous countries' currencies' values dropped |
| half-step short of war and will usually lead to war, | | | | dramatically in the space of weeks or months. |
| with Iraq being the most obvious example of | | | | The cost and problems associated with these |
| sanctions that failed to depose the dictator, caused | | | | international policies, according to Paul, far outweigh |
| tremendous damage to the people of the nation, and | | | | any supposed benefits received by the American |
| led to an undeclared, no-win war in the Middle East. | | | | government or taxpayers. In fact, many of the |
| Paul argues against both foreign aid and sanctions for | | | | policies only create more problems that the |
| their propensity to lead to war, which has far more | | | | bureaucrats will then feel the need to step in and |
| negative consequences to the American people and | | | | "solve" with more of the same solutions that caused |
| economy. To finance the wars, the government | | | | the original problem. |