Rhett Butler, Ron Paul, and the Election of 2012

0:00The published title of the talk was Ron Paul in the election of 2012, and I want you all to know that this is a completely objective, non-partisan sort of event. But even the published title wasn't exactly correct. My actual talk is going to be on Rhett Butler, Ron Paul and the election of 2012. And basically what I'm going to be talking about very briefly is my research that I've done over the last several years about the Civil War and specifically about blockade running and the union blockade.

0:50And my theory or my hypothesis is that the outcome of the American Civil War was not determined as it's traditionally stated as the battlegrounds, the land armies, Lee versus Grant, Gettysburg, you know, all of that kind of thing. But instead it was determined at sea by the blockade fleet and by the blockade runners. And of course, Rhett Butler, the prominent character in Gone with the Wind, both in the book and obviously the movie, is the prototype of the blockade runner, a smart, cunning, businessman, entrepreneur, cool and calculating, dark and mysterious, but really the only personification that we have with respect to that crucial entrepreneur during the American Civil War.

1:51Now how this is all going to impact the 2012 election will be developed as I go through this talk. First of all, I'd like to say about Ron Paul in the 2000 election. I get asked this question quite a bit. You know, it doesn't seem like Ron Paul really has a chance. The media is ignoring him. The other candidates have these massive super PACs and the odds seem all stacked against them. You know, why is he doing this? Why is he carrying on? Why is he bothering when he sort of remains in fourth place when, prior to this, if you were in last place, you'd drop out? Well, the first answer that I give is that, in my own mind, Ron Paul's already won.

2:38Basically, he's attracted and convinced all of the future leaders of our society that his politics and his economics is really the way to go. And so when I look at the crowds and I see the events, what I see are the leaders of tomorrow embracing a particular version of the future of tomorrow, and that's Ron Paul's Paul's vision of what American society is all about, what it truly means, what's truly unique about America and what has made us so great in the past. And so, in my own mind, Ron Paul's already won because he's captured this vast majority of the future leaders, the smart people, the entrepreneurial people, the people with organizational skills, the people who are attracted to moral and ethical as well as economical and practical issues.

3:43My talk tonight is going to be more along the lines, ultimately, what if he actually won? What would be the outcome if Ron Paul won this election in 2012? There's a lot of people who say, for example, that if Ron Paul did win, he'd throw the Would there be economy into chaos? Or what would happen with foreign wars and our possessions and our friends and our empire overseas? Wouldn't there be chaos everywhere in the economy, in politics, and in foreign affairs? So first I'm going to talk about my research about the Civil War and my theory which is that the war was won by the Union at sea rather than on land.

4:37And basically the idea here is that economics ultimately determines the outcome of wars. The better economy and the better use of military resources always seems to dominate poor economies, poor functioning economies and military operations which are inefficient and ineffective and usually gobble up a lot of resources in the process. So when we first looked at the blockade, one of the things we found was that the blockade not only suppressed the southern economy, but it actually demoralized the southern economy. And so what we looked at was the prices and the imports through the blockade.

5:28And what we found was that the blockade created what we call the Rhett-Butler effect, which was that there were a lot of luxury goods coming through the blockade rather than a and a lot of necessities in the minds of the southern people. And we were able to explain this importation of high-valued goods rather than low-value relative to weight and relative to volume goods by the blockade itself. The blockade imposed a cost on the blockade runners and this cost led them to try to import more valuable smaller products and in that mix of goods was indeed luxuries and the reason we looked at that is I did my dissertation on the economics of prohibition and one of the things that I noticed about prohibition is that there was a lot of similarities to Blockade Running. With prohibition, and in fact the U.S. spends most of its resources trying to suppress the drug war, trying to battle the drug war and fight the importation of illegal drugs, is at the border.

6:45And so as the cost to drug dealers rises trying to get across that border, the potency of the drugs that they import increases. So the more money we spend at the border trying to fight the war, the products that actually get through are much more potent and much more, in fact, dangerous. And of course we see this all the time at Auburn football games, right? If you go out around the stadium and you look at the tailgaters, almost everybody is drinking beer, right? There's not drinks being served, there's not wine being served. It's like 95% of people who are consuming alcoholic beverages are consuming beer.

7:34And then once you get into the stadium, there's less alcohol consumption, but 95% of it is whiskey. It's double-proof brandies, double-proof rums, things of that nature that are getting across the border of the stadium and Inside the Stadium. So just as Auburn fans switched from beer to whiskey, just as drug dealers switched from marijuana to cocaine, blockade runners switched from bringing in necessities like food and they only would bring in things like medicine, weapons and luxury goods. But what we did find was that the blockade was unusually effective.

8:27Blockade running is usually fairly easy to do. Every blockade that's come about, there's always people successfully running the blockade because it's very profitable to do so. They buy better ships, they buy faster ships, they buy in modern times bigger, or excuse And so, blockade runners would buy faster camouflage ships in order to get across the blockade. So we weren't sure why the blockade was so successful, so that was the second question we looked at is, why was the union blockade so successful? And what we found was that the Confederate government was passing all sorts of laws that got in the way of blockade runners.

9:18They passed an excess profit tax on blockade runners, okay, which was, you know, it wasn't, it was a discouragement to blockade running and it didn't collect much revenues. They put tariffs on imports through the blockade and they put tariffs on exports through the blockade. So basically, on all margins, the Confederate government was passing laws from the very beginning of the war. As a matter of fact, at the very beginning of the war, they had a tacit embargo on the exportation of cotton. So their number one moneymaker, the thing that could have gotten them more income, income that they could have used to buy food, they could have bought cannons, they could have

10:37called a Confederate Blockade of the South. In other words, it wasn't really the Union that was that successful at blockading in the South. It was the Confederate policy which discouraged the export of cotton and the import of goods. And of course, the income in the South fell precipitously. In the third paper, we looked at a specific piece of legislation that was passed late in the war in February of 1864, Confederate Trade Legislation of 1864. This legislation did several things. It put price controls on imports, it created a prohibition on luxury imports, and it required all blockade runners coming in and going out to give half of their cargo space to the Confederate government.

11:32So half of your cargo space is gone, that means half of your profits are gone. The idea here was that the Confederate government needed that space to bring in its own supplies. And the prohibition on luxury goods, which seems like it's not a big deal, turns out that the luxury goods were imported by the sailors on the blockade-running ships. And those luxury goods that they brought in in their own bag was the basis of their pay. So this legislation wiped out the pay of the sailors and wiped out the profits for the blockade runners. So this was truly a crazy type legislation and was a significant deterrent to blockade running.

12:24As a matter of fact, the number of blockade running ships, the number of runs through the blockade actually declined in 1864 and 1865 from the previous year, despite the fact that there were a lot more ships available to run the blockade. And these new ships were faster, more camouflaged, better technology, they would have been very and very effective blockade runners, so you've got more ships, you've got more need for imports and exports, and yet after this legislation passes, there is a drop in overall runs through the blockade. Another piece of legislation we looked at showed that the effect of this legislation instead of increasing the prices, excuse me, instead of decreasing the prices of necessities, food, clothing, things of that nature, which the legislation was designed to do, actually led to an increase in the price of those same goods.

13:32So the intention of the legislation basically backfired as an unintended consequence of that legislation. Captain Roberts, one of the most successful blockade runners, ceased all blockade running activity. And I'll quote him, quote, the game indeed was fast drawing to a close. Its decline was caused in the first instant by the orders from the Confederate government at Richmond, pressing addressing the blockade runners into their service to carry out cotton on government account in such an arbitrary manner that the profit to their owners who had been put to an enormous expense and risk in sending vessels in was so much reduced that the ventures hardly paid at all.

14:19Captain Roberts is thought to have been the model for Margaret Mitchell's Rhett Butler, who also, by the way, chose to stop running the blockade towards the end of the war, if you remember the movie or the book. Another famous and successful blockade runner was Thompson Taylor, who made 28 successful trips through the blockade. As he put it, blockade running should have been encouraged rather than discouraged by having obstacles thrown in its way. I am convinced that the conditions of affairs would have been altered very materially and perhaps would have led to the South obtaining what it had shed so much blood to gain, its independence.

15:09As Captain Roberts explains, the enterprise had lost much of its charm, for unromantic as it may seem, much of that charm consisted in money-making. So, basically, what we looked at was a situation where the Confederacy should have not been defeated in the American Civil War. It had the same military organization, it had a very successful economy, it should have been able to export its cotton at very high prices and been able to obtain all of the Necessities of Going to War, and it had done that and taken on a defensive strategy of having fortified cities and guerrilla armies.

16:02The Union could have never really successfully invaded and defeated the Confederacy, but for these policies regarding blockade running, which basically shut off the source of income and the source of raw materials that it needed to fight the war because the south, the southern economy was based on comparative advantage and basically it produced cotton, it produced a few other goods for exports and it produced some of its own necessities and essentials like food and clothing and so it needed international trade for its income and hence its war materials and things of that nature, and as a result of all this legislation, which choked all that off, slowly the South, the Southern population and the Southern economy began to crumble, and then in desperation it invaded the North against that defensive strategy and was militarily humiliated in both cases. So it got to the point where desperation led them to the invasion strategy which failed miserably.

17:19And speaking of that, the last thing we wanted to look at is why would the Confederate Congress vote for such stupid legislation? Because it was pretty obvious to everybody what was involved in that legislation. And what we found was we looked at the congressmen in the Confederate Congress and we looked at their personal history, what profession were they in, were they slave owners, were they landowners, and then we looked at their congressional districts, was it an urban or a rural district, was it a financial center or not, how many slaves per capita, how many and Money Slaves per Acre, all of these kind of variables regarding both the congressmen and the congressional district.

18:14And what we found was that the only variable that was really relevant was whether or not the congressional district was in union hands or in confederate hands. If a district was in confederate hands or was not controlled by the union, then the Congressman from Confederate controlled districts would vote against the legislation. If the congressman was from a district where the union was in control, they would vote for it. So rather than being voting stupidly for stupid legislation, they were basically voting for the private interest of their district. In other words, if you were still in the Confederacy and you would feel the pain of this legislation, Union, they voted against it.

19:07But if you were in the union behind the lines and would be unaffected by Confederate policy, then you voted for it because your constituents would not be affected. So basically what we have here is a series of policies that basically have an effect on entrepreneurs, a negative effect on entrepreneurs, and that negative effect translates over into to the Economy. And that's the sort of the core issue that I want to take into the discussion about Ron Paul and the election of 2012 and what would happen if Ron Paul was elected. Well, let's look at this in terms of how would a Ron Paul election affect entrepreneurs, which would in turn affect things like employment in the economy.

20:02Well, if you've studied Ron Paul's position, if you know his past, he's someone who's very consistent. In other words, what he believes and how he votes on a particular issue today is exactly the same as he would have voted in the mid-1970s when he first went to Congress. So there's the ultimate inconsistency in his positions. It's also the case that his particular views on just about any particular issue are extremely well known and it's also extremely well known that basically no one is going to change his mind on 99.9% of the issues.

20:50That's true so much so that lobbyists never bother going to visit him. They never try to go there and bribe him with dinners or campaign donations or to give him reports about, you know, how the FDA is hurting this industry or whatever because they know how he's going to vote on issues that affect them. He knows that they're going to vote against him and there's nothing you're going to be able to do to change his mind, to vote yes. And if he supports your private interests as a business, you don't have to spend money buying him out. You don't have to take him out to dinner. You don't have to send a campaign donation to him because that's the way he's going to vote anyways. Okay, so he's rather unique in American politics. Of course, this consistency is going to be true for a lot of politicians with respect to certain issues, a far-right social conservative republicans are always going to vote a certain way on abortion issues.

21:59And there's nothing in the world that's going to change them on those narrow issues. And the same is true for far-left politicians. If it's a liberal issue, it's not like you're going to be able to buy them out, change their The difference is that Ron Paul is consistent on all issues rather than just on his pet projects. So what's that going to mean? Well, it means that businesses, entrepreneurs, people who hire people, people who make investments in productive capacity, I have a lot of serious foresight for a Ron Paul presidency.

22:45For four years, things are going to turn out pretty much along the lines of a Ron Paul presidency that is very predictable. So if a new tax was passed by Congress, it's obvious that Ron Paul is going to vote against it. If Congress passes a deficit budget or at least one that's not sufficient in terms of cutting the deficit, Ron Paul is going to vote against it. If a new regulation is proposed with a few minor exceptions, Ron Paul is going to vote against that.

23:33He's going to be different in terms of enforcing regulations on all of the regulatory agencies that the executive branch controls. He's going to limit or eliminate all spending that's under his direct control. And most assuredly, he's going to replace Mr. Bernanke. And he's going to set forth a monetary policy that is much more market-driven. And of course he's also going to put forth and make a very strong effort to restore constitutional money in the form of a gold standard or at least make moves in that direction. And I just read in Barron's before I came over here, Tom Dolan's column which is really one of the best things that you should all be reading.

24:27It's in the last page of Barron's magazine. And he goes through these estimates that groups have done about President Barack Obama's budgets for the next 10 years, Senator Santorum's, Speaker Gingrich, and Ron Paul. And basically all of those proposed budgets are going to make things worse over the next 10 years. The National Deficit Relative to GDP is going to get worse under Obama's, Gingrich's, Santorum's, and Romney. I left out Romney. Can you imagine that? Just forgot him entirely. I guess that happens to him a lot.

25:18With the exception of Ron Paul. With Ron Paul budget, and of course these are all subject to reality, But only with a round Paul budget does the national debt relative to GDP decline over 10 years. And actually, they indicated that it would basically be the only one that was balanced or in surplus over that, at least at the end of that 10-year period. So with respect to taxes, with respect to the national debt, with respect to regulations, a Ron Paul presidency would create a large amount of certainty for businesses and it's all the type of certainty that is positive.

26:09Right now, what are businesses and employers worried about? They're worried about taxes. They're worried about taxes in terms of tax rates and they're worried about taxes in terms of the national deficit because, you know, that's a real resource tax on the economy in the present and it means that some form of revenue is going to have to be raised higher in the future. Okay? Ron Paul says no new taxes and we're going to try to eliminate as many taxes as possible. Regulations are a tremendous burden on the economy and the Democrats and Republicans Regulations have put, have expanded the regulatory state by a significant amount in many, many areas including financial services, regulations over medical issues, environmental regulations, business practice regulations, accounting regulations, all of which are burdens on the in the American Economy.

27:14A recent study done in Birmingham by a former Auburn graduate, I might add, found that eliminating one regulatory job in Washington DC would result in adding the addition of 100 new private sector jobs and a $6.2 million increase in GDP. A 5% cut in the regulatory budget in Washington DC, 5% would result in 1 million new jobs and an expansion of GDP of over $75 billion. So that's a real thing. It's not just an annoyance. It's a real job killing factor. And also I think there'd be a lot of certainty with respect to foreign policy and foreign affairs.

28:01Again, Ron Paul's views are widely known, obviously with all of these things there would be a disequilibrium in the short run, but in the long run I think there would be much more tendency towards equilibrium and harmony, not only in our economy, but in worldwide foreign affairs. So you'd see things like, for example, instead of Bernanke throwing money into the economy like a madman, along with all the other central bankers in the world, causing the price of oil to be up over $100 a barrel, I think with the Ron Paul presidency, you'd very likely see the price of oil come back down into a normal range, $30 or $40 a barrel, the price and the price of gasoline would fall, you know, I know Newt Gingrich makes this claim and it seems absurd because it is, because he has no idea about anything economics, but I think, you know, a Ron Paul presidency would actually show this in the sense that monetary policy, which flames oil prices, would bring the worldwide price of oil down to a more reasonable range of less than $50 a barrel,

29:25would bust the national government budgets of a number of oil exporting regimes, such as Venezuela, such as Russia, such as Iran, Saudi Arabia, and a few others would have been busted the budget of Libya. So a lot of the rogue regimes around the world depend on 80, 90 dollar barrel oil for their government budgets. At 40 or 50 dollars a barrel, they don't have any money to spend on things like terrorism. So there's a lot of indirect things like that that would, I think, bring the world into a much cooler, much more comfortable, much more harmonious place to live.

30:17And so, what my conclusion was, that what if Ron Paul really won, is not that we would be developing chaos in the economy, chaos in financial markets and worldwide politics, but quite the opposite, that the fact that his consistency would replace the uncertainty that currently exists in the economy for entrepreneurs and foreign policy and that that consistency would actually lead to a very quickly rebounding economy and a very quickly reduction in all the hot spots around the world that we see today and they're coming so fast these days that it's hard to keep up with them all.

31:07First it's North Korea and then it's Iran and then it's Syria and it's just the new New Hotspot of the Week, I think that would also be addressed either indirectly or directly by the consistency of Ron Paul's positions on issues. Okay.