If you covet Platonic Guardians in lieu of self-government, you’ll love the antagonists of Sen. Rand Paul’s Federal Reserve Transparency Act of 2015.
They include Janet Yellen, chairman of the Board of Governors of the Federal Reserve, and Catherine Rampell, a liberal dogmatist at The Washington Post.
Mr. Paul’s legislation should be uncontroversial and universally supported. Transparency is the rule and secrecy is the rare exception in every flourishing democracy. Secret government violates core democratic principles of accountability and government by the informed consent of the governed. As Justice Louis D. Brandeis sermonized, sunshine is said to be the best of disinfectants.
Mr. Paul elaborated: “A complete and thorough audit of the Fed will finally allow the American people to know exactly how their money is spent in Washington. [The Fed] currently operates under a cloak of secrecy and it has gone on for too long.”
The enormous Fed influence on the prosperity of the American people cannot be denied. It fixes interest rates. It expands the money supply by trillions of dollars overnight. During the financial crisis of 2008, it showered more than $10 trillion on domestic or foreign mismanaged financial and non-financial institutions to rescue them from free market forces. The monetary decisions of the Fed have as much impact on the economy as the budget decisions of Congress, and both should be subject to the same transparency to enable accountability and correction of errors.
The Fed is a creature of Congress. It was created by legislation in 1913, and facilitated President Woodrow Wilson’s ill-conceived initiative to enter World War I. It compounded the woes of the Great Depression, and arguably has caused the economy more harm than good during its life span. It is within the constitutional prerogative of Congress to abolish the Fed for incompetence or otherwise. Mr. Paul’s transparency legislation is necessary to insure that a congressional decision on that score is fully informed.
Chairman Yellen and dogmatist Rampell are apoplectic at the prospect of congressional or public scrutiny. Writing in The Washington Post (“Audit the Fed? No so fast”), Ms. Rampell is aghast at the idea that members of Congress and the public might question or contradict policy decisions or reasoning of the Fed. Monetary policy is too important and complex to be left to the political process which is preoccupied with short-term objectives, according to Ms. Rampell. She argues that, “politicians’ short-term goals—dictated by election cycles — are not always aligned with the long-term health of the economy.”
But by that logic, every important government activity should be shielded from congressional or popular interference, i.e., the democratic process. Generals should decide on war and peace. Economists should decide on budgets, deficits and taxes. Environmentalists should decide on pollution standards. Oil and gas experts should decide on the leasing of government lands. Congress should be dissolved. Elections should be canceled. And rule by Platonic Guardians should be substituted for self-government.
Every dictator in the world should retain Ms. Rampell as a publicist. She would have defended Mussolini for making the trains run on time.
In a Republic, however, the people censure the government, the government does not scorn the people. Indeed, the United States was founded on the principle that “we the people” are sovereign and entitled to chart our own destiny and to be held morally accountable for it — for good or for ill. Voters and their elected representatives are not to be treated as children too stupid to understand what is best for them in comparison to the unelected wizards at the Fed.
Ms. Rampell epitomizes the common liberal contempt for constitutional norms whenever they yield results that liberals oppose. This illiberal attitude of “the ends justify the means” is a clear and present danger to our entire constitutional dispensation.
Enacting Mr. Paul’s legislation is urgent to defeat such insufferable paternalism and alarming lawlessness.
For more information on Bruce Fein, visit Brucefeinlaw.