There’s a lot of justifiable shock today at a Wall Street Journal report on what Ron Paul’s portfolio consists of:
Most members of Congress, like many Americans, hold some real estate, a few bonds or bond mutual funds, some individual stocks and a bundle of stock funds….But Ron Paul’s portfolio isn’t merely different. It’s shockingly different.
Yes, about 21% of Rep. Paul’s holdings are in real estate and roughly 14% in cash. But he owns no bonds or bond funds and has only 0.1% in stock funds. Furthermore, the stock funds that Rep. Paul does own are all “short,” or make bets against, U.S. stocks. One is a “double inverse” fund that, on a daily basis, goes up twice as much as its stock benchmark goes down.
The remainder of Rep. Paul’s portfolio – fully 64% of his assets – is entirely in gold and silver mining stocks.
This tells us a few interesting things about Ron Paul. First, it is more evidence of his distrust of experts or of experts with beliefs within the mainstream. You would be hard pressed to find a non-crank economist or financial advisor who would suggest such a portfolio. Is there any economic issue about which Paul does not have extreme beliefs?
The investment advisor the WSJ talked to had this to say:
Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe. ”This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds,” he says.
What would it tell us about Ron Paul if he literally had a cellar-full of canned goods and nine-millimeter rounds? And what does it tell us about the average person who chooses the so-called “prepper” lifestyle?
In effect you are spending a lot of time and money insuring against one highly unlikely outcome. Either these people have extreme preferences or extreme probability beliefs. Extreme preferences would mean they would hate being unprepared in a post-apocalyptic U.S. way, way, way more than the rest of us would. Given how much almost any of us would hate it, it’s hard to imagine how their expected disutility in this outcome could be large enough to justify the tens of thousands of times more they spend on insuring than the rest of us do (“But I’m insuring against this zero” you object, but admit it: when you spend that extra $10 on the fancy maglite flashlight, visions of a post-apocaplyse and a thought of “just in case…” zipped through your mind. Don’t worry, I won’t tell your wife* you’re a prepping just a little bit). So I think this rules out extreme preferences as the primary determinant, which leaves you with extreme beliefs.
What do extreme beliefs about the odds of complete economic disaster tell you? One thing it suggests to me is bad economic theories. This is the point Krugman his rightly been making about those who have predicted we’d be facing hyperinflation by now. We didn’t need this datapoint to tell us Ron Paul has extreme and crankish ideas about economics, but it certainly reinforces the idea that he is not faking it.
In some part I think beliefs like this also reflect wishful thinking. There is a lot of moralizing that accompanies bad economic theories. As if our failure to adhere to the crank theories makes us in a way deserve economic collapse. The ability to yell “you should have listened to me!” and “I told you so!” from a well prepared bunker as society collapses is every crank’s fantasy. I’m not going to psychoanalyze too deeply, but I do think there is something sociopathic about a desire to be right that is so strong it makes people, even subconsciously, kind of want a global disaster to happen. To the preppers and doomsayers in the room: you can object all day you don’t want it to happen, but I have spoken to many of you in real life, and I have seen the wishful glimmer in many of your eyes**.
So what does this belief tell us about Ron Paul in particular? Well we can say something additional about his beliefs based on the fact that he is running for president. As Will Wilkinson pointed on on twitter, his insurance against disaster tells us either Paul thinks he has no shot at being president, or that even if he becomes president he can do nothing to prevent economic doom. So which is it? This is actually an important question and one that reporters should be asking him.
Another thing I think you can arguably take from this relates to the re-emerging scandal of Paul’s racist newsletters. Racism, especially of the kind espoused by whoever wrote Paul’s newsletter, can be thought of as another crazy belief. It is my contention that crazy beliefs tend to be correlated. For any given crazy claim, people who hold another crazy belief are more likely to accept it, and those who hold dozens of crazy beliefs are way more likely to accept it. Because of this phenomenon, of I think it is more likely that Ron Paul actually believes the crazy things published in his newsletters than it is that Barack Obama believes the crazy things Reverend Wright said. Ron Paul is on the record as holding many crazy beliefs, whereas Barack Obama is not (that creating green jobs is something for policy to target may be wrong, but it’s not crazy).
Overall though, I think Conor Friedersdorf is correct when he argues that it is unlikely Ron Paul truly believes these crazy racist things given everything else we hear out of him. But I do think the odds that he does are higher than they would be if he didn’t hold all the other crazy beliefs, and they are higher than the odds Obama believes the crazy things Wright said.
I don’t think this is a partisan argument, and I think even Ron Paul supporters should agree with me. This is because you can believe something is true and still agree it is crazy relative to expert consensus, and you can also agree crazy beliefs, defined as such, are highly correlated.
*Yes, I am implying here that the tendency to insure even the tiniest bit against doomsday scenarios is a primarily male tendency.
**Then again, who am I to judge? Some part of me wants a zombie invasion to happen.