Libertarians have traditionally had an assumed alliance with the "old right" or "paleo-conservatives". This makes sense in that many modern libertarian figures came out of the "right" of the 20's and 30's. However, I think there is some mythology going on here. While the old right certainly had its virtues, it is a stretch to claim that they were the bastion of libertarianism.
The old right contained definite libertarian elements within it to be sure, but it also contained some rather ugly elements as well: racists, nationalists and protectionists. Libertarians were never, ever, in the majority, even in the "old right". The old right, like all major political movements, was a mixed bag. It had a libertarian faction, but it also had some rather statist factions.
When I think of the old right, I am knee-jerkedly led to think of its virtues: resistance to the new deal, resistance to communism, resistance to WWI and the warfare state in general, laizzes-faire sentiment. But libertarians would be foolish to gloss over its vices: cultural separatism, bad forms of isolationism and protectionist elements. While libertarians tend to be non-interventionists on foreign policy, non-interventionism is not isolationism in my view.
Isolationism is an interventionist policy, revolving around (1) economic protectionism (2) extreme hostility to immigration; heavy immigration restriction and police enforcement of "borders" and (3) support for, or by the very least indifferance to, institutional (I.E. governmentally backed) segregation and racism; racist governmental policies. "Isolationism" does not just apply to relations between large territories like nations, but also down to the micro level, between towns and the various identity-groups within them.
While libertarians support free association (and by defacto, free disassociation), some paleo-conservatives tend to cross the line of free association in supporting some degree of forced segregation, I.E. governmentally created forced disassociation. The distinction between free disassociation and institutional segregation is an important one to make, for it separates a neutral policy from a separatist one. The two are entirely different.
There are other elements of the old right that are simply ultra-conservative, not libertarian, such as support for religious-based legislation, affinity with white power and neo-nazi movements, and even monarchists. Even in conjunction with libertarian causes such as opposition to central banking, you will find fringe nutbags with their own personal agendas (like world government and marxist conspiracy theories).
Indeed, neo-nazis tend tend to jump on the anti-central-banking bangwagon because they connect it to their views on Jews as banker-robber-barons. While libertarians oppose the federal reserve because of the disastrous economic effects of inflation, the need for competition and the Austrian buisiness cycle theory, paleos and neo-nazis oppose it because of tin-foil-hat conspiracy theories about the illuminati, free masons and Jews.
When libertarians ally themselves with paleoconservatives, they should be weary that they are allowing these elements into the libertarian movement itself. It should be quite clear that libertarianism is NOT a right-wing movement (and neither is it a left-wing one). Figures such as Pat Buchannan, while they may help the cause in some respects, hinder the cause in many respects (such as his extreme support for protectionism and his "culture war" nonsense).
It should be stated loud and clear: paleo-conservatives are not libertarians. Libertarians differ with paleo-conservatives as much as they share things with them, if not moreso. Furthermore, when properly estimated, the agenda of modern paleo-conservatives is not much less interventionist then that of the neo-conservatives. Nazism and paleo-conservatism have at least this one thing in common: staunch opposition to international capitalism.
Classical liberalism, which libertarianism is descended from, was cosmopolitan in that it viewed liberty as something to be applied universally, and it supported freedom of exchange (in economic goods and services, ideas, and people) between territories. Paleo-conservatism is just the opposite: it is anti-cosmopolitan, and therefore nationalist. It is fundamentally opposed to international trade, including the movement of people between territories. Paleo-conservatism wishes for an impossible world in which "nations" (I.E. territories) are kept hermetically sealed from eachother, with no genuine inter-territorial relations.
To the modern day paleo-conservative, it is the government's legitimate job to "protect our culture" (which in reality means the personal culture of a particular group, rather than the actual culture) and create "national unity". But from a purist classical liberal perspective, this destroys the natural polycentric nature of the society; "national unity" becomes nothing but a canard for coerced uniformity. "Protecting our culture" becomes nothing but the governmental enforcement of a particular cultural world-view onto everyone.
While the paleos are correct in their opposition to global government, their rationale for it is nonsensical and they unfortunately extend it to opposition to a global economy. Indeed, they tend to equate the two, claiming that a global economy is the pre-text to global government. They base their attack on global government not from the perspective of anti-government so much as pro-national-government. In other words, they oppose global government only because they see it as a threat to national government.
In practise, paleo-conservative opposition to global government is based on nationalism. They are national territorialists; which is, at root, a collectivistic conception of land/territorial property. In short, paleoconservatives correctly reject the collectivism of global territorialism, but then incorrectly support the collectivism of national territorialism. Indeed, hardcore paleo-conservatism appears to have much in common with national socialism than anything else on such questions. The national socialists strongly opposed the idea of both global communism and global capitalism, and then strongly supported a nationalist and right-wing variant of socialism.
If libertarians allow themselves to turn a blind eye to the obvious vices of their paleo-conservative bretheren, then the movement will be hijacked by them, gauranteed. Nationalist and protectionist notions are not conductive to liberty. They are historical enemies of it. The spirit of nationalism destroys the spirit of liberty by instilling the desire for territorial monopoly and uniformity into people's minds. It destroys all consideration for natural polycentrism and inequality (I.E. "diversity"). Paleo-conservatism is simply too monocentric and monolithic to be conductive to liberty.
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