From that Will Wilkinson post that Kerry Howley links:
Insofar as Ron Paul's racist newsletters propped up and encouraged racist norms, he has actually helped cultivate a cultural climate hostile to the prospects of "the blacks", whether or not he would end the drug war in the miraculous event of his presidency.
I would agree with this if the newsletters were Ron Paul's final contribution to the discourse or an end unto themselves. They were not. In large part they were a vehicle to raise money, build a national donor list, and make a Paul political comeback possible. And that's what they did. This is the toughest part of the story for me to deal with: if it wasn't for the Ron Paul Investment Letter and the Ron Paul Political Report, Paul wouldn't have raised so much money in 1996 and Greg Laughlin, a fairly typical southern Democrat-turned Republican, would be the congressman from Texas's 10th district.
What's the value been of having Ron Paul in Congress? I'm sure you could argue that policy papers and research and training from the Reason-Cato-IHS "Kochtopus" has done more to move libertarian ideas from the ether into practice than having a lone libertarian vote in the House. You could argue that Paul's career has been a net negative for libertarians, although I don't think Wilkinson is going there. Personally I like having Paul in the House, was thrilled when he entered the race (thinking he'd raise around $1 million and get a few votes in New Hampshire then pack it up), and am pleased that the next generations of libertarian-minded legislator—the John Campbells and Jeff Flakes—are pragmatic and removed from the old Rothbard mud-wrestling matches.
One thing, though. Neither of those guys, and none of the mainstream libertarain think tanks, have drawn more than 100,000 people to donate money or inspired thousands of people to camp out in snowy primary states, going door to door talking about libertarian ideas. Paul's done that, and he was able to do that, in part, because of hateful right-wing populist bigotry that grew his fundraising lists.
UPDATE: Fluffy, from the comments:
[T]he race war stuff in the newsletter was Rockwell's way of attempting to reach out to survivalists and militia members, who had overlapping issue affinity with a portion of libertarianism. How exactly would that "actually" worsen the cultural climate for minorities? Wouldn't the target for the material have already, you know, been racist?
I thought about this but it's awfully hard to prove. Maybe there were militiamen with Jesse Jackson dartboards who got the newsletters, found out about Hayek, and had "eureka" moments. Or maybe there were mainstream, Wilkinsonian libertarians who pored over this stuff about the "coming race war" and snagged copies of the Turner Diaries. We have no idea.