Latest / The Capitalism and Freedom in the Twenty-First Century Podcast / Former US Senator Phil Gramm on Inequality Fallacies and How Economic Freedom Creates Growth | Hoover Institution

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Former US Senator Phil Gramm on Inequality Fallacies and How Economic Freedom Creates Growth | Hoover Institution · The Capitalism and Freedom in the Twenty-First Century Podcast

0:09
- This is The Capitalism
0:10
and Freedom in the 21st Century Podcast, an official podcast
0:14
of the Hoover Institution's economic policy working group
0:16
where we talk about economics, markets, and public policy.
0:19
I'm Jon Hartley, your host.
0:21
Today, my guest is Senator Phil Gramm, who served
0:24
as the US Senator from Texas from 1985 to 2002,
0:28
during which time he served as chair
0:30
of the Senate Banking Committee.
0:32
Prior to that, he was a congressman in the US House
0:34
of Representatives from 1979 to 1985.
0:38
And prior to that, he taught economics
0:40
as a professor at Texas a and m.
0:42
From 1967 to 1978, he served
0:46
as vice chair at UBS.
0:48
He's a fellow at a EI.
0:50
He's also the author of recent books, the Myth
0:52
of American Inequality, which John Early and Robert und,
0:56
and the Triumph of Economic Freedom with Don Boudreaux.
1:00
Welcome, Senator Graham and honor to have you
1:01
- Oh, thank you, honor to be here.
1:04
I appreciate your patience, John.
1:07
- Oh, it's a true honor to have you here, Senator Graham,
1:10
and, and I think it's really so fantastic to talk to someone
1:14
who not only is a PhD research economist
1:19
and a very decorated one at that,
1:21
but also has served in government at the highest levels
1:25
of government engaged in economic policy.
1:28
I think it's a very rare, increasingly rare combination.
1:30
So it's a real honor to have you on
1:32
and to talk to you about all your thoughts on economic
1:35
policy and what, why economic freedom matters,
1:40
and how we should talk about inequality.
1:43
I wanna start with your early beginnings.
1:46
Senator Grave, you were born in Georgia,
1:48
your father was in the military,
1:49
and your mother was a nurse.
1:52
What got you interested in economics
1:54
and what led you to get a PhD in it
1:56
from the University of Georgia?
1:58
- Well, I, I was born at Fort Benning.
2:03
My dad was sergeant in the army.
2:06
My mother was a practical nurse, and I grew up in Columbus
2:11
and I went to the University of Georgia,
2:15
and I had run outta money at the end of my freshman year
2:20
and had spent 18 months working, going to school at night
2:24
and taking correspondence courses.
2:27
So when I got back to university, I, much
2:31
of the stuff I'd taken didn't add up to any kind
2:35
of degree plan.
2:36
So the first subject
2:39
that I thought I might be interested in was physics.
2:43
And so I thought, well, you know, I liked school.
2:47
And so I went to my professor, Dr.
2:51
Ning, and said, well, what would you recommend to somebody
2:55
who was thinking about getting their PhD in physics?
2:59
And in a level of honesty
3:01
that I don't think you would've run into by most people
3:05
who were in an active department teaching.
3:09
He said, if you love economic,
3:12
if you love physics more than anything
3:14
else in the world, do it.
3:15
But if you don't, don't, there are no jobs in physics.
3:20
You'll end up spending 15 years as a post doc.
3:25
You may never get tenure.
3:27
And so I walked out of his office down
3:30
to the National Science Foundation office,
3:34
and there on the wall was a poster
3:37
that showed the starting salaries of PhDs
3:43
in 1963.
3:46
And at the top of the list was economics.
3:49
So I thought, well, you know,
3:51
economics I think has something to do with the stock market.
3:54
So I signed up
3:56
and I was immediately taken by the fact
4:01
that economics described in a formal way the
4:06
world I'd grown up in.
4:09
I didn't know anybody knew those things.
4:12
I didn't know anybody'd ever formalize thinking about 'em.
4:16
I was immediately captured.
4:18
And so I became an economics major.
4:21
I won a national defense fellowship,
4:24
and I got my PhD at the university.
4:27
And then hearing the words of Horace Greeley, go west,
4:31
young man, go west.
4:33
I went to Texas a and m,
4:36
- How wonderful.
4:37
And, you know, love the Aggies, even though I'm sort
4:42
of becoming a Longhorn, that's another story.
4:43
I know, you know, John Cochran,
4:45
he, you know, studied physics.
4:48
Many economists, you know, first got their start in physics
4:51
and, you know, found their way into economics.
4:54
So I, I know you're not the only one.
4:56
And I think there's, you know, a lot of shared, you know,
4:59
tools, you know, from, you know,
5:01
differential equations and so forth.
5:03
So really, really fantastic.
5:05
And you were a professor at Texas a and m for many years,
5:09
- 12 years, great years, by the way,
5:12
- Along with your wife Wendy, and,
5:14
and who's also a, a PhD economist.
5:17
And you're both professors, you know,
5:19
you many wonderful publications.
5:22
I'm curious what, you know, what made you want to go
5:24
to Washington DC and serve?
5:28
- Well, I had met Wendy in
5:31
1969.
5:34
A professor from Northwestern had come
5:37
as a visiting professor at a and m
5:41
and was showing people a dissertation he was looking at
5:45
that he thought was great.
5:47
And we read it and everybody thought it was fantastic.
5:50
And it was by this young lady, Wendy Lee.
5:55
And so we decided the, decided
5:58
to interview her at the American Economics
6:02
Association meeting.
6:03
And I wasn't senior enough to have a vote on who we hired,
6:08
but I was going to be at the meetings.
6:10
And so I sat in on the interview with Wendy,
6:14
and then she was very impressive.
6:17
And as she walked out, I walked outta the room when she did,
6:20
and she was having trouble putting on her coat.
6:23
And so I went and rushed over to help her
6:26
and for some reason known.
6:28
But to God in the hip era
6:32
of 1969, I said to Wendy,
6:36
as a single member of the faculty,
6:39
I'd be especially interested in you coming to Texas a and m.
6:43
And that beautiful smile turned into a glare.
6:47
And she said one word to me, yuck.
6:52
And so I went back in the room, they voted
6:55
to make her an offer,
6:56
and I said, what, she's going to come to Texas a and m
7:00
and I'm gonna marry.
7:01
And she did, and I did, and our careers bloomed.
7:07
We bought one of the nicest houses in town.
7:10
We had two children.
7:11
Everything we touched turned a goal, and we were very happy.
7:15
But I became increasingly unhappy about
7:19
what was happening in America in the 1970s.
7:23
I knew we weren't running outta oil and gas.
7:27
All of this talk about we gotta learn to live on less,
7:32
the joy ride is over.
7:33
That wasn't the America I'd signed on for.
7:37
And so, make a long story short, I wrote an article
7:40
for the Wall Street Journal on the energy crisis.
7:45
I've since published over 150
7:48
of 'em in the Wall Street Journal.
7:49
But that was the first,
7:51
and I got a lot
7:55
of first class mail in response to that article.
8:00
And I'd written a lot in academic journals,
8:03
but I don't know who read the journals
8:06
or the tenure committee did, because I got a tenure
8:10
and I got promoted.
8:11
But I sense that people were interested in
8:16
how free markets worked, how prices work.
8:21
And so I started speaking out on energy,
8:24
and I was asked testify before the Senate Energy Committee,
8:29
and then I decided to
8:37
begin to enter the sort of public policy debate.
8:41
And I didn't know anybody really.
8:44
And the people who knew me didn't much like me.
8:47
And so it was sort of my political beginning,
8:50
and I was terrible at politics to begin with.
8:52
I felt uncomfortable going up
8:55
and glad handing somebody I didn't know.
8:59
But gradually I learned to do what I needed to do,
9:03
to do what I wanted to do.
9:06
And so I was finally elected to Congress
9:09
by 122 votes,
9:12
and that started my political career.
9:19
- Well, fantastic. And, and one amazing, you know, career
9:22
that you've had in Washington dc I wanna, I guess, talk
9:26
to you just about some of those accomplishments.
9:28
And you served as, you know, chair
9:30
of the Senate Banking Committee.
9:31
What accomplishments in particular,
9:33
from your time in serving in Washington,
9:36
DC are you most happy about today looking back?
9:38
- Well, I'm happy about a lot of it, including many
9:42
of the bad things that I killed.
9:45
But I think I should begin at the beginning.
9:50
I came to Washington two years before Reagan,
9:54
and my first day on the Energy
9:57
and Commerce Committee, I,
10:00
David Stockman, who was a,
10:03
a second term congressman from Michigan,
10:06
and I sort of discovered each other.
10:10
And we started working together on healthcare matters,
10:14
energy matters.
10:15
And we did a budget,
10:18
we call a bipartisan recovery budget in 1980.
10:23
And let me remind you, in 1980,
10:26
the inflation rate was 13.5%.
10:30
Prime interest rates were 21.5%.
10:34
The unemployment rate was the highest of the post-war era.
10:39
At 12.2%,
10:42
we were in a double dip recession.
10:46
And then Reagan was elected,
10:50
president Stockman became OMB director.
10:54
Our budget became the Reagan program.
10:57
I was a democrat in Congress.
11:01
There were no Republicans in my district.
11:04
I didn't think party made any difference.
11:07
I guess if you wanted to be technical, you say, I was sort
11:11
of a, a carryover from the Civil War era when in the
11:15
South there was only the Democrat party,
11:18
or at least part of it I was in, in rural central Texas.
11:23
In any case, I was the author
11:26
of the Reagan program in the house,
11:28
and we put together a bipartisan coalition
11:32
at the critical point, the Reagan program passed
11:36
by one vote, one vote,
11:42
and the inflation rate was brought down in three years.
11:46
The Soviet Union was on that headed toward the
11:49
as heap of history.
11:51
So it made a difference.
11:53
And so I,
11:58
that was the beginning of my working with Reagan.
12:02
And then in 1984,
12:06
suddenly it was morning in America.
12:10
We were at the beginning of a 40 year period
12:13
of no inflation.
12:16
Everybody forgot about the deficit except me.
12:19
Stockman had left.
12:21
Fortunately, a guy that I had gone to college
12:26
and graduate school with
12:28
and whose wife had been my lab partner in physics became
12:32
OMB Director, Jim Miller, another economist.
12:37
And so I did Graham Rudman.
12:42
I had gone to the, I'd been elected to the Senate not
12:45
by 122 votes this time, but by a million votes.
12:49
Votes. And so I did Graham Rudman
12:54
to try to get the focus back on dealing
12:58
with the size of government and with the deficit.
13:03
And so from there, I went on,
13:08
became chairman of the banking committee, and,
13:10
and was instrumental in the passage of Graham Leach Bliley,
13:14
which opened up competition in the American
13:17
financial sector.
13:20
- Yeah, so I guess I, I, a,
13:22
a couple questions on, on that.
13:25
I, I guess on, on the Reagan era, obviously the, you know,
13:28
tax cuts were, you know, fundamental to that time,
13:32
you know, deregulation.
13:34
And really this was, you know, if you compare this, I guess
13:36
to the, you know, the Nixon admin, which, you know, is,
13:39
you know, there's a lot going on in
13:40
that timeframe including, you know, price controls
13:43
and other things, and the economic policy.
13:45
I think many successes on the foreign policy side of things.
13:48
But, you know, it was a, a big, you know,
13:51
the Reagan revolution was a big turn in terms
13:52
of really embracing, you know,
13:54
free markets and economic freedom.
13:57
I, I think more fully,
14:00
but yeah, you know, when I think of, you know, the,
14:02
like C chair, like Marty Feldstein, he,
14:05
during the Reagan years, you know, he sort of,
14:07
I think famously left and,
14:08
and protest over over the deficits.
14:12
Obviously you, you had the 1986, you know, tax
14:17
act and, and you know, bringing down marginal rates from,
14:19
you know, pretty, pretty high levels when Reagan came in
14:22
and, and also brought down corporate rates.
14:25
Any thoughts about, I guess, debt
14:28
and deficits, just in the sense that, you know,
14:31
we talk a lot about public debt today.
14:34
Some, you know, critics of the Reagan admin, you know, sort
14:38
of say, well, you know, Reagan wasn't really a fiscal hawk
14:41
either in that sort of, this period
14:42
of deficits began in, in that era.
14:45
I mean, there was a, you know, democratic Congress as well.
14:47
But I'm curious what, what you think about public debt
14:50
and you, you know, has,
14:55
you know, what, what should Congress be doing in,
14:57
in your sense, or, or how did sort of congress
15:00
and, you know, administrations from both parties kind
15:04
of drop the ball on this?
15:05
I mean, it's sort of an issue where you don't really have a
15:07
lot of interested parties.
15:10
I mean, obviously the taxpayers
15:11
and future generations are, are interested parties.
15:13
I mean, many of them aren't born yet,
15:15
but I'm curious, what, what do you think about that era sort
15:17
of being the beginning of the deficit? Well,
15:20
- I, John, you've gotta start with the 1970s, one
15:24
of the most misunderstood periods in American history
15:30
in the 1970s,
15:34
beginning in, in earnest in 1973,
15:38
we started a period of nine years
15:42
where we had 9.2% average inflation rate.
15:49
We had a very large number
15:51
of tax brackets over 15 on average during the period.
15:55
And so with that massive inflation,
15:59
we had bracket creep at a galloping rate,
16:04
and the tax burden exploded.
16:08
Even though Congress cut taxes five times during
16:13
that decade, they never cut taxes as much
16:18
as bracket creep was increasing them, the size
16:22
of government exploded.
16:24
And the America, in essence,
16:27
in the 1970s became a welfare state.
16:32
Non-defense spending grew at rates unprecedented in the
16:36
post-war period.
16:38
And so when Reagan came into office,
16:42
defense had been cut dramatically.
16:45
The Soviet Union was on the march all over the world,
16:49
there had been an explosion in social welfare
16:53
spending, and the tax burden
16:58
was so high that the Congressional Budget Office,
17:02
which was run by Democrats for two years in a row,
17:06
warn Congress that we were courting a recession
17:11
because the tax burden was so high
17:14
that it was a constraint on growth.
17:17
So that's when Reagan put his hand on the Bible,
17:22
that January day, that's what the world looked like.
17:27
Okay. And so
17:31
we were able to reduce,
17:34
first the growth
17:36
and then the absolute size of non-defense spending.
17:40
Defense spending went up,
17:44
we cut taxes,
17:46
but taxes were still higher than they were in
17:50
1973 when the inflation started
17:56
and the economy responded.
18:00
We had Paul Voker, who was head of the Fed,
18:03
and I give Jimmy Carter great credit for appointing Volker.
18:08
And we forget
18:10
that the massive deregulation
18:13
that defined the world we live in today in transportation
18:18
and communications,
18:20
that deregulation occurred under Jimmy Carter,
18:24
and he doesn't get sufficient credit for it.
18:27
And then Reagan came in and expanded that regulation
18:30
and the energy and completed it in many of the other areas.
18:35
So the economy responded.
18:37
Inflation came down quicker than anybody had ever
18:41
anticipated.
18:44
The economy was growing at 7%
18:48
by 1984.
18:51
So the number of people
18:54
who were still focused on the deficit had gotten very,
18:58
very small.
19:00
And so the idea behind Graham Rudman was,
19:03
I had observed as a member of Congress that all the people
19:07
that wanted something from Washington were looking over the
19:11
congressman's shoulder,
19:13
letting people back home know whether they cared about the
19:16
old, the poor, the sick, the bicycle rider list went on
19:19
and on, but nobody was looking over the right shoulder,
19:24
seeing whether the congressman cared anything about the
19:27
taxpayer and our children and the future of the country.
19:31
So the idea behind Graham Ruman was
19:33
to set a limit on the deficit
19:36
and force special interest to compete against each other.
19:41
It was to bring to the budget
19:43
what the Constitution had done in checks
19:46
and balances on the different parts of the government.
19:50
And for a while at worked congress cheated on it,
19:54
and then the Supreme Court struck down the triggering
19:58
mechanism, which I had been forced to take, to get it passed
20:03
with a Democrat controlled house.
20:07
And so to get it re-triggered, we had
20:12
to agree that the new president,
20:15
whoever was elected at the Reagan, got
20:17
to decide whether to continue it.
20:19
And President Clinton was elected
20:23
and killed Gem Ruman.
20:29
And if I didn't sign, maybe I got, I hope I didn't get I
20:34
Clinton and Carter mixed up before Carter deregulated.
20:40
But in any case, it had an effect.
20:44
But our problem was, even though at the end
20:49
of the Reagan years, the tax burden was pretty much back to
20:53
where it was at the beginning
20:55
of the inflation defense was pretty well backed to
20:58
where it was there social spending,
21:02
which had been constrained
21:05
and continued to be constrained in the Clinton
21:08
administration.
21:10
And we balanced the budget three times at the end
21:13
of the clin of the Clinton administration
21:16
because we were using the peace dividend from the end
21:20
of the cold water.
21:22
And because he had controlled the growth, the growth
21:27
of social spending, and
21:28
because the economy had gotten bigger grown up relative
21:33
to the size of government, but
21:37
after that point, you had
21:40
to explosion in social spending,
21:44
and that's the source of the deficit in the debt today.
21:48
- Absolutely. So a challenging problem to, to figure out,
21:51
given the concentrated benefits
21:53
and sort of the diffuse costs spread on, you know,
21:56
future generations,
21:57
I wanna talk a bit about Graham Leach Bliley.
22:02
This is, you know, law passed in the late nineties,
22:06
you know, allowing commercial banking and investment banks
22:09
or commercial banks, investment banks
22:10
to merge undid glass Segal.
22:15
And you know, I, I think a lot of people, you know,
22:18
in the sort of the post 2008 global initial crisis
22:21
sort of plays blame on it.
22:22
I, I think it that this blame is misplaced, you know,
22:26
at some level, you know, you think about what it means
22:28
to allow commercial banks and investment banks to merge.
22:31
I mean, the trouble banks in 2008 were
22:34
actually the non-med banks.
22:35
They were the solo investment banks. Yeah.
22:36
Well, and Brothers, bear Stearns, Morgan Stanley,
22:39
the solo commercial banks of Wacovia wamu, the,
22:41
the merge banks like JP Morgan were just fine.
22:44
In fact, they were those, they were the ones providing,
22:46
you know, solvency the rest of the system.
22:48
So, you know, a lot of people, but for some reason,
22:50
Elizabeth Warren, you know, to to this day, still wants
22:53
to in Reinstitute Glass Segal.
22:56
I mean, what do you say to these
22:58
- Residents?
22:59
Yeah, well, first of all,
23:02
the subprime crisis was caused
23:05
by the federal government.
23:09
President Clinton had run for office on a platform
23:15
of using public money
23:18
to pro abusing private wealth
23:21
to promote public objectives.
23:24
But once he got elected, not even the unions were willing
23:28
to let him use their pension funds to do good.
23:32
They wanted their pension funds to do well for them.
23:36
And so he turned to HUD
23:39
and hud Department of Housing
23:41
and Urban Development set out a,
23:46
to bring down lending standards.
23:49
And so the policy involved the federal government
23:53
and regulators,
23:55
pressuring banks under an obscure law called the Community
24:00
Reinvestment Act
24:02
to make subprime loans.
24:06
And then the Congress set out a quota that got as high
24:11
as 56% of all loans,
24:16
home loans that was securitized by Freddy and Fannie.
24:20
The two government housing agencies had to be subprime
24:25
so that by the time the wheels came off,
24:29
when housing prices stopped growing in
24:32
19 67, 19 97,
24:37
when the wheels came off, 50% of all the loans
24:42
that were being made was subprime.
24:44
And these were people that when prices flattened
24:49
and started to decline, owed more on the house
24:54
and the house was worth.
24:55
And so they took the key, threw it over their left shoulder,
24:59
landed on the rug in the living room, and they walked out.
25:04
And so had a massive default.
25:07
Banks had been encouraged by government
25:11
to hold subprime loans
25:15
to hold securitized sub subprime loans
25:19
because banking regulators
25:23
counted mortgage backed securities as being
25:28
as secure as sovereign debt.
25:31
So on the balance sheet of the bank, government bonds
25:35
and mortgage backed securities were viewed
25:38
as the same degree of risk.
25:41
So since mortgage backed securities paid more
25:45
interest, which, which one do you think banks held?
25:49
They owe mortgage backed securities.
25:52
And so when the value of those securities started
25:56
to fall, it destroyed the financial base,
26:00
the world's banking system.
26:02
I was vice chairman of UBS investment banks,
26:06
then we were the best capitalized bank in the world.
26:10
We had $50 billion
26:13
of mortgage backed securities.
26:17
Any other bank in the world would've gone broke
26:21
with our balance sheet.
26:22
And we were typical.
26:24
Now you had made the point
26:26
before about what about
26:30
Graham Leach Bliley?
26:32
What had happened, by the time I had become chairman
26:36
of the banking committee, there'd been a 30 year effort
26:39
to do something about Graham, about glass.
26:44
Our competitors around the world
26:46
and banking had become an international business,
26:50
were working under different rules than we were.
26:53
We, we and Japan and Korea, which,
26:57
and we wrote their banking laws
26:59
after the war we were operating where banking
27:04
and securities
27:05
and insurance had to be totally separate businesses.
27:11
What Graham Leach Bliley allowed very
27:15
highly capitalized financial service holding companies
27:19
to do, was to own a bank,
27:23
own a security company, own an insurance company.
27:28
But they couldn't co-mingle capital.
27:31
They couldn't take capital outta the bank
27:34
to subsidize securities
27:36
or capitalize securities bids of subsidized banks
27:39
unless they paid it out as earnings within the law.
27:43
And nothing was deregulated.
27:45
Each of those entities was regulated as it was regulated
27:49
before Graham Leach Bliley.
27:51
So what happened is, when the law passed, most
27:55
of the biggest banks in the world were Japanese.
27:58
Today, most
27:59
of the biggest banks in the world are American banks
28:03
and the banks that were
28:06
Graham Leach Bliley holding companies.
28:08
As you mentioned, when you started the question
28:11
before I gave this long lecture,
28:15
those banks held up during the financial crisis
28:19
in this there.
28:21
So what really happened was
28:24
the Obama administration desperately wanted to
28:30
expand government control of the financial sector.
28:34
And so they blamed deregulation
28:39
for the financial crisis.
28:41
There had been no deregulation for the 30 years prior to the
28:46
financial crisis.
28:47
They said banks were poorly secured,
28:50
but they were,
28:52
the poor securitization was at Freddie and Fannie.
28:56
The banks had more capital than they'd had 30 years ago when
28:59
the crisis started.
29:01
But in any case, that's sort of the myth
29:04
that has been built up.
29:06
It's one of the myths we deal with in our new book,
29:10
the Triumph of Economic Freedom
29:12
to debunking the Seven Great Myths of American Capitalism.
29:17
- Fantastic. And I wanna talk to you about
29:19
that book in in just a minute.
29:21
I, I just wanna talk about,
29:22
I guess one other thing I I think is just fantastic about
29:26
your story, which is, you know, that, you know,
29:29
former Congressman Jeb Hesling, who was one
29:33
of your students at Texas a
29:35
and m, who like in in your very classroom went
29:40
on, you know, became a, you became a mentor to him.
29:44
And, and, and he went on to become a congressman
29:46
and eventually became chair
29:48
of the House Financial Services Committee in the late 2010s.
29:52
And he, he passed the, you know, fin reg, you know,
29:56
relief belt at the time that lowered the CFI standard level.
30:02
And I'm, I'm just curious, like, you know, does that kind
30:05
of lifelong mentorship really bring a lot
30:07
of fulfillment to you?
30:10
- Well, first of all, I love Jeff Penley.
30:13
He's as close to a son as I have that's not a member
30:18
of my immediate family.
30:20
But yeah, it's the only classroom in the history of America
30:24
where you had two future chairman of banking,
30:27
of the banking committee committees in the same classroom.
30:34
Yeah, I've had three people who work for me
30:38
or with students of mine have become congressmen.
30:41
I'm very proud of Jeff. He's a very good and great man.
30:46
- That's, that's wonderful. - And one of the rewards,
30:48
as you know, from academics of teaching, which I miss,
30:53
you know, I'm on my third life.
30:55
I was a college professor, I was in government,
30:59
now I'm in finance and I keep working
31:03
'cause I have a young wife who wants money
31:05
and would put me in a cheap nursing home if I tried
31:08
to quit to lie.
31:11
But I like a good life, I, I keep working
31:14
'cause I like working.
31:16
But in any case, part of the reward
31:19
for teaching is your students
31:21
or your student the rest of your life.
31:23
And so I stay in touch with a lot of my former students.
31:28
- Oh, that's wonderful. And you know, it's fantastic
31:31
that the brain trust that you built as,
31:33
as a, as a professor.
31:34
And it's also worth noting that Wendy, your wife, served
31:37
as chair of the CFTC, you know,
31:40
during the Reagan years as well.
31:42
So really quite amazing just how much economic policy
31:47
in Finch regulatory policy, you know, has been achieved,
31:52
you know, both in, in, in your household and
31:54
and amongst your students.
31:56
So really my, I tip my hat to you in in in that regard.
32:01
I wanna talk about your books and you know, I'm gonna go
32:05
and sort of in reverse order here,
32:06
and I wanna start with the triumph
32:08
of economic freedom, which you just mentioned.
32:10
I'm personally, I'm a, lemme
32:12
- Hold a picture of it.
32:13
- Oh, beautiful, beautiful.
32:14
- You can order it on Amazon
32:17
and I've already given the, the,
32:21
the royalties away, but I want people to read it.
32:27
The, the thesis of the book is that
32:31
we hold the views we hold
32:34
because of our life's experience and
32:37
because of our perception of how the world works.
32:42
And in America, that perception is built
32:46
around seven key periods in American history.
32:50
And if you go back
32:51
and look at the, the history as it is recorded
32:55
of those periods from the industrial revolution
33:00
through the two contemporary issues of poverty
33:03
and inequality,
33:05
basically the conventional view,
33:08
which is presented in the bestselling high school
33:14
history book, in the bestselling college textbook in
33:19
history, American history.
33:22
The myth is conventional wisdom.
33:25
And so what we do in the book is like
33:30
we, well, like Thomas St.
33:32
Thomas, we set out the undisputed facts and then the myth.
33:37
And we had 14 people, including some of your colleagues
33:42
at the Hoover Institute who read the transcript.
33:45
And nine of 'em said, you were,
33:49
you did too much in making the case for the myth.
33:53
I thought you were writing in support of it,
33:57
but we didn't change that.
33:59
We didn't wanna set up a straw man and knock him down.
34:02
We wanted to make the best argument they got
34:05
and then knock it down.
34:07
And I think we did.
34:09
- That's, that's terrific.
34:11
Had a true, truly inspired by Thomas Aquinas Su Summa.
34:16
And, and that's exactly how, how that,
34:18
that, you know, is written.
34:21
I'm personally a big fan of the idea
34:23
that economic freedom causes growth.
34:25
You know, the idea that strongly legal institutions rule
34:27
of law, light regulation
34:30
and, you know, light taxation, you know, allow people
34:32
to innovate and, and
34:34
and sort of by gain out of, out of the way,
34:37
by government getting outta the way, you know,
34:39
that enables economic growth.
34:40
I mean, what in your mind is sort of the, the best case for,
34:44
for economic freedom today?
34:45
I feel like there are a increasingly, you know, a lot
34:50
of, I don't wanna say yeah, to varying degrees, opponents
34:54
of, of the idea that, you know,
34:56
economic freedom causes growth, you know, that it's really,
34:59
it's, I would say it's not like even considered in ac in
35:02
academia to be like a mainstream idea.
35:06
I mean, obviously you have the first welfare theorem,
35:08
and I think that in a way kind of says that, you know,
35:11
markets, you know, lead to efficient outcomes.
35:14
And, and that I think is obviously held up
35:16
pretty well over time.
35:17
But, you know, people like, you know, STIGs would argue
35:21
that information frictions sort
35:23
of render the first welfare theorem mood
35:27
or inappropriate, I don't think
35:28
that's totally true or accurate.
35:31
But then, you know, you have these other theories of
35:33
what causes economic growth.
35:35
You have, you know, the sort of institution's view
35:38
of the world, which maybe I think economic
35:40
freedom can be embedded in.
35:41
But the challenge is just, you know,
35:43
you think about alu Robinson's, you know, theory or, or
35:47
or definition of inclusive versus extractive institutions at
35:50
some level, everything becomes an institution.
35:52
And you know, it's, it's not just about
35:54
- Free - Markets.
35:55
It becomes about, you know,
35:57
things like everything under the sun from trust to,
36:01
you know, democracy, you know, that, that everything.
36:03
And at some level people argue that government, you know,
36:06
more, you know, larger government is sort of a,
36:08
an institution too, or even regulation or things like that.
36:10
And it sort of, it comes outta at some level, it sort
36:14
of becomes a meaningless theory at some level.
36:15
But if institutions in my mind mean economic freedom, I,
36:18
I'm there or you know, these sorts of legal things, other,
36:21
you know, culture, you know, think, you know, culture
36:24
of Joel Meier's book
36:26
- Culture.
36:27
Yeah. Let me, I've got geography
36:28
- Too, but I'm curious, you know, economic freedom
36:32
as a theory of growth.
36:33
How does that stand up and and what do you say to these?
36:36
- Well, first of all, it's the only thing that stands up.
36:40
I mean, the greatest evidence
36:42
for economic freedom is America.
36:45
America's not a rich and powerful country
36:49
because most brilliant
36:50
and mentality people in the world came to live here.
36:55
They came to live here
36:56
because of the institutions of America.
36:59
But America's the greatest and richest country in the world
37:04
because it was here that ordinary people like you
37:07
and me had more opportunity
37:11
and more freedom than any other people
37:14
who have ever breathed the breath of life on this planet.
37:18
And with that opportunity
37:20
and with that freedom, we've done extraordinary things.
37:24
Critics of capitalism have been around a long time.
37:29
Karl Marx was funded by Ingles,
37:34
whose father owned two textile mills in Germany
37:38
and one in Britain.
37:41
And so from the very beginning,
37:47
Karl Marx writes about the industrial revolution.
37:50
First of all, in his genius, he was the only person
37:53
who really understood it.
37:55
And he said, it has done more,
37:59
it has unleashed more productive forces than all previous
38:03
generations combined
38:06
and has done it in only a hundred years.
38:08
That was the creative wave of destruction
38:12
of the industrial revolution.
38:14
But as Schumpeter later explained,
38:17
there was a destructive wave,
38:19
and he describes the destructive wave this way
38:23
capitalism hideously destroyed
38:29
feudalism
38:30
and its bonds that bound people
38:33
to their natural superiors
38:36
and left between man
38:38
and man, the only bond
38:41
of naked self-interest and cash payments.
38:46
Now we know naked self-interest
38:49
and cash payments as economic freedom.
38:53
Okay? What happened is it freed people
38:58
from feudalism.
39:00
It gave rise to the wage contract
39:05
people voluntarily left rural Britain
39:08
and in rural America to find a better life.
39:13
And they found it and they built from it.
39:19
America works.
39:21
And you look at the criticisms that are made,
39:26
and they're all, we're not in heaven.
39:29
We're not gonna get back in the garden of Eden,
39:32
certainly without dying then it's a question whether you'll
39:35
get there or not,
39:36
but is there any other place on earth you
39:41
would rather be?
39:42
Or is there any other time you would rather be living in?
39:46
I don't think so. I once said to my brother,
39:49
we were pulling weeds in the front yard
39:52
and I'd seen the movie Ivan.
39:55
So I said to my brother, older brother, Don,
39:58
don't you wish we'd lived in the olden days?
40:02
And he said, why would we have wanted
40:04
to live in the olden days?
40:05
I said, well, we'd lived in the olden days,
40:07
he'd been servants out here pulling these weeds.
40:11
And so he said, don't you realize that
40:14
if we'd lived in the olden days,
40:16
we would've been the servants.
40:20
We are living in the best era
40:22
that's ever existed in the best place anybody's ever lived.
40:27
And I've never forgotten that lesson.
40:29
And even though it came from a 12-year-old boy,
40:35
it is a profound lesson that it's important for us
40:39
to remember, look,
40:40
if government actually could run things better than freedom,
40:46
why didn't we tear down the Berlin Wall
40:48
to get into Eastern Europe?
40:51
Why were the Chinese starving to death
40:54
until they started adopting good policies?
40:57
And why did their growth rate stagnate when they started
41:01
adopting bad policies?
41:03
Again, it's no accident.
41:05
Freedom works
41:09
and the American system works.
41:11
Is it perfect?
41:13
No, it is better to be born brilliant
41:17
and beautiful and rich.
41:19
If you can do that, you should do it.
41:21
But being born ugly
41:26
and ordinary,
41:27
and four, they're not
41:31
disqualifications America, I'm living proof of that.
41:35
Neither of my parents graduate from high school.
41:38
My brother was the first person in my family ever
41:41
to graduate from high school, first to go to college, first
41:45
to graduate from college.
41:49
And so if Bernie Sanders is going to try to convince me
41:54
that the system's fixed it's rigged, he's going
41:57
to get up money early in the morning,
41:59
money early in the morning, the,
42:04
because the life I've lived.
42:05
And that heavily colors my view of the world.
42:09
And then the evidence, when you look at the evidence,
42:13
it's overwhelming.
42:15
I don't, my belief in economic freedom is not faith,
42:20
it's evidence, economic freedom works.
42:25
And, you know, we've got this new right wing element
42:29
and in the Republican party now that really believes
42:34
that government should decide, you know,
42:37
where investment occurs.
42:39
They can figure out these chosen people,
42:42
like in Plato's Republic, the the guardians.
42:47
These new guardians in our government are going
42:51
to figure out where growth can occur
42:53
and we're going to invest in there,
42:55
we're gonna beat the Chinese, and they're going to decide,
42:58
and then we're all going to be better off.
43:02
That's as old as, as the Greek republic,
43:07
and it's never ever worked.
43:10
Bad policies fail, not sometimes,
43:13
and not in,
43:15
in some places they fail all the time in all places.
43:20
So one of the reasons I know that America, as long
43:24
as people won't tolerate failure in government,
43:29
that America will never really be a socialist country
43:33
because socialism doesn't work.
43:38
And I don't care if you are a Democrat
43:40
or a Republican, if you deliver the goods,
43:45
the American voter throws you out.
43:48
That has been our salvation from the very beginning.
43:52
- Absolutely. I was born the, basically the day
43:55
that the Berlin Wall fell.
43:56
I was born November 11th, 1989.
43:59
And I think that basically everyone born
44:02
after in the millennial generation
44:04
and in Gen Z, you know, they, they sort of,
44:07
because they hadn't lived through the Soviet Union,
44:10
because they sort of lived through a time where, you know,
44:13
capitalism, you know, free market cap capitalism largely was
44:16
sort of the only game in town that they sort
44:19
of missed out on. You
44:22
- Know, the lesson, yeah.
44:23
- On the lesson of it.
44:24
So, you know, at some level, you know,
44:25
I feel like it's maybe the same thing with public debt too.
44:28
You know, there are these cycles where people sort of have
44:30
to relearn these, these difficult lessons of history
44:34
that you know, these, you know,
44:37
that ultimately economic freedom works
44:39
and that trying to hamper it can, can lead to in,
44:43
in a serious way, can lead to some disastrous results and,
44:47
and, you know, think the Soviet Union starvation or China
44:51
and, you know, it's, it's similarly, you know,
44:54
a terrible period of the great leap
44:57
forward and other things.
44:59
But yeah, you know, it's, it's amazing today just seeing,
45:02
you know, whether it's Mayor Menani in New York
45:05
or Senator Elizabeth Warren or Senator Bernie Sanders
45:09
or you know, a OC, how they sort of represent, I feel like,
45:13
you know, people who haven't learned these lessons yet, and
45:17
- Well look, there are a lot of people who history is full
45:22
of repeated failed experiments
45:26
and socialism has been tested
45:31
for at least 5,000 years of recorded history
45:35
and it's never worked.
45:38
But unfortunately, the birth death cycle
45:43
continually requires the teaching
45:47
of lessons in economics.
45:50
And often they're painful lessons.
45:53
It's a shame we can't avoid the cycle,
45:58
but the cycle goes on.
46:01
We're seeing the cycle in China today.
46:04
China, China rose very rapidly
46:07
by adopting market oriented systems,
46:11
but the communist party could not tolerate
46:15
genius, the ma.
46:17
And so in attacking them, they destroyed their,
46:20
their tech industry, half its equity value in a week.
46:25
And as freedom dies,
46:28
so does opportunity and growth.
46:32
This idea that I,
46:35
I guess Will Durant said it best opportunity,
46:39
freedom and equality are sworn
46:44
enemies when one lives the other dies.
46:49
If you set people free, some people are going to work hard
46:53
and be successful and some aren't.
46:57
And it is part of what you gotta accept in a free society.
47:02
And what the mayor of New York
47:05
and a OC
47:07
and Bernie Sanders, a lesson they have not learned
47:12
is that when you try
47:15
to promote artificial inequality, the only way to do it is
47:19
to kill freedom.
47:21
And it's, the trade is not worthwhile
47:24
because it makes everybody poorer
47:27
and talented people gain control of the government.
47:30
So you don't, you don't get, you don't get to them,
47:35
you just get to everybody else like me.
47:39
And so,
47:41
and that's a lesson, it's a shame, you know, why people have
47:46
to be hit upside the head with facts
47:49
to learn something is very difficult to understand.
47:52
But when the facts are out there, if you really go looking
47:56
for 'em, and what we try
47:58
to do in this last book is put it all in simple
48:02
readable English.
48:05
You read this, you'll, this is really a sort of a history
48:09
of American capitalism
48:11
and freedom in action in these seven,
48:16
in these five key historical periods
48:19
and with the two issues of poverty and inequality.
48:24
- Absolutely. And that, that segues into your other book I
48:28
wanna talk about titled The Myth of American Inequality.
48:33
You know, it won the 2024 Hayek Prize
48:36
and it was a 2022 Wall Street Journal, best book of the year
48:40
in, you know, really, you know,
48:42
since I'd say the 2014 publication
48:44
of Thomas Pickety book Capital in the 21st century,
48:48
in part named, you know, after Karl Marx's book desk Capal,
48:52
since the publication of the Pickety book,
48:56
there's been a real, I think, obsession about inequality,
48:58
particularly on the left amongst progressives,
49:02
not just in the US but really around the world.
49:04
And, you know, they point to, you know, these facts
49:08
that have been put out there by Pickety and,
49:12
and some of his co-authors that inequality's been rising.
49:14
Now I know you challenge, you know, to the extent
49:17
that Inequality's been rising,
49:19
but in my mind, you know, sort of inequality metrics aside,
49:23
you know, we should be more focused on poverty
49:24
and growth, you know, focused on absolute measures
49:27
and needs rather than, you know, relative measures.
49:31
Like, you know, whether someone's wealth makes someone else
49:34
work worse off through some sort of sort of jealous
49:37
externality or something like that.
49:39
You know, we could argue that, you know,
49:40
maybe inequality sometimes is maybe a byproduct
49:45
of something going on that's not great.
49:47
I mean, South Africa has a, you know,
49:49
high level in inequality,
49:50
but you know, that's maybe a, a product of, of many,
49:54
you know, many decades of, you know, some,
49:57
some pre you know, challenging, lack
50:00
of economic freedom, lack of opportunity Yeah.
50:03
On the apartheid system. But, you know, countries,
50:04
as you mentioned, you know, that, that are allowed
50:06
to succeed, you know, they will have inequality as well.
50:09
And, and so it sort of gets back
50:11
to this old Margaret Thatcher saying, some would rather the,
50:14
the poor B worse off provide the rich
50:16
or less rich. I'm just
50:17
- Paraphrasing that.
50:18
Well, lemme lemme respond by saying
50:21
that there are two facts everybody ought to know
50:24
and they're irrefutable.
50:27
Okay? So the first fact is
50:32
that the Census Bureau in the way it measures income
50:38
presents a totally inaccurate picture
50:41
of income distribution in America.
50:45
The Census Bureau does not count as income
50:50
any payment
50:52
where the government pays a bill on your behalf
50:56
as part of your income.
50:59
Now this didn't create much of a problem prior
51:02
to 1965 when the war on poverty came,
51:07
but now all
51:08
of our welfare programs are payments in kind.
51:12
You get a debit card and you can go to the grocery store
51:16
and buy your groceries and it doesn't count as income.
51:21
The government pays your rent with rent subsidies,
51:24
but it doesn't count as income.
51:27
The government pays your healthcare bill with Medicaid,
51:30
but it doesn't count as income.
51:33
70% of
51:35
what American middle class families spend their income on
51:40
is given to poor people, and they don't,
51:43
and the Census Bureau does not count that expenditure
51:48
as part of their income.
51:50
The Census Bureau says that the income
51:54
of the bottom 20% of income recipients
52:00
and the income of the top 20% of income recipients
52:05
that the top has 16.7 times the
52:09
income of the bottom.
52:11
But if you count transfer payments as income
52:16
to the recipients,
52:17
and you count taxes paid as loss to the people
52:22
who earn the income taxes,
52:25
they never see is deducted from their paycheck,
52:29
their ratio's not 16.7, but four to one.
52:32
Okay? Now you can say four to one's too much, it's not fair,
52:38
but there's a big difference between four to one
52:41
and 16.7 to one.
52:43
And then Pickety plays these games.
52:46
First of all, he compares
52:49
the top 1% of income murders
52:53
or one 10th of 1% to the bottom 50%.
52:57
Okay? He counts no government transfer payments as income.
53:02
He doesn't take taxes into account at all.
53:05
But then he does a final bait and switch.
53:10
He doesn't count your income if you're high income,
53:14
he counts what it would be if you sold all the
53:19
assets you own every year and paid taxes on.
53:23
Okay? So your income would be if you cashed outta your
53:27
TIAA club, you sold your house, you sold your car,
53:32
sold everything you own, paid taxes on it, every yes.
53:35
What your income would be under Pickety analysis.
53:39
Well, that's, nobody in the world measures income
53:44
that way except socialist.
53:46
You remember the ProPublica expose
53:50
where they stole the tax returns,
53:54
they had Bill Gates's tax return, they had Warren Buffets,
53:57
and they were saying how little taxes they paid.
54:00
Well, we got the data
54:03
and as it turned out, they apparently took the taxes,
54:06
they paid off the tax returns,
54:09
but they made up an income figure.
54:11
What would Warren Buffett's taxes be if he sold
54:16
everything he owned this year
54:19
and paid taxes on it?
54:21
And then they say, well, look how little he paid relative to
54:26
what he would've paid, and he sold all his assets
54:30
and paid taxes on it.
54:31
Well, you know, right? Sure.
54:34
And then picketing never says earned income,
54:38
people don't earn income.
54:40
They take it, they seize it, they're given it,
54:45
but they never earn it.
54:48
So if you,
54:51
and let me just talk about mobility a minute.
54:54
Okay? The great bulk
54:58
of Americans that are born
55:00
and grow up in the bottom quintile
55:03
of income earners work their way in their lifetime into a
55:08
higher income bracket, including 8%
55:11
that go all the way to the top.
55:14
So again, would they have been better off had they born,
55:17
been born child of Warren Buffet?
55:19
Yes, it would've been better off probably,
55:22
but not necessarily.
55:25
There are many people richer than the children
55:27
of Warren Buffett who weren't Warren Buffett's child.
55:32
But the point being, look what you can do.
55:37
Look at the opportunities that are available.
55:40
If you can put three successful generations together in
55:45
your family, you are going to be
55:48
what is called in the world we live in Rich.
55:52
Okay? It's within your power to do that now you have
55:56
to work your fanny off.
55:59
You have to do without things to accumulate wealth.
56:03
You have to transfer your values to your children
56:07
and they gotta transfer it to your grandchildren.
56:09
It is not easy,
56:12
but it is out there if you are willing to do it.
56:17
And to me, and, and there's one other thing.
56:22
If we call, we define the American dream
56:26
as doing better than our parents, okay?
56:29
Most of us do.
56:32
The gal who runs my business life named Marielle,
56:36
she just bought her first house.
56:39
She worked for me for 19 years,
56:40
but she finally bought her first house.
56:43
And so she was saying, you know, I know
56:45
what you're writing in these books is true,
56:48
but it's so hard to make ends meet.
56:51
And so I said, well, look, do this experiment.
56:54
Ask your mama to describe
56:58
to you the first house she ever bought
57:02
and then compared to the first house you ever bought,
57:06
her response, my house is nicer than any house
57:11
that my mother has ever lived in,
57:14
including the house she lives in today.
57:18
Yeah. If that's case, it's hard to make ends meet,
57:22
but the ends are way out here.
57:25
I mean, people just forget, in 1960
57:30
half of all poverty housing didn't have full
57:33
indoor plumbing.
57:35
Today 80% of poverty housing is air conditioned.
57:41
40% of people that are defined in America
57:45
as poor own their own home.
57:49
Okay? The world has changed.
57:51
When I wrote that first book with my co-authors,
57:56
I still envisioned poverty in America
57:59
as an unmarried woman with a bunch of children.
58:04
That's 50 years out of date.
58:07
The average poverty household now has between 1.7
58:12
and 1.9 members in it.
58:18
The world, if you look a little deeper,
58:21
the world looks very different.
58:24
Is it perfect? No.
58:26
But is it better than it has ever been?
58:29
And are we in the best place that anybody is in the world
58:34
Now, if you live in New York City, you chose to live there.
58:37
You could live in Texas, you could live in Florida.
58:40
But other than that,
58:42
we live in the best place at the best time in the
58:45
history of the world.
58:47
- Yeah, I, I fully agree
58:49
with you from an economic standpoint.
58:51
Yeah, I think that's, we definitely in, in the us Yeah.
58:55
You know, it's un unrivaled in,
58:58
in large part thanks to economic freedom.
59:00
You, the US has all these big, you know, tech companies
59:02
that other countries don't have.
59:04
And I think that's in part because of, you know, decades of
59:07
good, you know, economic good policies that sort
59:09
of promote economic freedom.
59:11
And, and I'm with you that, you know, I think
59:12
and equality metrics have been, you know, way overstated.
59:16
And I think really the goal should be, you know, economic,
59:18
you know, poverty alle alleviation through economic,
59:21
I I guess, you know, just talking about,
59:23
you mentioned housing a little bit, I, I guess on some
59:25
of these policy ideas that, you know, could bring about,
59:30
you know, further improvements in terms of, you know, cost
59:33
of living, you know, further reductions in poverty
59:35
and so, so forth.
59:37
You know, that really get at like these absolute measures.
59:40
You know, you know how many people are living, you know,
59:42
below a certain absolute income metric.
59:44
You know, when we talk about, you know,
59:46
the developing world, you know,
59:47
how many people are living under three, you know,
59:49
a dollar a day or $2 a day.
59:51
We sort of, if you have a constant, you know, poverty line
59:55
like some, you know, researchers put together, you know,
59:58
they found that in 1960, like
1:00:00
when the LBJ one poverty was started, 20%
1:00:03
of people live living under that poverty line.
1:00:05
Then if you use the same absolute standard, it's
1:00:07
around 2% today.
1:00:08
Massive improvements across the board.
1:00:10
But just I guess for those today
1:00:12
that young people in particular
1:00:14
who feel like housing's unaffordable,
1:00:15
what do you think about, you know, these, you know, sort
1:00:17
of pushes for land use, re regulatory reform, you know,
1:00:21
occupational licensing reform, these, these are some
1:00:25
of the things, you know, particularly on, on housing,
1:00:28
you know, it's impossible to build anything in places,
1:00:31
particularly on the coast.
1:00:33
San Francisco, la New York City, Washington dc.
1:00:37
What do you think about these, these efforts to do this?
1:00:40
I mean, it's, it's not easy given that people have to sort
1:00:42
of vote and face, well, reducing their own home values.
1:00:45
But what do you think about these sort of,
1:00:47
I'd say 21st century pushes
1:00:49
for economic freedom in sort of a new vein?
1:00:50
- Well, the look why people leaving Los Angeles
1:00:55
and New York City,
1:00:58
why are people packing up, getting, renting a U-Haul
1:01:03
and driving all the way to Texas
1:01:05
or Florida to get away from bad government?
1:01:13
If you wanna build something in Texas
1:01:16
and it is not doing any harm to your neighbors,
1:01:21
you can build it.
1:01:24
We don't have a state income tax
1:01:26
'cause we don't have a big government now.
1:01:29
We don't, we have
1:01:30
among the lowest welfare payments in the country,
1:01:34
but if you wanna work, you don't have
1:01:36
to pay income tax at the state
1:01:39
or local level in Texas.
1:01:42
So, and people vote with their feet,
1:01:46
so if they want New York to lose,
1:01:51
its productive people, they can go right on,
1:01:55
on the road their own.
1:01:56
And it appears they've made that choice,
1:01:58
at least in the short term.
1:02:01
But people will respond if you,
1:02:05
if people are free and we still are free in this country,
1:02:10
and you don't treat them what the way they think is fair,
1:02:14
they leave, they vote with their feet,
1:02:17
and that's going to continue until
1:02:22
they wake up.
1:02:25
And the problem is, of course, they're elected by people
1:02:30
who want something from government.
1:02:32
They want all these pension benefits they didn't pay for,
1:02:36
they want welfare benefits so they don't have to work.
1:02:40
And so that's driving the politics of these places.
1:02:44
And so it's going to have to get much worse
1:02:48
before it will get better.
1:02:49
And it's too bad.
1:02:51
New York is historically great city
1:02:55
and it's done great things for America and the world,
1:02:58
and it's very sad to me to see it destroyed.
1:03:02
To me, the new old New York Stock Exchange building is holy
1:03:06
ground, and I don't like to see it desecrated,
1:03:12
but you know, democracy,
1:03:16
you in democracy, you get to choose.
1:03:19
And some people choose wisely, and some people don't.
1:03:25
- It's, it's funny because I'm, I'm actually doing a move
1:03:26
myself from, from California to Texas, so I'm, I'm,
1:03:30
you know, just one, one data point in this,
1:03:33
this larger trend that's going on, you know, people who are,
1:03:36
you know, fleeing bad government for, you know,
1:03:39
for further freedom and, and, you know, greener pastures.
1:03:43
And speaking of Houston, you know,
1:03:45
Houston doesn't have a zoning code.
1:03:46
And you know, it's, it's interesting just how,
1:03:50
how much both, you know, Texas
1:03:51
and many parts of Florida, the example
1:03:53
that they provide in terms of, you know, being a, a,
1:03:55
a low taxation, stable sort of regulatory or,
1:03:59
or low regulatory sort, sort of
1:04:03
less regulation sorts of locations.
1:04:05
And they've also got much more affordable housing.
1:04:07
So really a great example and,
1:04:09
and thank you for, for saying it in, in representing
1:04:12
Texas for so long.
1:04:14
Senator Graham, it's a real honor to have you on to talk
1:04:16
- About, oh, this has been great, thank you.
1:04:18
And thank you for the good work you're doing,
1:04:21
and I'm very high on the Hoover Institute, one of the great
1:04:26
institutions in America,
1:04:29
and thank you for having me.
1:04:32
And if you hadn't read my book, the new one, the sh Triumph
1:04:36
of Economic Freedom, read it.
1:04:40
It will, it, if you believe in freedom,
1:04:44
it will empower you to make a stronger argument for it.
1:04:49
If you don't believe in it
1:04:53
and you think socialism is the way to go read it
1:04:57
and see if it changes your mind.
1:05:02
- Absolutely. I, I couldn't agree with you more.
1:05:04
I, I, I believe you know very strongly that you know,
1:05:08
it is indeed it is, you know, economic freedom that,
1:05:13
that cause growth
1:05:14
and that, you know, strong legal institutions like
1:05:17
taxation do that.
1:05:18
Definitely recommend the book as well as your other one,
1:05:21
you know, the, the, the myth of of, of American inequality.
1:05:25
Real honor to have you on Senator Graham,
1:05:27
- Thank you, I've enjoyed it.
1:05:30
- This is the Capitalism and Freedom
1:05:31
and the 21st Century podcast, an official podcast
1:05:34
of the Hoover Institution Economic Policy Working group,
1:05:37
where we talk about economics, markets, and public policy.
1:05:41
I'm John Harley, your host.
1:05:42
Thank you so much for joining us.