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Phil Gramm Says the Numbers on American Inequality Are Wrong · Liberty + Leadership

• 0:00
  SPEAKER_00: Welcome to the Liberty and Leadership Podcast, a conversation with TFES alumni, faculty, and friends who are making an impact today.
• 0:10
  SPEAKER_00: I'm your host, Roger Reed.
• 0:13
  SPEAKER_00: My guest today on the Liberty and Leadership Podcast is economist, former U.S.
• 0:19
  SPEAKER_00: Senator, author, and investment banker, Phil Graham.
• 0:24
  SPEAKER_00: Senator Phil Graham taught economics at Texas AM University for 12 years before his election to the U.S.
• 0:31
  SPEAKER_00: Congress.
• 0:32
  SPEAKER_00: He served first as a representative from Texas, then as United States Senator.
• 0:39
  SPEAKER_00: His legislative record includes a number of landmark bills, including the Graham Latta budget, which reduced federal spending and paved the way for the Reagan tax cuts, the Graham Rudman Act, which placed the first binding constraints on federal spending, and the Graham Leach Bliley Act, which modernized the nation's banking insurance and securities laws.
• 1:04
  SPEAKER_00: Senator Graham is currently visiting scholar at the American Enterprise Institute.
• 1:09
  SPEAKER_00: He's the author of two recent and excellent books, The Myth of American Inequality and The Triumph of Economic Freedom, which he co-authored with TFES longtime professor Don Boudreaux.
• 1:24
  SPEAKER_00: Senator Graham is a 2026 Bradley Prize winner, an honor I was fortunate to receive as well.
• 1:31
  SPEAKER_00: Senator Graham, thank you for joining me today.
• 1:34
  SPEAKER_01: Well, listen, thank you, Roger.
• 1:36
  SPEAKER_01: I'm very happy to join you.
• 1:38
  SPEAKER_00: Well, I look forward to talking about these excellent books and a little bit about your career and your advice for our country today.
• 1:46
  SPEAKER_00: You've spent much of your career studying and shaping economic policy, both as an economist and as a U.S.
• 1:53
  SPEAKER_00: senator.
• 1:54
  SPEAKER_00: What first drew you to the question of economic freedom and the role of government?
• 1:59
  SPEAKER_01: Well, I stumbled into economics as a formal study.
• 2:05
  SPEAKER_01: I had run out of money at the end of my first year in college and worked for 18 months in Atlanta for a bank.
• 2:14
  SPEAKER_01: And then my brother, who was stationed in Africa, gave me his car and I sold it the second day.
• 2:22
  SPEAKER_01: I had it and went back to the university.
• 2:26
  SPEAKER_01: And I at first thought I wanted to major in physics, but I had an honest professor who, when I asked about going to graduate school, said, Well, if you love physics more than anything in the world, do it, but then no jobs in physics, and you'll end up on a postdoc for 14 years.
• 2:44
  SPEAKER_01: You may never get tenure.
• 2:46
  SPEAKER_01: So I walked out of his office and I walked down to the National Science Foundation office, and there on the board was a poster of starting salaries, of new PhDs, and economics was number one.
• 3:03
  SPEAKER_01: So I thought, well, it has something to do with stock markets.
• 3:06
  SPEAKER_01: So I took the economics course.
• 3:10
  SPEAKER_01: And immediately I recognized that it explained the world I'd grown up in.
• 3:16
  SPEAKER_01: I didn't know people knew those things.
• 3:19
  SPEAKER_01: I didn't know there was a formal study of how markets worked.
• 3:24
  SPEAKER_01: I think by the time I was 15, I'd pretty well figured out that it was better to be born beautiful and brilliant and rich, but being none of those things didn't disqualify you in America.
• 3:39
  SPEAKER_01: And that the world I saw was basically a merit world.
• 3:43
  SPEAKER_01: Hard work, talent paid off.
• 3:46
  SPEAKER_01: People were successful because they made good decisions, they worked hard, they had sharp tools, as my mother called it, which is education.
• 3:56
  SPEAKER_01: And so economics made sense to me.
• 4:00
  SPEAKER_01: I became an economist.
• 4:02
  SPEAKER_01: I married an economist, and I was perfectly happy until the 1970s.
• 4:10
  SPEAKER_01: And we had a 9% inflation for nine years.
• 4:15
  SPEAKER_01: And I finally started speaking out on these subjects.
• 4:19
  SPEAKER_01: I knew we weren't running out of oil and gas.
• 4:23
  SPEAKER_01: And so I wrote an article for the Wall Street Journal.
• 4:26
  SPEAKER_01: I was asked to testify before the Senate Energy Committee.
• 4:31
  SPEAKER_01: And then I just got more involved in the debate, and suddenly I was teaching economics in Washington.
• 4:38
  SPEAKER_00: I know I first came across you when you were a professor at Texas AM, and as I don't remember the details of it, but you authored a pamphlet at the time, which I think had to do with energy policy in the oil industry.
• 4:51
  SPEAKER_00: And one of your journal articles was included in one of Milton Friedman's books.
• 4:56
  SPEAKER_00: So you'd established a name for yourself, you were doing well as a professor there, and then it was the economy that prompted you to run for Congress, was it?
• 5:04
  SPEAKER_01: I was doing a lot of consulting, and so as a result, uh my wife was teaching, I was teaching, we were more prosperous than we'd ever been in our lives and happier, but I wasn't happy about what was happening in America.
• 5:20
  SPEAKER_01: And so I started writing about it, I started speaking out on it.
• 5:25
  SPEAKER_01: So that sort of culminated in me being elected to the House in 1978.
• 5:31
  SPEAKER_00: You mentioned, as you talked about your path into economics.
• 5:35
  SPEAKER_00: It prompted a question I think we get into as we talk about your book, The Myth of Inequality, and that is, I'll just ask it now, is that American dream you reference still alive in this country for young people?
• 5:46
  SPEAKER_00: I think a lot of people are questioning whether it is.
• 5:50
  SPEAKER_00: Your book certainly answers that question.
• 5:52
  SPEAKER_00: What would you say about that?
• 5:54
  SPEAKER_01: I guess I have come about as close as anybody I know to living the American dream.
• 6:00
  SPEAKER_01: Neither of my parents graduated from high school.
• 6:03
  SPEAKER_01: My brother was the first person in my family, extended family, to graduate.
• 6:10
  SPEAKER_01: And so if somebody's going to try to convince me the system's unfair or there's no opportunity out there, they're going to have to get up money early in the morning.
• 6:20
  SPEAKER_01: Yeah, I see every evidence that people are succeeding every day in America with hard work.
• 6:28
  SPEAKER_01: And if you look at mobility, the ability of people to rise, mobility in America is still amazing in terms of the ability of people born and grow up in the bottom quintile, their chances of living the American dream, which is doing better than your parents, is overwhelming.
• 6:57
  SPEAKER_01: And the reason, of course, that so many people have and continue to succeed is that about two-thirds of all Americans today have incomes that would have put them in the top quintile of income earners fifty years ago.
• 7:20
  SPEAKER_01: So this broad base progress, broad base success.
• 7:25
  SPEAKER_01: And unfortunately, a lot of people don't recognize how rich they are and how far they have come.
• 7:36
  SPEAKER_01: The other day, my administrative assistant was telling me about how hard it was to make ends meet, and she just had bought her first new home.
• 7:46
  SPEAKER_01: So I said to her, Well, you need to get your mama to describe to you the first house that she and your father ever bought, and get her to describe it in detail and then compare it to the house you bought as your first house.
• 8:07
  SPEAKER_01: Her response was, well, my house is nicer than any house that my mother and father ever lived in, including today.
• 8:16
  SPEAKER_01: Well, you know, when her mother and father bought a house, only 20% of the houses, and it got you air conditioned.
• 8:23
  SPEAKER_01: Half of the poverty housing didn't have full indoor plumbing.
• 8:28
  SPEAKER_01: It's unfortunate that we forget.
• 8:31
  SPEAKER_01: I go back, visit the town I grew up in, and I threw the newspaper in the richest part of town, and I look at those houses that to me were manteed when I was growing up as a kid, and they're basically upper middle income, middle income housing today.
• 8:52
  SPEAKER_01: So I think that this idea that people aren't progressing, the facts don't bear it out, the ability of our wants to always exceed our ability to produce, always generates this situation, which for the economy and maybe for life itself is good, is people are never satisfied.
• 9:19
  SPEAKER_01: And uh that's good.
• 9:21
  SPEAKER_01: There's no reason we should be.
• 9:23
  SPEAKER_01: We're free, we have broad-based, virtually unlimited opportunity.
• 9:28
  SPEAKER_01: Why shouldn't we be satisfied?
• 9:30
  SPEAKER_00: In your book, The Myth of Inequality, you take on the mismeasurements that we see of many of these things, like inequality.
• 9:40
  SPEAKER_00: You talk here about the Census Bureau and their measurements of poverty, and that they almost entirely ignore transfer payments.
• 9:47
  SPEAKER_00: There are over a hundred programs you cite that transfer money to people in that lower quintile or the lower two quintiles.
• 9:55
  SPEAKER_00: And that's left out of the calculations of the Census Bureau when they look at poverty and inequality.
• 10:02
  SPEAKER_00: They also ignore, as you point out, the taxes paid by working people and people in the upper reaches of the income earning scales.
• 10:11
  SPEAKER_00: I think you cited there that about 85% of taxes are paid by the top 40% of earners.
• 10:16
  SPEAKER_00: And it gives a very distorted picture of inequality and poverty in America.
• 10:21
  SPEAKER_00: Could you describe that problem in a little more clarity than I just gave it?
• 10:25
  SPEAKER_01: In 1947, the Census Bureau, in trying to simplify it with what were then relative primitive tools of surveying, defined income as the receipt of cash or cash equivalent.
• 10:43
  SPEAKER_01: And there were very few fringe benefits.
• 10:46
  SPEAKER_01: Welfare payments were made in cash or cash equivalent.
• 10:51
  SPEAKER_01: But when the war on poverty came in 1965, almost every program was a payment in kind.
• 11:01
  SPEAKER_01: You got a debit card which you can take to the grocery store and buy groceries, and the government pays the bill, but you don't get cash, so they don't count food stamps as income for people that get food stamps.
• 11:18
  SPEAKER_01: Medicaid where the government pays your medical bills.
• 11:22
  SPEAKER_01: They don't count Medicaid as income because you're not getting cash.
• 11:27
  SPEAKER_01: Housing subsidies, where government pays for your housing, they don't count as income.
• 11:33
  SPEAKER_01: So a middle class family spends most of its money on housing, health care, and food, and yet lower income people who get those benefits from the government don't have that counted as part of their income.
• 11:52
  SPEAKER_01: 88% of all transfer payments, federal, state, and local, are not counted as income.
• 12:01
  SPEAKER_01: So the Census Bureau may say that poverty income is say twenty-nine thousand dollars, but if you add up the value of all the transfer payments, it's over sixty-five thousand dollars.
• 12:17
  SPEAKER_01: And the census says the ratio of the top quintile income is sixteen point seven times the bottom quintiles.
• 12:29
  SPEAKER_01: But if you count transfer payments as income gained and taxes paid as income lost, the ratio's four to one, not sixteen point seven to one.
• 12:43
  SPEAKER_01: Now you can say four to one's too much, but it's a totally different debate.
• 12:48
  SPEAKER_01: And nobody disputes these facts.
• 12:52
  SPEAKER_01: I've tried to get the administration to, through executive order, to require the census to count transfer payments as income and take taxes into account as income lost.
• 13:09
  SPEAKER_01: And I have not yet succeeded in getting that done.
• 13:13
  SPEAKER_01: Now I will say that the book has had a very substantial impact because almost never now does anybody write an article about inequality or poverty that they don't mention the not counting of transfer payments and the counting as income.
• 13:34
  SPEAKER_01: So we're beginning to change the public debate.
• 13:38
  SPEAKER_01: And obviously it's important.
• 13:41
  SPEAKER_01: The Bible says you shall know the truth, and truth will make you free, but doesn't tell you how to find the truth out.
• 13:48
  SPEAKER_00: Today in Reuters, it says U.S.
• 13:50
  SPEAKER_00: poverty rate dips to lowest on record, Cetsus Bureau says.
• 13:55
  SPEAKER_00: So even with the flawed measurements and the fact that they've ignored what you've pointed out in this book, they see poverty dipping, which is encouraging.
• 14:06
  SPEAKER_00: Why do you think it is that there is so much focus on inequality in our society?
• 14:14
  SPEAKER_00: Is it because of a misunderstanding of what it is, or is it deeper than that that it's tied into this appeal of socialism and hatred of the rich that we see in our country?
• 14:26
  SPEAKER_01: There's a focus on poverty because poverty in America, the land of opportunity, the land of milk and honey, the closest to Eden we'll get on earth.
• 14:40
  SPEAKER_01: Poverty seems so out of place here.
• 14:43
  SPEAKER_01: In terms of poverty, if you count all transfer payments, you've got less than 2% of the population that would qualify by definition of poverty.
• 14:55
  SPEAKER_01: And they're basically people that in many cases have physical or mental problems.
• 15:02
  SPEAKER_01: They often have alcohol or dope problems.
• 15:07
  SPEAKER_01: And the tragedy is that most welfare payments now go to people who aren't poor.
• 15:14
  SPEAKER_01: And we are not reaching the people who are poor in America.
• 15:20
  SPEAKER_01: In terms of inequality, I think it's a combination of factors.
• 15:26
  SPEAKER_01: I think you have these gross distortions.
• 15:29
  SPEAKER_01: And I'll just give you two examples.
• 15:32
  SPEAKER_01: ProPublica had stolen tax data, and there was a big expose about how these very rich people paid almost no taxes.
• 15:43
  SPEAKER_01: Well, when we looked at the data, they were apparently using taxes that were actually paid, that they got from the tax forms that were stolen, but they weren't using income.
• 16:00
  SPEAKER_01: They instead were estimating income by estimating what you would have gotten had you sold all the assets you own every year.
• 16:11
  SPEAKER_01: Whereas you can imagine, Warren Buffett would have quite a substantial income and on that basis would be paying relatively little tax.
• 16:23
  SPEAKER_01: And then Pickety, the famous economist, uh socialist, French economist, that nobody's read, but everybody's heard of, his analysis is even worse.
• 16:38
  SPEAKER_01: He doesn't count any transfer payments as income.
• 16:42
  SPEAKER_01: And he makes up an income figure based on asset sales.
• 16:48
  SPEAKER_01: And so you get a complete distortion, and then he compares the top one-tenth of one percent to the bottom 60% of income earners.
• 17:02
  SPEAKER_01: And it is true that there are people in America who are very rich, and we're going to have more of them because the power of ideas now can be converted into money and sold on the world market almost instantaneously.
• 17:24
  SPEAKER_01: Take Elon Musk, richest guy in the world.
• 17:28
  SPEAKER_01: I will still work.
• 17:29
  SPEAKER_01: I have a young wife and she wants money, and she put me in a cheap nursing home.
• 17:34
  SPEAKER_01: If I quit working, it's a lie, but I like telling it.
• 17:38
  SPEAKER_01: So I had to have an internet and I live in the country.
• 17:41
  SPEAKER_01: So they had all these wires in my attic, cost a fortune, and it wasn't very good.
• 17:49
  SPEAKER_01: And so Elon Musk comes out with a little satellite that you go out and screw on the corner of your house and run a wire in, and it cost about one-tenth my old system, and three times as good.
• 18:05
  SPEAKER_01: Elon Musk is rich, but his product made me better off.
• 18:11
  SPEAKER_01: So how am I somehow worse off because he's rich?
• 18:16
  SPEAKER_01: I'm better off because he's rich.
• 18:19
  SPEAKER_01: And Bill Gates, he owned 7% of Microsoft at one time.
• 18:25
  SPEAKER_01: But who owned most of the rest of Microsoft?
• 18:29
  SPEAKER_01: Your pension fund.
• 18:31
  SPEAKER_01: There's not a broad-based pension fund in America that doesn't know Microsoft.
• 18:36
  SPEAKER_01: And so he made us richer while he was getting richer.
• 18:41
  SPEAKER_01: There are estimates that the people who create wealth end up with a very, very small portion of it.
• 18:51
  SPEAKER_01: Because to get to the top of the mountain, you gotta have a lot of people help you get there, and they share in the benefit.
• 18:59
  SPEAKER_01: And then all of society shares in it.
• 19:02
  SPEAKER_01: So I guess you can have a view of the world that says, as long as you have more than me, I'm gonna be miserable.
• 19:12
  SPEAKER_01: But I don't think it's the view most people share.
• 19:16
  SPEAKER_01: You know, I want to be happy and prosperous, but the fact that somebody's richer than me is great.
• 19:24
  SPEAKER_01: I don't have a problem with it.
• 19:26
  SPEAKER_00: Envy has been around since the Garden of Eden.
• 19:29
  SPEAKER_01: And it's destroyed more societies than any other force from the very beginning.
• 19:36
  SPEAKER_00: One statistic in your book I found very telling was the difference between the Census Bureau's stats on income in comparison to the Bureau of Labor Statistics statistics on consumption.
• 19:48
  SPEAKER_00: And households that had income of an average of$13,258 had consumption of over$26,000.
• 19:57
  SPEAKER_00: So that tells you there, I think just on the surface, there's something wrong with the way the Census Bureau is measuring things.
• 20:04
  SPEAKER_01: I had to say that I was skeptical about census numbers for a very long time.
• 20:12
  SPEAKER_01: But the ultimate thing that convinced me to look far more deeply into the problem was the statistic that you quoted.
• 20:22
  SPEAKER_01: And it also shows that high-income people uh consume a fairly small portion of their income.
• 20:32
  SPEAKER_01: Of course, it's not adjusting for taxes.
• 20:35
  SPEAKER_01: So the 42% they pay in federal, state, and local taxes, that's as if they have it and they're saving it, but of course it's gone.
• 20:45
  SPEAKER_01: I was giving a presentation on this subject at Harvard, and a professor who was a specialist in poverty asked the first question.
• 20:59
  SPEAKER_01: So he said, Well, those of us who work in this area know these numbers.
• 21:06
  SPEAKER_01: And so another professor in economics says, Well, if you know this, why the hell ain't you told anybody?
• 21:14
  SPEAKER_01: Yeah.
• 21:15
  SPEAKER_01: Anyway, I tell you another, I mean, people need to understand that definitions and numbers affect the story you're telling.
• 21:26
  SPEAKER_01: For example, a decision was made as to how to count programming as a service or as manufacturing.
• 21:39
  SPEAKER_01: So if you're a programmer, are you in the service industry or the manufacturing industry?
• 21:47
  SPEAKER_01: And maybe I'm exaggerating, but I would be willing to bet good money that if you buy a top end suburban, almost half the cost is in gadgets.
• 22:00
  SPEAKER_01: And most of those are made by subcontractors, and they're not counted as being in manufacture.
• 22:08
  SPEAKER_01: So again, it creates a distorted picture.
• 22:12
  SPEAKER_01: Now, it is true that the number of jobs in manufacturing, like the number of jobs in agriculture, have declined because of improved technology, and will continue to decline no matter what kind of policy we adopt in terms of trade.
• 22:31
  SPEAKER_01: And it's part of two forces.
• 22:34
  SPEAKER_01: One, a great increase in our ability to produce, which is a blessing, not a curse.
• 22:42
  SPEAKER_01: And secondly, the fact that people, as their income goes up, want to spend more of their income on services rather than manufacturing.
• 22:54
  SPEAKER_01: And sadly, people get confused in thinking, well, we're losing jobs.
• 23:02
  SPEAKER_01: I once tried to explain to someone in the administration that my mama left a tenant farm in 1940 to go to work in the Eagle and Phoenix Mill in Columbus, Georgia.
• 23:15
  SPEAKER_01: And met my father there who had come south to for the Louisiana maneuvers.
• 23:20
  SPEAKER_01: And she spent much of her life eliminating two jobs in the cotton mill.
• 23:27
  SPEAKER_01: My job and my brother's job.
• 23:30
  SPEAKER_01: And why in God's name would we want to bring those jobs back?
• 23:37
  SPEAKER_01: Why would you want to make shirts when you can buy them for a third of the price that it costs you to make them?
• 23:47
  SPEAKER_01: It makes absolutely no sense.
• 23:50
  SPEAKER_01: But much of our politics is driven by things that don't make any sense.
• 24:12
  SPEAKER_00: This administration has been enamored with tariffs.
• 24:16
  SPEAKER_00: One justification has been to bring back manufacturing jobs, and I think you've just done a good job of dismantling that myth that our manufacturing output is as close to as high as ever.
• 24:28
  SPEAKER_00: It's just that we become so productive we don't need as many people to produce rising amounts of manufactured goods.
• 24:35
  SPEAKER_00: But let me ask, uh shift a little toward the fears people have that AI is going to take away everyone's jobs.
• 24:42
  SPEAKER_00: Do you fear AI from the standpoint of the employment side of that question?
• 24:48
  SPEAKER_01: Let me talk about the Industrial Revolution a minute.
• 24:52
  SPEAKER_01: If people had consumed in 1900 the same amount of goods they consumed in 1830, when the Industrial Revolution shifted into high gear, we could have produced everything that was consumed with maybe 25% of the labor force, and 75% of the people would have been unemployed.
• 25:20
  SPEAKER_01: By 1900, consumption had exploded.
• 25:25
  SPEAKER_01: We had discovered products that didn't exist in 1830, and the ability of the prior to the Industrial Revolution, the ability of people to procreate exceeded their ability to produce, and it produced a Malthusian world where for a thousand years people lived like their grandparents, a hard scrabble life.
• 25:54
  SPEAKER_01: In the Industrial Revolution, our capacity to produce exploded.
• 25:59
  SPEAKER_01: As Karl Marx said, the Industrial Revolution unleashed more productive forces than all other generations in history combined.
• 26:09
  SPEAKER_01: And it did it on only 100 years, he said.
• 26:12
  SPEAKER_01: But it also produced a situation where people wanted more things.
• 26:19
  SPEAKER_01: The ability of our wants to exceed our ability to produce is something that history has never really been able to challenge.
• 26:30
  SPEAKER_01: So my guess is with AI we will be able to produce what we produce today with fewer people.
• 26:37
  SPEAKER_01: But we will want more things that more people will need to produce.
• 26:44
  SPEAKER_01: And so it's not something that I think we should fear.
• 26:49
  SPEAKER_01: The Industrial Revolution changed everything in the world.
• 26:53
  SPEAKER_01: And we not only survived that, but we prospered.
• 26:58
  SPEAKER_01: Going back to Karl Marx, he talked about the Industrial Revolution having destroyed the old feudal system where man was basically looked after by his superiors and left a world where the only relationship between man and man was special interest and cash payments.
• 27:24
  SPEAKER_01: Now, we call that economic freedom, but Karl Marx didn't have much confidence in people in their ability to take care of themselves.
• 27:35
  SPEAKER_01: And I think history proved that to be wrong.
• 27:39
  SPEAKER_01: And so will AI mean change?
• 27:41
  SPEAKER_01: Yes.
• 27:42
  SPEAKER_01: Will we be able to cope with it?
• 27:44
  SPEAKER_01: Yes.
• 27:45
  SPEAKER_01: And don't forget, every month, this to me is one of the most remarkable statistics that I know.
• 27:52
  SPEAKER_01: Every month, five million people are either laid off or quit their jobs every month, and on average 5.1 million get new jobs.
• 28:06
  SPEAKER_01: We call that churn in economics.
• 28:09
  SPEAKER_01: And no other society in history comes close to matching it, which is why our system is so much better.
• 28:17
  SPEAKER_01: And preserving that system is critical because, you know, we're not the richest and most powerful country in the world, because the most brilliant intelligent people in the world live here.
• 28:30
  SPEAKER_01: We're the richest and most powerful country in the world, because ordinary people in America can do extraordinary things.
• 28:38
  SPEAKER_01: The system is everything.
• 28:41
  SPEAKER_01: You know, people look at these statistics and there's certainly nothing to celebrate.
• 28:46
  SPEAKER_01: But you've got 46% of Chinese students achieving at the level that we have 8%, because our education system has failed us.
• 28:57
  SPEAKER_01: But do I believe that means they're going to dominate the world?
• 29:02
  SPEAKER_01: No.
• 29:02
  SPEAKER_01: Because it's the system that works.
• 29:07
  SPEAKER_00: Well, and you do touch on the need to improve our education system in here as well as other reforms that are necessary if we want to keep the American dream alive and continue to raise people out of poverty.
• 29:19
  SPEAKER_00: Let me conclude with just getting your thoughts about why is it you think these surveys seem to show that the discredited and failed ideas of socialism are suddenly appealing to young people?
• 29:31
  SPEAKER_00: And of course, we've seen it in the through the electoral system as well, that some Democratic socialists have been gaining elective office.
• 29:40
  SPEAKER_00: Do you have some thoughts on either why that is or what we should be doing to counter it?
• 29:44
  SPEAKER_01: One thing we know about socialism is that it doesn't work.
• 29:49
  SPEAKER_01: And so it's going to fail and disappoint a lot of people and waste a lot of resources.
• 29:57
  SPEAKER_01: I think part of it is those people like me who defend our system tend to defend it in terms of efficiency, production, uh, growth in income.
• 30:14
  SPEAKER_01: And I think there are people who are idealists who want more, in the sense that you don't go out and die for efficiency.
• 30:25
  SPEAKER_01: You go out and die for freedom.
• 30:27
  SPEAKER_01: And I think what we often leave out is our system is great because the consumer decides what they spend their money on, not the government.
• 30:41
  SPEAKER_01: You know, we have these socialists on the right now who say, well, letting consumers decide maybe we should focus on jobs and not consumer welfare.
• 30:56
  SPEAKER_01: And that sounds, you know, it doesn't sound that bad until you say to them, well, who's gonna decide which jobs?
• 31:05
  SPEAKER_01: And that's when they say, Well, I am and so Plato's Republic, the guardians, the smart people are gonna decide for us.
• 31:16
  SPEAKER_01: The real things of value come from economic freedom.
• 31:22
  SPEAKER_01: And economic freedom is so vital because political freedom can't survive if you're not secure in your own personal property and your own ability to take care of yourself.
• 31:40
  SPEAKER_01: If you're dependent on government, your freedom starts to diminish.
• 31:46
  SPEAKER_01: And so the things that really matter are the things that we're for.
• 31:52
  SPEAKER_01: We just are not doing a good enough job of explaining that to people.
• 31:57
  SPEAKER_01: Partly that's our fault.
• 31:59
  SPEAKER_01: Idealism exists in every generation and it's a wonderful thing.
• 32:06
  SPEAKER_01: I don't want to do away with idealism.
• 32:08
  SPEAKER_01: We just need to explain better to people that the highest ideal is freedom, and that when government is deciding things, your freedom diminishes.
• 32:22
  SPEAKER_01: Now, the system becomes less efficient, you're not as rich, you're not there's not as much opportunity, but the really telling thing is freedom on all these issues I talk about, at the root of them.
• 32:39
  SPEAKER_01: I mean, take trade.
• 32:41
  SPEAKER_01: We pay twice the world price for sugar because of a quota, so that 3,400 people can be rich producing sugar.
• 32:53
  SPEAKER_01: Who gives government the right to do that?
• 32:56
  SPEAKER_01: We take food out of the mouth of children and give it to people who have favor with the government.
• 33:03
  SPEAKER_01: It's a takings.
• 33:05
  SPEAKER_01: It violates my rights.
• 33:07
  SPEAKER_01: That's the argument people don't hear.
• 33:11
  SPEAKER_01: And it's one that we need to make more often.
• 33:14
  SPEAKER_00: We're trying our best at the Fund for American Studies, as you know, to try to educate the rising generation through our high school and college programs, teaching them the economic way of thinking.
• 33:26
  SPEAKER_00: I do recall a professor of mine, Ben Rogie at Wabash College, who used to say that free markets, free enterprise, capitalism, it was the most productive system out there.
• 33:37
  SPEAKER_00: But he said even if he didn't believe that or was convinced it wasn't, he'd still support it because it's the only one consistent with the moral foundation of freedom that he believed in.
• 33:48
  SPEAKER_01: And that point is never made in most economics classes.
• 33:53
  SPEAKER_01: And it is the telling point, again, because people don't get passionate about efficiency, except business people who are going to succeed or fail by becoming efficient.
• 34:08
  SPEAKER_01: But they do get passionate about freedom.
• 34:12
  SPEAKER_01: And they need to know we deliver the goods on freedom.
• 34:18
  SPEAKER_01: The socialists on the right and left take it away.
• 34:22
  SPEAKER_00: Thank you very much for joining me.
• 34:24
  SPEAKER_00: Thank you for your books, The Myth of American Inequality and the Triumph of Economic Freedom.
• 34:30
  SPEAKER_00: They provide the facts to support our free society, and they provide moral arguments and arguments based on freedom.
• 34:39
  SPEAKER_00: So thank you, Senator Graham.
• 34:40
  SPEAKER_01: And you can order them on Amazon.
• 34:44
  SPEAKER_01: So go on Amazon and buy a copy.
• 34:47
  SPEAKER_01: The first one's now adding paperback.
• 34:50
  SPEAKER_00: With new material and two new chapters, I believe.
• 34:55
  SPEAKER_00: They're both excellent.
• 34:56
  SPEAKER_00: Congratulations as well to your co-authors.
• 34:58
  SPEAKER_00: Good to talk with you today.
• 34:59
  SPEAKER_00: Thanks.
• 35:00
  SPEAKER_00: Thank you.
• 35:02
  SPEAKER_00: Thank you for listening to the Liberty and Leadership Podcast.
• 35:05
  SPEAKER_00: If you have a comment or question, please drop us an email at podcast at tfans.org.
• 35:12
  SPEAKER_00: And be sure to subscribe to the show on your favorite podcast app and leave a five star review.
• 35:19
  SPEAKER_00: Liberty and Leadership is produced at Podville Media.
• 35:22
  SPEAKER_00: I'm your host, Roger Reim, and until next time, show courage in things large and small.