Vegas. What is freedomfest . The intellectual entertainment capital of the world. Oscar goodman the former mayor says this is the most unique event in las vegas because usually las vegas is about entertainment and so forth. We are a renaissance gathering where we talk philosophy, history, science and technology, healthy living, music and dance, a little bit of everything, liberal arts, education. We have over 300 speakers, we have many authors, where subtitles is great ideas, great books and great thinkers. We are one of the few organizations that have a conference where the center of our exhibit hall is a book or. We sell people hundreds of books at freedomfest. We are delighted to have booktv as part of the freedomfest. Host what is the political philosophy . Guest we attract libertarian and conservative audience. We have a lot of wealthy investors and it is hard to pinpoint political investors are. Two years ago we had donald trump who came at the last minute. He appeared 711 in 2015 so his lucky day because his poll numbers were down. The Media Coverage for donald trump was incredible at freedomfest and i was shocked by the Audience Response to donald trump. I expected a pure libertarian audience which would have serious reservations about what he said about immigrants, mexicans, the wall. Libertarians tend to be more openminded in building bridges rather than walls but at least half the audience gave donald trump a standing ovation. I was in shock. We have an eclectic audience. We like to do a lot of debates. I mentioned paul krugman and steve moore. Paul krugman convinced quite a few people to change their minds. I dont like to think of ourselves in a political way. We discourage from using the terms left and right which i think these are divisive terms. They are terms for smearing people you dont like. We like to take a more objective stance. All our debates are formal debates so we discourage talking over each other and yelling at each other because it is not who is right but what is right. What is the solution to our problems rather than this is the republicans or this is the democrats. We have a crisis so we have several sessions on health which we dont care who proposes it but we have Serious Problems and we want to resolve them. Host and economist arthur thanks paul krugman is a classic liberal economist. Do you agree with that . Is a liberal economist . Guest no. Classical liberal would be in the adam smith mode. Krugman is definitely a keynesian. Adam smith advocated sound money, antiinflation Gold Standard type of policy, very limited government, laissezfaire is the french said. A system of natural liberty, balanced budgets, free trade. Krugman would be more or less a free trader, most economists are but not an advocate of balanced budgets especially during recessions. He is more of a keynesian in that respect, more than inflation is to, more than interventionist. Im curious, did they give a reason why krugman . Host we were talking about Milton Friedman. I think it was he on chicago. Said that he thought paul krugman would be more in the Milton Friedman camp than a libertarian. Guest we had lanny here to debate steve moore and lanny is an interesting person because his background different classical economics. John stuart mill is his favorite economist. He has written a biography friedman. You would think he would be in that camp but he has drifted. In santa monica or santa barbara, he teaches there. He has been affected by the purple koolaid a little bit. In favor of a progressive tax, rather high progressive tax, Milton Friedman and so on, skeptical of progressive tax as am i and the supply side in general but the idea of transferring wealth from the private sector to the public sector, i cant see how that would be beneficial. I question lannys for them of how he is seeing things these days. Host you mentioned sound money. What is that to you . Guest you need a Monetary System that imposes discipline on central planners. How much does it cost . We have paper money. A lot of paper money. A 20 bill with Andrew Jackson on it but it costs 3 to mint that. To physically, that is the cost of production and 100 bill, same thing, 3. Or 0. 03, i am sorry. That was the liberty bell, by the way. People are ringing it how often they have been to freedomfest. If you have been there ten years they will ring a ten times. It is 0. 03 no matter what the bill is. You would want to print one for dollar bills, cost 0. 03, get more bang for the buck and need to provide discipline and the discipline, got this in my other back pocket, gold. Host real gold . Guest that is a mexican, 1. 2 ounces of gold. Host how much is this worth today . Guest 1500, maybe more. I keep this on me despite donald trump. It is mexican. Host are you not a fan of the current president . Guest no. I think like would be a much better choice. I like some of the things donald trump is done, shaking up the system and that sort of thing but his negative comments on immigration and trade are totally out of the mainstream of what we economists have found to be eternal truths, free trade is good leader ben franklin said no country was ever ruined by trade. If you have individuals who have lost jobs that they hopefully discovered new jobs and most have. More open borders, we are more a believer in building bridges than walls. Host do you think nafta is a good system . Do you think the tpp should have been approved . Guest absolutely. Anything that reduces barriers between countries is beneficial and this myopic view of America First and so forth economically make sense perhaps but from an economic point of view we need to be i will quote ben franklin. The policy of america should be commerce with and war with none. Very idealistic but at least on the trade side open borders in terms of trade is a superior policy than the view, buy American Products first. You buy the best product at the cheapest price and let people decide. It is all about freedom, that is what freedomfest is about, free choice and not imposing your view of what a person should buy. If you want to buy american that is fine but dont tell other people i have to buy american. Host bringing manufacturing back to the United States, is the freedom proposal economically viable proposal . Guest i teach economics at Chapman University and i show my students all the Manufacturing Products america still produces and exports. We are very much manufacturing when it comes to turbines, automobiles, all kinds of scientific instruments. It is fun to go down the list of all the things america produces in exports was we even export oil. We dont just import oil we also export oil and oil products. This idea that manufacturing is dying in america is a myth. Theres lots of dynamics going on. It is true that our government has imposed a lot on the local, state and federal level, incredible regulations that put us at a disadvantage from trade. I wouldnt mind seeing those reduced so we are on an even playing field. Host from an economist point of view why are there rusted out factories in the northeast and midwest, you have seen them as well, pretty stark. Host there is always a transition barrier but akron is an example of the rustbelt that is totally transformed itself and you do not see the problems you see in detroit and other rust belt areas because government policy was very activist in encouraging other Information Technology and other new industries to come into akron, ohio. It is a Great Success story but the media doesnt play that up like they should but i bring it up to my students to let them know theres a transition period. Government has to be active to make sure you dont just sit on your laurels and say it will come together on its own. Host you talk about the transition period. At some Point Industries in your view get overregulated and factory owners and producers moved out . Guest there is an element of that and new competition came in because we have a fairly freetrade environment. For the automobile industry, textile industry, cheap labor produced products with good technology, able to find a market in the United States and it decimated the clothing industry. Lets not sugarcoat the problems we had. We did lose jobs and so on but as i tell my students, labor, when you look at labor, capital, land and factors of production, which is the most flexible . Which can be retrained . Attractor or an oil rig . When the demand drops, what can you do, what is the alternative other than melting down is machinery . They sit idle but labor can become temporarily unemployed that you can be retrained, get new education, go back to school. All of us are flexible heterogeneous as we say in economics, labor is extremely flexible. Unemployment can disappear fairly quickly if we are quick enough to retrain and reeducate our people. Host what we heard about in the past campaign, income any quality, shrinking middle class. I those serious concerns . The shrinking is moves that they moved to the middle class but if they dropped down into a poor area, that could be a problem. You have to be careful with income and wage statistics. I focus on quantity, quality and variety. Of goods and services. People say wages have stagnated for 20 years. Is that true for quantity, quality and variety of goods and services . Know. You have seen an increase in all three of those rather dramatic and we have people using product they didnt have 20 years before and people doing away with products they have now. There is a dynamic going on in the economy that is very positive. Living is rising as wages may be stagnating. Host your accomplishments and economics, he talks about a term called gross outcome. What is that. And since the 1940s, we used one statistic Gross Domestic Product, Gross National product. A lot of conceptions about what that is. To use Gross Domestic Product gdp is a major of the economy, measuring final output. Clothing, suits, drinks, watches, the pen you have in your hands. That is counted in gdp. That is as it should be. The supply chain, what got you all the stages of production, in the intermediate stages, what is behind the grocery store. The work not counted in gdp is left out, the supply chain is left out of gdp and this is a shock to most people that what we have is a narrow view of what the economy is. To rent out the supply chain is bigger than gdp itself because there is a lot of buying and selling as you move the production process along and it turns out a huge sector in the economy. Retail sales, final sales is 20 of employment. Most people are employed in a factory stage or wholesale stage, the mining stage and so forth. Gross output is i wrote a book called structure production in 1990. An Academic Book that was recently updated, because the bureau of economic analysis, part of the Commerce Department put out quarterly gdp statistics. In 2014 under i would like to see i had some influence, they decided to publish gross output on a quarterly basis like gdp. It is top line and bottom line. If you take an accounting course or familiar with finance on wall street when a publicly traded Company Comes out with earnings it is earnings report, top line and bottom line, the top line is total Sales Revenue and the bottom line is profits earnings. Every publicly traded company when they release these quarterly reports have the top line and bottom line, sales and earnings, both are critical and no analyst would be worth his salt the didnt look at both because you dont get earnings without sales. They are integral. Low and behold, as i advocated we need the same topline bottom line for National Income accounting. What is gross output . It measures spending at all stages of production all along the way and they just released the First Quarter 2017 gross output statistics today, and it turned out to be 41 trillion, more than double gdp. They had to adjust that statistic a little bit because the government statistic does not include, leaves out some wholesale retail trade. I call it adjusted gross output or gao and it is 41 trillion so gdp is 19 trillion. Host gdp in this sense is the bottom line, more like the profits. Guest what we call gross profit because it includes other aspects. That is the idea. So in the 21st century economists have finally caught up with accounting and finance which have been doing this for years and we have topline and bottomline accounting but they dont come out at the same time but the they are indicating they will issue both gross output in gdp at the same time so just like the Financial Firms issue every quarter topline and bottomline so National Income accounting, the federal government will have her every quarter topline growth output, bottomline gdp. Is a real breakthrough and one of the reasons this is an important statistic, with gdp using it as a measure of the economy what is the biggest sector of the economy, when you hear all the time Consumer Spending. 70 of gdp in the consumer drives the economy but i argued all along it is business the drives the economy. Consumer spending is the effect, not the cause of prosperity. Because of prosperity is innovation, entrepreneurship, capital investments, the supply chain. We have our own statistic as a supply side or, gdp is more demand, speak her, government demand and business demand but the supply chain, turns out business spending as a percentage of gross output is 60 of the economy. I argue based on my work and structure of production that business spending is the elephant in the room. Consumer spending is 30 of the economy, not 70 . Growth output, all activity, not just final output, i hope it is pretty clear. My students get it especially business students when i say topline bottom line, they get a just like that. The economist a little slow but they are finally getting it. Host in a sentence or 2 what is the supply side of believe . Guest the supply side or believes the key to prosperity is innovation, entrepreneurs a bishop, savings, frugality. I actually think ben franklin said it best, one of my favorite founding fathers, three virtues. If you adopt these virtues you can be eminently successful as a family, as a business and as a nation as a government. Those principles are industry, drift and frugality, prudence, prudent behavior. If you work hard and you are productive but you dont waste your money, you are frugal, thrifty, live within your means and prudent with your investments and spending patterns, cant help but be successful as a family and the nation. This is an adam smith, ben franklin classical economics concept but unfortunately we have lost the supply side view of the world and it is more Consumer Spending, demand and the more Consumer Spending the more debt you go into, the better off you are. We shifted away from traditional views which i espouse. Not to say keynesian economics hasnt provided an important contribution. We have learned how to deal with recessions, but during the recovery, during normal times of Economic Growth we need to encourage industry, drift and prudence. If you look at the last administrations, democratic and republican, a lot of irresponsible spending going on. All economists agree you should have a balanced budget but during bushs era, he never ran a surplus, never did except the first year, and obama didnt improve matters that much either. We got to live within our means, government needs to be encouraging entrepreneursship and cant do it by doddfrank and obamacare which provide layers and layers and layers of bureaucracy. It is mindboggling. Not a Single Community bank has been created since doddfrank. There used to be dozens of Community Banks providing benefits to local communities. Not a single one has been created. I mentioned to the labor secretary under obama, not familiar with that statistic. Should be. Host somebody picked up a structure of production and is not an economist will they understand this book . They would understand the introduction but it is fairly heavy, and Academic Work meant to be written to economists. That is the strategy all along. You have to convince the heart and soul and mind of economists of your own discipline before you reach out to the general public. On my website i do a press release, we will have another one soon. Host is a ring the laymans terms . Guest yes. The top line total spending activity in the economy rose. The other thing that is interesting. When gross output is growing faster than gdp the economy is doing well. When gross output is falling faster than gdp you are in big trouble headed for recession. In the last 4 years, growth outputs growing faster than gdp which i write an investment newsletter, invested in the market at these levels because the economy is recovering and has been during the obama administration. Gross output was growing faster than gdp. Gross output starts dropping or doesnt grow as fast as gdp, we are in trouble. The supply chain telling us we better be careful or we can celebrate. Those who said gdp is slowing down, they have been saying recently, look at gross output growing faster so im relatively optimistic. Host we are talking with mark skousen, founder of freedomfest, author of the structure of production. Thank you for your time. Booktv has covered many others on economics including julian malvo, steve forbes and nobel prizewinning economist joseph stiglitz. Of this is a topic that interests you go to our website at booktv. Org and in the search bar type economics book and you will find a large archive of authors and materials would all of these are available to watch online. Host welcome to nashville and the southern festival of books. He will hear from many offers throughout the weekend including National BookAward FinalistPatricia Bell scott and nancy maclean, talk radio host eric erickson, basilica other liza monday and many others. For complete schedule visit booktv. Org or follow along on social media sites on facebook, twitter and instagram at booktv. We are kicking off todays coverage with biographer jonathan i on the life and politics of mohammed ali. This is live coverage on cspan2. [silence bracket good morning, everyone, thank you for coming and welcome to the 29th southern festival of books. It is my pleasure to have the opportunity to introduce jonathan eig, and author i admire. I have been reading his book for years and he is to talk about his