Next up, don watkins discusses income inequality i have so much enjoyed your trip with the book, equal iserr unfair, americas misguided fight against income inequality. It is so thoughtprovoking to read from some undersize inequality is not a problem. Would you start out by telling us why inequality is in a problem. Guest sure. Ro lets start out with usually equated with the rich getting richer and the poor getting poorer. Inequality just means a gap and make another cap because some people are getting richer and others get poorer. We can also have a guy because people are getting rich at different rates. Inequality can rise or fall for different reasons. One reason might be some people are being really productive. Gas bezos at amazon has great intensive value by pioneering convention. So he will get much richer than me and my wife who is a teacher. She is a great teacher, bush is only providing economic value to a few dozen people at a time. Other things can increase inequality that are bad, that are unjust and take it managing people. Eaua bernie madoff, a guy who will embezzle an a lot of money through fraud and that can increase inequality. The reason it isnt a problem is that we are concerned with is not how much money you have, but how did you get it. Did you get it or something fair or three process that was unfair . When you equalize people whoho earn their money honestly, that is something the challenges and that is is not a fair way to treat people. We hear off in the middle classes at canadian ands inequality is one of the causes. What you say about that . Guest you have to be cleared when the critics say the safety of middleclass stagnation because americans have a sense that we dont live in his era some world, that whem you achieve something through your work, it doesnt come that my sense. When jeff bezos. Amazon, you may be better off. If you want to convey to people that we live in a zerosum universe into lifts him up we have to bring others down, which is really what the Inequality Campaign is all about. You have to show something to the effect that the guys got character caused by disadvantaging and taking advantage of you. They have been central to them. They have stagnated, the general in 1879. I think this is wildly implausible just your common sense, that if you have somebody would you rather be makingof 50,000 today are 100,000 in 1979, given albeit dances in madison, given everything that is happening in your neck futuri technology realm, given just her bigger houses, very few people would take that. The question is what is this claim based on. It is based on claims that look at statistical aggregates. The idea we have in our minds is the idea of i started working in 1979 and i have not gotten a raise for decades. But thats really not the scenario we are talking about. Were talking about a certain statistical category with wages not increased over time. Statistical categories dontar reflect what happens to relate individuals with you and me. Just a couple of prefix samples. Middleclass incomes have stagnated over 40 years, the composition of who can change, we have different trends, immigration. R we have seen an end flux offso immigrants primarily from poor countries and they come here to the United States and earned more than they did in their home country so they are better off. We are presumably unchanged. We are making whatever we were making before and yet what will happen to the Median Income when you get this influx of people taking lowpaying jobs . Its going to go down even though everybody is on the scenario better off. Or what the statistics look at his household income. The composition has changed over time. In the 1970s we saw a rising divorce rate. If you make 50,000 a year and you get divorced, even if they get a raise, statistically that makes us look worse off because now you have two households making 35 instead of one household making tea. Year a lot, of as i think lead to te statistics that claim that we are stagnating. If you look around and really take a careful look, i dont think you can justify that claim. M. Postcode equal is unfair. Is there a new overtaxation . Should there be any taxation at all . Guest the question we have to ask is what do we need government for . No question about that. Im certainly not an anarchist. The reason we need a government is go back before the founding fathers. The basic setup of the government was all. Some people are born the rulers and if you wanted to rise in line, you have to get the favor of somebody whos one of the to rulers. For the founding fathers, life is nasty, brutish and short. Ef with a monaco back to those days . Exactly not. That is the ultimate brake system when you have these entrenched, unequal, politically unequal groups. The real insight of the enlightenment thinkers like the founders with each of us is equal in the fact we have equal rights. The governments job is not to rule us. It is to be our servant, the protector of our rights. What happens when it protects our rights equally . When it protects your freedom the same as mine . We will create different amounts of wealth because we have different abilities. We make different choices. Some of us want to become a teacher. For us thats what a successful life is. Whhts whether rico up from her parents were were down, that is what a successful life is. Other people want to be hedge fund managers. Other people want to start new companies. Go to inequality if we have equal freedom. Yeah, but what if the people who want the hedge fund cannot g do that because they have a poor education. Do you think government has any role in making the opportunities more equal then make sure they have a better education . No, absolutely not. I realized i skipped the important essence of your previous question, which does the government have the will to help out. But over the role of equality of opportunity. Its been a mistake to talk about equality because it can mean one of two things. One of them very good, one of one of them very good, one of them very bad. One is a level Playing Field that well play by the same rules. Thats what the politicall equality of us talking about means. Your freedom is protect it equally. The way the phrase has been used in the last 70 years or so is the quality of initial chances of success means that if you ars born to parents better pitcher or if they give you a good education are one account turned philosopher said if they did something so monstrous mr. Review, you will have unfair advantages. Its true we have unequal opportunities. Theres no way to change that. One important fact needs to be kept in mind at all times. One persons opportunity doesnt come at anybodys expense. Take the example of bill gates. Malcolm gladwell wrote a popular book a few years ago in which ho pointed out that we gave bill gates all this credit for succeeding, but he went to school that had computers and nobody elses school has computers. School he got up in the middle of the night. He snuck off to college, programmed computers and then came back to bed. His mother was wondering why he does have to wake in the morning. Guest thats exactly right. The highlights two things here first of all, would we have been better off if bill gates didnt have access to computers . No, we worse off. Opportunities wouldve been more equal, but everybody wouldve been a loser. The second is precisely that. A lot of what matters is not the opportunity you have come up to what you do with it once you have. A lot of success in life is turning things that dont look p like opportunities intofe is opportunities. One quick example. We tell a story in the book. Susan peterson had been a guest on the show shark tank. Great show. She had a business making stylish baby moccasins for little kids to wear. She started with this talent, but she couldnt turn it into a business because she didnt have any money. She complained about not having equal opportunities . No, she asked her brother who had a window but if she could follow him around for the summer, keep the discarded window frames the issue follows him around, banging out the glass. At the end of the summer term in the aluminum for 200 thats how she started her business and is now successful. If you has to she have any opportunities . In the abstract you with a no, she doesnt have any money. But because she set a goal and took the responsibility forow achieving it, she was able toere see something that was ans succ opportunity and an active turn them into success. Thats what you want to see. Stop presenting other peoples opportunities for mother but once open to you. But then, just to highlight, the reason you cant have the government promote one persons opportunity is the only way to do it is at other peoples expense. The number one thing i would like to see if the government stop taking away peoples opportunity, which it does way too much of. Hopefully we will talkt more about these. If you take effect the minimum wage, which noncalifornia where they still hike up 15 an hour over the next few years. Occupational licensing laws and these are really the Things Holding people back. Ack. Its Government Intervention. And its troubling this is spreading across the country. New york state might be then asked in the name of getting rid of inequality. Said theres a big debate in the literature about one side says the minimum wage creates unemployment. The other side says we look at the studies or they dont. We can think about this in a much more simple way, which is this. If i can find somebody willing to offer me 15 an hour to workt the minimum wage says its illegal for me to work. I combat this issue issue from the perspective of philosophy. One of the things philosophy is concerned with is just as. Even if it were true that 99 of the people get a higher wage and only 1 of the people get out s from working, that is unjust. He cant prop up some people byf obliterating the futures of other people who are unable to take that first step on the road to success. Academic economists conclude that its just the young and guilt that are hurt by these increases in the minimum wage. So what is really those who we are preventing him from getting their foot on the first run of the career ladder. It is very troubling that in california and perhaps new york teenagers arent going to be able to get jobs. The mac i think its really sad and really tragic and it ignores the main thing people need to succeed here this is the story of American History as an open road to success. Go back before we had a welfaret state, but for the government was doing anything to lift people up. Theres a time when human beings have economic progress for a relatively short amount of time and yet people were able to come here and build successful lives for themselves because he was opposed to home countries, nobody was going to stop you from doing what he judged best for your life. The more we open the road andwhd put pockets and barriers in the way of that, that is whats really going to allow everybody regardless of where they start to have the maximum opportunity to achieve success and happiness. Host yes, yeah. You say in your book that no onx can exploit you with voluntary trade. But they were always charlatans who prey on the uninformed. But that the bio diesel cars, for example, that they were by my emissions vehicles. Is there any role for the government such as the federal trade commission to make sure what people are saying is true or do you think theres any role for lost as a children under some age such as 15 or 12 shouldnt be allowed to wear to avoid expectation . The essence of a moral society as its voluntary. the we interact voluntarily, basically we reach a mutual agreement or were free to go our separate ways. Nobody can do something without our consent. The question is in cases where somebody says youre a project different than what they promise you, thats exactly what they need government to step in and say that now that the person consented to. He agreed to pay 20,000, it is a card that operate in a certain way. I dont think you need regulatory bodies. S. You just need laws against best and so on. The radio trade bodies do was they dont prescribe criminal behavior. They prescribe and proscribe productive behavior. They dictate how people produce and decide what kind of deal can we arrive at. Roduce a its not regulation to tell carmakers and you saw somebody sent in a better be what you told them it was. Your car has to get this kind of gas mileage and it has to have this many seat belts and do xyz rather than the mutual choice of buyers and sellers. As far as children, the government has a responsibility to protect the rights of children, but i dont think that applies in child labor lawsig which are on the whole pretty damaging. Im the one hand, they are unnecessary when you are concerned with the wellbeing because we are so rich and other parents are going to send their kids to a coal mine pit the first thing they do when they achieve economic success is they send their kids to school. You saw child labor going away before their burn for laws against child labor. Those laws make it much harder for kids who are excited. So to play nintendo or whatever the video game system is, they would love to have a job or they can earn money, gave responsibility. You know who suffers most from those laws . Poor kids. He was basically thrown into the foster care system and a pretty young age. Ally be hi this is one of the barriers. Until you had some arbitrary age by the government commander allowed to waste your life or hang out on this recliner or do any kind of unproductive thing you bought. The one thing you can do is be productive. I think that its unfair to young people. Host dont you think there should be allowed sane children under a certain age have to be at school. Here what if i know its not veryss common, but there were parents who would say well, im going to send my children out common but e parents who would say look, im going to send the children out to wash cars all day because our family needs the money or Something Like that. Shouldnt that be prohibited . Guest i think you have to have that government defined what we consider abusive children but after that it has to be up to the parents judgment. That brings you down a very dangerous road for a number of reasons. The basic one is now the government gets to decide what qualifies as an education. I things one that is one of the worst things you can do. Were worried about putting the government in charge of our healthcare decision which i agree. Thats a scary thing. Putting them in charge of the ideas, and the values that children are taught, weve taken that for granted over 100 years. I think the bigg that children should be taught in for innovators to come in and find effective new ways to educate children. It doesnt educate many children, particularly those in the poorest neighborhoods. Ny chd host one of the topics on most peoples radar is a president ial election. Has been interesting to see how much support Bernie Sanders hass had. It straight in his numbers muchr higher than they wouldve been otherwise. Can you talk about why that is . Mac as to what is going on in todays debate. Tons of charisma and sex appeal for some ideas that have a lot of power. It is the power of the ideas and really comes from two things. Pot number one, is he standing up for a moral ideal of economic equality. The second as he has on his side and moral narrative that tells us when you abide by my ideal, you flourish in you again in the ideal, you flounder. This you have no doubt heard the idea that america reached at cnet, its golden age in the postwar era when the government supposedly caught income inequality and we all did better and would have been in the 70s which is oddly equated with blaming reagan. In the 70s would have been as weve been in the ideal. The 1 took over, started drinking again. Imagine a freemarket direction and the result is that all the games and we all stagnated. Ed the lesson is supposed to be fighting inequality, things are bad. Host its been getting a lot of traction. N. They should go up to 80 , 90 . People cheer, College Students vote for him. They feel the bern. Guest yes. I think when you have morale and have morale and be on your side, at least, at least when you appear to have a moral ideal, thats inspiring particularly to young people. Host they think hes telling the truth, that its coming from his heart and see them as authentic. How do we fight that message . Guest i think what is going on as two aspects. One is he has this moral ideal. Take the idea of free college. Hes going to how people by giving them college. It also appeals to greet for the unearned. The message is also a hey, maybe a get out of these college loans. When you combine greed for the unearned, people will crusadernl for some rain and the only way to oppose that is to challenge the ideal. So long as you grant a free college makes you a good person, they can come out and take that. If a commodity in effect i want to bail out her hand out, you will not see the crusading spirit. The thing that is happening, what is tragic about the whole discussion is that the critics of inequality, people who dont want to see the governmentnt expanding how much wealth it takes from people, how much control it has over peoples choices, people support her enterprise and free markets. They have had not much to say on this issue. You know how many the left it put out . O poor guy of the year. Know how how many have the opponents of the inequality critics but how . T at that time, zero. One of the biggest issues already two years ago, said lead there has been to books and won by a canadian professor not too many people have heard of unfortunately even though his book was quite good and another by tom bissell which has some good elements but only address the small subcomponent of the debate. It didnt address the wholey evn thing. When we do see the debatee addressed it focuses on challenging statistics in saint inequality is not as bad as you think are challenging thess solution say we agree we should minimize inequality. If your member rand paul, republicans will reduce inequality better than democrats. Both of those can see the economic equality is an ideal and the problem is we are in trouble because Economic Freedom is immoral. We talked about bezos versus my wife. A freemarket leads to nothing or something inequality. That leads to progress for everybody, but very different progress. We have a lot of work to do. Ty we have to challenge their ideal and narrative and present a counter ideal and counter narrative. Thats what we do in the boat. Book. S host is certainly enjoyed reading it. It is very much worth everybody picking up. What seems to concern Many Americans isnt inequality per se, but mobility. We talk about people who start off slow and they just want to get better off. That seems to be economic inequality. What you see about that . Guest i think that is true. A lot of concern when it comes to fairness is not that gap. Are people able to rise by marriott . Are they able to rise by their own efforts, even if they start out without a lot of wealth, without all of the things peoplr on the more affluent side of the scale have. I think theres a couple things important to keep in mind aboutt mobility. First of all, mobility is not defined. Mobility in america is not declined over the last 40 yearsr even as economic inequality has probably been rising. We do have a mobility problem. The dangerous thinking about the ability in purely financial terms. A lot of times youll see charts. How many people move up in the bottom quintile into the top quintile or until the middle. Thats the wrong way to think about it. From the it is to find a career you are happy at, can be selfsupporting not to build a fulfilling life. I imagine my friend, jeremiah. We i dont know exactly how much money he makes, but i imagine most teachers dont take enough to get into the top 10 or topp 20 of earners. Teachers probably dont make enough to get into the top 10 are top 20 of earners. But isnt that success. Should we regret that he did not become an investment banker because he smart enough to because that wouldve gotten him to the top. People would say. Host people would say that we have to pay teachers more and that their level of giving back to society does not really square with the amount that we are paying. So his program from new york proposals where teachers teachers would get paid guest thats funny. F that is quite revealing. Of virginia. I think teachers should be paid as much a study they conjure in america. The problem is we dont have a market for Education Today so its not clear what teachers should be paid in the sense of how much economic valley are they really adding. But the basic question is then, how should we think about mobility if we shouldnt think about my look at these tables . I think the we think about it is our their barriers affecting a person from rising . Are their barriers stopping a person from rising . It comes down to is government intervene in the economy in the way that prevents a person from rising by productive achievement, by merit. Host theres so many. Occupational licensing which you discussed in your book. Guest let me give one example. Theres a million examples, maybe theres some that i knowa you but heres one that particularly annoys me. Lets say i can anybody to employment and so im going to go out on my own and want to teach or perform hair braided because its a skill and good it. Lets say i know a bunch of people who want to pay me to dob it. Many states i cant do that. Its illegal for me to did until i get a license from the state which can cost host to braid your hair . Guest absolutely. Im sure i could have as friends but as a trade i had to go and spend hundreds and hundreds of hours of hours to get a license or your the people most likely to try to become arab writers and or the least likely to be able to afford to go through a process like that . It is precisely the poor peoplel who need every ounce of freedom to get that step on the road to success. Thats just one of many, many examples. Host they were closing down childrens lemonade stands. Guest absolutely. A lot of the lemonade stands as a teaching the lessons of entrepreneurship. That teaches one of the main lessons which is you need permission from the government to do almost anything. T it really is outrageous. There are so many barriers, particularly for people starting out from the bottom. We talked about the minimum wage, education. Heres one more area. Everything the government doesnt the drives up costs, the things we buy come is a huge barrier on opportunity because if i have to work that much harder just to make a living. When the Government Funds and Affordable Housing crusade a lot of it is doing is driving up the cost of housing as more people are demanding housing. A lot of restrictions we see by the epa on energy productionby t such as the whole ethanol scandal, such as it is, that drives up the cost of energy. Who are the people most affected by that . T . The people who dont have that big a budget cant afford these Higher Energy costs uzbek the bottom spend 25 of the money on energy and oil according to the survey. And the top spends 4 . Guest onefourth of a tight budget is devoted to do. It our all these was which rising is becoming harder. If we are concerned with peoples ability to rise by merit your first obligation is to stop making it harder for them. Host what do you say to people who say we need to have more renewable energy, solar and wind even though it drives up the cost of energy because it helps the planet . Dont you want to help the of er planet . Guest this isnt a question but what i want to do is help human beings. I want to help human life. We do that fundamental is leave people free gives the best energy for the own lives. Let them decide whether its oil, natural gas, nuclear or hydroelectric. Host but then other people will come and say that this is polluting, increasing Greenhouse Gas emissions, this is causing Global Warming or climate change. What do you say to them . Guest how do we some that up in a few sentences . What i would say is this. If we look at the big picture pluses and minuses of use of fossil fuels, it is i think what i do question on net future beneficial to human beings. And want to understand how human beings went from living from 30 until living to 80 different results because we that cheap affordable abundant energy. I dont think that the arguments we hear against fossil fuels actually hold the. I dont think that the idea were running out of them, that we need to government to get us hooked on Something Else is true. I think they can cause pollution and thats what you need laws to protect us from pollution but you dont need to outlaw the fuel that more than 80 of the time is making possible industrial civilization. Climate change is i think a more complex issue. I dont think theres evidence that we are headed for a climate catastrophe. I think the planet has been warming and i think on net what fossil fuels do is give us the ability to cope with any climate. E majo but to circle and connect us into the whole inequality debate, one of the major things we are told is that we need to expand the power of government in order to equalize peopleefo economically and we are told we need expand the part of government to prevent us from destroying the planet from fossil fuels. Its always take away freedom and wealth from individuals andd give more power to the government. And the several become the two major arguments, environmental and inequality argument for expanding the government today. We are tackling the inequality argument here. I should just add a close friend of mine wrote a book, tackling environmental one called the moral case for fossil fuels. Lets see, i would say weve got the Problem Solved now. Two books, one at each edge host make right. Taken to heart. Guest that is the hard part of back a lot of people talk about scandinavia as the ideal and they say we should be more like scandinavia because scandinavia is more equal. Do you say about that . Guest this is one of the funniest things. I knew all about scandinavia but not a lot. I work with a colleague who is from sweden, and one of the surprising things i found was that actually if you look at the history of sweden, what you find is that it supports the complete opposite conclusion from what we are usually taught. Host why is that . Guest which are comparisons between sweden and america today. I think those comparisons are dangers for many reasons. Is a bunch of different registrar old policies. Its easy to cherry pick the political policies you want to say characterizes sweden versus america. We are often told sweden is the socialist country and america is a crazy capitalist country. In fact, we are pretty much comparable in the amount of government control there is in the economy. Its just of the. Their regulatory, much higher taxes can much more Wealth Redistribution but actually much less damaging regulatory in many ways that america. They are about comparable in that sense. But this is what was passing. The history of sweden, sweden started out as one of those poor countries in europe if you go back a few hundred years ago. One of the poorest countries in europe. Be it and quickly became one of the richest countries in europe and was because became one of they most free market countries. You could probably make an argument in many ways it was more free market for many yearsb than the United States. It became very rich, veryhl unequal, very unequal. And i think roughly the 1960s is when you start to get sweden as we hear talk about today where it moved in the direction of dramatically increasing taxes, dramatically increasing wealth distribution. It was not a socialist country but it was a pretty, it went very far in the direction of the social democratic redistributive straight. The result was that the economy basically flatlined. Things got really bad. You did see the Economic Growth. You didnt see the entrepreneurial verb that had been in sweden at the point. What happened in economic equality . It shrank. It got as low as its ever gotten. Tarted eventually the swedes said this is not working, and a more recent years have started to begin liberating their economy and it seemed really, really good economic outcomes. Of whats happened in income inequality . Is starting to grow. I think if you look at from the perspective of the history youas see at least a testament to the kind of case were making him that concerned about economicmic progress, what you want is the economic redistribution but economic liberation. Host we do want some redistribution, right . For example, we need armies. We need streetlights. We need certain things that only the government can pay for. Because of that we need to taxes thank you i think the needed pr information between two things. We need to pay for the things t the government does that protect all of our freedoms, particularly the military, theua police. Theres no question about that. You can debate about what are the best ways to raise that govm revenue. Ng i dont call that redistribution but redistribution is when the government, instead raising funds in order to protect everybodys freedom and property, basically take someones property so they can give it to other people. They are i think theres ever a justification for the. Host there shouldnt be any government the social safety net, no earned income tax credit, no food stamps, no unemployment insurance, no housing vouchers, no medicaid . Guest no forcing one person to work without pay so that other people can get paid without working. Host you dont work without pay. They get paid but a portion ofbl it goes to the social safety net. So if they get in trouble then they have that social safety net to fall back on. Guest know. I call that working without pay. What it really amounts to is i went to work and somebody wants to been in return for my services, and i dont get to decide what to do with that money. That goes to some other cause that i may not agree with, i may not one in that amount. Im not against a safety net if you want to go that. At things can happen in life. You have to be prepared for the. Bad things can happen to the people you care about and you want to do something about it that all of that could be taken care of voluntarily. I previously book focus on america before and after the welfare state. One of the things that wasth happening in america before the creation of the welfare state, really starting in 1935 with a so so scared act, was that the with these challenges involved in industrialization were suddenly going to forget what if i lose a job, or if we are living longer what do we do in retirement to take care of myself and take care of my family . And what was happening was people were starting to find private voluntary solutions. First of all they would justwa save much a significant, more significant amount of money that we do today. There was also rising insurance in terms of unemployment insurance, although that was often illegal for some bizarre reason in the states but private unemployment insurance. There was a phenomenon called mutual aid societies which were, in fact, little insurance agencies were i to join one of these lodges, pay an amount thaa i agreed to attend had ay contractual right to say Health Care Benefits or in some cases a place to stay at the elderly and could support myself. Then, of course, there was abundant private charity. Why she would make a social safety net if you want to call it that voluntary rather than coercive . Different people have different values. My dad and i host what about the food lines in the Great Depression . These things probably work for some people some of the time but weve all seen photographs of people stand in line for soup at the soup kitchens during the Great Depression. U are you saying that not having food stamps is an advantage transferred would you be shocked if i said yes . Im j know, but the fact is that the depression was, economists make the details but theres no question that this was fundamentally made possible by government over the economy and particularly actions of the Federal Reserve. So people are less free you dont get widespread depression. Host that is agreed on but one can say on the one hand that there should be less regulation and that the government should have, the Federal Reserve should have a consistent Monetary Policy tied to say the taylor rule without at the same time saying that there shouldnt be any social safety net. They dont both have to go together. Guest my point is this, if you recognize that Wealth Redistribution is immoral and destructive, the question is doo we need . What im saying is history shown we dont need it, and the Great Depression far from being an example of look what happened, what wouldve happened if we didnt have one, really it doesnt count as an example because the Great Depression is precisely the fact that we didnt all these Government Interventions in the economy. If you keep the government out t of things that doesnt create widespread depression, then private voluntary charity is always been more than abundant and, of course, we are so much richer now, this is way less of a concern, the fact there is way more money that you can use to buy insurance to all people that you care about to go because you care about. I dont see that as a problem. What i do see as a problem is a society that treats people not as individuals that we all respect for the freedom and property two, but to divide society into resources and to burdens. Burdens when we need handouts,th the resources to be exploited by society when we have achieved something. I dont think its a way of moral society treats people. Rsue i think its an independent beings who have a right to be left alone to pursue their own happiness and success. Host and if they fall on hard times, if they fall down in the street of a heart attack we dont have any obligation to help them get on their feet, we do have an obligation to get the medical care, if theyre there d we dont have obligations given any food . Guest the question is who is we. Theres only individuals and so the question is you have to ask which individuals have which responsibilities . If its my friend or even somebody that i know about the neighborhood and i see like their house burned down, i think of a certain obligation. Its part of having integrity, the people i care about when the chips are down im going to be there at the system. Postmen say their son is very nasty like a republican it is a difference at all in the person just has problems and theres no friend to bail them out. Are you saying there is no Government Entity that has a moral obligation to bail them out . Guest no. Thats one reason why you shouldnt be a jerk. If you want people to help you at people to be nice to you, you actually have to be a traitor, you have to repay the favor. Im against the idea that one persons need is an atomic. Limited but this question we often think of ourselves as the one doing the helping and we think i want to people. I was dating somebody starting in front of my eyes. So what i. Thats not the issue. You can have anybody want, and historically weve seen that people do. The question is this. Hoosiers offense issues of initial. Lets say you are sick and cant afford. Which you think im entitled ano some opposing and i dont care if theyre struggling to send their kid to school. Me i dont care if theyre trying to build their business. I need something as im going to march over to my neighbors house and im going to demand that debate from operation. Ive asked thousands that question i get to meet one person ive yet to meet one person says that the i would add that we would act is to ask it to understand that if they said no, all right, ill go out somewhere else. I think that same kind of civilized moral attitude should be reflecting government policy. This isnt about helping peoples this is about you were shooting in some regards of want of got into the position, and i never an argument for why it is an entitlement. Host if you need Something Like, take for the sake of argument, heart surgery and go to your friend and you say i do heart surgery them would you give me the money for heart surgery, your friend might wantn to give you the money but not be able to afford the magnitude of that operation, that surgery. But if we pooled the risks by taking a few pennies from everybody, depending on their income, so that when you needed your heart surgery they would be pennies from many, many people to help you with the heart surgery and would be a fund, a risk pool so that you wouldnt have to depend on one friend, and you have to have a rich friend to be able to help you with the heart surgery. These are questions that are fast economies of scale and the way you might say the governmena has a role to play in enabling these things to happen as a safety net. Guest but this is what the reason what insurance is such a great innovation. We can get those economies as good but we get them voluntarily. This is why thats so important because we can decide if its worth it to. The problem today, health care is a complex situation because it is so controlled by government that we take for granted that things would be as expensive as they are that insurance would be as expensive as it is. We have a section in the book would talk about some of the ways where Government Intervention has really made health care a combination of really, really good, that is we see a lot of innovation andth progress, and really, really bad. One of the way thats bad is itp has driven up cost costing almoe precise because it hasnt left h the market for a. Host thats true, we areof very, very severe problems in the delivery of our Health Care System just because of the lack of competition and the lack of the ability to get Bare Bones Health insurance. But it doesnt mean it always works to everybody and i would contend that we need some kind of safety net because we dont want a society where if someone doesnt have any friends, they are starving or dying of an early death, its very troubling to me that you dont see the need. Hostneed. Guest the kind of snow youre talking about isnt really a realistic scenario, that in a rich land where people feel benevolent to one another, that theres somebody out there thats not going to any friends, family, neighbors, no private charity willing to help them out. Of the idea that that is with us and were talking about i think doesnt make a lot of sense. But i want to separate two things. I think it would be great if today we are debating should the government have any role in a safety net . I think thats a good debate to have. I think its a different from debating economic inequality. Economic inequality debate focuses not on what happens to that one in a million person army be less a just cant help himself into that anybody to voluntarily help them. What it says is that we need ton equalize, and at the core of it is the idea that we need to bring down people at the top in and of itself is not about solving problems for poor people. Let me give you one example. Capital in the twentyfirst century, the chief proposal for fighting inequality are marginal tax rates of upwards of 80 , and a global tax of upwards of 10 and also an inheritance tax of 8 . He says explicitly this is not about raising money to help the poor. Because he argues these high taxes never raised that much revenue. This is about inking those big fortunes. I submit that that is very kindf different, its in a completely morally different category at a different kind of debate that the debate over what do we do about that very exceptional case of a person who is in need and is having trouble finding support, that even if a person disagrees and says we need some kind of safety net, i think they can see theres something morally corrupt if your viewsit are leading to to destroy fortunes even though you by your own admission to suck would admission to suck without that fourperson. Host right. Just completely very, very impractical because its very difficult to calculate a wealth. Wealth changes ever by the minuh with markets changing and values changing, so implementing wealth tax is extraordinary difficult which is why governments rely on income tax. But theres been a lot of animosity as you say toward some people at a lot of money such as ceos and the government is trying to rein in ceo pay and some different areas. Interestingly enough theres been a lot less animosity towards rock stars such as madonna and lady gaga, and also leading sports players. The animosity seems to be targeted at ceos rather than artists and sports players the people seem to think have earned the money that they get. Can you comment on that . Guest part of the reason is its very easy to see the value of what they lebron james does. Like we can see a this backpack employer and people love watching basketball. One of the really weird things about the debate over ceo pay is where talk of a really strong opinion about how much a ceo should get paid, but if you ask most people what does the ceo do, i have yet to get a decent h answer for most people post awh they managed the company. Guest but people have no clue as to why thats important. Experts who study does have some idea of the. Its not wellknown and get response to figure out how much they should get paid . The fortune 500, Biggest Companies in america between two and 200 billion in revenue, dean with average pay for the average ceo is . 10. 5 kilometer. Org. Thats a lot of money. Its nothing to scoff at. I would be happy to take a percent of that. T. Nevertheless, would you compare it to the skill of the companies theyre running, or compared to what lebron james makes, lebronn james made Something Like 20 million last year as his basketball salary. It does not seem particularly outrages at ceos of these companies are making that amount of money, particularly not when you look at how important their job is and how hard it is. In a, everything about us, the tv cameras, the building with airconditioning and heating, the fact we got here in a car. , if i pick up to the site of the country on an airplane. All of that was made by entrepreneurs and managers, but businesses and all thosed businesses were headed by ceos. As we have seen just an obvious case apple with and without steve jobs. Its clear a ceo can make a huge difference. Host thats true. You think is because people understand basketball, they understand madonna, they just dont understand ceos . Its not that you think have animosity towards business. I was thinking they had an animosity towards business . Guest is both, the lack ofob knowledge but we are taught to be suspicious of business in general. If i was going to boil down on what a booklet about at the end of the day, its a celebration of productive achievement. One of the biggest disgrace of one of the worst injustices inie history is that superlativeof te businessman, whats the most famous or associate with the assessment that the 19th century . Robber baron. The idea that the robbed peoplem what transformed this country in the country that was basically a swamp backwater, totally poor come into by 1914 the richest country in the world . It was a large part the actions of people like carnegie and rockefeller. It was the people who really created these new industries, these new modes of organization, and far from robbing people comt to look at the price of steel or the price of oil is rockefeller and carnegie are getting richer, the cost of which are producing is going down, down, down as the supply condition with kerosene and later gasoline and as the supply a nation with steel. Today in her own time weve seen a real spending of any businessman who is successful. Even steve jobs we think hesf also seen as an artist so i think theres a more positive response. Within weeks of his death you start hearing people going but he didnt give a lot to charity. Host you didnt have that,pe thats true. I remember that. Guest there was a person created an Amazing Company whoth make millions of peoples lives together that would also help lift the standard of other companies have started thinking about the User Experience at a better level. And get because he didnt give away the money he earned he wass televised. Totally unfair post exactly, yes, yes. Message to people who take from you but . Guest the debate about inequality as we debate about whats happened to the American Dream and how do we revive it. I think one side of this debate has refocused on blaming it on the book rich which means im not the most productive americans, and it means seeing the solution as penalizing and vilifying the rich, which means penalizing until find the most successful americans. What we say is that the cause of our problems, we do have problems, is injustice against producers on every level. If you want to boil down our solution in a sense, its not the way to move us in a better direction and revived the American Dream is to liberate productive ability and to celebrate productive achieveme achievement. Host yes. And what are your main recommendations for doing so, for expanding the economy, for having more Economic Growth . What do you think president ial candidates should be saying right now in terms of how to get us out of this stagflation . Guest i was a couple of things we can do, some controversial, may be somewhat less controversial. First of all let stand all this corporate welfare. Pe but businesses compete in a fres market. No subsidies, no bailouts, no special loans. Let businesses have to prove themselves in an actual Free Enterprise situation. I would say also lets stop putting barriers in the way of people rising, particularly people started at the bottom. Lets get rid of the minimum wage so people ar of redefined jobs. Lets get rid of the insane and necessary occupational licensing situation such as the hair braided that weve talked about. Lets stop the government from taking things so expensive to completely unnecessary and ineffective things such as thees ethanol subsidies and so when. Lets make it as easy as possible and the road is open as possible for people to start rising. I would say in terms of education i would like us to see us move in the direction of liberating education. Ha i think whats happening in nevada with parents getting more control and more choice with regard to education is a good sign. I would like to see more of that and i would like see a bunch of innovators and educational sphere running in nevadas we can really see education become cheaper and more effective for all americans. And then finally of the agency would happen in louisiana when the governorship changed . Children were not allowed to opt out of schools before. Before that allowed to opt out. They would a democratic governor came in place he said they couldnt opt out because its okay for them. H guest thats the egalitarian creed, its not country with you making mos thet of her life. Distance with a buddy making about the same other like. So for instance, one of the things, i take this debate personally. I do okay. My family does pretty well and i have a three year old daughter and a one year old son, andthing basically that you of any quality critics is that when i could give them more opportunities, im doing something wrong. Theithey are pursuit of happines less important than somebody whos more into a poor family. I think that is outrageous. I think each individuals life matters to him, and we should each be free to make the most of it to the idea of holding some people down even if its allegedly justified by lifting some people up, i think the least you can say about it is i becausithas nothing to do with e american ideal of unlimited opportunity. Host is there some country think does better than theit United States . Hugh hewitt al bundy program, is there some country that has followed it and has had more Economic Growth . Guest over all i think weve been the most productive in the greatest and most free nation over all but i think certainly theres things inong other countries that are better. I think in certain ways this more Economic Freedom and hong kong today than is america. Smh and with the regular sight with the regular site things come to spur for Economic Freedom in some ways in scandinavia than there is in america. A i still think that over all this is the country that has the greatest welcome the greatest amount of opportunity. And at the root come out lot of opportunity living in an opportunity rich society is not easy because you are notra entitled to anything. You do have to take responsibility. You are not guaranteed that jobs alexi always have to be learning and trying and really going out there and giving it your all to make something of your life. A a lot of people in this world, a lot of people in this country but thankfully not a majority, they dont want the. They want to be taken care. They want security. Rtunit that only comes come back and is only comes come that considered it comes at the expense of other people. Het if we want a society where everybody has unlimited opportunity to make the most of their lives, heres the place to fight for it because he was really where you have that kind of sense of life, emotional, cultural commitment to the idea of a selfmade man and independent individual who is rising by merit and ability. We can learn a lot from other countries but at the end of the i think theres Something Special about america that we should really be fighting to build on. Host i certainly agree with that and everybody should read equal is unfair and get the different perspectives of inequality that you dont get from the press today. Thank you so much. Guest its been a pleasur pleasure. Cspan, created by American Cable Television companies that brought you as a Public Service by your local cable or satellite provider. On sunday june 5 booktv is alive with author and publisher steve forbes on an in depth our life monthly callin show. He is the editor in chief of Forbes Magazine and was republican candidate in the 1996 and 2000 president ial primary. He is the author of many books which focus on politics and economics. Mr. Forbes recently appeared on booktv discuss his latest book spent the route were in today which is having profound implications for round the world, bad economies lead to bad politics, we see that anywhere around the world. It comes from mistakes. The nice thing about policy errors is they can be corrected. Those errors can be corrected. Thats why we wrote the book. We focus on three big reforms. The are a lot of other things that have to be done but you have to have priorities. So we have prioritized health care, on a new tax code and getting our Monetary System back on track for the first time in almost half a century. Steve forbes live on booktv sees in depth. I want to get immediately to introducing our panelists but first i want to say my
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