 Everyone, I'm Wendell Jones, and welcome to this edition of the platform on this program. We examine national and international issues, and the NASA Institute is doing a fine job in our country educating the Bahamian people on economic affairs, not only in the Bahamas, but in the United States and around the world. And from time to time, they would host seminars here and bring in to the country exciting guests. And one of the guests that we have in our country this week is Mr. Lawrence W. Reed, the better known as Larry Reed, and he became president of the Foundation for Economic Education in 2008. And prior to that, he was found and president for 20 years of the Mackinac Center for Public Policy in Midland, Michigan, and he is taught economics full-time and chaired the Department of Economics at Northwood University in Michigan from 1977 to 1984. He holds a bachelor's degree in economics from Grove City College and a master of arts degree in history from Slippery Rock State University, both in Pennsylvania, and he holds two honorary doctorates, one from Central Michigan University in public administration and Northwood University in Laws in 2008. Of course, his resume is as long as my arm, so we're going to stop right there. But suffice it to say, he's been on the platform before, and we had an interesting conversation with him, and so we are delighted that he's back here today. Welcome to the program. Thank you, Wendell. My pleasure. Godfrey, this is here as usual. Thank you. Nice to have you, Godfrey. Thank you. And I understand that you are going to be speaking on an exciting topic at the Nassau Institute. Well, I hope it'll be exciting. The topic is liberty and character. And my point in that talk is to explain that you cannot have liberty unless people widely practice certain traits of character, that the two go together. People have to be honest. They have to keep their word. They have to be humble and patient and courageous and perseverant. They have to be responsible. They have to respect the lives and property and contracts and rights of other people. And if you have all of that, then you have a chance as a society to be free. Okay, unsuccessful? Yes, I think so. But there are some people who have been successful and they've had some sporty characteristics on character. Oh, absolutely. In fact, I think the number one problem in our country is an erosion of character. And you see it in every occupation. You see it in government. You see it in business. You see it in labor unions everywhere. And concerns me very much. As a matter of fact, many people would suggest that the world economy went south because of people with bad character. You have one in prison today who has built people out of billions of dollars. Yeah, I don't... Is it Murdoch? No, I know who you mean. The guy from New York. Madoff. Madoff. Bernie Madoff. Oh, yeah. Talk about bad character. Absolutely. But we have bad ideas and bad policy too that make it even worse. In fact, some of that bad policy is the result of bad character. Bad policy. You're talking about policy put in place by the state. That's right. Some bad laws, bad regulations, special favors for a certain powerful few. That's not just bad economics in my view. It's bad character in most cases. Interesting. Gautry? Mr. Reed, in your recent, in your country's recent, general election, the issue of taxes is very prominent. And you know, one of the things that distills me about the American democracy, how a sophisticated country like that can allow Grover Norquist to hold a whole party hostage on some no tax. I don't understand that. In a democracy where you represent people, you can let a private individual hold your representative hostage. Well, you know, all Grover Norquist can do is to ask candidates for office to endorse a pledge regarding their position on taxes. They're free to say no. Mr. Reed. They don't have to. In fact, many of them say no. You're simplifying it, Mr. Reed. That is not the case. That is not the case. And you know it quite well. He held those Republicans to that. Oh, yeah. But what gave him that power? You have to ask them. I don't know. All I know is from where I sit, right? I find that astounding. Well, let's not speak to it. The only way that he can have power over legislators because of that pledge is if that pledge represents the views of the people back home. Otherwise, they could say, I'm not going to sign this, and people back home would be happily reelected. Mr. Reed. But I think that's reflective of a lot of people's... He was able to hold their feet to the fire. Yeah. Because he represented money. And those representatives of congressmen were afraid to go against them because money would unseat them. Well, Godfrey, I think you're selling short some of the principle and the philosophy behind the no-tax or no-tax increase pledge. You're kind of assuming that higher taxes is the answer to our... No, no, no, no. No, no, no. No, no, no. That's not my assumption. My assumption is that these people who signed that, I'd adhere to it because they didn't want Republican money against them in the elections. Well, I think you're selling short a lot of conviction. There are an awful lot of people who take that position because they really believe it, because it has merit, because they believe that the answer to our problems in Washington is not higher taxes because every time they raise them, they don't apply it to deficit reduction, they just spend more. Well, you're talking about 2% of the people who the president of the United States wants to raise taxes on 2% of your population who has income, they have income of over $250,000. And they pay about 50% of all the income tax revenue. Yes. So it's not as though they're not paying. They're paying half the income taxes. Yes, but he would want them to go back to what they were doing when President Bush was in the White House. They're resisting that. They signed a pledge with this gentleman. We're talking about liberty and character now. Isn't the wealthy in the United States of America, shouldn't they wish, shouldn't they want to go back to something that they were doing if it is in the national interest? Let's talk about the national interest of the country. Yeah, but why is it in the national interest to raise money for a government that wastes $2 trillion a year? Why is it not in the national interest to reduce spending? Why is it always in the national interest to take more of other people's money? It seems to me what's in the national interest is what gets the economy growing and what preserves our liberties. Do you think that those people are paying a fair share, the 2%? They're paying a fair share to the government? Well, now, realize you've asked me a very broad question. So if I were to say a broad yes or no, you can always find somebody in that group that you could say, ah, they escaped taxes or they did something they shouldn't have done and ended up paying a lower bill. But as a group as a whole, it's hard for me to say that 2% that pays 50% of the income taxes aren't already paying their fair share. But what worries me even more is that we're assuming that what the government takes their money to spend on is perfectly all right, shouldn't be cut when I think there is massive amounts of government waste. And I can't think of a good reason why anybody should send to Washington another dollar until they fix the spending problem. But the spending problem can be fixed simultaneously. But it won't be fixed by raising taxes. They'll just spend it. That's what they always do. I mean, this is a debate we have about every three years. Shouldn't we raise taxes? Okay, and much of the time we do. But then we go back to the problem again of bigger deficits than ever before. Shouldn't we raise taxes again? The focus has to be on spending. We tax because we spend. And if we spend too much, there's no amount of taxes that can be fair to cover that extravagant bill. One of the biggest expenditure items of the U.S. government. It's defense. Yeah. It's way too much. It's defense. And one of the, on the other side, one of the arguments that the defense expenditure is exacerbated by is the healthcare system. But shouldn't a country be responsible for the health of its people? Well, you raised two questions. First, on the defense issue, I think there's a lot of savings to be made. But it will require a redefinition of what it is legitimate U.S. defense expenditures are. Right now, we have a kind of fire. We've got troops and commitments in 150 countries. So until you redefine that and get it back to what I think would be within the confines of our Constitution. Namely, the purpose of the U.S. defense structure is to prevent attack or to provide security for the American people, not provide for the global police power. Yeah. So you've got to redefine that before you really get the big savings. On healthcare, rather than just assume costs are high, therefore more governments, the answer, I think we should be asking, why are they so high? There are a number of reasons. One, we have a third party payment problem with healthcare that goes back to the late 1940s. Anytime you have somebody else picking up the tab for someone else's healthcare or whatever it is, you have a disconnect between the consumer of the purchase of the goods and the payer. So then you have inherent inefficiencies. We started back in the 40s with this business of giving tax deductions to companies when they provide healthcare. But no tax deduction, that is for their employees, no tax deduction equivalent for an individual who pays his own healthcare. So it drove the whole system in the direction of employer provided healthcare. And it took the consumer out of the picture. That needs reform. But we also have at the state level these expensive state government mandated health benefits. Several thousand of them. And what that involves is where state governments have said to insurance companies, if you want to sell insurance in our state, you have to include coverages for all these various things. Some are better intentioned than others. But the problem is the more of those things you add, alcohol, oh yeah, and it prices low income people out of the health insurance marketplace. So I want to see, I want us to fix the fundamentals rather than just assume that that cake is already baked and we just have to play with it. I think we need to fix the fundamentals or we're going to continue to have this problem of healthcare costs going through the roof. This is the platform and we have as a guest Lawrence Reed. We'll come right back. Back here on the platform this evening, speaking with Mr. Larry Reed. Mr. Reed, there are some behemoths who believe that the U.S. political system is somewhat dysfunctional. And it is dysfunctional because politicians in your Congress are just not able to get it together. They seem not to be able to compromise on anything. There is this ongoing debate now and you have a fiscal cliff that somebody is going to be pushed over this cliff very soon. Why is your system so dysfunctional? Well, first of all, let me say I couldn't agree with you more. It is dysfunctional and I'll give you two reasons. They probably aren't the only two but I think they account for much of it. One is the sheer size and scope and duties, responsibilities, intrusiveness of our federal government establishment. If you look throughout history, whenever a society descends into expecting government to do virtually everything that run almost every aspect of their lives, when it gets so big that it spends 20, 30% or more of what people produce, inherently you get dysfunction and corruption. The reason is so many people either want to get in charge of this apparatus because it's so powerful, it's dispensing so much money, it's in charge of so many people's lives, it has the power to regulate anything and everything practically. They want to get in charge of it or they want to keep it at bay. And so they're always fighting with each other. And inherently the bigger government gets, the more it tends to attract the least competent and those of the lowest character. Look at our politics in America today. Every campaign is dirty, every campaign involves smear tactics, it's ugly, why would a good person want to do that? So what happens is the more that it degenerates that way the more good people say I'm going to do something else. So what do you end up with? Bad people who don't compromise, who don't have all sorts of issues that you wouldn't want in any government, big or small. Mr. Reed, but isn't there first of all a role for government? Sure. And secondly, isn't there a segment of the population that only the government can extricate from marginalization, from discrimination, you take black people if it weren't for the government, slavery would not be abolished. So there's a role for government. Well, on your last point, Gatry, on slavery, let's not underestimate the importance of private individuals and private groups and private campaigns that led the way against slavery. But it was the government. I know, but it was also government that sanctioned slavery, that enforced it, that passed such laws as the Fugitive Slave Act that said if a slave flees, we will round him up, use the police power of government to force him to go back. So government was complicit in slavery. In fact, you can make a good case that it wouldn't have lasted, it wouldn't have survived without government support and sanction. So I say it wouldn't have survived on the church. Exactly. Look at the people who led the effort against it. They typically weren't politicians. They were private individuals who convinced the politicians eventually to vote right and to end slavery. But slavery was endorsed by most governments of the world before largely private efforts to reinstill in people the appreciation for individuality and character and liberty finally convinced the politicians to get rid of it. Not necessarily so in the British Empire, but let's look at the issue of people who have been marginalized and need a government hand-off. Well, let's assume for a moment I agree with you. But I don't, I want to say, because I think most of those needs are better handled in other ways. But if I did agree with you, and then I took a look at the federal budget, I would say, well, there isn't all that much in the federal budget that does what you are talking about. There's an awful lot of extraneous stuff. There's a hundred billion a year in corporate welfare that the government dispenses. Several hundred billion or more that we spend, as we mentioned before, in defense that represents the maintenance of empire, not the legitimate security needs of the United States. There's a lot more to this gargantuan government now than simply helping the needy. So much, in fact, that you can argue, I think, well, that we're keeping the needy in their desperate conditions because we're preventing growth in the economy that gives them opportunity. We're taxing the productive who can create new jobs to the point where many of them are saying, forget it. But look how difficult it is to start a new business in America these days. I've talked to many young entrepreneurs who have dreams to start a business and hire people, but immediately they realize all the paperwork and the big guys are getting subsidies or special credits that I can't get. So they throw in the towel from the start and never even begin an enterprise. We need to fix that instead of just assuming that everything government does now is fine. We just need to pile on more of it. But shouldn't the government, Mr. Reed, protect the weak in the society? Those people who are unable to fend for themselves, those people, as Guthrie said, who are marginalized, those people who are caught in the grip of poverty, isn't that what governments are for? I often hear that, Wendell, but then I always want to know, what do you mean by that? Do you mean by help? Do you mean things like raising the minimum wage, the prices of some of those very people out of the job marketplace? If so, then I'd say no. If you mean creating generations of dependency, I'd say no. That doesn't help them. No. I mean when, through bad policy, or bad policies, the state causes people to become unemployed. Yeah. Then it should get rid of those bad policies. Hold on. And people are on the street. Yeah. And looking for sustenance, looking for food, looking for shelter. Isn't it the government's role and responsibility to give these people the kind of safety net that they should have and to bring them up? So I hear you're saying that even if the government causes the problem in the first place, instead of fixing that, it should subsidize the outcome. But they should do both. Shouldn't they do both? Why don't they fix the problem? Shouldn't they fix the problem, provide the kind of policies and programs to empower these people, while at the same time giving them some relief? And in the United States, you call it welfare, don't you? Yeah, but most people don't... Are you against welfare? Most people don't want to be dependent upon the government. Most people want opportunity. Yes. That's what we're crushing. Yes. And we're crushing it with things like social welfare programs. Yes, but they are found, they are caught up in this vortex of... And they cannot extricate themselves from it. Yeah. And they cannot extricate themselves from it because of bad policy. But until you fix the policy, doesn't the government have a moral responsibility to ensure that these people have food and shelter? Not a higher moral responsibility than stopping the problem in the first place by creating it. Yes, but you have a problem, Mr. Reed. The problem is here. We have the problem. The problem is that you have 20 million people who are unemployed. 20 million people who are homeless. Every time... What do you do? What is the role of the government there? Here's the problem. Every time we say, okay, well, let's have programs for those people, we get the programs, we get the expense, we get the intergenerational dependency and all the harmful pathologies that that creates, and they never get around to actually fixing the problem. So it may sound harsh, but one of those guys who likes to say, finally, for once, instead of just treating the symptoms, can we fix the disease? But these people deserve liberty. Yeah. They are in the position that they are in because of the bad character of their political leaders. Their political leaders did not have the characteristics necessary to empower these people. And so these people have fallen through the cracks. What do you do? Okay, now you would acknowledge that, even though we agree that there are bad policies, bad character on the part of the people in government who create these conditions, that there's also room for improvement on the part of some of those people who are dependent. Sometimes they're dependent because they've made poor choices in life and they can't absolve them of that responsibility. You can't just say everybody who's in need is automatically a victim. Some of them, in fact, have made poor choices and there's no amount of government aid that may fix that. They have to fix their choices. Yes, but sometimes people are set up to fail and governments set up people to fail by bad policies. You had a housing crisis in the United States. Entirely government-caused. Entirely executed. And a whole lot of people, millions of people were set up to fail. What is the responsibility of the government when these people would have failed? The first responsibility is to stop the policies that created the problem. Yes, but that's what under the bridge now. I know, but the horse is gone now. It's bolted the ban. I want to prevent the next crisis. But you have the crisis on your hand now. What do you do with the 20 million people who you set up to fail because of your bad character? These people want liberty. I'm using your theme, liberty and character. These people want liberty and liberty is found in them being able to take care of their children, have shelter. What do you do? You have to take the measures that will create as soon as possible a rapidly growing up economy with new opportunities. But in the meantime, you should give them something, right? Well, yes. A government that's a trillion and a half in the red, you're saying that we're supposed to spend even more? Again, I know it's so... It is your fault that these people are failing. It is your fault that these people have fallen through the cracks. My fault was against those policies. I'm speaking about the government now. Bad policies. Your bad policies, your bad programs cause these people to fall through the cracks. They are hurting. You should bear some moral responsibility to extricate them because they've fallen over the cliff. If I thought the government would help those people in the short run and fix the problems that won't put them into the soup again, then maybe I'd listen to you. But in the meantime, what do you do? In the meantime, you've got to fix... Let them suffer? See, I'm not running for anything, but I don't have to say what will get me votes. Yeah, but in the meantime, what do you do? Let them perish? Mr. Reed? What was the last time the Salvation Army or the Red Cross said to a truly needy person, get lost? Oh, I see. So you ship them off. They are the responsibility of the Salvation Army and the Red Cross and not the government? Is that what you're saying? I'm saying the government never has a monopoly on compassion. You're implying, Wendell, that these politicians really care enough to help other people in need. And I'm saying there are people all around us, all the time, who will help a neighbor, who will help a friend, who contribute to charitable causes. It's just not... Yeah, but I'm saying that the state has a responsibility to these people because the state disempowered them with bad policies, bad programs. And I'm saying with just as much insistence that the first responsibility of the government is to stop causing the problems that put them in that situation. And if somebody doesn't insist on that, and I can do it because I'm not running for anything, then we'll never do it. We'll just throw money at the symptoms and we'll never get around to fixing it. Let's look at it from another point of view. Let's look at circumstances of birth. I'm born poor. President Obama is wife Michelle. Affirmative action. They go to Harvard to get a good education. He becomes president, right? I don't have to be a Kennedy or somebody to afford to go to Harvard. The state has provided an affirmative action program which enables me to use my intelligence to get the best education that I am capable of getting. But you abandon that. How do you explain, Godfrey, how do you explain in the, say, roughly 1850 to 1900 in the absence of federal government aid that we had tens of millions of penniless immigrants who came to the United States in most cases poorer than the poorest who were already here and didn't even in many cases speak the language and yet pull themselves up and build a great nation? How do you explain that? Circumstances were different. It was a different world. No, it was a different world. At that world you're talking about you could get by with a sixth grade education or eight grade education. You can't get by in this world without a college education. It's impossible. And many people, college fees are going up. Just cannot afford it. And I know we have some of the highest rates of illiteracy these days among high school graduates that we've ever seen in this country. That's a forward of the system, education of the system. Okay, who's in charge of that? In America 90% of kids come through government schools for 12 years and yet millions of them fall through the cracks. That's a failure to government in that regard. Yeah, so what do we do? Throw more money at it? No, you have to fix it. That's what I've been saying. Don't you fix it through things like choice, competition, accountability? You can't fix it by abandoning a program which is beneficial. But it's not beneficial. A public schooling is not beneficial. A forward of action is beneficial. But don't you fix it by providing better teachers, giving teachers higher salaries and don't you fix it by smaller classrooms? Don't you fix it by giving students who are unable to have a breakfast or lunch, providing some subsidy for food? Isn't that the role of government? What is government for? Government, Mr. Reed, is supposed to provide safety, good health, good education. That is what the government is for and that is why you pay taxes. But you want to absorb a lot of these responsibilities. What I'm saying is that when you abandon that principal duty of providing security, safety, rights, and in this expansive new way you would say you're crazy. You're not qualified. You haven't fixed the programs you already have to go and broke. Yet that's exactly what Obamacare promises to do. It's a triumph of good intentions over reality. That's an oversimplification of what Obamacare is all about. And I put it to you since I speak on liberty and character that a government is only a government of good character when the government is looking out for the less fortunate in the society. If you are not looking out for the less fortunate in the society then you are not a government of good character. Well then why does the same government continue to raise the minimum wage and price literally millions of young and unskilled workers, intercity minorities, out of the labor market? The same government that says we're all for you passes laws that say if you can't find a job that pays at least $8 or whatever an hour, it's illegal for you to work. You have to raise the minimum wage if people are going to survive because there are a whole lot of people who are not able to survive because of the high cost of living and the high cost of living comes about by bad government policies bad programs or no policy or no program. Would you concede that there is such a thing as a job that's only worth $6 an hour let's say because it requires low skills or it's not incredibly needed? There is such a thing as a job that it's just worth only $6 an hour or is every job worth automatically what Congress declares? You know what you're doing now you're replacing rules now I'm making my points by asking questions but the point is if there is such a thing as a job that's only worth $6 and Congress says to an employer sorry even though it's only worth $6 you've got to pay $8 do you think that employer is going to say I'll gladly lose $2 an hour and hire that person anyway? No, he just doesn't get hired and that tends to fall on the inexperience the very young, the unskilled the very people who need that first start it doesn't matter many of the economic problems we face really goes to the market there's speculators there's no food there's no food shortage but people buy up food to control demand and supply people buy oil to control demand and supply and when demand is high and supply is short it's not a money it's market manipulation that's a bumper sticker give me an example what are you talking about? there's food for example we had a food crisis in 2008 so people bought food because they thought it was going to become more valuable speculators, people who control food the speculators bought food corn for example and they waited for the price to go up now if you're talking about the commodity futures these things are always more complicated than you guys with the bumper stickers present them to be but if you're talking about somebody who buys let's say because they think the price might go up that actually serves a very useful economic purpose because if, first of all, if they're wrong and supplies are more abundant than they expect and the value goes down that means Mr. Reid that people should die of hunger no, if they're right the effect of buying the food now before a shortage hits is to make the future price less high than it would be raising the current price evening out the effects of the shortage there's no humanitarianism in that it is all profit, greed but it ends up serving the consumer to allow that sort of thing if you command it that prices cannot move until the politicians no, no, no other politicians let the market have its way you know when the market is being manipulated you'll have people suffering you believe in free market, don't you? yeah, but you guys are just using these broad generalities who's in favor of manipulation it comes down to what's the road is, what does that look like what kind of a law do you want to pass and who you got to jail and what's their crime that's where these bumper stickers become real this is our final break the final break on the program and when we return we want to talk a little bit about big government I see a headline which says big government can't possibly be good government we're going to talk about that in this break we'll come right back the final segment of our program today with Mr. Lawrence Reed who is the president of the foundation for economic education in the United States and we said that we wanted to talk a little bit about big government can't possibly be good government and I know we need another hour to deal with that particular issue but many governments in our region of the world believe that the government has a responsibility to assist in providing employment when the private sector fails the government should step in and provide employment obviously you don't agree with that because I don't see far more government failure than I see success and I see a lot of the chronic unemployment and cyclical unemployment as the result of bad government policies so again I don't want to keep treating the symptoms I want to fix the problem fix the fundamentals and the point of that essay big government can't possibly be good government is that we have to understand we cannot expect government to continue to grow we can't expect at the same time the kind of good, fair, honest people that you'd want because the bigger it gets the more it commands society the more it tends to attract the power hungry the corrupt the people who are there to skim off what they can at other people's expense and so that's why if you can imagine a government that takes say 90% of the people's production could you expect that to possibly be a character? No. Yes, but in Singapore you have a model of government that is exactly that there's very little corruption mystery they provide first class services in Singapore it's a model government for many countries of the world including your country and there's an index of economic freedom that's produced every year in Singapore among the top 10 freest places in the world so it's got one of the smallest governments as a share of the economy and in fact when it comes to healthcare we talked about that they've had healthcare savings accounts for years whereby the people are empowered to put aside some savings tax free and then pay their medical bills out of their own accounts that's a better approach than say Obamacare where the government handles it for you maybe not in the way you thought Yes, but Singapore empowers their people by putting in place systems that enables people not to fall through the cracks and when they do the government has a safety net But Singapore has one of the freest they do the least amount of that of almost any other country they're rated as one of the freest in the world Mr. Reed sometimes the growth of government is involuntary it's a tendency to believe that politicians have great jobs for people and government expands but it's involuntary growth I'll give you an example the Bahamas has joined the WTO to be able to function in the WTO it's going to be a whole new cadre of professionals of civil servants that is involuntary growth if you want to participate in the globalized world Yeah, so it's even worse than voluntary growth When the government countries stand under these conventions you have to grow your government to be able to participate so this thing about big government the Jewish national because there is involuntary government growth I was in Montenegro which used to be part of Yugoslavia two or three years ago and one of the complaints there was that whenever they join the European community they would be immediately required to double their tariff rates in order to be more fair to neighboring Serbia and there's an example of where joining these conventions can actually set you back I had, I talked to economists there who said we've been trying to make Montenegro a free trade nation now if we join the European community we're going to lose one of the biggest advantages that we try to establish for ourselves so I agree with you that sometimes those conventions bring with them costs that may be greater than the benefits I still read liberty and character yes you should have a wonderful talk this week and I hope that Bahamians will go out to see and hear you because I believe that you can represent your side well in terms of speaking for a smaller government all that sort of thing you're very kind Wendell thank you I'm grateful to the Bahamas for the wonderful environment you have here and the great many friends I have the Nassau Institute and I hope Bahamians will visit our website at FE.org FE.org well thank you so very much for being here today my pleasure thank you Wendell thank you Godfrey thank you for watching and listening to our program today and we thank the Nassau Institute for bringing to us their guests all the time every time they have a guest in from from outside the country they always find a way to include the platform and we thank them so very much I'm Wendell Jones good evening everyone