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June 7, 2010 - Rush Limbaugh Program
36:42
June 7, 2010, Monday, Hour #1
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Welcome to today's edition of the Rush 24-7 podcast.
That is totally correct, Johnny Donovan.
Yes, and uh it's Walter E. Williams uh holding forth uh for uh Rush Limbaugh.
And uh we have a very busy program today, and stayed tune for the second hour as well as the third hour, but the second hour we're gonna have Rand Paul to uh talk he he's the uh fellow who won the primary in uh Kentucky and on the Republicans, and uh we're gonna talk to him about his vision uh of government and the vision of the Constitution, perhaps as well.
But I want to start off uh talking about the Great Depression.
Uh you know, Obama, he always talks about the Great Depression, and he's saying that this Great Recession uh is the worst downturn in our economy since the Great Depression.
But we ought to ask the question, what was the cause of the Great Depression?
Well, in 2002, Ben Vernanke, he's the uh governor of the Federal Reserve Bank.
Before he became chairman, he acknowledged the Fed's role in the Great Depression.
And here's what he said.
He said, and I quote, referring to the Federal Reserve, we did it.
We're sorry, and we won't do it again.
And he is referring to the unwise monetary policy of the Federal Reserve, and actually uh it was really a follow-up to many of the unwise economic policies of both uh Herbert Hoover and President Roosevelt.
And uh here's what happened.
Okay, so Ben Vernanke said, Well, we won't do it again, but yet they did it again.
In 2002, or two thousand around 2000, the Federal Reserve started promoting an easy money policy that is could keep interest rates low.
And what low interest rates encouraged individuals and businesses to load up on debt and contributing to the bubble that burst in 2008.
So what did the Federal Reserve learn?
It learned absolutely nothing, and it did so at our expense.
Now there's a really really wonderful article written in the Freeman.
That's published by the Foundation for Economic Education in New York, and by the way, the Foundation of Economic Education was started by a fellow named Leonard Reed, and it's the first free market outfit or think tank in the United States.
I believe it started uh back in the oh heck, uh, it could have been the 40s.
Anyway, there's an excellent article by Bert Ful Fulsom.
He's a uh historian at Hillsdale College, and you guys know that uh Rush talks a whole lot about uh Hillsdale College, which is a and I I have a very, very long-standing relationship with Hillsdale College, and it's a wonderful place.
And if you send your kids to Hillsdale College or send them to Grove City College in Pennsylvania, they will graduate as human beings, as opposed to sending them to some other colleges where uh they'll come back uh hating your guts, perhaps.
But anyway, uh Bert Holsom uh Bert Folsom in this article comparing the Great Depression to the Great Recession, and again it was in a June issue of the Freeman.
Uh he says, the main cause of both crises lie in the actions of the federal government.
In the case of the Great Depression, the Federal Reserve, after keeping interest rates artificially low during the 20s, raised them in the 1929 to halt the boom.
Well, that helped choke off some investment.
Also, President uh Hoover signed into law this smoothawley tariff.
And uh and finally, uh President Roosevelt signed a large tax increase Into law into in 1932.
That's beginning to sound like our friend Obama.
Now, none of this stimulus, so-called stimulus, they didn't call it actually stimulus during the Great Depression.
It didn't work.
Matter of fact, Roosevelt came into office in 1932, and in 1939, the unemployment rate was almost 21 percent.
In other words, the new deal was a failure.
Contrary to what people are being told today, the new deal was a failure.
And matter of fact, here's a quotation from President Roosevelt's Treasury Secretary, Henry Morgenthal, and he complained, quote, we are spending more than we have ever spent before.
And it does not work.
That's Henry Morgenthal's President Roosevelt's Secretary of Treasure.
He knew that the stimulus package or the big spending, it just did not work.
And President Roosevelt, he caused the Great Depression to last seven years longer than it would have lasted had he done nothing.
Matter of fact, the Great Depression was not over until 1946.
Well, how come stimulus packages don't work?
How come they don't work?
He signed a stimulus package, and the unemployment went up, and then it went down, and I think it's right around 10% today.
Well, let me explain why.
Okay.
There's something that good economists know.
It's called the broken window fallacy.
And that comes from a story that was written by Frederick Bastiat, a very famous French economist, he died, oh I think around 1850.
Anyway, he tells a story about a baker.
Somebody throws a brick through the baker's window, and a crowd assembles outside and the baker is very angry, and somebody in the crowd says, well, let's look on the sunny side of it, because the baker is going to spend $100 to get his window fixed,
and that $100 is going to create employment for the glazer, the window guy who fixes the window, and he's going to spend $100 for something else, and it will stimulate the economy.
Well, that is what Bastiat says is the seen part of it.
That's what people see.
Now here's the unseen.
You have to ask the question.
Well, what would the Baker have done with that hundred dollars if he had not had to repair the window?
Well, he might have bought a suit from the tailor.
That would it would create employment opportunities for the tailor.
So what happens is that the tailor being unemployed, that is unseen.
But the glazer being employed, that is seen.
And so all that it does is shifts employment from one person, shifts unemployment from one person to another.
That is, the tailor's unemployed and the glassmaker is employed.
And actually, people are worse off because the Baker, if the vandal had not thrown a brick through the Baker's window, the Baker would have had a window and a suit of clothes.
Now all he has is a window.
Now, translate that to what Obama is doing and what Roosevelt did.
Well, if they're going to spend, if Obama's going to spend, uh he and the Congress are going to spend $780 billion on stimulus, well, where's that money going to come from?
Is it going to come from the Tooth Ferry?
What about Santa Claus?
No.
In other words, if the government is going to spend $780 billion on a stimulus, it has to somehow force us to spend $780 billion less privately.
And so how's it do it?
It taxes us or it borrows money from us.
Okay, so if it taxes me $100 or taxes you $100 to contribute towards the stimulus package, well, you have to ask the question what would you have done with that hundred dollars had it not been taxed away from you?
Well, you might have bought some shoes with it.
Well, the person who would have sold you the shoes, he sells fewer shoes, he's he has less employment, and a guy building a bridge as a result of the Simmons program, he has employment.
So the bridge guy, the guy, the construction worker working on the bridge, that is the visible beneficiary.
The guy who makes shoes, sell shoes, he is the invisible victim of the policy.
And politicians love visible beneficiaries and invisible victims.
We're going to talk more about this when we come back.
We're back, Walter Williams sitting in for rush, and we're uh talking about the the Great Depression and the comparison to the Great Recession as of late.
And I need to correct something.
I said I said that uh Roosevelt in 1932 signed a large tax increase into law, and actually it was Herbert Hoover who signed a large tax increase into law.
But President Roosevelt, uh he became, according to Bert Fulson, he said that um President Roosevelt became Hoover on steroids.
And President Roosevelt and his advisors uh they got got engaged with the largest spending increase in uh U.S. history.
Uh they uh Roosevelt started the management of the economy through the Agricultural Andrustment Act and the fine and the Reconstruction Finance Corporation, et cetera, et cetera, and all this prolonged the Great Depression a full seven years.
Now, this big government spending explains the power of Congress.
If you look at it, it's a really a tragic thing, in my opinion, that in Washington, D.C., there are 35,000 lobbyists.
And matter of fact, one half of the former members of Congress, they don't go home.
They become lobbyists.
About one half of the former members of Congress are lobbyists.
And so you have the McCain fine gold bill, they're saying, oh, we're trying to get money out of Washington to end all this peddling, influence peddling.
Well, what's the big problem?
What is the big problem?
It's not money in Washington.
The big problem is the life and death power that the United States Congress has over all of us.
And people want to buy that power.
They're going to Washington to buy that power.
That is, the federal government this year takes $3.8 trillion from us.
And people want to buy into that.
They want to get part of that $3.8 trillion.
This is why we have 35,000 lobbyists in Washington.
They're going there to get your money and my money.
That is, we've turned into a nation of thieves.
Let me give you some examples.
For instance, Congress spends $1.7 million on research why pigs smell.
Now, pigs smell.
If you ask my grandmother, why do pigs smell?
Well, she probably say, well, because he's a pig.
He plays around the mud.
That's why they smell.
They don't brush their teeth.
Then there's another one, $800,000 for oyster rehabilitation in Mobile, Alabama.
$7 million for Hawaiian sea turtles.
Now, this has nothing to do with the oath of office that Congressmen take to uphold and defend the Constitution of United States.
I want a Congressman to come on air, call in, and I'll tell Kitt to give him first divs to come in and tell me how, for example, spending 1.7 million dollars to find out why pigs smell, how is that in keeping with this oath of office to uphold and defend the United States Constitution.
But I think most people are for Congress ignoring the United States Constitution.
If you just look at the programs other than these programs I just mentioned, you know, pigs and uh oyster rehabilitation and Hawaiian sea turtles, that's just a drop in the bucket.
The big issue, ladies and gentlemen, are the massive spending programs for Social Security, Medicare, prescription drugs.
And I believe that those three programs alone take up all of the tax money, income, federal income tax money that you and I send to Washington, and the rest of what government spends on is borrowed.
We have to borrow and do other things to get the rest of the money.
Let's take a let's take a call from let's see from Otto in Davis, California.
Welcome to the show.
Hello, Walter.
Hi.
I have a comment about your story about the store owner and the broken window.
Yeah.
In today's economy, the store owner would not pay for the window.
The insurance company would.
Yeah.
So the money would come out of the insurance company's account would stimulate the local economy.
Would there be a difference in outcomes?
Well, that's my question for you.
It's no difference in outcomes.
Well, it seems to me if the money's coming from the insurance company's uh reserve fund, it's pumping money into the economy that wouldn't have got into the economy.
Well, okay, what was the money doing before the insurance company sent it out to pay for the window?
Probably earning interest in their account.
And how did they earn interest?
It was maybe it was invested somewhere.
Yes.
Okay, so it has to take that money away from the invested activity that was in to pay for the window.
I mean, see, see, I think one of the things that we have to keep in mind, you know, Paul Krugman, he's not very smart economist, but he won the Nobel Prize.
But in in 9-11, he said, when when there's all this destruction in New York, he says, look on the other side of it.
Because to we're going to stimulate the economy by rebuilding, by rebuilding all the rebuilding that was necessary.
Well, I wrote a column about it, and I say, well, gee, that's the broken window fallacy.
Would the terrorists have done us a better deed if they had not only destroyed buildings in New York, but destroyed them in Washington, but destroyed them in Philadelphia and San Francisco and Chicago.
And the insurance company pays for the damage.
Would would the nation have been better off?
It's no way in the world.
Now, in the case of that Taylor, in the Baker I was talking about, the his wealth is lower.
The wealth of the economy is lower because all he has now is a window.
If the vandal had not broken the window, he would have had a window and a suit.
And I've suggested to people, I don't really mean in sync sincerely, you could create all kinds of jobs and employment.
Just take a base baseball bat and walk down the street and smash every automobile window in.
I mean, you could create a whole lot of employment, Couldn't you?
You could do you could do all kinds of destructive things that would require rebuilding.
But that's not the way to get wealth.
Because I think one of the things we have to recognize is that there's no free lunch.
There's no way that you're going to get something from nothing.
And that's what economists spend uh economics professors, good ones at least, they spend quite a quite a uh amount of time at the beginning of the class trying to talk to students about opportunity costs.
That is, in order to get more of one good of necessity requires that you give up something else.
That is, we're always talking about trade offs.
We're not talking about solutions to anything.
We're talking about if you get more of one thing, you're gonna have less of another.
We'll be back after this.
Walter Williams sitting here pushing back the frontiers of ignorance.
And by the way, stay tuned for the second hour.
We're gonna have Rand Paul on, and we're gonna talk about uh his ideas about what Congressman should be doing.
And by the way, for those of you who want to read more about the uh Great Depression, there are several sites.
There's several uh sources.
One is this book by Burton Folsom, the fellow, the professor of history at Hillsdale is called New Deal or Raw Deal.
And then if you look at my website, Walter E. Williams.com, and for all you ladies out there, there's a very handsome photo of me.
It's a new photo, it's a very, very handsome photo, and a lot of ladies, I think I've heard they've made my photo their home page.
Anyway, there's a there's another source.
Oh, matter of fact, this uh on my uh front page of the web page, it's called The Great Myths of the Great Depression.
Okay.
Then there's another article, actually a professional article in a journal.
It's called the Journal of Political Economy, one of the top rate uh economics journals, and there's an article written by two UCLA economists, uh Harold Cole and Lee O'Hanian, and they observe, they conclude, and they offer a lot of data in there, they conclude that President Roosevelt extended the Great Depression by seven long years.
And I'm hoping that Mr. Obama will not do the same about the Great Recession.
Anyway, we're going to go to the phones and talk to Fred from I Can't Pronounce That in Montana.
Callao.
Good morning, Walter.
How are you?
Hi.
I like to talk about Keynesianism.
You know, one of the things Roosevelt did was he kicked out Adam Smith's e-free in free market type you know, type economy, and replaced it with Keynesianism.
And under Keynesianism, I know you know the answer.
Government can spend its way to prosperity.
It's like standing in a bucket and trying to try to pick yourself up out of the handle.
But there's a couple more points about the depression.
Eighty percent of the workforce back during the depression was men working supporting families.
Right now, in this era, it's 50% of the workforce is women.
And over 52% of the workforce works with the government, directly or indirectly.
We have more government employees consuming wealth in this country than we do in the private sector making wealth.
We just can't survive under that, you know.
This country cannot survive under that kind of stupidity.
And and on top of it, the most rapidly growing labor unions are federal or government employee uh unions.
That's where the unions are growing, and then private sector uh unions are going down going down the tubes.
Oh, you better live it.
In fact, the average federal employee makes about 120,000 dollars a year.
That's not including his benefits.
The average private salary sector is only fifty-seven thousand.
That is absolutely the master, and who's the sermon?
That is absolutely right.
And thanks a lot for calling in Fred, and let's and by the way, uh, Fred, it's canes.
Uh not Ken's, it's canes.
That's uh kind of funny spelling.
It's like you uh ki uh let's say you would say uh C A N E S. Keynes.
But you that's not how you spell it, but that's how you pronounce it.
And let's go to Matt in Lexington, Kentucky.
Welcome to the show, Matt.
Dr. Williams, it's absolutely a pleasure to talk to you.
You're my uh favorite uh guest host, although your name is not Mark.
Thank you.
I just wanted to uh to make a point, and and actually one of the reasons why I'm I'm voting for uh Dr. Paul, or I've voted for him uh in the uh primary here in Kentucky, is that both uh conservatives and tr traditional liberals, if you really want power to the people, then we really need to vote against government regulation to eliminate lobbyists.
Lobbyists only exist where the government is able to step in.
For instance, in your broken glass fallacy, which is of course uh it's a an example that can go on and on, but I'm sure the baseball bat and glass lobbies would be well would be so much in favor of of that, whether it works for the great the greater good or not.
Oh, that's absolutely right.
You're absolutely right.
So uh so I I think that the thing that we have to do, we have to reduce the power of Congress.
And I don't know whether the Americans want to do that.
See, the I I think that the average American, this is really, really tragic to say and to have to admit, the average American wishes to live at the expense of somebody else.
That is the average American wants the United States Congress to do the same thing that if we did the same thing privately, we would get sent to jail.
We'd be rounded up, and people would and people would condemn us as an ordinary, despicable, low-down thief.
That is, for example, I could see, I I given this example any number of times, so some of you have been listening before you heard it.
I could see an elderly lady sleeping on a downtown on the grate in the dead of winter, she's hungry, she needs some medical attention, and she needs some shelter.
And I could walk up to you.
I could walk up to any of you with a gun in my hand and take your two hundred dollars, and having gotten your two hundred dollars, I go down and buy the lady some medical attention.
What would you find me guilty of?
Robbery.
I'd be guilty of theft, regardless of what I did with the money.
Now, here's the question.
Suppose I got two, three two or three people to agree with me to take your money and help the lady out.
Would it still be theft?
Uh of course it would.
Okay, suppose I got a million people to agree with us, or a hundred million or two hundred million, it would still be theft.
And so, what is theft?
Theft is taking the rightful property of one person and giving it to another to whom it does not belong.
And and if there's a consensus of taking that property, that does not make it any difference.
It is still theft.
The only difference between what Congress does and my example uh that I gave you, is that in the first case, where I walked up to you and took your money, that is illegal theft.
And when Congress takes your money, that is legal theft.
It's only a matter of legality.
Now a lot of people say, well, Walter, it's legal.
Well, for moral people, legality alone cannot be our guide.
That is many things in this world were or are legal but clearly immoral.
That is slavery was legal, but did that make it moral?
The Nazi persecution of the Jews, that was legal, but did it make it moral.
See, the moral question that we have to ask ourselves is what is the moral case for taking the property of one person and giving it to another to whom it does not belong.
I can't find any, and I also would say that for you Christians out there, I would believe I believe in helping people.
I believe in helping my fellow man in need.
But for you Christians out there, you should recognize that when God gave Moses the commandment, thou shalt not steal, he did not mean that thou shalt not steal unless you got a majority vote in Congress.
Moreover, I'm quite Sure, if you ask God, well, I'm not stealing, but is it okay to be a recipient of stolen property?
He would probably deem that a sin as well.
Now, don't misunderstand me, folks.
I believe in helping our fellow man in need, and I think that ray reaching into your own pockets to help your fellow man in need is praiseworthy and laudable.
Reaching into somebody else's pockets to help your fellow man need is despicable and worthy of condemnation, and we'll talk about this more when we come back.
We're back, and it's Walter Williams sitting in for a rush, and uh the next hour we're gonna have Rand Paul from Kentucky on to talk with us, and hope you stay tuned.
And right now we're talking about how big the federal government is getting.
And matter of fact, I mean, to give you an idea of what the framers thought the federal government should be doing, as I said, read the Federalist papers, because the Federalist Papers were a debate about the Constitution before it was ratified.
And it was saying what was in the Constitution, and the Fed and the people who wrote the Federalist Paper papers were James Madison, who's acknowledged father of the Constitution, John J. and Alexander Hamilton, and if you read Federalist Paper 45,
it says Madison, it was written by Madison and Madison says that the powers that we delegated to the federal government are few and define and restricted mostly to external affairs.
Those left with the people and the states are indefinite and numerous.
Now I ask you people out there, that is given Madison's vision of the Constitution, that the powers of the federal government are defined and limited and restricted mostly to external affairs.
How does the recent health care bill come in there?
How does that fit in there?
How does Social Security fit in there?
How does two-thirds or three quarters of the Federal what the Federal Government does?
How does that fit within that vision of James Madison?
It doesn't fit at all.
And here's what here's the tragedy of all of this.
If these great men that we celebrate, we're going to celebrate their vision next month on the 4th of July.
And if these great men were alive today, the average American would tar and feather them.
They would see they would see these men as oppressive.
They say, hey, uh uh James Madison, we're thinking about a health care bill.
James Madison say, that's not in the Constitution.
You don't have that kind of authority.
Or we're thinking about Social Security.
We're thinking about prescription drugs.
We're going to have a program to find out why pigs smell.
He said James Madison would say, that's not in the con you have no authority to do that.
Now, what these people what these people are doing, they're playing a rope of dope on the American people.
That is, they will they will give certain kinds of handouts to get you to vote for them and empower them to give handouts to their friends so that they can stay in office.
So they can give handouts to bail out big banks, to bail out uh Chrysler to bail out uh General Motors, and to bail out their union friends.
They're making suckers out of us.
We're losing our liberty bit by bit.
And how they're doing it, they're doing it, they they they won't do it all at once.
They're doing it bit by bit.
And that reminds me of a story by Leonard Reed, although the story is disputed.
Uh somebody people say it was by somebody else, but I'm gonna say Leonard Reed.
And he said that if you wanted to take liberty away from Americans, you had to know how to cook A frog.
And Leonard Reed said, you can't cook a frog by putting on a pot of boiling water and then throwing the frog in the water because the frog's reflexes are so quick that as soon as his feet touch the boiling water, he would hop away and be free.
Leonard Reed said the way to cook a frog is to put on a pot of coal water.
Put the frog in the water and heat it up bit by bit, and by the time the frog realized he is being cooked, it was too late.
That's the same thing with Americans.
If anybody came over here talking about taking away all of our liberties all at once, we would righteously rebel.
But they can talk about taking our way, taking away our liberties as they are, bit by bit.
Each year, we lose more and more liberty.
That's what progressivism is.
To take away our liberties, to recognize that there's no restraint on government.
This is what the people who are Obama and others have appointed to the Supreme Court.
These people that they have appointed to the Supreme Court have utter unmitigated contempt for the United States Constitution.
They view what they'll tell you, they'll tell you, oh, the Constitution is a living document.
Well, anybody who says the Constitution is a living document, they're saying we don't have a Constitution.
That is, for rules to mean anything, they must be fixed.
That means very much how many of you would like to play me poker tonight and the rules be living.
That is, under certain circumstances, my two pair can beat your full house.
In other words, ladies and gentlemen, the rules must be fixed.
Now the founders, they knew that we might have to change these rules now and then.
So they gave us Article V as a means to amend the Constitution.
But these people in Washington are so contemptuous of the Constitution that they say, heck with the uh uh amending the Constitution.
We'll just have a majority vote.
We'll have because we are a democracy.
And ladies and gentlemen, the framers of our nation did not intend for us to be a democracy.
They hated the very idea of democracy, and if you want to read more about it, just read all the statements by John Adams and and and uh James Madison.
They had utter contempt.
They wanted us to be a republic.
We'll be back with more after this.
Walter Williams sitting here for rushing.
You can be on with us.
I forgot to give the number out.
1800-282-288-2.
And let's go to Steve from North Dakota.
Welcome.
Yes, Walter.
You know, you tend to be a little hard on the farmers sometime about uh subsidies, but the thing you tend to miss in my view is that we're compelled to participate because of the need to be competitive.
Now, let's say, for example, you and I are neighbors and we're farmers.
We might be friends and of course, but we're also competitors, and what we compete for is the control of land.
That's where the wealth comes from.
Now, now are you saying when you say when you get subsidies, are you saying that aha, I have a good reason for living at the expense of somebody else?
Absolutely not.
Well, okay, but how do you get that money?
How do you get that money?
Absolutely not.
I agree with you completely.
I'm a conservative as well.
But uh what I want to impress upon people is that, you know, if if my neighbor, Walter participates in the farm program, and I do not, and there's a land auction for rent, which is commonly done, or it's for sale, and you have a source of revenue that's not available to me, then I am not competitive.
That's right.
I'm not going to be attacked.
And so here's what we're saying.
Here's what we're saying.
We're saying, and and we have to uh sorry let you go, Steve, but here's what we're saying.
We're saying I am saying that once legalized theft begins, it pays for everybody to get involved, including a ver, ver good guy like Steve.
That is, once We start stealing from each other.
Those who do not steal are left holding the brown end of the stick.
And I believe Steve knows what the brown end of the stick looks like.
So that that's that is the tragedy that we have.
That is the tragedy that we reach in the United States that it's such that from our economic interests, it pays for all of us to steal from one another.
And those who do not steal, who try to remain honest, they're in bad shape.
Look, stay tuned.
The next hour we're going to have Rand Paul.
Exciting interview in the next hour.
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