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Aug. 24, 2010 - Rush Limbaugh Program
36:36
August 24, 2010, Tuesday, Hour #2
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That is absolutely right, Johnny Donovan.
And it is Walter E. Williams sitting in for Rush, and Rush will be back tomorrow.
But right now, we have, I'm pleased to introduce my good friend and colleague, longtime co-conspirator, Dr. Thomas Soule.
He is the Rose and Milton Friedman Senior Fellow at the Hoover Institution in Stanford, California.
And Hoover Institution is a very, very distinguished place in our country.
And they have a lot of people who know a lot about economics and free market economics, particularly.
Welcome to the show, Tom.
Good being with you.
Now, your book, Dismantling America, I think it's a fabulous read, and I think everybody ought to go order it.
And it's available all over, isn't it?
Oh, yes.
Yes, yes.
Now, okay, let's start at the beginning.
Now, you say it was progressives of 100 years ago under the Woodrow Wilson administration and others who thought we need to adjust the Constitution to keep up with the needs of the times.
Can you explain that?
Yes.
I mean, there are many people who evaded the Constitution or violated it.
But Woodrow Wilson was the first president of the United States who actually came out and said that the Constitution ought to be superseded by what judges and others think are the needs of the times.
And I think given his general view of the world, that is, of elite people who ought to be taking decisions out of the hands of ordinary people, this was perfectly consistent because the Constitution is what protects ordinary people.
Yes, but however, the framers of the Constitution gave us Article 5 as a means to amend the Constitution, and you're suggesting they don't want the amend it.
They just want the courts just to say to reconvene the Constitutional Convention in their chambers.
Oh, absolutely.
Because if you are trying to amend the Constitution, then you're going to have to have ordinary people go along with you.
And the whole point of people like the progressives is to supersede the ordinary people with the views that prevail among the elite.
Oh, my God, yes.
And this is not a new idea.
I think it's been an idea that's been handed to us down through history.
Well, that's true.
But in a specifically American context, it was the progressives who really opened up the notion that judges ought to be adjusting to the needs of the times rather than to the words of the Constitution.
Yes, yes.
And this is one of the questions that these guys are grilled on during confirmation hearings.
That is, the senators want to know whether they're going to be strict constructionists or whether they're going to adjust to the needs of the time.
They don't actually use that language, but that's what I perceive when I listen to the confirmation hearings.
Oh, well, that's true.
But it's more true, of course, when the Democrats aren't in charge because the Democrats really do want people there on the bench who will do, who will, in effect, enact the liberal agenda from the bench and spare them the political risk of trying to enact it in Congress.
Yes.
Now, there's another part of this dismantling America that, and actually it's in part two of a series of essays that you wrote.
And you say that one way of circumventing the people and circumventing the Constitution is to rush legislation through Congress so fast that nobody knows what's in it.
And I was rather surprised when you said that our health care bill contained a provision creating a tax on people who buy and sell gold coins.
Oh, yeah, I was surprised when I learned that, too.
One of the financial bills also has a provision in it about, quote, inclusion, unquote, of women and minorities.
And of course, as we know from experience, inclusion means quota in different words.
And again, this is something that was never discussed.
It was never put forth to the public as something they were doing as part of the Financial Reform Act.
But all kinds of things can be sneaked through in these huge bills that nobody reads.
And this qualifies, I don't know whether I'm being unfair to Congressman or not, but it qualifies in my book as congressional deceit and dishonesty to, you know, in the case of the health care reform bill, to put tax provisions in there.
As you said, we can debate whether the tax on selling gold coins is a good or bad idea, but it should be debated at least as opposed to slipped into a bill and nobody talks about it.
Yeah, well, of course, if you took all the deceit and hypocrisy out of politics, there wouldn't be a lot left.
That's absolutely right.
And I love the paragraph that you added, and you said, not since the Norman Conquerors of England published their laws in French for English-speaking nation has there been so much contempt for people's right to know the laws that are being imposed on them.
That's right.
They don't have to speak a different language.
They just have to make the bill so big that we can't possibly have time to read it all anyway.
I know.
Now, later on in part two of your dismantling America, you point out that actually in Obama, President Obama said that their taxes weren't going to be raised on people making less than $250,000 a year.
But you seem to think that taxes will be raised.
Well, the people making less than $200,000 $50,000 a year may not be paying their own taxes, but they'll be paying other people's taxes.
That is, they'll be paying the taxes that the Obama administration is loading onto electric utility companies, unless, of course, the people making under $250,000 a year can do without electricity.
They'll be paying the taxes that the Obama administration is loading onto all kinds of other businesses who are obviously going to pass those taxes along.
So it's true that those people will not be paying any taxes of their own, but they'll be paying other people's taxes.
Yeah, and this is one of the things, I think one of the shortcomings of the economics profession is this whole incidence of taxation that is economists need to teach the American people that corporations or businesses, they are legal fictions and as such don't pay taxes.
Only people pay taxes.
And if you impose a tax on a corporation, the corporation is going to either do one of three things or some combination.
It's going to raise the price of the product.
It's going to lower the dividends or lay off workers.
And so it shifts the burden of the tax forward to other people.
And if Americans could see this, then they'd recognize that taxes on utilities were really the tax on them.
That's true.
That's one of many things that the economics profession does not bother to explain to the public because I think there's really no payoff for it.
As you well know, if you're an academic economist, you get no brownie points when time comes for your contract to be renewed or when you're up for tenure because you wrote a lot of stuff that explains to the public what elementary economics is about.
You're absolutely right.
You're absolutely right.
And that's tragic.
And so much of economics is simple, but it's just not out there for people to understand.
There's no question.
If I had written an economics textbook before I got tenure, I might not have gotten tenure.
And by the way, ladies and gentlemen, an excellent book that Tom Soule has written is Basic Economics and Applied Economics.
And you're revising them, aren't you?
Oh, yes, yes.
There's a second edition of Applied Economics, and right now I'm finishing up the fourth edition of Basic Economics, which will be out in January.
Oh, my goodness, my goodness.
And they're easy to read.
How many equations do you have in them?
None.
No graphs, no equations.
Frankly, when I first started to write it, I didn't believe a book like that could be written in economics.
But it took 10 years for this stuff to accumulate.
And eventually I realized I had enough for a book, and I wrote it.
Absolutely.
And excellent books, both of them.
Now, in part two of Dismantling America, you also say, well, and people, unless they're our age, they don't really can't appreciate this.
But there was at a time, you say, when most Americans resented the suggestion that they wanted someone else to pay for their bills.
Yes, one of the things that has eroded is a sense of personal pride, personal responsibility.
You know, there was a time when a man who swept the floor in a factory went home every night with a sense of pride because he was considered to be a good provider for his family.
And now the government is perfectly willing to provide for his family, and he's regarded as someone doing a menial job for Chump Change.
You're right.
And the values, I know you and I are roughly the same age.
I say roughly because I have you by a few years.
I thought I had you by a few years.
No, I'm going the other direction.
But I remember my mother telling us we were poor living in the Richard Allen Projects in North Philadelphia.
And she used to always say something like, well, you know, we have a beer pocketbook, but champagne tastes.
Yes.
And that's an expression you just don't hear anymore.
And then the idea, the values, that if you were into a lot of debt, there's something morally wrong with you.
Oh, no question about it.
And nowadays, well, so what?
And then there are advertisements that you see on television where they advertise to you, if you have credit card debt of $20,000, they'll use $20,000 or $10,000 or so, we can show you how to cut it in half.
Yes.
And I listen to that.
That's just amazing.
That is just plain dishonesty and immoral.
Yes, but again, this is one of the many erosions of values as distinguished from the deliberate dismantling of the values and institutions conducted by the current administration.
But the erosions had to take place first to set the stage for the time when politicians can deliberately start dismantling.
And it's only about the beer taste, the champagne taste beer budget.
Today, it's going to be up to the taxpayers to make sure you can get the champagne.
That's right.
We're learning to live at the expense of other people.
Yeah, someone once said that democracy can last only until the point is reached where 51% of the people believe that they can live off the other 49%.
And we're nearing that point in our country because, according to the Tax Foundation, I believe that they say that 49% of the American population has no federal income tax liability.
That's a really bad situation to create.
I remember many years ago when I was a young man and I was making $25 a week and they took out $2.5 for taxes.
I mean, when I heard about government waste, I think they're down there wasting my $2.50.
I mean, I was madder than any millionaire.
Hey, Tom, can you hang on?
We have to go make some money, and we'll be back with your calls after this.
We're back.
So Walter Williams filling in for Rush, who will be back tomorrow.
And you can be on with us by calling 800-282-2882.
And right now, we have Dr. Thomas Sowell with us discussing his new book, Dismantling America.
Tom, now, in this part four of Dismantling America, you say that constitutional government does not depend on the Constitution, but us.
Can you explain that a little bit?
Yes.
Well, the Constitution by itself is a piece of paper.
It's only when the rest of us believe in it enough that we will not allow people to circumvent it by throwing out a lot of high-sounding rhetoric, but we'll turn people out of office who do stuff like that.
We won't elect people who talk about wanting judges with empathy.
Because the empathy is just a nice rhetorical word for bias.
But, you know, when the Constitution was passed, there was some lady who asked Ben Franklin as he came out of the Constitutional Convention, what have you created?
And he said, a republic, madam, if you can keep it.
In other words, he understood that it would be up to us to maintain it.
It wouldn't maintain itself otherwise.
That's right.
And you make a point of saying that it's not just evil people who would dismantle America.
Oh, absolutely.
There are many people out there who have started, you know, unintentionally eroding all the values.
I think the public schools are a major offender in this.
And I think many of the teachers who are doing things like what used to be called values clarification, but which continues on under other names, had no idea that they were out there trying to destroy the country.
They were just doing something, quote, new and exciting.
But there are organized groups in the country who are promoting these kinds of programs in the schools that undermine the values that kids have been taught in their homes in order to substitute other values.
And they understand clearly what they're doing, even if the teachers don't.
Yeah, right.
Well, even government programs, this, let's say, so far as education is concerned, No Child Left Behind that came under the Bush administration or the prescription drug bill.
All these things, they reduce the, or they increase the power of government and increase the centralization of government, which is something that our Constitution sought to avoid.
Oh, absolutely.
Well, you know, they had to amend the Constitution just in order to have an income tax.
Yes.
People who wrote the Constitution understood that once you let the federal government have an income tax, it is Katie bar the door.
Yeah, absolutely.
And also, regardless of what one would say about the wisdom of prohibition, at least the people at that time said, well, gee, we just can't get a majority vote in Congress.
We have to amend the Constitution because there's no authority for us to prohibit the selling of booze.
Yeah.
And the other thing is that, again, when you have the public at large involved, once they discovered the real price of prohibition, they then repealed that amendment.
Yes, right.
And matter of fact, some of my colleagues in the public choice, they point out something interesting about prohibition.
They said people have been wanting prohibition since the late 1800s with what's the Carrie Nation, and she was pushing for it.
But Congress did not want prohibition because liquor sales were the major source of finance for the federal government.
And it wasn't until the 16th Amendment when they got another source of funding that they could go and repeal.
I'm sorry, they could support prohibition.
And something interesting is say, well, when did prohibition get repealed?
Well, it was in 1933 or 1932.
Well, what was happening in 1933, 1932?
Well, we were in a depression and revenues to the federal government were diminishing.
Well, see, in other words, they made a better deal if they had not passed the income tax amendment and also not passed prohibition.
That's absolutely right.
Oh, boy.
Now, so are you optimistic or pessimistic?
Pessimistic.
And I'm fighting off becoming despairing.
Well, you know, but as I said earlier in the show, in the first hour, if one can say anything good about this administration and the Democrat control of the House of Representatives and the Senate, is that they've been so brazen that Americans once again, for the first time in my life, are talking and debating about the Constitution.
They're forming Tea Party organizations.
And some of the top shows are the radio and television shows are shows that debate the Constitution, like Judge Napolitano's Freedom Watch.
That show would not have been on 10 years ago.
That's true.
So that's a little bit of optimism that Americans are learning that, well, government's getting too big.
Well, you're right.
If we manage to survive this administration, and I mean survive in terms of the economy, but also keep Iran from becoming a nuclear power, then I think we will be better off with this because we will have seen what happens when you disregard the Constitution, and they will see where the trends that have been existing in this country for a long time, where those trends lead.
Yeah, yeah.
Tom, can you stay for a few minutes of the next hour?
Oh, absolutely.
Have the break.
Okay.
Now, ladies and gentlemen, we're on with Dr. Thomas Sowell.
You can be on to ask him some questions.
The number is 800-282-2882.
We are discussing this excellent book, Dismantling America, and it is available in stores, I guess, just about everywhere.
Is that right, Tom?
Yeah, it was published on August 10th.
Oh, August 10th.
You get it, folks.
We'll be back.
We're back, and it's Walter Williams sitting in for Rush Limbaugh, who will be back tomorrow.
And we're talking to Dr. Thomas Sowell, and we're discussing Dismantling America, his new book that's available in all the bookstores.
Tom, I'm going to talk about some of the things you raised in part three of Dismantling America about Barack Obama's disregard for national defense.
Oh, yes.
Oh, there are so many of those.
I mean, it's fascinating that this man who has been spending hundreds of billions of dollars from coast to coast on all kinds of projects, some of them are laughably frivolous, is cutting $100 billion out of the defense budget.
And then you said under his administration, I believe, that they're releasing illegal aliens who are from terrorist countries.
Yes.
Recently in the Investors Business Daily, they said that there were literally hundreds of these people who were caught trying to cross the border from Mexico, which is not restricted to Mexicans, obviously.
And they're from countries which are on the list of terrorist countries.
And yet, when they're caught, they're then released on their own recognizance inside the United States.
That is truly amazing.
And if I were a member of the Obama administration, I would be terrified by something like that because, gee, if there's a dirty bomb goes off in one of our cities or some kind of a terrorist attack, the opposition will surely say, well, gee, you know, your administration is letting these terrorists in the country.
It's your fault.
Well, they might.
They probably would.
The media, I think, would try their best to circle the wagons around Obama as they have in the past.
Oh, my God.
And they have indeed in the past because I doubt, I doubt whether any other person could have become President of the United States who attended a church over 20 years with a racist minister who had friends who hated America, the weather, the underground people and the people who bombed the Pentagon one time, I believe.
Yeah.
But what other president could have run successfully with that in his background?
No one who didn't have the media completely behind him.
And it couldn't have happened even with the media behind you.
If it hadn't been that we had generations of dumbed-down education, of people who are taught to respond to rhetoric and who think that it's so important that we have, quote, the first black president.
I think if, heaven forbid, there comes a time when there's an American city lying in radioactive ruins, nobody will care what the complexion of the president of the United States was or how he talked.
They'll wonder what the hell happened, you know, that these people left us defenseless.
Yes, yes, yes.
Can you take a few calls?
Oh, certainly.
Let's go to who do we want, Kit?
Let's go to John in Barrington, Illinois.
Welcome to the show, John.
Good afternoon, gentlemen.
I'm proud to say that I consider you two great Americans regardless of race.
And I think I've torn out more of Dr. Soule's Forbes articles than any other author and put them on the side to save as being just clear thinking and things that you want to keep track of.
Well, thank you.
What's your question for Tom?
I actually wanted to mention, my wife once attended the Oprah show, and she gets emails from them once in a while.
And I snuck on.
They had a thing requesting people you wanted to see interviewed by Oprah in her final year.
And I got on there and submitted Dr. Soule's name because I think that would be a very interesting exchange if we could get Dr. Sowell on there.
I'm going to let Tom respond to that.
Or do you want me to respond for you, Tom?
Well, I'm not waiting by the telephone.
That's my only comment.
Well, thanks a lot, John.
Let's go to Frank in Chicago.
Welcome to the show, Frank.
Thank you.
Good evening.
Good afternoon, gentlemen.
I was just calling about Social Security.
My understanding was I know some people who work for the railroad, and they don't pay into Social Security.
And I understand that back in the early 60s, Lyndon Johnson tried to get the people that work for the railroad into Social Security, and the Supreme Court ruled that the government couldn't do that.
But they also ruled that Social Security was constitutional because participation in it was voluntary.
Wow.
I don't believe that.
Well, FICA stands for Federal Insurance Contributions Act, and contributions normally are deemed to be voluntary.
And well, I think also there's voluntary compliance with the tax code.
Is there really?
That's what the IRS says.
Well, thanks a lot.
It's a free choice whether you want to go to jail or not.
That's right.
Thanks, Frank.
Let's go to Ray in Greenville, North Carolina.
Welcome to the show, Ray.
Thanks, gentlemen.
I just wanted to kind of play off what you guys were talking about earlier, Charles, the education system.
Do you know of any effort or do you guys have any effort to try to get basic economics, what you've been talking about, taught in high schools?
Because I know when I was in high school, you know, a lot of what was taught was more pocketbook issues that you would deal with as far as buying insurance and balancing a checkbook, but not like macroeconomic issues as they affect people knowing that that's their money, not the government's money.
Well, that's something my publisher would have to do.
But there are high school economics textbooks and classes.
It so happens, however, that the tests that are given for AP economics do have graphs and equations and so forth.
And so my book wouldn't allow it, wouldn't help students to pass those kinds of tests.
No, no, it wouldn't.
However, they know much more about economics, though.
But, of course, the kids who are thinking of going to college are much more interested in having those AP credits on their resume rather than knowing economics.
Right.
Let's go to Bill?
Bill in Chicago.
Welcome to the show, Bill.
Good afternoon, gentlemen.
Dr. Soule, Dr. Williams, speaking to both of you together is almost as good as talking to Rush.
Oh, my.
Thank you.
I have a quick question.
I've heard Rush say many times that many economists say that the New Deal did not get us out of the Great Depression, that it was World War II that got us out of the Great Depression.
Accepting that premise, can the argument be made that the spending that was done for World War II was just a massive stimulus package?
A good question.
And in fact, that argument has been made by the people who are supporting the Obama administration's stimulus.
FDR himself offered a somewhat different view, which in this case I think is correct.
He said Dr. New Deal was replaced by Dr. Win the War.
In other words, a lot of the new dealers who were chopping at the bit to criticize and regulate business were quietly replaced by people from the business world in order to get businesses to make their maximum contribution to the war.
And what that means to me is that when they stopped the New Deal, the economy recovered on its own, as economies had recovered on their own for over 150 years before the 1929 stock market crash.
If you look at the data on unemployment, it seems very clear to me.
After the stock market crash, unemployment never reached double digits in any of the 12 months that followed that crash.
It peaked at 9%, two months after the stock market crash, started drifting downward.
It was all the way down to 6.3% by June 1930.
That's when there was the first federal intervention.
After that intervention, unemployment then shot up to double digits within six months, and it never came out of double digits in any month for the remainder of the entire decade.
So it was really not the stock market crash that caused the massive unemployment.
It was the, as in so many cases, it was the solution that was worse than the problem.
That's right.
And I think you make a very good point, Tom.
That is, we went from 1787 until 1920, and we had economic downturns for one year up to seven years.
Sometimes they used to call them panics.
And nobody thought that the federal government ought to be involved with the economy.
It was not until 1930 that the government thought that people thought the government should be involved.
And by the way, Roosevelt's own Secretary of Treasury, Henry Morgenthal, he said, quote, we've tried, he put in his diary, we tried spending money.
We spent more money than we've ever spent before.
We've never lived up to any of our promises.
And I say after eight years, this administration, we have just as much unemployment as we had when we started and an enormous debt to boot.
We can say almost the same thing about this administration, the Obama administration, that Henry Morgenthal said about the Roosevelt administration.
Oh, yeah.
And unfortunately, the media will not say it, but I think if he gets a second term, I mean, there's no limit to how long he can keep this recession going.
Thanks.
We'll be back with your calls and calls to Dr. Thomas Sowell after this.
We're back, and we're talking with Dr. Thomas Sowell about his new book, Dismantling America, that's available everywhere.
And Tom, while we were talking about the issue that you raised that the constitutional government does not depend on the Constitution but on us, I thought, I really forgot to bring it up, but as late as the 1950s, there was still kind of general respect for the Constitution because when we built, when President Eisenhower, when he called for building the interstate highway across our country,
he knew that there's no constitutional authority for interstate highway.
They even called it the National Defense Highway Act.
They tied it in with national defense.
But now, these people don't try to make any connection with the Constitution.
And I think, as you correctly say, that a lot of it has to do with the American people.
We've been dumbed down, and then people have their own agenda.
Oh, absolutely.
Right now, people judge judges according to whether the judges validate these policies that the people believe in.
You know, there's no thought that the judge's job is to decide whether the law that was passed fits the Constitution, whether or not the judge likes the law or not.
But now we talk about liberal judges and conservative judges and so on.
And really, the real question is whether this is a judge who thinks his job is to enforce the law that exists or whether he thinks it's his job to, quote, interpret, unquote, the law in such a way as to come out with the results that he wants.
Yes, that's absolutely right.
And I don't know, as you said, that the people who have the greatest stake in the Constitution are the so-called little people, the average America.
That's the only thing that's protecting them.
The rich people and the elite, they can always find protection for themselves.
But it's the little person that the Constitution protects.
Oh, absolutely.
And that's nowhere more true than the case of property rights.
Liberal judges and liberal law professors have tried to present property rights as something that's of interest to only the people who own a lot of property.
But as you well know, when property rights are disregarded, things like urban renewal come through and they destroy low-income neighborhoods.
And in most cases, minority neighborhoods, they don't come through Beverly Hills and destroy all kinds of property in order to build a highway.
And matter of fact, they used to call it not urban renewal.
They used to call it Negro removal.
Oh, absolutely.
That's what it was.
And it's also a way in which politicians can increase the amount of taxes they can collect by getting rid of moderate income people in a given neighborhood, destroying that neighborhood, and then allowing something like hotels and casinos to be built there because this will bring in more tax money, which the politicians can then use to get themselves re-elected.
Yeah, that's tragic.
And sometimes I'm almost as pessimistic as you are, but I think one of the things that we Americans have to recognize, there's an awesome responsibility that we have.
And that is, if liberty is lost in America, I believe that it's lost all times and all places in the world.
Absolutely.
And because the amount of liberty that exists in the world is because of the United States.
That's true.
But I think someone like Obama sees his role as that of putting us in line with the other welfare states of Europe.
Because right now, as long as there's the United States, people who don't like what's done in their own country, whether it's the health care or whatever, they can come to the United States.
People who are in business can invest in the United States.
But if the United States goes the same way, then they sealed off all those avenues.
That's right.
And matter of fact, in response to some of the columns I've written on healthcare, I've gotten letters from Canadians saying, please preserve a relatively free market in healthcare in the United States, or else, where will we Canadians go?
Yeah, if they destroy the health system of the United States as it's been destroyed elsewhere, we can't just go to Mexico when we get sick.
It doesn't work that way.
Hey, Tom, it has been a delight talking to you, and I'm very, very sure the Rush audience feels the same way.
And once again, your book is available, Dismantling America, and you're coming out with a revision to basic economics in January.
Yes.
Very good.
That's very worthwhile.
And you have all kinds of new material to put in it.
Oh, it's getting bigger over time.
I'm hoping that the weight that it puts on will all be fat, unlike that that I'm putting on.
Well, thanks a lot, Tom.
Take care.
We'll be back with your calls after this.
We're back, Walter Williams, sitting in for Rush.
And that was Dr. Thomas Sowell talking about Dismantling America, his new book that's available everywhere.
And I have a pretty good book, too, Liberty versus the Tyranny of Socialism.
You can check that out, too.
It's also available everywhere.
Let's take the last call for the hour.
Jim in Kingwood, Texas.
Welcome to Shogun.
You're welcome.
I'm sorry, Dr. Soule signed off because I was hoping to talk to two to the three of my favorite living economists and pose this question.
And I enjoyed both of your books, by the way.
Is there any constraints whatsoever to the money supply?
You hear the gold ads talking about the government printing money and so forth and borrowing money.
And I know that most of our money is not printed currency.
What are the limits to how much money the government can quote print?
Well, it's literally none.
I mean, if you go to Zimbabwe, where you can buy, I think at one time, a cup of coffee, their inflation rate, a cup of coffee, was something like a million Zimbabwe dollars.
And Germany had a rapid inflation.
Hungary, and inflation is always a result of printing money.
Actually, I call it counterfeiting.
So there are no constraints whatsoever, either economic or legal?
No, no, there's just no constraints.
If they have the authority to print money, they can just print money.
And matter of fact, I've often recommended to people that if they ever find themselves in front of a judge charged with counterfeiting, they just tell the judge, I was engaging in monetary policy because that's what these people are doing.
They're printing money, thereby lowering the value of every dollar out there.
And so what we have to do, you know, there is a constraint.
If we had a gold standard, there would be a constraint.
But we no longer have a gold standard, and those who want to run our lives make sure that we won't have a gold standard.
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