All Episodes
Previous Next
Sept. 29, 2017 - Ron Paul Liberty Report
17:03
Puerto Rico: How Government Increases Suffering

Natural disasters are, and will always be, difficult to prepare for and bounce back from. Unfortunately, a mistaken belief and faith in government makes both preparing and bouncing back much worse than it has to be. Ron Paul helps to dispel the fantasy of government "help."

|

Time Text
Need Not Government 00:06:43
Hello everybody, thank you for tuning in to the Liberty Report.
With me today is Chris Rossini as co-host.
Chris, welcome to the program.
Good morning, Dr. Paul.
Very good.
And today we'd like to talk some more.
We've talked a little bit this past week about Puerto Rico, but it stays in the news.
And it's really a good subject to talk about economic policy and a lot of other things and how the conditions of government and what government does can take a natural disaster, which is bad enough in itself, and make it much worse.
So when we look into this, we find out that, you know, Puerto Rico is not exactly a libertarian state.
I mean, it is a socialist state.
It's totally bankrupt.
It owes over $70 billion and $50 billion in pension obligations.
So they don't have any money.
And now they have a bad hurricane come in and do a lot of damage.
And they're going to need a lot of money.
They have no electricity.
So they haven't responded very well.
The first thought, Chris, that came to my mind was, you know, what happened to the old-fashioned idea of saving for a rainy day?
And you could say that Puerto Rico has had a rainy day.
And people who do save for a rainy day means you plan and you prepare.
And you don't just say, government will take care of me and depend on government.
So don't you think a little bit of preparation could have changed the outcome of this and helped the recovery effort?
Absolutely.
Unfortunately, Puerto Rico, for at least over a century, they've always been under someone's thumb, whether it was the Spanish Empire or when the United States captured and seized it in 1898.
So independence hasn't been a part of their culture, I guess, from other states.
It's dependency.
And, you know, they're part of the United States.
And look at the similarity.
Puerto Rico filed for bankruptcy earlier this year.
And the United States is 20 trillion in debt.
And everybody looks when there is a crisis to the government.
This seems like a bad idea, don't you think, Dr. Paul?
Well, there's no doubt about it.
And I think there's a bit of moral hazard in this because, you know, people have been conditioned, whether they're in Puerto Rico or in Chicago.
Most people believe the government will take care of it, you know.
And we have been given a gift by being able to issue the reserve currency of the world, which allows us to print money a lot longer than anybody else until the whole thing caves in.
So people think that, you know, government can pay for it.
And as it was said, when the governor of Puerto Rico goes to our president, they say, you need to help us.
You need to pay for this.
But they never say, where does it come from exactly?
Are they going to tax you and me and the people who still have a job in this country?
Or are they going to get it somewhere else?
And they never ask that question.
They just think the government has it.
In a way, you can't blame them because that's what the government does.
They just pull it out of thin air and they can get away with it until eventually this thing comes down on our heads.
And that's what's happening in Puerto Rico.
They've been able to borrow and adjust.
And before this hurricane, they didn't really have much of an infrastructure.
But then when they come in and they lose their grid and have no electricity and there's flood and damage and they haven't seen for a rainy day, I mean, this is what you should expect, but it shouldn't be necessary that it happens this way.
There are other ways to prepare for these kind of conditions.
And one would be not to accept the notion that government is there to take care of us no matter what happens.
Yeah, but unfortunately, government drills this idea into everyone's minds that they are there to help.
And as a result, people, they don't prepare, even in this country.
I mean, I don't know if we're all prepared for big disasters.
And when they actually happen, you find out you're really on your own.
None of it was true.
You learned that you can't depend on them.
And when they do get involved, whether it be a Katrina or in Texas or anywhere, you almost wish the government doesn't get involved.
They make things worse.
And then when money starts, becomes a part of the equation, all the shady characters come out to get a piece of it, and you hear about all the fraud.
So we really have to shake this idea that we need this overarching state to take care of us.
Yeah, and you know, there is one thing about the big debt they owe and the pension fund obligation.
But what caught my attention on one of the reports shortly after the hurricane hit was one real long line that they had a picture of, and they were all lined up, and were they waiting for food or just water?
No, they were waiting because there was only one ATM machine that they knew of that operated because there was no electricity, and this machine had a generator running it.
So people were lined up to get some cash.
So nothing worked.
And this is what could happen to a whole society, maybe the entire world, because fiat money is such it depends on electronic transfers.
And that could be private money or even government money.
But if you use real money, there's a difference.
Just think of a situation like this in Puerto Rico.
What if this happened and everybody was prepared for a rainy day and each had a bag of old silver that they could use?
They could immediately start trading and it would work.
It would be temporary.
So the ultimate money is usually something you can touch.
And when you're totally dependent on fiat, it usually fails because there's deception.
And that would be what happens.
And our dollar is the same way.
Our dollar is fiat, of course, and depends on bank transfers and everything else.
And some people say, well, that's overly simplistic.
But I tell you what, in a community like in Puerto Rico, if you could start paying for something of real value, somebody would find how to get these things.
But, of course, one of the things that helped set a bad situation for Puerto Rico was the welfare state.
And we know a lot of welfare.
It was a tremendously strong welfare state.
Systemic Failures Impact Welfare 00:08:49
There were government officials making a lot of money and big pension funds.
But then there was another thing.
There was the old-fashioned welfare, but then there was corporate welfare too.
And there's an interesting lesson there about the discussion and the change in attitude by the president on the Jones Act.
And of course, the Jones Act says that within our country, you can't go from one port to another port unless you use an American vessel.
So out near Puerto Rico, if there was a foreign ship available to bring goods into Puerto Rico, they weren't allowed.
And they were prohibited by it.
So there was a call for suspending the Jones Act.
And the interesting thing is Trump had a strong opinion.
He said, no, the ship owners don't want me to do that.
And of course, it guarantees a prop.
It's a system that helps beef up corporate profits even in ordinary times.
So then he changed his mind for political reasons.
And the point there is: if that helps in tough times to distribute products, why don't you just get rid of those laws?
You have all these kinds of tax abatements.
Oh, I want this company to come in.
Let's give them a tax abatement and a break, but just one big company to come in.
Well, if it works, why don't you give it to everybody all the time?
But then we'll do it for this company for 10 years and go on and on.
They don't quite see the picture that we should have a better economic system to prepare ourselves for these disasters.
Yes.
It was ironic to see a protectionist president at least peel away some protectionism for good.
Unfortunately, it's temporary.
It should be totally abolished.
But there have been a lot of excuses that have been to explain away the government's incompetence.
One, which I really liked, was when President Trump said that it's a big ocean getting to Puerto Rico.
But I never heard about a big ocean when they were fighting wars, sending half a million people to Vietnam and South Korea.
They'll go six, ten thousand miles away and have a thousand military bases all over the world.
And you never hear about the size of the ocean when it comes to war.
And today in the Washington Post, there was another excuse.
And they said, well, managing several disasters at once is really, really hard.
And I thought to myself, well, they manage multiple wars all the time in Iraq, Afghanistan, Libya, Somalia, Yemen.
Never hear that it's real hard.
So government is real good at doing the things it shouldn't be doing.
And when it comes to actually taking care of people, which they believe that they're there to do, they're terrible at it and they make excuses.
So if we as a country would spend a lot less pretending we can take care of the world, there would be a lot more wealth here at home that would take care of the people.
And if you had free markets, they could buy their own generators and be prepared.
But, you know, I was thinking even in the interim, you know, if we had a naval group, some naval vessels not too far from here, and they needed for some evacuation or something or some transport, you know, if you just withdrew them from this act of going off to another war, I would say temporarily.
I mean, they're already spent all the money on the naval vessels, and that's not the way it should be.
It should be in the economy.
You literally could, but oh, no, we can't do it.
You know, we have to get over there.
You know, we don't know what Assad's going to do tomorrow, you know, and on and on.
So they argue the case, and your point is well taken, that they can do these things for military reasons, but they don't do it for survival reasons.
Matter of fact, they do things like the Jones Acts that get in the way, and of course they destroy the economy and they destroy the incentive to save.
And we end up with chaos like this.
But I think they've known there's been hurricanes in the Caribbean for a long time.
And I just wonder about how many people there had flood insurance.
Flood insurance sometimes is an incentive to do the wrong thing.
They build their houses in the wrong places, it subsidize and all this sort of thing.
But I'll bet you a lot of them never even had insurance because they knew that the government would take care of them.
And they have to argue a little bit, but they're going to get a big bailout.
Look how long it took to get the first $15 billion.
It took less than a week.
So there's going to be big bailouts if the dollar lasts that long.
That's why this could be very important long term.
Yes, and October 3rd, at least to my knowledge, President Trump is going to add insult to injury by going down to Puerto Rico for a photo op.
It's going to cost millions of dollars.
It's going to cause everybody to come to a standstill.
They're struggling to survive just so he can take a few pictures.
So, Dr. Paul, what do you think about this?
Can he just do a conference call or something?
Absolutely.
I mean, it is grandstanding, and they all do it.
And, of course, if he doesn't, you can expect his enemies to really beat up on him.
But I think you can express concern.
I think this should be an opportunity for him to preach the gospel of free markets and sound money and limited government and balanced budgets and saving for a rainy day and why our troops ought to come home.
I mean, this is an opportunity for him to send the message.
And he could do a teleconference for that.
He could do it from the Oval Office.
And it's a message to the people of Puerto Rico.
But you can express your sympathies because they deserve it.
Oftentimes, they're total victims of natural disaster, but they're also victims.
Most people are victims, even though they participate in the welfare state.
They're victims because that's the system.
I blame more the corporate welfareists because they know exactly what they're doing and that they promote that and they lobby for this.
Others, you know, just accept that this is the system.
But I think when things like this happen, whether you have economic downturns, runaway inflation, or unemployment, it should be a time for the leader of the country to say, you know what the problem is, is we have been following the wrong economic model.
Keynesianism is wrong.
The central bank is wrong.
And governments just can't bail out everybody.
Governments can't do this.
Saying the government is going to pay for it and just expect the Federal Reserve to print the money, common sense would say, well, it sounds good.
I guess it's worked in the past, but will it work forever?
And one rule that ought to be taught is that the creation of new monetary units does nothing to create wealth.
Matter of fact, it's destructive in the creation of wealth.
It destroys the incentive.
And yet, this is how we've been working.
And we've done this in a massive sort of way because of the downturn of 2009.
In order to get things going, they had one tool, and that is create new digits, new money to monetary units, and just throw it out there, and all of a sudden there'll be economic growth.
Yeah, there was economic growth in the pockets of the 1% who live on Wall Street.
You know, it didn't go where they had hoped, unless they did really hope that it would go in that direction, because a lot of big corporate giants did get bailed out in those early years, but it continues.
But see, under these conditions should be the opportunity for people in leadership to try to explain why this happened, to explain that there have been people predicting that there's going to be a middle class that can't take care of themselves if you destroy the money.
This is a natural consequence and it's a predictable consequence and therefore put people's attention not to how fast can we get stuff there?
Whom are we going to take it from?
And how are we going to prevent the demagogues from using it just as a political tool?
And I think neither sides really understand economics and they fall into the trap.
It's all about not freedom and economics.
It's all about politics and who's going to have to pay the most penalty.
This is sort of what's going on with this tax changes and the tax reform.
Oh, it has to be revenue neutral.
Well, what kind of reform is that?
If you promise you won't raise anybody's taxes, it means that we are going to continue to run up the debt.
Tax Reform's Political Trap 00:01:14
We're going to send the money to Puerto Rico, and we're not going to worry about it until that thing comes down on our head.
Chris, I'm afraid that's what's going to happen.
But in the meantime, this station and our report is going to continue to try to point out the things that we think are important to bring sanity back to our system of government.
Chris, do you have a closing comment?
Just, you know, for the rest of us, we have to use this as a learning opportunity, not to depend on the state.
It's a big fantasy.
And hopefully, we make our case as to why it's a fantasy.
Yeah, and that's right.
The state didn't cause the hurricane, but the state makes the hurricane worse.
I'll tell you what, I have some personal experience about that on drainage and flood programs and everything else.
Believe me, the government doesn't reduce the amount of damage, and they aren't magicians in cleaning up the mess afterwards, even if they do give you big discounted flood insurance, a different story.
So I think your point, use it as an educational opportunity, it would be the thing to do.
I do want to thank everybody for tuning in today to the Liberty Report.
Export Selection