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Okay, this is Dr. Phil Fernandez, President of
the Institute of Biblical Defense, and today I have with me a guest,
Nelson LaPlante. Nelson's a good friend of mine,
and I'm going to be interviewing him. He's in the, I guess I would
call you an economist. You teach economics at a few
schools, and right now you're doing a little bit of teaching
at UW, University of Washington. Yeah, so I've taught at many,
many schools in the area. You used to teach at Olympic
College when you first came out here. Yeah, it was my first real
job. And so now you're teaching over
there at University of Washington. I think you want to say UW. And
it's going to go out all over the world. Some people might
not know exactly what it is. The Bongo campus is one of their
smallest. Yeah, University of Washington. And now you, did you do your
undergraduate degree in economics as well? I did my undergrad in
math, and I minored in economics, and I figured what the heck,
I could maybe use it someday, and then I ended up doing a graduate
degree. Okay, so you got a Master of
Arts from San Diego State. Yeah, that's my thickest jacket
that I enjoy wearing. Yeah, you're right. You're also
a runner, so you don't like to weigh yourself down that much.
The reason why I wanted to interview you, your economic theory, you're
a free enterprise guy, pro-capitalism. And so I wanted to ask you a
few questions on that. So first off, you can start out
with, what is free enterprise? What is capitalism? Are they
synonymous? And then we'll be talking about
why free enterprise? Why is that the way that we should
go versus something like socialism or Keynesianism, things of that
sort. So let's start out with that.
What is free enterprise? What do we mean by that? What
do we mean by capitalism? Are they synonymous? If they're
different, where are they different? Yeah, I think free enterprise
is basically just allowing individuals to decide for themselves. and
use their own property as they wish. And you have minimal, you
could say, laissez-faire, or let it be minimal government
intervention. And the terms of capitalism and stuff, I mean,
I would think of them as being fairly synonymous, essentially. And there's kind of like perversions
of capitalism, like crony capitalism. where it's really like what big
businesses are, you know, working hand in hand, money's changing
hands with the government, so... Kind of like corporate welfare
or something like that. Yeah, and where they kind of
protect legislation to protect certain big businesses. And that's
not really true capitalism, that's a perversion. Yeah, I mean, big
business doesn't really like free enterprise either. Big business,
typically, once you get to a point where you're big enough, After
all, I mean, I think it was Rockefeller who said, competition is a sin.
And so nobody likes competition. You know, I mean, you can even
think of it in your personal life. So I like kind of the individual
behavior aspects of economics, you know, human action. And,
like, you're dating somebody, you don't like competition. Right?
So how do you try to drive out the competition? Well, there's
many ways you can do it, and in big business it would be like... Well, you know, that's like a
free market, right? You're trying to attract them, but competition would be,
you know... flashing weapons or whatever
guy comes around here. The person you're trying to attract
to, you can think of it in terms of a business type of, not a
business interaction obviously, but a similar type of, nobody
likes competition. Because in the business world,
competition means you're gonna have to sell at a lower cost,
you're gonna have to provide better service, it's gonna cost
you more money, whereas if you could get the government to help
you monopolize your enterprise, then you could really charge
people you can't charge them whatever they want, but you can
charge them a much higher price and make a lot more profit. That's
what cracks me up about, like Bernie Sanders, because he would
slam big businesses and crony capitalism, and rightfully so,
but then he acts like, therefore we need to turn to the government
for all the solutions, as if the government should be more
trusting businesses when we can get we
can get trampled on by either one and the government they're
the guys with the guns and stuff so yeah like you mentioned deodorant
right any standard government should decide which deodorant
we have right yeah instead of having 18 and then I guess we
can save the starving children according to his yeah that's
like used to be of course now they probably cause most you
but used to me be like in the 70s blue jeans cost like something
like 70 dollars a pair in the Soviet Union when you could probably
get them for about 10 bucks in the States, but there was like
no competition there. What they were making chandeliers,
but the ceilings weren't strong enough to hold some of them,
so they made chandeliers that couldn't even be held by the
poor quality ceilings that they had. Great. And so the Union
is a great example of what a lack of competition may have been.
Was it the Edsel or whatever, the car? You know, you had a
lot of choice on what kind of car you got to get. I think you
had a red one, a white one, a black one, and a green one. And they
spewed out smoke. They had no shocks. They had
no power steering. They were just pieces of junk.
And they could barely get you from A to B. But, you know, that's
what the smartest guy in the room was able to develop. So
central planning. Yeah, and eggs. So, and you know,
I really believe God instituted human government to protect our
freedom, so I think free enterprise would go hand in hand with that. You were kind of touching on
it already, but basically, what's wrong with socialism? And what
is socialism? And then what's wrong with it?
Well yeah, so, before I say that, I do think God instituted the
idea among men of free enterprise. I mean, you know, socialists
They hate the idea of trade. So socialism is not sharing. It's not like being really happy
and getting together, and we're going to pool our resources.
People think Jesus was a communist because they shared. But no,
socialism is force. I mean, that's really, you want
to get down to the brass tacks. He'd say, it's force. And at
the point of a gun, it's the carrot and stick, right? There
is no carrot. There's just the stick, and they beat you with
it. if you don't conform. And so socialism is the national
ownership and government ownership of the means of production. Now Karl Marx, he talked about
one of the planks of the Communist Party is the abolition of private
ownership. Yet, you know, communism is supposed
to bring about the classless society. Well, that's never happened. and so you end up with a socialistic
regime. He wants the dictatorship of
the proletariat, dictatorship of the working class. It's supposed
to eventually, so you get this all-powerful socialist state
and then that's supposed to happen all over the world and then eventually
the dictators are going to give up their power and move towards
socialism. So I kind of view communism as
socialism, and communism is a pipe dream. I view communism as socialism
as being synonymous. Yeah, I think communism is more
of the political elements of socialism, perhaps. And the idea,
again, you mentioned the classless society, and I'm just going to
preach some heresy here in this area, that we're in the Seattle
area, and that is that, you know, income inequality is wonderful.
Market-based income, market-based wealth inequality is an absolutely
beautiful thing, because do you really, you know, why do people
go to school? Because they want to be better off than somebody
that doesn't graduate third grade, right? I mean, why would you
invest in yourself if you're going to have the same income
as everybody else. So yeah, market-based wealth
inequality is wonderful. So different classes are fine. There's nothing wrong with being
rich if you did it in a market-based way. And again, that's trade.
So socialism, I was going to say, they do not like trade.
Socialists hate trade. They hate money, because money
involves trade. And any kind of trade in subjective
value is a basis of trade. Trade means we both trade, we
both benefit, but maybe you benefit more than I do. And that's not
fair. And we can't have that. So we
shouldn't allow trade. And why would you need trade
anyways? The government provides you with all of your needs. And
so the government provides you with housing and with food. Of
course, you can watch some of my YouTube videos on Venezuela
and see that it takes like six months before the government
gets around to providing you with that food. And so if you can survive
six months without food, I guess, you'd be okay. And it'd run you
a little bit of food. Now, the redistribution of wealth,
take from the rich, give to the poor, why doesn't that work?
Well, there's, on one hand, there's also the idea that if you were
to allow them to go out and trade again, then within a number of,
maybe a decade or so, you'd be back to where you are. Because
some people are just not good with money. We all have a friend
who makes a lot of money But he's always broke. And you're
like, how can you be broke? You make x amount of money, like
two times what I make. And I have some of this in the
bank, right? And so some people are just, they have spending
problems. It's not an income problem. It's like government,
right? So on an income problem, it's a spending problem. And
so redistributing wealth, on the one hand, if you allow them
to continue in their ways, they're just going to blow it. And you're
going to see a total waste of resources. And two, is that you're
disincentivizing. In fact, in his famous book,
Piketty, a lot of liberals don't admit it, but Piketty says, I
think on page 536 or something, he says the whole purpose of
the wealth redistribution, the very, very high income tax bracket,
is to eliminate those high income earners. So you really disincentivize. any kind of capital accumulation
and wealth building. So it's kind of like taking from
the producers and giving to the non-producers just encourages
everybody to be non-productive. Yeah, in ancient times it was
taking from the people that produce food and giving to the people
that consume food. And people that produce food
are like, why am I working? In Rome they had price controls
and things. It was basically a type of redistribution. They
were giving one in three people in Rome were getting free bread
and circuses from And so eventually you get to the point where the
people that are producing the food say, it's not worth it because
I can't, one, they couldn't sell it because of price controls.
And so they just move into the city and they start consuming.
And so really the idea of redistribution is to disincentivize any kind
of production or wealth building. And you can't have a productive
society without rich people, without wealthy individuals.
And why is that? And that's because you need poor
people don't save very much. So if you have a high marginal
propensity to consume, that is for every extra dollar you get,
you spend most of it, you're not really saving a lot of money.
And savings is key to wealth building because savings, money
that you save, the rich, there is no Scrooge McDuck, right?
There's nobody that's got a money bin and they go swimming in it.
It's like, one of my favorite capitalists is Kevin O'Leary,
and he always has a shark tank. He says he wants to, he has his
money, he wants to send them out into the world to have little
money and come back, you know, with more. And so that's what
wealthy do, is they invest. And by doing that, it creates
jobs, it creates opportunities for others to move on up. Yeah,
it creates productivity, and I mean, that's really what drives
us, right, is our ability to work Like, you used to have to
work from sunup to sundown seven days a week, but now we work
40 hours a week, right? And, you know, that's sunup to
sundown in the wintertime up here, but it's only five days
a week. And how do you do that without productivity? And productivity
comes from capital accumulation, right? I mean, you could think
of, go to Costco. Just imagine a Costco without
forklifts, right? So, we got what? Forklifts. We don't have any pieces of equipment.
And so like raising, what would be wrong then, because it's kind
of a socialist idea, so what's wrong with like raising the minimum
wage to try to help somebody? Yeah, so I think there's a lot
of problems. One is you get into the idea
of the mutually beneficial exchange, right? You have an employer and
an employee, and they agree upon a wage. And with the minimum
wage, the employer kind of reluctantly agrees upon the wage. And yes,
the employee perhaps might be better off with a $9 an hour
than maybe he would be paid $7. But in a market base that, of
course, you have competition, and you're going to drive that
wage out. Some people think, oh, no minimum wage means they're
going to earn $0 an hour. That's ridiculous. Nobody would
work at that. So employers compete against each other for the best
laborers. And so you really go against that mutually beneficial
exchange, voluntary exchange, because you're forcing the employer
to. pay a certain amount. And then it's that you force
them to pay even more. And the employer who, I like
to say that originally you have an employer and an employee working
together. And they have a good relationship. And if the employer gives the
employee a raise, the employee is grateful, typically. He's
like, oh, you really appreciate me. Thank you. And the employer,
he likes the employee. He appreciates him. And so he
gives him the raise. And the employee never gets it. But then
you get a third party to come in and really kind of breaks
up this relationship and says, no, you must pay him. In this
area, it's $15 an hour in Seattle. And so I said, no, you must pay
your employee $15 an hour. And the employer's like, I can't
do that. He might not even make $10 an
hour himself. And now he's got to pay his employee
$15. And his employee isn't going to the employer and saying, oh,
you really appreciate me. He said, oh, you wouldn't give
me that money. It's just a big yada yada. And so it's the government.
You only do it if you guys are forced to. So I think there's
a lot of problems with it. At Liberty University, my economics
professor asked, the great thing I learned to take in a course
in economics at Liberty was that I did not want to be an economist.
I wanted to pass that course and be done with it. But I do
remember that he said that an increase in wages without an
increase in productivity will almost always lead to inflation. and he was using the word inflation
as inflation of prices. If your job is to produce 10
footballs a day for me, and I raise your wages, and you're still
producing 10 footballs a day, as your boss, I'm probably not
going to take that out of my paycheck. So what I'm probably
going to do is jack up the price of footballs now. And so in the
end, you could actually end up in a situation where a guy who
used to make $8 an hour, now you raise the minimum wage to
$10 an hour, there's a good chance that $10 an hour only bought,
can only buy what is $8, what he used to buy. Anyway, I even
think that there's sometimes it's almost, I don't know, class
snobbery, maybe even racism in so many minorities. are involved
with this, but... Walter Williams, right? A great
economist, an economist, and he talks about that a lot of
minimum wage is based in racism, especially in South Africa, under
apartheid. And it's because they come from
very crumbly inner cities, typically, and they're very poor schools
of thought. It's like the assumption, and
you mentioned Walt Williams, economics professor, brilliant
guy, just a great guy, but he takes it as an insult to African
Americans for somebody to say, you know, you can't earn higher
wages, you can't get a better job, so just leave it to us,
we'll keep raising it. And it's just like, whoa, whoa,
that's not, when I was making I knew I needed a better job. The worst thing that could have
possibly happened to me was they kept raising the minimum wage.
I'd probably still be there today, age 56, mopping floors and Carvel
in New Jersey. Yeah, no, that's another thing
that I usually bring into it, is that it really should be insulting
to people that are making minimum wage if you're making minimum
wage at a restaurant or whatever you're doing. You know, this
is not a job you're meant to do for the rest of your life.
And it's saying that, look, you're useless, you're unimportant,
you don't have any skills, and you could never be any better
than a minimum wage job, so us from the government are going
to come in with a white knight, we're going to save you from your own
incompetence. Everything's been twisted around,
so people say, no, you're a healthy, bright, young individual, you
can just think smarter and work harder, and if you don't like
the career you're in, get training in another field, and just move
on up the economic ladder. I would find it insulting for
somebody to say, no, you can't do any better, so just stay where
you're at, we'll just keep raising the minimum wage. Discomfort
is not always a terrible thing, right? You don't want to provide
somebody who in this type of situation, minimum wage, to be
comfortable and fully satisfied in a minimum wage job is not
healthy for you necessarily. And I'm not saying that it's
great for them to struggle. I'm not saying that. Let me preface.
But sometimes discomfort can get you to look around and say,
you know what? I don't have what I want right
now. So I don't have the things I want. How can I make myself
better? And that's why it's an incentive for a lot of people
to go to college, to go to school, to somehow better their skills
and make it so that the market can provide them with a higher
wage, not so that government can come and force somebody to
give them money. And what we've seen in Seattle is, yeah, prices.
They say prices haven't gone up, but you've seen a lot of
restaurants have restructured. And so I think a lot of people
in a minimum wage that are a wait staff, they're going to see their
wages fall. Because instead of tips, they're
adding a 20% surcharge. It's a minimum wage charge on
restaurants. And some of that money goes to
the back of the house. So maybe a dishwasher is better off. But
a wait person, who actually might be feeding kids, that's not what
you would consider a minimum wage job. It technically is.
No waiters, waitresses virtually make minimum wage. They're usually
making two or three times minimum wage. Which mostly disappear
under these... First of all, there's the assumption,
the unproven assumption, that the government leaders really
love us and want what's best for us. Or that they even know
what's best for us. And then, number two, we assume
that they're they know better how to spend people's money and
how to help people succeed than the people who are voluntarily
entering into these agreements to employ or work for somebody. Now, a lot of complaints... I
had an international student from China and he was taught
that capitalism is based on greed. It's greedy and it runs on greed.
How would you respond to that? I recall Milton Friedman's interview
with Donoghue where he asked Phil Donoghue, where are you
going to find these people that have no greed in the Soviet Union? Are there people in China? Are
they not greedy somehow? No, I think, one, greed is not
necessarily a bad thing. It's like, let me just mention
Ayn Rand. Her virtue of selfishness. Everybody
is self-interested. Yeah, we can call it greed. It's
got a very bad connotation. But everybody is self-interested. Again, you can go back to, why
do people want a higher minimum wage? Oh, so they can benefit
society. No, they want a higher minimum
wage because they want more things. And why do you go to college?
Why do you invest in yourself? Why do you try to make yourself
better off and get that higher minimum wage? Because you are
self-interested. Everybody is. You can boil down
everything people do to a rational self-interest. That's one of
the fundamental aspects of human nature. What I told the student
too, I said greed is part of the equation because we're falling,
we're gaining. But I said, when everything's
said and done, I think the key word that makes capitalism capitalism
is not greed, it's competition. I said, like you said earlier,
when businesses compete for my money, I'm probably going to
get a better product and at a lower cost to me. that it would have
been had it not been for free enterprise. Yeah, it's great. Everybody, yes, they're greedy,
but if you get greedy people to compete with each other, and
they're all trying to sell their product at a profit, the greatest
thing ever is the profit motive. And through that competition,
if you just have one greedy person, then yes, if you have one greedy
person in power over everybody else, And that's what you will
have if you have one person in power. And that's a problem.
But when you get a bunch of greedy people and they compete with each other,
then that's good for everybody else. Now, can we be free without
free enterprise? If we can't own our own businesses
and determine, can we really be fully free if it's the government that's
really got us so bogged down that they've got all these regulations
and taxes and rules? things at all, you know, can
we really be free if we're not free when it comes to the area
of our own incomes, our own business decisions? Yeah, if you don't
own anything, you know, how can you be free at all, right? You
only own yourself. There was a example on Geckert
and Planet Money, I think, and they were talking about a meeting
in which the Chinese officials back in, like, the 70s or something,
they were getting together, and they were talking about communal
ownership of everything. And you're like, OK, who owns
the little grain of wheat in the wheat head? Oh, that's owned
by everybody, right? It's a community. What about
my teeth? Who owns my molar? And I said,
no. Do I own my molar? No. You don't even own your own
teeth. It's communal ownership, right?
So how could I move if I don't own my own body, myself? If I
have to ask you permission, can I lower my hand? Does everybody
vote? Can I lower my hand? So I think of this communal voting
system in which I do every action. And it makes me how many Bernie
Sanders supporters And they want Bernie Sanders to move us towards
a socialistic state, because we're pretty much on that road
already. But, you know, if I just take
their cell phone from them, You know, if I'm teaching a kid,
he's got a cell phone out, they act like, you know, it's the
end of the world and stuff, and then, so... Yeah, no private
property, but gimme back my private property. So people don't realize
that property ownership is not just land and a big apartment
building, right? Private property ownership, or
private ownership of property means, like this, this is my
property, I can do with this what I wish, and I can exchange
it with you, and go back. Socialism means I can't trade because I
don't own this, right? If I don't own anything, how
can I do anything? How can I exchange with someone?
Pro-socialist, big government, bumper stickers on BMWs from
Bainbridge Island. I always thought they should
have a bumper sticker that says, redistribute the wealth, but
get your hands off my BMW. really doesn't make sense. Yeah,
what are we going to redistribute these? Because most socialists
tend to be fairly well-off, or they're just very ignorant of
what it is. But yeah, you see a lot of very
wealthy people, like, well, usually socialism means, or wealth redistribution
means, let's redistribute everybody else's wealth. That's why you
get all the Hollywood elitists that are, you know, DiCaprio
being worth like $500 million, whatever he's worth, and he sails
around the world in yachts, on airplanes, and then he talks
about wealth redistribution and climate change. Robert De Niro
bought quote-unquote farmland, which nobody farms on there,
and from doing that, he actually receives some kind of taxpayer
stipend. Tax incentives. So the wealthy
socialists are always going to be able to hire lawyers to protect their little
financial eggnest while they stink at everybody else. What that really means is take
from the American middle class and usually the money ends up
in the hands of dictatorships all over the place. BMWs. My neighbor, he's got three. That's rich. You should tax him.
That's pretty much what everybody says. Warren Buffett talks about
the, what we call the debt tax, right? The inheritance tax. And
he wants it to be, he'd probably like it to be 100% or something,
but he's not going to pay a penny of it, right? Because typically
these rich people, they put it in trust, and they totally void
the tax altogether. He's going to give it to the
Gates Foundation, but he thinks that everybody else to be taxed at
a very high rate. I think it was Amazon.com that
was fighting for the internet tax. And all I can figure is
they couldn't afford to take that hit. Their competition can't.
It's just a helpful way to wipe out their competition. Yeah,
because originally they fought against it, but now Amazon has
a business in pretty much every state. If not every state, I'm
sure they do. And the tax right now is if you
have a business in Washington, or you have like a location and
your business is headquartered in Florida, you still have to
pay the sales tax in Washington. Which, by the way, is incredibly
complicated. There's over 9,000 different
counties and different tax rates in the U.S. and so, you know,
you've... I ran into that. You know, we might sell 2,000
books a year. And it turns out that Washington
State wants me to... No one is making any money on
the Institute. It's a slightly different tax
rate than if I sell them in Bremerton or if I sell them in Bellingham.
And it's like, you know, it might be 9.632 and 1 and 9.647. And
they want the exact same, I told earlier, 8.6. So you'd probably have to send
it to them. So I called them up and said, hey, I'll tell you
what, I'll give you $0.09 on every dollar you'll make out
on this. And they said, no, you've got
to break even. Well, it's like, well, guess what? I can't afford
a full-time job. bookkeeper. So in the end we just basically
reach the point, talk to those who support the institute and
we just basically give the books away for free and if people want
to give a donation, fine. And so the only time my books
are really sold would be either at a bookstore or Amazon.com
and then I get a little royalty check. But there's an example.
Things like that will keep somebody who I have no incentive to work
hard and think smart and get bigger so that I'll create jobs
because they already got me so overregulated that I don't even
want to make enough money to pay my bills. You know what I'm
saying? big major computer databases
that they pay enough tax in every little county that they can kind
of know exactly where to send them and all that. But again,
let's say you had an actual business and you were selling books, and
somebody in Kansas, Kansas County or whatever, in Kansas, they
want to buy a book and you have to, what do you have to do? Look
up how much tax, where do I send my, you know, and say it's $100,
you know, I send my $9 check or maybe it's a $5 check. It
used to be a little problem, you know, like only like at one
time, like two states maybe, I think Massachusetts, somebody
else, where if you sold something either online or through the
mail, you still had to pay the state sales tax. All the other
states said, no, that's none of our business and, but whatever
the case, You know, if you're looking for formulas to destroy
business, and destroy productivity, and destroy prosperity, socialism
would be the way to go. Yeah, and Jefferson said that
the power to tax is the power to destroy. And so, yeah, if
you can go and tax some specific industry that sells here, you
know, something else sells in the area around it, you're going
to destroy that one competitor. Yeah. Okay, and Let's see, and
I think you answered this throughout, how does capitalism help people?
I think you mentioned numerous ways. So what about the poor? Those who believe in free enterprise
are often looked down upon, say, well, you're against the welfare
system, you're against helping the poor and stuff like that.
What would your response be to that? How is capitalism good
for the poor? Well, capitalism means you're
producing lots and lots of stuff. So you look at, where would you
rather be poor? In a socialist, communist society? China? I've been to China a couple
times, and I've seen poverty. You go around the US, come around
here to homeless. A lot of them do it by choice. Not everybody, obviously. But
there are a lot of homeless and poor by choice. I like Kevin O'Leary again. Everybody's
a self-made man. Some are more willing to admit
it. So there is a lot of that. There's
a lot of people who are poor by no choice of their own. They
have some kind of tragedy in their life. But again, capitalism
means, and this kind of goes back to Marx, that capitalism
would never produce enough stuff. But now you go the left that
despise capitalism. It's all about consumerism. Capitalism
makes so much stuff that you're just always buying things. And
so the poor are always better off in capitalist societies because
there is an abundance of things, goods and services that are made. And I can live off, very comfortably
off, X amount of money. And if I make X plus Y, then
I have an excess of Y. And as long as I'm not heavily
taxed to Y plus something, then I can go out and I can be charitable. The most charitable society in
the world, country in the world, is the United States. It's not
even close. And that doesn't even include the taxes that are
taken from us, right? The foreign aid, which is, as
Juan Pablo said, is taking money from poor people in rich countries
and giving it to rich people in poor countries. This is the
definition of foreign aid. But yeah, basically capitalism
means that individuals are free to pursue what is best for themselves.
And by doing so, engaging in the trade and value adding and
things, they make a lot of stuff. And they have a surplus, and
they can provide that surplus to the poor. I believe, too,
that since the 1960s, when a lot of the welfare programs were
instituted under President Johnson, since then, it's only really
increased the percentage of the population that is in poverty.
And so the welfare system can kind of chain you up in this
vicious cycle of poverty for multi, you know, multiple generations. Yeah, I mean you can kind of
go and look at the graph, the institution, or the installments
of welfare. in America, and they'll say,
look, you know, after welfare, the poverty rate went down. But
then you go back and you blow up the graph, the poverty was
way up here, and it came way down here under freedom, economic
freedom, and then you install welfare, and it pretty much flattened
out from there. We've never, I mean, it was,
what, like 90%, 95% poor in the 1800s. You have the Industrial
Revolution wiped out most of that, all the way up until the
1950s and 1960s, when suddenly, it hits 20% and it really pretty
much flattens out. Because welfare disincentivizes,
again it goes back to minimum wage, it disincentivizes productivity
and it disincentivizes work. Because let's say you are under
the poverty line, you make something like $15,000 and you can go out
and you can get benefits. Well, because poverty does not
include the benefits you receive. So you can get housing stipend. That's the equivalent of maybe
$1,000 a month. That's $12,000 a year, plus you
can get food, you can get WIC benefits, you can get all these
benefits that may be worth $20,000, $15,000, $20,000 a year. But
if you make more than $20,000 or something, suddenly you're
making $19,999 plus your $20,000 in benefits is shy of $40,000. But then you
make $20,000 and one, Those $20,000 in benefits disappeared
in your bank, so you make more by working less. I know Ellen
Craswell, ran for governor and she was a state senator for about
26 years or so, and was a good friend of mine, and it was really
interesting, she was against the welfare state, she was for
free enterprise. However, she actually fought
to pass legislation so if an unwed mother made, that was on
welfare, got a job and started making some money, she fought
so that that unwed mother would not lose her medical benefits.
Because an awful lot of ladies were refusing to get jobs and
to start bettering themselves and to join the workforce, they
weren't getting jobs because if they got a job they would
lose the medical benefits and they needed them for their kids.
And so she was saying, well if you're going to get them all
caught up in this cycle of poverty through welfare, let's figure
out a way to help them out of it. And so, but yeah, there's
an awful lot of people, Malcolm X's, Malcolm X's mom was dating,
his father died, real questionable about whether or not it was an
accident or murder, but he had about six or seven siblings,
And the gentleman that was dating his mom just decided to leave
town rather than marry her because he knew, as a black, I believe
he was in Chicago at the time, he wasn't capable of getting
a job where he could support the family. And she was doing
better with welfare than she would have done with him. So
he kind of skipped town. Malcolm X's mom had a You know, there's an example
of how socialism, where politicians can play it off as being a really
nice thing, but in the end, you can enslave people in the cycle
of poverty. Yeah, you really trap people,
because you disincentivize marriage, because a single mother can make
a lot of benefits, and you know, I have a friend of my wife's
who actually So I won't get into that too much, but you're disincentivized
from getting married. Because if you are a single parent,
you can get a lot of benefits. But as soon as you get married,
you lose all those benefits. And so people are incentivized
to stay as a single mother. And if you want to be poor, be
a single parent. Your likelihood of being poor
as a single parent is well over 50% of the people that are in
poverty. I think it's like 53 or well over that. under the
poverty line. And it's just simply because
it's difficult for a single parent to get out of poverty. How do
you better your skills when you're working full time to support
a child, you come home, you make dinner, you put them to bed,
you bathe them, you do all that, and you know, these online university
classes that kind of show that it's like you're up late, you're
up till one o'clock in the morning, and then you gotta get up at
five to go to work, you know. It's just you don't have the kind
of time in the day that it takes to better your skills if you're
a single parent. It triggered university videos.
They say, if you don't want to be poor, number one, graduate
high school, number two, get a job, number three, get married,
then have a kid. Now, you don't have to get married
and have a kid, but if you're going to have a kid, get married first,
then have the kid. And it's like, then the chances
of being poor is like... It's like almost non-existent.
Yeah, I think it's like 3% or less, less than 3% of the people
under the poverty line are married parents, or have a job. It's one of those two. But yeah,
if you're a two-parent household, your probability of being under
the poverty line is extremely low. And if you have a job, it's
also very, very low. You can see another area where
it where government interference really, and the welfare system
really destroys families. You visit prisons, and you talk
to the inmates. What a high percentage of them
grew up without a father at all. And so it was very destructive
to the family. Yeah, I usually look at, since
the Institution of Welfare, how I think the out-of-wedlock children
in the black community was low. I think it was in the 20s, and
now it's in the 70s. government intervention and yeah
it's a tragedy yeah and also I would say to it dealing with
the poor with the welfare system if you need a dollar if I give
you a dollar you get a dollar if you need a dollar the government
takes a dollar from you by the time it goes to the bureaucracy
you'll be lucky to get five or ten cents so it's not even cost-effective
I think J. Vernon McGee even said that.
It's, you know, welfare is like taking blood out of your left
arm, spilling 90% on the ground, and putting it back in your right
arm. So that's kind of the basis of how it works. I can see J.
Vernon McGee saying that. Okay, so what about monopolies? Don't businesses need to be regulated?
You know, if a monopoly, how does a monopoly start? I mean,
there's a lot of monopolies out there that nobody complains about.
You know, Google, right? Google's pretty much a monopoly.
It would be considered monopoly. They have their own word, right? Facebook is a pure monopoly.
I mean, if you want to have an online friendship, I don't know
who else there is. Myspace? I don't think they do.
Anyway, I'm going to tinker up a few facts. You know, locally,
people don't really think of it in terms of a business monopoly,
but we have a Seahawks fan here. The Seahawks are a monopoly.
If you want to go watch professional football on Sunday, or football
on Sunday, it's the Seahawks. If you really get into what a
monopoly is, Russell Wilson's a monopoly. We've got a lot of
people in his jersey walking around saying how much they love
him. So if a monopoly comes from a market base, they have their
own NFL, they have their own protection. How do you monopolize
a market? You provide the best service then it's your job to start a
business and compete with them and do a better job and sell
a better product. So the private sector dealing
with monopolies is a lot better. With the government it becomes
crony capitalism. I think it was Bill Gates at
Microsoft was under congressional investigation or something about
having a monopoly. It seemed to me, if I remember
correctly, he started donating a lot of money to Catholic charities,
which were really feeding hungry people, and they still wouldn't
get off his back. So I told my wife, I said, this
guy doesn't have a clue. But eventually he made some kind
of huge multi-million dollar donation to the UN or something,
and then all of a sudden you just didn't hear about it anymore. So I think he learned, he was
a new monk, And you got to pay your dues. And with crony capitalism
as well, it's not really about feeding the hungry. It's always about control. Yeah,
if you scratch my back, I'll scratch yours. And what about
Keynesianism? There's so many people who call
themselves capitalists, but it turns out they're really Keynesian.
What exactly is Keynesianism? John Maynard Keynes wrote a book
called Modern Macro Theory, I think, back in the 20s. And he was already popular. And
he's said to be a very brilliant guy. But his book was written
with lots of errors and fallacies in it, kind of the broken window
fallacy type thing, which is if I pick up a chair and I throw
it through a window, I'm going to create a bunch of jobs. But we've seen
that that doesn't work, right? War creates jobs, yes. There's very low unemployment
during a big, major World War II, but you're not producing
anything. We were much worse off in World
War II than they were during the Great Depression. We had
a lack of medical supplies. I guess my grandmother's first
husband, I think. I had no idea, but apparently
he slipped at a skating rink and he got an infection because
all of the antibiotics biotics went off to Europe, he died,
right? So you could die of very simple things during war. But
a real Keynesian would say, well, you know, war, it blows a lot
of things up and you have to rebuild them, and it takes people
to do that, and that means employment, and therefore we're stimulating
the economy that way. So it's kind of like a Keynesian
would say, we're not full-blown, we are not full-blown socialists.
We don't want the government to control everything. At the
same time, you do need an intellectual elite aspect of the government
to kind of monkey with the economy, because if we just leave the
economy to itself, it's going to be... It's real chaos, right?
Yeah, nobody wants that. So, you get the animal spirits,
right? People stop spending, you get
that demand curve, kind of the aggregate demand falls off, some
kind of aggregate demand, some of the demand from the economy
falls back, and you get below your natural level of unemployment.
How do you stimulate that back to your long run aggregate supply
curve, so you have that kind of natural unemployment rate
of two to four percent, well, government should come in and
pick up the slack. Where the private sector falls
off, you could have government come in with projects, right,
come in and building roads and roads and bridges, right, shovel
road projects, which is a comical term, but, yeah, and build things
and kind of pick up that aggregate demand, the slack. But what it
does is it creates a lot of malinvestment. So government comes in and starts
spending money. There's a lot of issues of where
does the money come from? Does the US government have cash just
sitting around? No, right? They're $20 trillion
in debt. So where are they going to get the money? They're going
to borrow, which means taxes in the future, which means, yeah.
So I mean, we've seen, we had some stimulus plans. They had
the tax rebates in 2008, I think it was. And everybody got a $600
check or a $300 check. What we found is that there was
no change in consumption of individuals. Because if you get a check in
the mail, and times are tough, like, you know, I don't know
if I'm going to have a job next week. I should probably save
this. I'm not going to spend it. But the idea is that you
give money to people that are the middle and lower class, and
they have a high marginal dependency to consume. You have a Keynesian
multiplier. You're not going into any of
the details. they'll go out and spend $100 million, they'll go
spend it, they'll cycle through the economy, they'll create $400
million, or a zillion. You still have like the puppet
masters controlling the economy. You still have a lot of central
planning. They're going to make better choices at the free market.
Yeah, you can get the monetary policy as well, with lowering
interest rates and incentivizing people to go borrow, but then
you get into the the Austrian business cycle, and where economic
downturns come from is, recessions come from that artificial interest
rate policy and cheap money, and it creates a lot of mal-investment. If you look up the skyscraper
theory, it's really interesting. And what is the skyscraper theory? So somebody, and I forget the
name of the paper, they went back, even back to the 1800s,
and they looked at recessions And they found that corresponding
with every recession, either right before the recession started,
or during the recession, they had just completed the world's
tallest building, or one of them. So you go back to the 1928, 29,
30, I think there were a bunch of tall buildings. 1911, we had a big recession.
They had the tallest building built. 1920 or 21, there was
one. You go back to 2008. Dubai, right? The tallest building in
the world, the biggest condo. They had to stop building because
of the the world economic crisis. And right now, they're building
the world's tallest building. They're trying to beat that again. I think it's in Shanghai or Dubai. I forget which one, but yeah. So the idea is that you get this
big roaring 20s, roaring housing market. It's driven by cheap,
easy money, low interest. And so people go out and And
they find, oh, money is abundant. We say it's a miscalculation
of entrepreneurs. They think, oh, there's a lot
of demand going on. Therefore, I should go invest
in housing. And it's not that there's big
demand. It's that it's from the cheap,
easy money that the Fed is printing. And that's getting out into the
market and people borrowing at very low interest rates. And
as soon as those interest rates start to rise, and you saw this,
you know, people have these arms, and three years later their adjustable
rate goes from 3 to 5 percent or something, and their monthly
payment goes from a quarter or a third of their monthly salary
to half, or, you know, 60 percent or so. Nobody can afford that.
You mentioned the Federal Reserve. Can you explain what that is? Are these elected officials?
Who are they, and what do they do? The Federal Reserve is a
private institution. It was created in 1913. There's a whole creature from
Jekyll Island that goes into the founding of the Fed. It's
privately founded, privately run, but it does have a very
tightly closed relationship with the government. It's not a government
bank per se, but The head of the Fed is appointed by the government.
Janet Yellen, right now, is appointed by President Obama. And Bernanke
was appointed by George W. Bush. And Alan Greenspan, which
I think was under Reagan. And so, yeah, they appoint these
people. But it is a prime institution, and they are allowed to essentially
do what they want, for the most part. They print the money. They
control the prime interest rates. the Fed funds rate, which is
the interbank rate, the discount rate, which is the rate you borrow
from the bank at. And so, yeah, they control, basically
they control interest rates. And so they really control the
economy with those interest rates. I mean, the QE 1, 2, 3, 4, this
was all Fed policy. Is the Federal Reserve that constitutional? Well, there's, it's, no, it says
that only the U.S. government is supposed to coin
money. Now they say, oh, well, you know, the Fed doesn't coin
money, it prints money. There's a difference, correct?
And so, just so you know, the government was supposed to define
money as, you know, so many grains of silver, so many grains of
gold, the bimetal standard. But the Fed, yeah, the Fed got
away from that. It's a fiat money who haven't been on a gold standard
since 71. That was a quasi-gold standard.
What's so bad about being off the gold standard? What's the
big problem with, like, paper money versus, like, silver and
gold? or even paper money that's backed
by real silver or gold? Well, if you had paper money
backed by real silver and gold, you know, like a gold or silver
standard, then that wouldn't be so bad, because that's what
you had in the 70s, up to 71, when you could take a $20 bill
and you could go down to a Federal Reserve Bank and get an ounce
of gold for it, or you could take, you know, gold, what, actually,
the dollars were 90% silver until 64. And so you could actually
get real money. But once you get off of the idea
of having a certain amount of gold for every dollar you print,
then you have nothing for every dollar you print. You can just
print as much money as you want. So the paper money has no real
value? No, it's got no value at all,
right? Yeah. And so it's... Just whatever
you... What will you give me for...
So it's the basis... So based on what the government
says it's worth, or our trust in the government, or whatever.
It's a relative value. It's a floating exchange rate
with all the other currencies in the world. And so with paper
money, paper money has never lasted very long in history. We have paper money embedded
in China millennia ago. OK, if it doesn't last, what
does it lead to? It usually leads to hyperinflation
and a destruction of the currency altogether. Now, we've only had
paper money since 71, and we've seen our greatest inflation rates
in the 70s, and I know they say officially inflation is pretty
low right now, but yeah, paper money just, the problem with
paper money is you can print as much as you want, and there's
no restriction. It comes with less, and less,
and less, and now hyperinflation, mass inflation might mean that
for a loaf of bread it might cost $20. hyperinflation, there's
no limit. It could cost $20,000, where
the money is just, they stopped printing all the lower bills
because it's worthless. Take some of those Mabwe $100
trillion notes, and even Venezuela, where Venezuela had a contract
to print their currency with, I think, a Canadian or a company
in Michigan or something, U.S. or whatever it was, and they
canceled their contract with Venezuela because they didn't,
they're printing Venezuelan currency, But they didn't want the contract
because they didn't think Venezuela could pay them, could actually
pay them the money it costs to print the currency. So that's
how bad it was. They were printing the currency,
but they didn't think Venezuela would be able to have the money
to pay them to print their own currency. And so they ended up
with $300. When the Nazis came to power,
there was the hyperinflation, and the Weimar Republic, Yeah,
and you can even go back to, they had a hyperinflationary
scenario in France. If you had money inflation in
France, when you had, what happened was, they had the revolution,
they took over the church lands, and they didn't have any money,
and they didn't have any way to get money in the government.
So they said, hey, let's print money, and it'll be more complicated
to use cash, but they were paying interest on it. And they said,
hey, we'll have the church lands, they'll back the money. And people
said, no, it'll be inflationary. They said, no, no. So they print
money, it creates a little boom, But at the end, the boom is short-lived.
And once the money's spent, prices go up. They said, hey, let's
do it again. So they printed it. A shorter boom, prices go
up again. And in the end, five years later,
prices were upwards of 50 or 100 times what they were before
the boom. And you actually, because people stopped In that case,
people stopped taking paper money. They said, no, I want actual
money. And so the government had to do a fiat, which they
had to say, a legal tender law, right? Which is, if you don't
accept this paper currency, then you will lose your head, right? And the person that turns you
in gets half of your possessions. And so what happens? Did it own
gold at one time in America? Yeah, in the US, between 33 and
74. So FDR made it illegal to own
gold. And it's kind of like a moratorium. France example, just like in
the German example, what you had is you had the guy who came
in and saved France, and his name is Napoleon, right? So, you know, good times. And
of course, in the Weimar Republic, you had the guy in the White
House, he comes in, he saves the economy, and happily ever
after. Yeah, so it's government takes
over, creates the big mess, And then whatever fills that void
may be something new. The issue is when people are
so bad off, in the case of the Weimar Republic, is people were
so broke to bring in wheelbarrows full of cash to pay things. I
mean, they were printing money one-sided, right? They were running
out of ink and paper and everything. And it got so bad that they said,
look, we don't really care who you are. Just please save us. And so there's a lot of things
that that might be the way the world is going, that they're
kind of pushing it in that direction. So even the UN, the League of
Nations created a big world war. And at the end of the war, they
say, hey, there's one way to prevent a second world war, which
is create a League of Nations. That didn't work. So one way
to prevent a third world war would be a United Nations. And
we'll all get together, and we'll all be a League of Socialist
Society. That's right. I think that's the direction
we're headed, is to the economic collapse of the United States
of America But when you get back to Germany
there was always that joke about the guy that goes to the store
with a wheelbarrow full of money and then goes inside, looks in
and comes out and his money's on the ground and he stole a
wheelbarrow because it was worth more. All right, well, we're
going to take a little break here, and then we're going to
bring in... I would say, again, China, when they started instituting
the idea of private property, a little bit towards free enterprise.
They're not a free enterprise system. They're still coming
in. They're moving in the right direction. Yeah, but they eliminated their
number of people that were in abject poverty, which is defined
as $1.25 a day or less. They reduced that number by 96%
of going from a socialist, communist, system to kind of opening up
their markets. And it seems to me they didn't
do that for the goodness of their heart. They just needed to be
more pragmatic with what they were offering. Yeah, they had
a 10-minute square, right? They had a 10-minute square, and they
said, we want political and economic freedom. And kind of what they
said, I guess, is, well, we're not going to give you political
freedom because people are greedy and they love power. So we'll
give you economic freedom. And yeah, so they opened up. You see, especially in the last
10 years, you've seen a massive influx of students from China,
and it's not because they're poor. You don't have money to
come study in the U.S. Their parents are either members
of the Communist Party or they're businesses that are favored by
the Communist in power, favored by the government. But I always
tell We're moving in the wrong direction.
If there's enough time, we're gonna be like two ships passed
in the night. But let's take a little break,
and then we'll bring Blake into this break. Blake Kilbourn, and
we'll try to have a spirited discussion on fascism and free
enterprise.
Interview with Nelson LaPlante
Dr. Fernandes interviews Nelson Laplante on Free Market Economy.
| Sermon ID | 121216180306 |
| Duration | 58:55 |
| Date | |
| Category | Question & Answer |
| Language | English |
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