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Wealth, Poverty, and Politics — Transcript

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0:00Poverty is the norm, wealth the
0:02exception. With us today, a man who has
0:04written a book to remind us of that
0:06fact. Dr. Thomas Soul on uncommon
0:09knowledge.
0:18Now, welcome to Uncommon Knowledge. I'm
0:21Peter Robinson. Thomas Soul has taught
0:23economics, intellectual history, and
0:25social policy at institutions such as
0:27Cornell, UCLA, and Ammerst. The author
0:30of more than a dozen books, well over a
0:33dozen books. Dr. Soul is now a senior
0:35fellow at the Hoover Institution at
0:37Stanford University. His latest work,
0:40Wealth, Poverty, and Politics: An
0:43International Perspective. Tom Soul,
0:45welcome. Good to be here.
0:48The big idea. Wealth, Poverty, and
0:50Politics. quote, "The difference between
0:53seeing economic disparities as due to
0:55differences in the production of wealth
0:58and seeing those disparities as due to
1:00the transfer of wealth from some people
1:02to other people is
1:05fundamental. Explain that."
1:08Well, I think there are a lot of people
1:10who who regard so-called disparities and
1:13uh inequities in income uh as something
1:16that requires some great explanation
1:18seem to assume that in the absence of
1:20some intervention, everyone would have
1:22something roughly equal uh income. Uh
1:26virtually everything that goes into the
1:28production of income varies enormously
1:31between groups, between nations, uh
1:34between people on the on the flat lands
1:36and the people in the mountains, you
1:38name it. It varies. It varies. And I
1:41take it, correct me if I'm wrong about
1:42this, but I was I was reading this. I
1:44take it as one of the principal efforts
1:45of this book
1:48to correct the thinking of Americans who
1:51have grown up most of us in conditions
1:54that by the standards of human history
1:57and by the standards of many other
1:58places on the globe today would be
2:01conditions of almost staggering wealth.
2:04Yes, even poor people in this country
2:06have smartphones, televisions, cars and
2:09so forth. And we tend to assume I it may
2:12be human nature. We tend to assume that
2:14our conditions are
2:15normal and conditions that differ from
2:18ours are the anomaly. And you're and and
2:20this book says no, no, no, no. Well,
2:23good heavens. And especially if you look
2:25back through time, uh really it's it's
2:28only within the last five or 10% of the
2:31existence of human beings that there's
2:33been agriculture. I mean, think what
2:35that means. That people had to feed
2:37themselves huntering, hunting and
2:39gathering. uh fishing, hurting animals,
2:42but and of course that meant that you
2:44couldn't have cities because uh for all
2:48those other ways of living, you need an
2:50enormous amount of land per person. If
2:53you were to one Manhattan would probably
2:55be enough, you know, to spread famine
2:57throughout the world. uh so that I start
3:01with geography because that's the most
3:04uh implacable uh uh obstacle and uh
3:07geography is nowhere anywhere close to
3:09being normal. For example, just
3:11geographic uh phenomena
3:14uh in the the great majority of all the
3:18tornadoes in the entire world occur in
3:20the middle of the United States. You
3:22don't hear about tornadoes in London or
3:24Paris or Beijing.
3:26uh and you don't hear about them in New
3:28York or San Francisco for that matter
3:30that just in one little place in the
3:32world all the conditions are there for a
3:34tornado alley uh and it's true with so
3:37many other things nothing is evenly
3:40spread out the the there are rivers on
3:42every continent but the rivers aren't
3:44the same uh let me I was especially
3:47struck let me give you this here's a
3:48quotation from the book Europe's rivers
3:51often lead out into open seas providing
3:53access to seapports around the world but
3:55most rivers in Eastern and Southern
3:57Europe are quite different. Yes. What's
4:00the difference and what what bearing has
4:02that had that had on economic
4:03development? Well, the the the the uh
4:05rivers in Eastern Europe tend to flow uh
4:08into into lakes and and inland seas. And
4:12so when you when you get to the end of
4:14the Danube or the Dawn, you are not out
4:16in the open ocean or you know Sea or the
4:19Caspian. That's right. And then if you
4:21want to get to the Atlantic, you have to
4:23go to the entire length of the
4:24Mediterranean to get out there. Uh the
4:26rivers in Russia, most of those empty
4:28into the Arctic Ocean, which is not
4:30quite as convenient as the Atlantic or
4:32the Pacific. Uh and what that means is
4:35that you can't have the commerce. Uh you
4:38can't have industry and whatnot to the
4:40same extent that you have. More
4:42importantly, you're not connected with
4:44the rest of the human race to the same
4:46extent. And one of the one of the major
4:49findings I throughout the book is that
4:51isolation almost invariably means
4:54poverty and backwardness in the
4:56mountains. Yes. If you live in Eastern
4:58Europe or Russia and you're cut off from
5:00the rest of the world, isolation leads
5:03in fact, well, we'll get to this in a
5:04moment, but it seems even to have an
5:07effect on cognitive ability, prolonged
5:09isolation. Oh, sure. Well, certainly in
5:12terms of not just sheer knowledge, you
5:14don't have the same knowledge. But more
5:15than that, you're not aware of what how
5:18the basic things of life are done
5:20differently in other parts of the world.
5:22And so people who are isolated will keep
5:24doing things for centuries or thousands
5:26of years. So that for example when uh
5:29when when the British landed in
5:30Australia uh they find the the
5:33Australian aboriges are living really in
5:36at a stone age level. Similarly when uh
5:39people from Europe uh got came to the
5:41Canary Islands, same thing. They they
5:44they had no idea of of iron in
5:47Australia. They they had no idea of
5:49iron. It's one of the great sources of
5:50iron or the world.
5:54Staying with geography for a moment.
5:56Again, one of the themes that seems to
5:58me to run through the book is this
6:01question
6:03of your
6:05resistance to notions of to attempting
6:08to pose to impose notions of
6:11morality on economic conditions. So for
6:14example with
6:16geography some people happen to be born
6:19in western Europe where the rivers lead
6:21to the sea and some people happen to be
6:24born in Russia where some rivers lead to
6:27the frozen Arctic and some rivers lead
6:30to the Black Sea
6:32and it's nobody's fault. Yes. It's luck.
6:35Yes. Or or or or sheer happen stance.
6:38Nobody's robbing anybody else. Yes. as
6:41as as one economic historian said, you
6:44know, the world has never been a level
6:46playing field. All right. Cultural
6:49factors, another one of the large
6:51segments of the book. Let me quote to
6:53you again. Wealth, poverty, and
6:54politics. Quote, without the cultural
6:58prerequisites for developing natural
7:00resources into real wealth, the raw
7:03physical resources themselves are of
7:05little or no value. Close quote.
7:09Tell us what you mean by cultural
7:10prerequisites.
7:13Partly that would be simply the uh
7:15knowledge of how to use things. Uh as I
7:19mentioned in the in the book, uh the
7:21main difference between us and the
7:22caveman is simply human capital. Don't
7:25forget the caveman had all the all the
7:27natural resources we have today. And he
7:29had them in greater abundance because
7:30none of them had ever been used up. But
7:33but he didn't have what the the
7:35knowledge that it would take to turn
7:38those to his own purposes. We just know
7:40more. Yeah, we just know more. Now, you
7:42note that you note a certain productive
7:46capacity that certain cultural groups
7:49demonstrate
7:51and you can see them because they
7:53demonstrate the certain the same let's
7:56call it industriousness
7:58as they disperse to different parts of
8:00the world. Yes. Germans, Chinese,
8:02Lebanese, Jews, Indians. Quote, the
8:05productivity as a matter of culture.
8:07That productivity as a matter of culture
8:09is shown by how many groups have arrived
8:11in various countries far poorer than the
8:14existing population and have
8:16nevertheless risen above the economic
8:18level of those who were there before
8:20them. Close quote. Let's just choose
8:24let's you name a lot of groups. It's a
8:26big book. Let me just give you toss one
8:28at you and see how you do. The overseas
8:30Chinese, oh my goodness, the overseas
8:32Chinese settled largely in Southeast
8:34Asia. Many of them came there with
8:37little more than the clothes on their
8:39backs. Uh there was one uh Chinese
8:43millionaire in one in one of the
8:44countries who had in the in the the
8:47foyer to his mansion this uh stick with
8:51a with a little cloth thing tied to it
8:54cuz he he walked into into this place
8:56with that stick all his belongings in
8:58this little cloth thing tied to his
9:00stick over his shoulder and he took off
9:02from there. All right. Uh the Jews Oh my
9:06heaven that's been in so many places. Uh
9:10my gosh, the the the lower east side of
9:12New York, one of the most terrible
9:14places when the Jews landed, uh the the
9:17uh poverty and uh squalor is just
9:21unbelievable. Uh in fact, even as latest
9:25when it was the 19 late 1940s when I
9:28went to school on the Lower East Side,
9:30I'd always heard that that all Jews were
9:32rich. And when I saw the Lower East
9:34Side, I was like, why are these rich
9:35people living like this?
9:40the the the the the buildings on the
9:42Lower East Side were older and in worse
9:44conditions than the buildings in Harlem
9:46where I lived and they don't live there
9:48anymore. No, those neighborhoods have
9:50turned over. Yes. Uh and it went went by
9:53generation. The generation that was
9:54there first. Uh even when they rose up
9:58to where they could have moved, they
9:59didn't because many of them uh were were
10:02not fluent in English and so on. And so
10:04you could live on the lower east side
10:06knowing only Yiddish and find doctors,
10:09lawyers, anything you wanted, going to
10:11stores and so forth. Uh and and if you
10:14moved up to upscale places like Harlem,
10:16which was once Jewish, or or to the
10:19Bronx, which at another time, which
10:20became Jewish, uh you you would lose
10:23that the more culturated people, the
10:25next generation who spoke English and
10:26were more familiar with American
10:28society, they lived in those kinds of
10:30places. Got it.
10:31So why is it that in many instances that
10:36you detail you get a a c a
10:39subgroup the Chinese move to Fiji
10:43and why is it then that so often we see
10:46the pattern that not that the indigenous
10:49the people who were there first fail to
10:51get with the program and in to the
10:54contrary not only do they not get with
10:55the program learning the skills of
10:57productivity they tend again and again
11:00and again to persecute the groups that
11:04came with nothing but achieve a certain
11:06level of affluence. So we have the Jews,
11:08that's an old story, ancient story, the
11:10persecution of the Jews. But you also
11:11show it with the overseas Chinese and
11:14Malaysia with Indians in East Africa and
11:17on and on it goes. What's going on
11:18there?
11:20Well, for one one thing, there's no
11:22there's no particular reason to have
11:24expected the indigenous people to have
11:27acquired the same skills that the people
11:29who came there had. Uh and worse yet,
11:32the leaders of these groups are very
11:35quick to blame the fact that they are
11:37lagging on the other groups who are more
11:39advanced. Uh one of the phrases that you
11:41often hear that this group took over
11:43this whole industry and in many cases
11:46there was no such industry until they
11:48came there and built it. They did not
11:49take it over. Right. Right. Um so those
11:54are industry those are examples of the
11:57way culture can promote or enable
12:00economic productivity. You also provide
12:01a counter example. The Soviet Union
12:04quote the Soviet Union was almost a
12:06tailormade reputation of geographic
12:08determinism. Explain that. Oh, the the
12:11the Soviet Union was one of the most uh
12:16richly supplied countries with natural
12:19resources and probably the most richly
12:21supplied.
12:23um it was the only industrial nation
12:25which has so much petroleum that they
12:27export oil right they have some f I
12:31don't remember don't remember the fat
12:33the fraction but they have a substantial
12:36part of the world's supply of natural
12:37gas which they're now supplying all over
12:40Europe um iron ore manganesees you name
12:43it they had it at one time uh something
12:47like half the the industrial diamonds in
12:50the world came from the Soviet Union uh
12:52the the land was so rich that when when
12:55Hitler had sent his army in to invade
12:57the Soviet Union during World War II, he
13:00had plans to have the railroads take
13:03back this land uh from from Russia into
13:06Germany because it it was that well
13:09known for its exp soil. He was going to
13:11say box cars of top soil. That's right.
13:14I didn't know that. It's one of the most
13:16fertile sections of the and the irony is
13:19one of the world's great famines
13:21occurred in the Soviet Union. How come?
13:24Mismanagement by the government. Milton
13:26Friedman once said that if if the if the
13:28government took over the Sahara Desert,
13:30there would be a shortage of sand. And
13:33the and the Soviet Union, it was it was
13:36just that way. All right, more on social
13:39factors. I'm quoting again from wealth,
13:40poverty, and politics. This is tricky
13:42ground. There is empirical evidence
13:44against against genetic determinism.
13:47We're talking about IQ scores now. For
13:49example, there have been whole
13:50communities of whites from isolated
13:53mountain regions in America whose
13:55average IQs have been similar to or
13:56lower than the average IQs of black
13:58Americans. But while such evidence
14:01undermines genetic determinism, that
14:04does not make mental test differences
14:08irrelevant. So, we're not genetically
14:11determined, but disparities among ethnic
14:14and racial groups are still worth
14:17noting, still consequential. How do we
14:18put this? No, no, it you're you're
14:21seldom hiring a whole group or or
14:24admitting a whole group to college. What
14:26you're doing is is judging individuals.
14:29Uh, and predictive validity is really a
14:32totally separate question from the
14:34question of genetics versus environment.
14:36See, in other words, if the IQ test uh
14:40does not have a single question about
14:41flying an airplane and you give it to
14:43people who want to become pilots, the
14:45only real question is, do the scores on
14:47those tests correlate with the
14:50subsequent performance of people in the
14:52air, right? But you see, I mean, it's it
14:55sounds so simple when you see it that
14:57way. But the Supreme Court of the United
15:00States had a totally different take that
15:02the employer must validate
15:06uh a test uh that is that is not
15:08jobreated. And so what they're saying is
15:11it's a question of whether this test
15:13seems plausible to third parties who
15:17have neither expertise nor experience on
15:19the job. And that would be the criterion
15:21for whether it's a good test. All right.
15:24Staying on this subject
15:25of genetics, race, ethnic groups, and so
15:28forth. You talk again in wealth,
15:30poverty, and politics. You describe
15:32three very selective. They're public
15:34high schools in New York, but they're
15:35very selective. You have to test to get
15:37into them. That's Styesscent High, your
15:39Styesscent High, Bronx Science, and
15:41Brooklyn Tech. quote, "The triumph of
15:44egalitarian principles and demographic
15:46diversity in the rest of New York's
15:48educational system has not resulted in
15:51an increase in the number or proportion
15:54of black or Hispanic students passing
15:56the admissions tests to get into
15:58Styvestcent Bronx Science and Brooklyn
16:00Tech. On the contrary, the numbers and
16:03proportions of black and Hispanic
16:04students have declined substantially
16:07over the years at all three
16:09institutions." Close quote. So telegram
16:12to Mayor
16:15Delasio as diversity becomes championed
16:19in the city of New York over the last 40
16:21years, 50 years,
16:23diversity actually diminishes at these
16:26very selective high schools. Why?
16:29Well, it's
16:31that diversity really doesn't do
16:33anything for you.
16:35uh there are many cultural doesn't do
16:37anything for you as a society or I'm
16:39sorry I as a society or or or the people
16:42in whose interest you you're promoting
16:44diversity. In other words, when black
16:45Hispanic kids go to to schools other
16:48than those three, they get a load of
16:51diversity. Uh it doesn't do them any
16:53good. For example, as of about uh 2012
16:58or 2014, I forget the exact one, the
17:01percentage of blacks at Styverson High
17:03School was onetenth of what it was 33
17:07years earlier. So, it's been a major
17:11retrogression. And so, while they're
17:12being t being their heads full of uh
17:15diversity, the Asian students are
17:17learning math and science.
17:19Plus uh the the schools are also uh uh
17:23another point against diversity is that
17:26in years past those schools were so
17:28heavily Jewish that Styverson was
17:30referred to once as a uh what a free a
17:33pre- prep school for Jews. Well, they
17:36weren't diverse but it was very
17:38successful. And now Asian-Americans
17:41outnumber whites by more than two to one
17:44in all three of those schools. It's
17:46still not diverse, but they're turning
17:48out people who do marvelous things, and
17:50that's what they are there for, to
17:52benefit the society, not to present this
17:54tableau that will please a handful of
17:56people. Got it. All right. Political
18:00factors. This is the last of the large
18:01factors you discuss in wealth, poverty,
18:03and politics. Quote, "Black Americans, a
18:06group often identified as beneficiaries
18:08of the welfare state in America, made
18:10considerable economic progress in the
18:1220th century." Fine. Of course, but much
18:16if not most, this is the thing with you.
18:19The dependent clause is where the sting
18:21is, but much if not most of this
18:24progress was prior to the massive
18:26expansion of the American welfare state.
18:29Close quote. That is so counter I want
18:32to say counterintuitive because we hear
18:34so much about African-American progress
18:36since civil rights and the the
18:38establishment of the welfare state that
18:39it really has become a kind of American
18:41intuition. Explain yourself, Dr. So,
18:44well, as of
18:451940, 87% of black households were in
18:50poverty. Over the next 20 years, that
18:53declined to
18:5547%. This is all prior to the civil
18:59rights laws, prior to the social welfare
19:02policies of the Johnson
19:03administration. Over the next 20 years,
19:05it fell an additional 18 points.
19:08But that that was not that that was just
19:11the same trend continuing at a reduced
19:14rate. Uh affirmative action is even
19:17worse because as I remember the P oh I'm
19:21trying to think now the numbers I think
19:24it was something like
19:27uh poverty rate was something like 30%
19:30among black households before
19:32affirmative action and a decade after
19:35affirmative action it was 29%.
19:37This is not the same as the 40% decline
19:40that occurred before there were any
19:42civil rights laws and before there was
19:43any social welfare state. And so what
19:46happened between 1940 and 1960 was the
19:49post second world war economic boom. It
19:51was that but it was that but it was also
19:53the massive uh migration of blacks out
19:57of the south. So they're getting better
19:59education and jobs. That's right. Okay.
20:03Now, you mentioned cultural and social
20:06retrogressions.
20:08Again, I'm quoting you. Arguably the
20:09most consequential of these was the
20:11decline in two parent families. Yes,
20:13close quote. Explain that one. Among
20:16African-Americans, we're still talking
20:18about African-Americans. Well, you know,
20:19when when when they talk about things
20:20like this, they talk about the legacy of
20:22slavery, right? Right. And and
20:25uh and I argue, well, empirically, it's
20:29not that. It's the legacy of the welfare
20:30state because as of 1960, which is
20:33almost 100 years after slaveryy's ended,
20:35uh the majority of black kids were being
20:39raised in two parent households. But
20:42within one generation after the welfare
20:44state, that had dropped down to a
20:46minority. So that the majority of black
20:49kids today are are raised in one parent
20:52households. When you think about it, I
20:54mean, uh, centuries of slavery and
20:58generations of Jim Crow did not destroy
21:00the black family, but one one generation
21:03of the welfare state did.
21:06The Moahan report uh what was it? A call
21:11for national action, the Negro, the
21:13Negro family, a call for national action
21:151965 and even 50 years ago. and his
21:18principal point of alarm and again now
21:21I'm trying to recall the statistics but
21:22I believe the out of wedlock birth rate
21:24among African-Americans in 1965 was 25%.
21:28Something like that. Yeah. And he was so
21:29alarmed that he wrote this report and
21:32today it's over 70%. And by the way the
21:34the rate among whites is over one-third
21:36at this stage. Yes.
21:39So how do these how does the family
21:42breakdown fit
21:45into an economic understanding? Is it
21:49simply the social breakdown of the
21:51American family is something that we
21:52have to understand aside from the tools
21:54of economics. It just doesn't fit into
21:57supply and
21:59demand history. This occurred at a time
22:02when the black income was rising. And so
22:07we're saying that previous generations
22:08of blacks with lower income and more
22:11racial barriers stuck to the family
22:14stuck together under those conditions
22:16and under the new conditions which were
22:18advertised to make great progress in
22:21fact created
22:22retrogressions. And I think many people
22:24who were gung-ho for the idea this was
22:27going to be progress simply cannot bring
22:30themselves to look at the evidence and
22:32say my god we made things
22:35worse. You close the book with a chapter
22:38entitled implications and prospects.
22:40Quote the all too familiar cliche about
22:42the paradox of poverty in an affluent
22:45society. We're going from international
22:46comparisons to this country now. The
22:48paradox of poverty in an affluent
22:50society is a paradox only to those who
22:53start with one a preconception of an
22:56egalitary egalitarian world in defiance
22:58of history and two a disregard of the
23:01arbitrary nature of the
23:04governmentdefined word poverty. Now
23:06we've already discussed point one.
23:08You've already established that
23:10historically speaking poverty is the
23:11norm and there's nothing like
23:13egalitarianism. It's spotty particular
23:15economic progress is is surprising in
23:18some ways. Number two, the arbitrary
23:21nature of the government defined word
23:24poverty. What do you mean by that?
23:26I mean that what what we define as
23:28poverty today. There was there's a Latin
23:30American scholar a scholar of Latin
23:32America. He he's not Latin American
23:34himself was saying that what we define
23:37as poverty here is the upper middle
23:39class in Mexico.
23:42uh most Americans families in poverty as
23:45defined by the statisticians in
23:47Washington. And that's the thing I try
23:48to bring out regardless of what we think
23:51of when we think of poverty. What it
23:53really means is whatever those
23:54statisticians say it means and and and
23:58that includes uh the great majority of
24:00people who are in poverty in the United
24:02States by that definition. Uh they have
24:05microwave ovens, they have they have
24:08central air conditioning. I mean I was
24:11in my 40s before I had a window air
24:13conditioner you know uh uh but the idea
24:16of central air conditioning uh most own
24:19an
24:20auto one motor vehicle or more and 14%
24:24own two or more motor vehicles uh simply
24:28it is simply not poverty not by any
24:30historical understanding whatsoever.
24:32Yeah. Oh. Uh the uh in in the old days
24:35particularly I'm thinking about the
24:36Lower East Side when the Jews lived
24:37there. You know that the uh the people
24:41were squeezed together in these tiny
24:43places. Uh uh
24:46today the average American in poverty
24:49has more space per person than the
24:52average European. Not the average poor
24:54European, the average European period.
24:57And so all those things by which we've
25:00spoken of poverty in the past, those
25:02things have long since gone. But the
25:04other part of the story is that that
25:06doesn't mean they've got it made. On the
25:07contrary, they have catastrophic
25:10problems because the same mindset that
25:13has created the welfare state, the same
25:16non-judgmental philosophy is also led to
25:19a great deal of leniency toward
25:21criminals. And so you have runaway crime
25:24and people are living in fear. I'm sure
25:27that when I was growing up that we we
25:29never had any of any of the stuff that
25:31uh uh people on on welfare have today.
25:35Uh but you know I can you hold on let's
25:38just test that. You grew up as I recall
25:41late adolescence to high school. You
25:43were in Harlem. Yes. Television in the
25:45house. Oh my god. No. Radio. And we
25:48thought we thought we were a big deal we
25:50had radio. Uh car. Oh my. The thought
25:53never crossed my mind. Uh, when you were
25:56a little boy going to school, how many
25:57pairs of trousers did you have? I don't
25:59know. I only wore one at a time. So,
26:03but you weren't getting J Crew or LLBAN
26:05cataloges on. Oh, they were not. They
26:07they must have overlooked me somehow.
26:09You weren't in the right zip code. What
26:11about What about uh Well, let me You
26:14weren't hungry though. You were still
26:15wellfed. Yes. Right. Yes. But but you
26:17know, you mentioned about LLBAN. My
26:19sister was visiting me from from the
26:20east coast once who said, you know,
26:22people in the ghetto would not write
26:24wear the kind of khakis you wear. I
26:26said, "What's what's wrong? I got these
26:27are doctors and what's wrong with No,
26:29they want designer uh uh things. I hear
26:32about the the uh tennis shoes that are
26:35bought there." I mean, I wouldn't pay
26:37that kind of money for regular
26:39shoes. You know, did you have enough
26:42money for books in the house?
26:44No. I But fortunately, I lived across
26:46the street from a public library.
26:49Uh but but other but other than that uh
26:52I I don't know if I ever bought a book
26:55when I was growing up. Newspapers
26:57though.
26:59Newspapers. Uh by the way, was it
27:01considered Oh dear, how do I say this?
27:05There's a place in your book where you
27:06talk about cultural the retrogression,
27:09cultural retrogression against among
27:11African-Americans and certain kinds of
27:13behavior called acting white. Acting
27:16white. Was it acting white in your day
27:17to go across the street to the library?
27:19Nobody ever said it. Okay. All right.
27:23So, I'm sorry, but you said you didn't
27:25have any of the things that supposedly
27:26poor people have today. You were making
27:28a point and then I jumped in and
27:30started. But but but of course, uh I I
27:33had I had I had a sense of security that
27:35you simply cannot have. And if you look
27:37particularly at the public housing, uh
27:40your neighborhood was safe. That's you
27:42mean just Yes. Okay. I mean, I I I can
27:44remember more than once waking up at
27:46midnight and deciding, I will go out and
27:48buy a newspaper to see how the base what
27:50the baseball scores are. And so, and the
27:53and the guy who was who was selling them
27:54was a very small uh elderly white man uh
27:58uh down at the end of the block.
28:01Okay. Today, both of us would be taken
28:03into custody and sent in for mental
28:04observation for being out there in the
28:06middle of the night. So, poverty in
28:08America today is not material want. It
28:12simply is not by the standards of all
28:15time, all history, other places. It is
28:17not material want. It's poverty of the
28:19mind. It's poverty of policy. It's
28:22squality of squalor of behavior.
28:25And how does that get corrected?
28:28Thus far, it hasn't been. Uh, one of the
28:31real problems and this this is not
28:33peculiar to the United States or to any
28:35group in America
28:38uh, ethnic leaders particularly leaders
28:40of groups that are lagging are a major
28:42obstacle to advancement because their
28:45self-interest
28:46uh, is in keeping their groups isolated
28:49and they and and and isolation has been
28:51tied in with poverty for all kinds of
28:54groups in all kinds of settings around
28:56the world. Al Sharpton versus Ben
28:58Carson. Yes. Al Sharpton is is bad for
29:02African-Americans. Is that what you're
29:04saying? But yes, but unfortunately al
29:06the Al Sharpton types uh have have been
29:09the rule rather than the exception for
29:11groups around the world. Back back in
29:1319th century Bohemia uh where the
29:16Germans again for a whole lot of uh how
29:18do you know all this? Because of my
29:21research assistance.
29:23All right. Go ahead. 19th century
29:25Bohemia. Uh the Germans had had all
29:27kinds of advantages that came out of
29:29history which you could go into if you
29:31felt like it. Uh but for example, if you
29:34were in the first in the early 19th
29:36century Bohemia and you wanted to uh go
29:38to high school uh and and you were a
29:41Czech, you would have to learn German
29:44because there were no high schools in
29:46the Czech language until
29:481848. And so but that was a condition
29:51common throughout Eastern Europe that
29:53the Slavic languages became literate
29:55centuries after the German language did.
29:57And therefore there was a huge buildup
29:59of knowledge in the German language that
30:02was not equally available in Slavic
30:04languages at that time. And so if anyone
30:07who wanted to become an educated person
30:09and go into the professions they had to
30:11learn German. Now you would think that
30:14then that the uh leaders if they were
30:16looking out for the best interest of
30:17their followers would say for heaven's
30:19sake learn German and move on up. No,
30:22they would have they would they fought
30:23tooth and nail against it.
30:26Dr. Soul and his critics from a review
30:28of wealth, poverty, and politics in the
30:30Washington Post. Now I'm going to just I
30:33don't want you to swing at me. All
30:35right. Soul does manage to score a clean
30:39hit on those who now complain that
30:41income inequality is too high by noting
30:44their refusal to say what level of
30:46inequal inequality they would consider
30:48acceptable. Fair enough. What we also
30:52learn in this book, however, is that
30:54there is apparently no level of
30:56inequality of income or opportunity that
30:59Thomas Soul would consider unacceptable.
31:02Close quote.
31:04and you reply, "Well, it it it's it's
31:07it's hard to know where to begin when
31:09someone misses the whole point of the
31:10whole
31:12book."
31:13Uh, of course you the big confusion
31:17among the redistributionists is between
31:19opportunity and outcomes. And one one of
31:23the examples I used in a recent column
31:24was that, you know, when I when I was a
31:27a kid, I briefly tried to play
31:29basketball. And uh I mean I was lucky to
31:32hit the backboard, never mind the
31:34basket, you know, but I had ex just as
31:37much opportunity to play basketball as
31:40Michael Jordan had. You cannot measure
31:43opportunity by outcomes. And that's what
31:46the redistributionists insist on doing.
31:48They say this group obviously didn't uh
31:50didn't have equal opportunity because
31:52they were turned down for loans more so
31:54than that group. Yes. If you have lower
31:57credit scores, you'll be turned down for
32:00loans more so than people with high
32:02credit scores.
32:06Okay, Thomas, you just mentioned a
32:08column. Let's let's let's turn to the
32:10the politics of the day for a moment.
32:12Thomas Soul on Donald Trump. Quote,
32:14"What is remarkable is that after six
32:16years of repeated disasters under a glib
32:18egoomaniac in the White House, so many
32:21potential voters are turning to another
32:22glib egoomaniac to be his successor."
32:26Close quote. Oh, come on. Aren't you
32:28being a little hard on both Barack Obama
32:30and Donald Trump? I thought I thought I
32:31was pulling my punches.
32:34Donald Trump is simply not suited to be
32:36president. I think that that's true as
32:38an understatement.
32:39All right, Barack. Nor is the current
32:42president. I was going to say Barack
32:43Obama is the president. Yes. Glib ego
32:45mean how bad has he been? Who where does
32:48Barack Obama rank in your mind? You who
32:50know so much history
32:52among the worst American presidents. He
32:56has displaced Jimmy Carter from that
32:58position. The worst. The worst. Worse
33:01than James Buchanan. Yes. Worse than
33:03Richard Nixon. Yes. All right. Richard
33:06Nixon did not after all put us in danger
33:09of of nuclear attacks probably win the
33:12lifetime of people living today. The
33:15Iran deal will do that. Yes. We're we're
33:18we're committed to stopping the
33:21Israelis from stopping the Iranians from
33:24getting a nuclear weapon. That's part of
33:25the deal.
33:28When I interviewed George Gilder about
33:30six or seven months ago, George Gilder
33:32known to both of us, he contended that
33:35with the right policies, the economy,
33:38coming back to the international scene
33:40in a moment, but the economy would
33:41actually turn around quite quickly. The
33:43American economy can be revived quite
33:46quickly, cut taxes, peel back
33:49regulation, and you'd see another
33:51version of the early 1980s. You agree?
33:53Yes. All we have to do is get out of the
33:55way in a certain sense. Yes. I mean uh
33:58uh there was there was a when when
34:00Warren Harding took office in 1921, the
34:04uh unemployment rate was around 12%.
34:07Warren Hardy did absolutely nothing. As
34:10the as the government's revenue fell
34:12because of the the downturn, he cut
34:16government spending. Now, but now both
34:19those things are things that the drive
34:20the Keynesians crazy, right? The
34:22following year unemployment had fallen
34:24to about half that level within a year.
34:27Yes. And then a year after that it fell
34:29yet again. Uh you know there is a
34:33history the first time the federal
34:35government intervened in the economy to
34:37get us out of a of a downturn was in
34:421930. now which means that for more than
34:46150 years the federal government just
34:48stood by and twidd their thumbs while
34:51the economy recovered on its own. And
34:54all that time there was never a
34:56depression as bad as the 1930s
34:58depression where there was all kinds of
35:00of intervention beginning with who
35:02Herbert Hoover helpers uh and then
35:05amplified by Franklin D. Roosevelt. So
35:07in terms if you're looking at what
35:09happened as a matter of fact uh again
35:12there was no there was no Federal
35:13Reserve prior to 1914
35:16uh the Federal Reserve was created in
35:18order to one cut back cut back on bank
35:20failures uh reduce uh inflation and
35:24prevent deflation. All of those things
35:27reached historic highs never seen before
35:30under the Federal Reserve. So the the
35:32the the idea was wonderful. It's only
35:35the reality that didn't cooperate.
35:38Oh, Tom, I I'm only laughing because
35:40otherwise I'd cry. The international
35:42scene, you've just said that under the
35:43right policies, the economy could
35:45recover quickly.
35:48Under the right policies, how quickly
35:49could how quickly could, let's just
35:51posit that you become president. Uh, how
35:54quickly does the international damage
35:57done by your favorite Barack Obama, how
35:59quickly could that be recouped? How
36:00quickly could the United States and the
36:02world recover? That that that's a tough
36:03one because whoever comes in there, he's
36:06got to face the damage that has been
36:07done and the further damage that has
36:10already been set in motion. And
36:13uh you know, you don't one of the
36:16reasons we won the Gulf War with far
36:18fewer casualties than anyone ever
36:20expected, the first Gulf War. First war,
36:22right? uh is that Ronald Reagan
36:25bequested the George Bush 41 a huge
36:29military establishment so that you could
36:31send all this stuff in there and just
36:33wipe out the opposing army. Whoever
36:36inherits this situation is going to be
36:38one where it's just the opposite where
36:39we've had reductions in the armed
36:42forces. We've had cutbacks in all kinds
36:44of research and so on and training. So
36:47what what what the next president has to
36:50op to to operate with is going to be uh
36:53just a very desperate situation. Where
36:56does Tom Souls stand on immigration?
37:02I guess there's no such thing as as as
37:04uh as policy toward immigrants because
37:07there's no such thing as just an
37:08immigrant. There are immigrants from
37:10different places, different kinds of
37:12immigrants, and we don't even want to
37:14discuss any of those things. You know
37:16100 years ago they were talking about
37:17immigration. They had all kinds of data
37:20on crime rates, death rates, everything
37:23you can think of about immigrants from
37:25various countries around the world. We
37:27have no one even dares to ask such
37:29questions today. So the country in the
37:33old days had the self-confidence to pick
37:35and choose. Oh absolutely. We'll take
37:37some from here but not from there. Yes.
37:39And that's what you'd like to see? Yes.
37:41And what would be the principles? We
37:43would accept immigrants who would do us
37:45economic good. Economic good and and
37:48presumably uh preferably not uh not not
37:51not plant explosives in various places.
37:55I'm with you. Okay. That the minimum the
37:58minimum
37:59hurdle single family uh single parent
38:04family the family breakdown is that is
38:07that reversible? If it's the result of
38:09the welfare state, if we were somehow or
38:10other to get rid of the welfare state,
38:13would the family in effect heal itself
38:15or is it one of those social constructs
38:17that once unraveled takes generations to
38:20put back together? It would take it
38:21would take time. But even the modest uh
38:23welfare reform under the Clinton
38:25administration led to uh uh uh pe more
38:28people actually going to work
38:31uh once the gravy train wasn't there.
38:36So that too. All right. All right. All
38:39these things are all these things are
38:40achievable. Yes. All we have to do is
38:43stop doing the wrong thing. Yes. We have
38:45to stop being stupid. Well, uh, you
38:47could put it that way. All right. Couple
38:49of last questions. We're taping this the
38:51week before Pope Francis visits the
38:54United States. Pope Francis in a 2013
38:58statement.
38:59Some people continue to defend trickle
39:01down theories which assume that economic
39:04growth encouraged by a free market will
39:07inevitably succeed in bringing about
39:09greater justice and inclusiveness in the
39:11world. This opinion which has never been
39:13confirmed by the facts expresses a crude
39:18expresses a crude and naive trust. Will
39:20you please stop interrupting? This is
39:21the pontiff. a crude and naive trust in
39:24the goodness of those wielding economic
39:26power and in the sacralized workings of
39:28the prevailing economic system. Close
39:30quote. Is there anything you'd like to
39:31say to the pontiff?
39:34I would say read my monograph on trickle
39:36down theory. Uh there is no such theory.
39:40It there there some years ago in one of
39:43my columns I defied anybody to name any
39:45economist of any school of thought
39:48outside of an insane asylum who had ever
39:50advanced that theory. I pointed out that
39:53uh Joseph Schumped's
39:561,2660 page book on the history of
39:58economic analysis printed in very small
40:00letters, you know, has no mention of any
40:03trickle down. There is no such theory.
40:05It's a straw man that's been created.
40:07And it's pathetic that someone in the
40:09position of the pope would would spout
40:13off about this. I would I would say to
40:15him what I would say to anyone else. you
40:17show me that theory and I and and you
40:20know I I'll give you $1,000 down payment
40:23on to towards some large What about his
40:25general suspicion toward capitalism some
40:27way oppressive?
40:31Well, again, if he if he has any facts,
40:33I'd be delighted to hear them. All
40:34right. You know what what is what is so
40:37frustrating to me is that we've gotten
40:39away from facts and evidence. Not some
40:41time back, someone uh did a paper
40:44disproving something I said in 1970.
40:46Now, no one likes to be uh uh found
40:48wrong. I was I was actually pleased with
40:51it. It was one of the few times someone
40:53has come up with any facts to even bring
40:55into the argument. Got it. Last
40:59question. As I said, you you titled the
41:02last section of this book implications
41:03and prospects. No, I titled it epilogue.
41:06Epilogue. Excuse me. You titled the
41:07penultimate section. I'm showing off
41:09that means next to last. Of course, the
41:11penultimate section is implications and
41:12prospects. So question about the
41:14prospect for the American experience
41:18experiment. We hear a great deal about
41:20the United States current condition as a
41:22new normal sluggish growth high unemploy
41:27high unemployment in this the
41:29unemployment rate per se is now down to
41:31a little over 5%. But if you take into
41:33account people who've dropped out of the
41:35workforce, difficult to say for certain,
41:37but it's still very, very high, possibly
41:39even in double digits still. Lowest
41:42labor force participation rate since
41:441977.
41:45So that's where we are. And we have this
41:48general sense that the United States is
41:50losing ground or seeding ground
41:52internationally. That's the new normal.
41:55To paraphrase Ronald Reagan, four years
41:58from now, will the country be better
42:00off?
42:01It depends what they what they decide
42:03next next November. So you don't have
42:06some kind of underlying faith in
42:10American democracy.
42:12I think I think any anyone who has
42:14watched the uh so-called debates would
42:16would find it hard to have much faith.
42:20All right. Now, but you mentioned
42:231977. Things were terrible then. Note
42:26how quickly they turned around when
42:27Reagan took office. For example, Iran
42:30released our hostages within hours of
42:32Reagan's inauguration.
42:35Okay. Thank you. Because I like to end
42:37shows on an optimistic note, Tom. You
42:40just gave me one. Thomas Soul, author of
42:42Wealth, Poverty, and Politics. Thank
42:45you. Thank you for Uncommon Knowledge on
42:47the Hoover Institution. I'm Peter
42:48Robinson.

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