Transcripts For CSPAN Heritage Foundation Forum Examines Imp

CSPAN Heritage Foundation Forum Examines Impact Of Government Polices On The Poor May 31, 2017

Story of war, politics, griftopia, and his most recent book, insane clown president. During our live threeour conversation, we would take your , and facebook questions on mr. Taibbis career. Live from noon to 3 00 p. M. Eastern, sunday. Next, a look at the impact Government Policies can have on u. S. Property rights. We will hear from former Trump Campaign economic adviser stephen moore, and a panel debate on the affected landuse restrictions can have on low income americans. This event was hosted by the Heritage Foundation. Good morning and welcome to the Heritage Foundation. I am the director of the center for free markets and Regulatory Reform here at the Heritage Foundation. I asked for those of you in the audience to please make that last little check of your cell phone. Make sure that they will not interrupt the proceedings today. We will get started right now. The event today is really designed to celebrate the publication of a new heritage special report on big Government Policies that hurt the poor and how to address them. The United States is a very compassionate country and we have an awful lot of government activities that affect poorer members of our population in one way or another. We have welfare programs, welfare spending that adds up to well over a trillion dollars these days and that can be in things like health care, direct income support at one time or another. We are not here to talk about those policies today. We want to talk about another set of Government Policies, those that are put in place for what seemed to be on the surface very wellmeaning purposes and in fact they made the necessary they may be necessary policies of one kind or another for government. But if you look at the second or thirdorder effects of the policies, they have a negative effect on poor people. The kind of policies we are thinking about are policies that have two main impacts. The first is the impact on prices. The free market is not going to work very well or work at all if government is changing the relative prices of goods or labor or capital and there are lots of programs that government undertakes that have some sort of impact on prices and unfortunately because consumption is a bigger part of the expenditures of poor people, those kinds of policies tend to raise the prices of consumer goods tend to hurt poor people more than they hurt rich people. And the second set of policies are those of that interfere with the opportunities of people to work. These would be restrictions like occupational licensing or i suppose you could put minimum wages in this category. Things that interfere with the ability of poor people especially to get into the workforce and take care of themselves. That is going to be the focus of our program today. I think youre going to be surprised at how many policies there are. We identify several dozen in the publication and i think were just scratching the surface. Fortunately, we have very eminent people to start us off today. Our keynote speaker for the event is at dr. Don boudreaux and don, i would say i would have to say is one of the leading economic educators in the United States of america. And im just going to find his actual resume in my list of papers here because i want to tell you he is a senior fellow with the Frederich Hayek the program for advanced study in philosophy concepts. He is a professor of economics, a former chair of the Economics Department at george mason. He studies free market capitalism that is not a word you hear very often these days, we ought to hear it more. He specializes in globalization law and economics, and antitrust economics. He is the author of one of the very few blogs online that i go to every day. Hayek, and icafe recommend it strongly for those of you who want to know what is really going on in the economics world. After don speaks, were going to have commentary and hopefully a conversation. Steve moore is a visiting fellow here at the Heritage Foundation. He runs our project for Economic Growth that focuses on a broad range of topics, including tax reform, budget, and Energy Policy. He is a senior economic analyst for cnn and took a leave of absence for his duties as heritage to join the Trump Campaign as a senior economic adviser to thencandidate donald trump. He is the author of several books including his most recent fueling freedom exposing the mad war on energy. Please join me in welcoming john boudreau. [applause] dr. Boudreaux thanks, jerry. Im pleased and honored to be here, especially with steve. When people say that i am an economic educator, that means i no longer do economic research. I dont think thats true, but i believe that economists the world can better use more Economic Education than use yet another journal article putting a curlicue in some esoteric point. I think that is revealed in the state of current public understanding of economics, of the contents of the public debate during the most recent national election, or any sign of the state of the publics economic understanding. I think it is incontestable that the state of the economic understanding is pretty poor. It seems to be the worst in my lifetime, which unfortunately, is rather long at this point. On the one hand, this fact is understandable and forgivable. Economics, even at the most basic level, in a unique way thinking about reality, its not difficult, but it does take some effort. It does take some time and willingness to learn a new way of thinking. To use a famous analogy, it take a willingness to see beyond what is immediately obvious to look at what is less obvious, and to wear those lenses requires to put those lenses on and use them require some effort. Once that effort is put forward, it is not difficult. You wind up seeing a lot about reality that would otherwise remain out of vision. In one sense, its not appropriate to scold people for not understanding economics. We live in a world where we are all busy, we have different jobs, we have a great deal of economic specialization. To spend time learning economics means you spend time away from your job and your family and taking care of personal matters. I cannot scold anyone for not learning even basic economics. Maybe it is no more appropriate to do that than to scold an economist for not learning the details of carpentry. I dont know anything about carpentry. The difference is the fact that i dont know anything about carpentry, that doesnt affect the state of public carpentry. Things seem to be working pretty well with carpentry. The problem with economics, if you dont understand economics, you can still vote and make public commentary. The lack of understanding when it is displayed through the voting process, displayed through public commentary process, the results are bad economic policies. My not understanding carpentry doesnt inflict bad carpentry on the rest of the world. Peoples lack of understanding of economics inflicts that economics on the rest of the world. I dont have any solutions to the problem. I wish i did. If i did, i could probably make a lot of money. I point the finger of blame on my fellow economists. We have done a poor job since the time of adam smith of conveying an understanding of basic economics to ordinary people. There are some people, Milton Friedman being the most notable. Mises,n, ludwig von there are a handful of other excellent economists and excellent public communicators. We have too few of those. The basic truths are not out there in the public mind. I tried to distill the basic truths of economics as they are relevant to todays Public Policy debate and ive distill them down to the convenient number of 12. I couldnt quite fit them into 10. Here are the basic truths of economics as i see it. If these truths were better understood by the general public, the state of the public debate and hence the state of politics and policy would be better. It would not be perfect, but it would be better. These are in no particular order except maybe the first one. Number one, there is no such thing as a free lunch. I like that phrase. You all know what it means. That means that every benefit have a cost. That does not mean the benefit is not worthwhile pursuing or grabbing, but it has a cost. Every benefit has a cost. Often, these costs are unseen. The flipside is a lot of costs have benefits. To be sound economically, you cant just focus on the benefits you see and ignore the call or see the costs and ignore the benefit. You have to look beyond the first stage. You have to look past the first act. There are several acts in an economic play and it doesnt end after the first act. Number two, as a general rule, each of us spend our own money more carefully and productively than we spend other peoples money. This seems to me to be indisputably obvious, but judging from the Public Policy that comes out of this town, it does not seem to be obvious to other people. A reigning presumption among many people, mostly people on the political left, but not always, if you take money from person a and give it to person b, then person b will spend person as money better than person a will spend that money. I dont get it. It seems to me obvious that each of us, as a general rule, stands spend our own money more carefully than we spend other peoples money. Number three, when the cost of an action rises, people will not take the action. This seems obvious as well. Its more costly for me to do something, im less likely to do it. Probably the most fundamental proposition of scientific economics is the law of demand. It is a fancy way of saying when the cost of taking an action go up, youre more reluctant to do it. You will find some alternative way of pursuing your ends. Ends. Number four, there is no fixed number of jobs in a country or a globally. The socalled lump of labor fallacy is indeed a fallacy. People on the left, on the right, in the middle, up and down, often fall for this lump of labor fallacy. If these jobs are destroyed, what will people do . I think this is a grotesque fallacy, it is belied by history. One of my favorite statistics is looking at the u. S. Labor force and u. S. Number of jobs. Civilian labor force number of jobs. In 1950, some 67 years ago, u. S. Labor force was roughly 60 million people. Today, the u. S. Labor force is roughly 155 million people. About 150 larger than it was just 67 years ago. And the amount of joblessness today is a little bit higher, a percentage point or two as it was in 1950. The labor force, the number of people in the economy were seeking jobs in the sector has gone up, so have the number of jobs. It tracks the number of people in the labor force pretty carefully. We see this as women enter the workforce, a Larger Population enters the workforce, jobs are created. As long as the economy is reasonably free to employ those people. Number five, just as there is more than one way to skin a cat, there is more than one way to succeed economically. I confessed, i have never skinned a cat. Ive heard this phrase. I would like to say i would never skin a cat. Im glad to know academically there is more than one way to do it, but i do know, not from personal experience, but from my reading of economics and economic history, theres obviously more than one way to succeed economically. If the cost of one way of pursuing business rises, competitive entrepreneurs find another way to conduct business. Theres not one way to conduct business. Successful and dynamic entrepreneurial businesspeople are on the lookout for alternative ways to conduct their affairs. Number six, consumption and not production is the ultimate goal of Economic Activity. Thats the ultimate justification. Not to employ people, but to create goods and services that make peoples lives better as they judge them. Number seven, dont be misled by number six. Economic growth is caused by, driven by increased production. It is not caused by increased consumption. Increased consumption is a happy result of increased production. Number eight, nothing about a political border changes the nature of trade. Any problems that arise when nebraskans trade with koreans arise when nebraskans trade with kentuckians. Number nine, therefore, when foreigners sell to us, they do so only because they wish to buy from us or invest in our economy. Foreigners are no more willing than we are to accumulate lots of pictures, monochrome pictures of dead american statesmen. But to listen on the trade debate on the left and the right, you would swear the goal of most foreigners is to harm us by sending us things like steel, cars, and consumer electronics, in exchange for ever larger pictures of George Washington and abraham lincoln. As much as i admire George Washington, abraham lincoln, and jefferson, and benjamin franklin, and ulysses s. Grant, none of us engages in Economic Activity to acquire these pictures. We do it because we want to spend those pieces of money or to invest in them and the same is true for the chinese, germans, mexicans, and all other foreigners. Number 10, a trade deficit is neither a symptom of poor domestic economic performance, nor is it a source of economic performance. It is usually quite the opposite. I dont think there is any topic now that is more misunderstood, at least across the political spectrum, than the topic of socalled trade imbalance. The trade deficit, as many of you, i hope, know in this room, but if you dont know a trade deficit or the better term is current account deficit. A trade deficit is offset by a capital account surplus. America runs a trade deficit, that means america is running a capital account surplus. Foreigners are investing more in our country. I fail to see how that can be bad for us. I fail to see how a trade deficit reflects poor economic performance. Usually when i invest, i invest in companies and in sectors that i think have promise. If someone tells me that company is on the ropes, that company has a poor future, i dont rush to invest in it. I rushed to take money out of it. Number 11, a trade deficit is not necessarily debt. People on the right and the left, and economists are to blame for this because of the language we use, incessantly describe increases in the trade deficit as increases in american debt. It is not the same thing. It can become debt, but its not identical with debt. In principle, every trade can become nondebt. It can mean that but it does not typically mean that americans are going further into debt. It can mean that, but it does not necessarily mean that, and the incessant description of the trade deficit as a source of increasing american debt is very dangerous, because it leads to misunderstanding about what the nature of a trade deficit is. Number 12, and this should appeal to steve, because its about his great teacher, the most important and scarce resource, as julian simon taught, the human mind in free markets. Human creativity is what makes our lives and standard of living possible. We talk about Natural Resources all the time. There is no such thing as Natural Resources. Resources arent naturally productive. Resources are made productive by human creativity, figuring out how to use them, how to transform them into goods and services to make our lives better. These points, if misunderstood, guide us away from good policy. Why they may be meant to help pooroor, they hurt the especially. I will talk briefly about minimum wage. Minimumwage legislation is the poster child for such a misguided policy. It seems so right. This person is paid less money than we think they should be paid, lets order the employer to pay them more. The trouble with that is, as the cost of taking action rises, people are less likely to take action, the cost of employing lowskilled workers goes up, fewer lowskilled workers are employed. Until about 20 years ago, there was widespread consensus among economists that minimum wage has negative employment effects. By the way, thats not the only effect it has. Minimum wage can change the nature of jobs. Even workers who keep their jobs, some employers will make those workers work harder. The employer becomes less willing to let the worker use worktime to handle personal business. There are a lot of ways to adjust to a minimum wage for an employers standpoint, but one of the ways is to employ fewer low skilled workers. It knocks them out of a job and getting paid zero per hour is worse than getting paid whatever you would be paid if you had a job in the absence of the minimum wage. Even worse, its not the loss of current income. Thats bad enough. Its the loss of job experience and job skills that you get when particularly a young person and an unskilled person. And also the distribution of the harm created by the minimum wage is notable. I have a teenage son who was raised in Fairfax County, a nice, wealthy suburb, good schools. My son has never had trouble getting a job at the minimum wage. When he was 16, he was an unskilled, typical 16yearold. Although he thought he knew a lot. But he never had trouble getting a job. What the minimum wage does is when he was 16, he was an unskilled, typical 16yearold. Not only strip some lowskilled workers of jobs, but the low skilled workers that are disproportionately harmed by this are minorities in the inner city. They are the leaders who dont have their own personal means of transportation. They are the teens more likely to have to stay home to help babysit siblings. They are the teenagers who have gone to failing government schools. The employer for understandable reasons, when the cost of hiring a worker rises, employers go away from those workers and it becomes more costly to hire kids even like my son, but the risk of hiring innercity teens is even greater than hiring teens from Fairfax County or montgomery county. So it is the teens from the inner cities that are harmed the greatest by the minimum wage. There is a raging debate in economics today. Does the minimum wage really destroy jobs or does it not . The bulk of the evidence still shows that the minimum wage destroys jobs and that the bulk of those job losses are among inner cities and especially poor families. There are people who dispute this. The empirica

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