Sen. Phil Gramm Deunks rates and the seven great myths of American capitalism

What role should the government play in the economic life of small entrepreneurs? It seems that with the Trump rates on taxes are that the government sets up our entire lives, but should he just stay outside?

On The small business radio show This week, Senator Phil Gramm Describes evidence on which the interference of the government and the failed policy that pays the most important threat to economic freedom.

Gramm, who has a long history in American politics, who has served both in the House of Representatives and the Senate, participates in my conversation with Don BoudreauxThat economist and professor are at George Mason University. They have called a new book “The triumph of economic freedom: the seven great myths of American capitalism”.

The role of the government in economic life

I asked Gramm for the right balance between the involvement of the government in the economy. Gramm claims that the government must primarily maintain the rule of law and let the private sector thrive. He believes that economic freedom is the cornerstone of the American exceptional, which contributes to the wealth and power of the nation. Gramm emphasizes that the more freedom should strive for individuals to pursue their economic interests, the better society will be as a whole.

Main points:

• The role of the government: enforcing the rule of law, protect property rights and guarantee fair competition.
• Economic freedom: essential for innovation, entrepreneurship and general social wealth.

Define economic freedom

When asked to define economic freedom, Gramm explains that it includes the right of individuals to use their skills to improve their lives and those of their families within a legal framework. He argues that real success comes from the production of goods and services that appreciate others, in contrast to the idea that only government or criminals can win without contributions.

Main points:

• Individual rights: freedom to use someone’s talents and resources to create value.
• Legal framework: ensures that economic activities are carried out fairly and ethically.

Debunking of myths of American capitalism

Boudreaux introduces the first myth from their book: the ‘Genesis Myth’, which claims that the industrial revolution impoverished employees. He claims that this story is a misconception. Although the industrial revolution led to considerable economic growth, it was not at the expense of the working class. Data even shows that ordinary people have experienced improvements in wealth, working conditions and life expectancy during this period. Boudreaux emphasizes that the wealth generated by capitalism has led historically to a better standard of living for everyone.

Main points:

• Genesis Myth: The Industrial Revolution improved, instead of worsening, the life of employees.
• Economic growth: in time leads to better standard of living and working conditions.

The great depression and capitalism

The discussion shifts to the great depression, with I ask Gramm why it is often seen as a failure of capitalism. Gramm argues that it was in fact a failure of government policy, in particular in the monetary policy and the implementation of the Smoot-Hawley rate, which has worsened the economic decline. He explains that the failure of the Federal Reserve to offer liquidity during the crisis led to widespread banking failures and extended the depression. Gramm notes that other countries recovered faster due to different policy measures, while the US did not fully escape depression until the 1950s.

Main points:

• Government policy errors: poor monetary policy and protectionist rates deteriorated great depression.
• The role of the Federal Reserve: Lack of liquidity provision led to banking failure and long -term economic hardships.

Rates and American production

I am discussed the rates, especially in the context of President Trump’s protectionist policy. Boudreaux claims that the conviction that trade is running out of American production is a myth. He quotes data that demonstrates that the American industrial output and production capacity are too all time. He argues that rates, which increase the costs for American producers, ultimately harm production instead of helping it.

Main points:

• Handelsmythen: American production blooms, in contrast to protectionist claims.
• The impact of rates: increase the costs for producers and damage to the wider economy.

Deregulation and the financial crisis

The conversation then goes to the myth that Deregulation caused the financial crisis of 2008. Boudreaux argues that there was little actual deregulation, and the crisis was primarily a result of the government policy aimed at artificially stimulating the homeowner. He explains how the government supported organizations such as Fannie Mae and Freddie Mac lowered the credit standards, which led to a cascade of risky mortgage loans that ultimately collapsed.

Gramm supports this vision and clarifies that the Gramm-Leach-Bliley Act Deregulated the banking sector as generally believed. Instead, it recognized the reality of large financial institutions that are active in various sectors. He emphasizes that the crisis was not caused by deregulation, but by government policy that put pressure on banks to provide risky loans.

Main points:

• DeregulationMythe: The financial crisis was driven by government policy, not by deregulation.
• Lending by the government: reduced standards led to risky loans and the final collapse.

Poverty and capitalism

Finally, I ask about the myth that poverty is a failure of American capitalism. Gramm claims that even the poorest Americans nowadays belong to the richest worldwide, and the perception of poverty often comes from measuring failure. He explains that when declaring taxes paid by earners with a high income and government transfers received by persons with a lower income, the gap between rich and poor narrowing considerably. He claims that hard work and responsible life can lead to prosperity in America, a story that has kept historically true.

Main points:

• Poverty myth: American capitalism has considerably reduced the poverty data.
• Wealth distribution: government transfers and taxes limit the income gap.

Conclusion

While the episode closes, I ask both guests what they hope that readers will take away their book. Gramm emphasizes the importance to rectify the record to economic myths and to promote a greater appreciation for freedom within the rule of law. Boudreaux reflects this sentiment and emphasizes the need for a fact -based alternative story for the conventional wisdom that is taught in schools.

Usable collection restaurants:

• Understand economic freedom: recognize the importance of individual rights and a fair legal framework in promoting economic growth.
• Ask common stories: be critical of generally accepted myths about capitalism and government intervention.
• Rate the benefits of capitalism: recognize the historical and continuous improvements in living norms driven by capitalist principles.
• Lawyer for noise policy: supporting policy that improves economic freedom and avoids those who impose unnecessary burdens on companies and individuals.

Listen to the entire episode in the Small Business Radio Show