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War is the improvement of investment climates by other means, Clausewitz, for dummies.
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All right, you guys, Scott Horton Show here.
And I got Mark Thornton on the line.
He is a senior fellow, of course, at the Ludwig von Mises Institute, the Mises Institute.
That's mises.org.
And he is the book review editor of the Quarterly Journal of Austrian Economics.
And his publications include The Economics of Prohibition, Tariffs, Blockades and Inflation, The Economics of the Civil War, The Quotable Mises, The Bastiat Collection, An Essay on Economic Theory, The Bastiat Reader, etc., etc.
And him and my buddy Robert Blumen, they were the very first ones to identify the horrible housing bubble that crashed in 2008.
Back in 2004 and 2005, I guess it was.
The author of, what is it called?
The skyscraper thesis?
The skyscraper what again?
The skyscraper curse.
The skyscraper curse, that's right.
And I'll just sum that up real quick.
Whenever you see a building, the tallest building in the world, you know there's an inflationary bubble.
And we're going to get to exactly what that means.
So that's why I want you here.
As you know, I think that other than the actual wars themselves, you know, the brute force end of the empire, that the second most important issue in the whole wide world is central banking.
And it sounds boring or maybe it sounds like something that only libertarians are interested in.
But what I think is that even if you're a socialist or a liberal or a conservative or some kind of whatever different brand of right winger, or no matter really what you believe about what policies should be about anything, you still got to recognize the fact that Mark Thornton and them, the Mises guys, they're the ones who figured out why we always have the boom and the bust, the boom and the bust.
The government is there to try to smooth out the boom and the bust because capitalism causes the boom and the bust.
But you say no.
That's absolutely right.
And, Scott, with war, the destruction of resources, capital and human beings is obvious to everybody.
But the destruction of resources that's involved in the business cycle can be just as large or even greater than the cost of war.
It's just not very obvious at all when you're building nice shiny buildings or nice shiny houses or nice shiny skyscrapers.
It appears at first that it's a good thing.
Only we find out later that it's involved in a misdirection of resources on a massive scale.
And so the Austrians have figured out, I didn't figure this out, Ludwig von Mises, F.A. Hayek, Murray Rothbard are the types of people who really figured this thing out and showed us in American history what's involved here.
And basically, when you put the government in control of anything, it screws things up.
With the government in charge of our money, our interest rate, our central bank, that's a major distortion.
When they print too much money or they artificially reduce the interest rate, they artificially increase the amount of credit.
Well, if you artificially increase the amount of credit, people are going to borrow more.
And, you know, so there's smart things to invest in and there's dumb things to invest in.
And when you lower the interest rate, you allow dumber people access to a lot more money.
And it's not surprising that they end up investing in the wrong things for the future.
All right.
So let me give a great example from my own life.
I was a cab driver in Austin, Texas, in the very late 90s.
And in fact, during the South by Southwest Music Festival in 1999, I think was the ultimate argument ad absurdum or something here, where every single idiot in California, I mean all of them, came to Austin.
And each one of them had some tens of thousands of dollars that somebody had given them.
And they were all there to promote the fact that they had the website that was going to be the place where everyone goes for music from now on.
And this kind of thing.
And it was the ultimate music industry meets dot com bubble cluster thingamajig that you could possibly imagine.
And guys were paying cab drivers like me a hundred bucks to just drive down the road.
They all had these endless, bottomless expense accounts.
And for that matter, you know, Tivoli, which was a spinoff of IBM, they had all their employees had bottomless voucher accounts to take cabs wherever they wanted all the time and all these things.
And the money was just.
And I remember asking the people in the cab and even some of the more capitalist ones at the higher levels of it.
Where are you getting all this money from?
And I had already read Jekyll Island, which had your endorsement on the back of it, by the way.
And so I already understood what was going on here even back then.
But I remember asking them, why does this make sense to be spending this much money on this much, you know, obvious nonsense?
You know, you're only ever going to have if everyone agrees there's going to be the website where everyone goes for their music.
Call it Spotify or iTunes or whatever it is.
Why would there be 10,000 of them?
Yeah, I know it's it's you know, the the craziness on the investment side goes hand in hand with the craziness on the consumption side.
So people are.
You know, investing, everybody's making money, everybody's profitability seems to be rising on the production side.
And so naturally on the consumption side, you see people getting at least temporarily filthy rich and they're engaging in, you know, luxurious, outrageous spendthrift behavior on the consumption side.
And we certainly saw that in 1999 with the tech bubble.
We saw it again in the early 2000s with the housing bubble, you know, and people, you know, like hiring the Rolling Stones to play at their teenage daughter's birthday party type of type of expenditures.
And, you know, that's that just goes hand in hand with what the Federal Reserve is is doing, basically.
And it distorts really almost everything we do.
It infects, you know, businesses throughout the economy.
It alters most companies structure of production because of false interest rates that falsifies prices and profitability throughout the economy.
So, for example, it doesn't take a skyscraper to be a bad investment here in Auburn right now.
They're building the tallest buildings that have ever been built in the city of Auburn.
And if you go back to the housing bubble, they were building the tallest buildings that had ever been built in Auburn.
They were building many buildings for luxury game day condominiums so that Auburn University football fans would have a place to stay when they were in town for the weekend for the six home football games.
And, you know, I asked some of these people who have condos right around the Mises Institute, you know, it doesn't really look on paper like, you know, you're putting in $250,000 and you're getting to stay in this condominium maybe 15 nights out of the year.
And, you know, if you took that $250,000, you could stay in the best hotels and eat at the very best restaurants.
Why would you pluck over all that money, which is mortgage money, of course?
And they would tell me, well, we can always sell it for more in the future, which of course turned out to be exactly the opposite of the case.
All of those luxury game day condominiums ended up going underwater and falling significantly in value.
Well, now, this is the thing, too.
The reason I'm good on this stuff is not because I was born rich and have a lot of experience in money markets and this and that.
It's just because I'm a Ron Paul guy.
I read Jekyll Island back in the 1990s and Ron Paul went back to Congress at the very beginning of 1997 after going back there, you know, being reelected then in 1996.
And I just started paying attention to him then.
And he just explained, you know, he was basically reading you and then talking about it on the House floor, giving these speeches and writing his articles that he sent home to his constituents and stuff that I subscribed to.
And he would just always explain.
And I remember when the dot-com bubble crashed in 1999 and in 2000, that he said, well, and we can see what's going on here, that rather than letting there be a real correction, now we're just going to double down basically on inflating the continuing housing bubble.
The stock market and the NASDAQ had crashed, but the housing bubble, he identified it as a bubble even then.
And he said, and now, Congress, you're going to continue the policies that direct this new inflationary money right into housing and it's going to cause all these problems.
And, I mean, anyone can check the record.
That's, quote, Ron Paul, the year 2000, right there.
Oh, yeah, absolutely.
Ron Paul's been reading Ludwig von Mises and Murray Rothbard and the other great Austrian economists for decades and decades and decades.
And his main motivation for seeking an office in the House of Representatives was the fact that Nixon took us off of the gold standard in 1971.
And Ron knew as a result of reading Austrian economics that that would be a terrible move and that would destabilize the American economy.
And, of course, it did.
We went into a more than a decade-long stagflation with high rates of inflation, high rates of unemployment, ending in what has to be called the Depression of 1980 through 1982, when we had interest rates above 10 percent and unemployment above 10 percent.
And, of course, the economy has remained very unstable and our stock market has remained very unstable.
And so, if you look at the economic statistics in the United States, whether it's the stock market, whether it's the trade deficit, it doesn't really matter.
You'll see a very stable economy, very stable indicators and statistics from World War II up until 1970.
And then after 1971, all of those same statistics graphically gyrate wildly instead of being stable.
And he knew that.
And he's put his money where his mouth is.
He's been telling the American people.
He's been educating the American people.
He's been, of course, a great supporter of the Mises Institute and our mission to educate the American people in terms of Austrian economics.
And he's really been an outstanding leader for this entire movement.
And so, we've got to give him an enormous amount of credit for making these issues that Austrian economists talk about all the time amongst ourselves, making those same issues relevant for the general population.
And boy, his presidential campaigns really got young people in America excited, even got people overseas excited about Ron Paul and about Austrian economics and the Austrian theory of the business cycle.
So, I think we're making an enormous amount of progress since going off the gold standard in 1971 when the Austrian school was very small and actually seemingly getting smaller over time.
And we've changed all that, and I think things are looking very positive going forward.
Yeah.
Well, you know, interesting side note here about Dr. Paul.
I think people who lean left are pretty familiar with the conventional wisdom that, well, you know, they repealed Glass-Steagall in the late 1990s, and that was a horrible part of this.
All this deregulation is what caused the problem, and I bet you Ron Paul was for that since he's such a libertarian.
But, in fact, if you go back and check the record, he voted against that.
He voted to keep Glass-Steagall, and he gave a big speech saying, of course, I want to repeal every regulation but not this one first.
Hell no, and here's why.
Because by basically agreeing with the Democrats' analysis that all you're going to do is you're going to allow the banks to bet with other people's money, whereas before they had these separate accounts that they could bet in the markets with but not with regular people's savings and that kind of thing.
And that what's going to happen is, as long as we have this central bank, federal government generated boom and bust cycle, you're just setting up a situation where these banks are going to end up ripping all these people off.
They're going to lose all their money.
Of course, the banks will get bailed out and the people will suffer, right?
And that's Ron Paul opposing Phil Graham and all those supposed free market guys who are really vile, evil, conservative statists.
There was your libertarian who was saying, we've got to keep this law, at least don't repeal it yet.
Yes, that's right.
Ron opposed the repeal of Glass-Steagall.
And you know, Scott, central banking, paper money, fractional reserve banking, it's a gigantic moral hazard where the central bank, the Federal Reserve, is a lender of last resort, which basically means it's going to bail out banks that undertake risky loans.
And of course, it's a moral hazard for depositors because they have insurance on their deposits from the government.
And so they don't even bother.
Consumers in the United States of depositors in the United States don't even bother with the safety and security of their deposits because they know the government's going to bail them out.
And so central banking, paper money, fractional reserve banking, it's a giant moral hazard.
It encourages banks, investment banks and commercial banks, to be reckless and to ratchet up the amount of leverage that they have within their firms.
And as a result, Ron has actually opposed all of the relaxing deregulation of the financial system.
And he would like to see it to be regulated in a way that would mimic a free market with a gold standard and greater limitations on fractional reserve banking and all of that.
So, you know, we've got a crummy system.
We've got a crony system.
And so the last thing in the world we needed to do was to repeal Glass-Steagall and let the banks essentially gamble with our money.
All right.
Hang on just one second.
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So now, well I want to talk about the current economic situation and all that here in a minute.
So I guess I want to go back to just my government school education as a child, which I don't mean to be patronizing or anything, but I think this is pretty much, unless you have been exposed to this kind of thing, then basically you probably think something along the lines of, well of course you have to have the government in charge of the money and George Washington on it.
Because one, that's why people believe in it, but also because the government then is impartial or at least should be impartial and their job is just making sure that there's enough money in circulation so that people have enough to trade with and all of that.
But jeez, what are you going to do?
Give the power all to Citigroup and let them issue all the currency?
Because that would be unfair and they would obviously benefit from that.
So obviously this is an elementary school education that I'm referring to here.
In fact, I think I learned that when they were teaching us how to count money.
Why it's government money, why it's George Washington on the quarter instead of some brand name or whatever.
That was what it was.
It was because that means it's fair.
Like a judge in a black robe, it means it's impartial.
Yeah, what politician are these people imagining when they believe that kind of stuff?
You know, our money used to be gold and silver coins.
Even modern money like the penny had a wheat.
It was called the wheat penny because it represented a commodity.
The nickel was made out of nickel.
The dime, quarter, half dollar, and silver dollar were all made out of silver.
So that these things had independent, tangible value that could not be easily manipulated by either the central bank or the government.
And it represented honest, sound money that maintained its value and its purchasing power over decades and centuries at a time.
And of course when you have that sound money, you don't have price inflation, you have price deflation.
And you don't have a business cycle, you have much more economic growth.
And so they've substituted this phony fiat central bank system for the sound, stable, commodity-based money of long ago.
And as a consequence, they're able to manipulate this system not in fair ways, but in ways that enrich the crony capitalist.
You know, who's getting an advantage from ultra-low interest rates?
It's not me, it's not you, it's not people in your audience.
It's big bankers, it's Wall Street, it's hedge funds, it's big corporations who have access to these funds for long periods of time at extremely low interest rates.
And so it makes their cost of capital shrink to almost nothing.
And as a consequence, it's the capital, the big capital, the wealthy people are benefiting from this phony fiat system.
And so it's not surprising that labor is falling further and further behind.
And so when we look at the issue of inequality, the fiat phony system is the main driver of this increasing inequality.
Scott, if you go back and you look at equality in the United States in terms of income and wealth, before 1971 when we went off the gold standard, Americans were getting more and more equal in terms of income levels and in terms of wealth.
And then after 1971, there's a huge run-up in income and wealth inequality in the United States.
So it's not the free market that's causing this inequality to skyrocket.
It's precisely and almost exclusively this phony fiat monetary system that has been forced upon us.
And of course, our sound money of gold and silver has been taken away from us.
All right.
Well, now, so back to government school, though, because I learned that you can't crucify me on your cross of gold.
What we need is free silver and inflation because my people are in debt, man, and they need a little bit of relief.
And so it would be better to have a situation where, you know, over time.
And in fact, people say this is why there's a middle class at all is because FDR loved everybody so much.
He created this system where people can borrow dollars for a house, but pay it back in dimes as the dollar depreciates.
The fixed price that they owe for the house that they bought 30 years ago stays the same.
And they can.
That's where the middle class comes from, is that kind of home ownership.
Now, I know you're going to say, oh, yeah.
How do you like your housing bubble crash?
And that's OK.
But still, the main point or does that completely erase the point that the average Joe with a job rather than the owner of something is able to own a house because of inflation?
That's certainly what the way they taught me in junior college.
Well, Scott, everybody lives in something.
And it's not necessarily a great thing in the first place to have home ownership, especially right now with our dynamic economy and people having to change jobs and change states and locations.
Home ownership has become a tremendous hurdle for people trying to improve their lot in life.
And so deflation under a gold standard is actually something that helps labor.
It makes your wage rate last longer and be able to buy more things.
You know, individuals, laborers in the economy, they're not the big borrowers.
The big borrowers are banks, Wall Street, big corporations and the government.
Of course, the biggest, you know, borrower of them all and the biggest borrower vis-a-vis everybody else is the federal government.
So the federal government is inducing these low interest rates to keep their expenses in terms of interest on the national debt as low as possible.
And, you know, facilitating more government spending, more military spending and all the rest.
So inflation is never and just standard economic historians will go back and show you that inflation hurts labor.
It hurts the middle class.
It hurts the lower income classes.
And it only seems to help the people at the upper end, the people who are actually borrowing large amounts of money, enormous amounts of money.
That's the big corporations.
That's the big banks.
It's Wall Street.
It's the hedge funds.
And it's the government.
Yeah.
All right.
So now, you know, I'm thinking about that last crash and where we've been since then with the QE, this and that.
We've talked about how they've created so much money that it would have probably created a mass price inflation throughout the economy.
Forget your bubbles in this or that sector.
We'd just be living in bad inflationary times.
But they came up with a loophole.
We'll just pay an extra couple percentage point premium.
The Federal Reserve will pay an extra premium to the banks to hold on to that money and not loan all of it out anyway.
And not, you know, precipitate that much price inflation at the bottom end, but at the same time, certainly creating enough money to keep all those banks in business.
But anyway, so the real point being that I don't really know what the prices would be like right now if it wasn't for all of that.
And I don't know what stage in the bubble, the current bubble crisis we're in.
You mentioned that there are skyscrapers going up in Auburn, Alabama.
I know there's endless construction here in Austin and, you know, all over the place.
And I know that interest rates have been held very low.
I also know that you Austrian economists like to say, well, geez, I don't know exactly when it's all going to come down.
But can you, does it seem like we're halfway through this cycle or two thirds through?
Or, you know, does this even count as a boom right now or we're still on the way up before it could even count as a boom big enough to crash?
Because it doesn't really feel like a boom to most people, I don't think.
That's a lot of questions.
I'm sorry, but while you're a genius, you can handle it.
I know I can.
Well, you know, Austrians say that if you create more money, you're going to create higher prices.
But it also depends on where the money is injected into the economy.
We haven't seen consumer prices rise very much, but consumers never got the money in the first place.
So we really wouldn't expect consumer price inflation on a massive scale.
The money basically went to Wall Street, hedge funds, banks, and so forth.
And they've been plowing money along with people in their IRAs and their 401ks, plowing money into stock markets and bond markets around the world.
And, of course, stock markets have risen to historically high levels in the United States and Europe and elsewhere.
Same thing with bonds and government bonds, historically enormously high prices for these government bonds.
And so the Austrian story is that you have to know, are they increasing it?
How much are they increasing it?
And where is the money going?
And our expectations are exactly met because they've been pumping it in at the upper end, and that's where the prices have been going up in stock markets and bond markets.
Now, where are we on the cycle?
Of course, the disclaimer is, of course, that economic theory cannot tell you when and how much.
But if you look at other tools outside of economic theory, you look at things like the psychology and markets, you look at how different are things today versus how they were in the past.
And it sure seems to me like we've run through most of this cycle.
Most of the upturn seems to be in place.
And so my expectations are for stock markets to not go any higher, to start declining, and for the worst of it to happen next year in 2018.
And to back that up, I invoke my skyscraper index in the skyscraper curse, which is the correlation, the unseemly correlation between the building of a world record-setting skyscraper and the onset of a world economic crisis.
And Scott, they're building what promises to be the world's tallest skyscraper in Jeddah, Saudi Arabia.
It's supposed to be one kilometer tall, and it's supposed to beat the old record by about a dozen floors.
And so that building is supposed to be setting the record or breaking the record sometime in 2018.
I can't really get good information as to what stage they're at, but the media reports indicate that they plan on completing the building in 2018.
So that would collaborate what I see on the ground in terms of the economy.
What I see in Auburn is I see a tremendous building of capacity for apartments, condominiums, retail space, and other features of the local economy, and they're building it now.
And it's going to come online, I would say, sometime in 2018, or much of it will.
And at that point, the capacity in the economy is greatly going to exceed the needs of the economy, and that's when you're going to see the malinvestments come forth where entrepreneurs had planned on getting such and such price for their product.
And because of too much supply of apartments, condos, and retail, and other things, then the prices and the profitability are not going to be sustained, and we're going to see things like bankruptcy.
But what's the Federal Reserve doing?
I remember in 2008, I admit I wasn't reading a lot of Umesis guys.
I'm really more of an anti-war guy, you understand, not an economist.
But I was reading a lot of LRC at the time, and Gary North, and I know he's not everybody's favorite libertarian in the world or whatever, but he was writing great stuff on the Federal Reserve and economics at the time.
And he was saying, hey, listen, we complain all day about them inflating in principle, but let's look at the details.
They're not inflating, they're deflating right now, and I'm predicting a massive stock market crash coming soon.
And that was, I'm quoting from August, September 2008, and then it happened at the end of September, right before the election.
Man, can you imagine if that had happened in 2007, and Ron Paul's entire campaign had been running on the crash instead of being called off a week or two before it took place?
But anyway, Gary North knew, and Gary North knew because he was watching the Federal Reserve's charts, and he was saying M1 this, and M2 that, and multiply by the ratio of the curve, and that tells you that stock market's coming down, right?
Oh yeah, I mean, you can see clues in money supply figures.
If you're looking at the correct money supply and you see it decelerating, that means that the whole financial system is contracting rather than expanding.
And so the correction and the crisis should soon follow that as the expansion stops expanding and the money supply and credit supply starts contracting.
That is the leading indicator that you should expect some kind of pullback, either a correction or a crisis, to happen in the economy in the near term.
And we've seen the Austrian measure of the money supply, the rate of growth in it, contracting, and that's another reason why I feel somewhat confident in saying that the economy and the stock markets are going to start to sour, and then ultimately we'll see that it will be revealed, maybe next year, that the economy is going to face some kind of economic crisis in the United States, maybe worldwide.
As a matter of fact, it's likely to involve Europe and China and other countries as well.
All right, one more question here.
You're all wet, Thornton.
Everybody knows that the problem here is trade and immigration.
No, no, no, no.
Donald Trump's policies with respect to trade are mostly bad.
And as a matter of fact, I'm going to be talking about this in class today.
And basically, trade is one of the main drivers of the enormous expansion in the standard of living that we've experienced over the last 50 years.
Trade has been freer, not perfect by any means, but as a result, Americans are better off, the Chinese are better off, the Mexicans are better off, the Canadians are better off.
This is something that's raised the standard of living, it's reduced the price of consumer goods and services worldwide.
You would probably remember what it was like paying your telephone bill before AT&T was deregulated compared to today, where you can call worldwide at any time for free, basically.
In the bad old days of government monopolies, you'd be charged roughly $3 a minute to call long distance within the United States.
And of course, you wouldn't have a cell phone to do it, you'd have a landline with a cord attached to your phone.
And so all of that's been made possible, from buying household goods and utensils to buying the iPhone.
The iPhone would not be possible if it weren't for international trade, because the parts suppliers for the iPhone are in a dozen different countries.
The manufacturing is done in the cheapest place possible, which is China.
But the American consumer gets to consume the iPhone on a massive level, and we get to do so at a price that we can afford.
Without international trade, literally, the iPhone would not be possible, because you couldn't sell enough of them at $1,000 apiece to justify its production.
And note, Scott, that all of the good jobs associated with the Apple iPhone, like developing it, engineering it, designing it, organizing the parts from around the world, coming up with apps, marketing the iPhone, those are all the good, high-paying jobs.
Here in the United States, where the average person involved with the iPhone, with the worker, is making like $150,000, whereas if you were in China and you were involved in the manufacturing process, you'd only be earning about $2,400 a year.
So in a very real sense, we don't want those manufacturing jobs to come home, because it would greatly increase the price of all goods and services in the American economy, and so we'd have trade-induced price increases, making every single American consumer worse off as a result.
All right, now, but what about immigration?
Because, of course, the problem here is mostly on the low end, for, you know, people feel that the heat of that competition for construction jobs and whatever, the lowest educational jobs that a lot of Americans do want, you know, framing houses, that kind of thing, that's a complaint I hear a lot.
All the Mexicans come and take all the house framing jobs, what am I supposed to do?
That's my thing.
Well, yeah, they come because of the housing bubbles, and when the housing bubble is over, they go back home.
And so it's partly a Federal Reserve-induced problem that massive numbers of Mexicans migrate to the United States to take advantage of that situation.
We need immigration.
I'm not for open and free immigration, but I'm not for restricting immigration or the building of the wall or any of that stuff.
It should be market-determined immigration.
Most of these jobs that the immigrants are taking are, frankly, not jobs that Americans are willing to work.
Unfortunately, the American worker has become weak and, to a certain extent, lazy.
I know, I realize that there's been dislocations in the American economy.
We have experienced those dislocations here in East Alabama and Georgia and Mississippi and other places where the textile jobs migrated to Mexico.
But as a consequence, eventually those jobs were replaced with automobile manufacturing and assembly jobs here in Alabama and Georgia and Mississippi and Tennessee.
And so there was that awful transition period where many people in textile manufacturing suffered.
But ultimately, the market emerged and created new opportunities for even better jobs.
We got even better, higher-paying jobs, and we got much lower prices for our textile production.
So it's basically a win-win for American labor and consumers, for those people who dug themselves out of a hole and got themselves into a new line of work.
Well, you know, something that, well, I guess a lot of you guys have pointed out.
I'm thinking of Anthony Gregory recently pointing out that a lot of these industrial jobs in America were all the result of protectionism and government distortions in the first place.
What government really did was stop propping them up rather than really destroy them.
But you could see how, okay, there's a transition from an older 20th century industrial economy to a new 21st century one that's a lot more services-based and electronics-based and this and that kind of thing.
But geez, you know, Mark, it seems like maybe the transition would be easier if we didn't have this horrifying boom and bust cycle every 10 or 12 years.
Pull the rug out from everybody, and of course everybody on the lower end are the ones who hit their head on the floor the hardest, you know, when the thing gets pulled out.
And they have to all start all over again.
You wonder why everybody hates each other so much.
It's because they've never read you.
They don't know that what they're supposed to hate is this horrible manipulation of the money supply that they've never heard of, much less understand how it works or what they could ever do about it or anything like that.
All they know is that they're not doing well and it looks like those other groups are at their expense, and so let's fight.
And look at us.
It's a disaster.
America's falling apart right now.
Yeah, we did have a lot of protectionism in the U.S. economy.
We still do.
We were protecting the old industries for a very long time, industries that should have migrated to places where there was a lot of labor at lower wage rates.
And so when NAFTA was passed, that artificially cut loose the textile industry and others in the U.S.
But actually what we'd like to see over time, and this is why Austrians support complete free trade, is that what we'd like to see is that lower-paying jobs migrate overseas while the U.S. economy leading the world economy creates more sophisticated, higher-paying jobs.
And the amount of manufacturing value in the U.S. economy has continued to increase, and so we're continuing to produce higher-valued products, manufacturing them here in the United States, technologically advanced-type goods and services and production-enhancing products in the U.S. economy.
And we've been sloughing off these lower-paying jobs in textile and other areas in the economy.
Americans are not really interested in jobs that would currently be paying just a little bit over minimum wage.
They'd like to have higher-paying jobs, and free markets and free trade is what facilitates all that.
So you shouldn't worry about low-paying jobs migrating overseas.
That's very natural.
We want to continue to lead the world economy, continue to lead in technology and innovation so that Americans remain in the highest-paying jobs.
So, yes, we're losing these assembly-line jobs to overseas, but now American workers are building things like robotics and designing new robots in the economy, and their wages are, of course, much, much higher.
They're programmers and they're designers and they're coders and things like that.
So we'd much rather have jobs that are paying $100,000 than jobs that are paying $24,000, and free markets and free trade is what guarantees.
And other good policies, obviously.
You need good free market policies.
It's going to continue to result in newer, higher-paying, more sophisticated jobs and the natural exodus of the simple lower-paying jobs.
Until the next crash, right?
Oh, yeah.
When we have a crash, if the Federal Reserve doesn't bail out Wall Street, doesn't bail out the banks, doesn't bail out the hedge funds and the investment banks, the big losers are the people at the high end who are making millions of dollars a year, and their companies are going to suffer enormous losses.
But the pain, as you move down the income scale, is less and less and less, because a worker could lose their job, but an owner can lose their entire corporation.
And so, if we don't bail out, you'll get three good things.
One is, the losses are going to hit the upper end.
It's not going to hit the lower end.
And we'll have a new cycle of entrepreneurship and a new cycle of companies that emerge from taking advantage of the low price of capital goods in the economy.
This is what happens in a recession, is that we get Microsoft and the personal computer, or we get the revival of Apple and the iPhone, or we get the introduction of Google, all happening in recessions in the U.S. economy.
So, there's some good things that can come from the crisis and the correction, as long as we don't let Washington and the Federal Reserve bail out the big guys in Washington, D.C. and New York.
Well, yeah, and I think that's always our best argument, is when people say, oh, man, deregulation is what leads to this.
We say, hey, they always keep the regulations that say that we, the people, have to bail out the banks.
Those are the regulations we want to get rid of first, right?
Again, like the Ron Paul, Glass-Steagall example.
No more bailouts, and then the rest of the deregulation will fall into place.
Believe me, we just got to get the accountability to fall where it needs to fall.
Well, you know, and they've implemented the bail-in proviso, which means the next time that big banks falter, that the depositors will automatically be forced to bail out the banks.
And basically what that means is that the banks take your deposits and give you stock in the bank.
And, of course, if the bank is facing bankruptcy, the value of that stock is going to be extremely limited, in my opinion.
We haven't really experienced it, so we don't know how it's going to work.
But, you know, if a bank declares itself in trouble, it can invoke this bail-in provision, essentially taking its depositors' money and giving them nearly worthless stock in the bank.
And so that's something that I think all your audience needs to be concerned about, because it's another example of the insiders, the people in Washington, D.C., the Democrat and Republican Party, stacking the deck against the average American citizen in favor of these monstrous institutions run by irresponsible people who are reaping enormous rewards on the inside.
And on the backs of American people.
All right, you guys, that is Mark Thornton, Senior Fellow at the Mises Institute.
And as I mentioned at the beginning, he is also the real expert on the libertarian, Austrian economic analysis of the war on drugs and its failure.
And his latest piece, actually, at Mises is called The Real Cause of America's Opioid Epidemic.
Obviously, we don't have time to talk about that this time, but you guys should definitely go and read that, because it's the very best take.
It could save your life.
Yeah, that too.
Seriously, people, there's lots of drugs to take that won't make your heart stop, all right?
Do some non-heart-stopping drugs.
I don't know why that's hard.
Thank you, sir, very much for your time on the show.
I really appreciate it, as always, Mark.
You're welcome, Scott.
It's good to be back on your show.
All right, you guys, Mark Thornton again, mises.org.
And that's Scott Horton's show.
Check out all the stuff at foolserend.us.
That's the book, scotthorton.org, for the archives.
And libertarianinstitute.org for my institute.
See ya.
All right, and thank you guys again.
Check out the book, Fools Errand, Time to End the War in Afghanistan, at foolserend.us.
Phil Giraldi just wrote a great review of it for the American Conservative Magazine, if you want to check that out.foolserend.us.
