Lecture Notes: Interview with Thomas Sowell on "Uncommon Knowledge"

Introduction

• Host: Peter Robinson
• Guest: Thomas Sowell, economist, syndicated columnist, best-selling author
• Subject: Revised edition of Sowell's book, Basic Economics
• Format: No charts, no equations, plain English

Segment 1: The Present Crisis

• Key Question: How is wealth created?

  • Wealth is created when people who know how to create wealth are free to do so.
  • U.S. became a large economy not through political action, but through individuals.

• Economic Crisis: 1983-2008 growth followed by trouble

  • Started with the housing boom and bust (2006)
  • Politicians increased mortgage risks, causing financial sector issues

Segment 2: Responses to the Crisis

• Federal Actions: Stimulus and bailouts, $3.6 trillion

  • Critique: Didn't stimulate effectively, banks didn't pass on funds

• GM Bailout: Seen as a short-term success similar to gambling

• Federal Reserve Actions: Quantitative easing (QE2)

  • Critique: Risks of inflation, hidden tax, currency debasement

Segment 3: Economic Policies

• Tax Cuts vs. Spending: Obama tax deal as admission of flawed policy

  • Historical evidence supports lower tax rates leading to growth

• Health Care Spending: U.S. devotes 17.7% of GDP to healthcare

  • Critique: High spending reflects higher quality and availability
  • Inefficiencies seen as less critical than third-party interventions

• Future of Health Care: Debate between market vs. government control

Segment 4: Trade and Global Economy

• Trade Balance: Minimal concern about balance of trade

  • Example: Car imports/exports with Korea

• China and Economic Growth: Success due to market freedoms, not democracy

  • Debate about sustainability of growth without political reforms

• Eurozone Issues: Common currency issues due to sovereign policies

Segment 5: Theoretical Perspectives

• Federal Reserve: Critique of its historical effectiveness

  • Suggestion: Abolish the Fed based on historical performance

• Keynesian Economics: Mixed effectiveness, provides tools but not always successful prescriptions

Conclusion

• U.S. Economic Superiority: Doubts about maintaining top GDP per capita

  • Concern over political and economic decisions

• Tea Party Movement: Seen as a response to economic mismanagement, providing some optimism

• Sowell's Closing Remarks: Despair about the future tempered by recent political changes

Overall Message: Sowell criticizes governmental interventions and supports free-market mechanisms, expressing skepticism about long-term economic policies unless there is significant reform and reliance on market principles.