Uncommon Knowledge Lecture with Thomas Sowell

Introduction

• Presenter: Peter Robinson
• Guest: Thomas Sowell, economist, columnist, and author
• Institution: Hoover Institution
• Latest Book: Revised version of "Basic Economics"
• Platform: Facebook - UNC Knowledge

Key Points Discussed

Segment 1: The Present Crisis

• Wealth Creation:

  • Occurs when those who know how to create it are free to do so without interference.
  • Critique of government intervention in economic recovery.

• 2008 Economic Trouble:

  • Rooted in the housing market crash of 2006.
  • Political pressure led to risky mortgages, changing rules that led to defaults.
  • Argues it was government interference that initiated the crisis.

• Government Response to Crisis:

  • Federal Reserve's liquidity measures and government stimulus packages criticized for being ineffective.
  • Sowell views bailouts/stimulus as missteps, benefiting special interests instead of economic recovery.

Segment 2: What Should Be Done Now?

• Quantitative Easing (QE2):

  • Critique of Federal Reserve's asset purchases, potential for inflation and devaluation.
  • Supports discontinuation of QE2 as per some Hoover Institute colleagues.

• Taxation and Economic Growth:

  • Historical examples of tax cuts increasing revenue.
  • Questions the success of Clinton administration's economic expansion post-tax increases.

Segment 3: Healthcare

• Cost and Spending:

  • U.S. healthcare spending high due to consumer choices and private care preferences.
  • Critiques government-led healthcare and inefficiencies.

• Future of Healthcare:

  • Debate between more market-driven versus more socialized healthcare.
  • Milton Friedman's views on healthcare were discussed.

Segment 4: Trade

• Trade Balance Concerns:

  • Skepticism about worries concerning trade imbalances, viewing consumer choice as primary.
  • Historical context of trade restrictions (1930s) as cautionary tales.

• China’s Economic Growth:

  • Discussion on China’s economic rise and its market reforms without democratization.
  • Sowell sees gradual political opening as likely but slow.

Segment 5: Theory

• Critique of Federal Reserve:

  • Historical inefficacy of the Federal Reserve in achieving its goals.
  • Suggestion to reconsider or abolish Fed, citing historical banking practices.

• Keynesian Economics:

  • Critique of Keynesian prescriptions; however, acknowledges some useful analytical tools.

Final Thoughts

• Future of U.S. Economy:
  • Uncertainty about maintaining highest GDP per capita.
  • Emphasizes need for public economic understanding to prevent political missteps.
  • Hopeful about potential political change following recent elections.

Conclusion

• Overall Tone: Critical of government intervention, supportive of free markets and individual choice.
• Takeaway: Importance of economic literacy and cautious optimism about political shifts.