WEBVTT NOTE Big Brother 1 00:00:00.000 --> 00:00:04.360 Good morning and welcome to KWAM 990. This is One for the Money. I'm Mike Stein, Senior 2 00:00:04.360 --> 00:00:07.960 Vice President of Investments at Wells Fargo Advisors right here in town. The phone number 3 00:00:07.960 --> 00:00:13.620 to our studio, 260-5926. And this morning, my special guest is Mark Thornton, who's a 4 00:00:13.620 --> 00:00:19.000 senior fellow at the Ludwig von Mises Institute. He serves as a book review editor of the Quarterly 5 00:00:19.000 --> 00:00:23.620 Journal of Austrian Economics. He served as the editor of the Austrian Economics Newsletter 6 00:00:23.620 --> 00:00:28.280 and a member of the editorial board of the Journal of Libertarian Studies. He served 7 00:00:28.280 --> 00:00:33.160 is a member of the graduate faculty of Auburn University, Columbus State University, taught 8 00:00:33.160 --> 00:00:38.340 economics at Auburn and Trinity University as well. He was the Assistant Superintendent 9 00:00:38.340 --> 00:00:44.680 of Banking and Economic Advisor to Governor Bob James of Alabama and was awarded the University 10 00:00:44.680 --> 00:00:49.820 Research Award at Columbia State as well. He has written several publications and good 11 00:00:49.820 --> 00:00:50.820 morning Mark. 12 00:00:50.820 --> 00:00:54.840 Good morning Michael, good morning Memphis. It's great to be back on One for the Money. 13 00:00:54.840 --> 00:00:56.560 Thank you so much for joining us. 14 00:00:56.560 --> 00:01:02.780 We wanted to have you back on to talk about our good friend Mr. Snowden. 15 00:01:02.780 --> 00:01:10.080 So tell us a little bit about what happens when a government security apparatus is given 16 00:01:10.080 --> 00:01:18.240 unchecked powers in the case of, I imagine, a whistleblower would be a good term? 17 00:01:18.240 --> 00:01:19.240 Absolutely. 18 00:01:19.240 --> 00:01:26.440 You know Snowden is a hero to many people who believe in privacy and they believe in 19 00:01:26.440 --> 00:01:32.820 individual rights like the founding fathers and you know this overreach by NSA, the National 20 00:01:32.820 --> 00:01:35.800 Security Agency is just outrageous. 21 00:01:35.800 --> 00:01:42.960 It's unethical, it's immoral, it's unconstitutional and Mr. Snowden brought it to public attention 22 00:01:42.960 --> 00:01:48.120 and you know the overwhelming majority of Americans support him, believe he did what 23 00:01:48.120 --> 00:01:53.080 was right and only a minority oppose him and of course half of the people who oppose him 24 00:01:53.080 --> 00:01:58.800 are neocons and half of those, the other half are just people who are not very well informed. 25 00:01:58.800 --> 00:02:06.680 So I think Mr. Stodin was a patriot, you know patriotism is not just slavishly following 26 00:02:06.680 --> 00:02:11.900 whatever the government says and whatever the government dictates, patriotism is opposing 27 00:02:11.900 --> 00:02:16.440 your government when you think it's doing something wrong and I think in this case it's 28 00:02:16.440 --> 00:02:20.920 It's pretty clear that the NSA was spying on Americans. 29 00:02:20.920 --> 00:02:27.720 It was vacuuming up huge amounts of emails and phone calls and they actually had access. 30 00:02:27.720 --> 00:02:34.200 Unlike the president said, they weren't listening to phone calls but they actually had the unchecked 31 00:02:34.200 --> 00:02:38.660 authority to listen to phone calls and to read emails. 32 00:02:38.660 --> 00:02:42.800 They didn't actually take in every 100%. 33 00:02:42.800 --> 00:02:52.000 They estimate that it's about 90% of all emails and phone calls were stored, basically, in 34 00:02:52.000 --> 00:02:58.260 NSA computers to give them the plausible done-eye ability that they weren't actually tracking 35 00:02:58.260 --> 00:02:59.920 everything that Americans did. 36 00:02:59.920 --> 00:03:04.580 So it's an outrageous policy on the part of the administration. 37 00:03:04.580 --> 00:03:08.080 And I think Mr. Stoden is a hero, he's a patriot. 38 00:03:08.080 --> 00:03:12.180 And this is something that we, you know, and the funny thing is even though the vast majority 39 00:03:12.180 --> 00:03:18.820 of American Support Snowden, a slight majority actually want to see a public trial. 40 00:03:18.820 --> 00:03:24.900 They don't think he should be sentenced or fined or killed, but they'd like to see all 41 00:03:24.900 --> 00:03:27.900 the facts come out before the public in an open hearing. 42 00:03:27.900 --> 00:03:30.860 So I think it's a good development. 43 00:03:30.860 --> 00:03:32.420 Here's a couple of questions for you. 44 00:03:32.420 --> 00:03:39.600 Number one, as we move through our interview with Mark Thornton of the Mises Institute 45 00:03:39.600 --> 00:03:47.800 and a noted economist talk a little bit about how this impacts the economy from on a short 46 00:03:47.800 --> 00:03:49.960 term and on a longer term basis. 47 00:03:49.960 --> 00:03:58.760 Let's talk a little bit about what exactly did Edward Snowden do that caused so much 48 00:03:58.760 --> 00:04:05.000 turmoil and tell our listeners about the PRISM program and what that means just to the average 49 00:04:05.000 --> 00:04:06.000 citizen. 50 00:04:06.000 --> 00:04:12.480 Well, basically, you know, the NSA, which is getting more than 10 billion dollars of 51 00:04:12.480 --> 00:04:20.680 our money to operate, was set up with the idea of intervening in foreign conversations 52 00:04:20.680 --> 00:04:27.200 and foreign emails and phone calls and things of that nature with other countries that might 53 00:04:27.200 --> 00:04:29.280 be our enemies. 54 00:04:29.280 --> 00:04:35.980 But the prison program and the related programs are designed to spy on domestic people, like 55 00:04:35.980 --> 00:04:42.740 ourselves where they're basically cataloging all of our phone calls or at 56 00:04:42.740 --> 00:04:49.140 least 90% of our phone calls and they're cataloging or have access to our email 57 00:04:49.140 --> 00:04:55.780 and so the idea was to to catalog these things and to run computer programs to 58 00:04:55.780 --> 00:05:01.360 identify patterns of who's calling who and how long of the duration and so 59 00:05:01.360 --> 00:05:31.360 and so forth and you know they have said in public recently that this has thwarted dozens of terrorist plots but when they had to testify in front of the US Senate committee on intelligence they admitted that they only had thwarted a few of these terrorist plots so in one case or the other they're lying basically and of course spies I mean by nature are liars 60 00:05:31.360 --> 00:05:38.360 and the secretaries. Their secrecy is their specialty and so they've been keeping this 61 00:05:38.360 --> 00:05:45.280 program or programs, I should say, basically secret from the public and from the government. 62 00:05:45.280 --> 00:05:52.320 In the recent testimonies before Congress where they had secret non-public meetings 63 00:05:52.320 --> 00:05:58.200 with congressmen and senators, where they had to reveal exactly what they were doing 64 00:05:58.200 --> 00:05:59.980 to Congress. 65 00:05:59.980 --> 00:06:10.020 One congresswoman came out of the hearings and said that she was flabbergasted and that 66 00:06:10.020 --> 00:06:14.840 what had been revealed to the public so far and what was in the media so far was only 67 00:06:14.840 --> 00:06:18.500 the tip of the iceberg, as she put it. 68 00:06:18.500 --> 00:06:24.800 And so you really have to wonder exactly how big these programs are and how intrusive they 69 00:06:24.800 --> 00:06:29.200 and how unconstitutional they are. 70 00:06:29.200 --> 00:06:37.500 One senator came out of the hearing who was on the Senate Homeland Security Committee and 71 00:06:37.500 --> 00:06:43.360 he said that he knew nothing of this program beforehand and he was shocked at the extent 72 00:06:43.360 --> 00:06:48.920 of what had been revealed in that committee secret meeting. 73 00:06:48.920 --> 00:06:57.420 Here you have a senator on the Homeland Security Committee not knowing it because the information, 74 00:06:57.420 --> 00:07:02.600 some of the information about what the National Security Agency is up to is only revealed 75 00:07:02.600 --> 00:07:07.360 in the Intelligence Committee which is a small number of senators so apparently the White 76 00:07:07.360 --> 00:07:12.400 House was somewhat in the dark about this and the vast majority of the House of Representatives 77 00:07:12.400 --> 00:07:17.880 in the US Senate were in the dark as to what the NSA is going on. 78 00:07:17.880 --> 00:07:22.680 So when you ask the question, what are these programs, well, I have to be truthful. 79 00:07:22.680 --> 00:07:28.120 We really don't know yet at this point because we've only been exposed to what the Congresswoman 80 00:07:28.120 --> 00:07:30.920 said was the tip of the iceberg. 81 00:07:30.920 --> 00:07:34.680 So I think there's going to be a lot more revelations. 82 00:07:34.680 --> 00:07:42.040 Mr. Stoden has indicated that he has more revelations to come and Glenn Greenwald has 83 00:07:42.040 --> 00:07:47.160 extensive interviews, only some of which have been revealed to the public. 84 00:07:47.160 --> 00:07:51.360 So I think this is an ongoing story and it's something that's going to continue on in the 85 00:07:51.360 --> 00:07:55.760 media and in the general public discussion for quite some time. 86 00:07:55.760 --> 00:08:00.480 We're talking with Mark Thornton of the Von Mises Institute, a noted economist and published 87 00:08:00.480 --> 00:08:02.560 author. 88 00:08:02.560 --> 00:08:10.320 In your short-term view of the economy, what will this scandal do? 89 00:08:10.320 --> 00:08:14.200 And in the long term, what are the possible effects? 90 00:08:14.200 --> 00:08:20.360 Because we're talking not only about a 29-year-old whistleblower, you're talking about Microsoft, 91 00:08:20.360 --> 00:08:31.000 Yahoo, Google, Facebook, massive amounts of data that now is in some and a broad range 92 00:08:31.000 --> 00:08:32.000 is compromised. 93 00:08:32.000 --> 00:08:35.040 Well, that's a very good point. 94 00:08:35.040 --> 00:08:42.800 The media has been maligning Mr. Snowen, especially the neocon media as a 29-year-old without 95 00:08:42.800 --> 00:08:43.800 a high school diploma. 96 00:08:43.800 --> 00:08:49.360 Well the fact of it is he does have a GED diploma and he was so smart that he bypassed 97 00:08:49.360 --> 00:08:56.040 the traditional educational process and went on to become a high level intelligence officer 98 00:08:56.040 --> 00:09:01.000 in the private sector and has made as much as a quarter million dollars a year. 99 00:09:01.000 --> 00:09:07.320 So as much as the neocons want to malign this guy, he's not just a hero but he's a bright 100 00:09:07.320 --> 00:09:14.720 guy, he knows advanced security and spying techniques and computers and all the rest. 101 00:09:14.720 --> 00:09:20.500 Now as far as the economy goes, this is a bucket of ice water on the economy. 102 00:09:20.500 --> 00:09:27.040 You may not be able to tell it in the datum, but basically what this is, is a signal to 103 00:09:27.040 --> 00:09:33.840 companies, tech companies, some of which that you mentioned, but the broad stroke of technology 104 00:11:03.840 --> 00:11:10.560 Sector. So this is an important losing proposition for the U.S. is American 105 00:11:10.560 --> 00:11:15.080 taxpayers are paying the National Security Agency more than ten billion 106 00:11:15.080 --> 00:11:18.880 dollars a year and all those people are making you know like at least a hundred 107 00:11:18.880 --> 00:11:22.600 thousand dollars a year and they're spying on us and they're not really 108 00:11:22.600 --> 00:11:28.320 deterring terrorist plots and but the the fact that they're spying on Americans 109 00:11:28.320 --> 00:11:33.200 and they're cataloging all our emails and all our phone calls is just it's 110 00:11:33.200 --> 00:11:37.480 It's unconstitutional but it's just distasteful for people in the economy and if they have 111 00:11:37.480 --> 00:11:42.400 an opportunity to move overseas and you know I teach at Auburn University and I see an 112 00:11:42.400 --> 00:11:47.860 increasing proportion of students that when they graduate they look for jobs overseas 113 00:11:47.860 --> 00:11:53.320 and I've had students going out of the country, going to Taiwan, going to Singapore, going 114 00:11:53.320 --> 00:12:00.560 to Australia, going to New Zealand, there's been a couple that went to Spain and so you 115 00:12:00.560 --> 00:12:04.360 You know, Auburn University students never thought of the idea that they wouldn't be 116 00:12:04.360 --> 00:12:08.640 working in Alabama or working in the Southeast and able to go to Auburn University football 117 00:12:08.640 --> 00:12:10.320 games and so forth. 118 00:12:10.320 --> 00:12:17.080 Now the trend increasingly is to take foreign languages, to take courses in international 119 00:12:17.080 --> 00:12:25.580 business and international trade and be entrepreneurial and hope to catch on in a foreign country. 120 00:12:25.580 --> 00:12:36.100 So it's a very negative step in the US economy as far as job growth in the high tech areas 121 00:12:36.100 --> 00:12:39.060 and entrepreneurial areas. 122 00:12:39.060 --> 00:12:41.000 The world is a global place. 123 00:12:41.000 --> 00:12:49.700 You can operate from anywhere, email goes everywhere and so at one point America was 124 00:12:49.700 --> 00:12:56.260 You know the best economy, we had the strongest military, you know and everything was hunky-dory 125 00:12:56.260 --> 00:13:02.220 but you know this is another step in the wrong direction as far as I'm concerned. 126 00:13:02.220 --> 00:13:10.460 Mark, the regulation enthusiasts that are in Congress will tell you that regulation 127 00:13:10.460 --> 00:13:16.940 is usually a positive for the economy from an economist's standpoint. 128 00:13:16.940 --> 00:13:20.860 Is there any regulation that's a good idea for the economy? 129 00:13:20.860 --> 00:13:25.020 I really don't think so. Government regulation simply does not work. 130 00:13:25.020 --> 00:13:29.260 It is designed with the hopes of success, but with no mechanism to actually achieve 131 00:13:29.260 --> 00:13:34.980 that success. You know, we hope for efficiency, but what we get is bureaucracy. We hope for 132 00:13:34.980 --> 00:13:39.180 effectiveness, but what we actually get is nothing but rules and red tape that serve 133 00:13:39.180 --> 00:13:44.520 neither the producer nor the consumer. You know, we hope for safety, but what we eventually 134 00:13:44.520 --> 00:13:49.800 get his chaos and of course there have been many prominent examples of this 135 00:13:49.800 --> 00:13:56.720 regulatory failure in recent years where a vast regulatory bureaucracy is supposed 136 00:13:56.720 --> 00:14:02.040 to be overseeing some aspect of the economy and it ends up failing 137 00:14:02.040 --> 00:14:08.120 tremendously and when we investigate the problem after the fact we actually find 138 00:14:08.120 --> 00:14:14.880 find that regulation is part of the cause of these problems. 139 00:14:14.880 --> 00:14:19.120 And so we're paying for the regulators and they're unable to actually serve the consumer 140 00:14:19.120 --> 00:14:21.680 or serve the producer. 141 00:14:21.680 --> 00:14:30.820 They end up actually contributing to these very negative outcomes in several prominent 142 00:14:30.820 --> 00:14:32.520 examples in recent years. 143 00:14:32.520 --> 00:14:40.560 Now, there are major Internet providers and as we mentioned, you know, beside the whole 144 00:14:40.560 --> 00:14:48.660 mobile industry, you know, T-Mobile, etc., AT&T and Apple, when you put all that together, 145 00:14:48.660 --> 00:14:57.160 the flow of information is almost impossible to really regulate and it's no matter how 146 00:14:57.160 --> 00:15:06.260 How good the NSA is or isn't, it would be impossible to monitor all that information. 147 00:15:06.260 --> 00:15:10.400 You would have to regulate your way. 148 00:15:10.400 --> 00:15:14.120 When you can't do it, when you can't monitor it, you'd have to prevent people from getting 149 00:15:14.120 --> 00:15:18.680 goods and services that they may have been able to get it before. 150 00:15:18.680 --> 00:15:25.260 So the companies come out and they issue statements on privacy and we're not going to give any 151 00:15:25.260 --> 00:15:31.740 Money, Information Away, etc. But then the amount of, and I'm putting this in a really 152 00:15:31.740 --> 00:15:38.140 simplistic way, the amount of phone calls that you'll get from telemarketers increases. 153 00:15:38.140 --> 00:15:47.040 It doesn't decrease. It seems that the technology is so overwhelming that the companies themselves 154 00:15:47.040 --> 00:15:53.420 have a hard time keeping up with the pace of technology. So clearly that has an effect 155 00:15:53.420 --> 00:15:58.660 on the Economy. But does it have an effect on the economy in a negative or in a positive 156 00:15:58.660 --> 00:16:05.900 way? Or are there going to be more jobs created because of this massive amount of information? 157 00:16:05.900 --> 00:16:14.300 Well you're right. There's no way that regulators or spies can get their hands around all of 158 00:16:14.300 --> 00:16:20.980 this information. It has to be the marketplace where everybody is looking out, where everybody 159 00:16:20.980 --> 00:16:25.940 is concerned about their next purchase or their next hire. 160 00:16:25.940 --> 00:16:34.000 It's only the marketplace that can accurately regulate markets and regulate firms and things 161 00:16:34.000 --> 00:16:36.340 of that nature. 162 00:16:36.340 --> 00:16:40.860 So I don't really blame the bureaucrats and the regulators for failing. 163 00:16:40.860 --> 00:16:47.340 I think it's just in the nature of the job and the regulation of these complex phenomenon 164 00:16:47.340 --> 00:16:55.420 and these huge markets with vast amounts of data and the problem is that when we put regulators 165 00:16:55.420 --> 00:17:01.740 in charge, we have the feeling that somehow everything is all right and that the regulators 166 00:17:01.740 --> 00:17:08.820 will take it, take care of us and so it's a moral hazard to put regulators in charge 167 00:17:08.820 --> 00:17:15.780 of information, in charge of marketplaces because they can't do the job but they give 168 00:17:15.780 --> 00:17:20.740 have the impression that somebody is doing the job and as a result, we've all put our 169 00:17:20.740 --> 00:17:26.500 guards down and we're not attuned to the things that we should be attuned to. 170 00:17:26.500 --> 00:17:34.820 So for example, the Bertie Madoff scandal and his Ponzi scheme, there's all sorts of regulators 171 00:17:34.820 --> 00:17:38.380 as you know over the financial services industry. 172 00:17:38.380 --> 00:17:43.940 I imagine it would be hard to tick off all of the various regulatory bodies that are 173 00:17:43.940 --> 00:17:52.820 are supposed to be monitoring a financial firm like Madoff's Ponzi scheme and yet the regulators 174 00:17:52.820 --> 00:17:59.320 never did anything to properly regulate Bernie Madoff's scheme and investors in the scheme 175 00:17:59.320 --> 00:18:06.180 just went merrily along the way thinking that somebody was actually overseeing what he was 176 00:18:06.180 --> 00:18:12.400 up to, making these outrageous profits year after year even when the market was down, 177 00:18:12.400 --> 00:18:21.000 was somehow up and in the end, the SEC failed to act. They failed to heed the warnings of 178 00:18:21.000 --> 00:18:28.380 many people that something was amiss with Bernie Madoff's firm and he was only actually 179 00:18:28.380 --> 00:18:38.040 caught when his own sons turned him in. In general, the whole financial crisis that we 180 00:18:38.040 --> 00:18:47.600 The idea that banking and finance are unregulated and need new layers of regulation is just 181 00:18:47.600 --> 00:18:49.160 plain laughable. 182 00:18:49.160 --> 00:18:53.920 There are various regulatory agencies at the state, federal and even the international 183 00:18:53.920 --> 00:18:59.280 level and there's over 12,000 bureaucrats devoted to financial regulation in Washington, 184 00:18:59.280 --> 00:19:06.200 D.C. alone and there are at least 115 agencies that regulate the financial industry at the 185 00:19:06.200 --> 00:19:11.760 State and Federal Levels alone. So, you know, there were all sorts of regulations 186 00:19:11.760 --> 00:19:19.120 and regulators and they never were able to stop the problem. And so we have to 187 00:19:19.120 --> 00:19:25.000 look beyond regulation. Regulation is not the cure. Regulation is actually a cause. 188 00:19:25.000 --> 00:19:31.800 It's a moral hazard. It makes us put our guards down and not be weary and leery 189 00:19:31.800 --> 00:19:41.800 The theory of what we're investing in, who we're buying from, who we're hiring, what firms we're dealing with, and so forth. 190 00:19:41.800 --> 00:19:47.800 This is something that only the marketplace can accurately regulate. 191 00:19:47.800 --> 00:19:51.800 Now, of course, if you have a free and unfettered marketplace, there's still going to be bad things happening. 192 00:19:51.800 --> 00:19:57.800 But they're not going to be systemic things happening. They're not going to go on for very long. 193 00:19:57.800 --> 00:20:21.680 Mark and just before we come on the bottom of the hour here, take our break, a quick 194 00:20:21.680 --> 00:20:27.560 Another question on the Health Care Act and what the impact is on the economy. 195 00:20:27.560 --> 00:20:31.320 It's just now getting cranked up. 196 00:20:31.320 --> 00:20:37.360 In your overall view on the short term, what is the impact of the Affordable Health Care 197 00:20:37.360 --> 00:20:38.720 Act on the economy? 198 00:20:38.720 --> 00:20:44.560 Well, it's in effect imposed taxes as the Supreme Court said. 199 00:20:44.560 --> 00:20:50.880 So it's going to be taxing consumers, it's going to be taxing the health care industry 200 00:20:50.880 --> 00:20:56.880 and it's going to be making it in some sense harder to get health care as more people have 201 00:20:56.880 --> 00:21:03.360 free access to health care and we need to go in the other direction because Obamacare, 202 00:21:03.360 --> 00:21:07.440 which was actually created by the Congress, is something that's going to make health care 203 00:21:07.440 --> 00:21:12.360 a messier sector of the economy. 204 00:21:12.360 --> 00:21:18.480 Mark Thornton, a senior economist at the Von Mises Institute, the author of several publications 205 00:21:18.480 --> 00:21:22.440 Studies, and a terrific economist. We thank you very much for joining us.