Good morning and welcome to KWAM 990. This is One for the Money. I'm Mike Stein, Senior
Vice President of Investments at Wells Fargo Advisors right here in town. The phone number
to our studio, 260-5926. And this morning, my special guest is Mark Thornton, who's a
senior fellow at the Ludwig von Mises Institute. He serves as a book review editor of the Quarterly
Journal of Austrian Economics. He served as the editor of the Austrian Economics Newsletter
and a member of the editorial board of the Journal of Libertarian Studies. He served
is a member of the graduate faculty of Auburn University, Columbus State University, taught
economics at Auburn and Trinity University as well. He was the Assistant Superintendent
of Banking and Economic Advisor to Governor Bob James of Alabama and was awarded the University
Research Award at Columbia State as well. He has written several publications and good
morning Mark.
Good morning Michael, good morning Memphis. It's great to be back on One for the Money.
Thank you so much for joining us.
We wanted to have you back on to talk about our good friend Mr. Snowden.
So tell us a little bit about what happens when a government security apparatus is given
unchecked powers in the case of, I imagine, a whistleblower would be a good term?
Absolutely.
You know Snowden is a hero to many people who believe in privacy and they believe in
individual rights like the founding fathers and you know this overreach by NSA, the National
Security Agency is just outrageous.
It's unethical, it's immoral, it's unconstitutional and Mr. Snowden brought it to public attention
and you know the overwhelming majority of Americans support him, believe he did what
was right and only a minority oppose him and of course half of the people who oppose him
are neocons and half of those, the other half are just people who are not very well informed.
So I think Mr. Stodin was a patriot, you know patriotism is not just slavishly following
whatever the government says and whatever the government dictates, patriotism is opposing
your government when you think it's doing something wrong and I think in this case it's
It's pretty clear that the NSA was spying on Americans.
It was vacuuming up huge amounts of emails and phone calls and they actually had access.
Unlike the president said, they weren't listening to phone calls but they actually had the unchecked
authority to listen to phone calls and to read emails.
They didn't actually take in every 100%.
They estimate that it's about 90% of all emails and phone calls were stored, basically, in
NSA computers to give them the plausible done-eye ability that they weren't actually tracking
everything that Americans did.
So it's an outrageous policy on the part of the administration.
And I think Mr. Stoden is a hero, he's a patriot.
And this is something that we, you know, and the funny thing is even though the vast majority
of American Support Snowden, a slight majority actually want to see a public trial.
They don't think he should be sentenced or fined or killed, but they'd like to see all
the facts come out before the public in an open hearing.
So I think it's a good development.
Here's a couple of questions for you.
Number one, as we move through our interview with Mark Thornton of the Mises Institute
and a noted economist talk a little bit about how this impacts the economy from on a short
term and on a longer term basis.
Let's talk a little bit about what exactly did Edward Snowden do that caused so much
turmoil and tell our listeners about the PRISM program and what that means just to the average
citizen.
Well, basically, you know, the NSA, which is getting more than 10 billion dollars of
our money to operate, was set up with the idea of intervening in foreign conversations
and foreign emails and phone calls and things of that nature with other countries that might
be our enemies.
But the prison program and the related programs are designed to spy on domestic people, like
ourselves where they're basically cataloging all of our phone calls or at
least 90% of our phone calls and they're cataloging or have access to our email
and so the idea was to to catalog these things and to run computer programs to
identify patterns of who's calling who and how long of the duration and so
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
and the secretaries. Their secrecy is their specialty and so they've been keeping this
program or programs, I should say, basically secret from the public and from the government.
In the recent testimonies before Congress where they had secret non-public meetings
with congressmen and senators, where they had to reveal exactly what they were doing
to Congress.
One congresswoman came out of the hearings and said that she was flabbergasted and that
what had been revealed to the public so far and what was in the media so far was only
the tip of the iceberg, as she put it.
And so you really have to wonder exactly how big these programs are and how intrusive they
and how unconstitutional they are.
One senator came out of the hearing who was on the Senate Homeland Security Committee and
he said that he knew nothing of this program beforehand and he was shocked at the extent
of what had been revealed in that committee secret meeting.
Here you have a senator on the Homeland Security Committee not knowing it because the information,
some of the information about what the National Security Agency is up to is only revealed
in the Intelligence Committee which is a small number of senators so apparently the White
House was somewhat in the dark about this and the vast majority of the House of Representatives
in the US Senate were in the dark as to what the NSA is going on.
So when you ask the question, what are these programs, well, I have to be truthful.
We really don't know yet at this point because we've only been exposed to what the Congresswoman
said was the tip of the iceberg.
So I think there's going to be a lot more revelations.
Mr. Stoden has indicated that he has more revelations to come and Glenn Greenwald has
extensive interviews, only some of which have been revealed to the public.
So I think this is an ongoing story and it's something that's going to continue on in the
media and in the general public discussion for quite some time.
We're talking with Mark Thornton of the Von Mises Institute, a noted economist and published
author.
In your short-term view of the economy, what will this scandal do?
And in the long term, what are the possible effects?
Because we're talking not only about a 29-year-old whistleblower, you're talking about Microsoft,
Yahoo, Google, Facebook, massive amounts of data that now is in some and a broad range
is compromised.
Well, that's a very good point.
The media has been maligning Mr. Snowen, especially the neocon media as a 29-year-old without
a high school diploma.
Well the fact of it is he does have a GED diploma and he was so smart that he bypassed
the traditional educational process and went on to become a high level intelligence officer
in the private sector and has made as much as a quarter million dollars a year.
So as much as the neocons want to malign this guy, he's not just a hero but he's a bright
guy, he knows advanced security and spying techniques and computers and all the rest.
Now as far as the economy goes, this is a bucket of ice water on the economy.
You may not be able to tell it in the datum, but basically what this is, is a signal to
companies, tech companies, some of which that you mentioned, but the broad stroke of technology
Sector. So this is an important losing proposition for the U.S. is American
taxpayers are paying the National Security Agency more than ten billion
dollars a year and all those people are making you know like at least a hundred
thousand dollars a year and they're spying on us and they're not really
deterring terrorist plots and but the the fact that they're spying on Americans
and they're cataloging all our emails and all our phone calls is just it's
It's unconstitutional but it's just distasteful for people in the economy and if they have
an opportunity to move overseas and you know I teach at Auburn University and I see an
increasing proportion of students that when they graduate they look for jobs overseas
and I've had students going out of the country, going to Taiwan, going to Singapore, going
to Australia, going to New Zealand, there's been a couple that went to Spain and so you
You know, Auburn University students never thought of the idea that they wouldn't be
working in Alabama or working in the Southeast and able to go to Auburn University football
games and so forth.
Now the trend increasingly is to take foreign languages, to take courses in international
business and international trade and be entrepreneurial and hope to catch on in a foreign country.
So it's a very negative step in the US economy as far as job growth in the high tech areas
and entrepreneurial areas.
The world is a global place.
You can operate from anywhere, email goes everywhere and so at one point America was
You know the best economy, we had the strongest military, you know and everything was hunky-dory
but you know this is another step in the wrong direction as far as I'm concerned.
Mark, the regulation enthusiasts that are in Congress will tell you that regulation
is usually a positive for the economy from an economist's standpoint.
Is there any regulation that's a good idea for the economy?
I really don't think so. Government regulation simply does not work.
It is designed with the hopes of success, but with no mechanism to actually achieve
that success. You know, we hope for efficiency, but what we get is bureaucracy. We hope for
effectiveness, but what we actually get is nothing but rules and red tape that serve
neither the producer nor the consumer. You know, we hope for safety, but what we eventually
get his chaos and of course there have been many prominent examples of this
regulatory failure in recent years where a vast regulatory bureaucracy is supposed
to be overseeing some aspect of the economy and it ends up failing
tremendously and when we investigate the problem after the fact we actually find
find that regulation is part of the cause of these problems.
And so we're paying for the regulators and they're unable to actually serve the consumer
or serve the producer.
They end up actually contributing to these very negative outcomes in several prominent
examples in recent years.
Now, there are major Internet providers and as we mentioned, you know, beside the whole
mobile industry, you know, T-Mobile, etc., AT&T and Apple, when you put all that together,
the flow of information is almost impossible to really regulate and it's no matter how
How good the NSA is or isn't, it would be impossible to monitor all that information.
You would have to regulate your way.
When you can't do it, when you can't monitor it, you'd have to prevent people from getting
goods and services that they may have been able to get it before.
So the companies come out and they issue statements on privacy and we're not going to give any
Money, Information Away, etc. But then the amount of, and I'm putting this in a really
simplistic way, the amount of phone calls that you'll get from telemarketers increases.
It doesn't decrease. It seems that the technology is so overwhelming that the companies themselves
have a hard time keeping up with the pace of technology. So clearly that has an effect
on the Economy. But does it have an effect on the economy in a negative or in a positive
way? Or are there going to be more jobs created because of this massive amount of information?
Well you're right. There's no way that regulators or spies can get their hands around all of
this information. It has to be the marketplace where everybody is looking out, where everybody
is concerned about their next purchase or their next hire.
It's only the marketplace that can accurately regulate markets and regulate firms and things
of that nature.
So I don't really blame the bureaucrats and the regulators for failing.
I think it's just in the nature of the job and the regulation of these complex phenomenon
and these huge markets with vast amounts of data and the problem is that when we put regulators
in charge, we have the feeling that somehow everything is all right and that the regulators
will take it, take care of us and so it's a moral hazard to put regulators in charge
of information, in charge of marketplaces because they can't do the job but they give
have the impression that somebody is doing the job and as a result, we've all put our
guards down and we're not attuned to the things that we should be attuned to.
So for example, the Bertie Madoff scandal and his Ponzi scheme, there's all sorts of regulators
as you know over the financial services industry.
I imagine it would be hard to tick off all of the various regulatory bodies that are
are supposed to be monitoring a financial firm like Madoff's Ponzi scheme and yet the regulators
never did anything to properly regulate Bernie Madoff's scheme and investors in the scheme
just went merrily along the way thinking that somebody was actually overseeing what he was
up to, making these outrageous profits year after year even when the market was down,
was somehow up and in the end, the SEC failed to act. They failed to heed the warnings of
many people that something was amiss with Bernie Madoff's firm and he was only actually
caught when his own sons turned him in. In general, the whole financial crisis that we
The idea that banking and finance are unregulated and need new layers of regulation is just
plain laughable.
There are various regulatory agencies at the state, federal and even the international
level and there's over 12,000 bureaucrats devoted to financial regulation in Washington,
D.C. alone and there are at least 115 agencies that regulate the financial industry at the
State and Federal Levels alone. So, you know, there were all sorts of regulations
and regulators and they never were able to stop the problem. And so we have to
look beyond regulation. Regulation is not the cure. Regulation is actually a cause.
It's a moral hazard. It makes us put our guards down and not be weary and leery
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.
This is something that only the marketplace can accurately regulate.
Now, of course, if you have a free and unfettered marketplace, there's still going to be bad things happening.
But they're not going to be systemic things happening. They're not going to go on for very long.
Mark and just before we come on the bottom of the hour here, take our break, a quick
Another question on the Health Care Act and what the impact is on the economy.
It's just now getting cranked up.
In your overall view on the short term, what is the impact of the Affordable Health Care
Act on the economy?
Well, it's in effect imposed taxes as the Supreme Court said.
So it's going to be taxing consumers, it's going to be taxing the health care industry
and it's going to be making it in some sense harder to get health care as more people have
free access to health care and we need to go in the other direction because Obamacare,
which was actually created by the Congress, is something that's going to make health care
a messier sector of the economy.
Mark Thornton, a senior economist at the Von Mises Institute, the author of several publications
Studies, and a terrific economist. We thank you very much for joining us.