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Interviewing Thomas Sowell On Basic Economics

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Posted on January 24 2011 11:00 am
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Late last year, I wrote a column for Townhall called 10 Life Changing Books To Give This Christmas. One of those books is Thomas Sowell’s Basic Economics 4th Ed: A Common Sense Guide to the Economy. Note the “4th Ed” part. That’s relevant because the book has recently been re-released. If you want a phenomenal, readable book about economics, you could not do better than Basic Economics 4th Ed: A Common Sense Guide to the Economy.

Happily, because Thomas Sowell’s promoting his book, I had yet another opportunity to interview one of the finest minds living on the subject he’s better than anyone else at explaining, the subject of economics. Enjoy!

We’re getting very close to the point where we could have states default on their debts for the first time. What should happen then?

They should go bankrupt. I’m looking forward to it.

There are three possibilities — bankruptcy or bailouts or ruinous taxations. Of the three, bankruptcy is the one that makes the most sense because it’s the one that conveys the most accurate knowledge — which is that they’ve run out of money and couldn’t cover all the promises they made. That fact should be revealed to all for future reference. The other thing about bankruptcy is that it’s the only thing I know of that can get rid of these ruinous public sector union contracts with these extravagant pensions. Those pensions are so popular because the politicians can promise the pension now and get votes now without losing the votes of taxpayers now, because they don’t set aside enough money to cover the pensions. Then they simply kick the can down the road and leave it to somebody else to figure out what to do when the money runs out.

Well, related question to that — certainly we should allow unions in society. Should we be allowing government workers to unionize?

Oh, I don’t know about allowing them to unionize, but they certainly should not be allowed to strike — and there was a time when they weren’t allowed to unionize. There’s a whole atmosphere in which a strike is regarded as some kind of sacred thing. A strike is not simply a refusal to work. We all can refuse to work whether we’re unionized or not. A strike is a refusal to let other people do the work that you refuse to do and I don’t know why anybody should have that right.

Yes, I agree. There’s a worry that China could essentially engage in economic warfare against the United States because they hold so much of our debt. Should we be greatly concerned about that?

Yes. For years, the Keynesians loved to downplay the importance of debt by saying we owe it to ourselves. There are problems with that which I go into in Basic Economics. But there are even bigger problems when in fact, we don’t owe it to ourselves, and something like 40 something percent of American debt is owed to foreigners. That means that at some point in the future, all those trillions of dollars worth of real goods and services in output of the American people will have to be shipped overseas to pay back the debt that we borrowed.

Read the rest of the interview at Right Wing News.

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