John Hawkins: Do you believe a flat tax would help produce more economic growth than the progressive tax system that we currently have? If so, can you explain why?
Thomas Sowell: A flat tax would not penalize additional efforts at an increasingly higher rate. This would reduce the discouragements to such efforts and to the taking of risks.
John Hawkins: Could you explain why rent control is a bad idea?
Thomas Sowell: Like all forms of price control, rent control leads to a simultaneous increase in the amount demanded and a reduction in the amount supplied. The resulting shortage then means that landlords need not spend as much money maintaining rented premises, because there are more applicants than apartments, thus leading to a faster deterioration over time. Meanwhile, fewer replacements — sometimes none — are built because of low or non-existent profits. This scenario has been played out in countries around the world — in Australia, Sweden, France, England, the United States, for example.
John Hawkins: Do you think a Balanced Budget Amendment or some other sort of legislation that forces government to control spending will be necessary to get the budget deficit under control long-term? If so, would you recommend a Balanced Budget Amendment or something else?
Thomas Sowell: Balanced budget requirements seem more likely to produce accounting ingenuity than genuinely balanced budgets. The real goal should be reduced government spending, rather than balanced budgets achieved by ever rising tax rates to cover ever rising spending. For this, the only policy that seems promising is “eternal vigilance,” the price we must pay for freedom in general.
John Hawkins: Can you explain why protectionist tariffs on let’s say steel or textiles actually end up costing America more jobs than they save?
Thomas Sowell: The number of jobs in the steel is exceeded many times over in industries making steel products, from automobiles to oil rigs, refrigerators, locomotives, etc., etc. Tariffs that save jobs in the steel industry mean higher steel prices, which in turn means fewer sales of American steel products around the world and losses of far more jobs than are saved.
John Hawkins: One thing you’ve said that I found intriguing was that,”if you gave every poor person enough money to stop being poor, that would cost a fraction of what our welfare state programs and bureaucracies cost”. Do you have any numbers on that and in your opinion, even if that’s not a good idea, would it be a better idea than what we’re doing currently?
Thomas Sowell: Professor Walter Williams of George Mason University has done the calculations of the cost of raising every poor person above the poverty level by directly giving them money and found it to be a fraction of the cost of the numerous programs ostensibly aimed at helping the poor.
John Hawkins: Joe Lieberman has said that he would limit “insurance company profits to 2 percent a year in order to reduce the cost of health care”. If Mr. Lieberman’s plan were implemented, what do you think the effects would be?
Thomas Sowell: Profit restrictions mean that investments flow to other sectors of the economy, leading to non-price rationing of inadequately funded insurance. The underlying confusion is between price and costs. They are by no means the same things. The costs of providing insurance remain unchanged when its price is controlled. A failure to pay these costs then means either a lesser quantity or a lesser quality of insurance. Actually lowering the cost of insurance would be accomplished by such things as making it harder for lawyers to win frivolous lawsuits against insurance companies.
John Hawkins: If we were to actually start enforcing our laws against illegal immigration and were successful in preventing most of them from being able to get a job in the United States, how much of an impact do you believe that would have on the US economy?
Thomas Sowell: Illegal immigrants are not simply “taking jobs that Americans don’t want.” Stopping illegal immigration would mean that wages would have to rise to a level where Americans would want the jobs currently taken by illegal aliens.
John Hawkins: Do you think the US would be better off having a strong dollar, a weak dollar, or one just as good as the other? Why so?
Thomas Sowell: Whether a currency is “strong” or “weak” tells very little by itself. These are among the many emotional-laden words used in discussing of international transactions which obscure more than they reveal.
John Hawkins: Overall, do you believe Affirmative Action has had a more positive or negative impact on the lives of black Americans?
Thomas Sowell: Affirmative action has been a boon to those blacks who were already affluent and particularly for those who were rich but has done little or nothing for those blacks who are neither. Moreover empirical data from other countries around the world shows the same general pattern from group preferences.
John Hawkins: Do you believe reparations should be paid for slavery?
Thomas Sowell: The people made worse off by slavery were those who were enslaved. Their descendants would have been worse off today if born in Africa instead of America. Put differently, the terrible fate of their ancestors benefitted them. If those who were enslaved were alive, they would deserve huge reparations and their captors would deserve worse punishments than our laws allow. But death has put both beyond our reach. Frustrating as that may be, creating new injustices among the living will not change that.
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