Tag Archives: interview

Dawn J. Bennett Interviews Ed Conrad on The Upside of Inequality

Dawn J. Bennett, founder and CEO of Bennett Group Financial Services and host of Financial Myth Busting with Dawn J. Bennett, recently interviewed Ed Conard. Conard is the bestselling author of Unintended Consequences: Why Everything You’ve Been Told About the Economy is Wrong (2012) and The Upside of Inequality: How Good Intentions Undermine the Middle Class (2016).  Conrad has also written a number of op-eds for The Washington Post, The Wall Street Journal, Politico, Fortune, Harvard Business Review, and more.

In his interview with Dawn J. Bennett, Conard discusses the theme of his latest book— the upside of inequality.

“If you look at United States, we have a very deep pool of well-trained talent which is taking more entrepreneurial risks than their counterparts in Europe and Japan, substantially more risk, and producing faster growth and higher median wages,” Conrad told Bennett.  “If you look at the U.S., employment growth has grown twice as fast as Germany and France since 1980 and three times faster than Japan, at median household incomes which are 15 to 30 percent higher than those economies.”

The U.S. is generating faster growth at higher incomes, compared to other nations. According to Conrad, the U.S. has too few high-skilled workers and the ratio between high and low is very significant. When you think about what a high-skilled worker can do, they really have three jobs, he explained.

“One is they can create innovation like the iPhone that’s beneficial to everyone; the second is they can be doctors and lawyers that just keep the gears moving, and the third is that they can organize unskilled workers into companies that can serve customers more effectively that increases the productivity of unskilled workers,” he said. “Those are the three functions so, to the extent if we’re short on workers, one of the arguments that the book makes is that properly trained talent and entrepreneurial risk-taking are the binding constraints to growth today, not savings. What we see is savings that are unused and the productivity of our workforce slows down.”

Though many people assume it’s impossible to climb the socioeconomic ladder in societies with large inequality income mobility, Conrad pointed out that that’s actually not the case. He explained that there is are two famous studies, one done by two fairly liberal Harvard researchers and one from the University California, that show mobility has not declined at all relative to the past in the U.S. It’s actually increased overtime, he said.

Conrad also noted that there are studies comparing U.S. mobility to that of Scandinavia, which has the most equally distributed income of all high wage economies. What you find is mobility in the U.S. appears to be a sociological issue more than an economic one.

“What you find is mobility is virtually identical for all Americans except in the bottom 20 percent and if you dig into the bottom 20 percent, the mobility is identical for white Americans, it’s slower for black or African-Americans in the bottom 20 percent,” he said. “And if you dig into that, what you find is that single motherhood and high school dropout rates seem to account for almost all of the differences in mobility and that has profound effect on mobility across all races, across all income groups.”

Conrad also said that the Fed’s actions of raising taxes on the risk, regulations and entitlements only slow down growth, which worsens the initial problem.

“The Fed does come in for criticism in trying to pump up growth by printing money,” said Conrad. “I don’t think it will work. You’ve got to remember that the Federal Reserve doesn’t produce anything, it doesn’t create anything that would actually increase growth. But the argument I made in my first book was that the money would largely sit unused because we’re bumping up into other constraints to growth which is our willingness to take risks so, for example, borrow that money and put it to work. It would sit unused and create neither inflation nor growth. So I think it’s largely to destabilize the economy a bit. It’s made financial markets harder to interpret but it’s had actually very little effect, I think, on the economy, so a lot of risk for not much benefit.”

Flyover America: The Financial & Political Misrule of Washington and Wall Street

Dawn J. Bennett, host of Financial Myth Busting, recently interviewed David Stockman, a bestselling author and former director of the Office of Management and Budget. In his new booked, Trumped! A Nation on the Brink of Ruin… And How to Bring it Bank, Stockman explains how 30 years of financial and political misrule by Washington and Wall Street elites have brought the United States to the brink of ruin.

According to Stockman, the Fed’s destructive ZIRP and QE policies have buried Flyover America in debt and clobbered the nation with shrinking real wages and vanishing job opportunities. Meanwhile, the bicoastal elites have greatly profited from the immense inflation of financial assets in the Wall Street casino and debt-fueled expansion of Imperial Washington’s domestic and global interventions.

In his book, he also argues Donald Trump’s unlikely candidacy occurred because Flyover American has had enough of the rigged system that benefits only a few and failed to deliver economic recovery and real prosperity at home and a safer, more stable world abroad.

In his interview with Dawn J. Bennett, Stockman explained that price discovery has been destroyed, market false liquidity has poured into the canyons of Wall Street like a flash flood, and bond prices are crazy worldwide.

“There’s $13 trillion of sovereign debt trading at sub-zero yield which on its face is the craziest thing anybody can imagine because no government should be paid for borrowing money,” he said.

Stockman also noted that in Flyover America, there’s no breadwinner jobs, as most of them have fled offshore, and there’s a 21% decline in the real standard of living. Meanwhile, $13 to $93 trillion worth of financial value falls onto a very small portion of the population.

Many progressives use income inequality to argue for more government intervention in the economy. Stockman explains in his book and interview that economic interventions actually worsen inequality.

“The point is that this income misdistribution they talk about is real and I mention it in my book, but it’s a consequence of bubble finance, it’s a consequence of the Fed falsifying the financial markets, of turning Wall Street into a casino,” said Stockman. “But the fact is that it is not real capitalism at work and that is not permanent wealth creation, so if we look at the period since ’87, the Forbes 400 has had a 1000% gain in real terms and net worth. The top 1%, a 300% gain in at least paper net worth, as calculated by the Federal Reserve. The bottom 90%, zero. Net worth today is not higher than it was in 1987. Now, that’s a perversion or corruption of capitalism, as I said in my last book.”

In his book, Stockman also argues that Trump’s candidacy is directly attributed to the growing sense that the U.S. economy is rigged and only helping those at the top.

“I think right now he’s [Trump] capitalizing on the [Populist] wave because clearly—and I don’t use this word in a condescending way—but I think it’s a fair statement that the rubes are in revolt,” said Stockman. “They’re treated as rubes by the Washington/Wall Street bicoastal elite and they’ve had enough and I think Trump’s phenomenal rise is reflective of that. Now, how that translates into fundamental change in policy… that’s a huge, open question.”

Trump vs. Clinton: Economic Tax Plans

Dawn J. Bennett, host of Financial Myth Busting with Dawn J. Bennett, recently interviewed Gerard Lameiro, an author, economic, philosopher, and engineer. Lameiro is the former founder and CEO of Lameiro Economics LLC, a company committed to promoting practical economic knowledge about freedom, economic growth, and prosperity nationally and worldwide. In his interview with Dawn J. Bennett, he discusses his view point on the economic tax plans of the presidential candidates.

According to Lameiro, Hilary Clinton’s plan is to raise taxes, while Donald Trump’s is to cut taxes. The two plans are about as opposite as they get. He explained that Clinton plans to raise personal income taxes by capping itemized deductions about $350 billion over a ten year period, as well as increasing corporate taxes by $275 billion, though there are not many details available.

Additionally, Clinton is planning a $400 billion fairness tax change. Though not clearly defined, she would have a fair share surcharge, which sounds like she’ll be taxing the rich and adding that to the general fund somehow so it can be spent on other things, Lameiro said. For death taxes, she might raise them, but they definitely won’t be lowered. Clinton would also increase capital gains taxes and the brackets associated with them, but there isn’t a firm estimate on how much revenue that would generate, according to Lameiro. He also pointed out that she would create new tax on stock trades, in which those who buy and sell stocks are going to pay a percentage.

He continued, “Then a new creation, the exit tax, which has to do with businesses who earn income overseas. She would not touch the currently high corporate tax structure and that, but she would add on this new exit tax. In addition, she has also endorsed, or said she is open to, a 25 percent national gun tax. I’m sure the NRA will love that one. And a high soda tax, which is interesting.”

Lameiro said he doesn’t endorse either candidate. His personal point of view is to see pro-growth and a solid constitutional conservative.  He is in favor of fiscally restrained policies, such as doing things that moderate corporate taxes and pulling back on regulations like ObamaCare, he said.

“I do not have such a person currently running that I know of, unless possibly the libertarian and that,” Lameiro said. “But I think Trump is somewhat of an unknown quantity, and he doesn’t have a real defined track record in either economics, or virtually any other area of the government, and Clinton does have a record which I don’t particularly like.”

He continued, “I think her long term record is not pro-growth. I would expect more progressive socialist type programs and policies, and I think that’s already doing a bad number on our economy. I think we have the weakest recovery in decades, generations, and I think this tax plan would probably result in literally trillions of dollars that would not be met with her budget expense that is likely to occur.”