U.S. Presidential Election 2012 and Sound Money

By: Casey_Research

Walter Williams has been a professor of economics at George Mason University in Virginia since 1980. He is the author of many books, hundreds of articles and a weekly syndicated column. You may have caught some of his many radio and television appearances - a champion of free-market economics speaking out against socialism and intrusive government. He has described laissez-faire capitalism as "the most moral and most productive system man has ever devised."

Casey Research: Good morning, Dr. Williams. I was immensely relieved to learn that you were not the author of the recent article No Matter What, purporting to explain why, no matter how bad things get, President Obama would win a second term. The article was widely circulated, however, and I have some concern that a lot of people were misled but never learned that you had not written it.

Walter Williams: Of course the article was a hoax. When it first came out and people started sending it to me, I sent it to the Creators Syndicate that handles my column. They contacted the website that ran the article, and that website ran an apology.

Casey Research: I am happy to have the opportunity to help set the record straight and to share your views with our readers. Can President Obama be defeated in 2012?

Walter Williams: Oh yes. According to a recent poll, if the election were held today, Mitt Romney would beat him. It's hard for a president to win reelection with a high unemployment rate. It looks like there is no way in the world, between now and the election, that unemployment will drop substantially. That does not bode well for Obama's reelection.

CR: I believe official unemployment now stands at about 9% and that it's actually even higher because of how unemployment statistics are reported.

Walter Williams: That's right.

CR: The midterm election and the Tea Party movement sent a strong message to Congress and the president. Voters want less spending on less government, but Congress and the president still seem to think voters will accept business as usual. Are they right?

Walter Williams: They could be. We can blame politicians a little bit, but the bulk of the blame lies with the American people. That was kind of an epiphany for me. During the 1980s, I would occasionally have lunch with Senator Jesse Helms from North Carolina. He knew that I was highly critical of agricultural subsidies, handouts to farmers.

Something Jesse Helms told me at one of our luncheons made me realize some things I had not realized until then. He said, "Walter, I agree with you 100% that these farm subsidies ought to be eliminated." But then he asked, "Can you tell me how I can remain the senator from North Carolina and vote against them? If I do what you say, I would be voted out of office."

Applying his observation today, we can note that the biggest expenditures by the federal government are Social Security, Medicare, Medicaid and prescription drugs. Along with other entitlements, these expenditures amount to almost 60% of the federal budget. The beneficiaries of these programs vote in large numbers. Politicians who talk about cutting these programs are going to run into trouble. We have to get the American people, as much as politicians, to respect the Constitution.

CR: It seems that we must overcome some significant misconceptions before we reach that point. For example, some smart people have asked why we can't just live on credit, why can't the Fed just continue to print money? You've been an economics professor for over 30 years. Do you have a sense of what it would take to teach the average American that living on credit does not work for the federal government any more than it would for individuals or families?

Walter Williams: We have to ask ourselves, "Are the American people any different than the Romans, the British, the French? Are they different from Spain or Portugal?" These were all once great empires that went down the tubes for bread and circuses, for huge spending. There is every indication that Americans will go the same way. They want politicians to enable them to live at the expense of other Americans.

CR: That seems to be a recurring message during elections: "I will give you what you want and make someone else pay for it."

Walter Williams: That is absolutely right. In my opinion, it is nothing more than legalized theft. If there is slight hope on the horizon, it's that the Obama administration and Congress have been so brazen that Americans, like never before in our lives, are arguing about the Constitution.

States' attorneys general are suing the federal government over Obamacare. State legislatures are passing Tenth Amendment resolutions ["state sovereignty resolutions" affirming that the US Constitution gives the federal government only specific enumerated powers and that all other powers remain with the state and the people]. Texas is telling the TSA to "keep your hands off our people." North Dakota has nullified the health care bill. So the point is, if there is hope on the horizon, it may be this slight groundswell of rebellion. The question is, is it too little, too late?

CR: The US dollar was once redeemable in gold or silver but now it just says, "In God We Trust." The US monetary system is based on trust, but that trust has been breached and the dollar is in decline. Americans will be wondering whom to hold responsible as we lose the privileges we have enjoyed as custodians of the world's reserve currency.

Walter Williams: Very seldom are people willing to blame themselves for the problems they create. They always want to blame someone else: the Chinese, Republicans, Democrats. It's a natural, normal human response, but blaming someone else does not solve the problem.

CR: I mentioned those who have asked why we can't just live on credit. What about those who really should know better, like Fed Chairman Ben Bernanke and members of the Joint Economic Committee in Congress - do they truly believe in Keynesian economics? For example, does the Fed chairman believe that one more round of quantitative easing will actually get the economy back on track?

Walter Williams: Keep in mind something that Richard Nixon said to John Ehrlichman, who warned that Milton Friedman, an economist and Nobel laureate, advised against the policy Nixon was pursuing. Nixon's response was, "Milton Friedman is not running for reelection." These people in Washington have commitments and responsibilities that I don't have. I don't owe anybody anything, so I can be perfectly honest. When you are trying to get reelected, or appointed to a high-level position, or hoping to have a high-paying job when you leave government, you just can't say the sort of things I am free to say.

CR: Will we ever return to fiscal responsibility when there is no constraint on how many dollars can be produced?

Walter Williams: The gold standard is a discipline for the monetary authorities. It restricts their ability to print money. Without a gold standard, the only restriction is the political arena's restraint that has been shown around the world to be insufficient. Our founders feared fiat money.

CR: Americans seem to have forgotten that.

Walter Williams: Not so much forgotten as just observed that such a restraint on government limits my ability to live off my fellow Americans. At the Democratic National Convention in 1896, William Jennings Bryan, one of the first so-called "progressives," gave a speech - the "Cross of Gold" speech - condemning the high rate of silver-to-gold convertibility. [Bryan called for the inflationary free coinage of silver at a ratio of 16:1 to gold. His answer to the demand for a gold standard: "You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."] At that time, we had presidents like Grover Cleveland, who fought against the weakening of the dollar and against moving away from the gold standard.

CR: That's certainly not a cause championed by Barack Obama.

Walter Williams: No, it's not. As to that article on Obama's reelection, I don't think any of it makes a lot of sense. I appreciate your efforts to get the word out that it was not written by me.

CR: My pleasure. Thank you very much, Dr. Williams. I appreciate you taking the time to talk with me.

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