tv The Structure of Production CSPAN September 17, 2017 1:17am-1:46am EDT
economists in the senate when he was pushing for the financial deregulation they created with george mason all these people were involved or pushing opening up the financial industry for deregulation. was there a moment of shame that the ideas did not work out? no, not the moment, just a more aggressive push to take advantage of the crisis and the dislocation of the financial collapse. i think our time is up but i'm thrilled to see so many people here. [applause]
now we want to introduce you to martin, an entrepreneur, author, economist and founder of freedom fest which is where we are right now in las vegas. >> intellectuals in the capital of the world. usually las vegas is just about entertainment and so forth but we are in a renaissance gathering where we each finance and technology, healthy living, music and dance, lol but of
everything in the arts education. and we have over 300 speakers and many authors. one of the subtitles is great ideas, great books and thinkers. we are one o of their organizationof the organizatione center of the exhibit hall is a bookstore and we sell people hundreds of books so we are delighted to have booktv as part of the freedom fest. >> what's the political philosophy? >> we are nonpartisan to attract more of a conservative and libertarian audience. we have a love of wealthy investors and it's hard to pinpoint. for example two years ago we had donald trump, she appeared 711 of 2015 kind of his lucky day because his poll numbers were
down and the media coverage before the donald trump was just incredible. what shocked me is the audience response. i expected it to be a pure libertarian audience which would have serious reservations about what he said immigrants, mexicans and the law. they tend to be more open-minded in building bridges rather than walls. but at least half the audience gave a standing ovation if i was in shock. so we have an eclectic audience and would like to do a lot of debate. i mentioned paul krugman. he convinced quite a few people to change their mind. i don't like to think of ourselves in a political way,
using the terms left and right because these are divisive terms for smearing people you don't like. so we like to take a more objective stance. we discourage talking over each other and telling. it's not who is right but what is right and what is the solution to the problem. but we have a health care crisis. we don't care who proposes that we have some serious problems and we want to resolve them. >> host: we talked to an economist author yesterday who said he thinks that paul krugman is a classic liberal economist. do you agree with that?
>> well, no because classical liberal would be in the classic adam smith mode and krugman is definitely keynesian so adams smith advocated for sound money anti-inflation gold standard type of policy, very limited government as the french called it. he called it the system of national liberty, balanced budgets, free trade. now he would probably be less free trade as most economists are but not an advocate of balanced budgets especially during that visit during the recession. so he's more of a inflation rest and interventionist so i would be curious did they give a reason why? >> host: we were talking about milton friedman.
he said he thought that paul would've beewould have been more milton friedman camp than perhaps a libertarian. >> we had him here to debate steve moore and he's kind of an interesting person because his background is in classical economics and john's wort mills is his favorite economist and he's written a biography of high afghan friedman so you would think he would be in that camp, but he's drifted in a lot of ways. i think he's been affected by the purple kool-aid a little bit there wa but it was a rather progressive tax and o of course
molten friedman and hayek and so on they were skeptical as mia and the idea of transferring wealth from the private sector to the public sector i can't see how that would be beneficial so i kind of question. >> host: you mentioned the term sound money. >> you need a system that imposes a discipline on the central planners because how much does it cost to help pay for money, 20-dollar bill with andrew jackson but it costs $3 to make that. >> it costs $3 to make daca
that's the cost of production or the same thing, $3 for a 1 dollar bill, 3 cents. that was the liberty bell by the way. people bring it for how long they've been at freedom fest so if they've been there for ten years they will ring it ten times. so no matter what the bill is, obviously you would want to print 100-dollar bills, cost 3 cents and get more bang for the buck so we needed to find a discipline and a discipline of course is i got this in my other back pocket, gold. that's 1.2 ounces of gold. it's probably $1,500 or a little bit more.
i keep this on me despite the donald trump because it's mexican. >> host: are you not a fan of the current president? >> guest: know i think mike pence would be a better choice. i like some of the things he's done but his comments are totally out of the mainstream of what we found. no other country was ruined by trade suggest individuals have lost jobs but they hopefully discover new jobs and most have. so more open borders an and i'mn the theater and bridges than walls. >> do you think that nafta is a
good system and should have been approved? >> anything that reduces barriers between the countries is beneficial and this myopic view of america first makes sense militarily point of view but again i will quote ben franklin. the policy of america should e-commerce as a whole and the war with none. very idealistic but at least on the trade side, open borders in the form of trade i trade as a y event and abuse at by american products first time no car at the cheapest price and let people decide. it's all about freedom, free choice and not imposing your view of a person should buy.
if you want to buy american, that's fine but don't tell me i have to. so bringing manufacturing back is that a freedom proposa they l and economically viable proposal? i teach economics at chapman university in vital ways show my student of manufacturing products that america still produces and exports. we are very much a when it comes to turbines, automobiles, scientific instruments it's fun to go down the list. we even export oil. so this idea that manufacturing is buying in america i think is a myth.
there's lots of dynamics going on. it's true that our government at all levels is imposed to regulations that have put us at a disadvantage. i wouldn't mind seeing those reduced so that we are more of a level playing field. >> lawyer there rusted out factories that you have seen as well? connectors will ease the transition period but akron ohio is the example of the rust belt that's totally transformed itself into you don't see the problems you see in detroit and other rust belt areas because it was activist and encouraged other industries to come in so it wasn't just the rubber
industry. i bring this up to my students so they know yes there is a transition period. at some point do they get overregulated and without? >> we have a fairly free-trade environment so for the textile industry these labor produced products with good technology were able to find a market in the united states and its decimated the clothing industry. what's not sugarcoat the
problems that we have. as i tell my students again when you look at labor, capital, land, which is the most flexible and can be retrained com, the tractor or the oil rig? when the demand stops what is the alternative, they just sit idle but labor can become void. but you can get retrained, get an education and go back to school. all of us are heterogeneous as we see in economics and labor is extremely flexible. unemployment can. >> some of the issues we've
heard about in the past campaign, income inequality, shrinking middle class. are those serious concerns in your view? >> the upper middle class that is not a problem but in a poor area it could be. you have to be careful with income and wage because i focus on quality, quantity. people say the wages have stagnated is that true for the goods and services? no we've seen an increase in all of those rather dramatically and we have people using products that they didn't use before and people getting away with the products that they have now. there is a dynamic that's going on and i think our standard of
living is rising even as the wages may be stagnating. >> your accomplishments and economics he talks about the term gross output. what is that? >> guest: i'm glad you brought that up because that's kind of my big thing that's happened. since the 1940s, we used one statistic to measure the economy, gross domestic product. there's a lot of misconceptions about what that is. it turns out when they decide to choose the gross domestic product they are only measuring final output, so clothing, suits, depending your hand.
what it doesn't count as the supply chain, what got you the suit, the tie. this activity is left out of gdp and this is a shock to most people that what we hav but whaa narrow view of how the economy is. it turns out the supply chain is bigger then gdp itself because as you move the production process along, it turns out that it's a huge sector in the economy. in fact, the retail final sales is only 20% of employment.
most people are employed in the manufacturing stage, the wholesale stage. so gross output is my measure i wrote a book called the structure production. they put up quarterly gdp statistics. in 2014, i think i would like to say i had some influence and they started to publish gross output on a quarterly basis just like gdp. i kind of look at it as topline and bottom-line. if you take an accounting course, when he publicly traded company comes out with earnings, its earnings report, there's a topline and bottom-line the
topline is total sales revenue and the bottom line is profits or earnings. every publicly traded company when they release these quarterly reports have the topline and bottom-line, sales and earnings. both are critical and no analyst would be worth the salt if you didn't look at both because you don't get your earnings of sales. they are integral. so going tso by and beholden ase advocated, we need the same topline and bottom-line for the national income accounting. it measures spending at all stages of production all along the way. and they just released the first quarter 2017 gross output of statistic today. it turned out to be about $41 trillion. that's more than doubled ep.
the government of statistic leaves out some wholesale trade. the gdp is 19 trillion. >> so it is the topline sales. it's the gross profits because it includes other aspects. since your economists have finally caught up with accounting and finance and now we have topline and bottom-line accounting. they don't come out at the same time but he indicated both at
the same time just like the financial firms of recorder is for the federal government will have every quarter. i think it is a real breakthrough. with gdp but as th is the bigget sector of the economy? we hear all the time consumer spending because it represents 7% gdp so the consumer drives the economy. consumer spending is the fact. its capital investment, it's the supply chain.
the gl is kind of a supply-side. we have our own statistic as a supply sider. the gdp is more on-demand as the consumer government demand and business demand. but the supply chain it turns out that business spending as a return of gross output is 60% of the economy. so, i argue based on the structure production business spending is the elephant in the room. gross output measures all spending activity not just final output.
what is the supply-side? for >> the >> the key to prosperity is innovation, on-chip viewership, savings, drift. i think ben franklin said best. one of my favorite founding father said there's three virtues you can be successful in my first as a business and a nation those principles are industry, thrift and frugality and prudence, prudent behavior.
you can't help but be successful this is kind of an adam smith ben franklin classical economics concept. bubut we have lost that supply-side view of the world and now it's more demand. we shifted from these views which isn't to say they haven't provided an important contribution. we need to encourage the industry and prudence and sadly if you look at the last
administration. it was full employment and he never ran a surplus except maybe the first year because he inherited from bill clinton the democrat into the improvements didn't matter that much either so we've got to live within our means of. not a single community bank is being presented since passed in 2010. there is dozens of banks providing bu that not a single .
>> as somebody picks up the structure of production as not an economist, will they understand this book? >> the understand introduction but it is fairly heavy it's meant to be written with economists to convince the heart and soul and mind and discipline before you reach out to the general public. it's in layman's terms in the topline of total spending activity in the economy.
gross output is growing faster than gdp that's a positive sign that they are doing really well. that's a sign you are in big trouble. it's been growing faster and i'm 100% invested in the markets even at these levels because the economy is recovering and has been during the obama administration. when it starts dropping or it doesn't grow as fast as gdp than we are in trouble because that is the supply chain telling us we better be careful.