Venezuela as a case study in violation
Fergus Hodgson, discussing Venezuela, reports that in the formal or open market there is no free market anymore and no real capitalism, and that at most there is some cronyism. He says that anyone who believes in free-market economics would find a place like Venezuela makes your head explode, and he enumerates the violations: no stable currency, no property rights, arbitrary confiscation, and price controls on basically everything, in particular exchange rates with foreign countries. He attributes an earlier formulation to Jacob Hornberger of the Future of Freedom Foundation, that the real free market is the black market. Hodgson says the element of socialism was always present in Venezuela through government healthcare, education and housing, which he opposes and thinks should be done privately, but that under the Chávez regime these were expanded to favored groups and the rule of law was broken down, with property rights violated at will and confiscations selected personally and staged on television. He reports that more than a million Venezuelans have left the country since 1999, with exile communities in Florida, in Doral near Miami, and in Ireland, and concludes that every free-market principle is being violated, which is why there is no economic growth and no investment Venezuela on the Brink with Fergus Hodgson (2017).
Voter competence and the Keynesian alternative
Bob Zadek, in two separate episodes, uses the 2008 election of President Obama as his example of an economic issue voters cannot adjudicate. He says the country was in the economic pits in 2008 and Obama ran promising to fix the economic doldrums, so that in effect the vote was on whether Keynesian economics or free-market economics was the right solution, and he asks how a voter could learn the economics necessary to make that decision. He calls that an insane standard by which voters should select a president, because they simply do not have the information. In both episodes he pairs this with a quotation he attributes to Winston Churchill, that the best argument against democracy is a five-minute conversation with the average voter, and he insists the point is not to make fun of the voter but to identify inherent weaknesses of the system: no sane voter could spend the time necessary to understand all the issues, so the typical voter is incompetent to decide many of them, not from inherent weakness but from lack of time or inclination. In the earlier episode he directs the discussion toward Randall’s book and the transition from a country that values liberty to one that values democracy, saying we are hitching our wagon to the wrong horse [[episodes/john_marini_on__unmasking_the_administrative_state|John Marini on Unmasking the Administrative State (2019)]] Randall G. Holcombe on Liberty in Peril (2019).
Defining whether a market “works”
Bob Zadek tells Lawrence J. McQuillan that any governmental measure is artificial if artificial means interfering with natural supply and demand, that minimum wage laws are artificial impediments to economic growth, and that any regulation of the free market is artificial because artificial has only one meaning, outside of the free market. He also singles out the phrase “it was working” as mischievous, arguing that something cannot work or not work in the abstract but only according to criteria, and asks what “working” means when McQuillan says the market once worked for housing and then stopped. McQuillan answers that to an economist it means the market allows entrepreneurs to invest new capital until they no longer receive what economists call normal rates of return, at which point additional investment stops or slows, and that capital can flow freely from one use to another until that point, after which it moves to other industries or sectors. He says impediments imposed by government artificially restrict the movement of capital and investment in housing in California, and that to an economist schooled in free-market economics as he is, this is an artificial impediment to a market working efficiently and correctly, producing housing and rental prices that are sky-high and continue to increase Homelessness & Housing Policy in the Golden State (2020).
Economics, politics and the “science” claim
Bob Zadek proposes to Thomas DiLorenzo that economists present themselves to government as scientists who have discovered secrets through the scientific method, and that government then selects which economist to believe, Keynesian or free-marketeer, so that economists get to make the rules by persuading those who make the rules to follow the science. DiLorenzo calls that about 90% accurate and describes a symbiotic relationship between many economists and politicians, in which economists provide plausible rationales for bigger government, more taxes, more interventionism and more socialism. He offers Larry Summers, the former Treasury Secretary who taught economics at Harvard and served as its president, as an example, saying Summers told CNN that the cause of inflation was the January 6th protests in Washington, D.C., and calls him the poster boy for an economic prostitute. He adds Paul Krugman, who taught economics at Princeton for many years, saying Krugman told CNN we are not in a recession even though the Commerce Department had said real GDP fell for six months in a row, which he says fits the textbook definition used for generations. DiLorenzo dates a shift to the 1930s, when economists began to understand there was more money, fun and prestige in running a government agency or advising a governor or president than in standing before a classroom of undergraduates, and became more interventionist-minded out of self-interest. Bob Zadek extends the parallel to COVID and “follow the science,” saying government can follow the free-marketeer scientist and still follow the science, so that the battle is between competing opinions of different scientists each defending an interpretation of the data Lies, Damned Lies & the Inflation Reduction Act (2022).
Taxation, wealth transfer and pedagogy
In the same episode, Bob Zadek calls it dishonest to describe the 87,000 new tax collectors as anything other than a tax increase, arguing that what people care about is how much they pay rather than what rate the statute states, and that paying more because a deduction was disallowed is still writing a check that was not written before. He says the measure transfers wealth from the private sector to the government and asks DiLorenzo to address who should decide how a dollar is spent: government, deciding on the politics of it all, or 300 million Americans making private decisions that collectively dictate how the economy goes. DiLorenzo answers that in the private sector a business that serves customers better makes money and one that serves them poorly loses money, whereas in government failure is financial success, because the worse the performance the more tax dollars are taken on the argument that failure came from insufficient money. He cites NASA receiving a 50% budget increase after blowing up a rocket ship, and a Maryland grant of $100,000 to a charity for Russian refugees that produced one part-time twenty-hour-a-week secretary job while about thirty people enjoyed an expensive lunch at taxpayer expense. Bob Zadek then says selling free-market economics to high school and college students is a hard sell, and DiLorenzo answers that students resent learning they have been lied to or fooled, that real-world examples contradicting their socialist professors turn many around, that one student who had donated to PBS told him he would never give another dime, and that he used Hayek’s Road to Serfdom as a textbook, adding that socialism is easy to sell if all you talk about is a socialist dream world rather than the real world Lies, Damned Lies & the Inflation Reduction Act (2022).
Across episodes
The 2019 episodes present Bob Zadek’s voter-competence framing of the Keynesian versus free-market choice in nearly identical language, the earlier one tied to Randall’s book on the liberty-to-democracy transition and the later one to the same book discussion, with no development between them beyond the dropped reference to key moments in American history. The two 2022 segments of the DiLorenzo episode move from the epistemology of economic advice to the mechanics of tax collection and the classroom, with DiLorenzo supplying the concrete cases and figures and Bob Zadek supplying the framing questions.
What the sources do not cover
The excerpts do not define free-market economics as a school or set out its founding principles, nor do they name the statutes, bills or cases behind the policies discussed. The Venezuela segment ends mid-sentence at a section heading, and the DiLorenzo episode breaks off before the guest answers the question about the standard by which free-market economics is judged better than alternatives. No excerpt states the outcome of any election or the content of any court holding.