Government, jobs, and the debt ceiling
In a July 2011 episode, Bob Zadek framed the economy, deficits, stimulus and the debt ceiling as the terrain on which President Obama was “perhaps most vulnerable,” noting that unemployment remained above 9%. He told guest Don Boudreaux that the government could “create jobs” by cutting the minimum wage in half or by hiring 10,000 men to dig a hole and another 10,000 to fill it in, but that such measures would be wasteful; in his view government can only create an environment in which businesses create jobs. He cited former Governor Granholm of Michigan, who said that morning on television that people want the government to focus on jobs, not on default. The Second American Revolution – NOW (2011)
Boudreaux, a professor of economics at George Mason University, called it a myth that government spending and government monetary policy create jobs. Entrepreneurs create jobs, he said, and they create jobs the freer they are, with wages worth more the freer the economy. He allowed that government can “create jobs” by reducing regulation, but compared that to saying government has stopped destroying jobs; hiring people to dig holes or to fight in a war employs them without producing anything consumers can purchase. The Second American Revolution – NOW (2011)
On the debt ceiling, Boudreaux argued that if the government managed not to raise it and prioritized its payments, paying off all its creditors, the credit markets would welcome the signal that Uncle Sam was serious about keeping his fiscal house in order. He said the political class and a gullible mainstream media had transformed borrowing in violation of a past commitment into an indication of responsibility. Zadek compared the situation to a business person who tells a banker he is on top of his cash flow, will stay current, and is cutting back on country club dues and superfluous marketing, versus one who is clueless, is not cutting back, and asks for more money. Zadek closed the segment by saying that if the debt ceiling is not raised there will not be a default but a strategic, politically motivated non-payment, and that politics cannot overrule sound fiscal policy. The Second American Revolution – NOW (2011)
The S&P downgrade and entitlements
A second 2011 episode turned to Standard & Poor’s downgrade of the United States’ credit rating. Zadek introduced the topic by asking whether Standard & Poor’s was correct and whether it had the right to do what it did, a question he said was being asked by the Senate Banking Committee. He said the discussion was loaded with code words and that he had spent the weekend breaking the code on the debate. His guest was Peter Suderman, an associate editor of Reason magazine who writes regularly on healthcare, tech policy and pop culture and had been a writer and editor at the National Review, the Competitive Enterprise Institute and FreedomWorks. Is the US the Next Enron? (2011)
The episode’s own description states that Zadek and Suderman discussed the downgrade by analyzing both the short-term political gridlock and the long-term fiscal challenges posed by entitlement spending, and that they explored historical precedents such as Canada’s recovery from a downgrade and debated the feasibility of solving the debt crisis through tax hikes on the wealthy versus structural spending cuts. The excerpt of the conversation itself breaks off at the point where Zadek begins the segment on political gridlock and fiscal insanity, so the arguments made in that discussion are not recorded here. Is the US the Next Enron? (2011)
Fiscal policy as a measure of freedom
In a 2022 episode on ranking freedom in the fifty states, Zadek noted that his guest’s book divides its analysis into sections, the first being fiscal policy, and asked why a reader should care about a state’s fiscal policy and its effect on freedom. William Ruger answered that fiscal policy is fairly intuitive as a freedom question: when the state uses coercive power to levy taxation and debt on a person and their children and grandchildren at a level above what is necessary to protect basic liberties and to do the fundamental purpose of government, it disrespects liberty and moral dignity by substituting its views about what a person’s hard-earned money should go for. He said fiscal policy is about 30% of their index, covering taxation at the state and local level, government consumption, government employment and debt, and that excessive taxation appears in places like Hawaii and New York. Ranking Freedom in the 50 States (2022)
Zadek interjected that taxation is a direct denial of freedom because somebody else will spend that dollar and decide how it is spent: it starts as your dollar, over which you have total dominion, and once taxed the government says you have no choice other than indirectly through the ballot box. Ruger described himself as a classical liberal or a statist libertarian rather than an anarcho-capitalist, holding that a limited government to protect lives and property must be supported in some way, but that both the federal and state governments are well beyond that level. He said government does not create wealth; individuals do in relationship with other individuals, and that as long as wealth is justly acquired and justly transferred, individuals should be allowed to keep, utilize and expend it as they see fit, a point he connected to Robert Nozick’s Anarchy, State, and Utopia and the issue of distributive justice. Ranking Freedom in the 50 States (2022)
Asked why voters in poorly ranked states tolerate the surrender of freedom, Jason Sorens said some people are willing to give up some freedom in exchange for other goods, and that the index is for everyone who cares about freedom, not only libertarians or anarchists. He said even a hardcore socialist might consider taxing people at 100% unjust, and that taxation is a cost, so achieving the same goods with lower taxation is all to the good. In high-tax places such as New York, Hawaii and Maine, he said, many voters are willing to pay higher taxes for more public services and vote for politicians who want that; states that vote Democratic in state elections tend to have less economic freedom, and changes in voting behavior cause changes in economic freedom, as with West Virginia’s shift from strongly Democratic to strongly Republican and its predicted and observed increase in economic freedom. He also described a residual of cronyism or corruption, in which tax dollars are systematically more likely to be wasted or given to private companies as subsidies, in states with more economic regulations on starting a business or entering a profession, higher lobbyist-to-legislator ratios and more corruption convictions. Ranking Freedom in the 50 States (2022)
On methodology, Ruger said the index weights variables according to the value of freedom affected by a particular policy to those whose freedoms are at stake, using a dollar estimate of the benefits of a shift in a pro-freedom direction, with a boost for things related to basic constitutional rights. Fiscal policy works out to about 30%, with personal freedom about 33% and regulatory policy about 35%, and within those categories are variables from government employment to raw milk sales, gun laws, cigarette bans and occupational licensing. Ranking Freedom in the 50 States (2022)
Ruger gave the top state for freedom as New Hampshire, followed by Florida, Nevada, Tennessee and South Dakota, noting that Florida had been number one in the printed fifth edition and that Florida does especially well on fiscal policy while New Hampshire does better on personal freedom. The bottom five were New York, Hawaii, California, New Jersey and Oregon, with New York the worst by a wide margin. He cautioned that people think of New York as a free place, but that the heavy hand of government pushes you down, and that consumerism should not be confused with freedom. Sorens added that every state does some things well and some badly: New Hampshire is much worse than average on zoning regulation, Florida has been extremely restrictive on criminal justice, Nevada lacks school choice, and South Dakota does well on regulatory policy but carries legacies of income taxes from the New Deal era. Ruger said the Northeast, the Mid-Atlantic and the West Coast have real struggles with freedom. Ranking Freedom in the 50 States (2022)
Across episodes
The topic recurs across three episodes spanning 2011 to 2022, and the excerpts show no development in the underlying argument: Boudreaux in 2011 and Ruger and Sorens in 2022 both treat taxation and government spending as coercive limits on liberty, with Boudreaux applying the frame to federal jobs and debt-ceiling policy and Ruger and Sorens applying it to a quantitative index of state fiscal policy. The 2011 Suderman episode touches the same federal terrain of downgrade, gridlock and entitlements, but its excerpt breaks off before the discussion is recorded.
What the sources do not cover
The excerpts do not report what Standard & Poor’s said in its downgrade rationale, what Canada did to recover from its own downgrade, or how the Senate Banking Committee’s inquiry turned out. They do not state the outcome of the 2011 debt-ceiling standoff, the terms of any agreement, or the specific taxes and programs at issue in the tax-hikes-versus-spending-cuts debate. The state rankings are given as results without the full underlying tables, and the excerpts do not name the book being discussed or its authors’ affiliations beyond the speakers’ own descriptions.