Capitalism vs. Socialism: Hong Kong Was a Rock With 750,000 People on It | Lawrence Reed

[00:00:00] Welcome back to another episode on economics. This is the second in a four-part series about economics. We are going to be joined today by Lawrence Reed, who is an economist and an author. I'm Jenny Beth Martin, and this is The Jenny Beth Show.

[00:00:29] Welcome to The Jenny Beth Show. Thank you so much for joining us today, and we are getting right back into it. And today's session is going to be on the systems of economic organization. Lawrence Reed, thank you so much for joining us. My pleasure. Thank you, Jenny Beth. So in our last episode, we talked a lot about the fundamentals of economics, and now we're going to be talking about the systems of economic organization. What does that mean exactly?

[00:00:55] This refers to how your economy is set up, whether it is centrally planned, with top-down mandates, or whether it is more spontaneous, in which case prices, supply and demand, entrepreneurship,

[00:01:12] are determining what's produced, not a central planner. We call that capitalism. But oddly enough, the man who came up with that term was one of its fiercest critics, Karl Marx, who called what we refer to as free markets, he called it capitalism. Everybody's for capital in the capitalism. Everybody's for capital in the sense that everybody would prefer to dig the foundation for a home with a backhoe instead of a spoon.

[00:01:40] That's to say you prefer capital-intensive opportunities as opposed to manual labor. Capital is a complementary form of a factor of production, just as labor is.

[00:01:55] But capitalism today means a free market where government provides the broad rules so that we punish deception and fraud and force, but otherwise people are free to run their own economic affairs. I think it's a good way to view capitalism is this way. It's what happens when you leave people alone.

[00:02:21] And what I mean by that is just imagine if there wasn't a top-down mandate-driven system, nobody with concentrated power who told everybody what to do, so people were then free to do as they wish. Well, they would naturally and immediately engage in capitalist activities. They would start to produce. They would engage in the division of labor. They would look for opportunities to trade to improve their well-being. They would create factories, hire people.

[00:02:51] I mean, capitalism doesn't need somebody at the top to order it into being. It just needs free people. And then they begin to do capitalist things. That's very different from capitalism's opposite, which is socialism, which is a kind of contrivance. It requires somebody to kind of sketch out how the economy ought to run and what the orders are that the powers that be should give to market participants and so forth.

[00:03:20] But capitalism, it's not a contrivance. It's natural. It's what happens when you leave people, peaceful people, alone. And what kind of differences capitalism made in the world? You know, for most of world history, we did not have what could be fairly termed capitalism.

[00:03:40] For most of history, we had some form of socialism with concentrated political and economic power often wielded by a monarch.

[00:03:52] It was only around the middle of the 18th century, thanks to ideas from the Enlightenment, that capitalism began to take hold, that the state or government began to shrink and allow more freedom of opportunity for participants in the marketplace. You look at the outcome of that, you find it's like a hockey stick. The production of the world just went through the roof.

[00:04:21] It had been stagnant for centuries. Yet all of a sudden, around 1750 and for the next 200 plus years, you find that productivity per worker grows at unprecedented rates. More products are made better than ever before and coming from all over the world, improving everybody's standard of living.

[00:04:46] People in 1900 were living so much higher in terms of their standards of living than people were in, say, 1700 or 1750. That was unprecedented in the world economy. And so capitalism made an enormous difference. It lifted out of poverty literally billions of people. There's been no other period in history where anything remotely like that has happened. Elaborate on lifted people out of poverty.

[00:05:16] By lifting people out of poverty, capitalism, trade, free markets made life easier for people. Think of the inventions of the 19th century that made life so much easier, that made production so much more fruitful. It lengthened lives. It improved lives all over the world.

[00:05:45] And to such an unprecedented degree that historians have a hard time finding any period in the history of the world that is comparable in terms of the growth of the economy that we've seen under capitalism.

[00:05:59] One of the things, as you were just saying all of this and talking about the improvements and more products in the last 200, 250 years, that I always think of that's a very visual imagery.

[00:06:16] Is that we went from walking in horse and carriages and some ships that were mostly sail ships to trains, submarines, airplanes, aircraft carriers, rockets, the moon, and now satellites in space all the time.

[00:06:41] So where it used to take weeks or months to convey a message from one person to another. It's instantaneous. Yeah, yeah. Around the entire world. And just in our lifetimes, look at the remarkable change. I remember being baffled when the fax machine appeared. Weird.

[00:07:02] I couldn't believe you could put a piece of paper in a machine, you know, in your phone and it would come out at somebody else's phone looking the same. Well, that's obsolete already. Yes. We haven't been using fax machines in years. That's the nature of what happens when people are free to accumulate capital, to benefit from the rewards of their economic decisions. They go to town. All you have to do is get off their backs and out of their way.

[00:07:29] That's why I say capitalism is a natural development. It's what happens when you leave people alone. Whereas every other system involves somebody sketching out some plan and then imposing it on people. And then when you were talking about lifting people out of poverty, before the way that capitalism works and societies that use capital, we had monarchs.

[00:07:59] And the monarch held all the wealth. And even if you were in the country, you were still subject to the monarch and your belongings really were part of the monarch. Your inventions belonged to the monarch. So in this kind of society where free markets exist, even if you have nothing, if you work hard and find a way to trade with others,

[00:08:25] you can find a way to make your life better as long as the government isn't interfering so much that it prevents that from happening or bullies and tyrannical forces. Yeah, exactly. In the Middle Ages, before the birth of capitalism in the middle of the 18th century, standards of living didn't change visibly from one generation to the next.

[00:08:47] Unless maybe you were at the very top, the political powers that be who had the power to tax and to make war on another country and take their stuff. But for the ordinary person, living standards had hardly changed for generations. But all of a sudden, as enlightenment ideas began to spread and we said to government, hey, you're supposed to serve us. So you've got to get smaller and get out of our way. All of a sudden, when that happened, people started producing immensely.

[00:09:18] And so we owe a great debt, I think, to the period of capitalism that we still have, although socialists are making a lot of inroads. Yeah, they really are. Give some examples of where capitalism rescued a country or saved a country. One of the best examples is in Germany right after World War II. Now, think about it. Germany had been a socialist country at least since Adolf Hitler came to power in 1933.

[00:09:47] The name of his party was National Socialist German Workers' Party. So he believed in the concentration of political power and the direction of the economy by central planners. And then he took the world to war. And by 1945, Germany was flattened, defeated, demolished, demoralized, divided, and occupied. What a low point for any country to be in.

[00:10:14] And yet a decade later, we have – I still remember in the late 50s hearing it from my teachers – the German economic miracle. What was that? Well, after World War II, for a brief time during allied occupation, we didn't allow the German economy to do much in a way of recovery. But then we backed off and let them do their thing.

[00:10:39] And a man named Ludwig Erhard worked his way up, became finance minister, ultimately chancellor of Germany. He understood that free economies, that capitalism would be the only way that a devastated and formerly socialized German economy could ever recover. So one night in 1948 or 9, he went on radio to speak to the country and very famously said,

[00:11:06] as of tomorrow morning, there will be no more price controls, no more rationing. We're cutting taxes. We're reducing tariffs. We're getting government off your back and out of your pocket. We're going to rely upon the magic of a free economy to take this devastated country and give it life again. And within a decade, Germany became the wealthiest country in Western Europe. How does that happen? Well, not through socialism.

[00:11:34] That's what they had suffered under for many, many years. Instead, they relied on free markets and completely recovered. You also have the example of Hong Kong. Oh, and that happened in West Germany, right? West. And right next door in East Germany, the exact opposite was happening. Yeah. So you kind of had a real life laboratory. East Germany, occupied by the Russians, went in the other direction and became a stagnant, controlled economy. The people wanted to flee from.

[00:12:03] But West Germany prospered, and that was because of Ludwig Erhard and his reliance upon capitalism. Hong Kong was just a rock with 750,000 people on it at the end of World War II. It had been occupied by the Japanese. They didn't have much in the way of resources. But they did have a man named John James Copperthwaite, who worked his way to top positions in Hong Kong.

[00:12:30] And he was a believer in capitalism and free markets. And while the mother country, Britain at that time, was going in a socialist direction that would make it the sick man of Europe by the time of Margaret Thatcher, who had to fix it by undoing that, Hong Kong under Copperthwaite went in a free market direction. His argument was, we're just a rock. We haven't got anything here that would prompt anybody to come or make investments.

[00:12:58] So what we're going to do is we're going to have the freest economy in the world. No tariffs, no minimum wage, no government interference, just a basic rule of law, punish the wrongdoers and otherwise leave people alone. And Hong Kong became the richest enclave in the world before China began to meddle in the economy of Hong Kong. But still, there are no examples in the reverse direction.

[00:13:25] Those are just two, but there are two of many examples of where socialism screwed up an economy and then capitalism had to fix it. There are no examples in the reverse where capitalism ran an economy into the ground, private enterprise ruined a country, and then socialism rescued it. There are no examples in all of history in that direction. What is socialism?

[00:13:51] You talked about it being contrived, and it's obviously making inroads here in America, as you mentioned a minute ago. It is, in its essence, the concentration of power in the hands of a state for certain objectives. And socialists will differ among themselves as to which objective they prefer to prioritize. But one objective of socialism is the redistribution of income.

[00:14:17] And some socialists focus on that almost to the exclusion of other things. They're just interested in taxing the rich and giving the proceeds to the poor or the constituencies they're trying to buy. But then another form is simply central planning of an economy, where you have bureaus and bureaucracies that issue orders to the people in the economy, to businesses. Make this and make it at this price and sell it over here and so forth.

[00:14:47] They plan an economy with top-down mandates and orders. That's a kind of socialism. Another is a kind of Marxist version, which is, or Marx believed in this, government ownership of the means of production. The factories would not be, under his way of thinking, owned privately by private investors, stockholders, and so forth. But instead would be owned by the government.

[00:15:15] The government would have its own steel mills, its own auto companies, and so forth. Because Karl Marx said that that would be the best way for those companies to be run. A lot of problems with that, but that is a form of socialism. Which is what we're seeing with grocery stores in New York. Yeah, exactly. It's not just top-down planning. It is the government coming in and owning. Actually getting into the business themselves.

[00:15:44] Okay, just a second ago, you talked about how there are no examples. You said there are examples where capitalism has saved countries, but there are no examples in the opposite direction. Now, what some people, I think, would say right now today as they look at America, well, you tell me. Right now, what are we living under in America? It's best described, I think, as a mixed economy. We are by no means a pure capitalist economy.

[00:16:13] Far from it. We have all kinds of government interventions. It spends an enormous amount of money. It runs up a debt that all of us are obligated sooner or later to pay. So government is all over the place. But we still have relatively free prices. It may differ from state to state, but you can still, with relative ease, start a company and invest as you choose and grow the company, hire people.

[00:16:43] We have more and more regulations that affect how free you are to do that, unfortunately. But we still have major elements of a capitalist economy in the United States. Okay. So what I was going to say, but I wanted you to define that, and I agree, we're not living in a purely capitalist society right now, is that people would say, well, we can come in and fix all the problems in America.

[00:17:13] And I think we would hear from the left, and I've heard this, that people on the left will say, well, capitalism has destroyed America or made it unfair or the rich have more and the poor don't have as much or whatever the arguments may be at the moment. Affordability, which we talked a lot about on the last episode, and we probably will in another.

[00:17:36] We don't have – so they may say, see, we can come in and use socialism to save what capitalism broke. But what is actually happening is they're going to add more capitalism on top of – I mean, they're going to add more socialism on top of the socialism that has already harmed the capitalist society. Yeah, and they never seem to be interested in the failures of previous socialism. I would say, well, what about the schools?

[00:18:01] You know, I mean, it's been commented on over the last 40 or 50 years that our schools that are government-run are, in many places, disasters. Better in some places than others, but still overall, public schooling, a government venture, suffers from massive cost and underperformance. Why don't they fix that?

[00:18:27] And there are a lot of ways to do it, I think mostly involving more private sector involvement than government. But socialists don't seem to care about fixing what they've already screwed up before they move on and try to screw something else up. The post office is a socialized operation. Fortunately, we haven't prevented competition. So we have UPS and FedEx and now email that gets around the archaic government post office.

[00:18:58] But at the Department of Motor Vehicles, whoever thinks of that as, oh, that's the way we ought to run our businesses. So we see government failure all around us. And what is mind-blowing to me is that how often socialists just ignore that. They don't want to fix what they're already involved in. They just want to move on and screw something else up. Yeah, they sure do. And they paint it in such flowery terms, and they're very good salesmen.

[00:19:26] For people who don't like capital, they sure are good salesmen. What are other examples of socialism's track record? Well, it's pretty awful. Well, I'd be hard-pressed to give you a single example that you could label success, no matter what form of socialism you're talking about. You know, the Pilgrims tried a form of socialism in their first couple of years at Plymouth Colony in the 1620s.

[00:19:53] Theirs was a kind of communal redistributive socialism where they would put everything they produced into a common storehouse and then divvy it up equally. But within a couple of years, Governor Bradford said, we're going to starve with this. Because he noticed that when people are rewarded irrespective of their effort, they give up on the effort. They just line up to claim what's coming to them. They feel entitled, and they don't show up for work in the morning.

[00:20:23] And so that had to be abandoned. And that's been the case throughout history. We had something like 150 communal utopian socialist communities in America in the 19th century. Every single one of them flopped. And none lasted more than five years. They involved people coming together, say, well, we won't have greed and competition. Everybody will be equal economically.

[00:20:49] Everybody will receive just what they need regardless of their effort. And it falls apart. And the reason is human nature. Human nature is such that we tend to be creatures of incentives and disincentives. And if you're rewarded irrespective of your effort, you're not going to put forth very much.

[00:21:14] I hear people say socialism has failed everywhere it's been tried. Yes. Explain that. Well, you know, in the 20th century, the first national experiment in Marxian socialism was the Soviet Union. And they came into power with all kinds of promises. We're going to make sure everybody's equal.

[00:21:40] And then we discovered that when you concentrate political power, even with all the flowery rhetoric about how we're going to help people and give them stuff, concentrated political power is inherently corrupting. And people who have it don't want to ever give it up, even if things that they try are failures. And so the Soviet Union ultimately collapsed because socialism doesn't work.

[00:22:06] And people get fed up with the tyranny and the inefficiencies and the scarcity of goods that it inevitably produces. So the whole Soviet experiment involving not just Russia, but many other countries that were satellites and practitioners of that same socialist system, they all went bust. And we have examples in Cuba and Venezuela. Yeah. Explain Venezuela.

[00:22:36] Can you do that? You've been to a lot. How many countries have you been to? Ninety-six. Ninety-six. You've got to get 200. You've got to make that around. Yeah, maybe next year. I'm kind of hoping. But you probably have been to Venezuela. So what happened there? Well, Venezuela's economy has always been mixed. It had major elements of capitalism and some redistributive programs and crony capitalist entities in times past.

[00:23:06] It's never been purely a free capitalist economy. But nonetheless, there was enough private entrepreneurship that Venezuela, especially with its vast oil deposits, became one of the richest countries in Latin America by the 1990s. But that wasn't enough for the leftists like Hugo Chavez, who said, well, we've got inequality.

[00:23:30] Now we need to take from some and give to others and buy off people by giving them goodies that we take from the rich. And a lot of people fell for that. And then we learned rather quickly that even though he came to power, quote, democratically and democratic socialists like to point that out. Socialism was always at war with the first part of that phrase, the democracy part, because when you concentrate power, you then have politicians who don't like dissent.

[00:23:59] They try to shut down competing voices. It's not enough to control the economy. They take it upon themselves to try to control everything else. So the democracy part ends up going out the window. That was true in Venezuela. And they've now had two socialist dictators in this period since the late 1990s. One of them, of course, Donald Trump has in a New York jail right now.

[00:24:27] But socialism in Venezuela was an absolute disaster. About 10 million people fled the country. They always flee socialism. The Berlin Wall was built to keep people in and keep them from escaping, not to keep others from breaking in. And so it just flops everywhere it's tried. But so many socialists will not admit to that because they'll say things like, well, it wasn't true. Socialism will get it right the next time. Right.

[00:24:59] Or it was the U.S. embargo and U.S. intervention that that caused the that come up with all kinds of reasons, never self-examining their own failures to admit that they brought about the difficult circumstances. So Venezuela is another failed socialist experiment. What about what I hear often now is, well, China, China's communist, but they're not really communist. And China's working.

[00:25:28] So what would you say to that? Well, under Mao Zedong, China did go full communist. It was thoroughly socialized and Mao was a brutal dictator, brutal. And something like 60 million people killed under his dictatorship. But by the time he was gone in the late 70s and then in the early 80s, you had a new generation of Chinese leadership

[00:25:57] who were maybe a little less doctrinaire and kind of looked around and said, you know, this country is a disaster. We have to change. We have to. And so you had Deng Xiaoping who came to power and he was much less ideologically socialist. He said, who cares what the what color the mouse is? Or no, how did he put that? Who cares what color the cat is if it catches mice?

[00:26:25] In other words, whether we have socialism, communism or a mix of the two. So he started to free things up in the late 80s. And the reason that China has done so well since is not because of the socialism they had, but because of the capitalism they finally allowed. So it's somewhere between. It's still a socialist economy with capitalist elements that are bailing out the socialist side of things.

[00:26:52] But you can't forget the fact that for 40 years under socialism, they went no place. Not until they adopted elements of capitalism did they start to grow. And they still are rather dictatorial. Oh, yeah. They're definitely it's not a free country. No, politically speaking, it's a complete dictatorship. They do not allow the competition of a multi-party system.

[00:27:20] Some people say Jesus Christ was a socialist. You wrote a book about that very thing. What is the name of the book? The book is titled Was Jesus a Socialist? And was he? No, he wasn't. And I point out in the book that, you know, when you use terms like capitalist and socialist to tag somebody, especially someone from 2000 years ago, you got some inherent problems.

[00:27:49] I mean, those systems, those terms didn't even exist until the 19th century. So I don't say that Jesus was a socialist for reasons I'll get into in a moment. I don't say he was a capitalist either. Because there's a lot of baggage to those terms, different understandings of what they really mean. But if you were to ask me, did Jesus ever suggest that he was sympathetic to the ethics or the economics of socialism?

[00:28:18] I would give you a most emphatic no. Those objectives that we talked about of socialism, central planning, redistribution of wealth, government ownership of the means of production. Jesus never suggested any of those things. You won't find anywhere in the New Testament where he says, oh, turn that over to the government.

[00:28:38] Even when it came to helping the poor, if he came back today and spoke to an audience of people and said, you know, I was interested in the poor. What did you do for them? If you raised your hand and said, well, I voted for the politicians who said they would take care of that. I can guarantee you he would not be impressed. He would likely say things like, wait a minute.

[00:29:00] I said for you to do something, not to pawn it off to the taxpayer or have government do it at twice the cost. He would say also, you're saying that you are robbing Peter to pay Paul and you think that's the advice I gave? He would be appalled with that. So there was a passage in the book of Luke where a man confronts Jesus with a redistribution request.

[00:29:31] Luke 12, 13 through 15. The man says, Master, speak to my brother that he divideth the inheritance with me. In other words, I didn't get a fair shake. I need more. Equalize the wealth. You know, take it from him and give it to me. See, Jesus did not say anything like, oh, we'll have to look into it. Oh, what a shame you didn't get the same. Uh-uh.

[00:29:54] What he says to the man is, man, who made me a judge or divider over you? Who made me a judge or divider over you? Then he goes on to say, beware of covetousness. So he turned down a request to redistribute wealth. There is not a passage in the New Testament where he suggests anything socialistic.

[00:30:21] He tells parables, about 40 of them, three of which have some economic lessons or content. And they're very anti-socialist. One is the parable of the talents, where he tells the story of a man who owns an estate. He's a wealthy man. And he's going to leave for a period of time. And he gathers three of his servants together and says, I'm going to divide up some wealth between the three of you to watch over while I'm away.

[00:30:50] And when I get back, we'll see what you did with it. And according to the parable, when the man comes back and he brings those three men before him, Jesus says to the first man, what did you do with what I trusted you with? And the first man says, oh, I buried it in the backyard. So I have every bit what you gave me, but no more. And Jesus has the estate owner criticize him. What? You didn't magnify the wealth in any way?

[00:31:19] The heck with you. Then he goes to the second man. And that man says, oh, I took what you trusted me with and I magnified it five times. I invested it and I've got five times what you trusted me with. He's praised in this parable. The third man says, and the numbers may be slightly off, but the principle is what matters. He says, well, I turned it into 10 times as much by the investments I made with it.

[00:31:45] Jesus says the estate owner in that parable praise the third man. And then he says, let's take the money from that first guy and give it to this third guy because he knows how to magnify wealth. Well, you'd never hear a socialist say anything like that. No, they'd say the exact opposite. Exact opposite. Take it from this third guy was greedy. Let's take it from him and give it to the first guy. Well, that's a parable of Jesus Christ himself.

[00:32:12] Also, he told the parable of the Good Samaritan where a man is on a road and he comes across another man who has just been beaten and robbed, perhaps within an inch of his life. What does the Samaritan do when he sees this desperate man? He does not say to him, oh, you need a social worker or there must be a government program for you. Good luck. See you later.

[00:32:38] No, he of his own free will chooses to help the man in need at his own expense and through his own free will. That's why we call him the Good Samaritan. If he had said to the man, well, put your name into the government program, we would not know him today as the Good Samaritan. We'd know him as the good for nothing Samaritan. So, Jesus was interested in what was in your heart, not in your bank account or not in somebody

[00:33:08] else's bank account that you somehow got access to. So, there are many examples. We can go through some of the others, but many examples of the words of Jesus that are not sympathetic, whatever, to the notion of socialism. What about what he said to the money changers? Yeah, he famously drove the money changers out of the temple in Jerusalem. And some socialists, I've heard them use that example.

[00:33:37] They say, well, see, Jesus didn't like people who make money. He chased them away. But keep in mind where this was. Jesus never changed or chased money changers from a bank or from a marketplace. He was chasing them from God's house. And there's good reason to believe that they were deceptive in some ways. They were harming some of the people who were trying to get into the temple for worship.

[00:34:06] You wouldn't show up at a funeral with a kazoo and start playing Happy Days Are Here Again. If you did, you'd have some people say, get out of here. This is not the place for that. That's what Jesus was effectively saying when he drove the money changers from God's house, not from a marketplace. And then the workers in the vineyard. Yeah, this is another parable where Jesus talks about a man who owns a large estate, and he needs to have the grapes brought in. Apparently, it's a vineyard.

[00:34:36] And he hires some people at the start of the day and tells them, if you will work for me and bring the harvest in today, I'll give you a denarius, which was a Roman coin. And so they go out and work. And then about noontime, the vineyard owner discovers, oh, I need more workers in the field if we're going to bring all those grapes in. And so he hires another group and says, if you work the rest of the day, I'll give you a denarius.

[00:35:05] And then late in the day, with maybe an hour of daylight to go, he still needs more workers in the field. So he hires some others who may have worked someplace else for the day. He gets them out in the field again for an hour, and he says, I'll pay you a denarius. Then later, according to the parable, all these workers are gathered expecting to be paid, and some of them are beginning to grumble.

[00:35:31] The ones who worked all day for the same amount that the other ones were paid for an hour, they don't think that's fair. And what does Jesus have the vineyard owner say to them? He says, it's my money. Didn't I give it to you as I promised? Didn't you effectively sign a voluntary contract? There's no dishonesty here. You agreed to work a certain number of hours for a certain degree of payment,

[00:35:59] and I was honest in my payment to you. So get out of here. Well, that's a defense. That parable is a defense of the right of contract. It's a defense of private property. And it's, I think, a defense even of supply and demand. Presumably that vineyard owner had to pay more at the end of the day to get some workers to go back out for another hour.

[00:36:21] The Ten Commandments have a couple of commandments that really affect economics. Yes. Thou shall not steal. And also not to covet. Yes. And when we started out in the last episode, you talked about how there are limited resources and unlimited wants.

[00:36:45] And I think that what you were saying is that economics can help solve that issue with human nature and just the laws of nature in the world itself, the limited resources. And God was saying, don't covet. Yeah. We do. We covet. We're jealous people.

[00:37:12] It is part of our nature and part of what we have to work on constantly. I mean, maybe not constantly, but it's something that creeps up and that we do have to work on. And I think it's a commandment because it can be so destructive. Yeah. It seems to me that socialism pulls from that and leans into that jealous nature and says,

[00:37:41] oh, you don't like what they have. Well, we're just going to take from one person and give to another. And so it's leaning into jealousy and it's theft also. That's a socialist tactic. They always vilify whoever they want to steal from first. They vilify them, call them, you know, the filthy rich or whatever. And then it becomes easier for them to use government power to take their money.

[00:38:10] Jesus said he came into the world to fulfill the law. And by that, he meant the Mosaic law, the Ten Commandments being at the core of that. And as you point out, Jenny Beth, the Eighth Commandment says thou shalt not steal. The Tenth says thou shalt not covet. Both of those end with a period after the word steal and after the word covet. It doesn't say thou shalt not steal unless you really want it.

[00:38:39] Thou shalt not steal unless the other guy has more than you do. Or thou shalt not steal unless you absolutely are convinced you can spend it better than the person who earned it. And it doesn't say thou shalt not steal unless you hire a politician to do it on your behalf. It says thou shalt not steal, period. And I think, you know, it's hard to say, hard to read God's mind. But my guess is the stealing commandment is number eight.

[00:39:07] But when he got to number 10, he may have thought, you know, humans seem to look for every kind of reason to steal. Maybe I need an extra commandment to kind of reinforce the eighth. And that's when he said thou shalt not covet because coveting is often a reason to steal. And I think that it helps reinforce the argument that you're making that Jesus is not, was not a socialist.

[00:39:37] That's right. Yeah. He never said, he never advocated turning something over to the government because the politicians will plan it better. I mean, he was interested in you, the individual. What was in your heart? When he talked about helping the poor, he never said do it by federal program. He was talking about, you know, what you do to volunteer in a soup kitchen maybe or how you take care of the truly needy.

[00:40:06] If you said to him, well, I help the poor by creating a business. I hired them. I gave them jobs and income. I produce products. I invented things. I lengthened their lives with life-saving drugs. I think he would say that's what I had in mind because you can do all that without harming anybody else, without taxing or stealing from anybody. Through your initiative, you've helped solve poverty.

[00:40:33] The early church, they were acting in kind of in a communal setting, weren't they? So sometimes I think people look to that as an example of saying, oh, no, the New Testament says be socialist, be communist, be in a commune. Yeah, I've heard this quite a lot.

[00:40:53] It's in the book of Acts where some early Christians in one place in Jerusalem did organize themselves in a kind of communal, socialistic way where they sold their possessions. Not all of them, but it turns out many of them kept their homes. But they sold many of their possessions and used the or put the revenue in a common pot, which they then shared. Well, Jesus himself never recommended that. That was a choice that some early Christians made.

[00:41:24] And I can see where they might have thought, hey, let's do that because we're a new faith. We're challenged all around us by government power and by prevailing orthodoxies. We can't look to anybody as though we're corrupt in any way. So otherwise, we might have somebody say, you're just in it for the money. So they may have adopted that for that purpose. But the bottom line is, it's not a commandment of Jesus.

[00:41:47] Most Christians who have ever lived have not lived under that kind of communal socialist arrangement. And Paul, by the way, in the book of Thessalonians, he kind of veiled criticism of those Jerusalem Christians. He keeps asking people from other parts of the region to send their money because they got to send it to Jerusalem to help bail out the condition of these Christians who are kind of socialist.

[00:42:14] So even then, maybe we were seeing that socialism was ordinary. And what was going on in Jerusalem at the time, none of it can be, and we can, it is very helpful to look at what else was happening in their lives at the time. They were standing up and saying they believe Christ was God. And that they believed in Christ. And that's how they were going to go to heaven.

[00:42:43] And they were asking other people to do this. And they believed that the Messiah had come. So they were going up against the establishment within Judaism. Yeah. And then they also were creating a new religion. And Rome was on the march and standing up against Rome as well.

[00:43:06] So they had two massive forces in the Roman Empire cannot be underestimated at all coming down on them. So the way that they chose to organize, even in that, they weren't saying the government forced them to do that. It was a voluntary decision in their part. So it's still, even in that situation, it was voluntary. Yeah, that's right.

[00:43:29] That's an important point because socialists ultimately don't use voluntary means to achieve their objectives. I mean, even in a capitalist country, you can behave like a socialist if you want. You can go door to door and to your neighbors and say, hey, let's put all that we earn into a common pot and share it equally. And if you can get them to do that freely and voluntarily, you've got yourself a little socialist commune. Well, good luck with that.

[00:43:57] That's going to be rather hard to put together and even harder to keep from falling apart. But, you know, this just doesn't work. And it was a temporary arrangement in Jerusalem anyway. It was not a permanent commandment or practice of those early Christians. When you talked a minute ago about ways that we could help the poor and you gave some examples,

[00:44:22] what also, what are other things that Jesus did when it related to the poor? I think you talked about some of that in your book. Yes. Most people would recall, I think, the feeding of the 5,000 when 5,000 hungry people, hungry for not only food, but also to hear what Jesus had to say. They show up and the disciples are a little worried and they say to Christ,

[00:44:50] if these people are to listen to what you have to say, we're going to have to feed them. They're hungry. And all we have are a few loaves of bread and some fish. Well, Jesus does not solve that problem by saying to his disciples, well, let's go rob a grocery store or let's go find rich people and take their stuff and bring it here. He magnifies the little bit of wealth that they had, the fish and the bread, through his own unique godly powers. He doesn't take anything from anybody.

[00:45:20] He feeds them through his own initiative, his own divine power. That's not a socialist thing. A socialist reach out and grab what somebody else has and redistribute it. That's a hallmark of their system. But Jesus didn't use a socialistic method to solve that problem at all. And the people who gave because they went through and collected the fish and the bread that people had. And the people who were giving the fish and the bread that they had, they did so, again, voluntarily. They chose to do it.

[00:45:50] They weren't coerced into doing it. Yeah. The government was not a factor. It wasn't even visible in that instance at all. Go ahead. No, go ahead. Well, I was going to say that sometimes socialists will say, what doesn't the Bible teach that money is the root of all evil? And therefore, isn't that a criticism of capitalist activity? Well, the Bible does not say money is the root of all evil.

[00:46:20] And Christ doesn't say it. It was Paul who says the love of money is the root of all evil. He didn't say money per se. I mean, how nonsensical would that be? The medium of exchange is evil. So we should just exchange by barter. He never said such a dumb thing. It's the love of money that Paul was warning against. Because if you love money, you've got your priorities out of order.

[00:46:51] So the message of Paul and of Jesus was to get your priorities in proper order. However, it wasn't anti-wealth or anti-money. It was just don't let money rule you. Don't let its temptations draw you into evil activity or take your eyes off of the ultimate prize. So Jesus was not against wealth per se, but he did have problems with how you got it.

[00:47:20] If you got it through theft, through political connections, he had a real problem with that. But by being productive, creating wealth, hiring people, he had no problem with that. What about one of the most famous lines when I think of Jesus and talking about money? And I think of render unto Caesar. What is Caesar's render under God? What is God's? Yeah.

[00:47:46] This involved the Pharisees who were opponents of Jesus. They were always trying to trick him into saying things that they could run to the authorities with and say, Ah, he's promoting treason or sedition or tax evasion or other illegal activities. So they asked him, should we pay our taxes with this particular coin or something of that nature?

[00:48:14] And Jesus notes whose picture is on it. And he says, well, if it is Caesar's, if it belongs to him, yeah, give it to him. But he didn't say that it did. In fact, he actually left open the possibility that maybe that coin really doesn't belong to Caesar. But if anything does, yeah, give it to him. But he left it to us to decide what is properly the government's and what isn't.

[00:48:42] You can't imagine that Jesus Christ would ever suggest that if Caesar says he wants it all, if he claims that everything everybody produces ought to be his so that he can waste the money or spend it on harmful things, you can't imagine that Jesus would say, oh, I'm for that because it's Caesar saying it. Of course not. That would run counter to everything else that he preached. So that was not a pro-socialist statement.

[00:49:10] If anything, it's kind of a pro-private property statement. If it is his, give it to him. But maybe it isn't. And then what about what he said about going through the eye of the camel and that it's easier to go through it, the eye of a camel? Yeah. This involved a rich ruler. I said the eye of a camel. Eye of the needle. Eye of the needle. The camel going through the eye of the needle. I knew what you were doing. Goodness gracious. But a rich ruler.

[00:49:39] This passage, by the way, comes up in two different Gospels. One does not identify the man other than a rich man. In the other book, I think it's Luke, he's identified as a rich ruler. Well, if you were rich in those days, chances are you had political connections. That's just the way things work. But this rich ruler approached Jesus and, paraphrasing, said, okay, I want to be a part of your inner circle. I want to follow you.

[00:50:09] What do I have to do to do that? Jesus, being who he was, knew the man's heart. He knew, he suspected that the man really didn't have his heart in what he was saying. So, he tests him by saying, sell everything and follow me. And that's when the ruler says, no, can't do that. Well, Jesus wanted people who were 110% following him.

[00:50:37] So, the ruler turns him down and then Jesus turns to a disciple and he says, it's easier for a camel to go through the eye of a needle than it is for a rich man to enter heaven. Socialists love to cite that and say, ah, see, he's anti-rich. He doesn't like rich people. They might not go to heaven. But what Jesus is really saying there is, with riches come temptations.

[00:51:06] He would say the same with power. With power come temptations. Just don't give in to them. If you have wealth and you've earned it honestly, don't let it run you. Use it for right purposes. And don't steal it to get it in the first place. But he didn't have any grudge against wealth itself. He stayed in the homes of rich people sometimes.

[00:51:31] So, I think it's a real stretch to say that Jesus was more interested in your bank account than he was what was in your heart. Yes. And in that example, what he was saying is, come follow me. Give it all up and come follow me. And the person wanted to follow him but wasn't willing to give up anything in order to do so.

[00:51:56] And you can't let your riches and the tangible things in life and even the intangible things be more dominant than following God and following Christ and making sure your heart is set to him. Yeah. And Jesus knew too that the new faith that he was presenting to the world was vulnerable to attacks by the powers that be who hated his message.

[00:52:24] And we're looking for anything they could say, ah, they're just in it for the money or they're, you know, some selfish reason why they're promoting this new faith. So, it's understandable why Jesus would say, you know, you really have to be with me and not have your eye on anything else if we're to succeed in this mission. So, that's not an anti-wealth statement.

[00:52:45] It just says, look, I'm in a unique position here and I need people who recognize that and will be in it too for the purpose of following me, not following wealth. What about, I have a note here about Romans 13. Yes.

[00:53:01] Romans 13 sometimes is cited by people who say, ah, it appears from Romans 13 that Paul, the author, is saying that we should all obey every government command because it's ordained from God. At first blush, when you read Romans 13, it looks like that. It looks like he's saying government is ordained, obey at every turn.

[00:53:27] But there's a context here that is often left out. Those words of Paul in Romans 13 presuppose that government is doing what government is supposed to do, protect life and property, for instance. If you'd have to, if you think that Paul was saying obey government no matter what it says and what it does, you have to ask yourself, he was arrested three times.

[00:53:57] He wasn't paying attention to his own advice here. And each time he was arrested, he went back to doing what he was doing before in violation of the authorities. So was he a hypocrite? No. Not when you understand the context in which he's making this statement. He would go further.

[00:54:16] I'm sure, in fact, pastors in the American colonies often address this very issue this way and point out that when government stops doing what it's supposed to do, when it stops being a government and becomes a tyranny, you are not under any obligation to obey its commands. Any more than you should honor your parents. But if they come at you with a knife to lop your head off, you're not commanded to just stand there and let them do it. So the context is important here.

[00:54:48] Unlimited, unqualified obedience to any government authority is not a Christian teaching. We are not told as Christians to roll over for any and all tyrants. And at the end of the day, Christ was here not to talk about how governments are supposed to run. He was here to win our hearts over to him. Yeah. And that's what his mission was about.

[00:55:12] He wanted us to follow him and to understand that God loves us and to accept God's love for us. Yeah. And I think that I don't – what you're saying and what you have in this book is pointing out Jesus wasn't a socialist. We're not turning around and saying Jesus was an absolute capitalist. I want to make sure Jesus was Jesus. Yeah.

[00:55:41] We shouldn't twist that into something else. To label him either one, capitalist or socialist, is to limit him to but a fraction of what he was all about and who he really was. So that's why I don't think either term is useful in this discussion.

[00:55:59] He was very unsympathetic to the notions and ethics of socialism and he was very friendly to the ethics of capitalism because to the extent that that means private property, free will, people doing their thing in productive ways and help others. I mean that's what capitalism is all about. But it's not correct to say he was a capitalist. He didn't invest. He didn't start a business.

[00:56:25] He wasn't here for that purpose and he didn't tell us, for instance, what form of government we should have and should we have checks and balances and separation of powers. I mean those are matters that he left to us. So yeah, his mission was of critical importance. No mission has ever been more important. But it wasn't all encompassing. He left a lot to us. And it really – his mission wasn't about bank accounts. That's right. It was more what was in your heart, not your bank account.

[00:56:54] So what – okay. So we took – we addressed that and now we're shifting gears a bit away from Jesus. But that's an important conversation to have when we're talking about socialism, especially as we look to certain senatorial candidates in Texas who are trying to say that God and Jesus were socialists. Yeah. Yeah. It's important to just go ahead and make those arguments.

[00:57:24] And even if they aren't running for the United States Senate, it's something that we're hearing. You wrote the book well before that nominee was on the scene. Yeah. Shifting gears a little bit, what are principles of sound policy?

[00:57:39] Well, if we take all that we've talked about so far, fundamentals of economics and the teachings of Jesus Christ and so forth, I think we're led in certain directions that allow us to say, here are some principles that we can embrace. It's important for people to have principles. Groucho Marx, the comedian, once said in a movie – he was the leader of a fictional country and he said to a crowd, those are my principles.

[00:58:09] If you don't like them, I have others. Which is really a way of saying, I don't really have any principles. I'll have whichever the crowd wants me to have. But I think adults should reach the point in their lives where they say, there are some things I really do believe. I think they're so true, I'm going to hold fast to them. And that should be true in economics as well as other walks of life. So I've compiled what I like to call the seven principles of sound policy.

[00:58:36] And the first one is free people are not equal. And equal people are not free. What do we mean by that? We're not talking about equality before the law. That's a virtue we should always strive to achieve. That means the law is fair, it's impartial, it's blind to irrelevant factors like race, where you came from, your creed and so forth.

[00:59:05] But economically, though, this principle means that when people are free, free economically, they're not going to generate the same incomes. Free people are not going to have equal incomes. Why? Because we're different in terms of the talents that we have, how effectively we put them to good use. We are different in terms of our willingness to work. Some people work harder, longer, smarter than others, and that will show up in a higher income most of the time.

[00:59:36] Also, we're different in terms of our savings. If we equalized everybody's incomes tonight, by noon tomorrow, they'd be unequal again because some of us would save it and some of us would spend it. So free people are not going to be equal, and that isn't something to be lamented. In terms of economics, it's to be celebrated. It's an indication that people are being themselves. They're putting their talents to use. They're serving others in the process.

[01:00:04] The second half of this first principle I think is even more powerful. Equal people are not free. If you came to me and said, Mr. Reid, I've just been to a country where everybody's equal economically. They're all making the same. They all possess the same material wealth, regardless of their contributions to the marketplace. I would say, without knowing anything else, that that has to be a very unfree country. How would I know that?

[01:00:35] Well, let's say your job is to make people equal. I'm the emperor, and I tell you, your job by the end of the year is to assure me that everybody in society is economically equal. How are you going to achieve that? You're just going to give speeches and say, oh, don't earn more than the next guy? Good luck. The only way you could even have the most remote hope of making everybody equal economically is to put a gun at their heads.

[01:01:02] You'd have to say to everybody, now, don't be better and different than the next guy. Don't come up with anything new that might earn you more than the next guy. Don't excel. Don't innovate. Don't be different. Don't be productive. Don't – I mean, can you imagine doing that in any profession? Say in the arts. Don't be perfect. You can't sing any better than the next singer. You can't paint any better than the next painter because that would make you unequal. What a terrible world that would be.

[01:01:30] It's the uncommonly good that we owe a great debt of gratitude to, not the – some homogenous average of all of us. So the only way you can make people equal to make them, in effect, what they're not is to put a gun at their heads. You'd have to use force. And that's why socialism, sooner or later, comes down to force.

[01:01:55] You have to make people do the things that you think are best for them so that one doesn't get ahead of another. All right. That's one. You said there's seven. Yeah. Yeah. I'll go through the others a little more quickly. The second one is what's yours you tend to take care of. What belongs to nobody or everybody falls apart. This is the principle of private property, really. If it's yours, there are exceptions, but you tend to husband it.

[01:02:24] You take care of it. But if it belongs to somebody else, you're just not as careful with it. Right? When you rent a car, do you wash it when you turn it back in? Definitely not. Yeah. Yeah. Who does that? Or let's say something is held in common. Everybody owns it. Well, that usually ends up meaning that everybody has a reason to use it, but nobody has a personal reason to take care of it. So it falls apart.

[01:02:50] So if you want to destroy the economy of a society, just abolish private property and tell everybody you've got to work for the government as hard as you were formerly working for yourself or your family. It just doesn't happen. A third principle is nobody spends somebody else's money as carefully as he spends his own. Another way of looking at the private property angle.

[01:03:17] And it explains a lot about why there's so much waste in government. If it's your money. If it's your money and you're using it to make a choice to buy something and you're the beneficiary of whatever it is you buy, you have a pretty powerful incentive to get it right. But if it's somebody who spends somebody else's money and gives it to get a third party, that connection between earner and spender and recipient of the benefits is broken.

[01:03:45] And so which arrangement tends to produce the greatest waste? It's that the latter. And that's what government does every day of the week. So if you I mean, we should always try to make government more efficient. But let's remember that it's a tough nut to crack to begin with because it's involving somebody spending somebody else's money on yet someone else. Yeah. Lots of opportunity for waste, fraud and abuse.

[01:04:10] Another principle is to consider all people and the long run, not just the short run and a few people. We have gotten ourselves into so much trouble as a country because of failure to follow this principle. Politicians winding up expensive programs today, making promises. And for a while, things look good. But then in the long run, sometimes those very things produce disaster.

[01:04:39] It's like the guy who goes to a party and drinks like a fish. And at 2 a.m. he staggers home. A few hours later, he wakes up with a horrific headache. If you confronted him at that moment, you'd have to tell him, hey, you know, you're in the situation you are now because of what you did last night when you thought you were having fun. You're just paying the cost right now. And as a country, that's what we're doing.

[01:05:07] We're spending money we don't have because we're thinking of the here and now, just us, send the bill to people we don't know yet. We're not thinking of the hangover. Exactly. We're not thinking of the hangover. Another principle is it says a lot about people as creatures of incentives. If you encourage something, you get more of it. Right. If you discourage something, penalize it, tax it, whatever, you get less of it.

[01:05:35] Even the socialists understand this when it comes to, say, smoking. They're always saying pile on the taxes on cigarettes because that will deter people from smoking. But if you if you talk about but you want to pile taxes on good things like production and trade and and hiring people, building plant equipment, taking risks, being entrepreneurs. Don't you see that you'll get less of that? And often they don't see that. But we are creatures of incentives and disincentives.

[01:06:05] A next principle has to do with government. And it says has two parts. Government has nothing to give anybody except what it first takes from somebody. So when your congressman comes back home and says, look what I got for you, the first question you should ask him is, where did you get it? Didn't you have to vote for every other congressman's goodies? Yeah. And so aren't we all like standing in the big circle with each of us having his hands in the next guy's pocket?

[01:06:34] You know, government isn't a fountain of free goodies. Everything it has to give away at first took from somebody. And the second part of that principle is a government that's big enough to give you everything you want is big enough to take away everything you've got. In other words, there's a tradeoff here. The more the government does for you, the more it has the power to do things to you.

[01:07:00] And finally, in some ways this could be termed the most important of the principles. Character makes all the difference in the world. If a nation doesn't get character right, the character of its people, not much else that it does is going to make a whole lot of difference. Character determines whether a society can prosper in peace and freedom or whether it will descend into chaos and violence.

[01:07:29] I don't know of any country in the history of the world that ever lost its character and kept its liberties. So that means in the public policy world, don't expect good policy to come from people of lousy character. We as voters should be electing people we have good reason to believe have solid character, because if they don't, the policies that they'll craft will not be helpful in the long run.

[01:07:58] And character is something over which we all have the greatest possible influence. You decide as an adult what your character is going to be by the choices you make. And if you get it wrong, you're going to screw up a lot of people. And it kind of ties back to what you said at the very beginning about capitalism and that capitalism is what happens naturally when you leave peaceful people alone to live freely. Yeah. But peaceful people, you didn't say all.

[01:08:27] So they have to have a mindset that they want to be living peacefully. That's right. They have to live by the golden rule. They have to treat others the way they would want others to treat them. If they commit fraud, force, violence, mayhem of any kind, then government is supposed to be there to prevent and punish that. So I think this concludes this session on economics that we're doing.

[01:08:55] We still have two more, the myths and misconceptions of economics and economic history and money and inflation. Yep. We talked a lot about money and inflation in the first episode, and we'll be coming back to it, but it's on people's minds. So there's a lot to discuss on that one. Absolutely. Well, Larry Reed, thank you so much for joining me on this session, and I look forward to our next discussion. Same here. Thank you, Jenny Beth. All right. If you missed the first episode in this economic series, then go back and watch it.

[01:09:24] We'll have a link on your screen if you're watching on YouTube, so you can click back through. And if you like what we're discussing today and you want more content like this, be sure that you hit like and subscribe and share this with your friends. It really helps us reach more people and makes a huge difference for us. We'll see you next time on The Jenny Beth Show. I'm Jenny Beth Martin. If you enjoyed today's conversation, go ahead and hit like and subscribe. It really helps us reach more people who care about liberty and the Constitution.

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