Tuesday, 25 Oct 2011 05:56 PM
Economist and author Thomas Sowell tells Newsmax that banks and businesses are sitting on piles of cash because they’re concerned about “what new bright idea” Washington might come up with to “mess up” their investments.
Sowell, a Senior Fellow on Public Policy at the Hoover Institution at Stanford University, says he would like to see a constitutional amendment barring politicians from intervening in the economy “under any circumstances.”
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Sowell is also a syndicated columnist and winner of the National Humanities Award. His latest book, “The Thomas Sowell Reader,” is a compilation of his writings on various issues over the past three decades.
In an exclusive interview with Newsmax.TV, Sowell was asked who is to blame for the dire state of the American economy.
“Practically everybody, and I think particularly the Washington politicians,” he declares.
“The crucial fact that brought this on was the failure of people with mortgages to pay those mortgages, and that in turn was due to politicians forcing lending institutions to lower their lending standards. That brought in lots of people who would not have been given mortgages before, who then failed to live up to their mortgages — which is exactly why the standards were higher before the politicians intervened.
“There’s a great pressure on people in Washington to ‘do something,’ and that pressure has led to many things that have been counterproductive.
“Right now the problem is not that there isn’t money in the economy. The problem is that the money is sitting idle. Banks and businesses have had record-breaking amounts of cash sitting around and are not doing anything with it. And they’re very prudent to be hesitant. They don’t know what new bright idea will occur in Washington over the next year that will mess up any investment that they make.”
Americans should not accept that unemployment will remain high regardless of who controls Washington, Sowell says.
“Not at all. Unemployment can go up and it can come down depending in many cases on what kind of policies the government follows.
“Even after the great stock market crash of 1929, the unemployment rate did not reach double digits in any of the 12 months that followed. It reached double digits after the politicians started intervening.”
His prescription for fixing the economy: “I would love to have a constitutional amendment that says politicians are not allowed to intervene in the economy under any circumstances. I think there would be a boom following that.”
Sowell, an African-American, recently commented on the Fox Business Network that presidential candidate Herman Cain “is certainly one of us far more so than Barack Obama.”
He tells Newsmax: “Barack Obama was raised in Hawaii where there is very little black population, and went to an expensive private school. What Herman Cain did was much more typical of most of the blacks in the country.”
Sowell says Cain’s 9-9-9 tax reform plan would probably have repercussions, like any tax plan, but they “would not be nearly as bad as those we are currently having — and might be a significant improvement.”
Asked if he’d like to see the IRS abolished, Sowell responds: “Yes. The country lived for over 100 years before there was an IRS.”
He was also asked if the Occupy Wall Street movement is right in blaming big banks for the nation’s income inequality.
“No. I’m always fascinated when people attribute very high incomes to greed. Greed tells you what you want. If you have high income it’s because other people are willing to pay it. And the other people who are willing to pay it very often in recent years have been the politicians who are spending the taxpayers’ money.”
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