Thom Hartmann: Dr. John Lott on the line. I’ve laid out for you my cash for geezers programme. John has read my op-ed – Want to stimulate the economy? Lower the retirement to 55 now.

He is the author of "Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't". His website is johnrlott.blogspot.com and John, welcome back to the show.

John Lott: Great to be talking to you again.

Thom Hartmann: I should add you are an actual real economist, right?

John Lott: I have a Ph.D. in Economics and taught at lots of different universities around the country.

Thom Hartmann: Great, and I just play one on the radio, and not even that. So, tell me why you are opposed to the idea of lowering the social security age, and thus tightening the labor market, and driving wages up and thus and also driving up the collection of social security taxes? It worked well for Japan. It worked well for France.

John Lott: Well, it’s going to make us poor for one. People are out there working now. They’re producing something of value. You’re going to have less being produced in total, and you have the same number of people there, but less income being produced.

Thom Hartmann: Now wait a minute. We’ve got sixteen percent unemployment. I’m not suggesting that we stop jobs, or that we shut down factories. I’m suggesting that unemployed people would no longer be unemployed.

John Lott: Well, you know a lot of the unemployment that we have right now is created by things like the stimulus package. When you go and you have the government move around a trillion dollars from one part of the economy where people normally would have been spending it, to areas where the government wants spent, it moves not only the money but it moves the jobs, and it takes a while for people to go and find new jobs. If you were to go and get rid of the eleven percent or so of the population that’s between fifty-five and sixty-four years of age, and say that they’re not going to be able to go and work, their jobs aren’t going to be instantly filled. It’s going to take a while for people that currently have jobs to go and find what new jobs are going to be opening up because those people are gone. You;re going to be increasing unemployment.

Thom Hartmann: Well sure, we could phase it in over a two or three year period. But two things that confuse me. First of all, a point of record. I did actually check the stats on this. Sixteen percent of the American workforce is over fifty-five. Just to set a baseline. But, you said the stimulus moved money from one area to another. The stimulus is actually paid for with borrowed money. So it was money that was taken out of thin air or will, assuming that it gets inflated out over time, or it’s money that we will have to someday repay, but they didn’t shut down jobs in order to create jobs.

John Lott: They had to borrow the money from someplace else, and if they’re going to…

Thom Hartmann: Borrowed it from China.

John Lott: Well most of the money is in fact borrowed from the United States, but also if you go and you print up money, that makes the value of other dollars worth less.

Thom Hartmann: Yes. No, I understand. I’m with you on the dangers of inflation. I suspect though, that you also acknowledge the dangers of deflation.

John Lott: Sure. There's problems in going and playing around with the money supply, either making the prices go up or down.

Thom Hartmann: So right now we’ve had thirty years of deflation with regard to wages of working people. Now certainly not with CEO’s and white-collar workers, but with blue-collar workers and pink-collar workers, we’ve had thirty years of deflation, and it’s because the labor market has increased faster than the job market has in this country. Why not, you know, first of all, let me back up a little bit. Do you acknowledge that when we went in 1938 to a forty-hour workweek from a fifty or sixty-hour average workweek that it tightened up the labor markets slightly, and there was a resultant increase in wages?

John Lott: I think there was, but you have more of a law. Look, the government did all sorts of things in the 1930’s. They made it so you could only plant so many crops…...

Thom Hartmann: I understand, I understand. I don’t want to debate the New Deal with you.

John Lott: No, but it's the same thing.

Thom Hartmann: I’d like to stay on labor if we can. The same thing with child labor in the late 19th and early 20th centuries. When we got children out of the workforce, it drove the cost of labor up, right?

John Lott: Right. That’s why unions fought so hard for child labor laws.

Thom Hartmann: Absolutely. It wasn’t that they cared about the kids; it was that they didn’t want the kids competing with them. I acknowledge that. I agree with you. So why not get the geezers out of the labor force?

John Lott: Because geezers produce something valuable. And it’s true the wages for other people are going to go up by enough, but it’s not up by some, but it’s not going to go up by the amount of lost output, that you would have from all those other people who are working, who aren’t going to be working…..

Thom Hartmann: But how can you have lost output when….. given there is going to be a time period, you know, it’s going to take, you know, a few months for a company that, you know, has somebody fifty-six decides to retire and they’re going to replace them with somebody twenty-five. It’s going to take them a couple of months to train that person, but you know, aside from that, I don’t see where the lost productivity is coming from. We have sixteen percent unemployment.

John Lott: Because I have people today, right now, who are between ages fifty-five and sixty-four who are working. Who are doing something valuable.

Thom Hartmann: Right.

John Lott: Something that you’re willing to go and pay for.

Thom Hartmann: Right.

John Lott: They’re not going to be doing that any more.

Thom Hartmann: But there’s somebody twenty-five willing to do it.

John Lott: No, but the thing is, it's not like you have a finite number of jobs that are there. If you go, there’s a reason we have unemployment right now. And the reason is, is because certain firms have found that people aren’t buying their product. If you go…..

Thom Hartmann: But if wages go up, more people will buy products. They’ll have more money.

John Lott: But look, you have, you have the… Presumably there’s a reason why somebody who’s fifty-five has a particular job. The firm thinks that person is the best guy to be working there. You go and you move in people that aren't going to be as desirable to the firm. And there are other problems too here with regard to choice…

Thom Hartmann: Sure. No, I get it. It’s a complex situation, and you make a good point for it, for your side of it. John Lott, thanks for dropping by.

John Lott: Thanks, very much.

Thom Hartmann: John Lott, johnrlott.blogspot.com is his website, so you can check out his writings. John, very much appreciate it.

Transcribed by Gerard Aukstiejus.