Thom Hartmann: And welcome back, Thom Hartmann here with you. And what is, what is the consequence of inequality? What is driving it? And why has the United States become the most unequal society in the world? Right up there with Portugal, the UK and Singapore and what is the consequence of that? Anthony Randazzo is with us. He’s with the Reason Foundation. Reason.com or Reason.org. Director of economic research. Anthony, welcome to the program.

Anthony Randazzo: Thank you for having me on, Thom.

Thom Hartmann: I’m looking, first of all this article, you wrote, “Want more equality? Support more capitalism!" I’ve been thinking about starting a baseball team. And, or a baseball league, rather. And in my baseball league, whoever pays me the most, since I’m going to make the rules, will get to have five strikes at bat and whoever pays me the least only gets two strikes at bat. Whoever pays me the most will have, you know, nine balls and the other people will have two. We can even change the position of the pitcher’s mound if they pay enough. And there won’t be any umpires, nobody’s going to be overseeing what they’re doing. We’re going to do away with unnecessary regulations. Do you think that that’s baseball?

Anthony Randazzo: Well it’s certainly not major league baseball. But as long as the other teams that are joining in your league voluntarily want to join it, I don’t really see a problem with it. I don’t think that it would take off, but if there are people that want to do it, in a free society, that should be allowed.

Thom Hartmann: I don’t disagree that it should be allowed, I just don’t think that it would work. And this is what you’re suggesting for our economy. That the, if the Koch brothers don’t want their downwind pollution which is causing cancer in some cases and killing people, to be regulated, that you know they should be able to buy off some politicians or help them get elected so that they can do away with those unnecessary regulations.

Anthony Randazzo: Well you know I don’t think that anything that I have written suggests that we should have zero regulation in society. And as a matter of fact, particularly giving that I’ve spent a lot of time looking at Wall Street and financial stuff, we absolutely have to have regulation and rules of the road and there has to be laws, particularly that provide consequences for failure, for fraud. Those are absolutely necessary.

Thom Hartmann: Then why would you say that free markets are the real source of economic opportunity. Because what you’re describing is not a free market. What you’re describing is a regulated market.

Anthony Randazzo: No it’s absolutely a free market. You cannot have a free market without the rule of law. We see this in countries like Albania where they tried to institute a free market but there was no sense of rule of law and what you get is carney capitalism. You get, you get…

Thom Hartmann: Right, and that’s what we have right now.

Anthony Randazzo: My Italian background. Right now I don’t think that we have a very free market. I think that we have a regulatory system that does allow for crony capitalists to come in and take advantage. I think that the more…

Thom Hartmann: Sure and the Supreme Court has made it possible. It has said, you know corporations are people, money is speech, so the wealthy get to, get more speech and the ... Go ahead...

Anthony Randazzo: Another thing is, is that if there were no rules for those corporations to try and manipulate, there would be no reason for them to give money to those politicians and try to, corrupt and drive society.

Thom Hartmann: So you want to do away with the rules?

Anthony Randazzo: I think that the fewer rules that there are, the fewer opportunities there are for people to come in and try and manipulate the system.

Thom Hartmann: So we should just say it doesn’t matter whether, for example, actually. Let’s just leave it at that, with that.

Anthony Randazzo: Yeah I think we can go round and round with this.

Thom Hartmann: Yeah we could and we could do dueling examples all day long and it wouldn’t get us anywhere.

Anthony Randazzo: Exactly.

Thom Hartmann: You write, “If the wealthy get wealthier, no one has to become a penny poorer. This childish idea that the economy is a zero sum game might appear to populist sentiments of the so-called 99%, to the envious nature of some others, or the emotions of many struggling through this terrible economy. But in the end it doesn’t stand up to the most rudimentary inspection."

Actually it does. If you look at the statistics from the Fed, this is from the Fed. In 1978 the top 1% on the ladder took in under 9% of the nation’s income, leaving a bit more than 91% for the rest of us. In 2007, the year before the crash, they took in 23.5%, leaving just 76.5% for the rest of the population to split up. You talk about how household incomes have not gone down, but household incomes, the average number of people working in a household has almost doubled since Ronald Reagan came into office. When you look at individual wages, you’re seeing, and when you look at individual wages of the bottom 90%, in other words you take out, the Koch brothers, you know it’s the old joke. Nine guys who make $30,000 a year are all standing at the bar, Bill Gates walks in, all of a sudden on average everybody there is worth 30 million dollars or 3 billion dollars or something like that. And if you take out, if you filter out that top 1%, then what you see is that average wages are going down. And they’ve been going down ever since Reaganomics was instituted. The economic policies that you guys are promoting are devastating the middle class in this country.

Anthony Randazzo: First, just to be clear, that one quote, I don’t want to take credit for something. That was written by David Harsanyi who writes syndicated columns, that shows up on our website, although I do agree with a lot of what he said. Here’s the thing.

Thom Hartmann: You’re right.

Anthony Randazzo: You know, one thing that I think should be absolutely clear is that income inequality is not inherently a terrible thing. If all of those people that were, that are on the bottom rung of the ladder had a million dollars and everybody at the top had a trillion dollars, in that 1% all have a trillion dollars, that’s a huge wealth gap but that doesn’t necessarily mean that it’s a terrible thing.

Thom Hartmann: But that’s not going to happen unless we have Weimar republic type of hyper inflation. You know…

Anthony Randazzo: So it’s, it’s not going to happen Thom, but it does serve a point to say that inherently wealth, income inequality is not a problem.

Thom Hartmann: No it serves no point. It’s an absurd example.

Anthony Randazzo: Where income inequality can be a problem is what are the causes, why is there a gap. I’m not so interested in talking about what gap exists other than what the causes of that gap are. If the reason is of income inequality is because two guys went and they stole all the gold from everybody, that’s terrible. If the reason …

Thom Hartmann: Well I think what you’re saying and what we’re agreeing on is that income inequality is happening because our system is being gamed. And I would say it’s being gamed because Ronald Reagan stopped enforcing the Sherman Antitrust Act which was a powerful regulation, which forced competition by keeping companies relatively small. Jimmy Carter was the last one to enforce that, breaking up AT&T and because Ronald Reagan dropped taxes on the very rich. And so, you know, we’ve got all this hot money going in the economy. And every time you see that.

But just look, I strongly suggest you check out this website, EqualityTrust.org.UK. It’s Kate Pickett and Richard Wilkinson’s book, “The Spirit Level." They’ve done, you know 20 years of research on this in countries all over the world. Plus they took every single state in the Untied States and they said okay which has the greatest inequality and how does that relate to social ills. And the conclusion that they came to was that if we were a more equal society, as in Japan, Sweden, Norway, Finland, Belgium, the Netherlands, Denmark, Germany, Switzerland, Austria, Spain, Canada, or France. If we had those levels of equality rather than the extreme level of inequality that we have right now, murder rates would cut in half, mental illness would be reduced by 2/3, obesity would be cut in half, imprisonment would reduce by 80%, teen births would reduce by 80%, and levels of trust among people in society would increase by 85%. Regardless of how you get to that reduction of inequality. So let’s look at the effect of it.

Anthony Randazzo: So regardless of how you get to it, in that…

Thom Hartmann: Whether you get to it by redistribution by taxes…

Anthony Randazzo: You can get to all of those benefits by showing up with cops at the doors of everybody that’s in the wealthy 1% and say we’re going to take 85% of your wealth, and we’re going to hand that money around to people who didn’t otherwise earn it and they’re going to all of a sudden, like overnight, change, become productive members of society.

Thom Hartmann: Yes. There is going to be a social safety net. When you look at those countries that do enforce taxes, and yes taxes are enforced by guys with guns. And when you look at those countries that do enforce taxes, on the very, very wealthy, and you know like in Germany where millionaires are paying 50, 60, 70% tax rates. And you get German businessmen saying you know I don’t want to be a rich man in a poor country. And you have a strong social safety net. Everyone has healthcare, everyone has retirement. Yes you have lower outcomes of social, poor social outcomes, absolutely.

Anthony Randazzo: Well I think one of the biggest problems with that is the correlation causation trap. We talk all the time in this country about how if you, if more people who are homeowners it’s going to come to all these social benefits and social gains but usually those are just correlated not causation…

Thom Hartmann: Anthony, this is causation. This is causation, trust me.

Anthony Randazzo: And I would strongly implore you in looking at the research that they did…

Thom Hartmann: Anthony Randazzo, Reason.org is the website. Check it out. And EqualityTrust.org.UK, Anthony I suggest you check it out. Thanks for being with us.

Anthony Randazzo: Thanks for having me Thom.

Transcribed by Suzanne Roberts, Portland Psychology Clinic.