Voices of Freedom - Interview with Samuel Gregg

Episode Date: May 2, 2024

Interview with Samuel Gregg America’s entrepreneurial spirit is part of what defines its national character. Americans celebrate the notion that one can build a business from the ground up by virtue of sheer determination and perseverance, whether it’s a neighborhood ice cream shop or a global auto company. This zeal for free enterprise quickly catapulted the country into an economic powerhouse and continues to captivate dreamers and innovators throughout the world. Yet America faces real obstacles to sustaining an environment that’s ripe for entrepreneurship. Burdensome red tape, a dire debt crisis and the vast expansion of the administrative state are barriers to entry and growth for businesses.  Our guest on this episode of Voices of Freedom is Samuel Gregg, one the country’s preeminent free enterprise scholars and a 2024 Bradley Prize winner. He shares his thoughts on how to keep America’s entrepreneurial vitality strong, as well as insights into current economic debates. Samuel Gregg is the Friedrich Hayek Chair in Economics and Economic History at the American Institute for Economic Research. He has written and spoken extensively on questions of political economy, economic history, monetary theory and policy, and natural law theory. He's the author of 16 books, including his most recent book, The Next American Economy: Nation, State and Markets in an Uncertain World.  Topics Discussed on this Episode: America’s support of free enterprise compared to other countries How entrepreneurial success stories have shaped Gregg’s perspective Improving the climate and outlook for American industry Big Tech, woke capitalism and the weakening of the family How proponents of limited government can address the breakdown of civil society China’s economic outlooks and lessons for the US The intersection of markets and morality The conditions that will allow the next generation of entrepreneurs to succeed What it means to win a Bradley Prize

Hello and welcome to Voices of Freedom, a Bradley Foundation podcast. I'm Rick Graber, President and CEO of the Bradley Foundation. On the podcast, we'll explore issues that affect our freedoms with a focus on free enterprise, free speech, and educational freedom. So let's get started. The namesakes of our foundation, Lynde and Harry Bradley, were 20th century industrialists whose hard work, perseverance, and entrepreneurial spirit enabled them to build a really amazing American company called Allen Bradley. While we at the Bradley Foundation wish we knew a whole lot more about these two brothers, there's just no doubt at all that they believe deeply in free markets and free enterprise. For nearly 40 years, our stewardship at the Bradley Foundation has been

guided by the ethos of these two brothers, who wanted future generations to have the very same opportunity that they had to innovate, to fail, to try again, and then ultimately succeed beyond their wildest dreams. We couldn't be more pleased then to award Dr. Samuel Gray, one of the nation's leading defenders of free enterprise, with the 2024 Bradley Prize. Sam is the Friedrich Hayek Chair in Economics and Economic History at the American Institute for Economic Research. He has written and spoken extensively on questions of political economy, economic history, monetary theory and policy, and natural law theory. He's the author of some 16 books, including his most recent book, The Next American Economy, Nation, State, and Markets in an Uncertain World.

Welcome, Sam, and hearty congratulations from all of us at the Bradley Foundation. Thank you, Rick. It's great to be back with you again to have a conversation about different things associated with Bradley and the Bradley Prize. Absolutely. So let's start, Sam, with the story of the Bradley Brothers. It's a story that I think you're pretty familiar with as a longtime friend of the Bradley Foundation. Their success is really illustrative of what makes America such an exceptional and unique country. And that is anyone from any background can dream and create and build and innovate. They can also fail and start over again, which the Bradley brothers experienced. You grew up in Australia. You studied in England. What is that very American experience that I just described about the Bradley brothers

compared to the opportunities that you saw available in other countries that you've lifted? Well, I think when you look at the things like attitudinal surveys and empirical analysis of things like innovation and entrepreneurship, America still leads the world. We have a lot of economic problems, but we are still leading the world when it comes to innovation and entrepreneurship. And that includes leading other, let's call them Anglo-American countries like my native Australia and Britain, not that there's a type of antagonism towards people who are entrepreneurs. It's more that they're not celebrated and upheld as people that other Americans should be looking to emulate. That, I think, is a critical difference. It's like, well, entrepreneurs are good, business is good, commerce is good, but it's useful, but really it's not that important compared to being an academic, being a lawyer,

being a doctor, any number of professions that are seen as somehow above the nitty-gritty of commerce and trade that entrepreneurs, of course, bolster and fuel every day. And in some cases, and this is particularly true of Australia, if you're seen as too successful, there's a thing called tall poppy syndrome. What that means is that anyone who's too successful, there's a tendency to sort of cut them down. Now, that's reflective of a very egalitarian streak in Australian culture. And I think you can see that in Britain as well. Although in Britain, it's tinged with a type of lefty socialism as well. But there's a type of reticence about celebrating and honoring entrepreneurship in, again, these countries that

are in many respects are very comparable to the United States. And it differs significantly from what we find in the United States. I found the same thing. I had the opportunity to live and work in the Czech Republic, which is different from certainly Australia, Britain, and Belgium. And you're right. It's not a bad thing. It's just not part of the DNA as it is in the United States. And it's hard to put your finger on why exactly, but I think that's very true.

Yes. why exactly, but I think that's very true. Yes, and I also think that earlier observers of America, people like Alexis de Tocqueville, one of the first things he noticed when he came to the United States was he said something like, they're all entrepreneurs. Americans, he said, would start a business and they'd get it going and then they'd get distracted and go and do some other entrepreneurial project, sometimes of an economic nature, sometimes of what we would call a type of civil society nature. And other visitors to America, even after things like the New Deal

and the Great Society, which are about as antithetical to entrepreneurship as you can imagine. Even then, external observers of America have noticed this entrepreneurial impulse that seems to be part of America's DNA, which no amount of government intervention seems to be able to completely suppress. Sam, you're clearly one of America's leading proponents of free markets. How have success stories like the Bradley Brothers shaped your perspective, your research, your opinions, your beliefs? who study questions of political economy from a conservative, classical, liberal standpoint. One of the things that I've seen echoed in America that I've seen in good literature on this subject is the role of entrepreneurship in many respects as being the starting point for all the other dynamism that occurs in the American economy. If you go back to the 19th century and you read a number of classic texts on political economy, you read a lot about capital, you read a lot about labor, but the entrepreneur is often missing from that entire discussion. It's as if entrepreneurs,

in some respects, don't even exist. And the key to entrepreneurship, and people like the late Michael Novak were very good at emphasizing this point. The key to entrepreneurship is the innate creativity that we possess by nature as human beings. Think about it this way. No other being has that type of creativity that we do because we have free choice. We have free will. We have reason. We can see things and notice things and imagine different possibilities.

And that, I think, is very central to entrepreneurship. And that's an insight that contemporary economics has only really started to grapple with, I would argue, over the past, say, 50 years through the work of people like Israel Kersner, a very good economist who has lectured for a long time at New York University and who really should be given a Nobel Prize. I feel compelled to say that. But people like him and others writing from a slightly different perspective, like Michael Novak, have underscored this creativity dimension as indispensable for the workings of markets. And that's why we need to be very concerned when that creativity either gets discouraged by things like excessive taxation, unreliability of

the legal system, et cetera, or when it gets diverted into creativity in terms of things like rent seeking or being a really good crony capitalist. So creativity is central to entrepreneurship. And it's something that I think those of us who defend and promote free markets need to keep pressing the point because I think it resonates with a lot of people, not just people who are established business leaders, but immigrants, for example, or people who come seeking opportunity or people from very humble backgrounds who are looking for a way of changing their lives. Entrepreneurship opens the door to mobility and opportunity, which happens, by the way, to benefit the rest of us as a whole. Business is always has been the backbone of the American economy.

President Coolidge once said the business of America is business, and I think he was right. Yet without question, as time has gone on, American business, American industry has been burdened with more and more regulation, more and more barriers to growth. I mean, what's your take on how we slow that down, how we improve the climate for American industry? Well, we talk about America as an exemplar of market capitalism. And the reality that you're pointing to is that we really are a very big, very prosperous mixed economy. Taxation, for example, consumes a very large proportion of GDP. You mentioned regulation. Regulation is just exploding throughout the United States. It's making it hard for business. It's even making it hard for people to do things like build more houses, which we desperately need if people are going to be able to acquire

property ownership, for example. So it's unfashionable to say it these days because the left and unfortunately parts of the right, I think, have become, let's put it this way, they have become complacent about the effects of regulation on the American economy. But we desperately need deregulation at the federal level, the state level, and the local level. Moreover, we need to stop the capacity of the administrative state to basically generate regulations that they derive out of their particular reading of legislation passed by Congress.

And that's where a lot of the regulation comes from. It's not as if these things are voted upon by people in Congress and then signed into law by the president. A lot of this comes from bureaucrats in Washington, D.C., who have enjoyed a pretty significant brief to be able to issue regulations and interpretations upon regulations that clog up the economy from top to bottom. So it's, again, unfashionable to say it, but I think that tackling the administrative state and degrading its capacity to behave like an autonomous regulator

that's, in some respects, free from legislative scrutiny, that I think is one way in which we can do that. And we can do that through legislation, but I think we're going to be doing it more through the courts as well. And I suspect that the Supreme Court is going to be saying things about this topic in the near future, which I think gives us hope for reducing the amount of regulation and reducing the power of regulators to basically push out as much regulation as they feel they're entitled to push out. And at some point, Congress has to start doing its job again. I mean, in many ways, it really has abdicated. Yes, because in many respects, Congress has effectively handed over

lots of its responsibilities to administrative agencies, because these issues are just, they would say, well, this is just too hard to deal with. Let's hand it over to the experts. Well, the experts are not doing such a good job these days. So a deregulatory agenda pursued by anyone, frankly, from across the political spectrum today, I think would be welcomed. And here's the other thing. Americans don't like regulators. I mean, we don't have this sort of instinctive love for government that characterizes a lot of other Western democracies. We're much more skeptical about government, and we're particularly skeptical about regulation and regulators. And that's something I think a wise politician, a wise policymaker would be able

to tap into in terms of generating the type of popular support that I think is ultimately needed to push such a reform program through. You alluded to it. Some from the right have taken the view that, yes, we can support free enterprise, but we also need government to address the tough challenges like big tech and old capitalism and weakening of the family. I'm pretty sure you don't agree with that. Tell us why. Well, it's not that these are illegitimate or wrongheaded concerns. We do have serious problems with the family in the United States today, judging by things like the divorce rate, people not getting married, young men and women putting marriage off for a long time,

which of course has consequences for births and demography. Woke capitalism is a real phenomenon. Just Google BlackRock and see what comes up. You'll see ESG, you'll see EDI, all these other things. It's true that big tech is a political problem insofar as it's dominated by people who come from not just the left, but particularly radical segments of the left in many respects, which of course causes dissonance, so to speak, in the political system and our capacity to have free and open debate. So these are real problems. And I think it's foolish to pretend that these are not problems. But I also think that government is not particularly good

at dealing with these problems. A tariff is not going to rescue a marriage. An industrial policy is not going to encourage young men and women to start getting married earlier than they presently are. Doing things like engaging in trade wars with China is not going to deal with the problem of opiate abuse. Engaging intervention into the economy, whether by things like income supplements or family income supplements, is not going to get young men out of their parents' basement to get out and work and earn a living. Those policies are generally

ineffectual. Moreover, they have, I think as any good economist would tell you, counterproductive effects. So for example, you may want to use the government to go after woke capitalists, but then you're essentially legitimating the widespread use that the left makes of government to try and censor its opponents. You don't fight bad ideas by articulating similar bad policies. So government, I think, is in many respects not particularly good at handling these problems and is often counterproductive. And I think the American way of dealing with many of the problems that you mentioned, particularly in the social

sphere, are really best addressed by what we call civil society, right? And I know that Bradley has a particular emphasis upon civil society, and it does great work in encouraging civil society associations and communities from all types of different backgrounds in developing the types of solutions that provide answers that fix many of these problems. Because I think it's true to say that those who are closest to the problem are often the best equipped to deal with the problem and are certainly much better equipped than a policymaker in Washington, D.C. who doesn't know the circumstances that affect a particular community, has no idea of the history of a particular region, who has no conception of the particular dynamics that

shape a particular community. Those types of civil society solutions are far more effective. Moreover, they're part of the American way. Again, Alexis de Tocqueville talked about this in the 1830s when he observed that Americans trying to deal with a problem didn't run off to the state capitol, let alone Washington, D.C., to fix the problem. They engaged in the habit of association, whereby they band together, try and work on and fix the problem, and then move on to something else. And that, I think, is not just more effective, it's also a way that engages people,

civil society, in real problems, rather than just handing these off to technocrats in places like Washington, who for all the goodwill in the world, simply can't know enough about the problem to produce concrete solutions. I mean, we see it in our hometown of Milwaukee, and it's true in every other community in this country, that the people that are doing the great work are, for instance, Bradley grantees, that one person at a time are restoring dignity or instilling a work ethic that hasn't been there. Amazing people that aren't looking for headlines, but just go to work every day with a passion that truly is making a difference. I think you're absolutely right.

And you look back to the experiments of Lyndon Johnson's Great Society or back even further to Roosevelt, these government programs just hasn't solved these problems. It's people helping people. And it's also the case that previous Bradley Prize winners like Amity Shlaes have shown in books like Great Society and The Forgotten Man just how much damage so many of these programs did, for example, to African-American communities, from which, in many respects, many of these communities have never recovered. Yes. Let's talk about China a little bit. I mean, we've heard for years,

maybe it's slowed the last couple, we've heard for a long time that China, any day now, is going to overtake America as the world's economic leader. Yet you've written recently that there seem to be some cracks that are starting to show in China's approach to the economy. Talk a little bit about that. Well, some of us have been long skeptical of the growth numbers that have been produced by China for a long time. I can recall going to conferences. I'm sure you had similar experiences and you were told, well, the growth number for China is 16% this quarter. And I would just raise my eyebrows and mentally, in the back of my mind, store that away for, let's check that out to see whether that's actually accurate. So I think there's a lot of disinformation out there about China.

But there's no question that China is trying to produce a different type of a model that it sees as competing with American market capitalism. The model they're promoting is, let's call it state, Chinese state capitalism. The difficulty that China is having, let's call it state, Chinese state capitalism. The difficulty that China is having now, and it's getting harder and harder to hide, is that the types of intervention that China engages in across its economy is having the same counterproductive effects that you would expect these policies to manifest in any society, in any economy. So, for example, the national debt is approaching Japan-like levels. They have a major demographic problem.

Their major demographic problem is the one-child policy has presented them with the inverted demographic pyramid, which now afflicts our European friends, right? You have lots of elderly people and not enough young people who are going to be providing the economic resources to support the older people in later life, which means China is going to have to divert more and more resources into things like social security and health care, which means less resources for R&D, let alone spending on the Chinese military. China has engaged in extensive industrial policy, particularly since 2012, and that has produced major failures in areas like three mobile technologies to things like semiconductors, about which there's a lot of talk today. Its Belt and Road Initiative has cost it trillions of dollars and managed to successfully alienate countries that might have been allies of China in some type of future conflict. Corruption is everywhere and spreading. Moreover, the centralization of power that Xi has engaged in since 2012 means that the feedback mechanisms that any government needs to know if things are going well or not going well, tells us what that's doing is it means that the Chinese

leadership is becoming more and more isolated from what's actually happening in the economy because people are telling them what they want to hear. China's efforts to engage in effective trade wars are costing it a great deal because the more it tries to subsidize exports, that means there's less and less capital to put into productive sectors of the economy. And all this, I think, is reflected in the fact that its National Bureau of Statistics is releasing less and less information. It basically last year, in August 2023, stopped issuing figures about its youth unemployment rate. So I think this tells us that the Chinese economy is running into the types of problems that you would expect from a country that is returning to more wide and deeper use of the state in the economy. So I don't think of China as a rising power. I think of China actually as a country and an economy that's in decline. Now, the problem, of course, is that countries in decline and that are aware of its own decline

are often prone to take risks that it might not otherwise take. And that, I think, is the challenge we're going to have to be watching. The other challenge we're going to have to watch is that we don't fall into the trap of mimicking Chinese policies as a way of competing with China. We, by the way, are way ahead of China when it comes to things like per capita GDP. Ours is something like $60,000 a year. China's is $20,000. So I don't view China as this looming economic threat. It has enormous internal problems, and the policies that they're using to address complacent, more morally bankrupt. And I guess the thought goes, as we become more attached to consumer goods, we become less attached to friends and family and community. Again, that would not be your perspective.

Tell us why. Well, there's no question that when societies become wealthier, there are temptations that come along with that. We can start to think of ourselves as defined by how much we have. We can start to attach more value to material things than perhaps we otherwise should. So those are genuine risks. I don't think anyone would deny that. In fact, if you go back to, say, great Scottish Enlightenment thinkers like Adam Smith, Adam Smith, of course, is very much markets, markets, markets, made the point that there were these types of risks associated with great wealth. Now, the flip side, of course, is that in poor societies, you can run into the same

sorts of problems because the sheer lack of goods can mean that people attach more significance to material things than they otherwise would. So it's not that poor societies or less wealthy societies are somehow immune to these types of challenges. The question, I think, is what type of commercial society do we want to live in? Do we want to live in a commercial society in which there is immense prosperity that gives us resources to do all sorts of things, including lots of non-commercial things, a society in which there is a dynamic civil society that accompanies and in many respects buttresses markets, a commercial society in which there are institutions ranging from schools and universities to religious organizations, etc., that remind us that there are things beyond the material world, that there are other virtues besides commercial virtues. And Scottish Enlightenment thinkers, and I think some of the best economic

thinkers, people like Smith, people like F.A. Hayek, people like Michael Novak, have always said that you need a certain type of moral culture to go along with markets. And you need to be very conscious of that. Now, governments can't create that type of culture. That's a bottom-up culture. So I think it's a question, again, a type of civil society question. It's a question of institutions that embody and try to model these values to show us how we can build these into our lives as we go about engaging in commercial activities. So to my mind, there's no contradiction between living in a dynamic, market-orientated commercial order and these other types of virtues, call them classical virtues, call them ancient virtues, call them religious virtues.

There's no inherent conflict between these things, but it requires a conscious effort on the part of all of us just to keep these things in mind. So I don't see that commercial society necessarily ends up in this type of materialist hedonism that, frankly, people on the left and the right seem to think is the future of the type of capitalism that organizations like the Bradley Foundation try to promote. But there's no question that the political and cultural forces that are working against

free markets are pretty strong. So how do free market defenders prevail so that the next generation of Lynde and Harry Bradleys have a real shot at creating the next Allen Bradley company? Well, the first thing I think is we need to recognize we're in the 2020s now. It's not the 1980s. And in the 1980s, the tide was with us. The intellectual tide was with us. The intellectual tide is not with us now, and that's certainly the case on the left. But as we've mentioned, this is a case on parts of the

right at present. So what do we need to do? Well, we need to keep making the empirical case. We need to keep showing that things like protectionism, industrial policy, extensive regulation, all the things we've mentioned don't work and actually have many counterproductive effects, including on those communities who we think that we're helping. So we need to make a strong empirical case. And I think free marketers generally are very, very good at that, which is why I think the left and parts of the right sort of avoid talking about that dimension of the question. Not all, but a lot of them do avoid it. The second thing I think, however, is we need to have a strong normative message. And that's where I think free marketers

have generally not done as good a job. We need to be able to persuade people that markets are not just economically good, but they embody certain freedoms and virtues that are good in their own right. And that the type of commercial society that we want is what made America great. It wasn't government that made America great. It wasn't government that made by the 1890s America the superpower of the world that it remains today. It was bottom-up entrepreneurship, competition, trade, an internal free market, immigrants coming into the country seeking opportunity. We need to build a better historical and frankly moral narrative if we're going to counter the left and parts of the right on this, because they talk about this all the time. And whether we like it or not,

that's particularly persuasive when it comes, for example, to young people. Young people want to know how things work. They're interested in things like economic truth, but they also want to be doing something that they think is uplifting, that's just, that's good in its own right. And that's the challenge, I think, for free marketers today, to build this case for markets into a wider account of what it means to be good and what it means to be good and what

it means to be American in the 21st century. Terrific. Last question, and it's a fun one. What's it mean to you to win a Bradley Prize? Well, the first thing I'll say is, as you know, when I was called to be given this good news, I was flabbergasted. I was shocked. Because when you look at the people who have won the Bradley Prize in the past, people like, we mentioned, Amity Shlaes, people like great legal thinkers like Robbie George, people like economists like John Taylor, foreign policy thinkers.

I mean, it's a who's who, so to speak, of the conservative and classical liberal world. So frankly, I feel very humbled to be included in these ranks. So that was the first thing I wanted to mention. to articulate the best case for markets, and to do it in a way that is attentive to something the Bradley Foundation cares a lot about, which is American exceptionalism. Now, maybe it's because I wasn't born in this country. Maybe it's because I'm an immigrant to this country. But when you read about this, when you read the founders, when you read the documents, when you become familiar with their ideas and the way that they have worked out over time, you realize, and again, maybe it's because I'm an immigrant, you realize this is something unique. This is something very, very different from virtually every other country in the world. So to the extent that this award, in my case, draws attention to the importance of

markets and the need to make the case for markets and the need to make the case for markets in America using that type of language and that type of history and that type of story and narrative about the place of markets and business and something you've mentioned a number of times, entrepreneurship, in the American story and what truly makes America a unique country. To the extent that the award to me is a reflection of that, then that makes me very happy and greatly honored. So I'm very thankful for the Bradley Foundation for this great shock. But I hope that it also articulates a type of message about the importance of economic freedom in America, the importance of limited government,

and the importance of American exceptionalism in remaining who we are as a people. Very well said. Dr. Samuel Gregg, thank you so much for your leadership at times waging a somewhat lonely battle. You're doing an outstanding job. Thanks very much. We look forward to celebrating with you in a couple of weeks and hope that it's a very, very special day for you and your family. Thank you very much. Great look forward to celebrating with you in a couple weeks and hope that it's a very, very special day for you and your family. Thank you very much. Great to talk with you.

Good talking with you. And as always, thanks to all of you for joining us on this episode of Voices of Freedom. Join us on Apple Podcasts, Spotify, or wherever you get your podcasts for our next conversation on issues impacting our freedom and America's foundational principles. And make sure to subscribe so you don't miss an episode. I'm Rick Graber, and this is a Bradley Foundation podcast. Thank you.