FLORIDA, December 5, 2012 — Paul Craig Roberts doesn’t engage in groupthink. As an assistant Treasury secretary under Ronald Reagan, he played a key role in formulating the Gipper’s now-legendary fiscal policy. As a journalist, he made no bones about reporting the facts as he saw them. Now, as a columnist, he shares his opinions about America’s turbulent sociopolitical climate.
Most pundits talk a good game about economics and politics. Few, however, are prepared to deliver anything beyond a superficial analysis of our time’s most controversial issues. Agree or disagree with Roberts, his ideas are genuine, and they’re his own.
So, can America escape from the torpor of the Great Recession and reclaim its economic vitality? What has the impact of free trade really been on our country? Did the Ron Paul movement bring any particularly important issues to the forefront?
Allow Dr. Roberts to explain about all of this and much, much more.
Joseph F. Cotto: America remains firmly caught in the Great Recession’s clutches. How do you think that our country can reclaim its economic vitality?
Dr. Paul Craig Roberts: The US cannot reclaim its economic vitality, which US corporations have sent abroad to India, China, and elsewhere, unless it can retrieve the offshored middle class jobs. The only way in which the US can retrieve its middle class jobs is to tax US corporations according to the geographical location at which value is added to their product.
If corporations produce domestically with US labor, they would have a low tax rate. If corporations produce abroad they would have a high tax rate.
The tax rate can be calculated to more than offset the lower cost of foreign labor and, thus, cancel the excess profits that corporations make from substituting low cost foreign labor for US labor.
Cotto: Prominent economists and politicians often say that free trade will only benefit America in the long run. What are your opinions about this idea?
Dr. Roberts: Ralph E. Gomory and William J. Baumol have proven conclusively in their 2000 MIT Press book, Global Trade and Conflicting National Interests, that David Ricardo’s free trade theory was incorrect from the beginning. Therefore, the free trade issue is mute and a red herring.
Jobs offshoring is not free trade. Even if free trade theory was correct, jobs offshoring is pursuit of absolute advantage, the opposite of comparative advantage, which is the basis for the free trade argument. The economists who continue to advocate free trade and continue to confuse jobs offshoring with free trade are simply incompetent and professionally ignorant.
Cotto: Everyone is talking about the Fiscal Cliff. What do you expect to happen if both parties fail to find common ground on a budget proposal?
Dr. Roberts: The “fiscal cliff” is likely to be like the debt ceilings and the budget resolutions; just another can kicked down the road. The Congress will pass extension after extension. The Republicans will use the fiscal cliff to try to cut the social safety net, and the Democrats will use it to try to raise taxes.
If the parties succeed, a weak and faltering economy will get a double-barrel dose of austerity and be driven further into the ground.
Cotto: Over the last several years, mass movements such as Occupy and the Tea Party have made an impact on the political process. Each is largely a result of the recession and popular anger at government malfeasance. From your standpoint, are Occupy and the Tea Party as different from one another as pundits tend to claim?
Dr. Roberts: Occupy and the Tea Party both are expressions of frustration over the fact that the US government represents only a handful of powerful private interests who purchase the government which then does the bidding of the private interests.
Cotto: Due to the Citizens United ruling, millions of Americans have become nervous about the role money plays in politics. Are these concerns legitimate?
Dr. Roberts: The concerns about corporate money ruling politics are legitimate.This was the case even before the Republican Supreme Court made its Citizens United ruling legalizing the purchase of the US government by private interests.
Cotto: During complicated times like these, a robust national security policy is essential. While America can continue to build stronger relationships with proven allies, more should be done to prevent domestic terrorism as well. What are your opinions on this most challenging matter?
Dr. Roberts: There is no domestic terrorism. Moreover, the “war on terror” is a hoax. The hoax is increasingly perceived abroad, and, consequently, America’s relationships with allies are beginning to unravel. Today all Washington can do is to use money to purchase the governments that it needs as allies.
Cotto: Illegal immigration is a political lightning rod. Some believe that America needs legislations like the DREAM Act. Others say that the federal government should deport all illegal aliens. What would you say is the most effective manner of dealing with such a contentious matter?
Dr. Roberts: It is too late to do anything about immigration. The immigrants comprise too large a percentage of the population and many are now integrated into society. Washington has no better chance of expelling immigrants than Rome had of expelling Germans.
Cotto: Multiculturalism is spreading across the Western world at high speed. This has led not only to language barriers, but substantial ethnic, religious, and racial tensions. How should our country’s leaders be approaching this volatile subject?
Dr. Roberts: Empires become multicultural entities. In the US multiculturalism is protected by civil rights law and political correctness. The US has a black president, a black attorney general, a black UN ambassador and, apparently, soon another black Secretary of State. I am not complaining, just acknowledging the reality of multiculturalism. When the US government demonizes and profiles Arabs and Muslims, it might be breaking its own laws and also making other ethnicities and religions nervous.
Cotto: Across the political spectrum, libertarianism has become very popular. Specifically in the Republican Party, followers of Ron Paul are posing a serious challenge to the establishment. What do you feel the Ron Paul movement brought to the conversation?
Dr. Roberts: Ron Paul tried to bring defense of the US Constitution to the conversation, only to find that neither Republicans nor Democrats had any interest whatsoever in defending the US Constitution.
Cotto: We all have turning points in our lives. At what point did the path diverge, leading you to become one of America’s most well known economists and political commentators?
Dr. Roberts: It is not my path that has diverged. Rather, it is the path of the US government which has become less truthful, less accountable, more immoral, more evil, and more oppressive.
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