Unvarnished Views of a "Radical" Economist: Walter E. Williams on More Innovation, Less Regulation, and the Entrepreneur as an American Hero

Ali, Abdiweli

Executive Summary

Walter E. Williams, John M. Olin Distinguished Professor of Economics at George Mason University in Virginia, has a B.A. degree in economics from California State University. He has M. A. and PhD degrees in economics from UCLA. In addition, he holds a Doctor of Humane Letters degree from Virginia Union University.

Dr. Williams, born in Philadelphia in 1936, grew up in a North Philadelphia housing project, and graduated from high school in 1954. For a brief period, he drove a taxi cab in Philadelphia until he was drafted into the U.S. Army. While in the army, "I said to myself-1 was 25 years old at the time - if I don't get started now, I'm never going to be anything." He wrote to his wife, whom he had married in 1960, "and I told her as soon as we save $700 we're going to leave Philadelphia and head to Los Angeles, and I'm going to go to college."

After receiving his PhD in 1972, he worked for the Urban Institute in Washington D.C. In addition to George Mason, where he has worked for 25 years, Dr. Williams has served on the faculties of Los Angeles City College, California State University at Los Angeles, and Temple University in Philadelphia. His research has appeared in scholarly journals such as Economic Inquiry, American Economic Review, Journal of Labor Economics, and Social Science Quarterly, and he has also written for popular publications such as Newsweek, National Review and Reader's Digest.

Dr. Williams' many radio and television appearances include Dr. Milton Friedman's "Free to Choose," ABC "Nightwatch, "Star Spangled Line," and CNN. He has also served as a frequent guest host on the Rush Limbaugh radio program. He has authored six books, including The State Against Blacks, which was published in 1982 and later became a television documentary entitled Good Intentions. His most recent book is More Liberty Means Less Government. In addition to his academic work, Dr. Williams writes frequent newspaper and magazine columns in which he comments on a variety of economic as well as social issues.

Author: Many consider you to be a conservative economist. Do you accept that label?

Williams: Well, probably I'm not a conservative at all. I guess politically I'm a radical, a radical very much like Thomas Jefferson and James Madison and other founders of our great nation. When I say radical, I believe in personal liberty, and today there are not many Americans who believe in personal liberty. Many people who call themselves conservatives are not for liberty. Many conservatives are supporters of tariffs, many conservatives are supporters of the growth of government regulation and control and so many other things I don't support.

Author: How did your views form: growing up, in college studies or life experiences?

Williams: Probably it was a combination of all of those. My mother was a radical person, the kind of person who would say as long as you don't bother me, I don't bother you. I was also heavily influenced by the writings of Thomas Paine. I must have read his book, Common Sense, perhaps 50 times. A number of my teachers at California State and UCLA were also very helpful in forming my outlook on life, and then again my personal experiences as well.

Author: At UCLA, probably Armen Alchian and others?

Williams: Yes, several of my tenacious mentors, Armen Alchian, Jack Hirshleifer and Axel Leijonhufvud. They were quite influential in my life as well as Milton Friedman (Nobel Laureate in economics). I have maintained an association with him for quite some time, and I met him when he was visiting at UCLA for a semester, teaching monetary theory.

Author: Which of your career achievements gives you the most sense of accomplishment and why? As a commentator? As an academic? You are well-known in many circles. Which of these accomplishments are you most proud of?

Williams: I think I'm most proud of being a commentator, both writing a nationally syndicated column and doing radio interviews. Why I say that is that when I was a graduate student at UCLA, Armen Alchian used to pick on me a lot, but (it was) kind of friendly picking on me. It was during a faculty graduate student coffee hour, and we were just chatting in the hall, and Armen Alchian said to me, "Williams, you know the true test of whether someone understands their subject comes when he can explain it to someone who doesn't know a damn thing about it." Well, I loved the idea of being able to explain economics and potentially complex economics to ordinary people - who have no training in economics - in ways that they can understand. I look at that as one of my greater achievements.

Author: Was it difficult for you to succeed in academia having views that are not doctrinaire left wing, to say the least?

Williams: I never ran into any problems that threatened my job, but of course at Temple University, where I was for eight years, there were a number of liberals in the department, and we got into debates and discussions but nothing nasty. Fortunately, I have not encountered that at all although I could have. One 1972 job interview took me to the University of Massachusetts, and I thank God that I never took that job.

Author: You gave a lecture titled "The Entrepreneur as American Hero" this year at Hillsdale College. What is the role of entrepreneurs in today's America? What are the obstacles they face in terms of regulations, taxes, etc?

Williams: The role of an entrepreneur is to innovate, make decisions and take risks and to pursue profits. The entrepreneur goes out and finds out what people want that they don't have and tries to produce it hi the most efficient manner possible driven by the desire to make profits. Now there are many obstacles that stand in the way of entrepreneurial activity in our country including economic regulation that stifles entry into business or stifles the growth of business. The taxes, particularly the corporate tax, and regulatory activity such as the minimum wage law, OSHA regulations, and EPA regulations are devastating to economic growth. I think that we Americans who are the richest people on the face of this earth can be thankful that those regulations and taxes were not around hi the 187Os or (early)1900s. If today's regulations had been around at that time, we would be a third-world nation.

Author: To follow up with that, hi your book, The State Against Blacks, you specifically discussed how black entrepreneurs have had problems establishing businesses? Will you elaborate on that?

Williams: Just a couple of examples. Let's say you go back to the early 190Os, you take a poor illiterate Italian immigrant. If the man had industry and ambition, he can go out and buy a used car, write the word taxi on it, and he was in business, supporting his family and moving up the economic ladder. Today, anybody who wants to pursue the same route for upward mobility would find out that in New York City he would have to go out and buy a taxi license in order to own and operate a taxi. I understand that the taxi license is (about) $250,000 and that stifles economic activity. One of the differences between black Americans and other poor immigrants who came to this country is that when black Americans became urbanized and had some economic freedom and political freedom, many of the standard routes for upward economic activity were closed to them through licensing laws, regulations on cosmetology, etc. You know you had to get a license to braid hair in many locations. And then finally laws like the Davis-Bacon Act, which is really a super minimum wage in the construction industry. That law was written for the explicit purpose of keeping blacks out of construction and that law is on the books today even though people don't have the same intentions. But the intentions are irrelevant to the effects of the law.

Author: The recent corporate scandals involving such American giants like Enron, WorldCom, Adelphia and Tyco International made it kosher for the public to suspect the role of the CEO in American corporations. Are American corporations shirking their social responsibilities?

Williams: First, there is no way that we should put up with the dishonesty and thievery of corporate executives and managers like those who are responsible for the activities at Enron and Arthur Andersen, the accounting firm, but most corporate managers and CEOs in my opinion are honest people. They are being tarred by the big scandals of Enron and some others. In terms of social responsibility, you must say their social responsibility is that of making profits and when I say profits you know you make profits under the following conditions. You make profits if you produce a product that consumers are willing to buy and you produce it hi a way that economizes on the scarce resources of the society. You produce something that people want and you find the least cost way of producing it and if you make profits hi an open market that suggests that you are serving society. Other social responsibility things that people put on business as for charity and to help out tsunami victims etc., I don't think that is the responsibility of business.

Author: Some economists believe that we are mortgaging our future by running a huge fiscal deficit. They also believe that the huge US trade deficit is not sustainable in the long-run. What are your views on that?

Williams: In the case of mortgaging our future through debt and deficits, I wouldn't quite put it that way. I would say that with the prolific spending that we are doing right now and creating debt means that we are bequeathing less capital to future generations of Americans and that means that future generations of Americans won't have the kind of economic growth experienced by past generations of Americans. Now to get into debt, let's say the debt to fight World War II was justifiable because it did benefit future generations for us to remain a free nation, but to get into debt for pure consumption, then that does threaten future generations, and most of our debt today is a result of pure consumption.

Now so far as the trade deficit, I believe that's much a do about little. When people are talking about trade deficit they are talking about a current account deficit, which is hi the goods and services account, but there's a surplus in the capital account, stocks, bonds, etc. The alarmists in a sense are saying, "Oh look how bad the United States is, people all around the world want to put money in the United States, they want to buy US bonds, buy US corporations." This reveals the argument as nonsense, that is, people all around the world have so much confidence in our country that they are willing to take their money and put it into the future of America and I think that's great to be living in a country like that. You don't find any capital account surplus in Somalia. Nobody is willing to buy up Somalia. As a matter of fact, the Somalis would be very happy if other countries and people were willing to unload their money in Somalia.

Author: What is your view on welfare? Do you believe there is such a thing as corporate welfare?

Williams: Oh yes, there's a whole lot of corporate welfare, and I think that this is dishonesty that we need to focus on in terms of many businesses. Maybe not dishonesty but a lack of morality. Many businesses get corporate welfare in the form of subsidies, such as great big agribusinesses like Archer Daniels Midland. There are also huge corporate subsidies. For example, the Boeing airplane company receives huge subsidies in terms of exports / imports grants. Then there are massive subsidies to industries like sugar, where the government and the Congress through tariffs and quotas keep out foreign sugar so that Americans pay four times the world price for sugar. So yes, there's massive corporate welfare, and it should come to an end.

Author: What is your view on welfare for the poor?

Williams: I'm against all forms of activity by a government that can be characterized in the following way: Using the power of government to take the rightful property of one American and giving it to another American to whom it does not belong. Activity that can be described as I just defined constitutes almost two-thirds of the federal budget where the government takes what belongs to one American and gives it to another American to whom it does not belong, and this is something that was not a part of the vision of the founders of this country. In 1794, when Congress appropriated $15,000 for relief of French refugees who fled from the insurrection in Santo Domingo to Baltimore and Philadelphia, James Madison stood on the floor of the House to object saying, "I cannot undertake to lay my finger on that article of the Constitution, which granted a right to Congress of expending, on objects of benevolence, the money of their constituents." That is James Madison, the father of the Constitution. He could not find any basis in the Constitution for spending the money of their constituents for the purpose of benevolence. Some people might foolishly argue that such spending is covered under the Constitution's "general welfare" clause. Madison spoke to that misunderstanding, and Thomas Jefferson seconded it by saying, "Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated."

Author: Taxation is defined as an involuntary contribution for the government to pay its bills. In your commentaries (newspaper/Internet columns), you claim that taxation is a form of theft. Do you believe that all forms of taxes are theft?

Williams: No, I don't. That is, if you look at Article 1, section 8 of the United States Constitution, there are the enumerated powers of the federal government and the spending activities that are authorized by the Constitution. I have no objection to taxing to force people to pay their share of the constitutionally mandated functions of the federal government. If you examine Article I, section 8, there's roughly about 20 things that Congress has been authorized to do through the Constitution. You don't find in there aid to dependent farmers, you don't find aid to dependent businesses authorization and most other government spending.

Author: In your commentaries, you suggest that there is a correlation between liberty and prosperity. Can you elaborate more on this?

Williams: When I gave talks to various countries around the world, I would tell people, to go to United Nations data and rank countries according to per capita income. Then rank countries to whether they are closer to a free market system or to a government controlled or communist or socialist type system and then go and rank countries according to Freedom House or Amnesty International's protection of human rights, you will find a very, very significant correlation. Those countries closer to the free market or having more liberty, would also be the ones that are richer, and they also tend to be the ones with greater human rights protection. And see we don't really know the cause of richness, we don't know the full answer, but it seems a very good starting point is to have economic liberty and political liberty for its citizens.

Author: You have also argued that democracy is not the best form of government. Is there a preferred form of government? And let me also add, what is the difference between a republic and a democracy?

Williams: In a republic, as the framers of our nation intended for us to be, the U.S. Constitution guarantees each state a republic form of government A republic form of government recognizes that a person's rights precede government. As a matter of fact, it is in our founding document, the Declaration of Independence. It says that our Creator has endowed us with inalienable rights. Now hi a republican form of government, a person's rights precede government and if you read through the Bill of Rights, the First Amendment, for example, doesn't say Congress shall regulate free speech, Congress shall establish free religion, it says that Congress shall make no law.

A democracy is very much like a monarchy hi the sense that your rights are determined by government, that is, a king determines your rights or a majority determines your rights. There's nothing sacrosanct about a democracy; in fact a democracy gives an aura of legitimacy to acts that would otherwise be deemed tyranny. I mean for example, suppose we had a majority rule, a democracy, on what we are going to have for Thanksgiving dinner, and the majority says we're going to have ham, and it's going to be illegal to have turkey. Of course, such a decision would never be made that way, but if it were most people would view that as tyranny. That is, the democratic process leading government to decree that we must be in its retirement program (Social security) is in no way conceptually different from having a king or a democratically elected Congress telling us whether we are going to have ham or turkey for Thanksgiving.

Author: How then would you make decisions if democracy is not an option?

Williams: The framers of the Constitution envisioned that the decisions by the federal government would be limited to those things they mentioned in the Constitution. You know Thomas Fame hi Common Sense said that government under all circumstances is a necessary evil. He recognized that we need some government, but he said that under the worst of circumstances it's an intolerable one, and this is why the framers of our Constitution sought to limit the government. They recognized the pitfalls of democracy or government decision making; they abhorred a democracy. As a matter of fact, you do not find the word democracy hi the Constitution, you do not find the word democracy in the Declaration of Independence, because the founders of this nation feared a democracy. Our Pledge of Allegiance doesn't say to the "democracy for which it stands," and the Battle Hymn of the Republic is not the Battle Hymn of the Democracy.

Author: Some believe that outsourcing is taking jobs from American workers. What is your take on this?

Williams: Surely outsourcing reduces some jobs, let's say hi the textile industry, but nonetheless we are the major beneficiaries of outsourcing because there's a lot of insourcing, that is many companies from Europe and Japan have set up companies in the United States. We are net beneficiaries of the whole concept of outsourcing, that is, if we were to eliminate outsourcing, the United States would be worse off as a result of it, because there are more jobs insourced to the United States than are outsourced from the United States.

Author: Is that empirically proven?

Williams: Yes it is. As a matter of fact Walter Wriston, former chairman of Citicorp, had an article in the Wall Street Journal, and there are other articles that I have cited hi my previous columns. So yes, that is empirically proven.

Author: You oppose affirmative action. Proponents of affirmative action believe that it is important to mitigate the effects of racism and sexism in America. If racism and sexism are still prevalent in American society, why oppose affirmative action?

Williams: At one time, Black Americans did not have the Constitutional guarantees that every other American had, but today black Americans do in fact have the Constitutional guarantees of everybody else so what that means is that the civil rights struggle in America is over, and it's won. Now because the civil rights struggle is over and won does not mean that every single vestige of racial discrimination has been eliminated, neither does it mean that Black Americans don't have some major problems, but they are not civil rights problems. I don't believe they have a darn thing to do with racial discrimination. I mean if you look at the Washington D.C. schools, the kids that graduate from those schools cannot earn a 700 or 750 on the SAT and so they can't get into college, they can't get a decent job. That doesn't have anything to do with racial discrimination, and it has everything to do with rotten education hi Washington.

As a matter of fact, if you were to ask where the poorest education for black Americans is, it is in the very cities where a black is the mayor, blacks dominate the city council, and (there's a) black school superintendent. I am not saying that there's a causal relationship, but you can't blame it on racial discrimination. You can't say that it's the Ku Klux Klan that's stopping academic excellence for black Americans. Affirmative action disguises some of the true problems. I doubt whether anybody can find me a college that is turning away black students with 1100 and 1200 SAT scores in the name of racial discrimination. The fact is that black students are not getting 1100,1200 SAT scores in large numbers.

Author: You are also against minimum wage legislation, which many consider as a ticket out of poverty? Isn't it American to give employees their fair share of total production?

Williams: If the minimum wage is a ticket out of poverty, we could solve the world's problems. We could just tell the legislature to have an $8 minimum wage or a $10 minimum wage, and there would be no more poverty in the US. Of course, it is utter nonsense that the minimum wage is an anti-poverty device. The wage that people earn is highly correlated with their productivity, and we don't help people by making minimum wages higher. We help some but at the expense of many others.

Minimum wage destroys jobs. Younger people, of course, don't know this, but older people would. When I was a kid growing up, neighborhood theatres had ushers to take you to your seats; kids who had jobs as ushers. Now you don't see ushers in theatres, and that's not because Americans of today like to stumble down the aisles in the dark to find their seats. When you pulled into gasoline stations, there were young people out there to wash your windshield, fill your tank with gas, check the air in your tires, and check the water in your radiator. Now we have self-service stations, not because Americans today like to smell gasoline fumes and get gasoline on their shoes while they fill up the car. The minimum wage destroyed those kinds of jobs and as a matter of fact the minimum wage is one of the most effective tools in the arsenal of racists around the world. I wrote a book about a decade ago called South Africa's War Against Capitalism, and I gave citation after citation that racist unions hi South Africa that would never have a black as a member, were the major supporters of minimum wage laws for blacks, and their stated reason was to protect white workers from having to compete with low-skilled, lowwage black workers.

Author: Today, 45 million Americans are without health insurance. What do you think is the solution to our health problems? Do you think socialized medicine a Ia Canada will be the solution?

Williams: No, that's not a solution at all. You have to ask why Canadians are coming to the United States for health care. Why is Cleveland, Ohio a major hip replacement center for Canadians? All we have to do is get the government out of the health care industry because it is driving up the cost. Forty-five million Americans without health insurance is not the same as saying that they are without health care. You don't find people dying hi the streets; you just might ask yourself when is the last time you had to step over people in the streets dying from lack of medical attention. Even though people are uninsured, they do hi fact receive health care so what it means is that they might have to wait a long time at the hospital, wait a half a day instead of just walking up to their physician to get an appointment, but nonetheless they get health care.

Author: Are you in favor of the Patriot Act or against it?

Williams: I'm surely for the war on terrorism and the measures that the government can enact to protect us from terrorist threats, but I worry about the Patriot Act, which threatens the liberties of so many Americans. That is, the government can look at the emails that people get, they can look at books that you check out of the library, and they can do all these things without a warrant and without the person's knowledge who is being questioned or investigated. So I have some strong reservations about the Patriot Act. On the other hand, I want the government to be able to have the tools to track down terrorists.

Author: Last question, do you support or oppose President Bush's call for a Constitutional amendment that defines marriage as between a man and a woman?

Williams: I guess no I don't. I think it bastardizes our constitution. I mean no more than I want to see an amendment that says you cannot marry a cow. It's just incredulous that I would want to see an amendment to our Constitution along those lines. I think that in this whole same-sex marriage, people want to have a particular relationship, and they are looking for some kind of social sanction, so they want to call it marriage. I don't think that I should have to recognize it as marriage, because marriage is a relationship between a man and woman. If a woman wants to marry another woman that doesn't mean I have to recognize it as marriage no more than I could call myself the King of Siam and require that you recognize me as such.

Abdiweli Ali

Niagara University

About the Author

Abdiweli AIi (Ph.D., George Mason University) is an assistant professor of economics in the College of Business Administration at Niagara University. His major research and teaching interests focus on institutions and economic growth, monetary theory and policy, and applied macroeconomics. Professor AIi was a Joel Leff Fellow of Political Economy at Harvard University's Kennedy School of Government (KSG) from June 1998 to August 1999. He was also a Teaching Fellow at KSG and taught graduate microeconomics and environmental economics courses. Before coming to Niagara, Dr. AIi was a research and forecast manager with the State of Virginia and taught economics at Northern Virginia Community College. The interviewer wishes to thank Melissa Heidt for her help in transcribing this conversation.

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