Translation of Dr. Yaron Brook's appearance on Israeli 23TV

By NotThat3 14, Jan. 2010 | Watch this show on our YouTube Page

Dan Margalit: Ayn Rand was the high priest of Capitalism. You may remember her book The Fountainhead. There is an institute on her name that represents Capitalism. It is headed by a former Israeli, Dr. Yaron Brook. Hello.

Dr. Brook: Hello.

Dan Margalit: You are a big supporter of Capitalism, despite the great world economic crisis, which didn't affect Israel very much, but is felt throughout the world in these last 2 years. What can you say in defense of Capitalism after it failed so clearly?

Dr. Brook: This crisis proves that Capitalism is the most efficient system. The crisis is one of government intervention through and through. If you look at what's happening in the United States, and Historians and Economic analysts will look back at the current crisis and will have it well documented. This crisis is due to the policy of America's Federal Reserve, due to Housing policy – Fannie May and Freddie Mac, and due to government subsidies of mortgages and housing in USA.

Dan Margalit: But what saved the economy was an extremely Socialistic move (bailouts)…

Dr. Brook: Not at all.

Dan Margalit: …Yet you (Ayn Rand Institute) think the government shouldn't be involved in the economy.

Dr. Brook: Firstly it didn't save the American economy, the American economy hasn't recovered from the crisis yet. To the extent that the US economy has recovered it is due to the fact that there are still companies who work and produce, that men go to their jobs and create and put effort. It is Capitalism that will save the American economy. You can not take money from one person, and give it to another, and claim that you've created jobs or economic activity.

Dan Margalit: We will be right back …

*Commercial break*

Maya Bengel: Dr. Brook could you explain the distinction that youve made. You are saying this is not a crisis of Capitalism, but a crisis caused by over intervention of the government in a Capitalistic system.

Dr. Brook: No, because the system is not Capitalistic.

Maya Bengel: In United States?

Dr. Brook: United States is not a Capitalistic system. In almost any segment of the American market there is massive government involvement. In the segments which are responsible for this crisis: Housing, mortgages, banking, the government involvement is especially strong. Capitalism means no government involvement. And today there is much government involvement. In Israel there is this myth that there is no government involvement in USA. This isn't true. American Banks have 70-80% of their activity guided and controlled by the government. 20% is free.

Dan Margalit: Do you think Obama's action of saving big companies, investment firms, insurance companies, and banks, was a mistake?

Dr. Brook: Catastrophe. It started with George Bush, who saved the banks, and Obama continued. It is a catastrophe for the American economy. It creates a situation in which American banks and companies will accept risks since they know that if they profit, they will get to keep their profits, but if they fail, then the government will be there to save them. This creates a moral hazard, and it is terrible for the American and global economies. It creates the foundation for the next crisis, and again Capitalism will take the blame despite government involvement is the cause, and again we will see more government regulation and involvement offered as the solution.

Maya Bengel: Or they will blame Obama for making promises he could not keep.

Dr. Brook: Not just Obama. This began with Bush. As much as I don't like Obama, the blame has to be placed where it is due.

Dan Margalit: Why don't you like Obama? Is he not a good president?

Dr. Brook: He's a terrible president, and US public polls start to reflect that. I think that Obama is the most anti-American president that America ever had. He's ashamed of what makes America special, he's ashamed of Capitalism, which is the foundation of America and what made America a great nation. Also in his foreign policy…

Maya Bengel: Could it be that you, who are the big supporters of Capitalism, have a hard time admitting that it failed?

Dr. Brook: Had we had Capitalism, I would admit it failed. But we did not have Capitalism. There wasn't a free market before the crisis. 70-80% of banks actions were guided by the government, so we see that a free market didn't exist before.

Dan Margalit: Then there isn't a free market anywhere in the world.

Dr. Brook: …And if we go back to 1929 to the great depression, today's Historians and Economic Analysts understand that what caused the great depression was not the free market, but rather government intervention in the economy.

Dan Margalit: From what you're describing, there isn't any free market in the world.

Dr. Brook: There isn't.

Dan Margalit: And America is the most free.

Dr. Brook: In certain very specific areas, China is freer than America. Hong Kong and certain parts of Asia have growing economies. And the reason for that is that they are more free economically. Banks, for example, are less regulated in Europe than in USA. So there is no Capitalism anywhere in the world today, there are varying degrees of government intervention. There are places where the government intervenes a lot, there are places where the government intervenes to a lesser extent. United States is somewhere in the middle.

Maya Bengel: Take for example the health reform that Obama is now performing, which he's worked a great deal on. You will probably argue that it's bad.

Dr. Brook: It's terrible.

Maya Bengel: On the other hand, consider all those who have no insurance and no money. They can not go to a hospital and get treated for something that bothers them greatly and can even cause their death.

Dr. Brook: That's not true. The hospitals in the USA are required by law to treat anyone who enters, and only later worry about the money. No one in USA dies because he doesn't receive medical treatment. The problem in the Health market today is that there is too much government involvement. 50 cents out of every dollar that gets spent in the Health sector is being spent by the government. There is no free market in the Health industry in America. There are several simple things which could've been done in America to provide insurance to those who need it and to lower the cost of medical insurance. These things were not done and they will not be done, because they involve the government removing itself from the Health sector. Free market causes prices to go down. Innovation and new technology causes the prices to go down. The problem with America's health market is that there is already too much government involvement in the Health industry, and now there will be even more involvement. America and the entire world will suffer as a consequence because most of the innovation in the Health industry today occurs in the United States. Why? Because United States is the most free in this regard. After Obama's plan and future changes it won't be as free anymore and we will all suffer because of it, Israel included.

Maya Bengel: Dr. Brook one word about Israel. What do you think of the fact that we weren't greatly affected by the economic crisis?

Dr. Brook: I think it is the result of 30 years of politicians who enacted more and more economic freedom in Israel.

Maya Bengel: Can you name your favorite politician in this regard?

Dr. Brook: No, however I am not following closely enough the Israeli politic scene. But if you go back to the 80's you see that they've began liberating the economy and removing Socialism. In addition to that, Israeli Central Bank has made far fewer errors than the Federal Reserve. This crisis is a lot because of Alan Greenspan and Ben Bernanke. It's terrible that they've appointed Bernanke for another 4-5 years.

Dan Margalit: If you keep talking like that and saying good things about Stanley Fischer (Chairman of Israel Central Bank), you will cause him and the guys at the Ministry of Finance to pale.

Dr. Brook: I said he's done _less mistakes_.

Dan Margalit: They might become uncomfortable with you saying good things about them.

Maya Bengel: I quite like Obama and I wish to thank you for coming, Dr. Brook, and presenting your fascinating stand.

Dr. Brook: Thank you.



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