R & R Time With Ben Stein

When looking at the cumulative difference of the tax on small businesses versus large businesses, how are they impacted differently?

Small businesses don’t usually have the cunning wherewithal and all the offshore means of hiding income that large businesses have. Large businesses are subject to a much greater scrutiny than small businesses, but large businesses also have armies of professionals to help them with tax avoidance. Small businesses normally do not. I think whatever taxes are increased will bear disproportionately upon small businesses.

You made indirect reference to cap and trade earlier. Do you see any benefit to business sectors regarding going green?

I don’t see what Mr. Obama sees in the sense that he’s going to create a new Industrial Revolution with millions of green jobs. The green power world is not that labor intensive. You put up these big solar collectors, and then the work generated is done. You do not have to do anything more to them for years. Building big wind farms takes workers for a period of months, and then that work is done. It is not like maintaining the industrial infrastructure created while fighting a war, where you have a huge number of people employed on a continuous basis. That said, there is a huge benefit in terms of breathing cleaner air. I am not convinced that global warming is a real thing. I believe if there is global warming, it is not caused by manmade activities. I am certainly convinced that every day, in this city of Los Angeles, thousands of tons, if not millions of tons, of particles are put up in the air. I breathe them. Geoff, you breathe them while you are visiting. My incredibly beautiful wife, our son, all are affected by air pollution. We would all benefit from less smog.

Do you believe greening is a net positive, a net negative or a wash?

I do not know. I do not like the idea of taking money from the taxpayers and giving it to the makers of solar panels or windmills until it is absolutely proven that it will work. On the other hand, I do like the idea of cleaning up energy. I think the bottom line is we just do not have the money to do it anymore. Mr. Obama is spending all this money that we don’t have. He keeps saying we’re the richest country in the world, we can afford this and we can afford that. We’re not the richest country in the world anymore. If you took our unfunded liabilities for Medicare and Social Security and subtracted them from the real wealth of the nation, we would not be anywhere near the richest country in the world anymore. So, we just don’t have the money to lay out on these things unless they’re absolute necessities. Defense is an absolute necessity, paying interest on the national debt, that’s an absolute necessity. After that, everything is going to be on the cutting board.

I’ll give you another example close to home. Here in beautiful Southern California, we have had titanic tax and direct subsidies for alternative forms of energy in this state for at least 30 years. Even after all those, the total amount that is contributed with energy production and consumption in this state by green power is roughly two percent. Today, our local economy is REALLY paying for it.

Are you a proponent of mining fossil fuel energy resources?

Oh, I am a huge, HUGE fan of the fossil fuel industry. I think they have gotten a bum rap. I do not know why we attack the oil companies. I do not know why we attack the natural gas companies. Oil is an incredibly efficient fuel, it’s a legal product, it’s produced in a legal way. Domestic companies that make it, refine it, distribute it and sell it are owned by Americans; they employ Americans. They are not bad people. I have no darned clue why we, as a nation and as a government, go after them so viciously. It is like there is something deeply psychotic in the political process because there’s nothing wrong with the oil companies. We should make fuel cleaner burning and not go after oil companies. They can make natural gases incredibly clean burning. I do not see why we need to go after fossil fuels. Fossil fuels are an incredibly great invention. There are those who say we need to go with clean nuclear power. Nuclear power produces residue that is lethally radioactive for 50,000 years. That is not clean energy.

Is an unfriendly domestic drilling policy counterintuitive to national security?

It is counterintuitive. I do not like the idea of paying all this money to Middle Eastern countries, many of which hate us. On the other hand, it does help power our economy. Almost all that revenue paid to foreign oil is recycled back into U.S. bonds. They are not spending all that money on Aramis bags and Gucci bags and Ferraris. Most of it is recycled back into U.S. bonds. That said, Americans should produce more fuel in America.

Why do you think there is such a visceral anti-drill mentality coming from some corners?

I believe some of the hatred towards drilling originates from the Rockefeller era. They remember the days of alleged price fixing and there is a large contingent of those who believe fixing is going on today. There is a refusal by some to accept supply and demand’s impact on commodity costs. The fact is the last successful prosecution for price fixing in the oil industry was close to 100 years ago. I believe the Democrats use a psychological, “something going on” tactic. There is likely some hatred because of the image of oil men driving Cadillacs with steer horns affixed to their front grills. It is largely a psychological matter, being either hatred or envy. It does not make any sense as a matter of rational calculation.

Do you see a point where private industry can make too much money?

No, there’s no such thing as private industry making too much money. I believe there is merit in limiting bonuses for companies bailed out by the taxpayers. When a company would not exist if it were not for the fact that the taxpayers rescued them, limits should be imposed on their bonuses. For anyone to receive huge bonuses when they have just recovered from a near-death experience by the grace of the taxpayers is wrong. This is a slap in the face to the taxpayers.

It gets far worse than that, Geoff, when you consider the whole picture. What should be more widely realized is that this recession that we’re in now, still suffering in, is manmade. It was not a natural or cyclical event. It was not like a random hurricane or earthquake. It wasn’t accidental. It was not made by mistakes in the Federal Reserve or the Treasury. It was made by manipulations on Wall Street involving housing securities. The big Wall Street banks put out enormous amounts of housing securities, bundles of mortgages, at the same time they were shorting them. They fully knew they were crummy, fragile, risky properties, and they sold them short. They sold them short in titanic amounts and this is what triggered the recession. This created the panic that swept through Wall Street. They got so out of control that some destroyed their own companies. It was like kids playing with matches—they burned down their own house.

Many of these companies were bailed out even though individuals selling the short side of the transaction made huge amounts of money. Some of the people working with the short side made unimaginable amounts of money, but the panic they generated ripped the throat of America and made Americans terrified to buy, borrow, invest, spend and that is what is still gripping this country.

This wasn’t done by the small businessman expanding his business investment. It wasn’t done by the ordinary citizen in San Bernardino or Miami or Orlando buying too big a house. It was done by manipulations on Wall Street.

Is Ben Stein a free market guy?

I’m a free market guy, but I’m not a guy who wants to see manipulations done in secret that screw up the economy. I am happy for people to make the trades as long as it is above board and known. I am not for some of these big investment banks that would put together bundles of mortgages and then sell them to, as an example, the Minneapolis Teachers’ Pension Fund, who would then go out and sell it short the same day. Some would buy credit default swaps, which were, in essence, a way of selling the thing short; they can sell a hundred times the amount of the instruments short. The buyers buying from the firms with the big fancy names were being ripped off mercilessly.