Guest: Rabbi D.B. Ganz
iTunes: Stream Episode
[iframe style=”border:none” src=”http://html5-player.libsyn.com/embed/episode/id/2568385/height/100/width/480/thumbnail/no/theme/standard” height=”100″ width=”480″ scrolling=”no” allowfullscreen webkitallowfullscreen mozallowfullscreen oallowfullscreen msallowfullscreen]
Rabbi D.B. Ganz is the author of “Uncommon Sense: The Talmud”s Timeless Solutions to Political and Social Challenges.” He joins the episode to discuss how the US can strengthen its military while at the same time reign in its spending. He also explains how much of society the government should control and at what rate people should be taxed.
He also touches on the following questions:
– To what extent should the U.S. regulate employer/employee agreements?
– How much is government interfering with private sector business activity?
– What should the U.S. do about its entitlement spending?
Find out more about Rabbi Ganz at www.rabbiganz.com.
ANNOUNCER: Welcome to the Solomon Success Show, where we explore the timeless wisdom of King Solomon and the Bible, as it relates to business and investing. False prophets and get-rich-quick schemes are everywhere; let’s not be distracted by these. Instead, let’s go to the source: the eternal principles that create a life of peace, power, and prosperity. Here’s our host, Jason Hartman.
JASON HARTMAN: Welcome to the Solomon Success Show. This is your host, Jason Hartman, where we talk about Biblical principles applied to business and investing. Learning from King Solomon, of course. And we will be back with a fantastic guest for you in just a moment here. But be sure to visit our website, www.solomonsuccess.org, or www.solomonsuccess.com. Take advantage of our extensive blog library, and our free content. I think you’ll find some fantastic things there. So, be sure to visit us on the web at www.solomonsuccess.com.
JASON HARTMAN: It’s my pleasure to welcome Rabbi D.B. Ganz to the show! He is the author of Uncommon Sense: The Talmud’s Timeless Solutions for Political and Social Challenges. Rabbi Ganz, welcome! How are you?
RABBI D.B. GANZ: Oh, I’m fine, thank you. Thank you for having me on your show today.
JASON HARTMAN: Well, the pleasure is ours. And you come to us today from I believe Cambridge, Massachusetts, rights?
RABBI D.B. GANZ: Right. Right, the stronghold of liberal think.
JASON HARTMAN: Yes. And you’ve got about 35 universities not too far from you, so. Those are all liberal brainwashing institutions.
RABBI D.B. GANZ: I’m within a mile of Harvard, and that makes up for all the rest of them.
JASON HARTMAN: It does. Well hey, with all the stuff that’s going on in the economy nowadays, and government intrusion, and so forth, maybe it’s good to just start with a very broad question. And then we’ll drill down on some of these specific issues. But, that question is, what really causes prosperity? How does a country—how does a populace create real prosperity, and real wealth?
RABBI D.B. GANZ: Well, I have a section in my book on government and social issues. And the first of those chapters talks about this very question, and I called it creating wealth. It’s about how the country gets rich, or how its people get rich or get wealthy or get prosperous, and how they don’t. I illustrate, as far as example goes, in a very simple way, of two people that have a limited amount of money, and they have to spend certain amounts to live every year. So, unless they get more money introduced into the pot, they’re going to starve eventually, because they’re spending money in order to live, and it has to come from some place. And I base this on classical ideas, where the problem was, this classical work of Jewish thinking, they discussed as a paradigm for creating wealth, a person who grows sheep.
And it’s only a paradigm; it doesn’t mean you have to grow sheep. But the expression is explained, because sheep produce new wealth. They produce milk, they produce more sheep, they produce wool, and then when you kill them they produce lamb chops. So, you take an animal, and then it makes more wealth. In the modern context, what does that is primarily manufacturing. If you take a piece of leather, and you start a business, then you can make a woman’s pocketbook, you can make a pair of shoes, you can make gloves, you can make this—so, leather that has, say, $10 worth of wealth, becomes $100 in products. That, in the thinking of that chapter, is how wealth is created. And it’s created in the way that the Talmud explains, is it’s done in a completely private setting, meaning the government is not involved; if someone goes bankrupt, they will lose their money. There’s no interference with how much you have to pay the worker, it’s all free market.
And that’s how it works best. And if we were doing this, we would have a more wealthy country. Now, when you have, you know, unionism, that forces the hand of the employer. You have laws about how much they have to pay them, and you have this interference, and that interference. And these things are hamstrung. And we talk about it more and more—we have a service economy. Service economy means I take my money and I give it to you and you give it back to me and the government takes some, and we keep depleting it by consuming some, by eating and living, and then we get poorer and poorer and poorer.
JASON HARTMAN: So, that’s interesting. I mean, are you saying that an economy cannot really function as a service economy, because it is constantly chipping away at prosperity because no actual widget is being created?
RABBI D.B. GANZ: Exactly.
JASON HARTMAN: Really?
RABBI D.B. GANZ: Well, it’s chipping away because everyone has to eat breakfast, and everyone has to pay for the heating bill, and they’re taking money out of the pot—
JASON HARTMAN: Fair enough, but—well, I mean, I don’t know if it’s maybe a break even, or—you’re saying it’s a loss, but I’m saying it could be argued at least that it’s a break even. Because the person that has to eat breakfast—well, maybe they have an auto repair shop, and so they perform that service to pay for another person’s service, and the person you bought breakfast from goes out and they cut people’s hair, and so that’s another service, and then some of that money is spent on something else, and it just—it just moves around, and actually increases the velocity of money, at least if there’s enough services being exchanged. Do you really have to make a widget? I mean—and understand that I’m playing devil’s advocate a little bit, because I believe that a manufacturing basis is critical to an economy, but I’m just kind of curious.
RABBI D.B. GANZ: Yeah. Well, let’s take your examples, let’s work with it. Say if you had an auto repair man, a doctor, and a hair cutter—what were the others? I don’t know if you said a hair cutter—
JASON HARTMAN: Yeah, I said a hair cutter.
RABBI D.B. GANZ: Okay, you have an auto repair man, a hair cutter, a doctor, and a shoeshine guy. Now, if they have a certain amount of money, we’ll seal the units. They have a certain amount of money between them. Now, a certain amount of money is lost every day by living expenses. They eat breakfast, they burn fuel, they burn gasoline. Now, when I pay the doctor or I pay the barber, so, the $5, the $20, goes out of my pocket and into his pocket, but the net amount in the group has not changed. It doesn’t really matter if I pay him or I don’t pay him, as far as the bottom line. So if the bottom line is being depleted every day by living expenses, it’s going to get more and more poor. It has to happen, because that breakfast gets eaten, the clothing that I bought gets worn out, everything I use gets worn out, and you need more money to buy more of it. And if you’re not introducing new wealth into the unit, it’s going to go broke!
JASON HARTMAN: Okay, so, the current business plan of the United States is basically, have someone else sweat, and do that manufacturing, if you will. China, the workshop of the world, or the sweatshop of the world, whichever way you want to look at it. And so, basically what we’ve done is we’ve exported our manufacturing base, largely. Although some of it’s still here, and it can be argued to some extent that some of it’s coming back to the US. I’m kind of excited about 3-D printing. That’s sort of an ancillary issue. Seeing what happens with that. So, aren’t we just arbitraging, and buying, getting more of a lifestyle benefit, more of a—I mean, if you can consider prosperity as having all the things you want, well, we get a lot more things for less money than we would get if they were produced here at home. Of course, we have a bigger unemployment problem, no question about that. But, kind of help reconcile that for us a little bit, if you would.
RABBI D.B. GANZ: Well, what you’re saying is certainly true, that if we buy an item in China for $10 that would cost $30 to manufacture here, we’re doing much better for ourselves. That, of course, is partially a result of the fact that we can’t hire employees at a true free market rate. I mean, they’re millions and millions and millions of jobless people who would be employed if they could be hired for whatever the market would bear. Though we could really, if—that’s part of this chapter that I wrote, that if the government would just get their hands out of the labor market, many of the exported items could be manufactured here. But, even so, let’s say, if I buy something from China—so, in a certain respect, there is a benefit, because it’s cheaper. But it’s also true that the amount of money that I paid for the shirt sort of left the circle of the United States. That sealed unit. You know, in the example we were talking about with the barber and the doctor and the—so, if they go and they spend money, and they sent it to China, then there’s even less money. So, you take that over manufactured—if you take that model, and you just blow it up many, many, many times, essentially that’s what’s happening in the United States. Massive trade deficits, and the trade deficits mean that the things that we buy are being—the money for it is being shipped overseas, and it makes the country more and more poor. It’s more and more poor, then they have to raise taxes more, and when they have to raise taxes more, it kills prosperity even more, and it’s a terribly vicious cycle.
JASON HARTMAN: But what we’re really doing with China is, the money really isn’t leaving the US. We’re giving them fiat money, and you know, I think we all realize that the emperor has no clothes—we’re not really going to pay them back. You know? I mean, that’s grounds for war, if you ask me, but we’re gonna pay them back in depreciated green and white paper known as dollars. So, who’s getting the better end of that deal?
RABBI D.B. GANZ: Well you know, when that happens, though—when you depreciate dollars that way, I agree that that’s definitely—it looks like that’s down the pipe. There’s an old Talmudic expression—who’s smart? Someone that can see what’s going to happen. I say Mr. Hartman that you’re looking at something that could God forbid happen.
JASON HARTMAN: Right, right. But just address that—I mean, who’s getting the better end of the deal? The US, or China? When you look at in on paper, from an accountant’s perspective, you would say, well, the US is really screwing up. We don’t have enough employment, people can’t find jobs, blah blah blah. But when you look at it from the bigger picture of how things actually work, and you know, understanding fiat currency, and who has the largest stick, the largest military—then it all changes, seemingly to me at least.
RABBI D.B. GANZ: Well, to a certain extent it’s true, but I would pose this to you—God forbid, let’s not say the United States, but some country buys a load of goods from China, and they can’t pay, and they print money to pay it, so the money that they’re paying becomes devalued, so China’s getting a bad deal, which is I think what you’re saying. But it’s also true that when that happens, the wealth of every single member of the country is taking a hit. So, essentially, you are paying. So, it may be—you know, it may be that as far as the goods go, in a way they’re not paying, but in a way we are paying, because life savings suddenly become worth less. Everything, you know—
JASON HARTMAN: Right.
RABBI D.B. GANZ: Your salary becomes less, and everything is gonna cost more—
JASON HARTMAN: And it doesn’t adjust for inflation very well at all. I mean, Americans haven’t had a real pay raise in three decades, but the reason we’re seemingly doing okay, and of course we could argue that. But if you’re employed right now, and you have a decent job, or a decent business, and you’re making a reasonable amount of money, maybe a median income, or above the median income, I casino mean, you got a lot more goodies than you had in the 70s or 80s! Life, in a material way, it seems better, to me, at least.
RABBI D.B. GANZ: I’m a bit of an old timer. I actually—bringing this up, I think in this chapter—I remember being a kid in the 60s, and everything—I grew up in a middle class, lower middle class neighborhood. My parents were from the old country. And they didn’t have that much. But every single family was a one-income family. Meaning that the husband went to work, there was very little divorce, and every single friend of mine—Jewish, gentile, all the kids on the block—they had mothers that would stay at home, and the family lived in a middle class level. Let’s say they owned a small house, they had one car, all on one income. Now, we have doodads. We have iPhones, we have these electronic things—they’re just gadgets. They’re not that much relative to the price of everything. My take on it is that there was just more money around, and what one person earned was more, and was able to pay for a family to live. At the end of the day, if one person has a job now, by the time it’s taxed, and this taken out of it and that taken out of it, and you pay so much when you buy something, you really can’t live on this! And I think—you know, this is not a scientific thing where I’m you know, producing spreadsheets and everything. It’s just common sense. But there was just more money around then. There was more money, because we were manufacturing, so, it was worth something. You had a dollar, you could go buy something with it. Now you can’t.
JASON HARTMAN: Yeah, well, that’s true. I mean, you can buy a lot more when it comes to technology, no question about it. But when it comes to real estate, for example, and you look at how in the 50s, 60s, 70s, someone on one income—a family on one income—could buy a rather nice home, in many cases, in a nice area that wasn’t a stacked condo where everybody’s in super-high density, and yeah! There’s no question, there’s a dichotomy there, because the real estate can’t be imported from China. You can’t get cheaper workers to make it. And it has no—it has no disruptive technology in any major way. So, so that’s interesting. Well, what do you think is the role of government in an economy? You mentioned before when you talked about how the labor market had the hand of government in it constantly in the US, and the unions, I think you alluded to that as well. Talk about that a little bit.
RABBI D.B. GANZ: So, I take the position in the book, again based on classical guidelines, that the role of government is mainly one to protect the citizens from harm, and to provide infrastructure. So, protecting citizens from harm means having an army, having a police force, having people there to stop white-collar crime, truth in packaging, and to build the roads, to keep the sewers going, and so forth. But when it comes to personal issues—morality—that is not what a government is for. This is—again, a classical guideline, I’m not trying to say—you know, I’m just putting it out there for the public to consider. But according to this way of thinking, a government is not there to enforce morality. First of all, his morality may not be my morality. My morality may not be Mr. Hartman. And a politician, by virtue of the fact that he or she won an election, does not automatically become an expert on morality. So, when the government comes and says, you must pay Social Security, you must pay Medicare, you must pay this—you must pay minimum wage, you must have a union.
All of this—at the end of the day, in principle, in theory, what it really means, is that the government is saying that this is what the person should have, and we’re going to make it happen. So, you know, that’s a very debatable matter. Who’s to say what someone should have? That’s getting involved in my wellbeing, against my wishes. Against the employer’s wishes. And this has—the concept has many, many ramifications. But in terms of the labor market, it would say that, leave them out of this! Just get out of it! And I point out that, a lot of things that I have to do to take care of myself—I have to live in a healthy way, to exercise, go to sleep on time, I shouldn’t drink, I shouldn’t gamble—the government doesn’t get involved, at least yet, with what time I go to sleep. But somehow, when I want to hire an employee, it gets involved, and starts telling me I should pay this, I should pay that—and it’s a tremendous drag on the labor market. It’s one of the reasons, when you buy a basket of goods at Wal-Mart, 80% of it comes from China. Because there are millions and millions of people that would work, and produce it inexpensively in the country. And because we have this basic overarching attitude that the government gets involved, what’s good for me, and what’s good for you, and what’s good for this, I have to buy from China, and it’s bankrupting the country.
JASON HARTMAN: Yeah. Well, that’s—minimum wage laws I think are a complete disaster. I mean, you look at youth unemployment, especially in minority groups, and it’s staggering. And you know, when these young males especially are unemployed, they just tend to get into trouble. And if they had a job, and a purpose, I think the whole—the whole complexion of crime problems would change, and reduce, and it would solve so many problems if we just obliterated minimum wage laws! Why should there be a minimum wage? There is just no good reason for it. People should be able to negotiate independently, and if one employer should compete with each other, and employees should compete with each other, in a free, open market, not restricted by government. All that happens, every time the government raises the minimum wage, all they do is create more inflation. So that’s the other part of it, that we didn’t talk about. And I’ll give you a great example of that. In 1964, the minimum wage was a buck 25, okay? Five silver quarters per hour. As of February of this year, those five quarters were worth $26.21 in melt value, if you just melted them. We don’t need to fix the minimum wage problem. We need to fix the money! Every time you raise minimum wage when you have a fiat currency, you just create more inflation. And inflation hits hardest among the working poor. It hits the people on government benefits as well, and welfare, but the working poor really get hurt the most. And that’s why many of them have made a conscious decision to not work. Because it’s a better deal.
RABBI D.B. GANZ: Yeah. Well, and then also, also, you get hit, because then you’re saddled with entitlement costs that they tax out of your hard-earned salary. Because of these people that were put out of work by minimum wage. And I think it’s also true, and I point this out in my book, that there’s a basic reality that I think people don’t talk about anymore. And that is, nobody works unless it’s to benefit themselves. People don’t go to work for the social good. For the greater good. They work to earn money, whether it’s poor men or rich men. Now, when a man has a job in a factory that wouldn’t be profitable if he got paid $5 an hour, and you pass a minimum wage law that he has to pay 6, he just closes it down. Nobody’s going to pay—if they raise it 20%, people don’t pay 20% higher salaries, they just close the jobs, they close the factory. So the net impact of minimum wage is just to eliminate jobs. That’s all it does.
JASON HARTMAN: Yeah, that’s exactly what it does. It eliminates jobs, it creates inflation. That’s all it does.
RABBI D.B. GANZ: I’m not gonna pay more because of [unintelligible] I’m gonna lose money! Why should I go to work and lose money? So I just close the factory, I close the business. And that’s what exactly has happened. Business after business after business is closing, every time they do this. I just—it makes no sense.
JASON HARTMAN: It makes no sense, but it increases the power base of the elites who run the system. And that’s why it continues. Politics is not about making sense. It’s about staying in power, unfortunately.
RABBI D.B. GANZ: Well, maybe. You have to get your radio show out there a little bit more. Maybe it’ll pack some sense into some people.
JASON HARTMAN: Yeah, it’s, you know. There’s a big movement of people who think like this, but an even bigger one of people who believe in entitlement and government. So, at what rate should people be taxed? For example, do you believe in a flat tax?
RABBI D.B. GANZ: Well, I have a chapter on that in my book. And, without getting into the source of it, the textual source, it’s in the book there. But, I approach from these classical sources, but there’s an idea out there that people will not pay much more than 20% of their income in taxation. And it is just sort of, you know, I know God helps—I found an article about it. A theory of an economist, someone named Hauser. W. Kurt Hauser, I think it is. And [unintelligible] San Francisco, and he has this theory that whether the government has a 20%, 40%, or 80% tax rate, all it collects is 20% of the Gross Domestic Product.
JASON HARTMAN: Mhmm. Tell us how that works.
RABBI D.B. GANZ: Well, I guess the way it works it—I don’t know his—I don’t know exactly what he based it on, but he—but around every two years, the Wall Street Journal runs something about his theory. I guess they don’t want anybody to forget about it. That’s where I saw it. But he said that people—they don’t pay more than that. And then if the taxes are greater, then they move the money in ways to not tax it. They move it offshore, they close businesses, they just don’t work—they don’t want to produce a profit more than 20% of which is going to the tax man. So, he wrote that that being the case, the only way to raise tax income is to somehow stimulate business activity so that there’s more money that’s kicking off 20% to the government. In my book, I said, well, it’s 20%, we should just have a flat 20% tax rate of all citizens, instead of a 70,000-page tax code, we should have a 7-page tax code. You pay 20%, end of story. Rich and poor alike. As for the argument that poor people can less afford it, well, I say, you know, on my own I volunteer the idea that it is true that it’s harder for them to pay, but the money that this taxation’s going for is mainly for civil services that people get from the government. So if you have somebody making $50,000 a year, and somebody making $50 million a year, so, $50 million is making 1,000 times more than $50,000. So if they both pay 20%, he’s paying 1,000 times more for the same police protection. Well, that’s enough. That’s enough. It’s not fair to make him pay more than that. It would streamline the economy incredibly.
JASON HARTMAN: Based on the huge check that I just wrote to the IRS and the state of Arizona, I’m wondering if I get in the VIP line next time I go to the DMV, or something. You know. I don’t know if I get anything more for that, than everybody else. I paid more than a lot of people, I know that.
RABBI D.B. GANZ: You’ll be treated rudely just like everybody else.
JASON HARTMAN: Yeah, I don’t get to press one to bypass the voicemail when I call a government agency either, and have someone take my call. At Nordstrom I get a personal shopper if I wanted to spend more money, right? But it doesn’t happen with the government. It doesn’t work that way. I thought they were so into equality, but I guess that kind of equality doesn’t work for them. So. Interesting. Interesting. Well hey, just kind of wrap it up for us, if you would, Rabbi, with any closing thoughts, and give out your website, tell people where they can get the book.
RABBI D.B. GANZ: I’ve set up a website, RabbiGanz.com, and on that website, if you want to buy the book. And I’ve also taken to writing a weekly blog, and I try to at least once a week write some article about something that’s going on. And a lot of times it’s based on something from the book. The latest blog was about, on the topic of government not being involved with morality. I talk about AIDS education, and my students have this whole discussion, and there they justify student loans, in terms of being something that makes education affordable.
JASON HARTMAN: Well, student loans, like minimum wage, are a complete disaster. I mean, all that they’ve done by insuring these student loans is they’ve just increased the cost of college, massively. It’s the classic definition of inflation is, too many dollars chasing a limited supply of goods and services. So, these universities have just increased their tuition costs at two and three times the rate of inflation. I mean, it is obscene, what they’re doing. And they’re using the government insurance as a way to prop up their obscene tuition prices. And to add insult to injury, the student loans are not dischargeable in bankruptcy, so, literally these kids are debt slaves for life. They are indentured servants, they never get a second chance, and they usually enter into these loan agreements having no idea that there’s no second chance, there’s no bankrupting out of a student loan.
RABBI D.B. GANZ: Yeah, I go against—I go off against it as well.
JASON HARTMAN: Yeah, it’s a complete scam.
RABBI D.B. GANZ: But the thing is—you know, the thing about—the style of my writing, I guess you could say, is that it’s the principle. Government shouldn’t be involved in these kinds of things. It’s not just that I’m against student loans in an isolated manner. It’s part of a whole mindset of government, that it gets involved in my wellbeing.
JASON HARTMAN: Yeah, you’re absolutely right.
RABBI D.B. GANZ: And really, I should be responsible for my wellbeing. Not you. You shouldn’t be taxed to see that I go to college if I want to. You know? It’s just like anything—if I live well, it’s not your business. You shouldn’t be taxed to make me do what I have to do for myself. That’s the basic philosophical premise behind it.
JASON HARTMAN: Yeah, well, very good point. Well, Rabbi Ganz, the book is also available on Amazon.com, correct?
RABBI D.B. GANZ: Correct, yes.
JASON HARTMAN: Well, hey, thank you so much for joining us today, and keep getting the word out! You must be the lone voice of liberalism in Massachusetts. Or I mean, of conservatism, in a liberal environment like Massachusetts.
RABBI D.B. GANZ: I have not many friends. You’re my first.
JASON HARTMAN: [LAUGHTER].
RABBI D.B. GANZ: I shouldn’t say that.
JASON HARTMAN: I know you’re kidding, of course. But anyway. Keep getting the word out, okay?
RABBI D.B. GANZ: It’s been really nice being on your show, sir. I wish you all the best, continued success.
JASON HARTMAN: Likewise. Thank you much.
RABBI D.B. GANZ: Okay, bye.
ANNOUNCER: This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com, or email [email protected] Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, or business professional for any individualized advice. Opinions of guests are their own, and the host is acting on behalf of Platinum Properties Investor Network, Inc. exclusively.
Transcribed by David