In the wake of the recent news revealing the extent of the NSA's level of citizen surveillance through supernetworks like PRISM, Chris speaks this week with Mark Skousen, former-CIA-agent turned founder-of-FreedomFest, one of the countries largest "gatherings of free minds."
Mark argues that in this case, technology has advanced at a far faster pace than our culture's ability to understand how to use it effectively, responsibly, and how to regulate it:
I think its like the Pentagon papers back in the early 1970s, where we definitely need to tell government You’ve overstepped your bounds. I mean, look, I worked for the CIA, I understand the need for secrecy, I understand the need for intelligence, especially against foreign threats. But there are plenty of ways to do this without this wholesale invasion of everybody’s emails and telephone records. You don’t have to use those methods, and in many cases we haven’t used those methods, and yet we’ve kept so many terrorists plots from being carried out. I’ve talked to a number of my CIA people, and they have all kinds of means and methods of finding these things out that are pinpointed without violating the 4th Amendment, the right to privacy, for the ordinary U.S. citizen.
And while the PRISM leak is raising an important debate about where to draw to draw the line between security and civil liberty, Mark doesn't feel the world has changed enough to depart from where the divide has been over past generations. And without hard constraints agitated for by the populace, our security apparatus will continue to expand and invade:
I don’t think it’s so much that the world is more dangerous; it’s just that the technology has advanced so rapidly that we’re now facing a situation where with these unmanned drones that can be the size of a mosquito and are taking pictures. We have GPS; they’re considering a rule to mandate that it be in every car, every cell phone, so we know where you are at all times. The capability of the NSA to collect all of this data, this is all new technology — it’s kind of like new military weapons; you always want to try them out.
The invasion of privacy is growing faster in technology than the privacy protectors. So I think that’s really what’s going on: They’re just using this as a ruse and excuse to use this new technology.
As mentioned, Mark is also the founder of FreedomFest. Within the podcast, Chris commits to posting a link to a brief video about the event – here it is:
Click the play button below to listen to Chris' interview with Mark Skousen (33m:18s):
Chris Martenson: Today we welcome Mark Skousen as our guest. Mark is a nationally known investment expert economist, university professor, the author of more than 20 books, and the editor-in-chief of Forecast and Strategies, a popular investment newsletter. But he is perhaps just as well-known today as the founder of Freedom Fest, an annual non-partisan festival billed as the world’s largest gathering of free minds.
Now, over the years, many Peak Prosperity readers have advised me that Freedom Fest would be a great audience to introduce to the Crash Course, as it’s comprised of many independent minded thinkers, like the ones we write for and regularly talk to. In the wake of the NSA spying, IRS and journalist wire tapping scandals, this podcast and this year’s Freedom Fest have added dimensions to them. So I’ve asked Mark to come to the program and tell us more about Freedom Fest, how it’s participants might view recent events, and what we need to be doing about the direction in which our country is headed.
Mark, thank you so much for joining us.
Mark Skousen: It’s a real pleasure.
Chris Martenson: In order to acquaint our listeners with yourself, what else should they know about your background that I didn’t cover?
Mark Skousen: I’ve actually been what you might call a “world traveler.” I grew up in Portland, Oregon. My father was an FBI agent. My uncle – many people know Cleon Skousen is – was also an FBI agent and kind of the father of the constitutional movement, the Tea Party movement, and the anti-communist movement, and so forth. So I was grounded in conservative political thinking. I’ve become more of a libertarian over time, but I basically got into – I got a PhD in economics back in the 1970s. I worked for the CIA, so I have a little bit of background in this whole issue of the NSA and so forth. But I basically built my career around the financial world starting in the 1970s, kind of an upside-down world that I got involved in with the financial revolution that went on during that inflationary 1970s. And have been writing my own newsletter called Forecast and Strategies since 1980, when Ronald Reagan was elected. And so I’ve been writing my newsletter for 34 years.
Chris Martenson: Wow.
Mark Skousen: Lived in Washington, DC, then moved our family – we have a family of five children, my wife and I; still married to my first wife after 40 years of marital bliss – and we moved to the Bahamas in the 1980s for a couple of years; I call that life in living color. And then we saved enough in taxes to buy a flat in London, so we lived there for a while and then moved to Orlando to raise our kids.
And since 2001, I’ve been living in New York; so I’ve traveled to maybe 70 some countries and during this time written about 25 books. I’ve been doing investment conferences for many years. And then about 10 years ago, I decided to start Freedom Fest as a national convention for all freedom lovers to come together once a year to learn and network and celebrate liberty, or what’s left of liberty. It’s been a really great experience, and we’re just growing every year. We’re going to have over 2,000 people there this year, so we’re really excited about it.
Chris Martenson: Congratulations on all of that, and that certainly helps paint the picture, so thank you for that background. Let’s start at the outside before we work in the particulars of Freedom Fest, which I want to get to. When you look at the macro trends that work in the United States, which ones most concern you?
Mark Skousen: I think there’s a lot of things that concern me, and one is the policy level of government – government is in many ways responsible for the errors. But it’s not just government, its economic policy based on what is being taught to our students in today’s colleges. And the best and brightest are learning still Keynesian economics, that the only solution to our problem is more inflation, bigger government and more intrusion in our lives.
And it’s most unfortunate that despite every effort by the Chicago school, Milton Freidman, and the Austrian School of Mises and Hayek, of which I’m partial to, we just have not made much of a dent. Supply-set economics has had some successes, but government is still very large, very intrusive, and it’s both in terms of our money system, which I think is suspect and government policy in general, the interventionist policies, the level of taxation. There’s just a whole series of problems that our country faces, and it’s largely due to bad government policy that has been taught in the schools over the years.
So one of my purposes – just as yours is, I believe – is to teach people sound economic principles. And I’ve written a textbook called Economic Logic, and I’ve written a series of textbooks to try to reverse this trend, but it’s still very much an uphill battle.
Chris Martenson: You know, it seems much of the Keynesian economics, in my mind – well, let me be fair to Keynes, I think it’s been distorted heavily over time, and in favor of allowing certain rationalizations to take hold such that people think they’re associated with Keynes, which is the idea that government should run persistent deficits, which I don’t think he really ever advocated. So maybe there’s a little fairness to him that’s due. But you’ve characterized two big areas; one is the size of the government itself, and I’ve seen a lot lately with doctors giving up on the medical profession because it’s just too complicated because more and more rules get layered on top of them. Teachers giving up for the same sets of reasons. It’s natural for any organizational bureaucracy, every company, to want to grow. Growing’s easy, but your argument would be that it’s grown too large. In fact, now additional growth is harming us rather than helping us.
Mark Skousen: Yeah; I’m not a total pessimist in the sense that I think we’re headed for an absolute disaster. I do think we are headed for disaster, but it is reversible. I don’t think we’ve reached the point of no return, like a lot of analysts think, but it does require – you know, we’re headed for a cliff, we’re driving a car. We’re in charge of the car, and we can make a U-turn but we’re coming closer and closer to the cliff, and we’re going fairly fast, so we have to put on the brakes in enough time to turn around; otherwise we go off the cliff.
So I like to use the example of Canada, our neighbor to the north, as a classic example in the mid-1990s that faced a similar problem of excessive government. I think government spending as a percentage of GDP was over 50%. The Canadian dollar was falling, they were running these huge deficits, government was too interventionist, and the liberal party of Canada – of all groups, the ones responsible for causing or creating this crisis – said, Enough is enough, and we’re going to reverse this ourselves. So in the mid 1990s, they fired federal workers, they balanced the budget in two or three years, and then they went on an 11-year supply-side tax-cut policy and high economic growth. They had no financial crisis in 2008, and the Canadian dollar is back.
So it is reversible, but it’s not going to be automatic; it depends on a change in government policy. And that requires leadership, and that’s one thing we really lack right now. President Obama is not listening to this podcast, unfortunately, and so that’s the problem; so we have to go to a survival mode. We have to predict where this is headed, the unfunded liability problems, Obamacare that you mentioned, you know how is that going to affect us? Our investment portfolio, our business, our relationships, and our standard of living?
Chris Martenson: Certainly, at the higher level of this, one of the Austrian quotes I really love from Ludwig von Mises is – to paraphrase it, it roughly says, When you undergo a credit expansion, you either voluntarily terminate it or you face a catastrophe of the currency system involved. And that’s what we’ve really done here. If you look back over the last 40 years – and this is apolitical, this is independent of party, because this has happened across all parties and all decades – we’ve been growing our credit market debt at roughly twice the rate of the underlying economy.
And as an individual, you can’t do that; you can’t grow your debts on your credit card faster than your income forever; that breaks. And instead of owning up to that, what we’ve got is a whole slew of new interventionist policies from the Fed, on the monetary side, from the fiscal side. And basically I think the collective statement there is, we don’t want to have to live below our means to adjust for the period where we lived beyond our means. We want to pretend that the period where we lived beyond our means was normal and something that could happen in persistent perpetuity. How would we go about you turning that particular dynamic at this point, would you think?
Mark Skousen: I do think things are reversible, but it is, to some, extent painful. There is no free lunch here. It means layoffs; it means changing direction. Take for example the Department of Education, which has spent something like a trillion dollars since it’s inception, and what evidence – what do we got to show for it, really? Nothing. The SAT scores are still down. We’re “teaching to the test,” which my wife will tell you, as a professor of English, is the worst way of teaching. People don’t really learn; they’re just regurgitating what they’re told that’s going to be on the test. And funding, dealing with these problems.
So if you decide to get rid of the Department of Education, which you and I and others have advocated for years, that means a lot of layoffs of federal workers. They got to find other jobs. Now there’s a savings there, the deficit is reduced as a result of it, but there’s still a lot of pain; individuals who are working for the government now have to find gainful employment elsewhere. When Canada went through this, they did fire 60,000 federal workers in Canada, which is a lot of people for them. So there is that pain that’s involved, and the media is not going to understand it. They’re going to complain; there’s going to be all kinds of protests. There could be riots in the streets.
You saw what’s happening in Greece and in Europe. That’s a classic example of where people who are benefit-corrupted, who are on welfare and so on, and you start cutting back on that, that’s why we have – when companies go through downsizing, they often do it through attrition. They say, we’ll make it a part time job or we’ll show you where you can get a new job. There’s all of these different methods that are used to minimize the pain, but you can’t eliminate the pain.
Chris Martenson: Right. Okay, well, let’s turn quickly now to the other side of this. You mentioned a couple of big trends, and the other one is kind of loss of civil liberties, if I could put it that way. Let’s turn now to this – I guess it’s very much in the news, and it should be – we’ve got the NSA tracking scandal, of course; we also have the IRS deal; we’ve got the journalist wire tapping. But looking at this NSA tracking scandal, what are your views there?
Mark Skousen: I think it’s a major – frankly, I’m really – I applaud these whistleblowers who have done this. I know they’re viewed as traitors and may be prosecuted for what they’ve done, but I think its like the Pentagon papers back in the early 1970s, where we definitely need to tell government that you’ve overstepped your bounds. I mean, look, I worked for the CIA; I understand the need for secrecy; I understand the need for intelligence, especially against foreign threats. But there are plenty of ways to do this without this wholesale invasion of everybody’s emails and telephone records. You don’t have to use those methods, and in many cases we haven’t used those methods and yet we’ve kept so many terrorists threats and plots from being carried out. I’ve talked to a number of my CIA people, and they have all kinds of means and methods of finding these things out that are pinpointed without violating the Fourth Amendment, the right to privacy, with the ordinary U.S. citizen.
So I am very disturbed about this new NSA building that is being built. I mean, it’s a monstrous, multi-level building that you’re finding out – in Bluffdale, Utah – that is going to be collecting the big data, collecting the emails. Okay,they may not be reading it, but they’re going to be collecting this data so that they could read it when they wanted to, when people like Chris Martenson become an enemy of the state.
Chris Martenson: Freedom and privacy have always gone hand in hand, and I’ve heard the argument lately where Obama had said that if you want 100% security, you’ve got to make some trade-offs. We have to be willing to concede certain things, and society has to decide where it wants to draw the lines. And the thing I objected to in that statement immediately was the idea that society didn’t decide anything. This was done in secret, and in many cases I believe even the Congressional and Senate people charged with oversight had no clue what was going on.
So this is all happening with secret courts, with secret rulings, and in fact, they tell us it’s legal, but we can’t actually see the ruling, because that’s secret. And this really harkens not to the principles upon which this country was founded, but others – more totalitarian regimes would have a better alignment with such an idea. In your views, do we really [need this] – is the world changed to the point where it’s worth it to give up our most fundamental right to privacy? I guess it’s a privilege, because rights can’t be taken away; privileges are temporary. For security, is the world that dangerous that we could no longer suffer an insult from a danger that we would have to give up something that’s worked so well for us for hundreds of years?
Mark Skousen: You know, Chris, I don’t think it’s so much that the world is more dangerous; it’s just that the technology has advanced so rapidly that we’re now facing a situation where with these unmanned drones that can be the size of a mosquito, that are taking pictures and that sort of thing; we have the GPS that they’re mandating – they’re considering a rule to mandate that it be in every car, every cell phone so we know where you are at all times. The capability of the NSA to collect all of this data – this is all new technology, and it’s kind of like new military weapons. You always want to try them out. We even start wars to see how good we can use these weapons. And I think that’s what’s happening here.
The technology to maintain privacy is also growing. There are ways to maintain privacy in your email and that sort of thing, but it just seems like the invasion of privacy is growing faster in technology then the privacy protectors. So I think that’s really what’s going on, and they’re just using this as a ruse and excuse to use this new technology.
Chris Martenson: Technology has a bad habit of advancing faster than the culture that generates it, and so it’s just going to take time for our rules, our regulations, our understandings, our habits to catch up with the technology. In the meantime, though, the government seems to be saying Trust us; don’t talk about it; we’re not going to misuse this in any way. But the IRS scandal shows power gets misused. In fact history shows that power will be misused and abused. And so I, for one, am not willing to sport a lot of faith to technology that’s so powerful. I think Stephen Colbert sort of nailed it for me last night, when he said, If you’re doing nothing wrong, you have nothing to hide from the giant surveillance apparatus the government’s been hiding.
Mark Skousen: I’ve never bought into that, either, because you do have something to hide. I mean, what if I asked you, Do you have any gold and silver coins, and can you please tell me where they are, and can you please give me your address, and can you tell me when you’re not going to be at home? So you have nothing to hide? What you mean to say is that you’re not doing anything illegal. But you still have things to – there’s a reason – there’s a rationale behind privacy.
The other thing is, if somebody is looking over your shoulder, that changes the way you talk and the way you act regarding people. A lot of times, you don’t tell people what you really think, because you know your voice is being monitored. That’s not freedom, you know; that’s a regulatory environment. That is what we mean by a “police state.” So I think this idea that if you have nothing to hide, what do you care? is really something to reject.
Chris Martenson: I agree. Now, let’s turn to Freedom Fest. You mentioned you started about 10 years ago, and it’s got a couple thousand attendees. What’s the mission behind Freedom Fest? Why’d you start it?
Mark Skousen: I came up with the idea when I was president of FEE, the Foundation for Economic Education; that’s why I moved to New York. And I said, We’ve never done this before, but let’s have a national convention. We’re the oldest free-market think tank; let’s invite all the other free market organizations. Let’s have a festival of great ideas, great thinkers, and great books, and have an intellectual feast. Let’s have it in the entertainment capital of the world, the most laissez-faire city in the United States. Let’s have it in Las Vegas. I mean, CPAC has its event in Death Star, which is what we call Washington, DC. And so we thought, as a Libertarian movement, why don’t we have it out in Las Vegas? And it fit just perfectly; we had 850 people the very first meeting.
I didn’t continue as president of FEE, but I thought Freedom Fest was something that should stick around. Because I think in many ways we’re all doing our own thing; we’re like a heard of cats. As Libertarians, we’re all going in different directions, and we’re losing. So I felt an urgency to come up with this idea of a national convention – or a world conference, if you will – of freedom lovers, where we all come together. There’s value to physically being together to see each other in the eye, to talk. Not just over the phone, not just through email, not just through texting, not through podcasts and all the other things that we do in different directions, but that we come together.
We live busy lives; we do it just once a year, only once a year, in July, in Las Vegas. A very hot time, so we have a captive audience; nobody leaves during the day. But it’s been growing. It’s taken a long time, but I think now we have a critical mass, if you will, because once you get a critical mass, then your growth can be like an atomic bomb – it can really explode. And I think we’ve reached that point, because we have all the major free-market think tanks coming, we have Kato and Heritage and Reason and FEE and Goldwater Institute and Freedom Works, Americans for Prosperity, they’re all coming. They all have booths, they all have exhibits, and we have other organizations that are coming together as well. So we have full exhibit space this year, and that’s really the idea behind it.
And in all these breakout sessions, we have over 100 speakers. So we have the top speakers, like Senator Rand Paul is coming; we have Steve Moore of the Wall Street Journal, Steve Forbes comes for all three days. John Mackey of Whole Foods Market is one of our co-ambassadors with Steve Forbes. So we have representatives from all of these organizations, and then each year, we choose a theme. And our theme this year is Are We Rome? Are we in decline; are we like the Roman Empire, like the British Empire? Like China, like Egypt? Are we all going through the same cycle, where we have this rise and become the super power? And then we start our decline and fall and maybe even collapse? And that’s the concern that you’re raising, and others are raising, and it’s a very legitimate concern.
This theme has really resonated with people, and I would encourage your podcast listeners to go to FreedomFest.com and watch our two and a half minute video “Are we Rome?” It’s kind of a preview where we look at the past and compare it to the future, and it’s been rated the number one video in a number of conferences. Just a short two and a half minute video at Freedom Fest.com, and people will get a sense of what we’re talking about.
Chris Martenson: You know what, we’re going to link that video at the bottom of the podcast so that people can click just straight through to that so check the bottom of the page, you’ll get a link you can click to there. And so, are we Rome? Is that a rhetorical question, or are you really going to – how are you going to explore that question?
Mark Skousen: That’s right. We do put a question mark after it, because I’ve done quite a bit of reading and we have over a dozen experts coming to address this issue – and by the way, John Stossel and Fox News is coming for the very first time. It’s a real breakthrough for us to have a major TV network coming to Freedom Fest in Vegas. So they’re also – John Stossel’s program is going to be called “Are we Rome?” and it is a question mark. So yes, what destroyed Rome? And the answer was an excessive foreign policy, with an army that was very expensive, so that meant an increase in taxes, but that wasn’t enough, so they debased the currency. They didn’t have paper money back then, but they clipped the coins and they made the silver Denarius worth less and less. They had almost a hyperinflation during that time.
Then they imposed state socialism under Diocletian and other leaders. So what Augustus the emperor had established, which was the biggest superpower of its era, went into decline and crashed because of excessive taxation, excessive welfare state, the free bread that they were offering all their citizens. They depended on a slave economy. Anyway, between taxation and inflation and state socialism, where they nationalized the trade unions and the mines and so forth, it all fell into disaster. Now on the other hand – so, we face all of those things, we have an excessive welfare state, we have monetary inflation debasement of the currency, we have excessive taxation. Taxation is not fair. It’s unfair to everybody. And finally the reason I say it’s a question mark is because we’re not a slave economy, which the Romans were. We’re not an agrarian economy; we’re a technologically advanced industrial information oriented economy. We’re so far advanced compared to these other countries, compared to Rome.
So that’s why it’s a question mark, because – and I think we do have the principles of sound economics among a minority of economists, but maybe people will recognize their problems and turn things around and we could move to a higher era of superpower growth. It’s not inevitable that we are in decline, although I think the evidence is that culturally and economically and politically we are in decline. I would argue we’re on a decline, but I would also argue that we have it in our power to reverse course before we have a collapse.
Chris Martenson: The reason that I resonate with a lot of that, and the reason that I focus on the economy first – I also look at resources, energy, how we’re treating the larger planet in terms of non-renewable natural resources being taken out and waste streams going back in. There are a variety of things we can focus on. I focus on the economy, and the reason is that a lot of people have embedded in them this idea that progress is a one way trip; that we will have better technology in the future. And that’s true if and only if we have an intact, functioning economy there to support it.
It’s worth noting that in the Roman experience, they had heated floors, spas, aqueducts, roads, arts, literature. They were advancing science; they had cement technology we’ve not yet duplicated. It’s extraordinary what they did, and that all went away for a long time. And that went away because their economy collapsed and their society collapsed. And so that’s why, I mean – if you have a functioning economy, a lot is possible. Wander over to Greece today and ask the question how are they doing? and you’ll discover they’re not doing all that well because their economy has gone away. It’s not that they lack people who are clever or motivated or resources; their economy has fundamentally gone away.
So I truly believe the greatest threat we face in the near horizon is fiscal and monetary mismanagement. It’s been cooking along for a while, but oh my gosh, if the Federal Reserve gets this wrong, we could actually see great harm, grievous harm, to our sense of selves, our cultural cohesion, and most importantly, our ability to really advance the dreams that we want to live into. If we really want an economy that can function on alternative energies, for instance, some day we have to wean ourselves off fossil fuels eventually. You know, then, how are we going to do that without a fully functioning economy?
So my view is that it’s the economic policies – and by that, I mean fiscal and monetary – that are some of the most grievous threats. You’ve been running Freedom Fest for a number of years now. What are our opportunities, then, to really effect positive change on the fiscal and monetary front in your estimation? How would we do that?
Mark Skousen: One of the things that we like to do is, we don’t like the attendees at Freedom Fest to walk away with their heads down and saying, Oh, man, there’s just no way – we’re just stuck, and what can we do? and they just wash their hands of it this year. Actually, we go to special lengths to offer an optimistic vision. So we have economists coming in talking about sound economics, but also we have experts who come in, especially led by Richard Ronn at the Kato Institute, who brings in experts of countries around the world that have reversed themselves and are on the road to success. Like Estonia that has a flat tax and has a balanced budget and went through austerity and has real austerity where they cut taxes and cut the size of government. That’s not the false austerity that Europe is going through, where they raise taxes and they didn’t really cut government spending and it’s counterproductive.
We tell the Canada story; we talk about Australia, New Zealand, Singapore, and Hong Kong, and the Economic Freedom Index people. People walk away from Freedom Fest with a new vision that says, Wow, we have in our hands the capability of turning things around if we can do X, Y, and Z. So we have a full three-day investment conference that talks about how people are successful in this environment.
So really, that’s one of the other purposes of Freedom Fest, is to give people hope for the first time. And we get a lot of letters from people saying, I’m really glad I went to Freedom Fest because I couldn’t believe there were so many like-minded people, and it just re-energized people for the first time in their lives to say, Wow there are several thousand people here; they meet new friends and maintain friendships for years. We even had a couple who met at Freedom Fest and get married last year at Freedom Fest, so it’s really quite fun.
The other thing we do, and it’s really important, is to have civil debates. I’m sure a lot of your listeners watch Fox News or some of the other channels, and they see these debates going on, and the shouting matches. We have debates, but they’re all civil; they’re all formal debates, so each person makes their point, and we try to avoid the demonizing that goes on, the left/right dichotomy. We talk about what is good policy and what is bad policy. We don’t care if it comes in a right or the left or whatever; it’s just, as Ronald Reagan once said, There’s no left or right; there’s only up or down. And I really like that approach, to treat everyone truly as an individual and respect the alternative point of view. And so it’s almost a love-fest, if you will, that we have every July.
Chris Martenson: All right, in Las Vegas; that’s a good place to have something like that.
Mark Skousen: It’s great, because during the day we have an intellectual feast, and by the evening people want to go out to a fine restaurant, to see a great show, to do some gambling, or whatever they want to do. It really is a “wow” experience, as people have reported to us. So we’re growing, and you can see why we’re growing when you come there.
Chris Martenson: Fantastic. So for anybody listening who is now hopefully very intrigued and would like to find out more, where do they go?
Mark Skousen: We have a simple website, FreedomFest.com that they can go to. We have an 800 number they can call there to find out more information. We have $89.00 a night for room rates. It’s really a very simple process.
Chris Martenson: Fantastic; so, FreedomFest.com, people can go there to look at it.
We’ve been talking with Mark Skousen. Mark, it’s been a real pleasure.
Mark Skousen: Thank you, Chris.