HS 66 – “Zero Jobs 101 – The Psychology of Alienating Employers” with Victor Davis Hanson

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It's my pleasure to welcome Victor Davis Hanson to the show. And today we are going to talk about several interesting things. A little bit about Europe, Greece, that meltdown, and also about California as well. Victor, welcome. How are you?

Very good. Thank you for having me.

Well, good. My pleasure. So you've written quite a bit. And maybe we'll start about this fairly recent Pajamas Media article, Zero Jobs 101, the Psychology of alienating employers. And as an employer myself, I couldn't agree more. If you're referring to the government alienating employers.

Yeah. Well, most recessions have recoveries and we've had the recession officially ended, as you know, in June of 2009. So these officially at least. So these last two years have been something quite unusual, at least in comparison to other post war recoveries, very sluggish recovery. And one of the reasons, I think, that we're having such difficult times as employers are hoarding cash, consumers are not spending because the president, for good or evil, has created a climate where a lot of people are uncertain. They don't know what the tax code is going to be, they don't know what the regulations are going to be. They don't know what the national policy is going to be about investment, savings. But they do have a sneaking suspicion that if they're affluent, let's say they make over $200,000, and those are a lot of the people who hire that they're in the proverbial crosshairs. They're not liked. So a lot of it's psychological. People just don't feel comfortable with a president who is talking about millionaires and billionaires in reference to those who make over $200,000 a year.

Yeah, all those people with 200,000 a year driving their private jets, as he likes to talk about.

Absolutely. Gulfstream cost $50 million. So I don't know who can that. But it's not the guy that has the local garage or the landscape business.

I completely agree. It's interesting. I don't know if you caught any of it, but I like the way Peter Schiff said it. He testified in front of Congress recently and I was watching the tape and he said the riskiest thing one can do nowadays is to hire somebody. You have threat of lawsuit, theft of your trade secrets. I mean, it is a risky thing to hire somebody. And you know, as an employer, I would agree. If I can find a way to get that job outsourced or to do it with technology, I'm going to do it.

I think everybody feels that way. And that was even true before Obamacare came in. Now we've already started to pay some of the taxes on a health plan whose details nobody knows anything about. I haven't met one person yet who knows what is expected of the employer except that it's going to be bad. I think he's really succeeded in shutting down American capitalism. Whether that'll continue for a long time, I don't know. But when you have things like this Dodd Frank, or you have Obamacare, or you're shutting down a Boeing plant, or you're reversing the order of the Chrysler creditors during bankruptcy to protect the union, or you have this share the wealth attitude, it all is in aggregate disturbing. Any One action or any one sermon in isolation wouldn't be too bad because people are pretty forgiving. But now, after almost three years in aggregate, people see the picture and they don't like it and they're starting to react to it. And it's quite unusual because as I said, the steeper the recession usually the more vibrant and robust the recovery.

But that's not happening this way. We missed two summers of recovery so far, so I don't know when one will actually happen. Let's maybe talk a little bit about global events in California and I'd like to get your opinion on the future in terms of, you know, is it inflationary, deflationary, your thoughts there? But maybe let's start over in Europe. I mean, is Europe coming to an end? I just cannot believe what is going on over there.

It's coming to an end. It's returning to the way it had been for centuries. I lived in Greece three years and I think anybody who knew the country well would be surprised that it could survive in the European Union. Because to go to Munich and go to Athens is much more different than to go to Mississippi and then go to New York. Culture is completely different. The attitude toward taxes, the siesta, the idea of work, the idea of the public sector. And so the idea you were going to have Germans and Northern Europeans subsidize a Mediterranean lifestyle was not sustainable without some type of federal coercive state. And so that's where we are. I think you're going to see, not with a more of a whimper than with a bang. I don't see a dramatic default. I just think that people are talking and preparing people for the eventuality that Greece will not pay those loans back and won't get enough to continue. And then we'll try to default and then it will have some mechanism to leave the European Union. And that'll probably be over a 24 month period or something. And I don't know to what degree that will spread but, but it seems unlikely that Spain and Portugal and Italy are going to find a way to pay those because their loans are much more massive. And that's what everybody's worried about. There's only 11 million Greeks, so it's not a big deal. But if Greece, and I think it will go, then when you have countries with 50 and 60 million people and 10 times the debt, that's the worry.

Huge problems ensue. I mean, I know what my answer is to this, but maybe I'll try to get yours. Was the mistake trying to Form a European Union or was it just the entitlement society, General?

Yeah, it was both. They had a pretty good idea with the Common Market where they were trying to achieve in the 1960s, tariff free, ease of trade. And like every bureaucracy, it just grew and grew and grew and it became less democratic, more utopian, more bureaucratic. And it tried to bridge and actually eliminate cultural differences that were much, much sharper than between states and the United States. And even in the United States we have regional cultures, but not to the same extent as different countries. And the other idea was the government. After World War II, I suppose people felt that nationalism and national identity had led to World War I and World War II and they were going to change the nature of man, so to speak, by making him better educated, with health insurance, guaranteed job, he wouldn't have to work 35 hours a week. That was contrary to human nature. So I think anybody who went to Greece by say 2000 was starting to notice things that in the beaches around Athens at 2 o', clock, everybody who worked for the government, electric company, water company, phone company, bank, they had their government panel vans down at the beach. And then you started to see that people were not eating until 9, 9, 30 in the evening and the siestas were a little longer. There was three or four more employees in the bank of Greece when you would go in than you'd seen before. It had been that way, but now somebody else was paying for it. So it was more acute. And then you started to see other things that didn't quite make sense. That a country with 11 million people, with a very unproductive agricultural sector, was starting to have very sophisticated subway system, highway system, airport, bridges. That was not a result of the capital they were generating in tourism or agriculture, but they were transfers from the eu. I guess what I'm saying is the more I read the Greek newspapers, there was a sense that even if we default, they still have more money than we do. And that's not fair. So maybe they'll blame it on World War II, as some of the op ed writers did. Maybe they'll blame them on the United States, as some have, but the Greeks have a tendency to do that anyway. But it's a radical version of Obama ism where they think that life isn't too fair and it conspired against the Greeks and they work just as hard as anybody else. But bankers or Jews or Germans from World War II or whoever their enemy of the week is, they're responsible and not themselves. You cannot get an average Greek on the street to look in the mirror and say what you do from 6am to 6pm explains why your country's broke. They just capable of that level of introspection.

Yeah. And retirement at what, 49? I mean, this is just craziness.

Well, it's typically Greek. It's officially, it looks great on paper. It's. I don't know what it is, 67 or 66. The problem is they have, I think it's 400 professions that are exempt.

Hairstylists working with dangerous chemicals and all this kind of stuff. You know, it's just crazy when it's everybody's money, it's nobody's money. Nobody cares when bureaucracies grow like that. But you know, just an interesting thing I wanted to ask you about. I remember my last trip to Europe. I did an Eastern European tour and I went to Bulgaria, Romania, Estonia, Latvia, and several of those countries had just come into the EU right before I was there. And that's why I was particularly interested in going. And you saw all these signs everywhere that said, this is an EU highway project or whatever. And they were building these great highways in Bulgaria where average wages were like €200amonth or something. And isn't that just part of the business plan, though, to kind of give those countries, put all this money into them, give them infrastructure and to hopefully lift them up and make them greater countries if they just had a head start, a hand up rather than a handout?

Yeah, that was the idea. And it worked a little bit better in Eastern Europe because they had so rejected statism, because they had really suffered under communism. So they saw the EU as a protection, more of personal freedom and protection, maybe even from the Soviets in a way. The Greeks, being part of the Western bloc, hadn't. But that was the idea that they were going to make a uniform European infrastructure. And then the way it was sold to a lot of Germans and Dutch and Scandinavians was simply, well, we're all in the same boat now. And you love to go down to Mykonos and you love to go to Napoleon, you'd love to go to Chania, Crete. So wouldn't you like when you get there, to have a good airport? And wouldn't you like to have a good subway system in Athens? And you're going to be there. Tourism. And that was the idea that everybody was going to enjoy it and there were no more national differences. And that's the way the Greeks looked at it. But of course, the problem is that when you're in Athens and the Meal costs more than it does in Berlin, and the people are working.

60% as productive. Then something has to give.

Yeah, it really does. It's just an immature philosophy to believe that you can have something without earning it. No question. So what is the conclusion going to be? I mean, will the riots and civil unrest continue? Will they get a lot worse? Will you see them spread into other European countries? And what's the conclusion? Print more money, cause more inflation? Just a huge reduction in standard of living?

Yeah. I think you're going to see a return to Southern European currencies. And when I lived in Greece, this happened all the time. I can Remember happening in 74, 77, 78, and where you would wake up and there'd be a radical change in the value of the drachma. When you went into Greece, you had to write on your passport all the dollars that you had, and you couldn't take any more out when you left. And then when you went to the bank, I think then it was $200 in cash. You could have. And everybody swarmed you that you saw, that you knew, because they wanted to trade black market drachma so then they could get US Dollars because they couldn't travel outside their country. They didn't have any currency that was convertible. Things were very cheap. And when they got. When corruption was exposed and there was a big budget deficit, they just printed more drachmas. Everything got cheaper. More tourists came in, less Greeks could buy imported goods. That's the big thing that I noticed in all those countries when one traveled in the 70s, you just didn't see electronics, jeans, sneakers. I never bought foreign clothes or foreign electronics when I was in Greece. You just couldn't get a hold of them. The government did not want to waste foreign exchange on stuff like that.

So the return of those Southern European currencies. And what does that mean? They're just not convertible outside of the country. Then again, in today's connected world, I can't imagine that.

Well, they have to be, because they don't earn. They don't have indigenous industries other than tourism that are competitive on the world market. So it's very hard for them to get a convertible mark or franc or dollar. And so one of the ways that the government functions is it doesn't let its citizens earn dollars or euros and then spend them abroad on vacations when the government really needs those to buy sophisticated power plants or to have a foreign company come in and build a br. And then it means the consumer doesn't really have access to Chinese goods or low cost consumer items because they have no mechanism to pay for it. And the idea is that people then find ways to be more productive. If they don't have exchange. Maybe they will not have a subsidized olive orchard that the Germans are paying for, then selling your oil to a subsidized co op and getting a check in the mail for doing really nothing. Maybe they'll have to go out and study what oil production is like in the United States or other places and then compete on the world market to earn foreign exchange. So I think we're going to go back to the way things were before the EU came onto the scene. And your question of whether it's going to be a source of social turmoil. I think it will be for a while and then it'll be followed by a collective depression. I mean a mental depression. People will just see there's no alternative to it. I don't see any alternative. The big question will be the political institutions, whether the democracies will be able to weather this radical downgrade in individual people's lifestyles without swing to fascism or communism.

Yeah, scary, scary stuff. Talk to us for a moment, if you would, about California. What is going on in. And when you say that, are you really focused on central California and the agricultural communities there or. I mean, the state is just a disaster of epic proportion. I mean, I just moved. I left California to move to Arizona and when I drove across the state line, my state income taxes went down by about 35% and everything else got a lot less expensive. I mean, the price of gas, the price of. There's just so much less regulation and it just seems like California is just collapsing under its own weight.

Yeah, it's kind of like Greece. And I'm kind of lucky because I, I drive from my farm in the center of the state, south of Fresno to where I work at Stanford University. So I go really from third world California to first world California. And I mean, I leave a community that's about 75% either first generation Mexican American or illegal alien. Then I go to a postmodern university avenue in downtown Palo Alto and I often speak a lot. So I travel all over the state and the symptoms are pretty disturbing. They're not just that we have the third highest income tax at 10%. I think the second highest sales tax at 10.1, highest gasoline tax at 46%, highest paid teachers, 65,000 highest per capita. I mean, highest housing prices at least on the coast. But what you get for it in value in Other words, our schools, our public schools are behind only Mississippi in math and English. Even though we have the most expensive teachers, we have the highest cost per prison inmate, we have the largest number of illegal aliens, we have the largest amount of US Dollars sent from a particular state to Mexico. So we have $8 billion that we are sending for Hispanics who are not citizens. And then they're sending about $20 billion in disposable income to relatives in Oaxaca, Mexico, for example. And I could go on, but people look at California and they think, with that high revenue coming in, why is 101 or the 99 Freeway? Why? By any intrastate standard, they're pathetic. Why is lax just pathetic? Why are the public schools pathetic? And the answer is that the number of people who are productive for the reasons that you outlined are leaving 3000 a week. We have about 200,000 that are leaving California, we think with incomes over 70,000. And they're being replaced by about 1500 people who are largely coming for the higher than average state subsidies. So we're starting to see it in very mundane ways. I could give you a thousand anecdotes that explain what's happening. Three weeks ago, before I came to Michigan for my teaching stint here, all the copper wire in my ag pumps was stolen by a gang. $1,500. They just ripped out the copper wire. I've had three accidents in the last 10 years. In all three cases, the person who hit me fled the scene of the accident. And the car that he left had no driver's license. I mean, he had no driver's license. Apparently no registration was left and no insurance. If I go to the Department of Motor Vehicles and I don't have an appointment, sometimes it's hard to get an appointment. I expect to wait two or three hours there.

I don't think there's scarcely an English speaking person at the DMV anymore. I mean, the last time I went in California, it's unbelievable. It's interesting you mentioned Michigan because I always compare the two. I say that California is the new Michigan. You have a place that used to be one of the world's greatest great cities, Detroit. And then it became, as I see it, just encumbered with liberal politicians, unions, public employees, and the weight of all that, that just the employers started leaving, the productive people started leaving, the people that wanted freebies stuck around and the bureaucracies grew and the crime rate soared, and it's just an epic disaster.

Yeah, I think it's true. And I think what. But what's sad about it is this discussion you can't have in California because the public rhetoric makes the necessary adjustments. So if I go to my local town of Selma and I pick up the newspaper, let's say, on August 20, I see the headline is that three public employees have been arrested for stealing the city's manhole covers and sending them in for scrap. Then I look at the next article, and all the bronze plaques, some of them from the 19th century for dedicatory buildings in town, have all been yanked out by gangs who were melting down bronze plaques. Then I see two policemen have been arrested for felony charges. And that's not atypical now. And what's happened is that when you combine 7 million illegal aliens and you have a lot of people who don't know English and are not legal and don't have a high school diploma, and you're trying to bring them up to social parity in a generation that requires a lot of capital, and then the rhetoric has to adopt to it. So if you object to it and you say that this won't work, then you're a racist or you're a nativist or you're a xenophobe. And so the same thing with public employees. If you're upset that the California State University system is unionized and all 30,000 professors make more than their counterparts elsewhere and they're not subject to dismissal for poor teaching very often, then you're anti education or you're anti university.

Or worse yet, if you say anything against the nea, the National Education association, which Steve Forbes fittingly called the National Extortion Association. What about the children? You're not compassionate. This is just. It's like we can't even have a discussion in this country anymore. When you can tell that the people that have just baseless arguments are the ones who always go to those ridiculous comparisons, they can't stay on the issue. They can't stay on point.

Yeah, the only thing that is real now in California, we did have a $25 billion deficit, as you know. So when the money runs out and it cannot print money like the federal government and people can leave, unlike US citizens that don't really leave the country, then them or they, the bad guys who make the money, who pay for things, leave. And then the people who are left, we go through a process of Detroitization. And now that's where we are. So people are starting to cope with it. And in the center of the state, we have furloughs where I know a lot of people who tell me that they make a particular salary, but they really don't because they're not. They don't go to work every day. They take one or two days to a month where they stay home and they're not paid because the unions are so strong. You can't readjust the salaries or the wages. And so people are kind of coping and it's getting back. One of the things I try to look at from a historian's point of view, I live in the same house as my great great grandmother and I can remember all of the so called marches of civilization. There were people that passed rules that said we had to have dog licenses and rabies shots and they'd come out and inspect your dogs. And then there was a mosquito abatement district we paid for taxes too that would drive in and make sure there was not mosquito carrying malaria or West Nile virus. Today, I suppose all that is starting to go backwards. So when I ride a bicycle 20 miles outside my home, I see rural lots with six or seven Winnebagos. I'll see three or four Pit Bulls with no collars on them. I'll see cantina is just up and down the streets where people are selling food but they don't have any permits and they've just taken, they've just made permanent restaurants, parked their cantina, put chairs, got a port, a potty. And they're not inspected. And so when you have hyper inspection, you discourage business, then you have hyper lawlessness. So one of the ironies of California, it's the most free and unfree place at the same time.

That's a very interesting point because I have found in business. I owned a real estate company a few years back that I sold. And it was interesting because the regulators will make a law and then they won't enforce it, or at least not enforce it very much. And everybody starts disobeying the law. And the problem is all your competitors are here disobeying the law, which makes them more profitable than you. If you're following the law and you live in fear that, gosh, if you're gonna break that law, are you gonna get in trouble? Right? And so this is exactly what's happening. The people who have nothing to lose are opening up these unregulated restaurants that you talk about that are violating every health code in the book, I'm sure, and not having a business license and they have nothing to lose. But a real business person, if they want to go in business, they're burdened by just mountains of Regulations, especially in the socialist Republic of California.

Yeah, I call it ignoring the felony and going after the misdemeanor. Because I was riding a bike this summer and I saw an individual come up, look both ways, open up the back of his van, take out a dishwasher and some used ruined appliances, and throw them on the side of the road where a lot of trash was and drive off. And then when I continued to ride up to a corner, I saw a highway patrolman and he was lasering people for cell phone violations, looking for cell phones. So he had his window down. I just talked to him for a second and I said, if you'll just get out of your car, get. You'll just turn your car around a mile away. We have real health hazards because people are throwing wet garbage, all sorts of appliances all over the road. And that seems to me a much more danger, greater danger, the public community than. Even though I don't like people who use cell phones. And he said something very interesting, just said, that doesn't pay.

Exactly. It's not profitable. Follow the money. They make money by writing tickets.

And he knows the people that he. I guess he thinks the people who have a cell phone will obey the law when they're stopped, and then they will pay the fine where if he arrests somebody throwing out a garbage, either they don't have the money or they'll have to be deported or they'll have to do something. And it's very funny because the people who are the architects of this system don't even like it. Jerry Brown was really the architect in the 70s of what became California and his vision. And now he's unhappy with what he created. Mayor Village Rosa in Los Angeles is unhappy with the security of the mayor's house. So he built a fence, which was kind of illegal, around his mayor's residence. And I can see that a lot, that some very liberal people whose ideas were reified now are either leaving or they're to trying. Fleeing to the Palo Alto hills, or they're trying to find in their own personal lives mechanisms not to deal with public agencies that they used to. That are the logical expressions of their own ideas.

Well, yeah, but of course, it's typical liberal hypocrisy, the limousine liberal syndrome, where they don't live the lives they created. But Jerry Brown doesn't seem that unhappy with what he did in the 70s. I mean, he's furthering his agenda from. From back then, he just allowed illegals to get free education, I think, in colleges in California. I mean, that's unbelievable. Where if you're, where if you're an Arizona resident, you come to California, you've got to pay out of state tuition. This is just so bass ackwards it's crazy. I mean, no logical human being could ever agree that this is fair and it's reasonable and it's okay in any way. There's.

But he is governor and he does have to balance the budget. So when he does that, where's the money going to come from? He knows that if he raises the taxes any higher, he's going to get 5,000 people going a week. So he's got to cut something. What's he going to cut? He's going to cut the epa, Is he going to cut. He doesn't know. I mean.

Well, I don't think he's going to cut anything. I think, you know, since they can't print their own money in California, they sell these lousy bonds that you hear advertised all the time, which I think is almost fraud. When Arnold Schwarzenegger was on the radio advertising California bonds, I mean that's like inducing someone into something that you know is a bad deal. I mean it's an insult to the state.

What I guess I'm saying is there are limits because they can't print money. And so they're looking around for revenue. And California Highway Patrol ticketed 1 million tickets in addition in 2010 than it did in 2009. So all the agencies are sort of in Latin American style trying to find their own revenue streams. They say they're not because they go into the general fund, but they really are and they're increasing fees on everything. And the principle is that if you're upper middle class you're going to pay more for this redistribution for people less fortunate. And we all. The sad thing is that even liberals know what needs to be done. You'd have to close the borders. You would have to go back into the school system and start stressing a fact based literacy, English mathematics curriculum rather than therapeutic social themes that are in the curriculum. And then you'd have to stress construction rather than regulation. And I don't think that there's too many people invested in the present system that they're afraid of. Mostly public employee unions. What runs California right now, I think are the public unions, the environmentalists and the open borders La Raza elite. And between those three groups, boy, you can't get much done in California.

And I always say that because you don't want to live in a state, meaning a state or A government, a state in that way, that is financially insolvent because they always end up going into business against their own citizens. And that's what the ticket business is. I mean, no one's going to say they like drunk drivers. Of course, that's terrible. But even when they lowered the DUI limit from, what was it, 0.01 to 0.08 or. I don't know exactly the right numbers for that, but you know, when they lowered that, that just was a whole new slice of revenue. These red light cameras, the speeding cameras. The government is going into business against the citizens to try and raise money. And it seems like the only way out for California is bankruptcy. So they can renegotiate the contracts, which I don't know if they will because the political will's probably not there. Even if that happened, or a federal bailout, I mean, what else is the state going to do?

Well, they don't like to talk about it, but if you talk to state employees, and I have a lot of friends who are state employees, and my son is a teacher in the Fresno Unified Central Unified School District, it's off the radar. But each year they're either not getting a raise or their pay is decreasing by 2 or 3%, or they're paying more for their health care. So Californians don't like to talk about it because that would represent fiscal discipline. But there really isn't any money there. And in all of these little towns, I read the local papers and they're laying off public employees. They're cutting back, they're very angry, they're trying to blame people. They won't. You know, that was part of the motif of the Whitman campaign, that she had a private jet. Carifierina had a private jet. That's not right. But privately, there's no money. So we're starting to slowly and incrementally go back to a smaller sized government. I think if you look at the budget of the state of California, where it was in 2008 to where it is now, I think it's down to about 2006 as far as the size of government. And it's going down because there's no money. And part of the irony is that the highest paid employees are so highly paid, the full professors in the CSU system, that you can't hire anymore. And so as the government shrinks, in some cases, we don't have enough public workers per thousand people because they're just too protected and too wealthy. I know that's true in education. I know that's true in construction. When a professor at California State University, any of the 22 campuses, retires, nobody can afford that $120,000 salary and $80,000 benefit. So they take the position and they divide it up in fours and they hire people by the hour, part time. And that's what they're doing all over California. So we're really. I guess all we're seeing is sort of an aristocracy that's retiring, public aristocracy that won't be replicated.

Right. So it'll just have to sort of die off.

Yeah, that's what's exactly happening. It's dying off very slowly.

Y But that could take a long time and California could end up being a much more devastated place than it is today. I mean, it's just. I don't know that there's really any hope for California in the next, what, 10, 15 years?

I think if they. Because it has such natural wealth. It's the wealthiest agricultural sector in the United States. This year it's going to export $16 billion worth of even despite the water cutoffs. And it's got natural beauty. It's the biggest tourist earner of any of the 50 states. They have things like Napa Valley, Silicon Valley. So it has strengths. It's got a lot of natural gas, especially with new fracking in the San Joaquin Valley.

I know, but nobody will let anybody get to that. You know, you could.

No, that's my point.

They'll do it. They'll cave in. I mean, are we going to see an oil platform in front of Barbara's Rice hands house in Malibu?

That would be. I think they're going to get. They're going to get to that point where they're going to be forced. And I think they're going to have to close the border. I think everybody understands that there's just too many people. The old idea that people are only coming to California to work and they're not coming up here to have children or they're not pregnant when they come, or they're not going to burden the health care. Too many people have been to the DMV or to the emergency rooms of community hospitals to see that they just don't have the resources anymore to extend such generous benefits to 6,7 million people from the third world. It can't do it.

Good point. First of all, do you have a website?

Yes, I do.

Victorhansen.com Victorhansen.com and you have several books, right?

Yes, I have a novel that came out this week called the End of Sparta.

That's interesting. Can I ask you about that for just a moment? I remember in college studying Athens and Sparta and how my professor would compare the two and I found that to be such an interesting thing. Now I know nothing about the novel, but did Sparta end because it was such a closed system versus Athens that was open?

Well, it won the Peloponnesian War, but it did eventually lose. And I talk about and the novel is the invasion of Sparta by Thebes and the freedom of all the serfs and helots. And it's about a great march that took it's an obscure event in history, but was very famous but very little known about it about a great march of farmers who marched all the way into the heart of Sparta, destroyed the state, freed all of their slaves and defeated it. So it's kind of an odyssey type of novel. Who was on the march? Why did they do it? What price did they pay for doing it?

Very interesting. Well, everybody should get that book. And Victor Davis Hanson, thank you so much for joining us today. Really appreciate the insights.

Thank you.

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