Ep. 10 - Economics of Freedom

Narrator: [: 00:00:00

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Ledly Jennings: to the Good Steward Law Wealth Podcast. We are excited to have some awesome guests here today. We've got two doctors, Dr. David Rankin, Dr. Bethann Rankin Baker, and they both, uh, co wrote, um, this book here. For those of you that are watching the economics of freedom. And I really wanted to have them on to talk some through some of the concepts that a lot of it's over my head, but I found it really interesting.

Thanks for coming on guys. Hey, we're glad to be here. Leslie. Yes. Great

e up to with these podcasts. [: 00:01:00

Ledly Jennings: Yeah, and I just, well, what I'll start with is I highlighted a lot of stuff in the book, but one quote jumped out to me and it's somewhat long, but it fit on with what I do with my, uh, estate planning and the philosophy of being a good steward.

So I'll read that and then just kind of jump in, um, in a capitalistic system, the best thing you can do for an individual is to help them get a good education or quality training. That empowers and equips them to do for themselves in this way, not only is the individual benefited, but a stronger and more prosperous nation will result Americans have generous hearts and generally want to help those who cannot fend for themselves.

ll as the national good. Um, [: 00:02:00

Um, but also some of the themes I took from the book was education and productivity. Um, and I'm curious on y'all's front, when you wrote the book, what themes did you intend to relay or by the end of writing it, what themes did you felt?

David F. Rankin, Ph.D., CFA: I just read a quote from Henry Hazlett a few minutes ago and talked about poverty didn't come because of distribution problems or discrimination.

and when I do that, then not [: 00:03:00

John Kennedy famously said, a rising tide raises all boats and he was talking about the economy. And so the more people we can get into productive activities, and we're seeing, like, with the hurricane relief and others there. There's always a need for fairly temporary types of assistance for people, but when it becomes generational.

Then those people never become productive. And so the whole week, not only do they suffer because they're not productive, but the whole economy suffers because the standard of living nationally is lower. So, I think if we can go back to that, you really are forbears realize that everybody realized you had to be productive to survive.

And I think we've got to go [: 00:04:00

Ledly Jennings: Yeah, that, that fits exactly. That's what, when I do, um, estate plans, I always try to encourage ways to leave things to the next generation in a way that they can then advance it and be more productive.

You know, if you're leaving something to a responsible. Child that you've raised and shares proper values with, they're going to then redeploy that money in the economy, whether it's through jobs, starting a business, whatever it is, and it has a bigger impact. So that's, that's, that's good to hear.

David F. Rankin, Ph.D., CFA: Well, exactly.

And you want to leave, you don't want to leave things to children that allows them to do nothing. You, you want, you want them to be responsible and this might enhance, maybe they could start a business or maybe they could buy a farm or something that would enhance their lives. So that even billionaires really worry about this.

heir kids a billion dollars, [: 00:05:00

Beth Anne Rankin Baker, Ed.D.: Well, and I'll say too, and the element of productivity, I'm a consultant, but I'm also a teacher and there's no more exciting moment in the world as a teacher than when that student has that moment of discovery when they are finding and perfecting that skill. That ability or that talent that is really has the capacity to impact not only themselves, but the world around them.

. I spend all that time at a [: 00:06:00

Yes. It makes me a better musician and a better performer and a better pianist, but hopefully through that skill, I am sharing music with the world and with people who might enjoy hearing that. And so I think that's the magic of productivity is that it not only solves an individual, uh, challenge, which is to have the revenue, generate the revenue that you need to support your quality of life and your standard of living.

And it also, at the end of it, should produce something of value, whether it's a good or a service that then goes out into the greater world and it meets the needs of other people too. And if they are doing the same, then you see this reciprocal relationship. And that's really what keeps the wheels of the economy moving.

ough time, and that's what's [: 00:07:00

David F. Rankin, Ph.D., CFA: Well, and that brings us to round two, capitalism. Capitalism is the economic system that rewards production.

It rewards productivity. It rewards those who, Staff Langdon and I are trying to figure out how to change, improve their business, and it rewards those that, that, that work hard and, uh, who prepare themselves to be productive. Socialism does, I, I frequently make a comparison with socialism that capitalism rewards production.

wer in those systems because [: 00:08:00

It's how you work the system and how you plug into the system and the system will reward you if you support it. In capitalism, they reward you if you're productive. Totally different system.

Ledly Jennings: Yeah, and I was looking at it and I hate to over quote your book, but that was another one in there where you said production must be the key mindset of our population.

And

Narrator: yes,

Ledly Jennings: I highlighted that one and it said right below that it said preparation is the cornerstone. Hard work and diligence follow that up, but the idea that we can just tax, uh, the rich and redistribute wealth is a bankrupt idea. So that, that goes again, the production is the key to everything. Um, and I had, while you were on education, I did want to bring this up.

rovided for if we pass away, [: 00:09:00

If we're not there, how do we pass on our values to them? If something happened to us, um, one strategy that I've been developing and helping clients do is, you know, getting a education map. Out where they have books that you want them to read, um, values you want to pass on experiences you want them to have.

And I know it's a big part of what y'all are doing is getting this book and just capitalism in general into the education system. But is there any specific resource that you would advise a young family or young kid to start with when trying to learn more about economics in general and capitalism?

lism has the profits are bad [: 00:10:00

Not to remind people that capitalism has flaws. But it's because people have flaws. But government has much worse flaws. Particularly concentrated government. Now, government is good. You need government. You've got to have national defense. You want your roads. You want a justice system. You want the police forces.

All those things. Need to be done, but what we've had in our modern society is government has expanded its reach into almost every corner of a citizen's life. And it is, it's becoming a little bit oppressive at this point. And you kind of think, well, how do we back up? The first book that I did was this one, what every American needs to know about economics.

and it was really well done [: 00:11:00

Our founding fathers would never have guessed that government would be setting wages. And minimum wages and prices in a free society. They never would have guessed that government would be in telling you who you can hire and who you can fire and things of that nature. They never would have thought about those things because that's not really the bailiwick of government.

an. He won the Nobel Prize in: 1979

And he wrote a blockbuster book, [00:12:00] and this, this has been 45 years ago, blockbuster book called Free to Choose. Of course, some of the, the statistics in there dated, but he was well ahead of the general population. He was 1. it was 40 years ago talking about skilled vouchers and talking about competition in medicine and talking about how.

The Federal Reserve System allowed the Great Depression to occur. Those were things that were not being talked about. And so he's so far well ahead of his time. But that would be also a great book. Some of the writings of Thomas Sowell, and I've got several of his books here. This one is called Discrimination and Disparities.

ing is people are not, I ran [: 00:13:00

And I thought, these people, you need to be reading some of these basic, uh, people, I have another one here, and this is from Frederick Bastier, you know, he wrote the law, this was done back during the French Revolution. And it was, but it's, it's really strong on freedom. It is something everybody ought to be familiar with.

And so we've got to get people to wake up and begin to look at some of these things and realize they need to be versed in some of these great writers. And the same thing with, uh, the founders of the country in the first chapter, and they talk about the, the amendments to the Constitution, the Bill of Rights.

So, those are the kind of things people need to be familiar with, and if they are, they will be able to give a great defense of capitalism.

ome. I haven't read a lot of [: 00:14:00

So, um, yeah, well, that made me think, what, what was it like working on a book as a father daughter duo? How did, how did that process work? Was it enjoyable? I'm sure it had its. I'll

Beth Anne Rankin Baker, Ed.D.: jump in. He was a lot of fun that I will say just the, the honor of getting to sit down and work with this project with dad, because he is an economics heavy hitter, as you well know.

support liberty and freedom [: 00:15:00

Through which we approach to this book is looking at the policies and the impact that economic policy has on freedom. And so that's why, you know, the name of the book that the economics of freedom. I mean, that's really what we were getting down into, but one of my jobs was to just make sure that you're non economics.

dimensions of socialism in a [: 00:16:00

That's one of the quotes that dad has in the book that he's always bringing you back to that. We don't live in utopia and we're yet to identify a nation or a country or a government system out there that is operating in utopia. So, meanwhile, Let's deal with the real, let's deal with the reality, and let's make the decisions based on that reality, and that, for us, we're looking at almost 250 years as a nation operating under this very unique economic system that I would say has produced Such an incredible prosperity, not only for our citizens, but I would suggest that Americans are the most generous, you know, that you see as generally speaking, as a nation, when a tragedy happens somewhere, it is America that steps up.

eps up, but I would also say [: 00:17:00

And I think just the calling that we both felt with this really propelled us forward. Forward and that was, I think, dad speaking from the perspective of me as your daughter. That was, that was really an honor to be a part of that.

David F. Rankin, Ph.D., CFA: Oh, you're so right. And we just had a great time. It is, uh, she's got great skills and, and research and, and so forth, and with tremendous, tremendous help with this book, and it's just fun to work together.

We go out and speak to social clubs, uh, city clubs, and, uh, it is, uh, it's just great fun. We kind of tag team and just have a wonderful time.

s: And that was a great part [: 00:18:00

So it was really made me think with this book about, you know, giving me some ammo to back up my thoughts and think deeper about it. So, um, that was awesome. Well, and the

David F. Rankin, Ph.D., CFA: people in Washington, D. C. have, for the moment, have discovered the money tree. All you have to do is print out the money and hand it out by the billions and we're fine.

o, the state of Arkansas, we [: 00:19:00

We have to balance our budget, and that is a real, real important asset to us. Say for instance, when I was president of the university, we had a time or two where the budget forecast didn't meet, the revenue didn't meet the budget forecast. The governor would either call or send a letter, said, Dear Dr.

Rankin, we're a little short of money up here. I think you're going to have to cut your budget a million dollars. Your friend, the governor, that's just the way that it works, but he doesn't work in Washington, DC. And as a result, we're stacking up all this debt and the interest on it is now more than the national defense budget.

It's going to be a real, real serious issue in a few years.

he reasons why we got checks [: 00:20:00

Um, so, but that also leads to the high debt. So I know you hit on that a little bit in your book about kind of the economics at play with the, the COVID pandemic and how that played out. Um, Could you elaborate a little bit on that?

David F. Rankin, Ph.D., CFA: I will. That was, the United States panicked, and it was a 6 trillion mistake.

We never should have shut the government down, the federal government down, or the state governments. And many of, we kind of learned our lesson with the federal government and opened everything back up. But many of the state governors continued on, and they, they left things shut down. You cannot do that.

ack in, I think it was May of: 2020

So the government, federal and state governments created the problem. Then they said, and Congress met, and after the problem had been created, they did the right thing. They created a large CARES Act that pumped money into the economy. Fortunately, instead of Starting big government programs, they sent money directly to the citizens.

Well, if you put money directly in people's hands, they're going to spend it. And then we had a very, very short recession and we got out of it, but it cost us 6 trillion dollars and added to the national debt. So, hopefully, we learned from that. We got stampeded and panicked by some of the medical experts who were lung the doom and it was serious.

But not serious enough to shut down the economy.

Ledly Jennings: Yeah, that's [: 00:22:00

David F. Rankin, Ph.D., CFA: Oh, well, I will say too here in Arkansas, we didn't, we did not shut the government down. I, I, we were, I was chairman Comedian at my church, and we were doing a big remodeling project. Well, if they had shut us down in the middle of it, it would have been a disaster. But it didn't. Here in Arkansas, we basically said, okay, we're going to keep doing whatever we need to do.

h, they almost destroyed New [: 00:23:00

And we, I'm really glad that we had common sense here in the state of Arkansas, which we're known for.

Ledly Jennings: And y'all both had, I think, several roles in the state of Arkansas, been advisors to governors on different boards and committees. So I'm sure you had some play in how things happened here. One thing I have to talk about with My line of work is estate planning people come in.

People worry about wealth and estate tax and always tell them if you come to me, it's almost a voluntary tax. But, um, what, how does wealth and estate tax play into the economics as a whole? I know right now, I have very few clients that have an estate tax problem because the exemption is so high, but I know it's cut in half at the end of next year and it could vary, uh, depending on who's elected.

Um, So what is the kind of concept behind a state tax and your thoughts on that?

ly interesting. Of course, I [: 00:24:00

Well, I have, I have family that are in the farming business over in East Arkansas, and they have just to make ends meet, you have to have a lot of acres over there. And you think about it, that is a lot of value. So, they may just be barely making it cash flow wise, but the value is, is rather large, because it's what it takes to run a productive farm.

nce between wealth and cash, [: 00:25:00

There are a lot of people who have a lot of dollar wealth, but the cash flow is minimal. So I, I think the estate tax is very destructive, and it really can destroy businesses, it can destroy the ability to leave things to family members. And fortunately, over the last few years, we've raised the limit, and that has helped.

But I think it should, I really think it should go away. But people do need to do a good state planning so that they can pass things on to their children that they worked for and worked hard for during their life and learned, but it is a destructive tax. I will say that.

Ledly Jennings: Yeah, it's always, especially with farmers.

the patriarch dies? Um, And [: 00:26:00

Um, that was the first one. And then I'll just go ahead and read the other ones. We've got freedom of enterprise. We've got the law of supply and demand. Opportunity for profit, limited economic risk role for government and entrepreneurship. Um, and entrepreneurship really stands out to me. I really believe that's how value is created, especially with small businesses.

Um, it's when there's less red tape or less taxes on small businesses, they're not typically pocketing that money that's going into hiring more people and making more and better products. Um, But private property comes up a lot in my line of work is people want to make sure they're whether it's 20 acre farm or just the family house.

hen you look at all of those [: 00:27:00

David F. Rankin, Ph.D., CFA: well, and private property is under attack in the United States. You have seen out in California and some of the New York City and some of the cities.

Where a mob just comes in, breaks the door down, and comes in and takes everything. Well, that's an assault on private property. And then, then some say, well, we deserve, we deserve a share of that. But when you assault private property, you assault one of the basic cornerstones of American politics.

Capitalism. You've seen squatters go over and go in and take over houses in various parts of the country. And that again is assault on private property. People need to be secure in their properties. And this is one of the basic functions of government. I mean, we're doing sending money all over the world.

ly an assault on capitalism. [: 00:28:00

Beth Anne Rankin Baker, Ed.D.: Well, and I'll say to you lately, you brought up entrepreneurship.

And to me, that really is one of the most magical ingredients that helps for the wheels of Productivity to go forward and to produce things either again, either to produce a product or to, to offer a, a A service and we very heavily service industry today. You are offering a service through your estate planning and the advice that you are giving to families and enabling them to make better decisions based on the tax law at the time.

ce, or I get a small, bigger [: 00:29:00

Let's just bake more pies. Let's just bake more and create things like make something out of nothing. And I think each one of us, you know, and all of your listeners that are listening to this can name entrepreneurs out there who they have probably never met, probably never will meet, but have made a direct impact on the quality of life of either themselves or members of their family, friends, or.

Or community members, and so my head is really off to the entrepreneurs because that and I, and my hope is that we always have an economic system that honors that spirit, because as we know, more than half of small businesses will fail within the first two years. Well, those entrepreneurs have taken an.

m when they're successful by [: 00:30:00

Like dad mentioned before, we need good regulations. We need manageable And reasonable regulations, but we don't need confiscatory tax policy that just sort of at its heart is saying I'm going to take from you because you made it, you know, he also mentions to the income tax way back in 1913, I believe, you know, that was Socket to the rich tax when it was passed, you know, that was only going to impact the top smallest portion of American citizens and we see how that's worked out, you know over a hundred years later We we pretty much are all familiar with the income tax and that was not what it was initially sold to the American people So we have tax Creep, it creeps in and then it grows bigger.

lk about in the book is that [: 00:31:00

And they might get advisors like you to help navigate, uh, those, those Those very complex laws to figure out how do we do this and still survive as a family and pass along, you know, what we need, given the laws of the land at the time.

Ledly Jennings: And that income tax chart you mentioned, I think it was in your book.

That's really interesting to look at when you see the, how the rates have varied throughout the years since it was created. Uh, I found that very interesting. Um,

David F. Rankin, Ph.D., CFA: exactly. It was designed for the super rich, but by the end of World War II, it was up to 91%. And that's basically was John Kennedy. It became the first supply side tax cutter and cut the top bracket from 91 to 70%.

agan came along, cut it from [: 00:32:00

That doesn't include state tax, then, uh, they, they may change their behavior, which is not what we want.

Ledly Jennings: Right. And, uh, on entrepreneurship, it's one of those things that you don't really know till you do it. I didn't know how much pressure it was on a business owner until I started my own business and seeing how my dad went through that and it is a lot of risks.

usiness. Um, but, and I know [: 00:33:00

How have y'all seen, made some inroads into getting this philosophy into schools and various things? What, what avenues are you trying for that?

Beth Anne Rankin Baker, Ed.D.: One very positive step forward that we've seen. Number one, here in the state of Arkansas, every single high school student has to have at least one. semester of economics education before they graduate from an Arkansas school high school.

dividual, which, as we know, [: 00:34:00

That retirement plan that they have, that's becoming even more critical for our young Americans today, uh, which is a blessing, you know, longevity. It is the, our, our, we are lengthening our years. We do have a longer, uh, standard, a wonderful standard of life here that we do have longer years, but we have to be able to plan and afford for those as well.

just basically saying, Hey, [: 00:35:00

I'll say also. I think this is especially important as we approach the 250th birthday of the United States of America. That will happen on July 4th of 2026. We have less than two years. I know Governor Sanders here in the state of Arkansas has already put together the Arkansas 250 Commission, which is a group of people who are going to be planning celebrations and festivities and acknowledgments of For this incredibly special time, no better time to be graduating a [00:36:00] generation of students who understand and can articulate individually, articulate the concepts and precepts and principles of capitalism, even if they don't agree with it, but that they graduate and they have that education, educational awareness of what it is.

And then as they go on through life to be able to experience that firsthand. Whether they're an entrepreneur or whether they work for another country or they're involved in a non profit, it doesn't matter what their course of action is, they're going to be operating within the capitalist society and helping them to understand exactly what that is so that they can carry that torch forward.

ould say is the biggest myth [: 00:37:00

Like my example in my world, my biggest myth is people think if you have a wheel, you avoid probate and that's not true. So that's my biggest myth. But how would y'all answer that? Um, in your, um, profession?

David F. Rankin, Ph.D., CFA: Yeah, I think for me, I would, I would say that the profits are looked on negatively by so many people.

Well, people are making a lot of profit or so. Profit is the return to the risk taker. That goes to the risk taker. And I mentioned a family over in East Arkansas. These folks work hard. I mean, you're talking about daylight to dark and beyond so many times. And maybe some years they make a profit, some years they don't.

out, uh, uh, George Bush and [: 00:38:00

We're just miles and miles of houses that you see when you fly. And it was all done by the private sector. Over in the Soviet Union, it was all done by government. And I've been there and seen those big high rise buildings. Apartment complexes that were built by the government and it's over here. It's done privately.

So, the, the idea that profits is the bad thing is totally bogus and, and some people say, well, we're making more profits than they should. Well, if they are, it's going to attract competition. They're going to be more people coming in to that industry because the profits attract them. And that is such a key to entrepreneurship is such a key to capitalism.

, this is fabulous. And that [: 00:39:00

Ledly Jennings: That's a great answer.

David F. Rankin, Ph.D., CFA: Bethann, I interrupted you. So you can go. Oh, no,

that our founding fathers in: 1776

And I would push back against that because there's a big difference between self interest and greed. I think one great example dad outlays in the book is to say for years and years, you know, he taught college students and I'm teaching a graduate course today on organizational leadership. My students are not in that class because they're greedy.

My students are in that class out of self interest. They are interested. In improving themselves and improving maybe their ability to get a promotion at work or to just lead in a way whatever organization that they are working in to lead in a better way that impacts the lives of the people in their organization in a more positive way.

king a couple of extra hours [: 00:41:00

Chances are at the end of it, you are also not just promoting your own self interest, but you're promoting. The national interest or the state interest, the regional interest, your community interest of those around you, because you're benefiting the lives of people around you by doing your job better and by improving your own skills and your own abilities.

So I love how this all plays together. And that was. The spirit of what Adam Smith was really driving toward in The Wealth of Nations when he talked about self interest and how that invisible hand moves and propels nations forward on the level of prosperity. And we are blessed to live in this country.

I want to end by saying that we are blessed to be here in the United States of America. So I know we feel that it's, um, on us, on our shoulders a little bit to continue carrying that torch for future generations.

e, I'll leave with Milton, a [: 00:42:00

He said there's only one alternative to free markets force. Some people telling other people what to do. And that's really it. You can choose capitalism and freedom, or you can choose socialism and force. And it was really to Vladimir Lenin, who, of course, was part of the, he wasn't really the father of combination, but he's the one who implemented the ideas that Colonel Marx thought.

He said the goal of socialism is communism. And that's from Vladimir Lenin. And of course, he introduced the brutal brutality, uh, to the Nth degree and to the Soviet Union.

Ledly Jennings: Well, this has been great. I could talk all day on this book. Um, so it's been a dream of mine to have a forum for this, to talk about this type of stuff.

hly encourage anybody to get [: 00:43:00

David F. Rankin, Ph.D., CFA: Well, and this book, you can get it at RankinEconomics.

com, and if you put in the information, we'll sign it and send it to you. RankinEconomics. com.

Ledly Jennings: Uh, I didn't get, I got mine on Amazon. I should have got your signature. You paid a little more for

David F. Rankin, Ph.D., CFA: it. We tried to get them to cut the price a little bit on Amazon, but ours is cheaper on RankinEconomics. com, but we're glad to be on Amazon, too.

Beth Anne Rankin Baker, Ed.D.: Yeah. Thanks for having us today, Ledley. Ledley. And thank you for the work that you do, uh, helping families, uh, really all across the state of Arkansas and beyond where we're very proud to know you and appreciate the work you do.

David F. Rankin, Ph.D., CFA: Absolutely. Ledley.

Narrator: Thank you for tuning in to the Good Steward Law Wealth Podcast.

m to book a meeting and sign [: 00:44:00