CW 226 – Rich Man Poor Man with Bill Whittle
INTRO: Welcome to Creating Wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing – fresh, new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self-made multimillionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it! And, now, here’s your host, Jason Hartman, with the complete solution for real estate investors:
JASON: Welcome to the “Creating Wealth” show. This is your host, Jason Hartman, and welcome to Episode 226. I hope you’ve been enjoying the last shows. We’ve got a lot of great ones coming up as well, with many interesting guests I’ve been interviewing recently and some really interesting topics, so I think you’ll very much like what is to come.
One of the things I also wanted to say about the show is I was so inspired at our last “Meet the Masters” event, which we talked about on the prior show, that I just want to make a general invitation to any of our listeners: If you’d like to come on the show and maybe co-host a show with me or talk about your experiences or anything like that, we’d love to have you. Just let us know by going to JasonHartman.com and you can mention through the website that you’d like to be on the show or co-host the show with me. What’s really great is just talking to people who get it, who understand the philosophies that we’ve talked about on the show over the years. If you’ve been following the show for a while and you understand it, we’d love to have you as a guest. Maybe you come on for a couple of minutes, or maybe you come on and we talk for a while and sort of co-host a show together. I’d like to extend that invitation to you. Let us know if you’re interested and we’d love to have you. Again, that applies to experienced listeners. If you’re brand new to the show, please listen a little longer, go back and listen to the older episodes, and get familiar with the material before we have you on. If you’ve been listening for a while, that invitation is out there for you.
A couple of things before we get started: We’ve got an interesting guest today and he’s going to talk about poverty, or really about poor people, even though “poor” and “poverty” is nothing good and nothing that anybody wants, but even with that he’s going to talk about how rich the poor are in America. I think you’ll be really interested in this interview. He did a very famous video that was circulated all around the blogosphere and social media, and he hosted a very interesting television show and did a segment about this topic that was fascinating. So I think you’ll enjoy that with our guest today, and we will have that for you in just a moment.
But before we get to that, I want to talk about an upcoming event that we have. I know this is short notice – believe me, I understand that – but we have done some business, although never promoting it heavily, in the St. Louis market, and we’ve been able to obtain some exclusive properties there, some exclusive deals, and some special opportunities. We’re going to do a tour there on November 11-13. I will be there and would love to see you there. We’ll have the bus tour and education. We’ve also got some very special hotel rates, but you’ll need to actually call our office and have one of our investment counselors book the hotel for you to get the special rate. The special rate is far below half price. Our office number is (714) 820-4200. Talk with one of our investment counselors and get these special deals. We’re talking about $300 to $1,000 per month in cash flow from turnkey rental properties there. Again, it’s a market that we’ve not promoted heavily, but in which we’ve been doing some business, although we haven’t talked about it very much.
If you’d like to join us for that tour, I’d love to spend the weekend with you – November 11-13 in St. Louis – to examine that city a little more closely. I know it’s short notice. We just had the opportunity come up and we wanted to offer it to you. The tour price is only $149 and you can get some very special hotel rates by calling our office: (713) 820-4200. By the way, we’ve got a whole new property section on the website, so if you want to go look at the property section, go to JasonHartman.com/properties. We have some excellent properties there, and I think you’ll really enjoy this new section. There are some updated presentations, a whole bunch of new text and copy, and just a nice, new, easy organization that you’ll enjoy. And it’s beautiful-looking. I’ve got to say “hats off” to Britney in my office who organized this section, and to Jesse who did a lot of the programming for it. It’s really cool, so check it out: JasonHartman.com/properties.
Our guest today is Bill Whittle. He’s a great educator in terms of illustrating graphically and conceptually how to think about a problem and how to solve it. We’re going to talk about the poor and the rich and what that means to American society now.
You know that I’ve long been saying that the middle class is under attack, and as such I hope that this show is providing some protection and some cover for the middle class as this attack is occurring by protecting their investments and keeping them from falling down the economic ladder, and hopefully raising people up into upper middle class or the wealthy class by investing properly and handling the tax from monetary policy (taxation regulations and so forth). That’s what we address here on the “Creating Wealth” show.
But what we need to understand is that in the United States, just by being here, people should be grateful in so many ways because they are richer than so much of the world, and richer, really, than people have been in any time in history – even now, even in the midst of an economic crisis, even in the midst of all of this despair, with the real unemployment rate being well over 20% in my opinion when you include underemployment, independent contractors, discouraged workers, etc. We’ve talked about it before. And when you look at the level of inflation that is coming at us… I just recorded a rather disheartening interview in some ways for my “Holistic Survival” show today, and in there the guest laid out a case for inflation easily approaching 100% or more annually in the upcoming years. And by some majors, that’s not even considered the kind of hyperinflation that other countries have experienced – whether it be the Weimar Republic (Germany), Zimbabwe, or Hungary, or any of the other great cases for inflation – that’s still tame in the eyes of history.
So I think you’ll find this interview to be interesting and very thought provoking. Then, if we have time, we’re going to have some guest comments on the “Meet the Masters” event as well. I just want you to hear some of the learning that took place there.
Here are a few quick comments from some of our attendees at our recent “Meet the Masters” event:
“You know, this is our second time, but I found Jason by chance searching around iTunes because I knew it was a good time to think about investment property. Both my wife and I are realtors. I’ve been a broker for 26 years, my wife 24, and we bought some investment property, but we’ve been too busy selling property. So when I found Jason’s podcast, it really opened my eyes. Even as long as we’ve been in real estate, our mindset has been to sell, not to buy for our own investments. So Jason got our minds in the right place, and I’ve become a devoted follower. When my wife and I came to the first retreat, I bought all the past podcasts. I’ve listened to every single one. There have been so many gems in there, and it’s been incredible. Now we’re on, I think, an amazing journey to buy a lot of property through Jason’s advice and his network. It’s been invaluable. It’s going to make a great retirement for us.”
“I think for me the important thing is – and I was hearing this with Andrew earlier – is that when we come to these events, we don’t feel like they’re trying to sell us hard on anything except information, knowledge, and to be well-informed to make the right decision for ourselves. And I appreciate that, because I’ve attended other events by your competitors, and they’re into just selling cruises, ‘we’re going to the Caribbean,” and ‘buy this, buy that,’ and it’s always $500 and above. So I truly appreciate good information with the right intentions.”
JASON: It’s my pleasure to welcome Bill Whittle to the show. He is the host of “Afterburner” and the creator of the “Rich Man, Poor Man” video that I saw that was extremely enlightening. He just has a lot of interesting perspective on society, on history, on social issues and political issues, and he really kind of debunks a lot of widely held misconceptions about politics and society. It’s going to be a great pleasure to talk with Bill today. Bill comes to us from Los Angeles. How are you, Bill?
BILL: I’m doing great. Thanks very much for inviting me.
JASON: Good. My pleasure. I love your work. Friends have sent me your videos that have circulated around social media (FaceBook and so forth). Very enlightening. Tell us what your perspective is on – I mean, you can start with the “Rich Man, Poor Man” video if you want. I thought that was a very enlightening video.
BILL: Thank you. I’d done one about a month or two earlier. The “Afterburner” videos are the ones I do at PGA-TV, and I did one independently in the “Firewall” series called “Eat the Rich” and they’re trying to connect it. “The Rich” was based on some statistical work done by a brilliant guy on our team named Iowahawk. He’s the funniest guy on the internet, and he’s a hotrodder who just loves to tinker with cars, but he’s also a mathematical genius. Basically, in “Eat the Rich,” he took a look at what the Federal budget was: about $3.6 trillion, which turns out to be about $10 billion a day. So in “Eat the Rich” what he did was he looked at the fact that if we spend $10 billion a day, and if Progressives tell you I cheated (s/l cheated – 10:42) off Michael Moore saying there’s tons of money in America to spend, it’s just the rich that are hoarding it all. So if you take a look at the fact that if you take all of the combined profits of Exxon Mobile and Wal-mart, the two most evil companies in the world, that’s $40 billion…
JASON: …and you’re saying that sarcastically, of course.
BILL: Of course, of course. That $40 billion, well, that runs the Federal government for four days. So that gets you from January 1st at midnight through January 4th if we take every penny of their profits. Looking at the world that way – take all of the money that the top Forbes 400 have and that buys you, let’s say, 23 days of Federal spending – what it does is it takes a look at the fact that if you were to take everything from everybody, you might be able to run the Federal government for one year, at which point you would have nothing left. Nothing. The spending is out of control. And the reason they use to justify the spending is always the poor – “We have to help the needy, we have to help the poor, we have to do this because poor people are starving in America” and all this other stuff.
JASON: And what they really should be saying is, “We have to buy votes so I can get reelected and maintain power and expand my bureaucracy and my power base.” That’s really what they’re doing.
BILL: Precisely. So what they do is they hand out benefits to a country where half of the people don’t pay income tax, so they’re buying their votes. And the justification that they use to inflict it on the other half is need, which is how socials always work. They always talk about the need.
Now, I’m not particularly bragging, as this is not anything to brag about, it’s just that people are aware of this: I’ve been dirt poor for a fair portion of my life, and I had to decide whether I was going to pay the electric bill or the rent for years and years and years. So I am not unsympathetic to this position. I mean, it can drive you fully mad just worrying about things. I’ve been there and know what it’s like. But when you get down to an actual analysis of what the definition of “poor in America” is and you realize that the Progressives are using this idea, this Keynesian idea, of people who have to decide which of their children they want to sell so they can find a crust of bread to eat for the night.
In “Rich Man, Poor Man”, I took a look at data gathered about the state of poor people in America. Again, I’m not saying that their life is cushy or easier or anything – it’s never good to not have enough money. But with that said, you find out that 82% of all Americans have air conditioning, and I think that it’s 76% of poor people who do. Thirty-one percent of average American household have a game console like an XBox, and 29% of poor households do. So if one in three average Americans have a game console and one in three poor Americans have a game console, you have a different idea of what poverty is by the American definition. So we’re the first society in history to produce poor people whose primary health problem is obesity. That’s a remarkable thing if you think about it.
JASON: Yes, it is. That reminds me, Bill. A few years back I did Thanksgiving at a soup kitchen, and I couldn’t believe that I was serving food and I was one of the thinnest people there. All the poor were coming in – now, granted, I know that a lot of this is because it’s just junkie food and bad nutrition, but most of it is bad habits. The point is, there is enough food. I just couldn’t believe I was scooping out food for people that are far more obese than I am. I just that this was kind of ironic. It’s crazy.
BILL: So you have to ask yourself, in the West today, let’s say in America today, you have to ask yourself what poverty is. Is poverty a state of insufficient resources for you to be able to function as a human being, or has poverty become a definition? One of the things I said in an essay many years ago is that if you have a club of billionaires, the guy with $900 million is a chump. He’s the poor guy at the table. When you understand that the poorest Americans are wealthier than 90% of the rest of the world – and that includes places like Europe and Japan and China and so on – when you realize that statistically the living standards for the poorest Americans are better than they are for 90% of the rest of the world, you have to start asking yourself some fundamental questions. And one of the questions you have to ask yourself is “Has poverty in its original meaning been eliminated?” Because as you well know, if you define poverty as the bottom 15% of any population, that can never be eliminated. By definition it can’t be eliminated.
JASON: Because there’s always a bottom 15. If the poorest people in, say, one of these oil-rich countries have a net worth of $400,000 – which they probably do, frankly, in Kuwait or Saudi Arabia or something, I don’t know which one – say they’ve got a high net worth, there are still people who have billions and multi-millions and deca-millions and centa-millions, so certainly by definition there’s always a bottom 5% or bottom 15% of every strata.
BILL: This is kind of the point I’m trying to make, again with a caveat. I know what the left is and I know how they function and how they like to defame people. I’m not saying poverty in American is swell, I’m not saying it’s a wonderful condition, I’m not saying everybody should enjoy it. I’m not saying any of that. I’d like to see people have as much money as they need in order to achieve their goals in life. That would be my goal. That’s why I believe in free markets. But with that said, you begin to approach a definitional strategy of poverty that is based on a percentage of the population, not upon some objective need, some objective condition. I’m not launching a war on poor people, I’m not attacking them. What I am attacking is this idea that people who work hard for a living have to continue to make sacrifices and give up half of everything – half so far – of everything they make to go to other people for the stated purpose of eliminating poverty when that poverty does not really exist in any meaningful sense anymore.
JASON: In the US, and of course it does exist around the world.
BILL: Of course. You got to Africa or even into Mexico/South America, you see grinding poverty – people starving to death in the millions in Africa, all the time. And this kind of also bleeds into the healthcare issue – not a bad turn of phrase there – because if you listen to your (s/l “keen” – 16:57) intellectuals, they’ll tell you that American – you just walk through an American street and you don’t know whether to step over the bodies of the starving or the bodies of the dying from their injuries or diseases which go untreated because of lack of healthcare. And it’s simply not true. It’s simply not true.
The whole point of ObamaCare was to take care of this vast unprotected group of Americans who don’t get any healthcare. That’s what they say. They have no healthcare. Well, first of all, we all agree that 93% of the American population was covered, so that meant that 93% of our population had the best healthcare in the world – in the world. So what does that say about the 7% or 6% or 30 million or 40 million or whatever that number is? It says that those people have not bought health insurance. But I was living without health insurance during those days and I ruptured a disc in my neck, and they went in there and gave me the surgery, and it got written off, which means that somebody who is more responsible than I was paid for that operation. Taxpayers of Florida paid for that operation. People who had their act up a lot better than I did paid for that operation. But it got taken care of. You don’t see people sitting outside of hospitals with broken legs or dying of tuberculosis because they don’t have healthcare. Those people are taken care of and the rest of America pays for it. And I have been doing my very best in the years since that incident to be as successful as I can, not only to take care of myself, but to pay back some of that money through taxation and so on.
But this whole thing is endemic. It’s a pattern. When you have half of the population that doesn’t pay anything, you have got a very, very, very dangerous situation because you’ve got the one thing that de Tocqueville, among others, said would be the death of democracy: when people realize they can vote themselves money out of the Treasury, it’s all over. And when politicians pander to half of the population and say, “You guys don’t have to do anything other than vote for us, we’ll take it from rich people,” well, sooner or later than will be 50%, then 60%, then 80% of the people who don’t pay anything and the burden on the producers get higher and higher. And then what happens? We all know what happens.
JASON: We all know what happens, and what happens is called “Michigan.”
BILL: That’s beautifully said! That’s exactly what happens – Michigan happens. And “Michigan” means that the people who create wealth – the wealth creators – either stop creating wealth – they just take their money and go retire – or they go someplace else. That’s what happens. And the people look around and say, “We can’t figure it out. It’s an utter mystery why Detroit is in ruins. It must just be bad luck.”
JASON: And California is about to become the new Michigan.
BILL: Watching California go from being the most innovative, free, dynamic society in the world to becoming the union of social Soviet republics is the most heartbreaking thing that I have witnessed in my lifetime. It is just heartbreaking to watch this. It’s just unbelievable. I’ll give you an example of California:
A friend of mine has a nice pool deck, but he wasn’t able to swim all summer because they were working on his pool. The pool was torn up all summer long. Why was the pool torn up? Well, the pool was torn up because apparently some girl at one place at one time was swimming in a pool and she got stuck at the bottom of the pool by the suction on the drain and she drowned. So now every single pool in California has to have two drains – every single one of them. And some politician somewhere decided, “Well, we can’t let this happen again, this obvious epidemic that’s sweeping the nation of children being sucked to their death at the bottom of swimming pools by the unbearable vacuum of the drain.” So some guy passes a law and every single apartment complex in California has to spend 50 grand or whatever it takes to be compliant with this.
JASON: Listen, Bill, I own a bunch of rental properties and I don’t like owning condos, but I do have a couple of them in my portfolio, and then I have apartment buildings and a lot of single family homes which I like a lot. Condos are not my favorite. But I’ll just tell you: I got a notice on that exact issue you’re talking about right now where the homeowners association sent out a notice to all the residents that they had to create a special assessment to update the pool drains because of that exact accident.
While certainly tragic, as nobody wants somebody to die, we’ve just got to understand that life is fraught with risk. I’ve seen someone’s little 2-year-old pass away of a heart condition and another friend, 25-years-old, killed by a drunk driver. It’s tragic. But you can’t tell everybody they’ve got to stop driving. You just can’t solve every problem. It seems like the left doesn’t understand.
BILL: I’m really glad to mentioned this risk issue, because I think if I had to stand back as far back as I could stand and look at America from geo-stationary orbit here and try and put my finger on what is going on, American life has become asymptotic, and let me explain what I mean by that.
JASON: Does that mean the “Nanny state”?
BILL: No, it’s a bigger issue than that, I think. Everybody knows what an exponential curve is. It’s a curve that as you move to the right as you advance in time, the rate of climb becomes ever steeper and then infinity becomes vertical. So an exponential curve is one that rapidly accelerates – the faster you go, the more numbers go up. An asymptotic curve is just the opposite. It’s one that starts out very steep, and as you get further and further in time, it starts to level out and level out and level out. So what do I mean when I say American society has become asymptotic?
In my father’s time, or certainly in my grandfather’s time, if he worked real hard his entire life and really did well and saved his money, he might be able to electrify his house. And electrifying his house means that he does not have to get up in the morning at 4 o’clock, march down the well or the river with a bucket, pump that thing, and carry water… Water is heavy. Most kids say they’ve never had to carry water. Water is heavy. They don’t have to get up in the morning and chop wood because chopping wood takes a lot of work. I’ve chopped enough wood in a half an hour to know that it will practically kill you. They don’t have to do any of these things. So a man who worked hard his entire life could show real progress for that, right? Suddenly you have hot and cold running water and you have electricity and you have all these things like a toaster and an iron, and maybe even a washing machine. You’ve made some progress in your life and you’re grateful for your progress.
What I mean by saying American culture today is asymptotic is simply this: If you’re 17 years old today in America, what does your life consist of? Well, you have 24 hour entertainment, 24 hour television, 24 hour games, and absolutely unfettered access to all of the information available to the human race at any instant that you want it. Your electricity has never been off, you’ve got all the food you could ever eat at any time of the day that you want it, and if there’s something special you want, you simply get in your car (which you’ve always had) and go get it. And when I say “go get it,” you don’t have to hike over mountains or go kill bears – you take a 5-minute drive and go get it. Every single need that you’ve ever had as a human being that people have struggled for for a millennia is present at your birth. You’ve never had to want for anything. If you’re a 17-year-old in America, with virtual certainty you’ve never been cold, you’ve never been hungry, and you’ve never been in pain – not for more than a few minutes, not for longer than it took to get you to the hospital or medicine cabinet. Right?
So the question is, where do you go from there? Right? Where do you go from there? What do you do to have any sense of accomplishment or improvement in life? I don’t know where you can go. You’re trapped under this asymptotic curve of prosperity that has given you so much that it becomes virtually impossible to improve on it. The problem here is not that things are great. I love the fact that things are great. The problem is that people assume that this is the natural condition of life and that it can never change. So when you get into a world where no one dies until they’re 80, and when everything is supposed to be protected and all of your needs are met, no one has to deal with the idea of risk. If some kid is killed on a bicycle, then either we didn’t wear enough helmets or we didn’t have enough stop signs or we didn’t have enough of this, we’ve got to ban this, we’ve got to improve this, we’ve got to have video cameras… It assumes that the world has become perfect and the world is never perfect. It’s never perfect. It never has been perfect.
The next video that I’m going to as an “Afterburner” has got to do with the Reno air races crash. My understanding is that Rachel Maddow and others have been calling for air races to be banned. The reason they call for them to be banned is because they don’t go to air races. It doesn’t cost them anything to ban air shows, because they don’t go to air shows. So this is the great American pastime now, calling for the banning or the regulation or the removal or destruction of things that we don’t do, but which we happen to agree to be harmful to our society because one person or two people or 12 people got killed. “Well, we simply can’t have this. This has to be banned and eliminated.”
My response to people like Rachel Maddow, to these people who live in skyscrapers in New York and talk about banning air shows…
JASON: They’re sort of like the academics in their ivory tower…
BILL: Well, 12 people were killed in Reno and of course that’s a tragedy. I’m not being calloused to their loss. I’m not saying I don’t care about them. Of course I do. But they assumed a risk when they went to that air show, and I’m sure that all of them knew they assumed a risk. They assumed a risk when they drove to the air show, right? They assumed a risk the minute that they entered this world that something would happen to them. And the price of entering the world is that something could happen to you.
JASON: The only secure place is death.
BILL: That’s right. Well, that’s what they want for us, really, when you get right down to it. So when you get the people like Rachel Maddow who want to ban all these things in the “public interest”, of course, never for them…They never come out and say, “I don’t like this, so we’re going to ban it.” It’s, like, “In the interest of public safety so that nobody else gets killed at an air show, I think maybe we should ban air shows.” Well, 12 people killed at Reno. The last time people were killed at the Reno air races was 47 years ago. And my response to Rachel Maddow would be, “If you want to really ban things that are killing people, if you’re all about the public safety as you claim and you really want to shut down these murderous things, why don’t we shut down something that murdered 600 people last year and 700 people the year before that and sometimes murders 1,200 people a year, Rachel? If you really want to do something for the public safety, why don’t you ban New York City? Why don’t you just shut down Manhattan where 600 or 700 people are murdered every year? If it’s really about public safety, why don’t you close your apartment where you live, lock up everything, leave it there, get on the last bus, blow the bridges and seal the tunnels, and then we don’t have to worry about all those hundreds of people dying every year.” Right? And if that sounds a little ridiculous to you and a little absurd, it’s probably because somebody’s talking about shutting down something that you actually enjoy.” You’ll say, “Well, that’s the price of living in New York,” and my response to that would be, “Well, that’s the price of watching airplanes fly at 500 mph because you enjoy that kind of thing.”
It’s assumed risk. It’s living life like an adult and understanding that there are no guarantees and there are no receipts. You’re not promised a life of 100 years of perfect health and longevity, interrupted only by a quick and painless death. No. That’s not how it works. But that’s how we think it works, and that’s the American disease today.
JASON: Well put. I definitely agree with you there.
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JASON: Bill, I want to go back to this issue of the rich and the poor for just a moment if we can. I love video you did that you talked about initially where you looked at the number of days we could fund the ridiculous, out-of-control Federal government – and we’re only talking about the Federal government there, not all the State and Municipal governments which add to the problem.
There’s simply not enough money to take. The concept of let’s just tax all the people that fly private jets more – and not understanding that, of course, a Gulfstream jet costs somewhere around $50 million and very few people actually have those… What really the Left is proposing – what Obama is proposing – is he’s saying tax everybody who makes over $200,000 a year. If you live in California or New York or any expensive place, that ain’t much money by today’s standard. There’s not enough to get. The taxing of the rich is not a solution, because there’s just not enough to get, first of all, and that’s what the video so beautifully illustrated. But in addition to that, of course, and Reagan proved this very well, the more you tax, the more you suppress economic activity. And so you actually reduce the amount of money coming into government coffers with higher marginal tax rates.
JASON: But they don’t care about that.
BILL: Right. Or like Obama was asked before he became President: If it could be proven – and categorically it can be – that raising tax rates actually lowered Federal revenues, would you still be in favor of it? And he said yes, because it’s not about the revenues, it’s about the equality. So first things first. Let’s get this idea…
JASON: That’s a scary, scary response. “It’s about the equality.” Wow.
BILL: Let’s just look at what’s really there and let’s look at what these people say in their own words. It is not about raising revenues to provide services to people who need it. It’s not about Grandma’s Social Security. It is about wealth redistribution by people whose primary motivation in life is (s/l “indy” – 30:52). That’s the first thing we need to understand. The President admitted it verbatim. I’m not putting words in his mouth. He said this. This is why the guy’s always on teleprompter because when he’s not on teleprompter, he says what’s on his mind, and when he says what’s on his mind, people begin to go, “Wait a minute now.” So that’s the first thing we need to understand.
The second thing we need to understand about this Federal spending is it is an addiction. It is the greatest addiction of all. If you had a credit card in your wallet that had no limit and you never had to make payments on it, what would your life be like?
JASON: It would be wonderful.
BILL: Right? It would be extravagant, right? But the thing you need to ask them about this Federal spending is this. People say, “Well, we don’t want spending, you know, we just need a little more money and then we’ll be able to pay for everything we want.” Just ask them this: “How much cocaine does a cocaine addict use?” The answer is: “All of it.” They do all of it. There’s no a coke addict in the world who says, “You know what? That’s enough. I think I’m going to go to work for awhile. I’m going to put this away for a couple weeks and I’ll come back to this on the 15th or something.” They do ALL of it.
It’s an addiction. These people are addicted. They will take every penny you have. If they’re taxing you 50% now, then they’ll take 60% and 70% and 80%, and then they’ll take 100%. And I have to tell you something. I remember when I was a young guy, probably 23 or 24 years old, I briefly dated this girl who came from Britain. Her father was a tax refugee from Great Britain, and she was talking about the tax rates on her dad, who was doing real well before he left. I don’t know if it’s true, but she told me this story and it seems reasonable. “You know what percentage of his income they taxed my dad the final year before we left?” I asked, “What?” and she said, “One hundred and three percent.” I said, “That’s impossible.” She said, “No, it’s not. They took everything he made that year plus they took 3% of his earnings of that year from his savings.”
JASON: Unbelievable. A wealth tax, which Obama has pondered, by the way.
BILL: Yes. So where does this end? It never ends. Where is Barack Obama’s spending line? Where did the Democrats – because it’s not just him – where does the Democrat revenue line cross the spending line in the future? They never say, because it doesn’t. They don’t understand it. They don’t understand it. They’re too stupid to understand the things that every single regular American understands, and that is you cannot spend more than you take in over any length of time.
JASON: Well, I say, Bill, that they’re not too stupid. They know exactly what they’re doing. They’re simply either conspiring to bankrupt and destroy the country, or they’re just simply pandering to get more votes and maintain the power and kick the can down the road. It’s one or the other. I mean, they can’t NOT understand it. Come on, this is just so beautifully simple.
BILL: Well, Maxine Waters doesn’t understand it. I’m convinced that some of these people don’t understand it. She’s complaining about why there are no jobs. These are her words. These are not my words, that if Barack Obama was not black we would be marching on Washington with “porches and pitchforks.” I think she said that verbatim.
JASON: She’s the one who said, “No justice, no peace” during the L.A. riots, encouraging violence.
BILL: There are a lot of people saying that. The thing that she said that is so indicative is here’s a person that doesn’t understand why there aren’t any jobs. She can’t figure out. It’s a mystery. And then she says to banks, “If you do not comply with our will and basically forgive these mortgages, we will tax you out of existence.” Unquote.
JASON: Then there will be no loans… and no banks.
BILL: When a representative of Congress says, “You do what we say or we’re going to tax you out of existence,” what the companies and private sector naturally and very intelligently say to themselves is this: “Here’s this threat looming out here. We’d better save every single penny we have because we never know when these idiots, these malcontents, and these charlatans are going to put a gun to our heads and tax us out of existence. So I don’t think we’re going to hire this new person or buy this new truck or open this new factory because we’ve already been threatened. We’re threatened every day by this Administration, by people who make us into villains and say we’re the source of all the problems and we’re just fat cats with our corporate jets.”
Of course businesses are sitting on money. I would, too. They’re waiting for this storm to pass. They’re waiting for some certainty. And even more than these repressive tax rates and these unbearable regulations, the one thing that the private sector cannot abide is uncertainty. They don’t know. Nobody knows. When the Federal government – and I’m talking about the first two months of this Administration – when the Obama Administration can come in and by fiat simply declare that Chrysler’s shareholders are not holding the papers that they thought they hold, that we just decided to come in and by legal fiat say, “No, the money that is owed to you is not owed to you anymore. We’re sorry. We’re not even really sorry.”
JASON: We’re just going to give it to the unions, basically.
BILL: “It’s just been done, and tough luck for you.” Now when that happens, my friend, we are now dealing with a very different kind of America. We’re not talking about Liberals or Democrats, we’re not talking about Conservatives or Republicans, we’re not talking about any of that anymore. We are talking about whether or not we are under the rule of law or whether we are a lawless society determined by the winds of the people in power.
JASON: We have a dictatorship.
BILL: When politicians can break contracts at whim – private contracts – when a politician can go in and declare it void legally, we no longer live under the rule of law. And then you live in the kind of world that is the Third World, and it’s just a matter of time before the living conditions mimic the legal structure.
JASON: It’s a slippery slope, there’s no question about it.
BILL: And it’s a steep slope, too.
JASON: It sure is, and I pretty much agree with you on all of this. I want to ask you a question. I want you to help me sort this out, because I think conceptually you’re absolutely spot on. However, in today’s modern world of business with internet, scalability, lobbying of Congress especially, and the lobbyist scam – which I think is a scam in a lot of ways – big corporations, “The Evil Rich,” as the Left likes to call them, which I don’t think they’re evil… However, I interviewed the author of “Winner Take All Society.” I don’t know if you’re familiar with that book, but he’s a professor and I like the concept of the book. I was interested in it, but when he got on my show he started talking about how the government needs to do more and regulate this and regulate that. I thought “Oh my God, this is just going to be another disaster if this happens.” But these big Wall Street companies, they’re not existing in a truly capitalist environment. They’re lobbying the government to make laws that regulate them more, while they go on TV and say, “Oh, it’s too much government regulation.” They’re playing both sides of the fence, because what they’re doing is by saying, secretly, “Regulate us more.” And the reason they say that is because they know it keeps out competition. I’m not going to open up a brokerage firm or an investment bank and compete with Goldman Sachs anytime soon. The entry is impossible. They’ve raised the bar so much that it’s not a fair playing field anymore, and I really do think that.
BILL: You sit upon the economic system that is always kind of working in the background, but when you have this kind of political cronyism it’s basically lawlessness in terms of contract law. Then what emerges in its place rapidly is mercantilism. Some people call it, “crony capitalism.” I never want to hear that word used again, because it associates capitalism with this. It’s got nothing to do with capitalism. It’s the opposite of capitalism. Free market capitalism says that laws protect people against things like fraud, and maybe insider trading, and that’s it. But mercantilism is the use of political influence in order to set your business up for an advantage that it doesn’t already have. Let’s take GE, for example. GE paid no income tax. How’s that possible? Jeff Immelt is Barack Obama’s go-to-guy, right? Wasn’t he given the Medal of Freedom? No, that was Warren Buffett. Another guy I’ll talk about in a second…
JASON: Another hypocrite.
BILL: I’ll talk about Buffett in a second. But here’s the guy who’s like the water carrier for the Obama foundation on the big business front. GE is a massive company, and when Barack Obama was elected I actually asked myself, “Why? How could these big businesses support the socialists?” And that is exactly what you said a moment ago. One of the things that GE makes is MRI machines, magnetic residence imaging machines. And it is a much tougher thing – I don’t have to tell you this. It’s much tougher for GE to go out and try sell 600 of these things to 600 different individual private hospitals than it is to pay a little money, get a little political influence, and sell a thousand of them to the federal government. That’s one sale, right? And it’s not even a tough sale and you don’t have to worry about competition because you bought the political influence. Then they write laws that say that this has to happen, and there you go. They write laws that protect you against competition. Mercantilism is the opposite of the free market. It’s not an outgrowth of the free markets, it’s not a mutation, it’s not what the free market is – it’s the opposite of the free market. And when you think of all the images you have of the pop culture of capitalists, the fat cat guy with the top hat and the enormous stomach, holding a sack of money. That image…
JASON: It’s Mr. Potter from “It’s a Wonderful Life.”
BILL: Well, yeah, it’s the Monopoly guy image – the guy in the top hat and the waist coat, the fat guy holding the big bag of money – drawn by Thomas Nast back in the 1800’s, and it was done to represent the trusts, these mercantile monstrosities that existed back at the time of Tammany Hall, which were all Democrats by the way – just feel like I need to add that. Tammany Hall was “Boss” Tweed in New York City, and at the end of the 1800’s, if you wanted a contract in New York City… This was open knowledge. This wasn’t secret. This was openly known. If you wanted to do a $100,000 worth of renovations to a building in New York City under Boss Tweed, you had to come up with $100,000 to do the renovations and $100,000 to pay to the Democratic political machine, which went directly into Boss Tweed’s pockets. It’s mercantilism. It is this unholy alliance; it’s an aneurysm of government regulations and private enterprise. And so, yes, of course, this is the problem with these big business guys, with these mercantilists. And I don’t know what the answer is. But when you get a guy like Warren Buffett saying, “They should raise taxes on me! They should raise taxes on me, I’m a millionaire! I’m a billionaire!”
JASON: My secretary pays more, yeah, right.
BILL: Do you know what I found out? I found this out yesterday. Do you know what Warren Buffett’s take-home salary is?
JASON: How much?
BILL: His pay, his taxable income? $100,000.
JASON: I had a feeling it wasn’t that high.
BILL: It’s a $100,000. I make more money than Warren Buffett takes home. I am taxable – let me rephrase that. I don’t make a 100th of 1% of what Warren Buffett makes, but my taxable income is higher than his. He makes $100,000 in taxable salary, because he has sheltered everything, and not just unfairly, it’s all done legally, but also because almost all of his money is through capital gains.
JASON: Well let’s go see if Buffett is going to start lobbying for a wealth tax. And let’s see if they can take – like your ex-girlfriend there – let’s see if they can take 3% of his multi-billion dollars of wealth away every year.
BILL: Let’s see how he feels about that. And the fact that they’re not talking about that means Warren Buffett is an enormous hypocrite. He is a mercantilist. He is taking a position that sounds very noble, which endears him to these Progressives. “I’m a billionaire and I think you should raise my taxes.” See? Even the billionaires say that we’re not taxing them enough. Well, Warren Buffett makes $100,000 a year of taxable income. He’s actually probably not paying any income tax at all. He’s certainly under Barack Obama’s magical $250,000 level, right?
JASON: Well, the other thing is he’s not, I mean, you’d think that Warren Buffett secretary is a pretty special person and he’s not paying her a hundred grand. I would think –
BILL: She’d have to be making (Inaudible 43:01).
JASON: I would think that’s a pretty high-end secretary there, to one of the richest men in the world.
BILL: This is how the whole thing works, right? It’s all about political influence. Leave business alone. Some people say, “Oh, you free market guys, you don’t want any regulations.” That’s like saying, “I’m a football fan who doesn’t want any rules.” Of course I want rules. I want rules about penalties. I want rules about out of bounds. I want the clock to stop when a guy runs out of bounds. I want a touch down to be worth seven points. But what I want is, I want a touch down to be worth six points every time. I want a field goal to be worth three points every time. I don’t want a referee to be able to throw a flag at a guy because he doesn’t like the way he looks at him. I don’t want a referee to throw a flag at another guy because he doesn’t like orange and the guy’s wearing the orange uniform. I want a limited set of consistent rules that are applied uniformly to everybody. And that’s what everybody in the free market wants.
JASON: You mean like a flat tax? How’s that for an idea?
BILL: Yeah, how about that? How about that?
JASON: Steve Forbes, he got no traction. I remember I was in Russia and I was hanging out with a couple of Steve Forbes’ daughters, and I asked them, “What happened the last time he ran for President?” They said, “It was just a complete media blackout. No one would cover him.” It was just that he couldn’t get any traction. It sounds very much like Ron Paul and how he’s marginalized in the media. The guy has the support of the people. You just see it over and over. I mean, it’s unbelievable what happens and how they just don’t cover him. Don’t know if you saw the Jon Stewart video, which is pretty funny actually, about Ron Paul. You really should look that up. It’s mind-boggling. It really is.
BILL: Well, Forbes wasn’t covered, because the flat tax idea would destroy the Democratic Party. Forget the Democratic Party – it would destroy liberalism. But, if everybody was in this together and it wasn’t on how much you made but how much you spent, then – I don’t know whether that’s the flat tax or the fair tax, I lose track. But here’s the thing: if everybody’s in it together then everybody’s in it together. You don’t get to divide the country up into tribes anymore and play them against each other. And for people who say, “Well, that’s unfair. The rich should pay more,” let me just ask you this. Let’s take an example that everybody can connect to…
JASON: The rich will pay more on a flat tax. They’ll pay 15%, just like everybody else.
BILL: That’s right, needless to say. Let me just take an example that most people can resonate with. When you’re standing in line at the grocery store on a football Sunday, let’s say, and there’s a long line. You’re 15 people deep and every single register is filled with people. You’ve got all different kinds of Americans standing in line to get their stuff for their barbeque that day. No one for a second thinks that the guy in front of you should pay more of your grocery bill because he makes more money than you do. It never enters anybody’s mind. No one ever says, “I want to see your bank balance before you check out, because you should actually be paying for some of my groceries or maybe I should be paying for some of yours because you’re not doing as well as I am.” Nobody thinks that way, but that’s what the income tax system is today. It’s a way of checking the wallet of the guy in front of you, and if he has more money you take some of it. And if the guy behind you has less money, then he takes some of yours.
No one ever thinks that way in public when you’re dealing with real people. It’s only when you demonize classes of people – like these Progressives are becoming expert at – that people start thinking that way. I think most people in a supermarket line would say, “Look, if there is somebody outside the door who’s starving, every American who’s decent would – if it’s a genuine need, real hunger. There’s not a person in America who would walk by without chipping in. So with that said, why is it that we can’t all understand that when we go to a checkout line to get our Sunday groceries, it’s a question of, “Hey, this is my business, right? If I’m buying T-bone steaks and you’re buying flank steaks, well, if you want T-bone steaks, figure out a way to work a little harder or save your money.”
JASON: Or sacrifice something else. Sacrifice in a different part of you life.
BILL: Or sacrifice something else. Yeah, if you’re texting someone on your iPhone…
JASON: You don’t need the brand new Nikes.
BILL: If you’re texting somebody on your iPhone about how unfair it is that the guy in front of you has T-bone steaks while you don’t, you might be onto the nature of the problem here.
JASON: Exactly. No, it’s very true. And you know, as far as the unemployment issue, it seems like one way you could just instantly increase employment is get rid of the minimum wage. Why doesn’t the free market dictate what we pay people? You see the Left constantly talking about how black unemployment is so high and teen unemployment is so high. And the teenagers can’t get…
BILL: No one can afford to hire them.
JASON: …can’t get summer jobs. Well, how about taking away some of the regulation on the businesses? How about letting the businesses hire people for whatever people are willing to work for? I mean, what a novel idea that is. In business, when I go – I mean I only work for myself really, because it’s my own company – but when I go and negotiate with a potential customer, no one’s regulating how much that customer should pay me for whatever I’m going to provide with them. It’s up to the free market.
BILL: Well, let me just close my time with you today with a little personal story here. And I’m not trying to put myself on a pedestal. This is not unique to me; there are millions of people who have done what I’m about to tell you. This is the idea of America and I didn’t know it in advance, it just occurred to me.
I was 12 or 13 years old and I got into astronomy in a big way. I just loved the idea of astronomy and I saw a telescope that I wanted for Christmas. My dad said, “If you pay half, I’ll pay the other half, and you can get it for your Christmas present.” I said, “Okay.” So I got massively into astronomy and I moved to Miami. Then on a field trip I went to the Miami Space Transit Planetarium in 5th grade. When I walked into that building, I could feel new neurons being burned into my head. I was absolutely overwhelmed. I said, “This is it. This is what I want to do.” I was 13 years old. I went to this show and came back that weekend. We took a bus there. I said, “I’d really just love to be a part of this and I’ll do anything you need. I’ll take tickets, I’ll sweep the floor. Sometimes people get sick because of the motion there – I’ll clean up the vomit. I’ll show people to their seats. Anything. I just want to be a part of it.” And the first words out of their mouths were, “Well, we don’t have any money to pay you. We’re a museum and we’re on a very tight budget.” I said, “You don’t have to pay me. I just want to be here.” This was not a ploy on my part. This wasn’t like my secret master plan. I just wanted to be there. I wanted to do it. It was a field that I was interested in, and I suppose on some level I did feel like if I can show them over the course of a year or so that I’m actually valuable, maybe they’ll find some room for me.
So I went in. I took tickets and did all that stuff that day and they said, “Yeah, nice,” and they never thought they’d see me again. But I came back on Sunday and I came back the following Sunday. Honestly, I hadn’t been there four or five times before they said, “Ah, we got to pay this kid something.” So they started paying me $2.50 an hour. I still have my first check for $37.50 for two weeks’ work or a month’s work or something. But the point is they started paying me $2.50 an hour.
Then I started watching what the console operators did, and when there was an opportunity to do a show and nobody to run it in an emergency, I told them, “I know how to do it,” because I’d been practicing on my own time because I loved it. So they gave me the opportunity, and the short form of this is I was a planetarium console operator at the Miami Space Transit Planetarium when I was 14 years old, and it’s only because I wanted it. I didn’t have any special connections. I didn’t have any connections, I just wanted it. And I came in there every day and showed them that I wanted it.
This is the thing our listeners need to understand. You’re a businessman. You know this in your bones to be true. People like that make businessmen almost weep. Business people live their lives to find people like this.
When people ask me, “How do I succeed in the world?” I say, “There’s only one thing you need to know. You don’t need a college degree, you don’t need this money, you don’t need this capital, you don’t need this kind of person out there. There is one thing you need in the world if you want to succeed, and that is very simple. Whatever job it is you take, you make sure you get there a half an hour before the boss arrives and you stay a half an hour after he leaves and don’t mention it, don’t say a word about it. You do this for three months and you are on your way, because people who run businesses, who start businesses, love what they’re doing. They’re not in it for the money. Money is great, but I’m not aware of anybody who started a business because, “I want to make money, I just got to find a business.” People do things that they love and when they see people who are on the team, who really get it, who seem to love it, too, that person will be on a rocket ship of promotion and success. And there’s no way to stop them. It’s just that simple.
JASON: Absolutely, there’s no question about it. One of the great things about the free market, Bill, is that people pre-select themselves for the thing they most love and the money comes as a result of them digging what they love and expressing their love to the world and providing great products and services. That’s why we must, at all costs, maintain a free market system and capitalism. I mean, this is a very, very, very intense time in history right now in this country. And I sure hope things work out correctly…
BILL: And I think they will, too.
JASON: …because it could kind of go either way here.
BILL: I think if this guy gets voted out of office and we see low regulations and a lower tax rate, we’re going to see a 7% economic growth in this country. There’s so much pent-up growth that’s just waiting this thing out.
JASON: I know. It’s just been great talking with you today. Your videos are fantastic. Where can people find them?
BILL: I’m on every week at PJTV.com. It’s a membership-based thing, but they let you watch 10 of them for free, and if you’ve never been there, you might want to check it out. I do an “Afterburner” series there, a show called “Trifecta”, with two of my good friends, Steve Green and Scott Ott. Also, you can get on YouTube and search for BillWhittleChannel (all one word). Pretty much all of my other videos are up there. “Eat the Rich” is there and a number of others, so that’s generally the best way to find them. And you can always go to BillWhittle.net.
JASON: Fantastic. Great websites, great resources, and phenomenal videos. Thank you so much, Bill Whittle. We appreciate having you on the show today.
BILL: My pleasure.
JASON: Here are a few additional comments from some of the attendees at our Meet the Masters event:
“It’s truly inspiring that you have this group of people listening to everyone’s walk and how they came to real estate investing. This group is full of people basically that just want to bring wealth to themselves and bring wealth to others. It’s inspiring that true capitalism is alive. Listening to your podcast, that information is so important I wanted it to be heard by everyone, but we’ve got to do our part to educate people and bring that information to everyone we know. Your podcast is truly inspiring and I want to tell everyone I know about it.”
“I started to become aware of Jason, I suppose, about a year or a few more months ago. I got into the real estate business as a landlord about 30 or so years ago, dabbled in it. I still own one property. I’ve always been thinking about getting back into it, and I think this is the time to go ahead and do it. Thirty years ago this kind of a business never existed. It was much more difficult to get a global sort of idea about what a person should do to invest for retirement, so I’m very, very enthusiastic about it. I certainly learned a lot.”
“I always learn something new, just sort of absorb everything. To me, it’s good to come back because you get re-motivated. When you leave here, it’s kind of overwhelming. Then after a week or two you may not act, so when you come back you’re kind of motivated to act. It just keeps you fresh and meeting people. That’s why I come back.”
This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com or email Media@HartmanMedia.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, or business professional for individualized advice. Opinions of guests are they own, and the host is acting on behalf of Platinum Properties Investor Network, Inc., exclusively.