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Bill Black: History has proved Nobel prize winning economist Friedrich von Hayek, the patron saint of plutocrats and libertarians, profoundly wrong

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JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore. And welcome to this latest edition of The Black Financial and Fraud Report.

We’re now joined by Bill Black. He’s an associate professor of economics and law at University of Missouri-Kansas City, white-collar criminologist, former financial regulator, author of The Best Way to Rob a Bank Is to Own One, and he’s a regular contributor to The Real News.

Thank you so much for joining us again, Bill.


NOOR: So, Bill, what have you got for us this week?

BLACK: We’ve got von Hayek, the patron saint of plutocrats and libertarians in what libertarians broadly consider the absolute best thing he’s ever written, “Why the Worst End Up on Top”–and this is chapter ten of The Road to Serfdom. And I decided to look at his theory of why a Democratic government always is going to lead to tyranny and the mass murder of the citizens of the state and, you know, prison complexes and such.

And he says there are three reasons why the absolute worst folks will always prevail in a democracy. First, the core group that they’re going to appeal to is the stupid people and the uneducated people. Second, they’re going to broaden that base of support by having propaganda campaigns that are able to convince the gullible to join them. And third, they’ll then have a campaign of hate to bring in the haters. And the haters will be those folks who are envious of rich people, who are more productive and have greater income. But they’ll also be haters of minorities and such. And he says, because only the most unscrupulous politicians would be willing to put together this kind of a troika of totalitarianism, it’s always the worst people that’ll come to the top in the political process.

And, of course, he’s writing this in something published ( the road to serfdom) in 1944, and he gets the Nobel Prize in 1974–in economics, of all things–for this prediction, which, of course, proved absolutely wrong in every single case. And it’s 40 years since his Nobel Prize, this year. And, of course, it’s proven to be true in absolutely no of the democratic nations of Western Europe and the United States and Canada, which is what he was writing about and predicting that they were all going to become these kind of police states.

And if you think of his theory, the thing that the liberal types and, as we use the phrase in America, progressives, or what he would have called socialists and such, then socialists and progressives should have been fighting to make sure that people weren’t educated.

But who really fought against public education? Well, that would have been the conservatives, who fought against the land grant colleges that transformed America. Well, that would be the conservatives and the South and such.

And, by the way, who actually goes disproportionately to the polls and votes? Well, that would be people with higher levels of education.

So economics is the only field in which you can be completely absolutely wrong and get a Nobel Prize for being completely absolutely wrong and refusing to admit that you’re absolutely completely wrong.

NOOR: Thank you so much for joining us, Bill.

BLACK: Thank you.

NOOR: Thank you for joining us on The Real News Network.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.

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William K. Black, author of The Best Way to Rob a Bank is to Own One, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.

Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.