Transcript
Paul Winkler: I’ve got a guest with me. I don’t do guests very often, but I have strong ties to Trevecca here in town, and I’ve been working with those guys over there for quite a while. Now, lots of friends in the accounting economics business department over there and Dr. Phil Rickard is here with me today. Welcome.
What Is Public Policy and Why Should We Be Interested?
Dr. Phil Rickard: Thank you, sir. It’s great to be here. I woke up this morning and thought that wow, I’ve arrived. This is fun based upon what people have been telling me. It’s like, man, if you could be a guest on Paul’s show, your life is forever changed.
Paul Winkler: Tell him it’s changed. All right. We’re not sure if that’s for the better now. Okay. So Dr. Rickard is a professor of accounting and strategy at Trevecca and is director in the masters in public administration. Also, he wears a lot of hats over there—assistant director of masters of business administration, teaches manager accounting the MBA program, MPA. And this is something we’re going to be talking about is the MPA program over there a little bit. This is really interesting stuff, especially in this political climate. We’re going to get into some really, really interesting territory today on the show.
You were a senior consultant with Clarion strategies, worked with Christian higher education for 23 years. He’s got eight years of church ministry experience also working with corporate businesses, CPA certified public accountant as well, and also has a DBA and MBA. You have more degrees than a thermometer. Kind of like the kind of guys I like to hang out with. So really welcome. It’s going to be a lot of fun today. So public policy. Talk a little bit about what public policy is and why people should be even interested in this whole topic and how it applied.
We’re going to have lots of specific questions, but in general, just to just talk about what public policy is.
Dr. Phil Rickard: I’ll start with, it’s extremely broad, but it really relates to government decisions and any action that’s taken to address any matters of public concern. So for example, in our public administration program, at the master’s level, we have an individual course in public policy. However, really you’re looking at the subjects in that course touching all the other core courses that we have in that program. But if you think about everyday life, I mean, most of these public policy issues, they come into touch with us. As you know, we look at our individualization, our families, our communities, the businesses that we engage in. So again, it’s very broad touching on education, healthcare, you know, foreign policy right now.
Paul Winkler: Which is really it’s. Yeah. It’s huge. You know, so healthcare everybody’s talking about that, how’s the healthcare system, is it broken? How are you going to fix that? What are we going to do in that particular area? You know, one of the things that we want to do, and I want to talk about that a little bit, you know, healthcare. I used to go door to door and I would have business owners say, “well, yeah, Paul, you know, I would love to buy a health insurance policy off of you.” But you know, what happens is a lot of my people are on the public system here. And it was, you know, TennCare is what they were on and it was subsidized and they, you could, I could put a policy in place here and I could pay half the premium and it was still be, they would still have to pay more money than if they got onto the public system here in Tennessee, under TennCare.
Now we’re looking at basically a healthcare system. We’re trying to make it nationwide, make it something like another country. Maybe socialize it. Talk a little bit about what’s being discussed in that area and what the implications are, man. It could be so broad ranging. What, what do you think?
Healthcare Issues
Dr. Phil Rickard: Well, you’re right. It is so broad ranging and it’s extremely complex. If I think about the two major issues, it’s one. And I think you just touched on it in regards to what you’re describing for the individual. Is it truly affordable? You know, so many of us were looking at getting our healthcare through our employers, but then you have those who are not privileged enough to have employment. And it’s a matter of, okay, where’s their health insurance going to come from. We also had the issue of that, just the trend, which just seems to escalate at higher levels each year in regards to the level of healthcare cost for our nation. I mean, we’re talking about approximately 20% of GDP.
I mean, that’s phenomenal when you think about it and you know, we’re, we’re looking at a $3 trillion cost of healthcare. I mean, it’s, it’s gigantic.
Paul Winkler: That’s insane. I can’t even get my mind wrapped around that. So one of the things they talked about is making it affordable. Now I know from my own perspective, you know, over a thousand, well, over a thousand dollars, $2,000 a month, I can’t even remember what the average is. I think I want to say it’s like $2000 a month. Something like that. It’s, it’s super, super high for some business owners that I know which is unattainable. Right. And the idea initially was this is health insurance is healthy people paying for sick people as is a friend of mine. Always put it. No. So in essence, what we’ve got to do is we got to get everybody paying into the system somehow, but the problem is, is it conflicts with people’s interests and what happens a lot of times as younger people just stay out of the system.
Dr. Phil Rickard: Yeah. And it’s important for us to recognize that in order for there to be affordability, if, if we can ever really achieve that, there needs to be economies of scale. And so therefore you need as many players in that healthcare process as possible. But if you look at most States, there’s a limited number of players. And so going back to what you mentioned before, do we continue to go in a direction of having a more centralized approach, which is the trend and so many other countries. So if you think about what’s happened over the last decade and when we saw the legislation passed the affordable care act. And so with the affordable care act, there’s a lot of controversy associated with it, but we could sit back and we could say, well, is it truly affordable?
If we see premiums continue to go up and we have a lot of individuals, I mean, you know, we’d have to do the research and see what the numbers are, but who are left out of the process. Now what’s going on currently is this issue is going before the Supreme Court. And it’s primarily a landing there on the basis of the individual mandate. So that’s something that, you know, we could discuss further, but what the justices are going to have to determine is whether the individual mandate is constitutional and if it’s not labeled as constitutional, does that mean that you just go ahead and deconstruct the affordable care act?
So it’s extremely complex. It will be very interesting to see how this plays out. One issue also is whether the States that are gonna, you know, bring this forward is whether they actually have standing to take it before the Supreme Court.
Paul Winkler: As an issue interstate in a bait, could I be a Tennessee resident, get a healthcare plan up in Kentucky or something like that, or have the ability to cross state lines. I remember that was an issue. The issue of making everybody pay is the big deal though, because if you have people that are opting out of the system, because they can’t afford it, they don’t want to buy typically who is it that can’t afford it, younger people, right? Who is it? When I said healthy people pay for sick people, where is a lot of the money coming from younger people? And it just seems to me, it’s like this issue that is really, really difficult to solve.
Dr. Phil Rickard: Yeah. I don’t think there are easy solutions. I’m also not going to sit in front of you right now and pretend that I’m an expert. Matter of fact, most of the public policy issues that we would discuss today, I’m not an expert, but I think what’s important to understand about that is I believe that you and I can both relate to the people who are out there as your listeners. And we compare ourselves in, in their positions where these issues are so complex and they’re not easy to solve. So what’s the best thing that we can do in my opinion, don’t believe the hype because there’s a tremendous amount of hype that comes from the media and from other sources, politicians, you know, also are very much in the mix there.
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What Is Our Civic Duty?
So what’s our civic duty? Well, you know, just like your listeners, I’m imagining that, you know, they’re concentrating on doing their job, trying to raise a family, serve, you know, in society best that we can, we cannot legitimately devote 24/7 to try and keep up with these issues. So we’re very dependent upon, you know, finding objective information and being able to lop on it. But I think that’s the challenge. And so I get objective information exactly. That’s the problem. Yeah. But I think it’s our responsibility to, to look and try to find, I mean, one of my goals is to try to devote a certain amount of time over a two week time period.
Just say, I’m going to take one of these subjects and I’m going to take this topic and I’m gonna explore it. And I know we’ll try to find out, okay, what is the most objective information that I can make decisions on and then know how to support it? But you gotta keep this in mind. Part of my responsibilities at Trevecca is to engage in that activity. What about the average person who can’t really devote that time? What I find is I can devote that energy, but I still step back and think, I still don’t know what the right answer is here.
Paul Winkler: So part of this is why as a teacher, what you’re trying to do is bring in students and help them gather enough information to understand the difference between objective versus non objective information.
Dr. Phil Rickard: Absolutely. Because I think we have some patterns that have developed in not only higher education, but lower levels of education for so many years where it’s to a great extent about indoctrination.
Socialism Versus Capitalism
Paul Winkler: Yeah. It reminds me a lot of when I always say what I always talk about with investing, you know, when it comes to investing, a lot of times, we don’t know what the truth is. So this is why educate so much so that you can make an informed decision. You know, if you know nothing, then you can get swayed by every blow of the wind. And, and there’s, you know, there’s nothing to stop that, but if you understand how things work, you don’t have to know everything, but there’s certain things. If you start to get a handle on how the healthcare system works, you know, what are some of the conflicts of interest, who are the payers, who are the parties out there that are getting paid and how does the system work? You know, so I can see where your students really have benefited from that to a great extent. Now that leads us to another thing that when we talk about socialism versus capitalism, let’s open up a can of worms right here.
Okay. You know, because right now I’m seeing an awful lot of movement where people are saying, you know, I think, you know, socialism, which might be a good way of running the country. And I’m sure you have a lot to say teaching public policy about that topic right there.
Dr. Phil Rickard: Yeah. It’s really surprising to see such a clash in ideologies between capitalism, socialism. I mean, if you look at our heritage, it is very much baseball in the idea of democratic capitalism. So it’s shocking in some ways that we could have this, if you can believe the opinion polls, I mean, apparently based on what I’ve read is we have a vast number of millennials. If I can use that sure. Classifications who are growing in support of the idea of socialism and the reason why I say it’s shocking socialism, quite frankly, doesn’t have a very good track record.
I mean, if we look at, you know, what brought down Russia, I mean, to a great extent, it was, you know, the communist socialistic type of state. But I mean, if you look at what’s happened in China and Europe, I mean, we’re talking about people starving to death, you know, in some of those regimes, you go to Africa and Latin America, you’re looking at massive amounts of controversy, baseball corruption, right. And there’s just.
Paul Winkler: No poverty. Yeah. And sovereignty as a result of it. Well, and I think that’s part of the…
Dr. Phil Rickard: The selling point that we’re seeing in our country, right? The belief that economic freedom does not lead to solutions for poverty. And, and that’s so untrue because if you go back to say the 1990s and, and move forward, we’ve seen approximately a billion people be delivered from poverty around the world.
Paul Winkler: Capitalism is absolutely. Yeah. Yeah. That’s easy. Yeah. If the tests aren’t in any harder, I’ve got this class, Dr. Phil Rickard here from Trevecca. So what I’m, what I’m hearing right here, number one is that people are believing or younger. People are believing that socialism might be an answer, but my question is, are they misinterpreting what socialism really is?
Dr. Phil Rickard: I believe they are. I think there’s just miseducation. I’ll just say it this way. Our educational system has really not served our young people well, in regards to teaching civics and basic economics.
Leave that most of these issues are just based upon hype and political theater and rhetoric, as opposed to legitimate understanding. I really don’t want to question the motives of those who are rising up in support of socialism. I do believe if I can say it this way, that there’s a great level of ignorance when it comes to the legitimacy of socialism. I mean, do we really want central planning, right. And to trust that the government who has given us the United States Postal Service and its inefficiencies can govern healthcare, can govern energy policy.
And so many of those other areas with a type of efficiency that can come anywhere close to rivaling the free market system. What is interesting to me is if you actually…
Paul Winkler: Ask them, do you want the government in charge of major industries in the United States? These same people will tell you no. So that tells me it’s a vocabulary issue and a nomenclature issue. The problem is that they don’t understand the definition of socialism is not that they don’t, it’s not that they want that type of an operation or that type of a governmental operation. It has nothing to do with that.
Capitalistic Systems
Dr. Phil Rickard: Yeah. It really seems like the catchphrases today are social justice and redistribution of wealth. But even in capitalistic systems, you still have a certain degree of redistribution. I mean, we’ve got to come to grips with the fact that, you know, if you look over the past century, it’s not like we have a completely free market capitalist system in the United States.
Paul Winkler: Talk about that. Let’s take a break and come back because I think that’s fascinating. You know, when we say that we want capitals, we want it, we want it really bad, but the reality is, do we have, what would be totally considered capitalism in the United States? Or is it some kind of an amalgamation of a couple of different things going on here? So let’s discuss that right after this. You’re listening to The Investor Coaching Show, Paul Winkler, along with Dr. Phil Rickard from Trevecca Nazarene University right here in Nashville, Tennessee. We will be back right after this.
Phil Rickard is here hanging out with me today. He is a teacher of public policy running, lots of wearing lots of hats over there at the university with an accounting. I have a significant accounting background and a significant background in public policy. Economics is one of my passions. So as you know, sometimes I like to slip into these areas, but it’s because it’s just plain fun. So we were talking a little bit about, you know, socialism versus capitalism and, you know, you get more people talking about, Oh, I want socialism. I think it’s a really good thing. I think we ought to be more, we got to have more, you know, the rich are getting too rich.
You know, they’re getting too much money. There’s too much concentration of wealth in the hands of too few people. And the middle-class is going away. It’s disappearing. And the poor it’s increasing any comments about that, you know, in, in re in just regards to that statement right there.
Dr. Phil Rickard: Well, I think we have to step back and ask if we have these issues, what is the real source of the problems?
Do We Really Have a Capitalistic System?
Paul Winkler: This does this go to what we were talking about just before the break, do we really have a capitalistic system in the United States, or is it a quasi-capitalistic system or is there maybe hints of socialism that have been creeping in for many, many years?
Dr. Phil Rickard: Well, I think that’s exactly the type of questions we have to ask, because again, it’s not my purpose to come on your program and tell people how they need to think, but it’s instead my objective to say, let’s step back. And let’s realistically assess what is the real source of so many of these social and economic issues. So for example, if you go back to 1939, we did not. Well, I was going to say I was going to throw a joke out there, you know, based upon, you know, maybe both of our receding hairlines, but I won’t really go there, but, you know, 5% of Americans were subject to an income tax back in 1939.
Okay. 5% you move forward. And by the end of World War II, we’re looking at 75% of Americans being subject to an income tax. Now I’m not necessarily saying that we shouldn’t have taxation. I mean, you know, obviously we need to have taxation and support for our government, but at the same time, we are far beyond the rest of the world in regards to that type of taxation, as far as relying upon the income tax. So I think a viable question would be…
Dr. Phil Rickard: There’s just a wide range of taxes. When you start looking around the world, whether it’s a value added tax, whether it’s tied to the income taxes, as far as, you know, relies upon more business versus individual. So a wide range, I mean, we could sit here and talk about that for the next two hours, but what we have to just recognize is the progressive nature of our tax system. The more you make, the more I make, we’re going to be moving into a hard bracket. Now that’s offset by the fact that you’re going to have some of your income. That’s going to be exempt at certain levels. And that obviously helps those who are not earning as much.
And also those who are, you know, really at poverty level. So we have a built in redistribution that is embedded in our tax system. But I think the important issue that we have to examine, it’s not only the effectiveness of whether this is helping those who are, you know, in what I’ll call the poverty level, the welfare areas, but is it really stimulating the economic growth based upon what’s needed? I couldn’t help but notice this, that we really haven’t seen any viable change over a 30-year time period. If you go from 1965 to 1995 in the poverty level, that you’re looking at the same percentage.
Okay. It is. And so the question, you know, that we have to address is: Is this more of some of the decisions we’ve made as a society that relates to the family and related to the community? So, for example, if you look at those who are going to be most likely in poverty, it’s going to be those who come from a single parent family. It’s going to be, you know, a situation where, if you look at the trends with, you know, commission of violent crimes, it’s going to be those individuals who are growing up without a father in the home. So what is the real source of some of these problems?
And if you bring this back to, you know, the way that we need to look at this from an economic perspective, there’s really four major drivers of GDP. So we’re looking at consumption, we’re looking at government spending, we’re looking at what’s happening with our net exports, and we’re looking at business investments. It’s not very pretty when you go back to 1990 and you look forward, as far as what we’re seeing, we’ve seen over consumption for the most part in the last couple of decades, we’ve seen a pretty much a steady amount of business investment, but we’ve seen a great increase in government spending, but here’s the one that is most concerning for me.
It’s the trend with net exports. It seems like we are becoming more and more dependent upon importing goods, especially those that are vital. I mean, we’ve seen it even with what’s happened during the pandemic. If you go back to earlier in the year, there were some major concerns about whether we’re going to be able to get the medical necessities, as far as being here in a timely manner in order to meet the needs that we were actually facing. And, and I know we’re probably going to talk about this a bit later, but even with the discussion about climate change, are we really stepping back and asking when it comes to wind energy and solar energy and even the electric, where are most of these materials going to be coming from?
Right. And do you know, do we have, I mean, we’ve worked so hard, Paul in the United States to become energy independent, we don’t have as much of a reliance upon Saudi Arabia and the rest of the Middle East. Are we about to turn that around? Because some of these vital supplies are going to need to come from China and do we really want that? So I think these are all some really critical questions that we have to address. And again, I’m not here trying to say, well, this is how I need your listeners to think. Instead, I’m saying, we just need to think we need to step back and ask these questions, dive deeper into, okay, like for example, the subject of climate change is there truly scientific evidence that is so widespread and so accepted that it’s fact-based and not belief.
Why Public Policy Matters
Paul Winkler: Yeah. I think, I think it’s going to, where we come from here is just the idea that this is what young people need to be learning. They need to be understanding these things. And I think that’s why it’s so critical that young people actually go into public policy and learn about these issues and how they can affect going forward. You know, because if we look at what happened in the last administration, you know, we’re, we’ve been dealing with trying to rearrange where things come from, you know, like, for example, if I make a car, I have a lot of components that go into the car, where did they come from? Who manufacturers who puts it, who puts these things together. And it’s interesting because there have been two philosophies.
Number one is export, get rid of manufacturing and move it off shore. And the reason that you do that is that, Hey, any household is going to go and get rid of and delegate tasks that are lower tasks. You know, for example, as I move up in education and as I become more skilled, I don’t paint my own house. I don’t go in and cut my own grass, or, you know, I don’t do a lot of these things because they’re lower tasks. Whereas let’s say in manufacturing, I’m not going to have three washing machines. That’s a manufactured item, but I might have different people doing services for me. So it’s been that philosophical bent. And I’m kind of curious what you, where you land in regards to that.
Dr. Phil Rickard: Well, I think what’s critical for us to really examine is what grows our economy and how important a diverse economy really is. And that includes manufacturing, but I like to look at numbers and see what the numbers communicate. And so let me just share this with you. If you look at 1946, through 1999, we’re talking about the average annual growth rate in the GDP of 3.2%. That sounds about right. Yeah. The potential growth rate of the American economy is achieved when you can get the GDP to be a little bit more than 3%.
If you go back and you look at the last two decades, we were at 2.4% for that time period of 2000 and 2009. If you look at the last decade, it’s been just a little bit below that. So we’re not achieving what is necessary. And overall, the rule of thumb here is for each 1% of growth that you have, you’re looking at approximately a million jobs. It can be exponential. Absolutely. So if we’re operating about, oh, a half a percent below where we need to be then on an annual basis, that’s the equivalent of 500,000 jobs.
So over a decade, I mean, do the math, I mean, we’re talking about 5 million jobs.
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