'Post-Katrina' Radio Interview

0:00And welcome back to The Dig Show here on the Big 870 WWL. I'm Dig Bellaville. We'll be here with you tonight talking, of course, post-Katrina recovery and rebuilding, as always. Also, we'll talk a little entertainment, a little culture, a little later in the program as well, as we're having the taste of the town. We have a fundraiser for the Louisiana Restaurant Association with Tommy Centanevich, also on the menu tonight. State Representative Cedric Richmond will join us and we'll talk about satellite voting and is it necessary for a fair election and right now our very special guest is Dr. Walter Block he's a professor at Loyola University in New Orleans and we're talking about the high cost of living I guess skyrocketing Dr. Block may be a better little term to put in there but man everything it seems to have gone up and for some folks Dr. Block everything's gone Yes, I think you're right. The prices for several things at least, and many more that I might not be aware of, are going up. And some incomes are going up too, some are not, and some people are still unemployed, so they get it from both ends.

1:26in New Orleans talking about the skyrocketing cost of living and we're going to cover everything folks, loans, utility, everyday expenses, mortgages and gas and before we get on gas which is a hot topic, Dr. Block, let's get your thoughts on mortgages and some folks right after the storm were able to, I guess you'd say talk to their mortgage companies, loan companies and were able to set up something to where, okay look, the fear of the payments

2:21This is a production of the U.S. Department of State

3:21Dr. Walter Block, professor at Loyola University, New Orleans, joining us, we're talking about the skyrocketing cost of living post-Katrina, we're talking about gas, electric bills, rent Mortgage and Credit Card Bills, 504-260-1870, 866-889-0870, Gas, Gas prices have jumped about 14 cents a gallon since about mid last week and it's kept in a four-week run at pump and one of the things that was interesting I'm gonna get your thoughts on this in the The Wall Street Journal, they were blaming and talking about how gasoline prices and I quote what they're saying is arising again and this time Iraq or hurricanes aren't to blame. It says Congress's energy policy mistakes are finally catching up with it and American drivers are paying for the bungles. It goes on to say here that Capitol Hill which created the conditions for this mess last summer with its latest energy bill. It says that legislation contained a stop to Midwest corn farmers in in the form of a huge new ethanol mandate that began this year and requires drivers to consume

4:477.5 billion gallons by the year 2012. That also said at the same time, Congress refused to include liability protection for producers of MTBE, a rival oxygen fuel additive that has become a tort law lawyer target. How much of this do you weigh in this that really is Well, I agree with you pretty much entirely. I'm second to no one when it comes to blaming government for things, and I see no reason why we shouldn't give government its fair share for this crisis as well. Not only ethanol subsidies, but refusal to allow people to drill in Alaska and offshore. All of this keeps oil and gas prices higher than they otherwise would have been and need be. So I agree with you entirely.

5:38The Big Bad Government is screwing up it once again. And Dr. Block, we're going to get to a few callers in a second, want to ask you some questions. Estimated now that we could see $3, if not higher, this summer, obviously, because folks on the road more, they're expecting, you know, it may be up to national average over $2.60 a gallon by sometimes in April. I mean, this is an awful lot, and you know, when folks, and I know you know you talk about this and budget, when folks are trying to plan budgets, I don't know how you plan that when you go from, you know, one part of the year from $2.30, I got today was $2.42 a gallon and the national average by sometime in April could be over $2.60 a gallon, I mean that's an awful lot, especially for folks who make a pretty large commute each day.

6:26Yes, I think what will happen is people will start to carpool more and will go to smaller

7:01I just really want to say that I'm really listening to your show. I think it's a great show, but I think people are whining too much. Gas prices hasn't elevated a whole lot over a 20-year span, and it probably went much worse with the inflation as far as jobs are concerned. There are many, many jobs out there, so people can go to work. You know, the mortgages, you have to pay your mortgage. So, you know, adjust and do what you have to do. So, you think folks are just whining too much and we shouldn't pay attention to these figures where the gas goes up. Is that what you're saying? Oh, no, no, no, the figures, the gases, the gas goes up. Well, that's something, that's something to whine about, Jason.

7:48Well, you know, the... I mean, if you've got an average of $2.14 nationwide in December 2005 and the average now is nearly $2.50 across the nation, that's a big jump. Well, I mean, I understand that, but you know, people's living has gone up and they haven't been jammed as much as far as inflation has gone. You know, they have a regulation for the gas, I understand that. Well, you know, gentlemen, I'm sort of a moderate on this question, I agree with both of you. I certainly am in favor of whining, especially against the government. On the other hand I agree with Jason the caller that there is something to be said for not whining and also for not calling for laws to stop it or laws against price gouging or anything like that because prices have a role to play and when they go up it's a signal that there's a greater scarcity and it also is a signal to the market to go produce more

8:49gasoline. So, I guess I'm sort of a moderate on this position, a position to which I'm unaccustomed, but I see both sides in this case. Jason, thank you for the call. Okay, Dr. Block, let's go to Rick in Slidell. Rick, you're on with Dr. Block of Loyola University and Deke Bellevue on WWL. Hey, how y'all doing? Fine. Pretty good. Alright, I was calling about the mortgage situation, getting off the gas subject right now. Okay. The problem I'm having right now is I have applied and been approved for SBA loans, and I requested a relocation request, and I'm waiting on that. In the meantime, I haven't paid my mortgage. My house is unlivable. So I'm forced to live somewhere else. I have a mortgage where the house can't live in.

9:38What I'm worried about is that the mortgage company is going to foreclose on the house. I will have no place to go back home or to fall on it. There's some kind of buyout money. And that's a lot of worries for me and my family because, you know, we lost our equity. We didn't have flood insurance, unfortunately, but what happens, you know, If the mortgage company repossesses the property, forecloses, then all of a sudden you're left with nothing.

11:02Well, you know, there's some properties that have increased in value, those are the high and dry places. On the other hand, the places that got hit by either the storm or the floods have obviously decreased in value, and it's possible that they won't want to foreclose, because if not you, who else are they going to get into that house? So it's a little difficult, but I sort of resist the notion that we should wait for the government to bail us out. I'm more of the opinion that the government is the cause of the problem in the first place and we shouldn't trust those rascals and we shouldn't rely on them and we've seen what FEMA has done, we've seen what HUD has done, we've seen how the government has screwed up everything and ruined the situation to a great degree.

11:49So I think the way ahead lies in more independence and certainly more independence from government. We're visiting with Dr. Walter Block, professor at Loyola University here in New Orleans. The Skyrocketing Cost of Living, Gas, Bills, Rent, Mortgage, Credit Card Bills, What's Hitting Your Wallet The Hardest 504-260-1870, 866-889-0870 When we return, we'll take a break and we'll get Dr. Walter Block's thoughts on rent control and price gouging. He wants to comment on that and also your phone calls. Bruce, Richard, Steve, Jim and Mike, you have your time with Dr. Walter Block. I'm Deke Belivea. It's a Deke Show on the news talking sports leader, the Big 870. You're listening to WWL.

12:38It's the Deek Show with Big Chief, Deek Belavia on the Big 870 WWL, Jump in 504-260-1870 or 866-889-0870. And welcome back, we're visiting with Dr. Walter Block, Professor of Economics at Loyola University here in New Orleans, talking about the skyrocketing cost of living post-Katrina, Dr. Block, rent control and the price gouging laws and I can remember clearly right after the storm somebody said that they needed a price gouging hotline number to the Attorney General's office because they paid like $7 somewhere for a gallon of milk.

13:35Now, of course, things like that have kind of teared off obviously, you know, since we're so far out from the storm, but talk about the price gouging laws and have they really been in effect to protect the consumer? No, I think price gouging laws are the last thing we need. Price gouging laws are 180 degrees in the wrong direction. You see, prices have a role to play in the economy. The prices are to economics as street signs are to the geography of the city, and if you take the street signs down or if you switch them around, you're going to get all screwed up in travel. Similarly, if you interfere with market prices, pre-enterprise prices, you also mess up the economy. High prices are like a call for help, a call for help of the economy, and if prices of

14:54I agree with you to a certain extent of what you're talking about, but just the people

15:48The most profitable way is to bring milk here, which is exactly what we want, and not just milk, but flashlight batteries and water and candles and all sorts of stuff. You don't want to stop that. That's what FEMA did. FEMA stopped people from coming in. Walmart out of benevolence had a whole truckload of stuff that people needed, and Walmart and FEMA turned them back. No, we don't want FEMA. We don't want socialism. What we want is capitalism and free enterprise. Let's take a few calls. Let's go to the call's way in Richard. Richard, thank you for patiently waiting. You're on with Dr. Walter Block on the Big 870 WWL. Good evening. I was calling regarding the gas prices and listening to your comments regarding the price gouging. With all the refineries we have here locally, I noticed that the prices are still very high.

16:37When in December we went on a trip to South Carolina and through most of the gas stations between here and the coast, gas was significantly cheaper, 15, 20, sometimes 30 cents cheaper a gallon when it would be more scarce later and we have more here and still the prices are very high. I just wanted to see what your thoughts were in regards to that. Maybe other things are not equal.

17:35One of the quick questions, any thoughts or any knowledge as to any of the tax law that's changed because of Katrina to help out individuals here locally? Well, I'm a big fan of Peggy Wilson who was calling for either low tax or no tax. Richard, thank you for the call. Let's move forward. Let's go to Steve and Punch Tula.

18:20Steve, thank you for calling the Big 870. Hey, how are you doing, Dave? Fine, Steve. Oh, great. Listen, the world oil price now is at, apparently, $60-plus a barrel. And And if you look at it, two years ago it was selling for $30. So gas prices were $1.20 two years ago, now they're $2.40. It's just supply and demand, it's a world economy. The U.S. has nothing to do with sending precedents in politics on their ad price, no matter what Bush does. Well, I certainly agree with you that there is a world market and we just can't have a made in the U.S. price for a commodity that's traded internationally.

19:09A big part of the problem is the Federal Reserve System which keeps increasing the money supply and creating inflation. If they weren't doing that, all prices wouldn't be rising as fast as they are. I don't know how old you are, Deke, but I'm 64 years old. Transcription is the only explanation now it's not government policy that's dictating the

20:25Steve, thank you for the call. We're visiting with Dr. Walter Block, economics professor at Loyola University in New Orleans, 504-260-1870, 866-889-0870 is the number getting involved. Let's take another quick call. Let's go to the West Bank and Jim. Jim, thank you for calling WWL. Good evening, Deke. How are you doing? I've got a question for Dr. Block. I'm listening to some of his talk, but I can see with gasoline because you have refining costs and all that. My question is diesel, which is the least refined. It's as close to crude as you can get. Why is it more than premium? Has he got any theories on that other than everything in the country moves by diesel and they're just trying to get their finger on the profit polls?

21:24The way is correct. This must be a temporary situation where a less refined good charges more. If I were in the business, I'd start producing diesel and make vast profits and as more diesel came online, I would expect that the profits would go down. That would be my assessment of the situation. Well, I'm trying to figure it out because I purchased a vehicle with diesel for the reason. The reason to get it cheaper and then now, boy, you know, Jim, you got a one to two now to demand the diesel. I mean, I'm sure you get on the interstate sometimes. I mean, just about everybody I've seen pulling a Femur trailer or hauling trash or two tons trucks that just pulling and most of them are diesel. And I guess now it's just hot as it could be. Everybody bought them for the same reason you did, and now they just in such demand.

22:17I just bought mine this year, but the price was already up, but I bought mine for the reason that my diesel gets better mileage than any of the gas engines right now. So even with the higher price, it's kind of bouncing out right now, but if it continues to rise, it's not going to work, but I don't understand. Like I say, I mean, it's the lowest refined product. As a matter of fact, the diesel engine was actually designed to run on vegetable oil. Well, these are temporary market phenomenon, given the facts are as you say they are. I'm not really into that sort of thing. I don't know one refinery from another. But if what you say is true, then this must be a temporary situation. I mean markets don't adjust instantaneously. But they will adjust, and they'll adjust a lot faster than FEMA will adjust.

23:04Let's go to Slidell and Jim. Jim's got a question about price gouging. Jim, thank you for calling the Big 870. I have a question for the doctor and that is, if prices are rising in Louisiana and increasing your profit and they're going to send more gas to Louisiana, doesn't that create an artificial shortage in other places where they will then rise their prices again? Now, if prices went up 30 cents in the past month, my salary is not going to go up 30 cents an hour. I'm not going to get increased any money until another year when my contract comes up. So now inflation is going to outpace my ability to pay.

23:53Well, happily, wages are going up too. You pass McDonald's or Burger King and they're advertising high salaries and big bonuses

24:32in accordance with the consumer's desires. We're visiting with Dr. Walter Block, economics professor at Loyola University here in New Orleans, talking about the cost of living, how it's going up when we return, we'll get his thoughts on rent control. Sam, Johnny, Gus and John, I'll be right back to you and more with Dr. Walter Block here on The Big Show. On the news talking sports leader, the Big 870, this is WWF. And our special guest this hour, Dr. Walter Block, economics professor at Loyola University

25:32I guess, sir, will there be rent control here in New Orleans and the surrounding areas? Well, I hope not. Rent control is a horrible violation of the free enterprise ethic of free prices that are determined by supply and demand and market driven. New Orleans City Council President Oliver Thomas has called for rent control to deal with higher rents, but this is the exact opposite of since. This man is a menace. and Money should not be re-elected.

28:00I ain't building Jack. I can promise you that. And if I do build, I'm going to pay cash for it and keep my money in my pocket. But that's just a difference in philosophies. Let's move on. Let's go to Johnny on a sale. Johnny, thank you for calling WWL. Yes. I had something I wanted to ask the gentleman on the phone, the doctor. Anyway, in President Clinton's second half of his term, The President went at the time, I said Bill Clinton, he said to everybody, he said, let me tell you something, I'm going to check into this, if it looks like the monopoly being formed, all parties that are involved in this gas raising price deal is going to go to federal penitentiary.

28:48Do you know that that gas went back down to 99.9 so fast that it bounced on the ground two or three times? Well, all I can say is thank God for Monica Lewinsky. We didn't get as much Clinton as we would have deserved for electing him in the first place. Actually, I don't have nothing against the man for his private life. I don't think he did too, too bad as a president, but in the same case, my father taught me something about business. What you're talking about is the economics of cartels, which tend to set up a monopoly, This is very fallacious, because whenever a cartel tries to limit production and raise profits, there are two sources of the dissolution of it, that's why cartels never work.

29:53One is internal and the other is external. External is, people who are not now in the industry move into the industry to take advantage of these higher profits. Secondly, cartels are subject to break up from internally, each member of the cartel has an incentive to cheat. They want everyone else to cut back, but they don't want to cut back. So cartels very, very rarely work, at least on the free enterprise system. No, no, I think you're heading in the wrong direction with Clinton and dictating prices to the market. That's just, you know, we fought a war. We had a cold war over this sort of stuff. The Russians were in favor of economic dictatorship. We were supposed to be the land of the free and the home of the brave. Why? You know, we won that war fair and square.

30:39Why are we giving up? Let's get to one more quick call before we have to let you go. Let's go to Chow Med and Big Earl wants to talk about rent control. Big Earl, thank you for calling. This is Big Al. Big Al, I'm sorry? There's absolutely nothing wrong with rent control, with checks and balances, and as far as free enterprise, the gentleman keeps talking about, he's a professor, he better hit the books again because there hasn't been anything like free enterprise in this country

31:36The American people are being sold down the river by their own government and the corporate entities that look where all their money comes from to run for office, from the corporate statism. Big area of the band is pushing me out, my man, but thank you so much. Dr. Block, I enjoyed having you on, man. Your point of view is certainly something that you certainly believe in, and some of our callers did and didn't, but that's what makes radio great, and I'll tell you what, you had the phone lines lit up for the whole hour, and I appreciate visiting with you.

32:30Could I just get ten seconds to answer the question? Go ahead, Doc. Let me just say that he's right, there is no full-free enterprise anywhere in the world. It's an ideal that we should strive toward. The countries that have more of it are richer, the countries that have less of it are poorer. Dr. Walter Block, professor at Loyola University here in New Orleans, thank you so much for spending the hour with us. Everything was great. We look forward to talking to you down the line. It's a pleasure. Thank you so much. I'm Deke Bellavere. Hour number one's in the book. Hour number two next. It's The Deke Show on WWL. www.fieggen.com