John Allison is a former chief executive of BB&T and the head of the Cato Institute. He is the author of The Leadership Crisis and the Free Market Cure, published in 2012. He appeared on The Bob Zadek Show to discuss the book, the 2008 financial crisis, and the philosophical foundations of libertarianism. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Background and the leadership crisis
Bob Zadek introduced Allison as the former CEO of BB&T, which he described as the tenth largest bank in America, and as a firsthand witness to the financial crisis of 2007 and 2008. Zadek noted that Allison had since left the chairmanship of BB&T to join the Cato Institute as its leader. Zadek characterized the book as assimilating the collective wisdom of Aristotle, John Locke, Thomas Jefferson, and Ayn Rand. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Statism versus individualism
Allison described a fundamental philosophical fight for the future of America, with statists on one side and classical liberals and libertarians on the other. He defined statists as people who believe in big government, who believe government can solve all problems, and who fundamentally believe that the average person is stupid and that they, in the pursuit of the common good, need to make sure we make good decisions. He said statists are elitist power-lusters found on both the left and the right: on the right they usually want to control your personal life, and on the left they just want to take all your money. The most visible statists today, he said, are the progressives. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Allison argued that the whole idea of the common good is an oxymoron because there is nothing, practically speaking, that is equally good for everybody. He said that when the idea of acting in the common good is put forward, individuals do not matter and only the group matters, which produces group warfare—what is good for the unions, what is good for the taxi drivers, what is good for my business. In that world, he said, no individual really has any right; it is the groups that have rights, and the power-lusters show up to decide which group gets what. He contrasted this with the Founding Fathers’ ideal of life, liberty, and the pursuit of happiness, and with each individual’s right to the product of their labor. John Allison on the Leadership Crisis and the Free Market Cure (2015)
The nature of government and coercion
Zadek observed that government is special because it is the only institution authorized to use coercion, force, and take away liberty, and that to the extent power is allocated to government rather than to individuals, power is allocated to the only institution that can coerce. Allison agreed, saying government is dangerous and that throughout history, next to old age and disease, government has killed more people than any other cause—hundreds of millions of people, far more than terrorists and far more than the mafia. He said government is needed to protect individual rights so people are not fighting each other with guns, but that it needs to be very limited because it is extraordinarily dangerous, and the more power it has, the more power it abuses. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Altruism and rational self-interest
Allison said he argues in the book for a set of values for individuals: a sense of purpose, commitment to rationality, and commitment to earning happiness through rational self-esteem. He observed that people seem to have one standard of behavior when acting alone but that the standard disappears when acting collectively through government. He asked how many people, if personally making the decision, would tell others how to run their lives—whether a gay person could be married, whether one could smoke marijuana, whether one could make a loan to Joe or had to make a loan to Joe, or that one had to have a license to do hair care or to be a home decorator. He said that 95% of regulations are constraints individuals would not impose on others, but that somehow when people get in a group it is okay. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Allison compared collective action to a lynch mob, saying that individuals in a lynch mob would not go hang people even if they had the physical strength, but collectively they go hang people. He described a strange disconnect from the values most people accept as individuals and the rationalization to do destructive things using force when done collectively. Zadek said this point was an eye-opener for him and compared it to Lord of the Flies, saying collective behavior gives people moral cover to do bad acts. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Entitlements and healthcare
Asked how a libertarian approach to governance would alter the country’s prospects, Allison said he would radically reduce the role of government, radically reduce government expenditures, and radically reduce regulation, because he thinks regulation has a huge negative impact on economic growth. He said that alone would not fix all problems and that Social Security, Medicare, and Medicaid must be taken on. For Social Security, he proposed that people at a certain age—he suggested picking 50—would have to be paid because it is too late, but that people under that age could go into the equivalent of a more like a 401(k) plan, which he said would create a huge amount of capital to spur growth and pay for a lot of the deficiency. For Medicare, he proposed getting rid of it for people under a certain age and going to a free market in medicine, while for people over a certain age he proposed a voucher system. He said the problem with the whole medical system is that there is no price competition: if you go to a doctor, he has no idea what it costs and you have no idea what it costs. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Zadek offered an aside that Obamacare had in a perverse way built a mini free market in healthcare, because many plans greatly increased deductibles up to $5,000 and $6,000, meaning the patient pays their own money and gets careful. Allison agreed that deductibles create discipline and control costs, and said the problem with health insurance in the United States is that it is not insurance but a payment system. He compared it to car insurance, which he said he has used maybe two times in his life, whereas medical insurance is used every month. In a free market, he said, people would expect to pay normal medical expenses, care about them, and prices would fall, with some kind of catastrophic coverage for something really serious costing $25,000 or $50,000. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Education privatization and the mission of Cato
Asked about Obama’s concept of two free years of community college education, Allison said that as a libertarian he is for the privatization of schools and that there ought to be for-profit private schools that would be unregulated and disciplined by the market. He said education in the United States has failed by any kind of objective standards because government runs the school systems, which means they do not innovate, are not creative, and do not teach people how to critically think. He said the decline of the middle class is primarily because public schools are not teaching middle-class kids how to be critical thinkers. He said he is fine with subsidizing students through tax credits or vouchers, though that is not what he would prefer, and that there is a Sam Walton out there who would radically reform education if he did not have to compete with hugely government-subsidized schools. He predicted that better market solutions through the internet, radically superior to community colleges, would emerge in the next 10 to 20 years. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Allison said the mission of the Cato Institute is to create a free and prosperous society based on the principles of individual liberty, free markets, limited government, and peace. He said Cato pursues this through intellectual study, policy papers, 150 seminars a year, books, educating students, and public outreach, and that on an average day its scholars have 50 major media hits in the Wall Street Journal and the New York Times. He said Cato is not conservative and not pro-business but pro-free markets, and does not think businesses should be subsidized any more than individuals. He said Cato agrees with liberals on issues such as that government should not be in the marriage business and that adults get to do bad things for themselves as long as they do not hurt anybody else. John Allison on the Leadership Crisis and the Free Market Cure (2015)
Across episodes
The excerpts come from a single episode, so they show no development of any topic across episodes.
What the sources do not cover
The excerpts do not state Allison’s birth date or place, his full tenure at BB&T, or the circumstances of his departure from that institution. They do not give the founding date of the Cato Institute or the names of any statutes, bills, or court cases. They do not describe the specific subprime mortgage mandates or government interventions Allison blames for the 2008 crisis, beyond the general claim in the episode introduction.
Episodes
1 appearance, 2015–2015.
- John Allison on the Leadership Crisis and the Free Market Cure (2015) — The Leadership Crisis and the Free Market Cure. Former CEO of BB&T and head of the Cato Institute