This is a rush transcript from "Glenn Beck," February 16, 2009. This copy may not be in its final form and may be updated.
GLENN BECK, HOST: There's been a growing cry now for the nationalization of U.S. Do people know what nationalization even means?
Here's the author of the book, "Freedomnomics." He's John Lott.
Hello, John. How are you?
JOHN LOTT, AUTHOR, "FREEDOMNOMICS": Great to talk to you again.
BECK: I'm riddled with ADHD and I'm seeing a sign behind you that's going to drive me crazy. Where are you? Are you are at a bar or do we catch you someplace?
LOTT: Yes, I just bought everybody a round of drinks. I'm in Philadelphia.
BECK: Philadelphia. I'd rather be in a bar.
OK. So, John, let me play this from Lindsey Graham over the weekend. Here's what he said about national — this is a Republican, by the way, talking about nationalization of the banks.
(BEGIN VIDEO CLIP)
LINDSEY GRAHAM (R), SOUTH CAROLINA SENATOR: This idea of nationalizing banks is not comfortable, but I think we've got so many toxic assets spread throughout the banking and financial community throughout the world that we're going to have to do something that no one ever envision a year ago, no one likes, but to me, banking and housing are the root cause of this problem. I'm very much afraid that any program to salvage the bank is going to require the government to get...
GEORGE STEPHANOPOULOS, ABC NEWS ANCHOR: So, what would you do now?
GRAHAM: I would not take out the idea of nationalizing the banks.
(END VIDEO CLIP)
BECK: John, you want to help me out? First of all, I'd like somebody on — I mean, this is a serious question. Is the senator got an eye problem? Because I notice he's not looking at people anymore. He's always looking down at table.
The real question for you is, tell me about nationalization of the banks. Why? Why is that bad?
LOTT: Well, you know, it's interesting you led off with Chavez in your introduction there, because what he's done to the economy there is what we could look forward to for nationalizing assets here in the United States. What you find, what economists find is that when government takes ownership, even partial ownership in companies, their profit rates go down a lot. And there's a simple reason for that, and that is, they do things to please politicians then rather than things that make any type of economic sense.
Look at defense contractors and how they'll build plants in congressional districts for leading congressmen who control where the money is, not necessarily where it makes business sense to do it. You can look at something like Airbus in Europe, where you have the wings for the new 380, the new jumbo Airbus that they have there made in England, the fuselage made in Germany, the tails made in France. Everything assembled in Spain — everything assembled in France, and you have to cart in especially-made barges, these huge wings in all sorts of strange paths to get them from England to France.
The only reason why all those jobs are spread out is because each country owns some shares in the company and they all want to have a certain percentage of jobs in there.
LOTT: Even if what you'd want to do — you want to do if — go ahead.
BECK: No, go ahead.
LOTT: But, you know, it's — you want to have the plants next to each other. But they spend so much money, so much money that's wasted that profitability for the companies go down, the productivity of workers falls. The amount that workers can earn go down, and the countries are poorer as a result.
BECK: Here's what I'm — here's what I'm concerned. I'm concerned about a couple of things of the nationalization of banks. First of all, does anybody — is anybody bothered that the United States government will be controlling all of our finances?
BECK: I mean, when you think of this, John, you really wouldn't have to pass any more laws on, you know, the unions. You wouldn't need to pass any more laws on affirmative action, because, why don't the banks could just say, "Well, now, you don't have enough minorities working or you're running your business this way or you're not union or whatever," and you won't get a loan. Is that possible to do it that way?
LOTT: Well, just look at the history of the United States, the First Bank of the United States. The reason why Andrew Jackson shut it down was because the loans were going to politically-connected cronies of politicians that were there. You know, so you want to go and help out certain people you like, or you want to go and have certain restrictions — that's quite plausible that they would have that.
The point is, they're going to have — look at what we've done to the banks in terms of the current financial situation, where we forced them through different laws to make loans that they didn't want to make, make loans to people who didn't have any down payments on it. That's going to be on steroids when you have government there as a direct owner and it's not going to be as obvious because you won't have regulations that you can point to. You can just have the presidents of the bank doing what they're being told by the politicians behind the scenes to go and do.
BECK: So, John, here's what — I mean, people are saying now, and if I hear this one more time — America, listen to me. Please, listen to me. You have a responsibility.
BECK: You are the protectors of liberty. You are the ones. It's been passed to us. We're just going to let this just go?
If I hear one more person says, "Well, capitalism doesn't really work." Capitalism is just the engine. We're the driver of it.
When we say capitalism hasn't been working, maybe we should look at fact that the GDP in 1900, the government-controlled 4 percent. This year, the government is going to control 33 percent. Last year, they controlled 25 percent.
BECK: We haven't been doing real capitalism in a long time, have we?
LOTT: No. I mean, just look at all the banking regulations that we've had, that we've gone and forced banks to make loans to people that they would never think of making them to, just because if they didn't, they would face sanctions from the Federal Reserve and others. The Fannie and Freddie would go and subsidize loans to be made to people who didn't have deposits down, who didn't have any income, who would have — to put up welfare checks as the income for a loan that they would have.
BECK: All right.
LOTT: And if they didn't make that, they would face certain discrimination rules.
BECK: OK. Thanks a lot, John. I appreciate it. We'll talk again.
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