Bennett Group Financial

Dawn Bennett, Host of Radio Show "Financial Myth Busting," Interviews Jonathan Hoenig, Founding Member of Capitalist Pig, Television Contributor, and Author


Wasington, D.C. -- (ReleaseWire) -- 04/23/2015 --DAWN BENNETT: Jonathan Hoenig is a founding member of the hedge fund Capitalist Pig and a regular contributor on the Fox News programs Cashin' In, Your World with Neil Cavuto, and Red Eye with Greg Gutfeld. His writing has appeared in The Wall Street Journal Europe, Wired, Trader Monthly, Maxim, and on Jonathan, welcome to Financial Myth Busting.

HOENIG: Thank you. Great to be with you.

BENNETT: Jonathan, it seems that another presidential campaign is born. Ted Cruz, Rand Paul, Lincoln Chafee and Hillary Clinton have announced. So far Rand Paul seems to be making the biggest waves, and since this show deals with the intersection between finance and politics, I'm curious for your thoughts on what a Rand Paul presidency would mean for investors.

HOENIG: Elections are the cashing in, if you will, of a country's economic and philosophical ideas. That's the result, it's not the cause. So I think anyone who earns the presidency will be much more of a reflection of the country's economic priorities rather than a cause for something new. And when it comes to any of these candidates so far declared on the right, my fear is that none of them are really radical enough and think just as many who don't believe in capitalism, many are against what I think are integral American ideas, the ideas that are necessary for a successful economy, a successful stock market. As explicit as some of them are, I wish many on the right, many who propose to support capitalism were equally as explicit. Rand Paul is up there, but it's just too early to tell exactly which way any of these candidates is going to go.

BENNETT: When Rand Paul was being interviewed by Savannah Guthrie, she started to give him a pretty tough interview and Rand told her to stop editorializing, which of course led to accusations that he's a sexist. Is it really sexist, in your opinion, to fight back when the media is trying to create a narrative about your worldview?

HOENIG: No. I think it should be about the issues. If you go back and see how you pick any political candidate, it is on their basic moral philosophy, where they stand on the issues not how adept they are at TV interviews or even in debates. So it's where do they fundamentally stand and which candidates fundamentally reflect what I believe to be the American basic fundamental principles of individualism, capitalism, owning your own life, not being here to serve the King, or society, or the Czar. So the people who understand that, their policies will reflect that. You mentioned Rand Paul, I want to hear Ted Cruz, I want to hear other candidates talk about the Constitution, protecting the Constitution, basing their policies on the Constitution. I mean that's what makes our country's economy successful, right? It's not like the water here is so different than in Pyongyang. It's our ideas that have made this country the most prosperous in all of history. So when I hear the candidate talking best about those American ideas, that's the one that piques my interest in terms of supporting.

BENNETT: But there are a number of unabashed free marketers running for president in 2016. What kind of criteria are you using to separate the wheat from the chaff? Any litmus test?

HOENIG: Tell me who are the unabashed free marketers? Who are they?

BENNETT: Ted Cruz, I think, and Rand Paul.

HOENIG: Well, I'm excited when I hear people talking about for example repealing the IRS, but when they talk about wanting to save and protect Medicare and Medicaid, I think that's, in my opinion, not unabashedly free market. I mean, what does free market even mean? I mean, free from governments, right? I mean, it doesn't mean free to do whatever you want. I think that's one of the things that we have to really combat. I mean, it's not just making the economic case for free markets, right? Everyone gets that. There's no question in anyone's mind the free market's freedom—you deliver the goods, they deliver prosperity. The problem is that people think that it's totally immoral. They think it is this "dog eat dog" dystopian world where there are sacrifices and those being sacrificed. So you have to make that moral case for capitalism that it's good, it's right, it's just, and that everyone benefits and that it's not the antithesis to that one compassionate socialism that it is always portrayed to be.

BENNETT: Would you abolish the IRS? We talk about overhauling it a lot, but nothing ever comes of it.

HOENIG: That's exactly right and that's what excites me about Ted Cruz or, to a lesser extent, Rand Paul, is that they are able to make those declarations and actually mean them and make the point that a flat tax or abolishing the IRS in that sense would not only be easier for all of us, but it would be moral, it would be just to actually treat every American in the same way and not give any American---big, small, rich, poor—the opportunity to navigate the system with loopholes and backdoor opportunities, something that treats every American equally, and again, getting back to those basic principles. So those are the types of ideas, a flat tax, eliminating large swaths of government that I think could really get people excited about the potential of what this country can be in our most successful economic years. The most successful economic periods of prosperity in this country came before the minimum wage, Medicare and Medicaid, and all that we consider being the integral bedrocks of our so called capitalist economy. Those came after the most prosperous period. There was a prosperous period with the 1800s, late 1800s, with huge rises in the standards of living. We could have that again. We just need to get the government out of the way.

BENNETT: Maybe we need to get the media out of way, because in the first week of Hillary's campaign, I think the most newsworthy point was when she was buying lunch at Chipotle. Do you think this campaign is getting the right type of attention?

HOENIG: Hillary is kind of like the political Oprah. I mean, people are interested in every little move she makes and what kind of blouse she's wearing and pants she's wearing and where she's going, because she's a celebrity in that sense. I think once again Americans are smart and they'll go back to those basic ideas. What have Hillary's public statements on the economy have been about? About the need for the redistribution of wealth. The investor class has too much; the poor middle class doesn't have enough. What's moral, what's right is for us to is for us to redistribute some of that wealth from the haves to the have nots. What's unfortunate is that most people agree with that. You know, most people believe that it's the role of government to redistribute wealth, to take it from those who have earned it and give it to those who have not, even if it's, you know, Medicaid, even if it is those who are in need in terms of health care.

So that's what needs to change. It's not just Hillary versus some other candidate, but that the basic idea is that people say, "Wait a minute. You earned your money you have a right to keep it. It's not government's role to expropriate from you and to give it to somebody they think is more deserving of your wealth."

BENNETT: One thing Hillary did say this week is that we need to get rid of unaccountable money in politics, even if that takes a constitutional amendment. Yet, we've also learned she plans to raise $2 billion. So something tells me she wouldn't want this new rule to take effect while she's campaigning.

HOENIG: There is only money in politics because politics are in the economy, I think unconstitutionally. I mean, if government can dictate every element of your business, you're a fool not to go lobby them. You have to lobby them, otherwise you're going to be lobbied out of business by your competitor. Again, the problem isn't that money is in politics, the problem is that politics is in the economy. In my opinion, if politicians stuck to their proper constitutional role protecting individual rights and not determining how much raw milk has to be in artisanal cheese or how many doors have to be on a school bus or outhouse or anything else, there wouldn't be any need to lobby for your own preferential treatment. So get government out of the economy, and money will come out of politics.

BENNETT: Now switching gears a bit, America has been concerned with fights in Indiana and Arkansas over their Religious Freedom Restoration Acts, and I'm curious to hear your perspective on this. There was an outcry that led to both governors walking back their legislation, and it appeared the business wing of the right overpowered the social wing. Isn't there a case to be made that businesses should want to preserve their right to have some discretion about whom they work with?

HOENIG: Every discretion. Every discretion. This is a free country, and discrimination in my opinion is completely moral, is completely just. It's become kind of a smear term for thinking. In other contexts we think it's wonderful to be discriminating. We think it's great. Well, why not in a business context as well? And I think in a free country you have every right to discriminate for any reason, religious reason, any reason you want. And what people quickly find is that discrimination is not good for business. To refuse to make a cake for a couple because you don't think that it's great that two guys are getting married or something, it's your choice. I think it's a pretty irrational choice and what you find in the free economy is that there's plenty of other bakers who are happy to have that business.

BENNETT: That's right.

HOENIG: But absolutely, people should not be forced. Economy is all about free choices, people making free choices. So any time government gets in there and says, "You have to make this cake, you have to serve these individuals," that's immoral, whether it is religion or anything else.

BENNETT: Are we living in an era where businesses are so fearful of being dubbed politically incorrect that they're always just going to sign up for whatever seems to be the new hot idea? Last week we talked about what led to Starbucks' embarrassing attempt to repair America's race relations by having their baristas talk about race when they were serving coffee. Apple Computer made a point about opposing Indiana's law which critics contend is intended to target gays. But as many pointed out, Apple does a ton of business in countries like Saudi Arabia where being gay can result in being executed. Is this the trap companies fall into whenever they try to embrace politics?

HOENIG: Well, you know, companies should be run, in my opinion, for profit. They should be run for the benefit of their shareholders and not necessarily the political whims of their of their CEOs or even the members of their board. But companies are made up of individuals and individuals have political leanings and political stripes and preferences so, for example, a lot of companies give money to certain charities. BP gives money to environmental charities that many shareholders think is terrible, for example.

I think the great thing at the end of the day is that in America, in a capitalist system, it's all voluntary. You shop at a store voluntarily, or with a company voluntarily, you own their stock voluntarily, you engage with them voluntarily, and there is no force point along in the chain. And that always needs to be kept in mind that if Starbucks wants to have its baristas talk about race, certainly it's their prerogative, although I don't think it worked very well for them, from a PR perspective at least. But when you start to get government with a gun that goes into the store and says, "Now, you have to make that cake. You have to serve these people," that's when the problems always arise.

BENNETT: Why don't companies fight back against ever expanding government? When Washington was consumed planning ObamaCare, the insurance industry decided to become a partner in the effort, and now they're complaining about how the onerous rules are killing them. Shouldn't the private sector sometimes try and keep the free market free?

HOENIG: Well, you would hope so and think so. Unfortunately oftentimes the intersection of government and business creates these monopolies despite the fact that people say, "Well, we have to have government to protect against monopolies." It's government that creates the monopolies and too often the private sector wants to become one of them, so they'll make those deals with the devil to get that preferential treatment which not only bites them, but ends up biting everyone, in the end. We should all be advocating for a free economy, not just because it's better for our own bottom-line, which it is, but because it's better for the country. It's better for society. It's better for our future. It's frustrating when oftentimes, as you said, the worst proponents of capitalism, the worst offenders of it, are the business people themselves. So if we're going to succeed and this nation continues to strive I think that has to change.

BENNETT: Jonathan, thanks so much for being on Financial Myth Busting. Jonathan Hoeing is a founding member of the hedge fund Capitalist Pig. You can see him every week on Cashin' In on Fox News.

All data sourced through Bloomberg

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About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or