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If one rejects laissez-faire on 
account of man's foul ability 

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and moral weakness, one must for
the same reason, also reject 

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every kind of government action.
Welcome to Keith's night. 

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Don't tread on anyone. 
And the libertarian Institute 

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today. 
We have Peter Leeson author of 

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Anarchy, Unbound. 
By self governance works better 

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than you. 
Think. 

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He is a professor of Economics, 
at George Mason University. 

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Mr. Leeson. 
Where is the best place for 

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people to find your archive of 
work? 

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Peter Leeson.com, my personal 
website? 

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Excellent. 
Let's get into. 

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Terrific book. 
What is anarchy? 

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Anarchy is the absence of 
government. 

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And what is government? 
Well there, I think things 

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become a little bit trickier. 
I adopt a, I think so, you know,

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the classic description of the 
vibe. 

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Aryan definition is a legitimate
Monopoly on the use of force, 

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which is a territorial 
definition and I think it's 

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useful for many purposes and I 
think that other attempts to 

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really precisely Define what 
government is are also useful 

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but I experienced, you know, 
looking at different social 

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institutions looking at 
different societies over time 

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talking to people my own 
intuition. 

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None of these definitions 
adequately or at least 

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perfectly. 
I should say capture what it 

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really means to have government 
or its absence. 

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So we understand again, 
Anarchy's the absence of 

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government, but we're talking 
about what is government. 

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And so I tend to think about it 
as lying on some kind of a 

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spectrum where you have more or 
less government. 

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And I think for the most part, 
when we're talking about anarchy

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versus the state, people's 
intuitions are very similar to 

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one another's. 
And so, you know, we don't 

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really run into a classic Atari 
problem. 

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There are some cases where I 
think we do, but I think they're

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not so important. 
So I adopt for in short, an 

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approach to, you know, what 
government or Anarchy is, is, 

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you know, it when you see it, I 
don't think that as I say any 

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given situation, Satisfies. 
All of the various ways or 

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particular particular forms of 
definition that people have 

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offered, you know, that would 
capture it. 

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And so that's why I take this 
kind of loose approach, which 

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some people are upset about some
people don't like, but I think, 

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you know, basically captures 
what we haven't have in mind. 

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So what is wrong with the 
definition that state or 

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government? 
Rather is a group of people that

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claim the right to initiate 
violence in a geographical 

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territory on and with Property, 
they didn't just lie acquire 

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with people who haven't 
contracted with them. 

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Well, there's nothing wrong with
it per se, but notice how many 

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things you packed into that into
that damage dust the acquire, 

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right? 
What does that mean? 

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Sure, territorial Monopoly over 
what territory, right. 

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That are to whether or not 
you've got a a territorial 

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Monopoly. 
Depends upon how you define the 

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territory. 
And question is it is is the 

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territory a block? 
Is it that is the territory 

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eight blocks. 
Is it something that a country 

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that the size of the United? 
Is it a territory? 

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The size of Alabama? 
It completely depends, you know,

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I think if we and I'm going to 
probably forget, you can tell me

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what's wrong with it. 
But I may miss some of the 

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qualifiers that you had, but if 
you think about, you know, a 

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mafia Organization, for example,
an organized criminal unit, they

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have within some territory. 
Typically a something 

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approaching a, or they can at 
least a monopoly on Force. 

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It's not a legitimate Monopoly 
on Force, but that begs the 

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question of what we're Counting.
In is legitimate. 

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They may claim that they have a 
legitimate Monopoly on Force. 

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So we probably don't want to 
look to that as as part of our 

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definition. 
But I think more generally, you 

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know, I think most people would 
say, well look they don't have a

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monopoly because these or 
criminal organizations for 

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example exist within some broad 
or territory, where there is a 

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government where there's a state
and so they are not, these are 

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not these criminal groups, don't
have a monopoly and I would say,

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okay, but by the same token, 
then the state or the government

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doesn't have a monopoly either. 
We just acknowledge that there's

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another organization. 
In this case, the criminal gang,

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that also wields force, and it's
performing many of the functions

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that a government normally does.
So that's my issue to use the 

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example that you gave, you know,
with these kinds of definitions.

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I also think more importantly 
that it doesn't really matter so

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much. 
I mean other than kind of for 

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mostly pedantic purposes. 
Most people would think about a 

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mafia organization as not a 
state as not a government. 

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You know, often we think about 
criminal organizations emerging 

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where the state is, is not 
active in some important way. 

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And so, we could study criminal 
organization a mafia, for 

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example, as a case of private 
governance, with respect to 

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those individuals relations 
among themselves. 

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They are in an anarchic 
environment. 

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They can't rely upon the 
ordinary. 

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What we ordinarily, we call 
State institutions to help them 

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cooperate to prevent them from 
engaging in conflict with each 

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other. 
So, from that perspective, There

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is an anarchic context. 
That's just, which is a way of 

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thinking about it, in some other
context, that we might be 

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interested in studying. 
However, we might want to think 

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about the mafia as a government.
None immediately comes to my 

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mind, but I've had enough 
discussions about what Anarchy 

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our government is with people to
find that sometimes especially 

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when people are trying to when 
they have a particular interest 

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in a certain definition because 
they want to make a certain 

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point. 
All the sudden things that I 

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don't think they ordinarily, 
would call governments become 

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governments or or vice versa. 
And so that's why I take this 

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kind of, you know, this approach
that says, look, let's put all 

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that aside, call it whatever you
want. 

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In fact, it's not even that 
interesting to me whether or not

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someone wants to call it, 
Anarchy or government doesn't 

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really matter. 
What matters to me is the 

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mechanisms of governance that 
they use. 

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And I think ordinarily, we can 
classify. 

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Those governance institutions as
a relay as either relying upon a

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state or not. 
And I think in the case of a 

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criminal organization, we say 
that's not a stake in. 

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Case of a, perhaps different 
sort of criminal organization 

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that we call a federal 
government. 

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In some cases we call a state. 
So we make the we make the the 

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differentiation in your review 
of Anarchy and legal order by 

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Gary chartier. 
You say there are two approaches

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to proving a point when 
discussing an orgasm one 

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attempting to demonstrate that, 
it is better able to achieve 

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some stipulated outcome or 
outcomes or to by attempting to 

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demonstrate that it Does more 
just or moral than Alternatives 

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in your book in Turkey on bound?
Which approach do you take to 

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making the case for anarchism? 
I take the former approach. 

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So, you know, I broadly I'm an 
economist. 

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And so I think about things 
economically, the moral side of 

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the equation. 
While certainly very important 

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is not really something that I 
feel especially well qualified 

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to comment on, which is the sort
of Justice angle in the quote 

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that you were just giving I 
think. 

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That doesn't mean that there 
isn't a matter of justice. 

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But to be frank, also, one of 
the things that I like about 

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economic science, is that it in 
its constant in its, the 

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scientific part of it tells us 
something about the consequences

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of what it is that we do now 
whether or not we want to call 

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those consequences, good or bad 
is obviously a normative 

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judgment, but the science part 
gets us to my mind a long way of

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the way there. 
It can be joined with a pretty 

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minimal set of normative claims 
and and generate A broader 

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worldview. 
Whereas I think when we rely 

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much more heavily on the 
normative component, the, what 

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is just component. 
There's a lot more room for 

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disagreement and I'm not saying 
that that disagreement is wrong 

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or misplaced, but there can be a
lot of butting heads about. 

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You know, what the what the true
nature of justice is or what the

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just outcome is, whereas the 
question of, you know, does the 

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minimum wage cause dis 
employment, whether you think 

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Just or not. 
It has that effect. 

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Right? 
And so it clarifies, I think a 

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lot or takes a lot of stuff at 
least that I don't feel like an 

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expert on off the off the table 
and that's a big part of the 

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reason why I rely on, you know, 
economic reasoning joined with, 

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of course, normative values to 
arrive at a worldview. 

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What are some examples of 
Anarchy in our everyday lives. 

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Well, there are pockets of 
Anarchy. 

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This again, it gets, gets it 
back a bit to definitions in a 

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sense. 
But I think that actually most 

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people, most of the time are 
effectively interacting even in 

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places like the United States 
are effectively interacting in 

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and pockets of Anarchy and in 
anarchic. 

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Contexts, what I mean by that is
that although there is a formal 

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State apparatus that is 
available to us. 

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Most of the time, we don't Avail
ourselves of it. 

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And the reason that we don't 
Avail ourselves of it, is that 

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it would be impractical or too 
costly to do. 

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So, that's not the only reason, 
but it's a common one, right? 

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So if you think about, you know,
if you go to a restaurant and 

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you order a, you know, a filet 
mignon, and they bring you out a

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flank steak. 
Probably the last thought in 

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your mind is, I'm going to call 
the police or I'm going to 

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pursue this legally or uneven. 
I'm going to report this to the 

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Better Business Bureau. 
You're probably going to 

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Instead, try and resolve that 
conflict with the proprietor of 

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the restaurant and they will 
probably ordinarily be resolved 

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without problem. 
That is an anarchic interaction,

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in the sense that the 
Cooperative Arrangement, and 

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ultimately, the contract that 
underlies it is not in practice,

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going to be enforced by a state.
So when you view it, that 

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broadly, most of our 
interactions, as I say, our our 

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anarchic If you want to get a 
little bit more official about 

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it, so that's a very micro view.
If you zoom way out. 

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Obviously all of the world at a 
global level exists in an 

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anarchic context as well. 
Because states are obviously 

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Visa Vie one another without a 
supranational third-party with 

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formal authority to which they 
can appeal to resolve conflicts 

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between them. 
So scale way down. 

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We've got Anarchy all around us,
scale way up. 

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We've got Anarchy all around us.
That doesn't mean that we never 

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We use the state sometimes we do
but it's a relatively small part

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of the world that even has that 
as a potential reliable option. 

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And even there we see people 
often I think overwhelmingly 

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choose not to resort to it, 
simply because of cost 

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considerations. 
Now, people very often. 

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Say anarchy is something that we
tried in Somalia. 

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Somalia, currently not a 
desirable place to live. 

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I'm associating that with 
Anarchy, the lack of a monopoly 

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00:11:00,300 --> 00:11:02,400
State. 
Therefore, anarchism has 

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00:11:02,400 --> 00:11:06,600
empirically been disproven and 
shall be laughed out of the 

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00:11:06,600 --> 00:11:08,800
intellectual Court of 
discussion. 

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00:11:09,000 --> 00:11:12,500
How do you respond to the idea 
that the existence of Somalia is

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00:11:12,600 --> 00:11:14,500
real? 
Life proof that anarchism 

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doesn't work. 
Oh, I tend to think of it as the

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opposite. 
I think I tend to think of it as

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as pretty strong, evidence that 
often times in the least 

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00:11:24,900 --> 00:11:29,500
developed world. 
No government is Superior or may

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00:11:29,500 --> 00:11:33,800
be superior to government and 
that is not I should point out a

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00:11:33,800 --> 00:11:38,200
a testament to the incredible 
Virtues Of statelessness in a 

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00:11:38,208 --> 00:11:40,800
place like Somalia. 
I don't think it is. 

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00:11:41,200 --> 00:11:45,400
I think it's a testament to just
how bad bad. 

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00:11:45,600 --> 00:11:52,000
Add governments are, and can be.
And, you know, unfortunately in 

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00:11:52,000 --> 00:11:55,500
the least developed World a 
crucial part, to My Mind of why 

217
00:11:55,500 --> 00:11:57,900
they are least developed is 
that, they have really bad, 

218
00:11:57,900 --> 00:12:01,200
governments, governments that 
are strong enough to 

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00:12:01,300 --> 00:12:06,400
essentially, expropriate people.
But either because they lack the

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00:12:06,400 --> 00:12:09,900
strength or the will do not 
provide effective governance for

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00:12:09,900 --> 00:12:12,200
them. 
And so, in those situations, 

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00:12:12,200 --> 00:12:16,900
even if you are a quite Pro 
State personnel, You should at 

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00:12:16,900 --> 00:12:20,700
least conceptually imagine a 
scenario where the state is so 

224
00:12:20,700 --> 00:12:23,700
dysfunctional that having 
nothing at all. 

225
00:12:23,700 --> 00:12:27,100
Just letting people go, you 
know, Free Willy, even if it is 

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00:12:27,100 --> 00:12:29,400
a kind of hobbesian Jungle, 
which I don't think it is, but 

227
00:12:29,400 --> 00:12:31,900
even if it approximates, that 
could be better. 

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00:12:33,500 --> 00:12:36,600
Then having the state and I 
think that is what we actually 

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00:12:36,600 --> 00:12:39,700
observed in Somalia. 
So as a matter of, you know, 

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00:12:39,700 --> 00:12:43,200
evidence as a matter of the 
empirics, When somalia's 

231
00:12:43,200 --> 00:12:47,600
government collapsed in the 
early 1990s, there was a brief 

232
00:12:47,600 --> 00:12:50,500
period of civil war. 
That was, of course, quite bad, 

233
00:12:50,800 --> 00:12:56,100
but in the years, the decades 
that followed welfare in Somalia

234
00:12:56,100 --> 00:13:00,900
seems to have improved under 
statelessness relative to what 

235
00:13:00,900 --> 00:13:04,600
it was under government. 
Not because again, Anarchy was 

236
00:13:04,600 --> 00:13:05,800
working. 
Great in Somalia. 

237
00:13:05,900 --> 00:13:09,000
It wasn't, but because Anarchy 
was working better than 

238
00:13:09,000 --> 00:13:11,000
something. 
That was even more disastrous, 

239
00:13:11,000 --> 00:13:15,100
which was a predatory 
dysfunctional state in that 

240
00:13:15,100 --> 00:13:18,100
regard Somali as I say is Not 
Unusual. 

241
00:13:18,600 --> 00:13:22,100
Most ldcs have similarly 
dysfunctional and predatory 

242
00:13:22,100 --> 00:13:25,100
States. 
What was unusual in Somalia was 

243
00:13:25,100 --> 00:13:29,100
the collapse of government and 
then this pretty protracted 

244
00:13:29,100 --> 00:13:34,600
period of stable panarchy, so 
So, you know, the key thing is 

245
00:13:34,600 --> 00:13:40,300
always when people both on the 
prostate and the anti Stateside,

246
00:13:40,400 --> 00:13:43,700
the important consideration is 
to always ask yourself relative 

247
00:13:43,700 --> 00:13:47,300
to what, you know, I'm 
advocating for something 

248
00:13:47,300 --> 00:13:53,300
relative to what and too often. 
In my opinion, the comparative 

249
00:13:53,300 --> 00:13:57,600
Benchmark is a hypothetical one.
It's a benchmark in theory. 

250
00:13:57,600 --> 00:14:01,600
It's, you know, it's a what? 
I call First best theorizing, 

251
00:14:02,100 --> 00:14:05,400
right? 
So we imagine that, you know, 

252
00:14:05,400 --> 00:14:08,300
Somalia and Anarchy is 
horrendous because we see that 

253
00:14:08,300 --> 00:14:11,000
there's lots of problems and 
poverty their tremendous, which 

254
00:14:11,000 --> 00:14:16,300
is true, and the relative 
comparison point in our mind. 

255
00:14:16,300 --> 00:14:18,600
When we make that claim is 
something like well what if they

256
00:14:18,600 --> 00:14:20,900
had a government like the one in
the United States? 

257
00:14:22,000 --> 00:14:23,700
That's the thing. 
We should be comparing to an 

258
00:14:23,700 --> 00:14:26,000
obviously, people are much 
better off in the United States 

259
00:14:26,000 --> 00:14:29,300
and Somalia. 
Therefore, Anarchy is a disaster

260
00:14:29,300 --> 00:14:33,200
and government is great. 
Well, that comparison is Zan is 

261
00:14:33,200 --> 00:14:37,500
only a sensible one, if you 
think that American Quality 

262
00:14:37,500 --> 00:14:40,100
government is possible in 
Somalia. 

263
00:14:40,800 --> 00:14:45,000
If instead you look at what 
other governments in sub-Saharan

264
00:14:45,000 --> 00:14:48,700
Africa have and what Somali 
historically had, what you'll 

265
00:14:48,700 --> 00:14:53,200
see is a much more sobering 
comparative, which is a highly 

266
00:14:53,200 --> 00:14:55,100
dysfunctional and predatory 
government. 

267
00:14:55,200 --> 00:14:58,200
So that is probably to my mind, 
but we ought to be comparing 

268
00:14:58,200 --> 00:15:02,000
Anarchy in Somalia to or again 
for any other comparison 

269
00:15:02,000 --> 00:15:03,800
institutional. 
Harrison that people want to 

270
00:15:03,800 --> 00:15:07,800
make, they should think about 
what the relevant alternative to

271
00:15:07,800 --> 00:15:10,600
what their discuss what they're 
considering is not what their 

272
00:15:10,600 --> 00:15:13,400
preferred alternative would be 
in la-la land. 

273
00:15:13,800 --> 00:15:15,800
But in the world that we 
actually live in, where we have 

274
00:15:15,800 --> 00:15:19,300
constraints about the governance
institutions of various 

275
00:15:19,300 --> 00:15:22,700
qualities that are available to 
us how to things look there. 

276
00:15:23,900 --> 00:15:28,100
Yeah, I remember Bob Murphy 
said, people will say that a 

277
00:15:28,100 --> 00:15:30,800
small Anarchist Village would 
have a lot of trouble defending 

278
00:15:30,800 --> 00:15:34,300
itself, which is true. 
Also a small state of a few 

279
00:15:34,300 --> 00:15:37,200
couple hundred, people would 
have trouble defending itself. 

280
00:15:37,200 --> 00:15:41,200
And I love the analogy you use 
where you said, I didn't know if

281
00:15:41,200 --> 00:15:44,000
I should buy this car or that 
car didn't have so much money. 

282
00:15:44,100 --> 00:15:46,600
So well, I was told why don't 
you just get a Bentley? 

283
00:15:47,000 --> 00:15:50,500
Well, that was an unrealistic 
option of yours at the time and 

284
00:15:50,500 --> 00:15:53,600
that really got to the root of 
the, you know, Nirvana fallacy. 

285
00:15:53,700 --> 00:15:57,300
C or the fallacy of 
unconstrained Choice? 

286
00:15:58,100 --> 00:16:02,100
Don't you see that all over in 
in discussing economics, instead

287
00:16:02,100 --> 00:16:04,300
of, you know, they're being 
poverty? 

288
00:16:04,600 --> 00:16:06,600
And instead of there being 
sweatshops. 

289
00:16:06,600 --> 00:16:10,100
They should have American wages.
So let's Outlaw sweatshops. 

290
00:16:11,300 --> 00:16:14,800
Don't you see this all the time 
and how important this fallacy 

291
00:16:14,800 --> 00:16:15,900
is? 
Yeah. 

292
00:16:15,900 --> 00:16:19,100
It's crucial. 
I think a huge part of the value

293
00:16:19,100 --> 00:16:21,900
added of Economics, you know, 
you cannot mix and it's base is 

294
00:16:21,900 --> 00:16:26,500
so simple and it is And one of 
its starting premises, is that, 

295
00:16:26,500 --> 00:16:29,600
you know, we Face constraints. 
Which means we can't choose 

296
00:16:29,600 --> 00:16:31,900
things outside the opportunity 
set. 

297
00:16:32,400 --> 00:16:34,900
So, you know, while we would 
love to have during the 

298
00:16:34,900 --> 00:16:39,000
Industrial Revolution, for 
example, we would love to have 

299
00:16:39,400 --> 00:16:43,700
this safer working conditions, 
you know, 21st century working 

300
00:16:43,700 --> 00:16:47,000
conditions, for example, and the
higher wages that went along 

301
00:16:47,000 --> 00:16:49,500
with them. 
Unfortunately, time machines 

302
00:16:49,500 --> 00:16:51,600
don't exist. 
And so that was not one of the 

303
00:16:51,600 --> 00:16:54,600
options available to, to People 
during the Industrial 

304
00:16:54,600 --> 00:16:57,500
Revolution. 
And so, you know, we can think 

305
00:16:57,500 --> 00:17:01,000
of any number of examples you 
pointed to some others where, as

306
00:17:01,000 --> 00:17:03,600
long as once, we're recognizing 
that, we're choosing within 

307
00:17:03,600 --> 00:17:06,400
constraints that choices are 
made within constraints. 

308
00:17:07,000 --> 00:17:10,300
Then, we again face, you know, 
more sobering, I think. 

309
00:17:10,300 --> 00:17:13,800
Alternatives. 
Did you write the chapter that 

310
00:17:13,800 --> 00:17:18,200
there's a book legal systems, 
very different from ours, and 

311
00:17:18,200 --> 00:17:21,000
there's a chapter on Pirates. 
Did you write that chapter? 

312
00:17:21,200 --> 00:17:22,200
I did. 
Yes. 

313
00:17:22,599 --> 00:17:26,099
What is the importance? 
It's of pirate law and 

314
00:17:26,099 --> 00:17:29,500
understanding of how Anarchy 
worked within pirate Realms. 

315
00:17:30,600 --> 00:17:35,500
Well, I think, you know, there's
several surprising aspects of 

316
00:17:35,500 --> 00:17:39,100
governance among early 18th 
century Caribbean pirates, which

317
00:17:39,100 --> 00:17:44,400
is what which is what I've 
studied and probably the most 

318
00:17:44,400 --> 00:17:49,400
startling fact is that these 
guys who had devoted themselves 

319
00:17:49,400 --> 00:17:53,500
to theft and violence as a way 
of living somehow. 

320
00:17:53,700 --> 00:17:57,300
In order to succeed as a 
criminal Enterprise, in order to

321
00:17:57,300 --> 00:18:00,100
cooperate with each other needed
to make sure that they didn't 

322
00:18:00,100 --> 00:18:04,500
behave violently and with and 
stand stealing from each other. 

323
00:18:05,000 --> 00:18:09,400
And the fact that they were able
to overcome that problem. 

324
00:18:09,400 --> 00:18:13,400
I think is somewhat surprising, 
but the way in which they did, 

325
00:18:13,400 --> 00:18:16,900
it is even more surprising and 
that was essentially to 

326
00:18:16,900 --> 00:18:20,200
anticipate a system of 
constitutional checks and 

327
00:18:20,200 --> 00:18:23,500
balances that predates. 
A very similar system that we 

328
00:18:23,600 --> 00:18:28,100
ultimately adopted here in the 
United States Pirates developed,

329
00:18:28,100 --> 00:18:29,800
you know, the infamous pirate 
code. 

330
00:18:29,800 --> 00:18:32,500
It was a real thing. 
They had written constitutions 

331
00:18:32,500 --> 00:18:36,500
that divided power among their 
officers as a way to 

332
00:18:36,500 --> 00:18:40,100
simultaneously empower the 
officers, such as the captain on

333
00:18:40,100 --> 00:18:42,500
their ship. 
But also to restrain the 

334
00:18:42,508 --> 00:18:46,400
captain's ability to use that 
Authority against crew members, 

335
00:18:46,400 --> 00:18:50,000
for his personal benefit, the 
Paradox of power, that famously 

336
00:18:50,000 --> 00:18:53,500
Madison, articulated Pirates. 
Basically, you know, lived that 

337
00:18:53,700 --> 00:18:56,800
Cool experience again. 
Before the founding fathers, had

338
00:18:56,800 --> 00:19:00,500
put pen to paper. 
I think that is, especially 

339
00:19:00,500 --> 00:19:05,200
surprising because, not only, is
it criminals, who are coming up 

340
00:19:05,200 --> 00:19:08,500
with a self-governing solution 
who naturally can't rely on the 

341
00:19:08,500 --> 00:19:12,300
state to help them cooperate, 
but they are developing what, I 

342
00:19:12,300 --> 00:19:16,400
think most contemporary 
observers would regard as a 

343
00:19:16,500 --> 00:19:19,300
quite sophisticated form of 
self-governance. 

344
00:19:19,900 --> 00:19:23,400
A lot of times when people think
of, and when people talk about, 

345
00:19:23,600 --> 00:19:28,600
Self-governance. 
They have in mind, very crude 

346
00:19:29,300 --> 00:19:31,800
institutions of self-government 
which are critically important 

347
00:19:31,800 --> 00:19:33,300
by the way. 
I don't mean to denigrate them, 

348
00:19:33,300 --> 00:19:35,700
by calling them crude. 
But for instance, the discipline

349
00:19:35,700 --> 00:19:38,200
of continuous dealings, which is
simply the idea that if you 

350
00:19:38,200 --> 00:19:40,000
cheat me, I won't interact with 
you again. 

351
00:19:40,600 --> 00:19:44,700
That's really important, but 
it's also very basic Pirates. 

352
00:19:45,900 --> 00:19:49,500
Relied on that institution. 
But overlaying it was, this much

353
00:19:49,500 --> 00:19:53,100
more elaborate and sophisticated
system that involved. 

354
00:19:53,100 --> 00:19:57,200
Written rules checks, and 
balances divided, power, excuse 

355
00:19:57,200 --> 00:19:59,400
me, and was incredibly 
successful. 

356
00:20:00,000 --> 00:20:02,700
So I think those are probably 
the first things that come to my

357
00:20:02,700 --> 00:20:06,600
mind with respect to the 
surprising success of anarchic 

358
00:20:06,600 --> 00:20:10,300
pirate governance. 
What is the ricardian law of 

359
00:20:10,300 --> 00:20:14,200
Association? 
That law is. 

360
00:20:14,200 --> 00:20:18,400
That's a term from from mises. 
And you know, mrs. 

361
00:20:18,600 --> 00:20:21,500
Liu defy mises. 
My favorite Economist is then my

362
00:20:21,500 --> 00:20:23,500
favorite book of his called 
Human Action. 

363
00:20:24,000 --> 00:20:27,700
Alternatively, he was going to 
title it, social cooperation and

364
00:20:27,700 --> 00:20:30,700
the ricardian law of Association
is really just about social 

365
00:20:30,700 --> 00:20:33,500
cooperation. 
It's about individuals finding 

366
00:20:33,500 --> 00:20:37,300
ways to cooperate with each 
other based on the division of 

367
00:20:37,300 --> 00:20:41,400
labor in order to You realize, 
you know, material gains to 

368
00:20:41,400 --> 00:20:43,400
mises is mind, at least in my 
reading. 

369
00:20:43,400 --> 00:20:46,100
And to my mind. 
It is the foundation of 

370
00:20:46,100 --> 00:20:51,100
civilization, our ability to 
find solutions to obstacles that

371
00:20:51,100 --> 00:20:54,200
otherwise stand in the way of 
our that otherwise stand in the 

372
00:20:54,200 --> 00:20:57,600
way of our ability to realize 
Mutual gains from exchange. 

373
00:20:58,400 --> 00:21:04,500
And so, you can think about 
really Studies of Anarchy, 

374
00:21:04,500 --> 00:21:10,700
studies of self, governance, as 
contributing to that strain of 

375
00:21:10,700 --> 00:21:14,700
thought as trying to understand.
In my, in my case, trying to 

376
00:21:14,700 --> 00:21:17,400
look to the world and understand
how people who have confronted 

377
00:21:17,400 --> 00:21:20,200
various practical problems of 
governance in the absence of the

378
00:21:20,200 --> 00:21:22,900
state have. 
In fact, figured them figured 

379
00:21:22,900 --> 00:21:27,300
out ways around them with many 
imperfections, but I think, you 

380
00:21:27,300 --> 00:21:30,700
know, one of the things that's 
important, why I emphasize the 

381
00:21:30,700 --> 00:21:35,000
empirical component here. 
Is that it's all well and good 

382
00:21:35,000 --> 00:21:38,200
and fun. 
I get try to enjoy it 

383
00:21:38,200 --> 00:21:42,400
tremendously to think, 
abstractly about how stateless 

384
00:21:42,400 --> 00:21:46,300
systems would operate, you know,
about competing private 

385
00:21:46,300 --> 00:21:48,900
insurance companies and 
competing private defense 

386
00:21:48,900 --> 00:21:52,400
agencies and so on. 
But it's for the most part. 

387
00:21:52,400 --> 00:21:56,500
Not what real world stateless. 
Societies have developed. 

388
00:21:56,500 --> 00:21:59,200
There are some features that are
in common, but their systems 

389
00:21:59,200 --> 00:22:02,200
tend to look somewhat different.
And part of the reason for that.

390
00:22:02,500 --> 00:22:06,000
Is that they are typically 
confronted with some quite 

391
00:22:06,000 --> 00:22:10,800
particular governance problem 
that they need to overcome and 

392
00:22:11,100 --> 00:22:14,300
the institutions that they 
developed reflect the particular

393
00:22:14,300 --> 00:22:16,100
solutions, to those particular 
problems. 

394
00:22:17,500 --> 00:22:21,100
Please get inside the mind of 
someone who says something. 

395
00:22:21,100 --> 00:22:25,300
Like, if men were angels, we 
wouldn't need government first. 

396
00:22:25,300 --> 00:22:27,200
What are the assumptions in that
statement? 

397
00:22:27,200 --> 00:22:29,400
And second. 
How do you respond to that 

398
00:22:29,400 --> 00:22:32,100
logic? 
If men. 

399
00:22:32,100 --> 00:22:33,900
So, that's a quote, quote, for 
medicine. 

400
00:22:33,900 --> 00:22:36,100
So, if men were Angels, they 
wouldn't need government. 

401
00:22:36,100 --> 00:22:39,500
Well, I mean, I think it's true,
right? 

402
00:22:39,600 --> 00:22:42,200
If men were angels, we wouldn't 
need government, you know, 

403
00:22:42,200 --> 00:22:49,300
government is one form of trying
to provide governance a system 

404
00:22:49,500 --> 00:22:53,400
and of creating and enforcing 
rules that promote social 

405
00:22:53,400 --> 00:22:56,700
cooperation. 
If everybody internally always 

406
00:22:56,700 --> 00:23:00,300
did the right thing if we all 
innately cooperated without 

407
00:23:00,300 --> 00:23:02,900
them. 
For incentives, then we would 

408
00:23:02,900 --> 00:23:04,500
have no need, not just for 
government. 

409
00:23:04,500 --> 00:23:06,200
We wouldn't have a need for any 
system. 

410
00:23:06,300 --> 00:23:08,000
Any institutions of governance 
at all. 

411
00:23:09,200 --> 00:23:12,500
The follow-up piece of that, of 
course was that or the follow-up

412
00:23:12,500 --> 00:23:13,700
piece of that that we should 
consider. 

413
00:23:13,700 --> 00:23:16,700
Is that precisely? 
Because men aren't angels. 

414
00:23:17,200 --> 00:23:21,500
We do need some incentives to 
help us realize the gains from 

415
00:23:21,500 --> 00:23:24,300
cooperation. 
And those are governance 

416
00:23:24,300 --> 00:23:26,600
institutions. 
One form of, which is to be 

417
00:23:26,600 --> 00:23:30,200
provided by a state, but it's 
not the only one, you know, I 

418
00:23:30,200 --> 00:23:33,600
just gave you an example of. 
We just considered this example 

419
00:23:33,600 --> 00:23:38,800
of early 18th century pirate's, 
who did not were not asked. 

420
00:23:39,000 --> 00:23:41,400
We're not a government. 
I think in the ordinary sense of

421
00:23:41,400 --> 00:23:43,900
the term that anyone would use 
that I want to come back to that

422
00:23:43,900 --> 00:23:46,700
in a second, with respect, to 
our previous discussion about 

423
00:23:46,700 --> 00:23:50,500
what a government is, by the 
way, but just presume for the 

424
00:23:50,500 --> 00:23:53,300
moment that they were, that they
were a criminal organization and

425
00:23:53,300 --> 00:23:59,000
not a government. 
They developed these private 

426
00:23:59,000 --> 00:24:02,200
solutions that have a lot of 
features that look like what we 

427
00:24:02,200 --> 00:24:05,000
associate with the American 
system of government. 

428
00:24:05,100 --> 00:24:08,000
But a crucial difference in 
Pirates case was that their 

429
00:24:08,000 --> 00:24:11,700
system of Since that, that 
version of constitutional 

430
00:24:11,700 --> 00:24:16,100
democracy, if you want to call 
it, that they adopted was 

431
00:24:16,200 --> 00:24:18,700
unanimously, voluntarily 
consented to. 

432
00:24:19,500 --> 00:24:22,100
So, all the numbers of a pirate 
crew agreed to be governed by 

433
00:24:22,100 --> 00:24:24,600
those rules, which of course, 
makes it quite different in some

434
00:24:24,600 --> 00:24:27,200
respects from the American 
system of government. 

435
00:24:27,400 --> 00:24:30,900
But back real quick to this 
issue of what a government is in

436
00:24:30,900 --> 00:24:32,500
there. 
For what, you know, what is 

437
00:24:32,500 --> 00:24:35,600
government's absence. 
Pirates. 

438
00:24:35,900 --> 00:24:40,900
Have a monopoly on violence on 
their ships. 

439
00:24:43,000 --> 00:24:44,400
Does that make them a 
government? 

440
00:24:44,600 --> 00:24:46,900
I don't think so. 
Although I should say, I've had 

441
00:24:47,000 --> 00:24:50,100
discussions with some people, 
including some Libertarians who 

442
00:24:50,100 --> 00:24:52,300
have insisted to me, that no, it
was a government. 

443
00:24:52,400 --> 00:24:55,800
It was a government because they
had this Monopoly on violence. 

444
00:24:56,100 --> 00:24:58,200
As I say to me, the terms, don't
matter so much. 

445
00:24:58,200 --> 00:25:01,100
But this is an illustration of 
why I think think the terms 

446
00:25:01,100 --> 00:25:03,700
don't matter so much in ordinary
conversation. 

447
00:25:03,700 --> 00:25:07,100
We would call Pirates. 
A criminal organization that was

448
00:25:07,100 --> 00:25:09,800
at odds with a government that 
was seeking to suppress them as 

449
00:25:09,800 --> 00:25:11,900
criminals, which is in fact was 
the case. 

450
00:25:12,800 --> 00:25:15,100
For some particular purpose of 
argumentation. 

451
00:25:15,100 --> 00:25:18,100
Somebody might want to insist 
that, it's a government, fine. 

452
00:25:18,600 --> 00:25:22,300
But here we need to note that 
the crucial difference was that 

453
00:25:22,300 --> 00:25:26,200
pirates consented to be governed
by these rules explicitly, 

454
00:25:26,900 --> 00:25:32,200
where, as citizens of the United
States, for example, that is not

455
00:25:32,200 --> 00:25:35,100
true. 
And so that is one dimension in 

456
00:25:35,100 --> 00:25:39,700
which we can distinguish pirate 
governance from governments. 

457
00:25:40,200 --> 00:25:44,600
Having said that one more quick 
thing on this That distinction 

458
00:25:44,700 --> 00:25:48,100
of. 
Voluntary agreement is 

459
00:25:48,100 --> 00:25:52,200
attempting one to use to try and
separate out if definitionally 

460
00:25:52,200 --> 00:25:56,000
governments from not. 
But that also fails, that's 

461
00:25:56,000 --> 00:25:58,800
another distinction that doesn't
work and it's a shame. 

462
00:25:58,800 --> 00:26:01,400
I think it doesn't work because 
it is from a Libertarian 

463
00:26:01,400 --> 00:26:04,500
perspective. 
Probably the natural kind of 

464
00:26:04,500 --> 00:26:06,100
Distinction that we would want 
to draw. 

465
00:26:07,200 --> 00:26:12,600
The reason, I think it doesn't 
work is that It is very hard to 

466
00:26:13,200 --> 00:26:15,900
construe in reasonable terms to 
my mind. 

467
00:26:16,400 --> 00:26:21,000
A system that is governed by 
spontaneously emergent social 

468
00:26:21,000 --> 00:26:25,200
norms. 
As one that all the members who 

469
00:26:25,200 --> 00:26:29,600
are governed by those Norms 
consented to in an explicit way.

470
00:26:30,500 --> 00:26:33,000
The reason being that people 
haven't consented to them in an 

471
00:26:33,000 --> 00:26:37,000
explicit way their Norms. 
Nevertheless, you could imagine 

472
00:26:37,000 --> 00:26:39,400
a society, and there have been 
some that are governed 

473
00:26:39,400 --> 00:26:41,600
exclusively. 
Possibly by Norms there, 

474
00:26:41,600 --> 00:26:45,200
ordinarily called stateless. 
Societies there, anarchic by my 

475
00:26:45,200 --> 00:26:49,800
understanding, but they wouldn't
satisfy this, no coercion rule, 

476
00:26:50,100 --> 00:26:51,500
right. 
They wouldn't satisfy this. 

477
00:26:51,500 --> 00:26:53,100
Everybody had to explicitly 
consent. 

478
00:26:53,100 --> 00:26:56,000
Now, you could torture, you 
could torture the example and 

479
00:26:56,000 --> 00:26:59,300
make it so that all the sudden 
they are consenting, you know, 

480
00:26:59,400 --> 00:27:02,000
well if they wanted to, they 
could move into dada da. 

481
00:27:02,200 --> 00:27:04,000
But wait a minute. 
Those are the same types of 

482
00:27:04,000 --> 00:27:06,800
arguments that we as 
Libertarians ordinarily object--

483
00:27:06,800 --> 00:27:10,200
to when people say well, the 
United States government is 

484
00:27:10,300 --> 00:27:11,700
Voluntary. 
Because if you don't like it, 

485
00:27:11,700 --> 00:27:14,900
you can move right? 
The same, all the same 

486
00:27:14,900 --> 00:27:16,900
arguments. 
Basically come reverberating 

487
00:27:16,900 --> 00:27:21,000
back at us. 
When we try to think through 

488
00:27:21,000 --> 00:27:25,200
these various again, particular 
eyes, definitions of government 

489
00:27:25,200 --> 00:27:28,400
versus Anarchy that have been 
suggested, which is why. 

490
00:27:28,400 --> 00:27:31,800
I again adopt this, what I call 
the commonsensical view, which 

491
00:27:31,800 --> 00:27:35,300
is that pirates are criminals, 
not governments governments, our

492
00:27:35,300 --> 00:27:38,100
governments, we can probably 
agree on that. 

493
00:27:39,500 --> 00:27:41,800
Who makes the laws under 
Anarchy? 

494
00:27:43,500 --> 00:27:46,600
Well, it depends on the anarchic
context, right? 

495
00:27:46,600 --> 00:27:50,400
So I just mentioned social norms
in an anarchic context that is 

496
00:27:50,400 --> 00:27:53,300
governed by social norms or 
Which social norms play an 

497
00:27:53,300 --> 00:27:56,300
important role. 
No one makes the rules. 

498
00:27:56,900 --> 00:28:00,000
The rules are organic. 
They are it's like saying, who 

499
00:28:00,000 --> 00:28:02,900
makes language, who makes 
Customs. 

500
00:28:03,100 --> 00:28:07,000
No, one person does they develop
as a result of people 

501
00:28:07,000 --> 00:28:09,800
interacting trying to find 
solutions to their problems. 

502
00:28:10,500 --> 00:28:15,100
In other cases? 
The rules are Made by the people

503
00:28:15,100 --> 00:28:18,100
explicitly, who are who the 
rules are going to govern. 

504
00:28:18,200 --> 00:28:22,000
Think back again to the pirate 
ship Pirates, made the rules 

505
00:28:22,000 --> 00:28:25,400
deliberately and explicitly 
consciously. 

506
00:28:25,700 --> 00:28:28,400
That would govern their ships. 
They sat down and Drew up pirate

507
00:28:28,400 --> 00:28:31,100
articles that written pirate 
code or Constitution that I 

508
00:28:31,108 --> 00:28:35,000
mentioned before. 
That's two extreme cases. 

509
00:28:35,000 --> 00:28:40,000
I think many anarchic context, 
have some combination of those 

510
00:28:40,000 --> 00:28:43,700
and perhaps some other things in
between that are not, not 

511
00:28:43,700 --> 00:28:47,500
immediately coming to my mind. 
But the point is there isn't one

512
00:28:47,500 --> 00:28:51,600
answer to who creates the rules 
the where the rules Come From, 

513
00:28:51,600 --> 00:28:56,000
depends upon the anarchic 
context and that source of rules

514
00:28:56,000 --> 00:28:59,500
as well as the substance of the 
rules is going to reflect the 

515
00:28:59,500 --> 00:29:03,200
particular problem situation, 
again of the people who Going to

516
00:29:03,200 --> 00:29:08,600
be governed by the rules. 
Social norms, one of the nice 

517
00:29:08,600 --> 00:29:11,400
features of them is that they 
work really well. 

518
00:29:11,400 --> 00:29:15,800
When you have very large groups 
of people because since they 

519
00:29:15,800 --> 00:29:18,600
organically emerge, we don't 
have to all get together in a 

520
00:29:18,600 --> 00:29:21,700
collective decision making body 
whether its private or not and 

521
00:29:21,700 --> 00:29:23,900
say, okay, here's how we're 
going to greet each other. 

522
00:29:23,900 --> 00:29:26,500
When we see one another, here's 
how we're going to deal with 

523
00:29:26,500 --> 00:29:29,700
contractual default. 
We don't have to do that, that 

524
00:29:29,700 --> 00:29:35,100
conserves economizes on a lot of
cost of decision making On the 

525
00:29:35,100 --> 00:29:38,800
other hand, if there's only 30 
of us or 80 of us like there was

526
00:29:38,800 --> 00:29:43,300
on the on on the, on an early, 
18th century, pirate ship, that 

527
00:29:43,300 --> 00:29:46,400
Collective decision-making cost 
of coming together to explicitly

528
00:29:46,400 --> 00:29:49,600
create rules is much lower 
because there's fewer of us, 

529
00:29:50,100 --> 00:29:52,900
right. 
So there are these trade-offs 

530
00:29:53,400 --> 00:29:56,800
explicit rules tend to be more 
costly to create. 

531
00:29:57,300 --> 00:29:59,900
But they also give us a bit more
control over. 

532
00:29:59,900 --> 00:30:03,400
Exactly what the rules are going
to be rules that emerge 

533
00:30:03,400 --> 00:30:05,600
spontaneously. 
Asleep precisely because no 

534
00:30:05,600 --> 00:30:09,100
individual controls them. 
Can be harder for us harder 

535
00:30:09,100 --> 00:30:12,300
harder for the, for any 
individual to have influence 

536
00:30:12,300 --> 00:30:14,600
over much much harder. 
And so they tend to have their 

537
00:30:14,600 --> 00:30:18,300
own sort of inertia their own 
development, which is again, 

538
00:30:18,300 --> 00:30:21,200
both a both a benefit and a 
cost. 

539
00:30:21,600 --> 00:30:24,000
So, these, these trade-offs to 
these different sources of 

540
00:30:24,000 --> 00:30:28,700
rules, and we tend to in my 
mind, observe sources that are 

541
00:30:28,700 --> 00:30:31,300
economically sensible. 
Given the context in question. 

542
00:30:32,500 --> 00:30:36,600
What are some examples of 
Private money that you have come

543
00:30:36,600 --> 00:30:40,300
across in your research. 
Private money. 

544
00:30:44,000 --> 00:30:47,100
I'm trying to think. 
I don't know that I've studied. 

545
00:30:49,200 --> 00:30:54,600
Private money, I mean, in the 
case of Somalia, what you had 

546
00:30:54,600 --> 00:30:57,100
was after the after the 
government collapse. 

547
00:30:57,100 --> 00:30:59,700
So the government had, there was
a Somali Shilling which was the 

548
00:30:59,700 --> 00:31:03,000
government currency after the 
government collapsed. 

549
00:31:03,000 --> 00:31:06,200
Obviously, there was no Central 
Bank, that was printing money 

550
00:31:06,300 --> 00:31:08,400
and so in a sense, it was 
private money. 

551
00:31:08,400 --> 00:31:11,400
What what somalis did was 
continued to circulate the 

552
00:31:11,400 --> 00:31:15,100
existing Somali Shillings? 
So that fiat currency was 

553
00:31:15,100 --> 00:31:18,400
actually just piggybacked on 
once there was no government in 

554
00:31:18,400 --> 00:31:22,400
was and Chose was used by people
simply because it was in 

555
00:31:22,400 --> 00:31:25,200
circulation and was already 
being used, it performed its 

556
00:31:25,200 --> 00:31:26,800
function. 
There were some problems that 

557
00:31:26,800 --> 00:31:30,600
emerged because one of which was
that as the existing Somali 

558
00:31:30,600 --> 00:31:33,200
Shillings began to wear out when
nobody else was creating the 

559
00:31:33,200 --> 00:31:35,500
money. 
There was a bit of a problem and

560
00:31:35,500 --> 00:31:38,900
so they began importing notes 
and that led to some periods of 

561
00:31:38,900 --> 00:31:43,800
inflation. 
So the system didn't work, you 

562
00:31:43,800 --> 00:31:48,800
know, did not work perfectly at 
all, but that's the only example

563
00:31:48,800 --> 00:31:50,800
that That's coming to my mind 
of. 

564
00:31:50,800 --> 00:31:53,900
I'm trying to think maybe I've 
studied a lot of different 

565
00:31:54,100 --> 00:31:57,200
anarchic episodes, but that's 
the only one where where I can 

566
00:31:57,200 --> 00:32:02,200
think of of money coming up in 
an important way. 

567
00:32:03,500 --> 00:32:07,400
Yeah, Paul Krugman has an 
article where he says the best 

568
00:32:07,400 --> 00:32:12,000
argument for keynesianism. 
Is there was a small group of 

569
00:32:12,000 --> 00:32:15,900
parents who got together and had
babysitting coupons 30 minutes 

570
00:32:15,900 --> 00:32:18,900
each / coupon and no one was 
doing anything. 

571
00:32:19,100 --> 00:32:22,100
Because everyone wanted to save 
up their own coupons, then 

572
00:32:22,100 --> 00:32:26,000
someone decided we're going to 
print more coupons to stimulate 

573
00:32:26,000 --> 00:32:29,500
demand and then people started 
babysitting in this got this 

574
00:32:29,500 --> 00:32:33,600
babysitting, Co-op working, what
he explicitly says, without 

575
00:32:33,600 --> 00:32:37,600
knowing it is, private money can
work and you don't you didn't 

576
00:32:37,600 --> 00:32:39,700
need a state to come in in 
prison. 

577
00:32:39,700 --> 00:32:41,500
Everyone who used a different 
currency. 

578
00:32:41,600 --> 00:32:44,700
So you're able to do that. 
You think things like casino 

579
00:32:44,700 --> 00:32:50,000
chips, coupons, checks Pride. 
I've Bitcoin. 

580
00:32:50,100 --> 00:32:53,100
Do you think there's anything 
there to the idea of private 

581
00:32:53,100 --> 00:32:55,300
money? 
So we could not only understand 

582
00:32:55,300 --> 00:32:58,000
it philosophically and 
economically but maybe embrace 

583
00:32:58,000 --> 00:33:01,800
it to strip the state of some 
Federal Reserve power or if they

584
00:33:01,800 --> 00:33:04,400
keep inflating the dollar to the
point where it loses too, much 

585
00:33:04,400 --> 00:33:07,900
value, anything there you think 
is worth looking into. 

586
00:33:08,400 --> 00:33:10,500
Well, sure. 
I mean, you know, look, I 

587
00:33:10,500 --> 00:33:13,800
certainly am a, am a proponent 
of privatizing money. 

588
00:33:14,200 --> 00:33:15,500
It's just that I haven't studied
it. 

589
00:33:15,500 --> 00:33:17,500
So I know one of my colleagues 
Larry. 

590
00:33:17,500 --> 00:33:22,100
White Lawrence Eight who has 
studied historical private 

591
00:33:22,100 --> 00:33:25,200
monetary systems. 
He's the person to talk about to

592
00:33:25,200 --> 00:33:27,100
talk to about these things. 
That he's done. 

593
00:33:27,200 --> 00:33:30,600
Excellent work documenting how 
the system has various systems 

594
00:33:30,600 --> 00:33:37,700
of in fact operated. 
So I don't see any reason why I 

595
00:33:37,700 --> 00:33:40,200
don't, I shouldn't say, I don't 
see compelling reasons, why 

596
00:33:40,200 --> 00:33:43,800
money shouldn't be privatized in
the same way that I think, 

597
00:33:43,900 --> 00:33:46,400
essentially everything else 
should be, should be privatized,

598
00:33:46,800 --> 00:33:48,800
but I'm not a, I'm not a 
monetary. 

599
00:33:48,900 --> 00:33:53,000
Very expert. 
Have you come across any 

600
00:33:53,000 --> 00:33:56,200
interesting examples of how 
anarchic societies have dealt 

601
00:33:56,200 --> 00:33:59,600
with externalities? 
Sure. 

602
00:33:59,600 --> 00:34:02,900
Sure Pirates. 
Another great, great example, 

603
00:34:02,900 --> 00:34:10,100
you know, the what on pirate 
ships practically every activity

604
00:34:10,100 --> 00:34:14,500
that a person engaged in, was 
liable to create a negative 

605
00:34:14,500 --> 00:34:16,800
externality. 
Okay, the reason for this is 

606
00:34:16,800 --> 00:34:21,400
that pirates sailed on, Merch 
stolen Merchant ships and these 

607
00:34:21,400 --> 00:34:25,000
Merchant ships to give you to 
put the put a, give you a size 

608
00:34:25,000 --> 00:34:27,699
perspective here. 
The average merchant ship 200 

609
00:34:27,699 --> 00:34:30,300
ton merchant ship of this 
period, would typically have 

610
00:34:30,300 --> 00:34:32,300
like a dozen Merchant Sailors on
it. 

611
00:34:32,699 --> 00:34:36,100
So Pirates would take that over 
but their pirate Crews had like,

612
00:34:36,100 --> 00:34:39,100
you know, 80 guys. 
So you're cramming 80 guys into 

613
00:34:39,100 --> 00:34:42,100
this really confined space and 
moreover. 

614
00:34:42,100 --> 00:34:45,500
This confined space is, you 
know, combustible quite 

615
00:34:45,500 --> 00:34:48,199
literally, you know, it's a 
wooden ship with call with 

616
00:34:48,199 --> 00:34:49,199
cloth. 
Al's. 

617
00:34:50,100 --> 00:34:53,699
So fighting on the pirate ship, 
could not only very easily, 

618
00:34:53,699 --> 00:34:55,100
injure the ship. 
It could injure the other 

619
00:34:55,100 --> 00:34:59,600
Pirates around you, you know 
smoking in the hold of the ship 

620
00:34:59,600 --> 00:35:02,500
could blow the crew to 
Smithereens, you know, 

621
00:35:02,500 --> 00:35:06,800
practically any conflict between
Pirates created a perspective, a

622
00:35:06,808 --> 00:35:11,100
potential problem for create 
terms of creating - spill spill 

623
00:35:11,100 --> 00:35:15,500
overs for other members of the 
crew and Pirates, adopted a 

624
00:35:15,600 --> 00:35:18,800
private regulatory solution and 
their anarchic context. 

625
00:35:19,300 --> 00:35:22,500
Which was they simply had rules 
that said, things like you can't

626
00:35:22,500 --> 00:35:27,200
smoke in this part of the ship. 
You can't, you know, have 

627
00:35:27,200 --> 00:35:29,300
violent conflicts on board, the 
ship. 

628
00:35:29,300 --> 00:35:31,500
If you're going to have them, 
they need to be settled on 

629
00:35:31,500 --> 00:35:33,100
Shore. 
And they would typically have 

630
00:35:33,100 --> 00:35:36,100
duels that were refereed by the 
quartermaster was another 

631
00:35:36,100 --> 00:35:38,800
officer on the pirate ship. 
So, they had they laid out these

632
00:35:38,800 --> 00:35:42,300
rules in their constitutions and
the punishments for violating, 

633
00:35:42,300 --> 00:35:45,400
those rules. 
Also existed in more enforced 

634
00:35:45,400 --> 00:35:50,500
and they exist. 
They consisted of Monetary fines

635
00:35:50,500 --> 00:35:53,000
essentially or corporal 
punishment. 

636
00:35:53,000 --> 00:35:58,300
So up to and including death. 
The book is anarchy Unbound. 

637
00:35:58,300 --> 00:36:02,200
Why self governance works better
than you, think what is 

638
00:36:02,200 --> 00:36:06,900
economics? 
Economics is an approach to 

639
00:36:06,900 --> 00:36:09,600
understanding human behavior to 
my mind. 

640
00:36:11,100 --> 00:36:15,500
What is the economic difference 
between something being in the 

641
00:36:15,500 --> 00:36:18,000
private sector and the public 
sector? 

642
00:36:19,200 --> 00:36:22,000
Can you say it one more time? 
What is the economic difference 

643
00:36:22,500 --> 00:36:25,100
Shore? 
So if I'm looking at, you know, 

644
00:36:25,100 --> 00:36:28,800
in Industry, Healthcare would, 
what would be the pros and cons 

645
00:36:28,800 --> 00:36:33,600
of it being privatized versus 
done under the rule of a state? 

646
00:36:34,600 --> 00:36:38,000
Well, again, it depends on the 
particular case but in very, 

647
00:36:38,000 --> 00:36:42,400
very broad Strokes. 
To my mind, the chief benefits 

648
00:36:42,400 --> 00:36:46,500
of privatization of private 
property rights versus having 

649
00:36:46,500 --> 00:36:49,700
something be owned by the state 
are twofold. 

650
00:36:50,100 --> 00:36:54,600
The first is information, and 
the second is incentives. 

651
00:36:55,400 --> 00:36:57,700
So when you have private prayer 
and those are intimately 

652
00:36:57,700 --> 00:37:00,100
connected, you could even you 
can think of them as two sides 

653
00:37:00,100 --> 00:37:05,800
of the same coin, when you have 
private ownership, you have 

654
00:37:05,800 --> 00:37:08,500
markets and when you have 
markets you have price 

655
00:37:08,500 --> 00:37:13,600
information and that Information
is a guide to the private owners

656
00:37:13,600 --> 00:37:17,000
to the resource owners and 
resource users about how to best

657
00:37:17,000 --> 00:37:21,000
use and combine resources in a 
way that increases their social 

658
00:37:21,000 --> 00:37:24,800
value. 
Once you have that information. 

659
00:37:24,800 --> 00:37:27,600
However, you need to have 
incentives to act upon it, 

660
00:37:27,600 --> 00:37:29,400
right? 
You need, you need to not only 

661
00:37:29,400 --> 00:37:34,000
know, for instance, that 
consumers want would rather have

662
00:37:34,000 --> 00:37:40,100
leather be devoted to boots. 
Then you know, Choose You Need 

663
00:37:40,100 --> 00:37:42,500
to not only know that, but you 
then need to have resources 

664
00:37:42,500 --> 00:37:46,300
resource, owners be incentivized
to produce boots, instead of 

665
00:37:46,300 --> 00:37:49,000
shoes, and that's the incentive 
piece. 

666
00:37:49,000 --> 00:37:52,200
So as I say, they're intimately,
connected private ownership, 

667
00:37:52,200 --> 00:37:55,800
which creates residual Clayman 
see, gives us that incentive. 

668
00:37:55,800 --> 00:37:59,200
And because it's permitting for 
market exchange, gives us the 

669
00:37:59,200 --> 00:38:03,200
information that comes in the 
form of prices about how to 

670
00:38:03,200 --> 00:38:07,400
combine resources best. 
That's the general, the general 

671
00:38:07,400 --> 00:38:09,600
benefit of private property 
rights. 

672
00:38:10,100 --> 00:38:14,400
Is public property, right? 
Public ownership, having said 

673
00:38:14,400 --> 00:38:17,000
that, and this is something that
I think is often overlooked. 

674
00:38:17,000 --> 00:38:20,900
There are benefits also to 
public ownership or to not 

675
00:38:20,900 --> 00:38:26,000
private ownership. 
If private ownership were always

676
00:38:26,000 --> 00:38:28,600
appropriate than what you would 
see when people were left to 

677
00:38:28,600 --> 00:38:32,100
their own devices is that they 
would privatize everything. 

678
00:38:33,000 --> 00:38:36,300
They would establish private 
property rights in all of the 

679
00:38:36,300 --> 00:38:38,900
otherwise on privately owned 
stuff. 

680
00:38:39,200 --> 00:38:42,800
And yet they don't do that. 
Why don't they do that? 

681
00:38:43,500 --> 00:38:46,700
They don't do that because the 
cost of establishing of defining

682
00:38:46,700 --> 00:38:49,900
and enforcing the private 
property rights would exceed the

683
00:38:49,900 --> 00:38:53,900
benefit. 
It's efficient to leave some 

684
00:38:53,900 --> 00:39:00,000
things in the comments as it 
were and so, you know Harold M 

685
00:39:00,000 --> 00:39:03,600
sets famously wrote a great 
paper, right called toward a 

686
00:39:03,607 --> 00:39:06,200
theory of property rights, that 
analyze this question. 

687
00:39:06,200 --> 00:39:09,800
He was interested in how it was 
that private property rights had

688
00:39:09,800 --> 00:39:13,600
emerged among some Indians who 
hunted, fur in Canada. 

689
00:39:14,200 --> 00:39:17,400
And what he found was that 
basically, when the fur trade 

690
00:39:17,400 --> 00:39:20,000
took off, so they were 
traditionally, communally 

691
00:39:20,500 --> 00:39:22,700
communally owned. 
Land in which the fur animals, 

692
00:39:22,700 --> 00:39:26,200
that they hunted existed. 
And that led to overhunting, 

693
00:39:26,400 --> 00:39:27,800
right? 
That's one of the cost of common

694
00:39:27,800 --> 00:39:30,800
property because they didn't 
have the incentives because they

695
00:39:30,800 --> 00:39:34,700
didn't have private ownership to
conserve on the resource, when 

696
00:39:34,700 --> 00:39:38,100
the price of fur, he found 
increased because the fur trade 

697
00:39:38,100 --> 00:39:42,800
was flourishing, that created an
incentive for these Indians to 

698
00:39:42,800 --> 00:39:45,600
establish private property 
rights in the trading, land as a

699
00:39:45,600 --> 00:39:48,900
way to reduce that externality, 
that that oat, that Commons 

700
00:39:48,900 --> 00:39:51,200
problem that over over hunting 
problem. 

701
00:39:51,600 --> 00:39:54,900
And so he says, this is what 
explains the development of 

702
00:39:54,900 --> 00:39:57,700
private property rights among 
these Indians, which is 

703
00:39:57,700 --> 00:40:01,200
perfectly sensible. 
But an important part of that 

704
00:40:01,200 --> 00:40:04,600
story is that in the period 
before the fur trade took off, 

705
00:40:05,000 --> 00:40:08,800
which is to say before the value
of creating and enforcing 

706
00:40:08,800 --> 00:40:12,400
private property rights in the 
forest areas was high. 

707
00:40:12,700 --> 00:40:16,800
It was in fact efficient to 
leave the forest areas in the 

708
00:40:16,800 --> 00:40:22,600
common realm as the Indians were
doing So there's as with 

709
00:40:22,600 --> 00:40:25,200
everything in economics. 
There are these trade-offs 

710
00:40:25,200 --> 00:40:27,500
right? 
There's costs and benefits and 

711
00:40:27,500 --> 00:40:32,000
while in general private 
property rights are appropriate 

712
00:40:32,000 --> 00:40:36,100
and in general, I think we can 
do better by privatizing more. 

713
00:40:36,100 --> 00:40:40,200
It's important to understand 
that private property rights are

714
00:40:40,200 --> 00:40:44,700
sometimes sensibly not adopted. 
We deliberately sometimes we'll 

715
00:40:44,700 --> 00:40:47,400
leave things in the Commons 
because we're better off as a 

716
00:40:47,408 --> 00:40:51,400
consequence of doing. 
So, Spite the fact that they 

717
00:40:51,700 --> 00:40:54,500
those common property rights 
undermine incentives and 

718
00:40:54,500 --> 00:40:57,800
preclude information, 
incentives, and information are 

719
00:40:57,800 --> 00:41:01,300
crucial, but there's a cost to 
basically getting them, right? 

720
00:41:01,300 --> 00:41:05,000
And if the cost exceeds that 
benefit, don't want to do it. 

721
00:41:06,200 --> 00:41:10,600
You said that I found and still 
find Human Action and endlessly 

722
00:41:10,600 --> 00:41:13,200
rewarding and Illuminating book.
In my opinion. 

723
00:41:13,200 --> 00:41:16,400
It is the most important book on
economics of the 20th century 

724
00:41:16,400 --> 00:41:19,400
and quite possibly the most 
important book, and economics 

725
00:41:19,700 --> 00:41:23,300
period. 
What are the main takeaways from

726
00:41:23,300 --> 00:41:26,700
Human Action? 
Oh man, that's a hard question. 

727
00:41:27,800 --> 00:41:31,600
It's a, it's a long book. 
There are many, many takeaways. 

728
00:41:31,600 --> 00:41:36,600
I think that among the among 
those That that come to my mind 

729
00:41:36,600 --> 00:41:40,800
that that have influenced me the
most, our first, how we conceive

730
00:41:40,800 --> 00:41:44,000
of what economics is. 
So, before you ask me, what is 

731
00:41:44,000 --> 00:41:46,300
economics, I said, it's an 
approach to understanding human 

732
00:41:46,300 --> 00:41:49,500
behavior. 
I didn't say it's about an 

733
00:41:49,500 --> 00:41:52,000
approach to understanding Market
Behavior. 

734
00:41:52,200 --> 00:41:55,500
It's an approach to 
understanding stock markets, or 

735
00:41:55,500 --> 00:41:59,700
an approach to understanding 
trade of goods for dollars. 

736
00:42:00,700 --> 00:42:03,200
It is all of those things, but 
it's an approach to 

737
00:42:03,200 --> 00:42:07,100
understanding human. 
Social behaviors much more 

738
00:42:07,100 --> 00:42:11,200
broadly than that, and mises is 
understanding of Economics 

739
00:42:11,200 --> 00:42:13,200
grounded in what he calls. 
Praxeology. 

740
00:42:13,200 --> 00:42:15,700
This, this General logic of 
human choice. 

741
00:42:17,100 --> 00:42:20,600
Was is to my mind, one of the 
earliest and to my mind one of 

742
00:42:20,607 --> 00:42:27,600
the best. 
Renderings of that idea, mises 

743
00:42:27,600 --> 00:42:31,600
was an economic imperialist to 
my, to my reading, at least 

744
00:42:31,600 --> 00:42:35,300
before, economic imperialism, 
was really fully understood as a

745
00:42:35,300 --> 00:42:38,000
thing. 
So, he saw economic is applying 

746
00:42:38,000 --> 00:42:41,200
broadly to human behavior. 
Hence, the title of his of his 

747
00:42:41,200 --> 00:42:44,200
book, Human Action. 
So, that's one of the, the first

748
00:42:44,200 --> 00:42:48,300
sort of kind of, I don't know, 
if it's right to call it 

749
00:42:48,300 --> 00:42:51,200
methodological, but it's a sort 
of an overarching view. 

750
00:42:51,200 --> 00:42:54,300
I think it is methodological, 
but an overarching View. 

751
00:42:54,500 --> 00:42:57,700
Of Economics relationship to its
subject. 

752
00:42:57,700 --> 00:43:01,000
Matter that I think is crucially
important among the much more 

753
00:43:01,000 --> 00:43:03,400
specific lessons that come out 
of that book. 

754
00:43:03,400 --> 00:43:06,700
I think probably the most 
important one to point two is 

755
00:43:07,000 --> 00:43:09,400
relates back to the ideas that 
we were just talking about with 

756
00:43:09,400 --> 00:43:14,000
respect to private property. 
Mises is argument about economic

757
00:43:14,000 --> 00:43:17,300
calculation under private 
property rights. 

758
00:43:17,300 --> 00:43:20,200
Visa Vie, its impossibility 
under socialism. 

759
00:43:20,200 --> 00:43:24,900
So the this part of the 
Socialist calculation debate, Is

760
00:43:24,900 --> 00:43:28,600
it in my judgment? 
You know, one of the very most 

761
00:43:28,600 --> 00:43:33,000
important ideas for 
understanding and economics 

762
00:43:33,000 --> 00:43:36,200
period, but in particular for 
understanding comparative 

763
00:43:36,200 --> 00:43:41,300
economics, for thinking about 
why it is that markets are tend 

764
00:43:41,300 --> 00:43:44,900
to be so effective. 
And why it is that government 

765
00:43:45,700 --> 00:43:48,900
government trying to perform the
same, task tends to be so 

766
00:43:48,900 --> 00:43:52,500
disastrous and even why it is 
that government interventions 

767
00:43:52,500 --> 00:43:55,900
within a mostly market economy. 
Are often problematic. 

768
00:43:57,000 --> 00:44:00,900
That Central logic that he lays 
out about economic calculation, 

769
00:44:00,900 --> 00:44:05,200
I think is just absolutely, you 
know, crucial and genius. 

770
00:44:06,700 --> 00:44:11,100
Now, when Austrian start off 
with the idea that humans act, 

771
00:44:11,200 --> 00:44:13,900
what is the importance of? 
Recognizing that as a starting 

772
00:44:13,900 --> 00:44:16,100
point and what are its 
implications? 

773
00:44:17,400 --> 00:44:19,900
Well, its implications are to my
mind. 

774
00:44:19,900 --> 00:44:22,200
All of economic theory in a 
broad sense. 

775
00:44:22,200 --> 00:44:27,500
So economics to my mind, starts 
with this single premise mises 

776
00:44:27,500 --> 00:44:32,500
called it purposive Behavior. 
In more contemporary terms, we 

777
00:44:32,500 --> 00:44:36,700
might call it maximization or 
some people might call it 

778
00:44:36,700 --> 00:44:39,800
rationality. 
It's simply the idea that people

779
00:44:39,800 --> 00:44:43,300
have goals and they pursue those
goals as best. 

780
00:44:43,300 --> 00:44:46,100
They can given the constraints 
that they face. 

781
00:44:47,100 --> 00:44:52,500
That's it from that simple idea.
You'd arrive according to mises 

782
00:44:52,500 --> 00:44:57,600
and I which I agree you. 
Do you derive the basic, the 

783
00:44:57,600 --> 00:45:00,100
fundamental propositions of 
economic starting with the law 

784
00:45:00,100 --> 00:45:04,500
of demand and then moving from 
their out. 

785
00:45:04,800 --> 00:45:09,000
So, it's that, that premise is 
to my mind. 

786
00:45:09,000 --> 00:45:13,300
What actually is at the core of 
the economic approach to human 

787
00:45:13,300 --> 00:45:17,800
behavior. 
And it's developing. 

788
00:45:17,800 --> 00:45:20,300
Its theoretical implications is 
what gives us. 

789
00:45:21,600 --> 00:45:24,900
Economic theory and then the 
application of those principles 

790
00:45:24,900 --> 00:45:27,700
to what we observe to trying to 
understand the world is what 

791
00:45:27,700 --> 00:45:29,800
gives us what mrs. 
Called history or today. 

792
00:45:29,800 --> 00:45:33,200
We would just call, you know, 
applied economics, empirical 

793
00:45:33,200 --> 00:45:38,700
work and so it all starts from 
that from that core from that 

794
00:45:38,700 --> 00:45:42,400
first proposition. 
If you take out that 

795
00:45:42,400 --> 00:45:49,600
proposition, you enter a realm 
of to my mind, but you enter, a 

796
00:45:49,600 --> 00:45:53,700
great risk of ad hoc re in your 
approach to trying to understand

797
00:45:53,700 --> 00:45:56,300
human behavior. 
So what unites, what has 

798
00:45:56,300 --> 00:45:58,400
historically? 
This is beginning to change but 

799
00:45:58,400 --> 00:46:02,100
historically, what unites what 
unites the economic Economist 

800
00:46:02,100 --> 00:46:05,500
and the economic approach is 
that all of the theories that 

801
00:46:05,500 --> 00:46:08,400
were being developed and 
subsequently, the applications 

802
00:46:08,400 --> 00:46:10,700
were coming, were starting from 
that premise? 

803
00:46:11,000 --> 00:46:14,800
Maximization. 
If you get rid of that premise, 

804
00:46:14,800 --> 00:46:18,900
it opens up the door for all 
kinds of other stuff, you know, 

805
00:46:18,900 --> 00:46:22,600
it opens up the door for pushing
what at least traditionally has 

806
00:46:22,600 --> 00:46:26,700
been economics out the door and 
substituting it with something 

807
00:46:26,700 --> 00:46:32,900
like ideas from psychology 
which, you know, that's a fine 

808
00:46:32,900 --> 00:46:35,500
Enterprise if someone wants to 
do it, but to me it's not 

809
00:46:35,500 --> 00:46:38,100
particularly Illuminating. 
Of course, I would say that 

810
00:46:38,100 --> 00:46:39,800
because I'm quite partial to 
this. 

811
00:46:39,800 --> 00:46:43,900
Me Ceci and perspective, which 
insists upon Beginning from this

812
00:46:44,100 --> 00:46:48,700
first Axiom. 
Now, let's take the idea of 

813
00:46:48,700 --> 00:46:51,600
Human Action. 
How would you apply it to the 

814
00:46:51,600 --> 00:46:54,900
understanding of marginal 
utility and if you could explain

815
00:46:54,900 --> 00:47:02,400
what marginal utility is sure. 
So, this is a bit of a bit of a 

816
00:47:02,400 --> 00:47:06,800
bit of a of an unusual question 
in a way. 

817
00:47:06,800 --> 00:47:11,200
But so there are different 
approaches to this. 

818
00:47:11,200 --> 00:47:15,800
But this is the central idea. 
Is that from mises, is that each

819
00:47:16,200 --> 00:47:19,100
Channel unit of a homogeneous 
stock of goods. 

820
00:47:19,600 --> 00:47:23,900
Satisfies a less urgently felt 
desire than the preceding unit. 

821
00:47:24,800 --> 00:47:29,500
That's what his notion of 
marginal utility is and that 

822
00:47:29,500 --> 00:47:34,100
implies a downward sloping 
demand curve because it implies 

823
00:47:34,100 --> 00:47:37,200
that each additional unit. 
If you're holding everything 

824
00:47:37,200 --> 00:47:39,400
else constant of that good 
because you're using it to 

825
00:47:39,400 --> 00:47:44,300
satisfy a desire that you value 
less than the one that you 

826
00:47:44,300 --> 00:47:48,700
satisfied that the unit prior 
satisfied, means that your value

827
00:47:48,800 --> 00:47:52,600
of that good is declining. 
So the marginal part simply 

828
00:47:52,600 --> 00:47:55,600
refers to what is happening to 
your valuation. 

829
00:47:56,100 --> 00:47:59,500
As you as you consider, each 
successive unit of that 

830
00:47:59,500 --> 00:48:02,000
homogeneous stock of goods is 
that? 

831
00:48:02,600 --> 00:48:04,100
Yes. 
Yeah, it does. 

832
00:48:04,600 --> 00:48:08,400
I'm trying to take it from a 
different angle to see if 

833
00:48:08,400 --> 00:48:12,000
there's any Austrian explanation
for why. 

834
00:48:12,000 --> 00:48:15,400
Sometimes if the price of 
something increases you will see

835
00:48:15,400 --> 00:48:19,800
an increase in purchasing by 
people because it went from oh 

836
00:48:19,800 --> 00:48:22,200
this cheap thing. 
That anyone could have to. 

837
00:48:22,400 --> 00:48:25,500
Oh my gosh, if I pay for this, 
this will raise my social status

838
00:48:25,500 --> 00:48:28,400
and people know that I could 
afford this bottle of wine this 

839
00:48:28,400 --> 00:48:33,300
car, or this handbag does 
increased purchasing as a cause 

840
00:48:33,300 --> 00:48:36,200
of result of an increase in 
price, refute the Austrian 

841
00:48:36,200 --> 00:48:39,800
position. 
No, because in what we just did 

842
00:48:39,800 --> 00:48:43,100
in that in the example that you 
gave, we haven't considered a 

843
00:48:43,100 --> 00:48:47,600
homogeneous stock of goods a 
homogeneous stock of goods is a 

844
00:48:47,600 --> 00:48:50,700
stock of goods, for which each 
unit is equally serviceable. 

845
00:48:51,500 --> 00:48:57,100
If what we say is that, you 
know, when the in a much shorter

846
00:48:57,100 --> 00:48:59,700
way of saying that is we haven't
held everything else constant, 

847
00:49:00,200 --> 00:49:04,600
right? 
So if what we say is that, can 

848
00:49:04,600 --> 00:49:07,900
you give me your example? 
Once again, it's when when 

849
00:49:07,900 --> 00:49:11,800
people purchase something after 
the price increases because they

850
00:49:11,800 --> 00:49:15,700
see it as in them, increasing 
their social status or saying. 

851
00:49:15,700 --> 00:49:17,600
Oh, it must be more valuable. 
Yeah. 

852
00:49:17,600 --> 00:49:21,700
So what we would be saying in 
that case, is that At the value 

853
00:49:21,700 --> 00:49:25,300
of the good to me before the 
price check before and after the

854
00:49:25,300 --> 00:49:28,500
price change itself changed, 
right? 

855
00:49:28,500 --> 00:49:30,900
Which means that the good is not
equally serviceable. 

856
00:49:30,900 --> 00:49:36,600
So it's sort of like saying, 
it's sort of like, saying, what?

857
00:49:36,600 --> 00:49:40,000
I'm if I'm buying more of the 
good because it's price went up 

858
00:49:40,000 --> 00:49:42,500
because I'm trying to show 
people, you know, in the sort of

859
00:49:42,500 --> 00:49:45,700
the veblen idea, you know, I'm 
trying to show people that that 

860
00:49:45,700 --> 00:49:49,900
I'm wealthier then it's price, 
is actually part of the good and

861
00:49:49,900 --> 00:49:52,700
we've missed. 
What's on the X and y-axis, 

862
00:49:53,400 --> 00:49:55,800
right? 
So it has to be that we're 

863
00:49:55,800 --> 00:49:57,700
holding everything else 
constant. 

864
00:49:57,700 --> 00:50:01,500
When we derive this, this 
downward sloping demand curve. 

865
00:50:02,300 --> 00:50:05,200
You don't have to resort to 
something as exotic as that in 

866
00:50:05,200 --> 00:50:09,100
order to observe in the world. 
That when the price goes up, 

867
00:50:09,100 --> 00:50:13,000
people might people might buy 
more because in the intervening 

868
00:50:13,000 --> 00:50:16,000
period, lots of things that 
analytically we are holding 

869
00:50:16,000 --> 00:50:17,900
constant. 
We just gave one example, but 

870
00:50:17,900 --> 00:50:20,500
there are many potentially 
income for example. 

871
00:50:21,100 --> 00:50:24,100
That were holding constant when 
we're when we're thinking about 

872
00:50:24,100 --> 00:50:27,100
downward-sloping, demand are not
held constant in the rich in the

873
00:50:27,100 --> 00:50:30,900
real world. 
So insofar as one of those 

874
00:50:30,900 --> 00:50:33,700
things changes, we haven't 
violated the law of demand, 

875
00:50:33,700 --> 00:50:36,400
which said, there is this 
negative relationship between 

876
00:50:36,400 --> 00:50:38,400
price and quantity holding 
everything else. 

877
00:50:38,400 --> 00:50:41,100
Constant. 
What we've done is show that 

878
00:50:41,100 --> 00:50:45,300
everything else wasn't constant.
And that makes sense. 

879
00:50:45,500 --> 00:50:46,600
Yes. 
Yes, it does. 

880
00:50:47,700 --> 00:50:50,700
I'm going to have to re-watch it
10 times, but yes, but for the 

881
00:50:50,700 --> 00:50:52,600
time being it definitely makes 
sense. 

882
00:50:53,600 --> 00:50:57,300
A lot of people will say, you 
got to give it to the austrians.

883
00:50:57,300 --> 00:50:59,700
They were right about the 
business cycle. 

884
00:50:59,900 --> 00:51:02,300
It's been a lot of time and a 
lot of history. 

885
00:51:02,500 --> 00:51:03,600
Yes. 
We grant that they're right 

886
00:51:03,600 --> 00:51:06,400
about that. 
However, they do not appreciate 

887
00:51:06,400 --> 00:51:09,700
empiricism. 
And a lot of the studies that go

888
00:51:09,700 --> 00:51:12,100
into seeing how humans respond 
to things. 

889
00:51:12,100 --> 00:51:15,100
They think they could get all 
their answers simply by sitting 

890
00:51:15,100 --> 00:51:17,100
in the armchair. 
How do you respond to the 

891
00:51:17,100 --> 00:51:21,300
shortcomings of empiricism as an
approach to understanding 

892
00:51:21,300 --> 00:51:23,700
economics? 
I don't think there are 

893
00:51:23,700 --> 00:51:25,800
shortcomings. 
I think that there is a great 

894
00:51:25,800 --> 00:51:28,300
misunderstanding on a lot of 
different sides about the 

895
00:51:28,300 --> 00:51:33,700
relationship between empirical 
work, the relationship between a

896
00:51:33,800 --> 00:51:35,200
relationship of empirical 
worked. 

897
00:51:35,200 --> 00:51:38,300
Austrian economics, mises wrote 
a book which he published in 

898
00:51:38,308 --> 00:51:41,000
1957. 
He thought it was one of his 

899
00:51:41,000 --> 00:51:42,300
big. 
Maybe it's best book called 

900
00:51:42,300 --> 00:51:46,600
Theory and Street his point. 
He also talks about this, a 

901
00:51:46,607 --> 00:51:48,800
human action. 
But his point is, we develop 

902
00:51:48,800 --> 00:51:53,100
Theory which is an analytical, a
set of analytical constructs 

903
00:51:53,200 --> 00:51:55,800
like the law of demand, which is
why this to go back for a 

904
00:51:55,808 --> 00:51:57,300
moment, why it can't be 
violated. 

905
00:51:57,300 --> 00:52:01,400
Empirically the law of demand is
an analytical construct. 

906
00:52:02,400 --> 00:52:07,200
It's a tautology just like you 
can't empirically violate the 

907
00:52:07,200 --> 00:52:10,500
Pythagorean theorem. 
You can't empirically violate 

908
00:52:10,500 --> 00:52:14,800
the law of demand which is true.
By definition is point, was we 

909
00:52:14,800 --> 00:52:18,200
developed so so we develop these
analytical, we develop these. 

910
00:52:18,300 --> 00:52:22,500
These analytical Concepts in 
order to which is pure Theory. 

911
00:52:22,500 --> 00:52:26,100
That's the theory part that's 
economic theory in order to help

912
00:52:26,100 --> 00:52:29,400
us understand the world. 
The match is not ever going to 

913
00:52:29,408 --> 00:52:31,900
be perfect for reasons. 
That we just considered a moment

914
00:52:31,900 --> 00:52:33,600
to go. 
Other things can change. 

915
00:52:33,600 --> 00:52:36,400
This is a model, right? 
This is the world. 

916
00:52:37,100 --> 00:52:39,400
We're using the model to help us
understand the world. 

917
00:52:39,400 --> 00:52:42,900
But by definition, the model is 
not a literal description of 

918
00:52:42,900 --> 00:52:45,100
reality. 
It's highly simplified. 

919
00:52:45,100 --> 00:52:47,600
That's what, that's what makes 
it useful useful for helping us 

920
00:52:47,600 --> 00:52:50,300
understand the world. 
One of its features that makes 

921
00:52:50,300 --> 00:52:52,600
it useful for helping us 
understand the world. 

922
00:52:52,800 --> 00:52:56,300
So, his idea is, we develop 
economic theory, which itself 

923
00:52:56,300 --> 00:53:00,900
cannot be empirically 
empirically. 

924
00:53:00,900 --> 00:53:03,900
It doesn't make sense to 
Empirically, test it because 

925
00:53:03,900 --> 00:53:06,100
it's in, it's an analytical 
proposition, just like, it 

926
00:53:06,100 --> 00:53:07,700
doesn't make sense to 
empirically, test the 

927
00:53:07,700 --> 00:53:09,800
proposition that two plus two 
equals four. 

928
00:53:10,100 --> 00:53:13,500
That's an analytical proposition
like for the Pythagorean. 

929
00:53:13,500 --> 00:53:16,500
Theorem example that I gave, 
we're going to use that to 

930
00:53:16,500 --> 00:53:19,300
understand what is actually 
happening in reality. 

931
00:53:19,600 --> 00:53:21,800
That's the empirical part. 
That's his, what he calls 

932
00:53:21,800 --> 00:53:26,200
history. 
So empirical the whole reason 

933
00:53:26,200 --> 00:53:30,200
for theory is to do history. 
Okay. 

934
00:53:30,400 --> 00:53:34,200
So empirical work is crucially, 
important from an Austrian 

935
00:53:34,200 --> 00:53:36,800
perspective. 
It's the whole reason that we're

936
00:53:36,800 --> 00:53:38,800
developing the theory in the 
first place. 

937
00:53:38,800 --> 00:53:40,900
We're not developing the theory 
for its own sake. 

938
00:53:41,200 --> 00:53:43,700
We're developing a theory to 
understand the world, which 

939
00:53:43,700 --> 00:53:49,500
means doing empirical work. 
But because the law, the 

940
00:53:49,500 --> 00:53:53,100
principles, the foundational. 
Analytical structures of 

941
00:53:53,100 --> 00:53:56,500
Economics are theoretical the 
empirical work. 

942
00:53:56,500 --> 00:54:01,900
Can't ultimately test. 
Just those things, it can test 

943
00:54:02,100 --> 00:54:04,400
assumptions that go into our 
models. 

944
00:54:04,400 --> 00:54:06,400
It can tell us what other 
things, for example, weren't 

945
00:54:06,400 --> 00:54:10,700
being held constant or some 
other posited, aspect of your 

946
00:54:10,700 --> 00:54:12,200
model. 
For instance, the constraints 

947
00:54:12,200 --> 00:54:16,200
that you supposed didn't hold in
the way that you that, you 

948
00:54:16,200 --> 00:54:17,600
imagined that they did in the 
world. 

949
00:54:17,600 --> 00:54:20,600
It tells us those things which 
is why the model can still 

950
00:54:20,600 --> 00:54:25,000
produce testable implications, 
but the implications that are 

951
00:54:25,000 --> 00:54:31,000
tested are not Implications that
refer back to the print, the the

952
00:54:32,200 --> 00:54:34,100
analytical constructs 
themselves. 

953
00:54:34,700 --> 00:54:37,900
The law of demand is can't be 
violated because it is a 

954
00:54:37,900 --> 00:54:41,300
tautology. 
So observing people buy more 

955
00:54:41,400 --> 00:54:43,300
corn. 
After the price of corn Rises 

956
00:54:43,300 --> 00:54:44,400
doesn't violate the law of 
demand. 

957
00:54:44,400 --> 00:54:47,100
It might mean the law of demand.
Is it useful in that case? 

958
00:54:47,300 --> 00:54:49,400
Or is it useful in general? 
Maybe it means that but it 

959
00:54:49,400 --> 00:54:51,200
doesn't tell us that the law of 
demand is wrong. 

960
00:54:51,700 --> 00:54:53,600
It also does it? 
Tell us that are starting? 

961
00:54:53,600 --> 00:54:55,700
Axiom was wrong. 
Remember this? 

962
00:54:55,700 --> 00:54:57,900
These this did for the The same 
reason, it doesn't tell us that 

963
00:54:57,900 --> 00:55:00,900
that law is wrong. 
It doesn't say people aren't 

964
00:55:00,900 --> 00:55:03,400
maximizing. 
It just as we failed to specify 

965
00:55:03,400 --> 00:55:06,200
something correctly. 
In the particular model that we 

966
00:55:06,200 --> 00:55:10,800
use that that leverage these 
analytical devices that doesn't 

967
00:55:10,800 --> 00:55:13,400
comport exactly with reality 
which is why it's important. 

968
00:55:13,500 --> 00:55:17,100
It tells us that our model, some
aspect of our model is wrong, is

969
00:55:17,100 --> 00:55:20,000
wrong. 
So we're doing all of this 

970
00:55:20,000 --> 00:55:24,000
theoretical stuff in order to 
understand this empirical stuff.

971
00:55:24,800 --> 00:55:28,600
That's the first piece and the 
second piece is the empirical 

972
00:55:28,600 --> 00:55:32,000
stuff. 
Can refute some things, but it 

973
00:55:32,000 --> 00:55:35,400
can't refute, the purely 
analytical things, like the law 

974
00:55:35,400 --> 00:55:39,600
of demand. 
That is I think to my mind that 

975
00:55:39,600 --> 00:55:43,300
the more nuanced relationship 
between Theory and history or 

976
00:55:43,300 --> 00:55:47,500
between from an Austrian 
perspective between the 

977
00:55:47,500 --> 00:55:49,400
analytics and the empirical 
work. 

978
00:55:49,700 --> 00:55:53,400
But it doesn't it all say that 
empirical work isn't important. 

979
00:55:53,900 --> 00:55:57,500
It just says, here's the nature.
Here's what here's how empirical

980
00:55:57,500 --> 00:56:02,300
work is related. 
Back to the theory pieces. 

981
00:56:03,200 --> 00:56:06,000
Here's the here's how we 
conceive of the relationship 

982
00:56:06,000 --> 00:56:08,800
between them. 
And one of those things from the

983
00:56:08,800 --> 00:56:12,600
Austrian perspective, one of 
those relations Is that you 

984
00:56:12,600 --> 00:56:19,100
cannot use the, you cannot use 
empirical evidence to falsify, 

985
00:56:19,200 --> 00:56:21,600
analytical propositions? 
Because they are analytical 

986
00:56:21,600 --> 00:56:23,900
propositions. 
Does that make sense? 

987
00:56:23,900 --> 00:56:25,100
Yes. 
Yes, sir. 

988
00:56:25,700 --> 00:56:28,100
Two more questions for you. 
Thank you so much for being so 

989
00:56:28,100 --> 00:56:32,500
generous with your time. 
You had mentioned that a 

990
00:56:32,500 --> 00:56:35,500
general, understanding of 
Economics, Human Action 

991
00:56:35,500 --> 00:56:39,500
cost-benefit analysis can really
help you in almost every sector 

992
00:56:39,700 --> 00:56:42,200
of life. 
And how you interact with 

993
00:56:42,200 --> 00:56:44,500
people. 
What are some everyday examples 

994
00:56:44,500 --> 00:56:48,100
of how an understanding of 
Economics could could help 

995
00:56:48,100 --> 00:56:51,000
someone understand a situation 
or problem. 

996
00:56:51,800 --> 00:56:55,600
Well, I there are look a bit. 
I actually don't think of it. 

997
00:56:55,700 --> 00:56:57,800
I don't really think of it that 
way. 

998
00:56:57,800 --> 00:57:01,800
I think, economics. 
I think of Economics is a way 

999
00:57:02,000 --> 00:57:05,800
again for us as social 
scientists, to try and 

1000
00:57:05,800 --> 00:57:07,100
understand the behavior of other
people. 

1001
00:57:07,300 --> 00:57:10,300
People, I don't for the most 
part, think about. 

1002
00:57:11,400 --> 00:57:15,000
What comes out of Economics as 
not to say that, it never does 

1003
00:57:15,000 --> 00:57:17,000
because it certainly does. 
But I don't in general, think 

1004
00:57:17,000 --> 00:57:21,000
about it as lessons that people 
in the world can use to help 

1005
00:57:21,000 --> 00:57:23,900
them navigate the world better. 
Okay. 

1006
00:57:24,500 --> 00:57:26,300
I don't that's just not how I 
typically think about it. 

1007
00:57:26,300 --> 00:57:28,900
I don't think that, I don't 
think that that is it a would be

1008
00:57:28,900 --> 00:57:31,200
an accurate description for most
people in their in their 

1009
00:57:31,200 --> 00:57:36,400
everyday life. 
Having said that if you simply 

1010
00:57:36,400 --> 00:57:39,900
can think in terms of people 
having goals trying to pursue 

1011
00:57:39,900 --> 00:57:43,000
them as best they can. 
And understanding what their 

1012
00:57:43,000 --> 00:57:46,800
constraints are that people face
in trying to achieve their 

1013
00:57:46,800 --> 00:57:49,700
goals. 
Then you get a sense of you met 

1014
00:57:49,700 --> 00:57:52,800
in your in any given you, no 
interaction that you have with 

1015
00:57:52,800 --> 00:57:56,800
someone have a sense of what 
incentives are for them. 

1016
00:57:57,100 --> 00:58:00,100
And what would constitute a 
change in their incentives of 

1017
00:58:00,100 --> 00:58:02,800
some type? 
And you could in principle, use 

1018
00:58:02,800 --> 00:58:06,600
that information to understand 
how to interact with them better

1019
00:58:06,600 --> 00:58:08,900
or to manipulate them 
effectively. 

1020
00:58:08,900 --> 00:58:12,900
Essentially, you know, and we 
kind of do This, you know, we do

1021
00:58:12,900 --> 00:58:16,200
this with, you've got children. 
You'll know this happens or if 

1022
00:58:16,200 --> 00:58:20,300
you, you know, when you're 
growing up with friends, once 

1023
00:58:20,300 --> 00:58:25,500
you have an understanding of 
what people are after and what 

1024
00:58:25,500 --> 00:58:30,000
constitutes a relative price, 
change of one sort or another 

1025
00:58:30,000 --> 00:58:33,200
for them. 
Then you modify your behavior to

1026
00:58:33,500 --> 00:58:36,800
essentially create the kind of 
price change that is, you know, 

1027
00:58:36,800 --> 00:58:39,800
conducive to your interaction 
with that person. 

1028
00:58:40,200 --> 00:58:44,900
Now, that's a very That makes it
sound far more deliberately 

1029
00:58:44,900 --> 00:58:48,900
manipulative manipulative than 
it is, is all again. 

1030
00:58:48,900 --> 00:58:53,700
I think a way of describing of 
thinking about how people in 

1031
00:58:53,700 --> 00:58:55,600
part interact with each other 
rather than a yeah. 

1032
00:58:55,600 --> 00:58:57,700
It's not a conscious thing that 
I think that they're going 

1033
00:58:57,700 --> 00:59:01,300
through the conscious piece of 
it is, you know, businesses can 

1034
00:59:01,300 --> 00:59:03,600
hire consultants and Consultants
can tell them things. 

1035
00:59:03,600 --> 00:59:06,700
I don't think about the things 
that Consultants tell 

1036
00:59:06,700 --> 00:59:09,600
businesses, as being in the 
realm of social science, though.

1037
00:59:09,600 --> 00:59:14,800
It's practical. 
Ice, it's not-it's not of the 

1038
00:59:14,800 --> 00:59:20,100
sort of exercise that social 
scientists are engaged in for my

1039
00:59:20,100 --> 00:59:23,900
perspective, which is trying to 
understand and explain behavior 

1040
00:59:23,900 --> 00:59:26,500
rather than trying to help 
people improve their behavior. 

1041
00:59:26,500 --> 00:59:29,900
If that makes sense. 
Yes, sir and final question. 

1042
00:59:30,500 --> 00:59:33,400
If you are trying to judge 
someone and determine whether 

1043
00:59:33,400 --> 00:59:36,700
there are good or a bad 
Professor or teacher. 

1044
00:59:36,800 --> 00:59:39,800
What are some of the things you 
look for and would categorize 

1045
00:59:39,800 --> 00:59:41,500
someone would make you 
categorize. 

1046
00:59:41,600 --> 00:59:46,500
Has someone as a good teacher? 
Well, I do, I try not to, I try,

1047
00:59:46,500 --> 00:59:52,700
not to judge people on stuff 
like that, you know, really on 

1048
00:59:52,700 --> 00:59:55,200
anything but especially at stuff
like that, but I can tell you 

1049
00:59:55,700 --> 01:00:00,500
what I can tell you is what I 
have found to be in my own 

1050
01:00:00,500 --> 01:00:06,300
experience, the most 
inspirational and enlightening 

1051
01:00:06,300 --> 01:00:11,100
teachers, and professors for me.
And those people what they share

1052
01:00:11,100 --> 01:00:14,200
in common. 
Then I think most importantly in

1053
01:00:14,200 --> 01:00:16,900
addition, to obviously they 
understand the material, but I'm

1054
01:00:16,900 --> 01:00:20,900
going to take that for granted 
is that they have a passion for 

1055
01:00:20,900 --> 01:00:25,400
that material, you know, I 
sometimes will suggest to 

1056
01:00:25,400 --> 01:00:30,400
students that they should choose
their courses or even even what 

1057
01:00:30,400 --> 01:00:34,900
they're going to study based on 
professors and not, on course, 

1058
01:00:34,900 --> 01:00:37,700
subject matter, you know, you 
might think, well, I'm 

1059
01:00:37,700 --> 01:00:41,100
interested in, you know, and 
then pick some topic. 

1060
01:00:41,100 --> 01:00:41,700
You know, what? 
Ever. 

1061
01:00:41,700 --> 01:00:43,100
I'm interested in labor 
economics. 

1062
01:00:43,100 --> 01:00:44,800
So I should take the labor, 
economics course. 

1063
01:00:44,800 --> 01:00:48,900
It doesn't have to be economics.
Whatever field they're in and 

1064
01:00:49,500 --> 01:00:52,200
that's one way to do it. 
But in a weird way, you might 

1065
01:00:52,200 --> 01:00:56,500
actually be more likely to learn
about labor economics directly, 

1066
01:00:56,500 --> 01:01:02,500
or indirectly, for example, from
just taking a professor who you 

1067
01:01:02,500 --> 01:01:05,500
get a lot out of who you find to
be inspirational. 

1068
01:01:05,500 --> 01:01:08,600
And you find to be passionate 
about the material that 

1069
01:01:08,600 --> 01:01:11,400
ultimately may lead you to find 
out. 

1070
01:01:11,600 --> 01:01:15,100
Or about labor, economics than, 
if you took a course on, you 

1071
01:01:15,100 --> 01:01:19,100
know, labor economics, who was 
taught by somebody, who didn't 

1072
01:01:19,100 --> 01:01:21,000
who didn't resonate with you in 
that way. 

1073
01:01:21,400 --> 01:01:23,700
And that's another reason why I 
would hesitate to say there's 

1074
01:01:23,700 --> 01:01:27,400
good and bad because I think 
what resonates with different 

1075
01:01:27,500 --> 01:01:29,800
people different types of 
students is different. 

1076
01:01:30,300 --> 01:01:35,800
You know, for me What mattered 
most was was this this issue of 

1077
01:01:36,200 --> 01:01:39,600
being deeply passionate about, 
what that whatever it was that 

1078
01:01:39,600 --> 01:01:42,000
they were talking about and an 
Comics. 

1079
01:01:42,000 --> 01:01:46,100
What that meant was being 
deeply, passionate about the 

1080
01:01:46,100 --> 01:01:49,300
economic way of thinking. 
There's a lot of stuff that goes

1081
01:01:49,300 --> 01:01:52,900
on Under the Umbrella of 
Economics rights. 

1082
01:01:52,900 --> 01:01:57,700
And a lot of it, I think, is 
really not economics or not. 

1083
01:01:57,700 --> 01:02:03,900
Not the, what is in my mind, the
spirit or Essence of economics. 

1084
01:02:03,900 --> 01:02:10,200
And so finding someone, who, who
is passionate about that Spirit 

1085
01:02:10,200 --> 01:02:13,600
or Essence, as I Standard, which
is has this kind of necessity 

1086
01:02:13,600 --> 01:02:18,500
and flavor. 
You know, that's, that that's 

1087
01:02:18,500 --> 01:02:21,100
just incredibly know. 
I get I get so much. 

1088
01:02:21,500 --> 01:02:25,300
I still I get so much out of 
that from from other professors 

1089
01:02:25,300 --> 01:02:29,100
who you know, who have that and 
and that was true. 

1090
01:02:29,100 --> 01:02:33,200
Also as I was going through 
college and graduate school, mr.

1091
01:02:33,200 --> 01:02:34,800
Leeson. 
Thank you so much for your time.

1092
01:02:34,800 --> 01:02:38,000
The book is anarchy Unbound, why
self governance works better 

1093
01:02:38,000 --> 01:02:40,300
than you think? 
Thank you for watching Keith, 

1094
01:02:40,300 --> 01:02:44,000
and I don't tread on anyone. 
And the libertarian Institute.