1 00:00:00,400 --> 00:00:02,800 Welcome to Keith's night. Don't tread on anyone in the 2 00:00:02,800 --> 00:00:07,100 libertarian Institute today. I'm joined by David L bahnson. 3 00:00:07,100 --> 00:00:11,300 He is the chief investment officer and managing partner at 4 00:00:11,400 --> 00:00:15,200 the bahnsen group. His book is there's no free 5 00:00:15,200 --> 00:00:19,700 lunch, 250 economic truths. Here's my interview with David 6 00:00:19,700 --> 00:00:22,600 Bronson. What is economics and why is it 7 00:00:22,600 --> 00:00:30,300 important economics is the study of human action around the Ian 8 00:00:30,300 --> 00:00:36,400 of scarce resources, so as a basic definition goes, I think 9 00:00:36,400 --> 00:00:41,900 it captures the most important things in defining, the field 10 00:00:41,900 --> 00:00:46,900 that it is about human activity, and specifically, the way in 11 00:00:46,900 --> 00:00:51,900 which humans act around the reality of scarcity. 12 00:00:51,900 --> 00:00:56,300 So, those basic concepts pack quite a punch, but it does 13 00:00:56,300 --> 00:01:01,900 Define the field of economics. When people look at economics, 14 00:01:01,900 --> 00:01:05,200 they don't usually think that it's usually well GDP or the 15 00:01:05,200 --> 00:01:07,400 stock market. Can you walk us through how 16 00:01:07,400 --> 00:01:11,700 Robinson Caruso on the island all by himself faces economic 17 00:01:11,700 --> 00:01:15,300 decision-making? Yes of Robinson crusoe's on the 18 00:01:15,300 --> 00:01:19,600 island by himself. Then he is acting out of the 19 00:01:19,600 --> 00:01:26,600 objective of self-preservation as making decisions to allocate 20 00:01:26,600 --> 00:01:31,700 resources in the most rational. And preserving manner possible. 21 00:01:32,100 --> 00:01:34,800 The Robinson Crusoe is not on the island by himself. 22 00:01:34,800 --> 00:01:38,900 And is there with one other person and Robinson Crusoe has 23 00:01:38,900 --> 00:01:42,800 in his possession. Bananas the other person as 24 00:01:42,800 --> 00:01:48,100 water and they decide, they want to do a trade to provide food to 25 00:01:48,100 --> 00:01:53,400 one and beverage to the other on its own organically with no law 26 00:01:53,800 --> 00:01:59,000 with no regulation with no brick-and-mortar. 27 00:01:59,200 --> 00:02:03,600 Marketplace to individuals, freely act and what we call that 28 00:02:03,600 --> 00:02:09,199 is a market and our belief is that markets are not imposed 29 00:02:09,199 --> 00:02:14,900 legislated, created markets, organically happen when two 30 00:02:14,900 --> 00:02:21,700 people act and of course, their actions reflect their own 31 00:02:21,900 --> 00:02:26,500 sometimes subjective taste, sometimes their Necessities, but 32 00:02:26,500 --> 00:02:29,000 they certainly all come out of self-interest. 33 00:02:29,100 --> 00:02:34,300 Interest in the desire to either Elevate one's quality of life or 34 00:02:34,300 --> 00:02:38,400 in some cases like the deserted island scenario that us 35 00:02:38,400 --> 00:02:41,900 economists love using just to simply survive. 36 00:02:42,200 --> 00:02:46,200 But the point is is that defining economics Lee I have is 37 00:02:46,200 --> 00:02:50,200 very important and avoiding economics being defined the way 38 00:02:50,200 --> 00:02:54,800 that you alluded do is also very important because the second one 39 00:02:54,800 --> 00:02:59,000 starts to finding economics as econometrics GDP. 40 00:02:59,100 --> 00:03:04,300 Inputs, mathematical inputs and formulas and spreadsheets. 41 00:03:04,300 --> 00:03:08,800 They not only have they dehumanized the field but they 42 00:03:08,800 --> 00:03:13,200 have implicitly allowed for this mistaken idea. 43 00:03:13,200 --> 00:03:17,700 That somehow one can optimize economics by mere. 44 00:03:17,700 --> 00:03:23,400 Empirical observation by data inputs by feeds that they can 45 00:03:23,400 --> 00:03:29,200 depersonalize and essentially set the table for the Real 46 00:03:29,200 --> 00:03:33,500 planning of an economy. But the reality is that because 47 00:03:33,500 --> 00:03:38,200 economics is at its Central tenant about the human person, 48 00:03:38,600 --> 00:03:41,900 one cannot centrally planned such a thing and one certainly 49 00:03:41,900 --> 00:03:45,500 cannot reduce it to me or mathematical inputs. 50 00:03:45,500 --> 00:03:51,100 That are devoid of the, what, why, when where how human beings 51 00:03:51,100 --> 00:03:55,200 function? Please walk me through those two 52 00:03:55,200 --> 00:03:58,300 different approaches when it comes to something like the 53 00:03:58,500 --> 00:04:03,200 minimum, Or but, maybe State Health Care could be a better 54 00:04:03,200 --> 00:04:05,600 example. Some people will say, well, what 55 00:04:05,600 --> 00:04:09,000 we got to do is we got to look at a country like Sweden where 56 00:04:09,000 --> 00:04:12,000 the state's heavily involved in medical care and then other 57 00:04:12,000 --> 00:04:15,500 countries, maybe Singapore, Hong Kong and America and then we're 58 00:04:15,500 --> 00:04:18,399 going to study these the people in these countries. 59 00:04:18,600 --> 00:04:22,000 And then we're going to come up with a standard as to what 60 00:04:22,000 --> 00:04:24,600 constitutes good health care. And that's how we find out 61 00:04:24,600 --> 00:04:28,400 what's good health care is or the effects of the minimum wage. 62 00:04:28,400 --> 00:04:30,700 What is it? Alternative way to find out the 63 00:04:30,707 --> 00:04:34,100 effects of the minimum wage if we're not going to places and 64 00:04:34,100 --> 00:04:39,500 studying the results. Well, I think that in both 65 00:04:39,500 --> 00:04:43,800 cases, there's a sort of political connotation here that 66 00:04:43,800 --> 00:04:48,200 has to do with something very different than the basic 67 00:04:48,200 --> 00:04:51,200 economics of it. But to the extent that the 68 00:04:51,200 --> 00:04:55,700 question is just simply how we want to evaluate the efficacy of 69 00:04:55,700 --> 00:04:59,300 certain policies. I believe very much that we To 70 00:04:59,300 --> 00:05:02,900 observe policies. Now, of course, when I say that, 71 00:05:02,900 --> 00:05:07,200 I don't mean merely the intent, but I also mean the actual 72 00:05:07,200 --> 00:05:11,700 outcomes in the end, the product and the byproduct one of the 73 00:05:11,700 --> 00:05:16,800 limitations though, as Basquiat taught us with the broken window 74 00:05:16,800 --> 00:05:22,800 fallacy, that most economic fallacy comes from observing 75 00:05:22,800 --> 00:05:27,700 only that which is invisible and Not Invisible, observing that 76 00:05:27,700 --> 00:05:32,300 which is short-term and Not long term in visiting the effects on 77 00:05:32,300 --> 00:05:34,900 some, and not the effects on all. 78 00:05:35,300 --> 00:05:38,700 So to properly, understand things like the minimum wage. 79 00:05:38,700 --> 00:05:42,500 We first have to understand the concept of price Discovery. 80 00:05:42,800 --> 00:05:46,000 We have to understand the concept of the knowledge problem 81 00:05:46,200 --> 00:05:51,100 who has the knowledge to appropriately determine what the 82 00:05:51,100 --> 00:05:55,800 clearing price saw to be between producer and the consumer or in 83 00:05:55,800 --> 00:05:58,600 this case, an employer and a labor. 84 00:05:59,200 --> 00:06:02,200 Um, so there are sort of philosophical Concepts that have 85 00:06:02,200 --> 00:06:05,600 a social context. Why do they have a social 86 00:06:05,600 --> 00:06:08,500 context? Because economics is about human 87 00:06:08,500 --> 00:06:12,000 activity. It's about human cooperation. 88 00:06:12,400 --> 00:06:14,800 So it is not merely a condom metric. 89 00:06:15,100 --> 00:06:17,300 So I think there's a number of angles. 90 00:06:17,300 --> 00:06:19,100 I had taken answering your question. 91 00:06:19,500 --> 00:06:24,500 But how we evaluate policies has to be hold a stick visible and 92 00:06:24,500 --> 00:06:28,900 invisible short, and long-term some and all parties. 93 00:06:29,100 --> 00:06:32,700 He's impacted, but it also allows for empirical 94 00:06:32,700 --> 00:06:35,500 observation. We can look to the quality of 95 00:06:35,500 --> 00:06:37,100 healthcare. Now, of course the Quality 96 00:06:37,100 --> 00:06:40,000 Healthcare may very well be non-economic. 97 00:06:40,000 --> 00:06:43,900 And the way in which we look at it, one country may have a 98 00:06:43,900 --> 00:06:46,900 particular economic structure in place for how they pay for 99 00:06:46,900 --> 00:06:50,700 healthcare, but may have really bad health care because they 100 00:06:50,700 --> 00:06:53,800 don't have good. Doctors, another country may 101 00:06:53,800 --> 00:06:57,100 have a different mechanism for financing Health Care. 102 00:06:57,400 --> 00:07:00,900 Might be a really good one. My might be bad health care or 103 00:07:00,900 --> 00:07:03,000 good health care. Just again, depending on the 104 00:07:03,008 --> 00:07:05,900 medical outcome. So you have to have separation 105 00:07:05,900 --> 00:07:08,200 of categories in the way. You look at these things. 106 00:07:10,100 --> 00:07:13,000 I love the title. There's no free lunch because 107 00:07:13,000 --> 00:07:17,200 that gets to the heart of so many of the major issues. 108 00:07:17,200 --> 00:07:19,700 When it comes to, there should be free college. 109 00:07:19,700 --> 00:07:21,300 There should be free. K through 12. 110 00:07:21,300 --> 00:07:24,800 There should be free healthcare. It's like okay one side thinks 111 00:07:24,800 --> 00:07:27,000 that it should be free. That means everyone should have 112 00:07:27,000 --> 00:07:28,200 it. So that must mean there's 113 00:07:28,200 --> 00:07:31,100 another side where they just want to exclude people from 114 00:07:31,100 --> 00:07:34,200 having this thing, walk me through how you would talk to 115 00:07:34,200 --> 00:07:38,400 someone with the mindset of we can just make this free with the 116 00:07:38,407 --> 00:07:41,900 Federal Reserve. Is digits into people's accounts 117 00:07:42,100 --> 00:07:44,900 and this way everyone can buy this thing called college 118 00:07:44,900 --> 00:07:47,800 education. For example, how is that not 119 00:07:47,800 --> 00:07:50,100 free? If the state's printing the 120 00:07:50,100 --> 00:07:52,900 money into our accounts and we're simply buying the product 121 00:07:52,900 --> 00:07:56,800 for free. Well, first of all, the Federal 122 00:07:56,800 --> 00:07:59,600 Reserve is not doing that with college. 123 00:07:59,600 --> 00:08:06,900 The the government is state, is providing the funding and asking 124 00:08:06,900 --> 00:08:11,200 that it be paid back and the state the College providers are 125 00:08:11,200 --> 00:08:14,300 being paid the money. So it isn't funny money. 126 00:08:14,300 --> 00:08:18,500 It's real money. And the colleges are being paid 127 00:08:18,500 --> 00:08:20,700 that now. They could forgive the debt of 128 00:08:20,700 --> 00:08:23,900 the person who borrowed it, but it wouldn't change the fact that 129 00:08:23,900 --> 00:08:27,500 the money had already been spent, the colleges are not 130 00:08:27,500 --> 00:08:32,799 willing to provide the education for free, but, but regardless of 131 00:08:32,799 --> 00:08:35,200 that, I guess it's quite important. 132 00:08:35,200 --> 00:08:37,400 When we talk about there, being no free lunch. 133 00:08:37,400 --> 00:08:39,700 And when people talk about wanting either free medical 134 00:08:39,700 --> 00:08:42,200 care. Are free college free, this free 135 00:08:42,200 --> 00:08:45,100 that that of course, they don't mean free either. 136 00:08:45,200 --> 00:08:50,600 It's a matter of changing who the payor is and that's fine. 137 00:08:50,600 --> 00:08:53,300 But that is different than referring to something, actually 138 00:08:53,300 --> 00:08:56,600 being free. So then the question has to be, 139 00:08:56,800 --> 00:09:02,600 what is the optimal situation in socially and economically? 140 00:09:03,600 --> 00:09:06,400 Should the person who is receiving the good or service 141 00:09:06,400 --> 00:09:09,200 pay for it? Should someone else be compelled 142 00:09:09,300 --> 00:09:11,200 to pay? For someone else, receiving a 143 00:09:11,200 --> 00:09:14,000 good or service. We have traditionally in a 144 00:09:14,000 --> 00:09:17,200 market economy. And in a free Society recognized 145 00:09:17,200 --> 00:09:21,400 that the most logical payer of a service is the person receiving 146 00:09:21,400 --> 00:09:25,100 the service, and when they cannot afford it, we have needs 147 00:09:25,100 --> 00:09:29,300 based programs, which I believe in a very robust Society of 148 00:09:29,300 --> 00:09:33,900 Charity and philanthropy, but I do, but I don't confuse charity 149 00:09:33,900 --> 00:09:39,900 for compulsory activity when we force one to pay for the goods. 150 00:09:39,900 --> 00:09:43,200 Services of somebody else. We haven't prescribed anything 151 00:09:43,200 --> 00:09:47,100 charitable. We've prescribed something that 152 00:09:47,100 --> 00:09:52,400 is actually coercive and the opposite of how a normal person 153 00:09:52,400 --> 00:09:57,300 would Define charity, but when it comes to the question about 154 00:09:57,300 --> 00:10:03,500 free, what we have done is push prices up at levels. 155 00:10:03,500 --> 00:10:07,400 Never thought imaginable, all in the name of trying to create 156 00:10:07,400 --> 00:10:12,500 Freer Healthcare or higher. Education or lower cost of 157 00:10:12,500 --> 00:10:16,000 housing because when you subsidize something, you get 158 00:10:16,100 --> 00:10:19,900 more of it and we have subsidized three things at a 159 00:10:19,908 --> 00:10:24,600 massive governmental level at scale in the last 40 years. 160 00:10:25,000 --> 00:10:27,900 And these are the only three things in our entire society 161 00:10:28,400 --> 00:10:33,400 that have experienced substantial price inflation in a 162 00:10:33,400 --> 00:10:37,300 period that is mostly been known until the last year or so for a 163 00:10:37,300 --> 00:10:42,300 great moderation of inflation. And that is housing, higher, 164 00:10:42,300 --> 00:10:46,800 education, and Healthcare, not coincidentally, the only three 165 00:10:46,800 --> 00:10:50,300 things that the government subsidizes at scale. 166 00:10:51,500 --> 00:10:55,100 There's a girl, famous Antonin, Scalia quote, the transformation 167 00:10:55,100 --> 00:10:58,200 of Charity into legal, entitlement has produced donors 168 00:10:58,200 --> 00:11:01,300 without love and recipients without gratitude. 169 00:11:01,700 --> 00:11:06,100 We you explain taxation is coercive therefore putting it in 170 00:11:06,100 --> 00:11:09,500 a separate moral category. What are some of the secondary 171 00:11:09,500 --> 00:11:11,300 effects that Haslett would have us? 172 00:11:11,300 --> 00:11:14,700 Look at when it comes to the effects of having a welfare 173 00:11:14,700 --> 00:11:19,600 state Beyond also higher prices. Well, what I would say is the 174 00:11:19,600 --> 00:11:24,900 first The most important I couldn't live with all the 175 00:11:24,900 --> 00:11:27,100 others as bad as I think they are. 176 00:11:27,100 --> 00:11:31,900 And as unfair, as I think they are, the number one component. 177 00:11:31,900 --> 00:11:36,500 Is that the welfare state, Rob's the recipients of the welfare of 178 00:11:36,500 --> 00:11:40,500 their god-given dignity. I don't believe the welfare 179 00:11:40,500 --> 00:11:45,000 state is Affordable, but I'll put that aside for a moment. 180 00:11:45,100 --> 00:11:48,900 I don't believe the welfare state is just for people like 181 00:11:48,900 --> 00:11:51,100 you or me to be asked to foot the bill. 182 00:11:51,200 --> 00:11:55,300 Bill for the welfare cost provided to others. 183 00:11:55,700 --> 00:11:59,800 I don't think the welfare state is efficient that lack of a work 184 00:11:59,800 --> 00:12:03,700 requirement. The administration of it, the 185 00:12:03,700 --> 00:12:06,400 rampant abuse and fraud that takes place. 186 00:12:06,700 --> 00:12:10,100 But when you put aside affordability, Justice and cost 187 00:12:10,100 --> 00:12:14,600 as if those three things don't matter put those aside, you're 188 00:12:14,600 --> 00:12:19,900 still stuck with the real fatal error, which is that it treats 189 00:12:20,100 --> 00:12:22,800 people made in. Image of God as if they are, 190 00:12:22,800 --> 00:12:29,000 merely recipients of others largesse as opposed to actual 191 00:12:29,000 --> 00:12:33,800 productive, agents created with an ability to be Innovative. 192 00:12:33,800 --> 00:12:36,800 And to be productive. I think it robs them of their 193 00:12:36,800 --> 00:12:39,500 dignity. I think it's dehumanizing, and 194 00:12:39,500 --> 00:12:44,300 it is the great moral iniquity of the welfare state mentality. 195 00:12:45,500 --> 00:12:49,700 What do you say to the mindset? That the free market is the 196 00:12:50,100 --> 00:12:53,500 institution which Rob's people of their dignity by turning 197 00:12:53,500 --> 00:12:58,200 everyone and everything into a commodity that can be monetarily 198 00:12:58,200 --> 00:13:01,100 purchased. Yeah. 199 00:13:01,100 --> 00:13:03,900 Well, I think that, if I understand the question 200 00:13:03,900 --> 00:13:08,100 correctly, well, you know, repeat the first part of it for 201 00:13:08,100 --> 00:13:10,800 me. The wording you used is 202 00:13:10,800 --> 00:13:14,700 interesting. The free market system, turns 203 00:13:14,700 --> 00:13:18,900 everything into a commodity that can be purchased monetarily. 204 00:13:19,000 --> 00:13:23,000 Therefore, that is what really Rob's people of their dignity 205 00:13:23,100 --> 00:13:25,400 and Living. Well, spiritually, how do you, 206 00:13:25,400 --> 00:13:27,400 what do you say to that mindset? Yeah. 207 00:13:27,400 --> 00:13:31,000 I mean, of course on the merits of just the basic facts, it's 208 00:13:31,000 --> 00:13:34,300 totally untrue. The free market is completely 209 00:13:34,300 --> 00:13:37,900 incapable of turning love between a mother and daughter 210 00:13:37,900 --> 00:13:39,100 into a commodity. Aditi. 211 00:13:39,400 --> 00:13:42,600 The free market is completely incapable of turning. 212 00:13:42,600 --> 00:13:47,400 The act of human compassion, 14 towards their neighbor into a 213 00:13:47,400 --> 00:13:50,200 commodity. The free market is incapable of 214 00:13:50,200 --> 00:13:54,600 turning the virtues. Those great character traits 215 00:13:54,600 --> 00:13:58,200 that we exhibit in the way. We cooperate and transact and 216 00:13:58,200 --> 00:14:03,900 Society into Commodities to the extent that the free market 217 00:14:03,900 --> 00:14:08,600 takes goods and services that have values the free. 218 00:14:08,800 --> 00:14:14,000 Market enables free human beings operating, under the rule of law 219 00:14:14,100 --> 00:14:18,000 without coercion. It enables them to set up right 220 00:14:18,100 --> 00:14:22,200 pricing mechanism. That is a glorious thing. 221 00:14:22,200 --> 00:14:26,100 It provides a lot of information to people in the decision-making 222 00:14:26,100 --> 00:14:29,100 process. It enables us to enhance quality 223 00:14:29,100 --> 00:14:32,000 of life for others. It enables us to meet human 224 00:14:32,000 --> 00:14:34,700 needs in a more efficient and productive manner. 225 00:14:35,300 --> 00:14:38,600 It cannot make a commodity though out of scarcity. 226 00:14:38,700 --> 00:14:41,900 T. Now, water and sand are more 227 00:14:41,900 --> 00:14:45,800 available in our society than other raw materials that are 228 00:14:45,800 --> 00:14:48,600 much more rare. So, the market is unable to 229 00:14:48,600 --> 00:14:53,900 commoditize or, or solve for the problem of scarcity. 230 00:14:54,500 --> 00:14:58,700 And the market is certainly unable to make a commodity to 231 00:14:58,700 --> 00:15:02,600 turn into crass, that which is unclear ass virtue, 232 00:15:02,800 --> 00:15:06,800 relationships loves things of that nature. 233 00:15:07,200 --> 00:15:09,500 But what the market Does not do in. 234 00:15:09,500 --> 00:15:13,800 Those regards is exactly what the central planner attempts to 235 00:15:13,800 --> 00:15:18,900 do in those regards and fails miserably as the entire 20th 236 00:15:18,900 --> 00:15:24,400 century as a testimony to what I love about this book is that I 237 00:15:24,400 --> 00:15:28,100 could just turn to any page or any section and learn something 238 00:15:28,300 --> 00:15:32,500 in like 30 seconds or at least be reminded of some of the great 239 00:15:32,500 --> 00:15:36,600 wisdom that we have inherited. One of my favorite quotes was a 240 00:15:36,600 --> 00:15:38,600 Thomas L, call you chose the most. 241 00:15:38,700 --> 00:15:43,100 Most basic question is not, what is best but who shall decide 242 00:15:43,100 --> 00:15:45,100 what is best? Walk us through why that's 243 00:15:45,100 --> 00:15:49,500 significant, please. Well, I alluded earlier to what 244 00:15:49,600 --> 00:15:51,900 Friedrich Hayek called the knowledge problem. 245 00:15:51,900 --> 00:15:56,800 It is my belief that when decisions are made in in a 246 00:15:56,800 --> 00:16:02,600 market economy that are being made by people who have more 247 00:16:02,800 --> 00:16:07,900 time and place knowledge than a central planner ever could time 248 00:16:07,900 --> 00:16:11,700 and place. Circumstances that individual 249 00:16:11,700 --> 00:16:16,700 actors have better. Optics towards the situations 250 00:16:16,700 --> 00:16:20,900 that face them. That require decision-making, 251 00:16:21,400 --> 00:16:25,600 whereas the central planner because of the broad dispersion 252 00:16:25,600 --> 00:16:28,800 of knowledge in a society can never. 253 00:16:29,100 --> 00:16:34,500 Before they plan before they act have the knowledge necessary to 254 00:16:34,500 --> 00:16:38,500 make efficient decisions, but what soul is getting at there? 255 00:16:38,700 --> 00:16:41,900 There goes even beyond the knowledge problem, and it gets 256 00:16:41,900 --> 00:16:46,100 into the incentive problem. What one might call skin in the 257 00:16:46,100 --> 00:16:49,700 game. My View is that disinterested 258 00:16:49,700 --> 00:16:53,800 third parties, lack, both knowledge and incentive. 259 00:16:54,200 --> 00:16:58,900 And as nesam Talib is written in recent years skin, in the game, 260 00:16:58,900 --> 00:17:03,300 cannot be defined merely on the positive front, meaning those 261 00:17:03,300 --> 00:17:05,599 who will benefit from a good decision. 262 00:17:06,000 --> 00:17:09,200 You know, we look at trade and we say, well, you know, What 263 00:17:09,200 --> 00:17:12,599 this person's obviously buying something and paying for it 264 00:17:12,599 --> 00:17:15,500 because they think they're going to benefit from its receipt. 265 00:17:15,500 --> 00:17:21,099 However proper skin in the game, also requires someone to hurt, 266 00:17:21,200 --> 00:17:26,099 if something goes badly, if they make a bad decision and the 267 00:17:26,099 --> 00:17:31,000 decisions that get made need to bring pleasure when they're done 268 00:17:31,000 --> 00:17:32,900 well and pain, we're done poorly. 269 00:17:33,100 --> 00:17:35,800 And that's something that a disinterested third party, like 270 00:17:35,800 --> 00:17:44,300 a central planner is Totally incapable of bearing, their lack 271 00:17:44,300 --> 00:17:46,500 of skin in the game. Not only does not give them 272 00:17:46,500 --> 00:17:50,800 positive incentives for advancement, but it doesn't 273 00:17:50,800 --> 00:17:54,700 force them to deal with the negative repercussions of bad 274 00:17:54,700 --> 00:17:58,500 decisions. So lacking positive incentives, 275 00:17:58,500 --> 00:18:02,800 lacking negative incentives and lacking the basic knowledge to 276 00:18:02,800 --> 00:18:08,500 Steward the Affairs of society. I can think of No Greater error 277 00:18:08,500 --> 00:18:13,100 than And to delegate decision-making in society to 278 00:18:13,100 --> 00:18:16,200 someone in that position and that's exactly what central 279 00:18:16,200 --> 00:18:21,200 planners are lobbying for. What is the difference between 280 00:18:21,300 --> 00:18:25,800 the federal government giving power to the state governments 281 00:18:25,800 --> 00:18:29,700 who give power to the county governments versus wall, Mart 282 00:18:29,700 --> 00:18:35,000 CEO gives regional managers power and those regional 283 00:18:35,000 --> 00:18:37,400 managers give local managers power. 284 00:18:37,600 --> 00:18:40,900 The progressive might look at this and say this is all top 285 00:18:40,900 --> 00:18:45,000 down ruling but we need is the workers of the world to unite. 286 00:18:45,000 --> 00:18:48,600 So therefore both of those systems, the free market and the 287 00:18:48,600 --> 00:18:51,100 state. Of this knowledge problem, where 288 00:18:51,100 --> 00:18:53,300 some people have way too much power for things. 289 00:18:53,300 --> 00:18:57,800 They're totally distant from what is it? 290 00:18:58,000 --> 00:18:59,200 The difference between those two? 291 00:19:00,000 --> 00:19:04,000 Well, of course, the fundamental difference is that in the case 292 00:19:04,000 --> 00:19:10,000 of Walmart decentralizing their processes their operating out of 293 00:19:10,008 --> 00:19:14,100 a profit motive. If Walmart decides to put the 294 00:19:14,100 --> 00:19:18,500 power of Bentonville Arkansas over, what is the most 295 00:19:18,500 --> 00:19:21,600 profitable? Herbal, efficient, and, and 296 00:19:21,600 --> 00:19:26,400 beneficial to the bottom line of the company that not only can 297 00:19:26,400 --> 00:19:28,500 their board of directors, be removed. 298 00:19:28,500 --> 00:19:32,300 Can shareholders remove managers, can the board remove 299 00:19:32,300 --> 00:19:38,300 managers who make the conscious decision to utilize, and Steward 300 00:19:38,300 --> 00:19:45,700 and Harold power over profits. But but you also theoretically 301 00:19:45,700 --> 00:19:50,500 have a system in which the Bottom-up people that they're 302 00:19:50,600 --> 00:19:53,700 reporting down to our decentralizing power down. 303 00:19:53,700 --> 00:19:58,400 Do ideally, can tell them which decisions they can make most 304 00:19:58,400 --> 00:20:03,100 officially which ones they can in a power environment with the 305 00:20:03,100 --> 00:20:07,500 federal government example, no such structure exists. 306 00:20:07,700 --> 00:20:11,800 They cannot Steward the Affairs of the economy because they do 307 00:20:11,800 --> 00:20:14,900 not have the incentives to do. So. 308 00:20:15,400 --> 00:20:21,200 Now I happen to think that the analogy Is still on the margin, 309 00:20:21,500 --> 00:20:26,000 a good one for a basic business practices of subsidiarity. 310 00:20:26,400 --> 00:20:32,000 I like local Walmart's having decentralized authority to make 311 00:20:32,000 --> 00:20:37,100 decisions beneficial for their store, apart from the regional 312 00:20:37,100 --> 00:20:40,300 level, the state level and what you might call the national 313 00:20:40,700 --> 00:20:42,700 level. But of course in any 314 00:20:42,700 --> 00:20:46,100 organization, they're going to formulate a hierarchy a 315 00:20:46,100 --> 00:20:50,600 management system that is going The theoretically serve the 316 00:20:50,600 --> 00:20:54,900 needs of the shareholders and optimize, what makes most sense 317 00:20:54,900 --> 00:20:58,700 for the administration of the company's Mission? 318 00:20:58,700 --> 00:21:03,900 The delivery of goods or services to the extent a company 319 00:21:03,900 --> 00:21:05,700 becomes guilty of the same thing. 320 00:21:05,700 --> 00:21:09,500 I fear with the government, which I think happens in 321 00:21:09,500 --> 00:21:14,700 Corporate America all the time, there is recourse for such 322 00:21:14,700 --> 00:21:20,000 suboptimal Administration, you can and You see this all the 323 00:21:20,000 --> 00:21:22,800 time. You see shareholders lobbying 324 00:21:22,800 --> 00:21:26,400 for the removal of overly bureaucratic managers. 325 00:21:26,400 --> 00:21:30,100 Why do they want to do that? What is the thing that they are 326 00:21:30,100 --> 00:21:33,600 watching when they are underperforming because we take 327 00:21:33,600 --> 00:21:37,200 for granted in a for-profit entity that they have the 328 00:21:37,200 --> 00:21:43,600 ability to, and the obligation to maximize profits, to optimize 329 00:21:43,600 --> 00:21:47,300 the delivery of goods and services with the government. 330 00:21:47,300 --> 00:21:48,700 Everything is rooted in the exact. 331 00:21:49,000 --> 00:21:51,200 To sit. There is no assumption to be. 332 00:21:51,200 --> 00:21:55,700 We can debate what level of bureaucracy and Central Central 333 00:21:55,700 --> 00:21:59,600 planning is necessary within a private organization. 334 00:21:59,600 --> 00:22:03,400 But with the government we take for, granted that there is no 335 00:22:03,400 --> 00:22:06,600 need for such things. Subsidiarity is thrown out the 336 00:22:06,600 --> 00:22:09,700 window entirely, and I go back to my prior point. 337 00:22:09,700 --> 00:22:15,100 The reason is that power is held off as a means unto itself, an 338 00:22:15,100 --> 00:22:18,900 end unto itself and, and Company at Walmart. 339 00:22:19,000 --> 00:22:20,800 Could never get away with something like that. 340 00:22:20,800 --> 00:22:26,200 They would lose to competition and consumers and shareholders 341 00:22:26,200 --> 00:22:28,400 alike would hold them accountable. 342 00:22:28,400 --> 00:22:30,400 That's the beauty of a market economy. 343 00:22:32,000 --> 00:22:36,300 When people look at capitalism. It's usually seen as greedy 344 00:22:36,400 --> 00:22:39,900 dog-eat-dog. Very focused on materialism. 345 00:22:40,100 --> 00:22:43,800 You have a great quote in here. Capitalism is a system that 346 00:22:43,800 --> 00:22:49,100 begins not with taking but with giving to others, how can You 347 00:22:49,100 --> 00:22:53,300 say, such a thing capitalism's about greed and pursuing your 348 00:22:53,300 --> 00:22:57,700 self-interest. Well, I believe that capitalism 349 00:22:58,100 --> 00:23:04,200 properly understood is about self-interest and that market, 350 00:23:04,700 --> 00:23:08,200 free enterprise system that I advocate for Define 351 00:23:08,200 --> 00:23:14,000 self-interest as antithetical to greed greed, where one holds a 352 00:23:14,000 --> 00:23:19,800 callous disregard of one's neighbor, has no In whatsoever, 353 00:23:20,700 --> 00:23:23,400 in an economy of greed in a system. 354 00:23:23,400 --> 00:23:26,500 Agreed. There's no reason to stop where 355 00:23:26,500 --> 00:23:30,000 one may committee legality fraud, coercion. 356 00:23:31,000 --> 00:23:33,900 As long as one can properly. Avoid getting caught. 357 00:23:35,000 --> 00:23:38,700 It's devoid of any system of morals or Transcendent truth. 358 00:23:40,000 --> 00:23:43,100 Generally in a market, economy is difficult to do because one 359 00:23:43,100 --> 00:23:46,500 will get caught, but to the extent one, could just be become 360 00:23:46,500 --> 00:23:48,300 very clever, at not getting caught. 361 00:23:49,200 --> 00:23:53,700 They violate a basic code of morality and I believe that when 362 00:23:53,700 --> 00:23:57,800 we talk about self-interest that we need to talk about it, in the 363 00:23:57,800 --> 00:24:02,800 burkean sense of an enlightened self-interest that cares about 364 00:24:02,800 --> 00:24:05,900 community that holds in high regard. 365 00:24:05,900 --> 00:24:10,700 The concept of moral formation. So I Don't hold to a highly 366 00:24:10,700 --> 00:24:15,500 secularized or humanistic sense of morality. 367 00:24:15,500 --> 00:24:19,300 I desire that are market economy, be administered with a 368 00:24:19,300 --> 00:24:22,500 greater pursuit of virtue and character and discipline. 369 00:24:23,200 --> 00:24:30,400 However, in the state and encounter capitalist systems, I 370 00:24:30,400 --> 00:24:33,700 remain mystified by one by one believes that those things 371 00:24:33,700 --> 00:24:39,000 operate, devoid of greed by the obsession, with a power. 372 00:24:39,100 --> 00:24:42,700 Religion over economic self-interest. 373 00:24:43,100 --> 00:24:49,000 It does not strike me that we have achieved the Holy Grail of 374 00:24:49,000 --> 00:24:54,000 good moral living. The former Soviet Union. 375 00:24:54,300 --> 00:25:04,200 The CCP in China State actors that generally run on autocratic 376 00:25:04,200 --> 00:25:09,000 basis, that are tyrannies, have not. 377 00:25:09,100 --> 00:25:14,000 Additionally been known for their great benevolence where I 378 00:25:14,000 --> 00:25:18,300 say that market economy is a mode where we can serve our 379 00:25:18,300 --> 00:25:20,600 neighbor. Is it to tala G? 380 00:25:21,500 --> 00:25:26,800 It is self a testing Lee true that in a market economy. 381 00:25:27,200 --> 00:25:32,300 One must first identify, then meet the needs of another human. 382 00:25:32,700 --> 00:25:35,700 In order to have access to a Profit Stream. 383 00:25:36,500 --> 00:25:40,200 One can do so more efficiently than Someone else and turn the 384 00:25:40,200 --> 00:25:45,200 knobs up or down on the way in which they exhibit greater 385 00:25:45,200 --> 00:25:49,400 service, to others greater patients with employees, higher 386 00:25:49,400 --> 00:25:54,300 regard, for their personal lives, greater amount of 387 00:25:55,100 --> 00:25:58,500 flexibility, in the way one deals with a vendor, the 388 00:25:58,500 --> 00:26:03,400 specific decisions will still operate out of a constructive 389 00:26:03,400 --> 00:26:08,800 freedom and yet allow for, I true morality. 390 00:26:09,100 --> 00:26:14,600 That is not compulsory, which is the only kind of morality one 391 00:26:14,600 --> 00:26:18,300 that is not coerced. But fundamentally, I go back to 392 00:26:18,300 --> 00:26:21,600 the two people on an island. We spoke about at the beginning 393 00:26:21,600 --> 00:26:26,400 of our talk that if economics is the study of human action. 394 00:26:27,300 --> 00:26:30,100 You cannot avoid the fact that human beings are going to have 395 00:26:30,100 --> 00:26:32,800 to interact with one another in a market economy. 396 00:26:33,300 --> 00:26:39,000 And that what most but still imperfectly promotes. 397 00:26:39,100 --> 00:26:43,700 Also cooperation is a system in which one benefits by meeting 398 00:26:43,700 --> 00:26:47,700 the needs of others. Great points there. 399 00:26:47,800 --> 00:26:51,900 It's not like you look at Congress and say, well, those 400 00:26:51,900 --> 00:26:54,400 are the selfless people in society. 401 00:26:54,900 --> 00:26:58,400 Do they think that Congress like works at a monastery and is a 402 00:26:58,400 --> 00:27:03,200 bunch of volunteers, who refused to take any money for themselves 403 00:27:03,200 --> 00:27:07,600 or or any fame or any Fortune of of course not? 404 00:27:07,700 --> 00:27:09,800 That's why books like this are so. 405 00:27:09,900 --> 00:27:13,500 So, vitally important, you mentioned the work of Deirdre 406 00:27:13,500 --> 00:27:16,300 McCloskey a number of times throughout this book. 407 00:27:16,800 --> 00:27:20,200 Where they're generally getting into what's referred to as the 408 00:27:20,200 --> 00:27:24,000 hockey stick of mankind. Where you have very little 409 00:27:24,000 --> 00:27:28,500 economic growth up until say around the year 1800 and you 410 00:27:28,500 --> 00:27:32,000 have drastic growth after that. What do you say is? 411 00:27:32,000 --> 00:27:35,800 What caused the hockey stick of economic growth throughout human 412 00:27:35,800 --> 00:27:38,700 history. Well, there really isn't any 413 00:27:38,900 --> 00:27:41,600 ambiguity about what caused the hockey. 414 00:27:41,600 --> 00:27:45,800 Stick growth after the enlightenment was indeed. 415 00:27:45,800 --> 00:27:47,800 What? What Saskia, first is the great 416 00:27:47,800 --> 00:27:52,500 enrichment, is the embracing of a modern economy after the 417 00:27:52,500 --> 00:27:57,200 development of classical economics, that allowed basic 418 00:27:57,200 --> 00:28:03,900 concepts of private property, and individual, human Liberty to 419 00:28:03,900 --> 00:28:08,000 become some of the guiding precepts of how Society was 420 00:28:08,000 --> 00:28:12,100 organized in the United Kingdom and eventually the United 421 00:28:12,100 --> 00:28:16,400 States. So the Anglo World adopted 422 00:28:16,500 --> 00:28:22,600 Certain social contracts that allowed for the rapid promotion 423 00:28:22,600 --> 00:28:26,500 of a market economy and therefore greater human 424 00:28:26,500 --> 00:28:31,100 flourishing to come with the classical school of Economics 425 00:28:31,100 --> 00:28:34,800 that rejected. The mercantilism you had prior 426 00:28:34,800 --> 00:28:41,300 basic, Birthright views to economics to feudalism. 427 00:28:42,200 --> 00:28:46,300 There were four centuries entire. 428 00:28:46,600 --> 00:28:51,400 Systems of thought that were incredibly limiting and the 429 00:28:51,400 --> 00:28:56,600 ability to meet human needs and benefit from meeting human needs 430 00:28:56,900 --> 00:29:00,600 through the development of Greater goods and services. 431 00:29:01,200 --> 00:29:07,100 When you all of a sudden married, the ideologies that 432 00:29:07,100 --> 00:29:11,500 stemmed out of the Enlightenment, the social 433 00:29:11,500 --> 00:29:15,700 contract, and of course, the kind of development of the 434 00:29:15,700 --> 00:29:20,700 American Experiment in particular, you you really 435 00:29:20,700 --> 00:29:25,300 poured accelerant on the idea of economic enrichment coming out 436 00:29:25,300 --> 00:29:28,800 of human Freedom shortly thereafter. 437 00:29:29,000 --> 00:29:33,700 Let's call it 100 years. The this incredible ideological 438 00:29:33,700 --> 00:29:37,500 phenomena was met with the Industrial Revolution. 439 00:29:38,200 --> 00:29:41,300 Now the it is my argument that since the Garden of Eden. 440 00:29:41,300 --> 00:29:44,700 This has been the story of Economics, which is raw 441 00:29:44,700 --> 00:29:48,300 materials that already. Stood being met with human 442 00:29:48,300 --> 00:29:53,100 Ingenuity, resulting in advancement of civilization. 443 00:29:53,500 --> 00:29:57,300 But there's no question that after the ideas of the American 444 00:29:57,300 --> 00:30:00,500 experiment were met with the technological. 445 00:30:00,500 --> 00:30:03,100 Advancements of Industrial Revolution. 446 00:30:03,500 --> 00:30:07,300 That we really saw some of the greatest hockey, stick growth, 447 00:30:07,700 --> 00:30:11,500 this great enrichment. The mycoskie refers to in the 448 00:30:11,500 --> 00:30:14,500 19th century. Ever thought possible, and we 449 00:30:14,500 --> 00:30:16,300 haven't exactly slowed, the pace. 450 00:30:16,500 --> 00:30:19,500 It's in the 20th and now 21st century is either. 451 00:30:20,900 --> 00:30:25,100 I'm trying to get a solid definition of Regulation. 452 00:30:25,100 --> 00:30:29,500 I think the closest thing that I came across was a what was an 453 00:30:29,500 --> 00:30:32,000 article at Cato. The original meaning of 454 00:30:32,000 --> 00:30:34,400 regulate. As in the Constitutional 455 00:30:34,400 --> 00:30:38,000 authorization, to regulate interstate commerce was to make 456 00:30:38,000 --> 00:30:41,700 regular in this sense regulations, provide customers 457 00:30:41,700 --> 00:30:45,500 information and help people make informed decisions so that they 458 00:30:45,500 --> 00:30:48,500 can protect themselves from dubious products. 459 00:30:49,000 --> 00:30:51,200 When you hear that. And is there anything that 460 00:30:51,200 --> 00:30:54,300 screams out to you? This is a unique thing that only 461 00:30:54,300 --> 00:30:58,800 the states can achieve or can we achieve regulation in the 462 00:30:58,800 --> 00:31:04,000 voluntary sector as well? Oh II believe that significant 463 00:31:04,000 --> 00:31:09,600 amount of Regulation can and in fact is obtained in the private 464 00:31:09,600 --> 00:31:14,200 sector that before we feel the need to provide a bureaucratic 465 00:31:14,200 --> 00:31:20,400 definition or a sort of administrative definition to To 466 00:31:20,400 --> 00:31:24,400 regulation we have to remember what a market is producer. 467 00:31:24,400 --> 00:31:29,700 And a consumer are engaged in regulation with one another, the 468 00:31:29,700 --> 00:31:33,900 ability to not buy a product the ability to adjust Jamaica, 469 00:31:33,900 --> 00:31:37,500 formulated decision around one's reputation. 470 00:31:38,100 --> 00:31:42,500 Now, you can make this more formal with Good Housekeeping, 471 00:31:42,500 --> 00:31:48,400 seals of approval with voluntary trade groups with Consumer 472 00:31:48,500 --> 00:31:52,500 Reports. Journals trade Publications. 473 00:31:53,000 --> 00:31:57,500 There's any number of forms in which privatized regulation 474 00:31:57,500 --> 00:32:01,600 takes place. But where we talk about State 475 00:32:01,600 --> 00:32:04,600 regulation, we get into the Restriction of activity. 476 00:32:05,400 --> 00:32:08,400 And again, there may be some forms of Regulation that we 477 00:32:08,400 --> 00:32:13,600 decide we will tolerate as a society, you know, for example, 478 00:32:13,600 --> 00:32:17,500 that we're not going to win a free and moral Society allow 479 00:32:17,500 --> 00:32:22,700 people to refuse to serve. A good or service to someone 480 00:32:22,700 --> 00:32:24,900 based on the color of their skin. 481 00:32:24,900 --> 00:32:28,600 There's a certain civil rights regulation that we've said, we 482 00:32:28,600 --> 00:32:33,900 will allow as a society. And and then working downhill 483 00:32:33,900 --> 00:32:37,800 from that. There may be other forms of 484 00:32:37,800 --> 00:32:42,400 Regulation less striking less obvious than those of civil 485 00:32:42,400 --> 00:32:47,600 rights, that may or may not have a place, but fundamentally most 486 00:32:47,600 --> 00:32:54,200 regulation is As the restrictions around voluntary 487 00:32:54,200 --> 00:32:59,700 exchange that are imposed by a disinterested third party. 488 00:33:00,900 --> 00:33:08,600 So our basic assumption around regulation should be one of high 489 00:33:08,600 --> 00:33:12,100 skepticism. That's not to say that all 490 00:33:12,100 --> 00:33:15,300 regulation is bad, but it is certainly to say that most 491 00:33:15,300 --> 00:33:21,600 regulation is unnecessary and that Human Action being what it 492 00:33:21,600 --> 00:33:24,800 was what it is. All humans are engaged in a 493 00:33:24,800 --> 00:33:29,300 constant Act of Regulation themselves and yet they're doing 494 00:33:29,300 --> 00:33:32,500 so with more knowledge. More incentives than a 495 00:33:32,500 --> 00:33:37,500 disinterested, third party, like, Washington DC is doing in 496 00:33:37,500 --> 00:33:41,900 1986 Thomas, Soul wrote a book, civil rights rhetoric verse 497 00:33:41,900 --> 00:33:44,100 regality. I believe is the title and he 498 00:33:44,100 --> 00:33:47,300 said that proceeding, the Civil Rights Movement. 499 00:33:47,300 --> 00:33:51,100 You saw black literacy Skyrocket, you saw black 500 00:33:51,100 --> 00:33:54,100 entrance into professional Fields, increase at a higher 501 00:33:54,100 --> 00:33:58,400 rate than they did after the Civil Rights Act, after before 502 00:33:58,400 --> 00:34:00,700 the Civil Rights Act in affirmative action, so Ed. 503 00:34:00,700 --> 00:34:03,100 You saw a black family, staying together more. 504 00:34:03,100 --> 00:34:07,100 You also saw an increase in income among black households at 505 00:34:07,100 --> 00:34:09,699 a higher rate than after affirmative action. 506 00:34:09,699 --> 00:34:13,500 Legislation took place. Do you, are you of the opinion 507 00:34:13,600 --> 00:34:16,199 that this need for discrimination? 508 00:34:16,199 --> 00:34:20,000 Legislation is actually unjustifiable or would you 509 00:34:20,000 --> 00:34:22,900 support something like affirmative action and civil 510 00:34:22,900 --> 00:34:25,500 rights legislation? Well again, I think that there 511 00:34:25,500 --> 00:34:30,100 were about two totally different things, the Civil Rights Act of 512 00:34:30,100 --> 00:34:37,100 1964. 64 that prohibited one in the Public Square from refusing, 513 00:34:37,100 --> 00:34:39,699 service to a member of another race. 514 00:34:40,100 --> 00:34:43,500 I think, is in the public interest of a free and virtuous 515 00:34:43,500 --> 00:34:47,000 Society, that's categorically different than affirmative 516 00:34:47,000 --> 00:34:49,199 action. In fact, I would argue 517 00:34:49,199 --> 00:34:56,900 affirmative action in most examples or administration's 518 00:34:56,900 --> 00:35:00,100 thereof is itself. Highly discriminatory. 519 00:35:01,000 --> 00:35:08,200 It calls for by definition, the determination of a policy based 520 00:35:08,200 --> 00:35:13,100 on the color of one's skin. And and so to me is very counter 521 00:35:13,100 --> 00:35:16,800 to the notion of civil rights that is looking for a more, 522 00:35:16,800 --> 00:35:23,500 genuinely free and open Society. So I would bring a very 523 00:35:23,500 --> 00:35:28,300 different point of view about civil rights, then as then I 524 00:35:28,300 --> 00:35:33,000 would with affirmative action. But the role of the state, in 525 00:35:33,000 --> 00:35:37,600 these things ought to be very limited in case of affirmative 526 00:35:37,600 --> 00:35:41,400 action, which is race-based quota systems. 527 00:35:41,700 --> 00:35:44,900 It ought to be none at all. And the reason is not only 528 00:35:44,900 --> 00:35:48,800 because the state is a bad administrator of such things, 529 00:35:48,800 --> 00:35:54,700 but that because the very notion in my opinion, generates race 530 00:35:54,700 --> 00:35:59,700 based outcomes as opposed to meritorious ones which ought to 531 00:35:59,700 --> 00:36:03,200 be The pursuit of a racially, just Society. 532 00:36:03,600 --> 00:36:08,000 If I had to say my favorite quote of yours in this book, 533 00:36:08,000 --> 00:36:10,600 that there were so many to choose from, but use 534 00:36:10,600 --> 00:36:13,800 specifically said, the vast majority of poor economic 535 00:36:13,800 --> 00:36:16,500 policies. We have seen over the years do 536 00:36:16,500 --> 00:36:19,600 not come from those who disbelieved key principles, but 537 00:36:19,600 --> 00:36:23,000 rather those who fail to consistently apply the 538 00:36:23,000 --> 00:36:26,600 principles, they claim to believe in to matters of 539 00:36:26,600 --> 00:36:30,000 application. Please give me an example of a 540 00:36:30,000 --> 00:36:33,600 principle that someone believes in but does not. 541 00:36:33,700 --> 00:36:36,100 Not apply it. Consistently where? 542 00:36:36,800 --> 00:36:41,900 Where they absolutely should. Yeah, there are so many examples 543 00:36:41,900 --> 00:36:44,400 here. We can take the remainder of our 544 00:36:44,400 --> 00:36:48,800 time. I think a great prevalent one in 545 00:36:48,900 --> 00:36:54,300 kind of public policy has to do with Healthcare, where one says, 546 00:36:54,600 --> 00:36:58,300 they desire better Quality Healthcare and they desire that 547 00:36:58,300 --> 00:37:02,200 to be at a lower price and they've already established they 548 00:37:02,200 --> 00:37:07,300 believe in principles of supply and demand and competition. 549 00:37:07,900 --> 00:37:11,800 And yet then That when it comes to health care for some totally 550 00:37:11,800 --> 00:37:17,300 inexplicable reason believes that competition reputation 551 00:37:17,600 --> 00:37:24,300 Market forces would not produce the higher quality of service 552 00:37:24,300 --> 00:37:28,600 and lower cost that a market economy, produces and every 553 00:37:28,600 --> 00:37:32,600 other aspect. And so one is sort of making an 554 00:37:32,600 --> 00:37:35,700 exception to the rule. Without justification. 555 00:37:36,400 --> 00:37:38,900 I do believe this also to be the case of minimum. 556 00:37:39,000 --> 00:37:43,000 Wage laws where one says, we believe that a price is to be 557 00:37:43,000 --> 00:37:48,000 discovered between a voluntary to voluntary actors. 558 00:37:48,000 --> 00:37:53,000 Neither, one of which is being is operating under a gun with 559 00:37:53,000 --> 00:37:56,700 that, with with no threat of coercion or compulsion. 560 00:37:57,500 --> 00:38:00,500 And yet we believe that somebody in Washington d.c. 561 00:38:01,000 --> 00:38:07,700 Should set the clearing price for a wage between a worker at a 562 00:38:07,700 --> 00:38:12,000 restaurant. In South Carolina and the new 563 00:38:12,200 --> 00:38:17,600 owner of a restaurant in South Carolina and it strikes me as a 564 00:38:17,600 --> 00:38:19,600 grotesque violation or principle. 565 00:38:19,600 --> 00:38:23,100 That one would otherwise recognize they believe in. 566 00:38:23,600 --> 00:38:26,900 Now I can go on and on two principles around credit and 567 00:38:26,900 --> 00:38:31,300 sound money principles around the optimal allocation of 568 00:38:31,300 --> 00:38:35,600 resources. I have no problem with people 569 00:38:35,600 --> 00:38:38,800 who believe in the cause of a free enterprise. 570 00:38:39,000 --> 00:38:44,400 Economy, recognizing the need for some legitimate function of 571 00:38:44,400 --> 00:38:49,700 government, but when one operates as, if the expenditures 572 00:38:49,700 --> 00:38:53,800 of even the legitimate functions of government, do not come at 573 00:38:53,800 --> 00:38:58,200 some cost that they do not extract from what would 574 00:38:58,200 --> 00:39:03,400 otherwise be a more optimal allocation of resources by 575 00:39:03,400 --> 00:39:05,300 extracting from the private sector. 576 00:39:05,300 --> 00:39:08,400 We at least have to recognize the principle. 577 00:39:09,000 --> 00:39:13,700 That it is a sort of necessary, evil, in a free society. 578 00:39:14,000 --> 00:39:16,400 And I think that that's where we get ourselves in a lot of 579 00:39:16,400 --> 00:39:18,000 trouble. Forget these general, 580 00:39:18,000 --> 00:39:23,500 time-tested principles. Alexandria Cascio Cortez. 581 00:39:23,500 --> 00:39:27,100 And Bernie Sanders went to go speak to a group of Amazon 582 00:39:27,100 --> 00:39:31,000 employees who were attempting to form a union. 583 00:39:31,300 --> 00:39:34,000 And the general statement was were the ones. 584 00:39:34,000 --> 00:39:37,200 Here we show up. We do all the work Bezos. 585 00:39:37,200 --> 00:39:41,100 Basically just sits back and collects a check and all these 586 00:39:41,100 --> 00:39:44,300 people are making billions. We need more money. 587 00:39:44,600 --> 00:39:48,100 What would you say to someone? Who says the workers who show up 588 00:39:48,100 --> 00:39:50,900 to the physical facility. They should be the decision. 589 00:39:51,100 --> 00:39:55,400 Makers, not someone like Bezos who doesn't do any work. 590 00:39:56,900 --> 00:40:01,600 Well, of course, every it's barely worthy of a response. 591 00:40:01,600 --> 00:40:08,100 But to be as gracious as I can be, the work that Bezos did was 592 00:40:08,100 --> 00:40:12,300 in formulating, the entire architecture of the business to 593 00:40:12,300 --> 00:40:18,900 allow for them to be there to begin with and so the principles 594 00:40:18,900 --> 00:40:22,700 of private property. Extended the ownership of a 595 00:40:22,707 --> 00:40:26,700 business and the right to make decisions about the direction of 596 00:40:26,700 --> 00:40:30,500 a business. And the labor also has 597 00:40:30,500 --> 00:40:34,600 tremendous rights. Number one of, which is the 598 00:40:34,600 --> 00:40:40,300 right of portability, the right to go work somewhere else and 599 00:40:40,300 --> 00:40:44,400 utilize and leverage Market forces to their own advantage. 600 00:40:44,900 --> 00:40:49,500 And we're company a is not treating them well or giving 601 00:40:49,500 --> 00:40:52,900 them enough role in These are giving them long enough, lunch 602 00:40:52,900 --> 00:40:56,700 breaks, or paying them generously enough in salary or 603 00:40:56,700 --> 00:41:00,700 bonus compensation, or, or stock options, or whatever. 604 00:41:00,700 --> 00:41:05,100 The case may be Company B or companies C or company D may 605 00:41:05,100 --> 00:41:06,400 very well. Choose to do. 606 00:41:06,400 --> 00:41:11,700 So, and employees, as free market actors made in the image 607 00:41:11,700 --> 00:41:15,500 of God, have the ability to take advantage of choice and 608 00:41:15,500 --> 00:41:18,900 competition to pursue a different outcome. 609 00:41:18,900 --> 00:41:20,900 They cannot be compelled to work for a company. 610 00:41:21,000 --> 00:41:25,700 Company treating them poorly, certain companies, choose in 611 00:41:25,700 --> 00:41:30,100 their own management structure and corporate philosophy to 612 00:41:30,500 --> 00:41:33,900 allow greater decision-making from employees than other 613 00:41:33,900 --> 00:41:37,300 companies do sometimes, it's circumstantial. 614 00:41:37,300 --> 00:41:42,000 Sometimes, it's even token, but the fact of the matter is that 615 00:41:42,000 --> 00:41:46,800 the general primary responsibility comes down to the 616 00:41:46,800 --> 00:41:50,900 management of a business and to try to take away. 617 00:41:51,000 --> 00:41:54,500 That right and have a disinterested third party, 618 00:41:54,900 --> 00:41:59,800 determine who should be the decision maker in a business is 619 00:41:59,800 --> 00:42:01,800 a form of theft. It's a form. 620 00:42:02,000 --> 00:42:06,600 It's a theft of the control of private property. 621 00:42:06,600 --> 00:42:10,300 In this case, the business interest of an e-commerce 622 00:42:10,300 --> 00:42:14,100 retailer, or of course, we can apply this to any number of 623 00:42:14,100 --> 00:42:17,600 other companies. So the distinctly marxian notion 624 00:42:18,100 --> 00:42:24,600 that the worker is at odds. With the employer or the 625 00:42:24,600 --> 00:42:26,800 entrepreneur, or as Marx called it. 626 00:42:26,800 --> 00:42:31,600 The capitalist that there is an internal intrinsic struggle 627 00:42:32,100 --> 00:42:37,400 between the proletariat and the capitalist is a distinctly 628 00:42:37,400 --> 00:42:41,100 Marxist idea. And one that does not stand up 629 00:42:41,100 --> 00:42:45,200 to the testimony of history and the great social cooperation. 630 00:42:45,800 --> 00:42:50,800 They comes from employers and employees transacting freely to 631 00:42:51,000 --> 00:42:55,600 Gather for the betterment of all economic and existential 632 00:42:55,600 --> 00:42:59,500 interests. Ludwig von mises wrote a book 633 00:42:59,500 --> 00:43:03,700 planning for Freedom, where he says, what makes wages rise is 634 00:43:03,700 --> 00:43:05,900 capital investment and competition. 635 00:43:06,200 --> 00:43:10,100 Whereas I had always thought it was every few years, the state 636 00:43:10,100 --> 00:43:12,700 steps in raises. The minimum wage organizes 637 00:43:12,700 --> 00:43:15,800 unions, and that's what pushes wages up. 638 00:43:15,900 --> 00:43:22,900 How do wages rise in a voluntary system wages rise in a voluntary 639 00:43:22,900 --> 00:43:27,900 system for the same way that any price mechanism functions and Is 640 00:43:27,900 --> 00:43:32,700 it is wages. Are a reflection of the 641 00:43:32,700 --> 00:43:37,600 agreed-upon clearing price between a employer and employee. 642 00:43:38,200 --> 00:43:42,300 And as the employee becomes more vital to the profits of the 643 00:43:42,300 --> 00:43:48,100 employer, the employee generates greater leverage where it is 644 00:43:48,100 --> 00:43:54,000 more indispensable and skilled and specialized labor. 645 00:43:54,300 --> 00:43:57,300 The labor has even more advantage. 646 00:43:57,400 --> 00:44:02,000 And so, it is constantly subject to Market forces, and Market 647 00:44:02,000 --> 00:44:05,300 forces or subject, competition, competition. 648 00:44:05,300 --> 00:44:11,300 Puts downward pressure on prices sold to a consumer, puts upward 649 00:44:11,300 --> 00:44:13,700 pressure on wages. Paid to a laborer. 650 00:44:14,700 --> 00:44:20,200 In the sense that the labor has when one sees the profits of a 651 00:44:20,207 --> 00:44:23,400 business. Another producer is incentivized 652 00:44:23,400 --> 00:44:29,200 to come in and enter the same space and And try to compete for 653 00:44:29,200 --> 00:44:35,200 talent by offering more wages. This is hardly a mystery. 654 00:44:36,200 --> 00:44:40,100 We see this in free agency and professional athletes. 655 00:44:40,100 --> 00:44:45,400 We see it as Hollywood scripts, often times, by the way, 656 00:44:45,500 --> 00:44:50,700 reflecting a distinctly socialist view of the economy, 657 00:44:50,700 --> 00:44:55,600 our society and yet ironically agents are out pounding the 658 00:44:55,600 --> 00:44:57,200 pavement to get the greatest possible. 659 00:44:57,400 --> 00:45:00,900 Wage for their clients. The actors, the stars of a 660 00:45:00,908 --> 00:45:05,100 movie. Who after their agent, competes 661 00:45:05,100 --> 00:45:09,000 to get them from 15 million up to 20 million dollars in a, in a 662 00:45:09,000 --> 00:45:13,000 performance fee, the actor then comes in and plays their role in 663 00:45:13,000 --> 00:45:16,400 a script that denigrates the idea of Market activity. 664 00:45:16,400 --> 00:45:21,300 The irony is rich, Fa Hayek wrote a book, The Constitution 665 00:45:21,300 --> 00:45:25,100 of Liberty in which he says I just lost it. 666 00:45:25,100 --> 00:45:28,100 Sorry. Our rapid economic advancement 667 00:45:28,100 --> 00:45:32,000 is in larger, part and result of inequality and impossible. 668 00:45:32,000 --> 00:45:34,700 Without it progress at a fast rate. 669 00:45:34,700 --> 00:45:38,500 Cannot proceed on a uniform front but must take place in an 670 00:45:38,500 --> 00:45:42,800 Echelon fashion. Why is it that inequality is 671 00:45:42,800 --> 00:45:46,400 actually able to create more wealth for people at lower 672 00:45:46,400 --> 00:45:50,000 income scales as And to inequality just benefits the 673 00:45:50,000 --> 00:45:52,800 rich. Well, the first thing we have to 674 00:45:52,800 --> 00:45:59,000 do is Define inequality and generally most in the classical 675 00:45:59,000 --> 00:46:03,900 liberal tradition have understood that our aspiration 676 00:46:03,900 --> 00:46:08,800 for equality as codified in the Declaration of Independence is 677 00:46:08,800 --> 00:46:13,000 in that pursuit of life, liberty, and happiness, that the 678 00:46:13,000 --> 00:46:17,300 equality meaning the right to life, liberty, and the pursuit 679 00:46:17,300 --> 00:46:20,800 of happiness. Is enshrined in our Declaration 680 00:46:20,800 --> 00:46:23,600 of Independence as equality, of opportunity. 681 00:46:24,400 --> 00:46:29,600 And equality of outcome, is not something that we view as a 682 00:46:29,700 --> 00:46:34,100 noble aspiration. For the very simple reason that 683 00:46:34,100 --> 00:46:41,000 it is not a theoretically possible Pursuit that exact 684 00:46:41,000 --> 00:46:46,900 equality cannot ever take place when we are dealing with the 685 00:46:46,900 --> 00:46:51,400 subjectivity of A stand appetites when we are dealing 686 00:46:51,600 --> 00:46:58,300 with Des differences in output and effort and risk, taking, I'm 687 00:46:58,300 --> 00:47:02,300 fond of using the example of what we would happen. 688 00:47:03,100 --> 00:47:07,300 If we took all of the Capital stock in the world and divided 689 00:47:07,300 --> 00:47:10,500 it up perfectly evenly. Just right, we're gonna have a 690 00:47:10,500 --> 00:47:16,400 great reset of wealth equality and that whatever the total 691 00:47:16,400 --> 00:47:21,500 amount of capital Lambda. Land cash value is in the entire 692 00:47:21,500 --> 00:47:23,500 world. We're going to divide it up, 693 00:47:23,500 --> 00:47:29,300 equally by the number of citizens or or the population. 694 00:47:29,300 --> 00:47:32,500 If you will, it would take something in the range of about 695 00:47:32,500 --> 00:47:37,900 five seconds to have wealth inequality, because almost 696 00:47:37,900 --> 00:47:42,000 immediately, there would be some stewarding more wisely than 697 00:47:42,000 --> 00:47:44,600 others. Others making different 698 00:47:44,600 --> 00:47:48,200 decisions that the free activity. 699 00:47:48,400 --> 00:47:52,400 Human beings would create a dispersion of result 700 00:47:52,400 --> 00:47:56,000 immediately. And so, any quality is not to be 701 00:47:56,000 --> 00:47:59,200 thought of as good or bad, unless we're referring to the 702 00:47:59,200 --> 00:48:03,000 quality of opportunity. That is encapsulated in the 703 00:48:03,000 --> 00:48:05,600 concepts of life, liberty and pursuit of happiness. 704 00:48:06,100 --> 00:48:09,700 But if we're talking about equality in terms of a paycheck 705 00:48:10,000 --> 00:48:13,300 or a balance sheet, we're talking about something that 706 00:48:13,300 --> 00:48:17,700 cannot and never has and never will exist, and would not be 707 00:48:17,700 --> 00:48:21,200 beneficial. So to anybody, if it did exist 708 00:48:21,900 --> 00:48:28,500 the quality of effort, what would would be a complete and 709 00:48:28,500 --> 00:48:33,200 total non sequitur to this notion of human flourishing. 710 00:48:33,600 --> 00:48:35,900 And so because we believe in different. 711 00:48:35,900 --> 00:48:41,100 Tastes different efforts different risks, we necessarily 712 00:48:41,100 --> 00:48:43,700 agree and believe in different outcomes. 713 00:48:44,100 --> 00:48:46,900 So this is as much a logical conversation as it is an 714 00:48:46,900 --> 00:48:50,600 economic one. And and to the extent that what 715 00:48:50,600 --> 00:48:54,700 we want is a greater equality of opportunity. 716 00:48:55,100 --> 00:48:59,300 It would behoove us to eliminate the central planner who plays, 717 00:48:59,300 --> 00:49:03,800 such a vital role in the cause of cronyism that exist to 718 00:49:03,800 --> 00:49:08,000 actually. Enshrine in equality, instead of 719 00:49:08,000 --> 00:49:13,800 allow for continued fostering of innovation Ingenuity Ergo 720 00:49:14,300 --> 00:49:19,600 competition. When I watch the G7 and people 721 00:49:19,600 --> 00:49:23,700 like Justin Trudeau or Emmanuel macron, even Michelle Obama and 722 00:49:23,707 --> 00:49:26,600 Barack Obama. Some of the most powerful people 723 00:49:26,600 --> 00:49:30,600 on planet Earth, get up there and on the stage talk about 724 00:49:30,600 --> 00:49:33,200 equality. Whereas there is the least 725 00:49:33,200 --> 00:49:36,900 amount of equality between him and everyone else not only in 726 00:49:36,900 --> 00:49:39,200 that room. But in the world you have a 727 00:49:39,207 --> 00:49:42,800 general theory as to why people with the greatest amount of 728 00:49:42,800 --> 00:49:47,300 power actually preached, the doctrine of Quality of all 729 00:49:47,300 --> 00:49:50,700 things. Yeah, I have a very good idea 730 00:49:50,700 --> 00:49:53,100 why they do. So, but it doesn't come from an 731 00:49:53,100 --> 00:49:58,400 ideological commitment to the concept that comes from the self 732 00:49:58,400 --> 00:50:04,900 protected agenda of power. That by preaching a concept of 733 00:50:04,900 --> 00:50:07,600 inequality. They preached the concept of 734 00:50:07,600 --> 00:50:13,200 aggrievement and that, as long as one believes that you can 735 00:50:13,200 --> 00:50:18,500 govern the Affairs of society under the The pretext of there 736 00:50:18,500 --> 00:50:24,000 being an oppressed and an oppressor, then you are be who 737 00:50:24,000 --> 00:50:26,900 you are. Shall we say, catalyzing votes 738 00:50:26,900 --> 00:50:32,300 in your favor all the while leaving a continually distressed 739 00:50:32,300 --> 00:50:36,200 Society to show for it. So I don't think that the talk 740 00:50:36,200 --> 00:50:41,000 of inequality, from leaders, like Trudeau reflects any 741 00:50:41,000 --> 00:50:44,700 different understanding of human nature than the understanding 742 00:50:44,700 --> 00:50:48,300 I've shared with you today. I think it stems from the self 743 00:50:48,300 --> 00:50:52,600 in the business model if you will of politicians, and I think 744 00:50:52,600 --> 00:50:57,100 it's unseemly. You discuss in the bookmarks, 745 00:50:57,100 --> 00:51:01,400 verse freedmen, as far as the lesson of the 20th century or 746 00:51:01,500 --> 00:51:06,100 lessons that we've learned after 1945, when it comes to real 747 00:51:06,100 --> 00:51:09,500 world examples. I get the theory, I've read the 748 00:51:09,500 --> 00:51:13,000 books show me where I can go, where I could see the free 749 00:51:13,000 --> 00:51:15,800 market working and places that have more state-controlled 750 00:51:15,800 --> 00:51:18,800 economy's doing worse off. Where are the empirical 751 00:51:18,800 --> 00:51:23,000 examples? Oh, why thinking in the 20th 752 00:51:23,000 --> 00:51:28,200 century? We see the general failure of 753 00:51:28,200 --> 00:51:34,200 soviet-style Communism to deliver on the meeting of needs 754 00:51:34,200 --> 00:51:37,200 of the working class. That was the great promise of 755 00:51:37,200 --> 00:51:41,100 Marxism was to deal with The Angst. 756 00:51:41,100 --> 00:51:43,900 That was an errant in the proletariat. 757 00:51:44,300 --> 00:51:50,000 And because a market economy, delivered, many, many. 758 00:51:50,100 --> 00:51:55,700 Many tens of millions of people satisfied in their work, in the 759 00:51:55,700 --> 00:52:00,300 fruits, of their labor, in their economic advancement, that came 760 00:52:00,300 --> 00:52:05,700 from there were and the Socialist Vision. 761 00:52:06,200 --> 00:52:12,900 Resulted in such a incredible and systemic dissatisfaction. 762 00:52:13,700 --> 00:52:17,500 I think that that argument became one of the easiest ones 763 00:52:17,500 --> 00:52:21,700 to make in the for the cause. Milton Friedman versus the cause 764 00:52:21,700 --> 00:52:28,000 of Karl Marx, but I would add that even if one is looking 765 00:52:28,000 --> 00:52:34,100 Beyond worker satisfaction to a more generic dare. 766 00:52:34,100 --> 00:52:38,400 I say econometrics, you know, you talked earlier about GDP for 767 00:52:38,400 --> 00:52:41,800 me, you know, they'll of measuring things with some kind 768 00:52:41,800 --> 00:52:46,300 of inputs. Well, I don't think history is 769 00:52:46,300 --> 00:52:50,100 totally ambiguous here about where greater GDP growth. 770 00:52:50,100 --> 00:52:55,500 Came from that as somewhat primitive parts of the world 771 00:52:55,500 --> 00:52:58,900 very much. Mired in third world conditions 772 00:52:58,900 --> 00:53:06,100 embraced on the margin greater Market reforms, they experienced 773 00:53:06,100 --> 00:53:12,900 incredible growth of prosperity and such that Global poverty 774 00:53:13,300 --> 00:53:19,200 saw. Greater reduction in, 25, 30 40 775 00:53:19,200 --> 00:53:24,400 and 50 years out of Market, out of embracing of Market 776 00:53:24,400 --> 00:53:27,900 mechanisms. Then we had seen in thousands of 777 00:53:27,900 --> 00:53:33,600 years combined prior. So the testimony of history is 778 00:53:33,600 --> 00:53:39,900 very clear and at this point the great debate is no longer about 779 00:53:39,900 --> 00:53:45,000 whether or not we believe that a market economy or Ilysm creates 780 00:53:45,000 --> 00:53:47,100 a greater outcome. Now. 781 00:53:47,100 --> 00:53:51,500 We're just simply debating as to who ought to be in charge of the 782 00:53:51,500 --> 00:53:56,200 administration of these things. And it's a debate I intend for 783 00:53:56,200 --> 00:53:59,700 our side to win. Final question, sir. 784 00:53:59,700 --> 00:54:02,500 Thank you so much for your time. What do you think is the 785 00:54:02,500 --> 00:54:05,700 greatest contribution to the field of Economics by Adam 786 00:54:05,700 --> 00:54:08,900 Smith? Well, there's no question that 787 00:54:08,900 --> 00:54:13,400 Adam Smith is most known for his contribution. 788 00:54:14,000 --> 00:54:17,700 The concept of self-interest, his famous quote about the 789 00:54:17,700 --> 00:54:23,100 butcher Baker and Brewer that we have our dinner at night because 790 00:54:23,100 --> 00:54:25,800 not of their benevolence. But because of their own 791 00:54:25,800 --> 00:54:31,000 self-interest, did he enabled us to see the ways in which as a 792 00:54:31,000 --> 00:54:37,400 kind of classical economists that market forces generate a 793 00:54:37,400 --> 00:54:42,600 mutually beneficial result in a free Society, but I would argue 794 00:54:42,900 --> 00:54:45,200 that we're Smith. Is that the biggest influence on 795 00:54:45,200 --> 00:54:49,900 me and indeed where his thinking is most vital is when one 796 00:54:49,900 --> 00:54:53,100 synthesizes, his two, great books. 797 00:54:53,500 --> 00:54:58,000 First theory of moral sentiments and second The Wealth of Nations 798 00:54:58,400 --> 00:55:03,300 to where the general concept about self-interest is married 799 00:55:03,300 --> 00:55:09,000 to our understanding of moral formation in society, then leads 800 00:55:09,000 --> 00:55:13,900 to not only the intrinsic, good of a free Society. 801 00:55:14,000 --> 00:55:18,800 Sia T, but our ongoing Noble aspiration for a virtuous 802 00:55:18,800 --> 00:55:22,200 Society. I think that Smith's work on 803 00:55:22,200 --> 00:55:29,000 this synthesized objective is vital and why Adam Smith is the 804 00:55:29,000 --> 00:55:31,300 greatest of the classical economist. 805 00:55:32,400 --> 00:55:38,400 The book is there is no free lunch, 250 economic truths by 806 00:55:38,600 --> 00:55:42,400 David bahnson links will be in the description below, mr. 807 00:55:42,400 --> 00:55:43,900 Bonds, and thank you so much for your time. 808 00:55:44,400 --> 00:55:46,800 Thanks so much for having me. I enjoyed the conversation.