WEBVTT NOTE An Austrian Analysis of the Fourth Estate 1 00:00:00.000 --> 00:00:06.000 And as I begin this lecture, I really would like to thank Lew Rockwell first and the Mises Institute for inviting me to speak. 2 00:00:06.000 --> 00:00:16.000 After I realized that Lew had taken leave of the census in giving me this invitation, I decided to accept it anyway. 3 00:00:16.000 --> 00:00:20.000 And I also would like to thank all of you for attending this session. 4 00:00:20.000 --> 00:00:27.000 And we will determine in about 40 minutes or so if, in fact, you had taken leave of your census to be here. 5 00:00:27.000 --> 00:00:33.000 But I would like to thank all of you for being here. This is an exciting conference. 6 00:00:33.000 --> 00:00:37.000 In fact, you know, I look at this thing, it's not really so much sessions as it is intellectual feasts. 7 00:00:37.000 --> 00:00:41.000 I mean, I started looking at sessions, which one do I want to go to? I actually want to go to them. 8 00:00:41.000 --> 00:00:46.000 It's not like going to the American Economic Association, wherever you get a book this thick, 9 00:00:46.000 --> 00:00:50.000 and you go through it and say, I don't want to go to any of these sessions. 10 00:00:50.000 --> 00:00:53.000 So this is what I, you know, I really appreciate. 11 00:00:53.000 --> 00:01:00.500 I will not be giving anything on PowerPoint. I've actually never done a PowerPoint presentation in my life. 12 00:01:00.500 --> 00:01:03.000 I don't want to start now. 13 00:01:03.000 --> 00:01:08.000 I will not be doing anything here on West Virginia PowerPoint, as Richard Vedder calls it. 14 00:01:08.000 --> 00:01:18.000 So we'll just have to deal with the spoken word and hope that everything turns out well. 15 00:01:18.000 --> 00:01:22.500 I am honored to give this lecture today, and especially honored because it's named after Henry Haslett. 16 00:01:22.500 --> 00:01:26.100 and I think Jeff Tucker aptly named him the People's Austrian. 17 00:01:26.100 --> 00:01:29.100 All of us are indebted to Henry Hazlitt. 18 00:01:29.100 --> 00:01:35.100 As a journalist, he towered above his peers and as an economist, and I do call him an economist. 19 00:01:35.100 --> 00:01:42.100 He could intellectually overpower the imposters who have dominated mainstream economics for more than a century. 20 00:01:42.100 --> 00:01:48.100 To make my point, all we have to do is remember that Henry Hazlitt once wrote on the same editorial page 21 00:01:48.100 --> 00:01:51.100 that today embraces the rants of Paul Krugman. 22 00:01:51.100 --> 00:01:59.100 Who is a better economist? One was a high school graduate, did not go to college. The other has his doctorate from MIT. 23 00:01:59.100 --> 00:02:12.100 And all I have to say is, you know, in areas of clarity, sense, and in economics, I don't even think there's a contest. 24 00:02:12.100 --> 00:02:20.100 Mr. Krugman still has yet to learn what opportunity cost is. So he has a long way to go. 25 00:02:20.100 --> 00:02:27.100 Well, but as for journalism, remember that Hazlitt wrote for the New York Times. 26 00:02:27.100 --> 00:02:38.100 Now, the New York Times, as we know, also gave us the faux journalist who won a Pulitzer Prize fraudulently, a man named Walter Durante. 27 00:02:38.100 --> 00:02:43.100 But at least back then, the Times could counter with Henry Hazlitt. 28 00:02:43.100 --> 00:02:50.100 Today, the Times gives us Jason Blair and then counters with Judith Miller. 29 00:02:50.100 --> 00:02:59.100 So you can tell that the state of intellectual prowess at the New York Times has gone down in the last few decades. 30 00:02:59.100 --> 00:03:05.100 We also owe a huge debt of gratitude to Henry Hazlitt, who along with Leonard Reed helped Ludwig von Mises 31 00:03:05.100 --> 00:03:10.100 gain a tiny intellectual toehold upon the U.S. academic world. 32 00:03:10.100 --> 00:03:24.100 You know, academe scorned Mises, but Mr. Hazlitt saw through the chap thrown about by other academic economists and realized that the rejected Mises still held the keys to the kingdom and helped to make Mises' work secure even as that handiwork has outlived both men. 33 00:03:24.100 --> 00:03:28.100 And Henry Hazlitt was an outstanding economist in his own right. 34 00:03:28.100 --> 00:03:33.100 We're talking about a man who gave us the book, The Failure of the New Economics. 35 00:03:33.100 --> 00:03:40.900 and Mr. Hazlitt was somebody who actually read Keynes' general theory and understood it. 36 00:03:40.900 --> 00:03:48.100 I'm not sure Keynes understood it, but he understood and he wrote a line-by-line reputation. 37 00:03:48.100 --> 00:03:52.300 And one time I was teaching a course at the University of Tennessee at Chattanooga. 38 00:03:52.300 --> 00:03:56.100 It was an upper division macro course and we were using Wallace Peterson's text. 39 00:03:56.100 --> 00:03:59.700 And this was the most popular intermediate macro text. 40 00:03:59.700 --> 00:04:04.500 and to give you a sense of what this book is like, it quoted Keynes like scripture. 41 00:04:04.500 --> 00:04:05.700 In other words, I'm serious. 42 00:04:05.700 --> 00:04:10.100 I mean, he would present an idea and he would have something from the general theory 43 00:04:10.100 --> 00:04:13.300 and that was, in his thinking, that was all you needed to do. 44 00:04:13.300 --> 00:04:15.200 That was the only argument needed to be made. 45 00:04:15.200 --> 00:04:17.300 Obviously, it was right because Keynes said it. 46 00:04:17.300 --> 00:04:18.900 Well, what did Hazlitt do? 47 00:04:18.900 --> 00:04:27.200 Hazlitt took a line-by-line refutation of that book and I would use that in that class, 48 00:04:27.200 --> 00:04:31.800 basically use Keynes as a foil and use Hazlitt as the main body of work. 49 00:04:31.800 --> 00:04:36.280 I wasn't supposed to be doing that, but I did it anyway. 50 00:04:36.280 --> 00:04:42.960 And so I would say that Henry Hazlitt was a real giant in journalism. 51 00:04:42.960 --> 00:04:49.840 If you really want to get a sense of his career, I would urge you to read Jeffrey Tucker's piece in the book, 52 00:04:49.840 --> 00:04:56.560 Fifteen Great Austrian Economists, and this is the one entitled Henry Hazlitt, The People's Austrian. 53 00:04:56.560 --> 00:05:01.960 So, in that, because of that, because it is available, I'm not going to be going through his long career here. 54 00:05:01.960 --> 00:05:08.160 I just want to say that Hazlitt really was a giant in a lot of fields. 55 00:05:08.160 --> 00:05:16.660 And this was a man who, if he applied for a newspaper job today with his educational background, 56 00:05:16.660 --> 00:05:19.260 he wouldn't even be allowed to sweep the floor. 57 00:05:19.260 --> 00:05:26.460 And yet we look at what he produced versus what all of these people with graduate degrees 58 00:05:26.460 --> 00:05:32.460 Working in the media, see what they produce, I leave the results up to you to determine. 59 00:05:32.460 --> 00:05:37.460 And so, again, I'm very much honored. 60 00:05:37.460 --> 00:05:49.460 Also, partly, I'm interested in Hazlitt as a journalist because I was a journalism major in college 30-some years ago. 61 00:05:49.460 --> 00:05:52.460 That doesn't mean I learned anything, I will confess to you. 62 00:05:52.460 --> 00:06:03.460 I took econ, I was on the track team, and we had difficult workouts, and econ class was a very, very good time to sleep, and so I did not do very well in my economic studies. 63 00:06:03.460 --> 00:06:14.460 And I remind some of my old professors of that every once in a while, saying that you had a chance to kill me off right there, but oh no, now I'm in the profession. 64 00:06:14.460 --> 00:06:44.460 And so, I've always had obviously an interest in the press having worked for a newspaper and the like and in fact I wrote my doctoral dissertation on the media and took some different views of the media and have off and on dabbled and done some papers, actually done some articles for the Mises Institute on the Mises page and also done some more formal academic papers 65 00:06:44.460 --> 00:06:52.460 in the subject, so I do have a lot of interest in it, and I do hope that I can convey some of that interest to you and some of the insights I feel I've picked up. 66 00:06:52.460 --> 00:06:58.460 One of the things I want to do today, though, is sort of take an Austrian view of the media. 67 00:06:58.460 --> 00:07:01.460 Now, when you say an Austrian view, I know it's a really wide-ranging thing. 68 00:07:01.460 --> 00:07:06.460 I'm going to be coming at it more from the point of view of the Austrian economist, as you shall see, 69 00:07:06.460 --> 00:07:14.460 dealing with Menger, with Mises, some of the theoretical points and see how this applies to journalism. 70 00:07:18.460 --> 00:07:24.460 One of the things that you find though with journalism is that the mainstream economists simply haven't written very much about it. 71 00:07:24.460 --> 00:07:30.460 And I would say one of the reasons is because it doesn't lend itself easily to mathematical modeling. 72 00:07:30.460 --> 00:07:35.460 And without mathematical modeling, I mean where is economics, poor thing? 73 00:07:35.460 --> 00:07:53.460 And so, we tend to shy away from it, or the approach to economics sometimes becomes like, if you look at, for example, Professor Eakland and others wrote a book called Sacred Trust about the medieval church. 74 00:07:53.460 --> 00:08:02.460 and the assumption is that people were only interested in otherworldly things. 75 00:08:02.460 --> 00:08:08.460 It's sort of the good government viewpoint that all politicians are interested in good government. 76 00:08:08.460 --> 00:08:15.460 That's making wise decisions that benefit all of society and of course never themselves. 77 00:08:15.460 --> 00:08:18.460 And so often we see this in journalism. 78 00:08:18.460 --> 00:08:33.460 I'm going to, if I may, use a really crude example, but in that great classic movie Animal House, there is a scene towards the end where somebody steals the baton from the bandleader and marches the band into a brick wall. 79 00:08:33.460 --> 00:08:37.460 And the band keeps trying to march through this brick wall, and they never succeed. 80 00:08:37.460 --> 00:08:45.460 And we often come up with that in the area of government. We continue to come back to the well of good government, good government. We have to have good government. 81 00:08:45.460 --> 00:08:50.460 Or, same thing with journalism. We know that these guys, quote, are biased. 82 00:08:50.460 --> 00:08:55.460 We know that they are going to have certain proclivities. 83 00:08:55.460 --> 00:09:02.460 And yet, somehow, in the end, we still expect them to produce this non-biased material. 84 00:09:02.460 --> 00:09:07.460 And we're asking somebody to do something I think that they're really not capable of doing. 85 00:09:07.460 --> 00:09:21.860 But at the same time, no matter what, and being a refugee of journalism school, I can assure you that the good journalism, good government theme was pounded into us. 86 00:09:21.860 --> 00:09:36.060 And nobody quite knew what good government was, but I think it was regulating those monopolies called businesses, protecting consumers, and all the other things that government is supposed to be doing. 87 00:09:36.060 --> 00:09:54.060 So, first I want to begin in talking about the modern institution of the press, and keep in mind that when I'm speaking of journalists today, I'm speaking as part of the institutionalized press, not the idea of simple freedom of speech. 88 00:09:54.060 --> 00:09:57.060 There are times when people confuse the two of them. 89 00:09:57.060 --> 00:10:07.060 To give you an analogy, if people criticize public education, what's thrown back at them? 90 00:10:07.060 --> 00:10:12.060 Oh, well, you're against education. You're against people learning how to read and write. 91 00:10:12.060 --> 00:10:17.060 And you think, no, I'm against public education. I don't know how to learn to read and write in public schools. 92 00:10:17.060 --> 00:10:32.060 Well, when you look at, you know, at the modern institution of the press, and you say something critical about it, what comes back? 93 00:10:32.060 --> 00:10:42.060 Oh, you are against freedom of the press. Well, obviously, you know, you want to censor people. 94 00:10:42.060 --> 00:10:53.060 Now, that's not the point we're making, but I want to concentrate on this institution that we call the press and apply some Austrian insights there. 95 00:10:53.060 --> 00:11:04.060 Now, the first thing I think we have to keep in mind is that the modern press, as we know it, really is a progressive era institution. 96 00:11:04.060 --> 00:11:14.060 You really cannot understand the New York Times and these other entities, CBS News or whatever, 97 00:11:14.060 --> 00:11:20.060 without understanding the Progressive Era and the mentality that was produced there. 98 00:11:20.060 --> 00:11:27.060 Now, if you really want to learn about the Progressive Era, I would urge that you read one of Professor Higgs' books, 99 00:11:27.060 --> 00:11:47.060 The Progressive Era Ended Around the Time of World War I 100 00:11:57.060 --> 00:12:10.060 and, again, that proverbial band running into the wall, at the same time we continue to go back to them, demand that these institutions produce something that they really can't produce. 101 00:12:10.060 --> 00:12:15.060 And so I would like to look at a little bit about that. 102 00:12:15.060 --> 00:12:26.060 In 1922, a number of journalistic representatives came up with the so-called canons of journalism. 103 00:12:26.060 --> 00:12:37.060 And in the canons of journalism, the idea was that newspaper reporters, and this was at the time, it was really pretty much journalism was dominated by the print media. 104 00:12:37.060 --> 00:12:49.060 And the idea was that they should be objective. So the front page, you should not be able to tell what a person's ideology is, where they're coming from, but on the editorial page you could say what you wanted. 105 00:12:49.060 --> 00:13:01.060 And this was, in essence, be the institution of journalism, and not only that, but they wanted to take a, quote, scientific approach to it. 106 00:13:01.060 --> 00:13:12.060 And the same way that during this particular time they're taking more scientific approaches to government, to management, and I put scientific in quotes, 107 00:13:12.060 --> 00:13:16.620 So I will let you determine whether or not these things really were scientific, but at 108 00:13:16.620 --> 00:13:21.540 any rate this was the way of thinking. 109 00:13:21.540 --> 00:13:31.020 And this is opposed to the older press, what we would call the party press, something that 110 00:13:31.020 --> 00:13:36.420 in many ways is like a lot of today's blogs, you know, you're not going to read the daily 111 00:13:36.420 --> 00:13:59.260 The Party Press, once upon a time, you knew where the writer stood, you knew where the 112 00:13:59.260 --> 00:14:05.740 points of view were, and out of that, Americans still managed to get information, managed 113 00:14:05.740 --> 00:14:27.740 What we also began to see, very much though, with the so-called progressive-era press or the modern candidates of journalism press, was a dominant viewpoint that somehow capitalism in and of itself was bad or it needed to be curbed. 114 00:14:27.740 --> 00:14:49.140 that you had a lot of writers, for example, Upton Sinclair that they're talking about this week because of the 100th year anniversary of his book called The Jungle which not only got it, it also got the conditions and the meat packing plants wrong as well. 115 00:14:49.140 --> 00:14:58.140 I mean, people think that somehow Sinclair was describing things that actually were happening when in fact it really wasn't. 116 00:14:58.140 --> 00:15:09.140 And I had a tarbell with her history of the Standard Oil Company and the like that the view was, in fact, that there was something wrong with capitalism. 117 00:15:09.140 --> 00:15:20.140 And so you needed scientific institutions to sort of take the edge off what was seen as a system that was very predatory. 118 00:15:20.140 --> 00:15:31.140 Also, the press at that time was seeing something in akin, in its relationship to government, something in akin to a regulatory agency. 119 00:15:31.140 --> 00:15:41.140 Now, we have a little bit of an irony here. A privately owned entity, the press, in essence regulating the workings of government. 120 00:15:41.140 --> 00:15:48.140 It was to be a watchdog of government, that the press, their job was to keep government in check. 121 00:15:48.140 --> 00:15:56.140 Well, what do we know about regulatory agencies? Well, economists over the years have talked about capture theory. 122 00:15:56.140 --> 00:15:58.140 What happens with capture theory? 123 00:15:58.140 --> 00:16:05.140 Well, what we find is that the entities being regulated often would capture the regulatory agencies 124 00:16:05.140 --> 00:16:11.140 and in fact that you would see some sort of cooperative action between them 125 00:16:11.140 --> 00:16:18.140 and there would often be a revolving door between the agencies and the industries. 126 00:16:18.140 --> 00:16:24.140 And obviously there's a whole lot of room for corruption and all that. 127 00:16:24.140 --> 00:16:41.140 And I think that everybody in this room understands the real limitations of the, everybody understands the real limitations of regulation, government regulation of business. 128 00:16:41.140 --> 00:16:47.140 And I don't even want to go into that in this talk. And I don't want to go down, you know, down that particular rabbit trail. 129 00:16:47.140 --> 00:16:50.140 But I think people, I think, instinctively understand. 130 00:16:50.140 --> 00:17:04.140 Well, what happened with the press? Well, guess what? Journalism regulating the press, the watchdog of the press, what has happened over the years? 131 00:17:04.140 --> 00:17:15.140 Well, the outstanding journalist and also advocate of free markets, Warren Brooks, or should I say the late Warren Brooks, 132 00:17:15.140 --> 00:17:32.140 He wrote an article in the Quill back in 1991, shortly before he died, and he said that journalists are not so much interested in the status quo as they are interested in the statist quo. 133 00:17:32.140 --> 00:18:02.140 and that he said his point was that our main beat is government and that therefore if you think about that you all you know that this these are where the relationships are formed now I can give you a little bit of a personal side to that and very much an understanding for a few years I was a newspaper reporter 134 00:18:02.140 --> 00:18:14.140 And the prize beats were the government beats. Beats like the political, you know, our top person was the political writer and he covered the state legislature. 135 00:18:14.140 --> 00:18:26.140 Also the other top beats would be the county courthouse because that's also where the trials were held. So you cover county government plus all of the trials going on. 136 00:18:26.140 --> 00:18:33.540 The police reporter, and he would play cowboy with the police, to put it mildly. 137 00:18:33.540 --> 00:18:36.940 He ultimately got a job with the sheriff's department. 138 00:18:36.940 --> 00:18:45.740 He wrote a lot of articles, let's just say, that were favorable to the candidate running for sheriff in 1978, 139 00:18:45.740 --> 00:18:55.740 and soon afterwards was rewarded for his coverage with a new job with the Hamilton County Sheriff's Department, but also City Hall. 140 00:18:55.740 --> 00:18:59.740 Now, less so at that time especially was the Federal Courthouse. 141 00:18:59.740 --> 00:19:05.740 The Federal Courthouse was a real backwater and for years, by the way, all over the country, 142 00:19:05.740 --> 00:19:12.740 Federal Courthouses really were a backwater for journalism until the drug war and until the 1980s 143 00:19:12.740 --> 00:19:18.740 when the Reagan administration pushed through a number of acts that allowed the, 144 00:19:18.740 --> 00:19:23.740 either criminalized things that weren't criminalized before or allowed certain activities 145 00:19:23.740 --> 00:19:29.020 at a current and a local level to somehow magically be transferred into federal court. 146 00:19:29.020 --> 00:19:33.980 And so now with so many cases going to federal court, it no longer is the backwater that 147 00:19:33.980 --> 00:19:37.180 it used to be, unfortunately, I say. 148 00:19:37.180 --> 00:19:41.780 And those of you who have read my articles on the federal criminal justice system, I 149 00:19:41.780 --> 00:19:46.880 think you probably understand that I would not really want to see this particular development. 150 00:19:46.880 --> 00:19:50.940 But at any rate, what beat did you not want? 151 00:19:50.940 --> 00:19:53.220 You didn't want the business beat. 152 00:19:53.220 --> 00:20:01.220 Why didn't you want the business people? Well, businessmen wanted you to write PR stuff for them. 153 00:20:01.220 --> 00:20:11.220 You weren't going to go to their board meetings and see the give and take of activities. 154 00:20:11.220 --> 00:20:22.220 They didn't want you to see any of that. What they wanted you to see was a favorable view of their operations. 155 00:20:22.220 --> 00:20:26.940 and uh... there was no sunshine law for business meetings and for these private 156 00:20:26.940 --> 00:20:29.860 organizations and so 157 00:20:29.860 --> 00:20:33.580 you didn't want to uh... you didn't want to see any of that 158 00:20:33.580 --> 00:20:37.500 and so therefore you know you you you had the sense of my I guess my job is 159 00:20:37.500 --> 00:20:38.940 just the right PR 160 00:20:38.940 --> 00:20:41.940 for the business people that's what they want and so you didn't want that beat 161 00:20:41.940 --> 00:20:46.300 now we did have a business reporter who kind of uh... he loved getting these uh... 162 00:20:46.300 --> 00:20:50.580 press releases but they also gave him the Tennessee Valley Authority as a SOP 163 00:20:50.580 --> 00:21:20.580 so he would have some real stories to cover as well but our view of and it's very very interesting because in that newsroom your view of the businessman really was colored by you know you know you had the sense of government being open and wow this is where all the action is and the business world well it's just where all the press you know all the PR is created and I should say a very skewed view of the world but there was and so start multiplying this across 164 00:21:20.580 --> 00:21:28.580 Newsrooms across the country, and you get a sense of, you know, where the relationships are. 165 00:21:28.580 --> 00:21:34.580 And, you know, you didn't really cultivate sources in the business community. 166 00:21:34.580 --> 00:21:42.580 They did you no good. Nobody in the business community was really interested in being a source for somebody who was a journalist. 167 00:21:42.580 --> 00:21:47.580 It just really wasn't, it just wasn't seemly. 168 00:21:47.580 --> 00:21:55.940 and so you cultivated your sources in government and in fact that you know if 169 00:21:55.940 --> 00:22:01.700 you got that phone call that that little anonymous tip I remember once that give 170 00:22:01.700 --> 00:22:07.140 you an idea of a story that that I covered in my first year at the Chattanooga 171 00:22:07.140 --> 00:22:13.320 Free Press there was a plant it's fertilizer plant and the equipment blew 172 00:22:13.320 --> 00:22:20.320 And so, it was equipment that was the water pollution control equipment. 173 00:22:20.320 --> 00:22:26.320 Well, now these guys had a real problem because their stuff coming out wasn't being treated. 174 00:22:26.320 --> 00:22:28.320 Well, what do you do about this? 175 00:22:28.320 --> 00:22:32.320 And so, you know, we first had a story about, you know, why? 176 00:22:32.320 --> 00:22:41.320 Because somebody from the Water Quality Agency, one of our sources, called us up and said there's been an explosion at this particular plant. 177 00:22:41.320 --> 00:23:11.320 Plant. Well, of course, nobody from the plant called us up. I mean, Jim Dickerson, I remember, was the plant manager at the time, and I don't think he would have called us up. But anyway, I remember going to a water quality meeting on Saturday, and another reporter and I, nobody quite knew who we were. We just sat there and said nothing. Then they had a private meeting with representatives from the Tennessee Water Quality and the Environmental Protection Agency, and we managed to go in there and sit. 178 00:23:11.320 --> 00:23:14.160 and finally somebody asks, well who are these guys with? 179 00:23:14.160 --> 00:23:16.680 And I thought it was with you, no, it was with you. 180 00:23:16.680 --> 00:23:19.400 Well by then we'd found out some really interesting stuff. 181 00:23:19.400 --> 00:23:29.760 And got some very, very nice scoops against our arrival at the Chattanooga Times. 182 00:23:29.760 --> 00:23:39.660 And so, but you can see that the world according to the journalist is going to be one in which 183 00:23:39.660 --> 00:23:53.260 In the real world, it's very different. If you go into a business, into any kind of enterprise, this is where you see the real world happening. 184 00:23:53.260 --> 00:24:02.260 This is where you see people making things, producing things, selling things. In a very real sense, making life better for people. 185 00:24:02.260 --> 00:24:10.260 You know, you go even away for a long time. I go into the courthouses and into the government offices, and there I see the real backwater. 186 00:24:10.260 --> 00:24:16.260 But as a journalist, that view of the world was turned completely upside down. 187 00:24:16.260 --> 00:24:22.260 And I'm just giving you my own perspective. 188 00:24:22.260 --> 00:24:31.260 And one that I think that, you know, you start multiplying it, and you get to understand some of the biases across the line. 189 00:24:31.260 --> 00:24:39.860 Also, the people who often go into journalism generally are going to have certain proclivities. 190 00:24:39.860 --> 00:24:46.460 There seems to me almost to be a self-selection bias going on. 191 00:24:46.460 --> 00:24:53.100 But there's something else too that I, in my observations, that what I have found over 192 00:24:53.100 --> 00:25:22.100 over the years has been that journalists generally do not, they work for organizations, there's not a lot of selling something, even though they create a product that ultimately the public consumes, in their minds that's not the real customer, the customer is the entity for which they work, and or some other publication, not the general public. 193 00:25:23.100 --> 00:25:38.100 And what I find myself observing is that in these newsrooms across the country, that the makeup of people, in some ways, represents a college faculty, now, and especially the arts and sciences faculty, and being at a university, how do you make money? 194 00:25:38.100 --> 00:26:05.100 Research across the country. That the makeup of people in some ways represents a college faculty. Now, and especially the arts and sciences faculty. And being at a university, and not in the arts and sciences faculty, I'm in the business faculty, and I find that there's a little more common sense that goes on among in discussions there. 195 00:26:05.100 --> 00:26:14.100 In the sciences faculty, we have people there, they really believe that if government provides a service, government has conquered the law of scarcity. 196 00:26:14.100 --> 00:26:22.100 In fact, to them, the law of scarcity really is contrived. It was something dreamed up by capitalists, and if only the government could have its way with everything, 197 00:26:22.100 --> 00:26:29.100 we could abolish all work, all scarcity, life would be good, we would just party all the time. 198 00:26:29.100 --> 00:26:34.600 And you think I'm exaggerating. I have seen things that some of the arts and sciences faculties have written. 199 00:26:34.600 --> 00:26:37.100 I mean, people really believe this sort of thing. 200 00:26:37.100 --> 00:26:40.600 And again, look at the disconnect. 201 00:26:40.600 --> 00:26:48.100 As faculty members, we do not directly sell our services to our customers, okay? 202 00:26:48.100 --> 00:26:54.600 Now, ultimately, in the Mengerian sense, if you remember Carl Menger, one of his important insights, 203 00:26:54.600 --> 00:27:02.480 And he was not just simply solving the issue of what we call marginal utility, but also 204 00:27:02.480 --> 00:27:11.400 it was Menger who pointed out that the value of the factors of production ultimately was 205 00:27:11.400 --> 00:27:20.280 derived from, or we would say that their value was imputed from the value of the final good 206 00:27:20.280 --> 00:27:22.200 that was consumed. 207 00:27:22.200 --> 00:27:32.200 Or what Menger said was that it's the final good, it's the goods characteristic of a final good that gives goods characteristic to these other... 208 00:27:32.200 --> 00:27:36.200 He didn't call them factors of production, he called them higher order goods. 209 00:27:36.200 --> 00:27:45.200 And in essence, in journalism, you have to remember that I think there's a notion, well, they're just trying to sell papers. 210 00:27:45.200 --> 00:27:47.200 They're writing, they're just trying to sell papers. 211 00:27:47.200 --> 00:27:56.200 The journalist, in his or her world, that's not really a big deal to them. 212 00:27:56.200 --> 00:28:02.200 They're selling their work to their employer or to a publication. 213 00:28:02.200 --> 00:28:07.200 They're not trying to sell the publication. 214 00:28:07.200 --> 00:28:09.200 I'm talking about that larger publication. 215 00:28:09.200 --> 00:28:12.200 That's really not where they're at. 216 00:28:12.200 --> 00:28:15.200 There is going to be somewhat of a disconnect. 217 00:28:15.200 --> 00:28:30.200 Look, if you ever read the New York Times editorial page, day after day after day, or the Baltimore Sun. I remember, in fact, I used an example from the Baltimore Sun editorial. 218 00:28:30.200 --> 00:28:43.200 It was this editorial appeared 24 years ago, and the editorialist said that Americans obviously don't value education because professional athletes make more than teachers, and so that was, you know, proof positive. 219 00:28:43.200 --> 00:28:48.040 Well, I wrote something in the Freeman that appeared, I think, in August of 2000 entitled 220 00:28:48.040 --> 00:28:51.200 In Praise of Athlete's High Salaries. 221 00:28:51.200 --> 00:28:56.840 And I took that and basically I said, look, this is an example of the Diamond Water Paradox. 222 00:28:56.840 --> 00:29:01.160 Well, it's very, very interesting, you see, that a journalist could not...if you said 223 00:29:01.160 --> 00:29:06.600 Diamond Water Paradox to a journalist, this person might have a master's degree from Columbia 224 00:29:06.600 --> 00:29:11.720 University, but I can assure you that he or she would just have their eyes glazed over. 225 00:29:11.720 --> 00:29:18.280 And you might as well try and explain the Diamond Water Paradox to the wall over there. 226 00:29:18.280 --> 00:29:20.320 But read the New York Times. 227 00:29:20.320 --> 00:29:25.640 They believe that we can conquer poverty by raising minimum wages. 228 00:29:25.640 --> 00:29:34.140 That if we order the automobile companies to build automobiles, lots and lots of automobiles 229 00:29:34.140 --> 00:29:37.760 that get higher gas mileage, there's no opportunity cost to this. 230 00:29:37.760 --> 00:29:40.240 This would just simply produce nothing but benefits. 231 00:29:40.240 --> 00:29:49.240 It would help us save oil. Nothing about forcing automobile companies to spend billions of dollars in new capitalization for which there is little return. 232 00:29:49.240 --> 00:29:56.240 And if you said that, they can't understand. So you're really dealing with, I think, a real disconnect. 233 00:29:56.240 --> 00:30:09.240 And to a certain extent, you want to try to educate them. I know that the Political Economy Resource Center has done that over the years with journalists and environmental issues. 234 00:30:09.240 --> 00:30:27.240 And it sort of had mixed results. Ultimately, these journalists go back to where they work, and anything that they write that's against the zeitgeist of the day, or the prevailing view, is one in which it's a view that's going to be scorned. 235 00:30:27.240 --> 00:30:42.240 And sooner or later they realize, you know, if I keep writing stuff that's getting me scorned, you know, my employment, you know, things like raises and promotions, all these other things really, you know, start playing a role. 236 00:30:42.240 --> 00:30:56.240 I'll give you another example. It's more personal. I actually, and I will admit it in this room to these people now that it's being streamed over the internet, the whole world will know, that I actually am friends with Jack Abramoff. 237 00:30:56.240 --> 00:31:26.240 and yes and no I have not got any money from him but we did have dinner in his house but the there was a national editor from the Washingtonian and name is Kim Eisler and he was interviewed by Howard Kurtz of the Washington Post and he said you know I know Jack Abramoff he really is not the monster that he's being portrayed in the press well you can 238 00:31:26.240 --> 00:31:31.240 The next thing you know, I emailed Isler about it and he emails me back and he says, 239 00:31:31.240 --> 00:31:39.240 Well, you're not going to believe it. I got a handwritten note from Chris Matthews telling me that I was defending a dirt bag that I was now the laughing stock of all his friends. 240 00:31:39.240 --> 00:31:44.240 He says, Why would a guy who makes a million and a half a year take the trouble to do this? 241 00:31:44.240 --> 00:31:52.240 And to him, now he's got a problem because now he's committed a major sin in the eyes of other journalists 242 00:31:52.240 --> 00:32:20.240 If you look, for example, at the Sunday morning news shows, Phase the Nation, Press the Meat, and the George Stephanopoulos show, or whatever that's called, you'll find some other things that you can do. 243 00:32:20.240 --> 00:32:29.240 You find some other things too. Again, people talk about the general consumption, the audience, the purpose of this is to educate Americans. 244 00:32:29.240 --> 00:32:35.240 Well, no. You get a sense of what's going on when you look at the advertisements. 245 00:32:35.240 --> 00:32:44.240 Only on Sunday morning do you find that Arthur Daniels Midland really is the supermarket to the world. 246 00:32:44.240 --> 00:32:47.240 We don't see ADM advertisements the rest of the time. 247 00:33:17.240 --> 00:33:23.240 People have this idea that movie producers are just simply out there trying to, quote, make money, and then they're always puzzled. 248 00:33:23.240 --> 00:33:29.240 Well, gee, the G-movies do really well. Why do they keep giving us this R-rated stuff and the like? 249 00:33:29.240 --> 00:33:36.240 Well, you have to keep in mind that a lot of times producers really do not see the general public as their final customers. 250 00:33:36.240 --> 00:33:44.240 The people they're playing to are the Academy Awards people, other people living in Hollywood. 251 00:33:44.240 --> 00:33:55.240 You've got to show some nudity once in a while. You've got to have some bad words, or something that's pushing the envelope. 252 00:33:55.240 --> 00:34:06.240 And so, again, you have to understand that we have this notion that what these people are saying they're doing is writing the news why to help educate the people. 253 00:34:06.240 --> 00:34:32.240 And sometimes there's complaints about those people. Recently, Aaron Brown, an ex-CNN broadcaster, complained that, well, we were trying to give people real news, and it's those damn people over at Fox, and they're covering Natalie Holloway. We were trying to cover the tsunami, and they gave us the Natalie Holloway story, the girl who disappeared in Aruba. 254 00:34:32.240 --> 00:34:33.240 and Aruba. 255 00:34:33.240 --> 00:34:39.400 Of course, Natalie Holloway disappeared in around, I think, the beginning of June 2005 256 00:34:39.400 --> 00:34:45.040 and the tsunami occurred in very late 2004, so maybe CNN was just getting around to covering 257 00:34:45.040 --> 00:34:47.320 the tsunami, I can't tell you. 258 00:34:47.320 --> 00:34:53.520 But the idea, of course, that there is this contempt ultimately for this public that they 259 00:34:53.520 --> 00:34:58.240 say they're trying to reach and trying to give them the news that they have to have. 260 00:34:58.240 --> 00:35:04.740 Now, again, how does the Austrian look at this? 261 00:35:04.740 --> 00:35:18.740 Well, number one, I think that the Austrian understands that an institution that was derived in the progressive era 262 00:35:18.740 --> 00:35:26.240 is not going to do what it supposedly is created to do. 263 00:35:26.240 --> 00:35:38.240 The modern journalism with all of its canons of journalism, they were updated in 1975 by Sigma Delta Chi, which is the Society of Professional Journalists, 264 00:35:38.240 --> 00:35:50.240 and it's basically the same sort of thing, that modern journalism is not a regulator of the state, no matter what they say. 265 00:35:50.240 --> 00:35:55.240 These people are not the watchdogs of government. They are the lapdogs of government. 266 00:35:55.240 --> 00:36:04.240 I would like to give you a couple of anecdotes, again, to explain to you just how serious this particular problem is. 267 00:36:04.240 --> 00:36:11.240 I've written a lot about the case of Michael Milken and Rudy Giuliani. 268 00:36:11.240 --> 00:36:16.240 And anytime I can get a little slapping against Giuliani, I'm always glad to do it. 269 00:36:16.240 --> 00:36:29.240 During the late 1980s, Giuliani decided that he was going to clean up Wall Street. 270 00:36:29.240 --> 00:36:36.240 Now, it was presented in the press as the honest prosecutor simply looking and saying, 271 00:36:36.240 --> 00:36:43.240 there are dishonest and wrong things going on on Wall Street and I've got to clean it up. 272 00:36:43.240 --> 00:36:55.240 Michael Milken was actually doing, let's face it people, if it weren't for Michael Milken, our standard of living would be substantially lower today than it was. 273 00:36:55.240 --> 00:37:00.240 There have been other papers presented about that and that's as much as I can say with it. 274 00:37:00.240 --> 00:37:07.320 but certainly Milken's competitors didn't like him getting his clients and they 275 00:37:07.320 --> 00:37:13.940 didn't like what Milken was doing and Rudy Giuliani had, let's just say that he 276 00:37:13.940 --> 00:37:18.820 had aspirations of being more than just the US Attorney for the Southern 277 00:37:18.820 --> 00:37:26.020 District of New York and so Giuliani started his raids, if you remember the 278 00:37:26.020 --> 00:37:47.020 I had a raid on the trading floor at Princeton Newport Securities in which people were hauled out literally in chains and you had U.S. Marshals going in with loaded submachine guns with their fingers on the trigger going up against a bunch of unarmed traders. 279 00:37:47.020 --> 00:37:57.020 and the idea like they're raiding a drug house in Southern California or something, or an illicit arms factory or something. 280 00:37:57.020 --> 00:38:00.020 Of course, why did they do that? 281 00:38:00.020 --> 00:38:07.020 Because so the press could come behind and film all this and have the perp walk and these people dragged out in chains. 282 00:38:07.020 --> 00:38:12.020 Obviously, well, we have a criminal here. This must be dangerous crimes going on. 283 00:38:12.020 --> 00:38:30.020 And in his investigation of Giuliani, Milken found that things were being leaked to the Wall Street Journal and the New York Times. 284 00:38:30.020 --> 00:38:35.020 And the Wall Street Journal, the two reporters here were Laurie Cohen and James Stewart. 285 00:38:35.020 --> 00:38:44.020 And what Giuliani was doing was leaking material from the grand jury. Now this is a felony. 286 00:38:44.020 --> 00:38:53.020 This is a real live on the books felony. Okay? And he kept leaking this material out and so what you had were two, 287 00:38:53.020 --> 00:39:02.020 were a number of journalists aiding and abetting a felony. Alright? And of course they were all on a great crusade of course of law and order. 288 00:39:02.020 --> 00:39:18.020 And this went on and then later Giuliani leaked to Laurie Cohen a story that he was about to come in a new superseding indictment of a hundred more indictments for Milken. 289 00:39:18.020 --> 00:39:24.020 And Milken was getting ready to go to trial. He said, we have no idea. What are these indictments about? We have no idea. 290 00:39:24.020 --> 00:39:29.020 It turned out Giuliani didn't have any indictments. The whole thing was made up out of whole cloth. 291 00:39:29.020 --> 00:39:32.020 That, again, is a felony. It's called obstruction of justice. 292 00:39:35.020 --> 00:39:43.020 So what we had here, in the name, of course, of following the law, 293 00:39:43.020 --> 00:39:49.020 we had the destruction of a human being, with journalists aiding and abetting, 294 00:39:49.020 --> 00:39:55.020 a criminal or a prosecutor engaging in acts of criminality. 295 00:39:55.020 --> 00:39:59.020 And all of this is the public's right to know? I don't think so. 296 00:39:59.020 --> 00:40:08.020 What we're dealing with here is simply this incestuous relationship between the press and government. 297 00:40:08.020 --> 00:40:13.020 The Martha Stewart case. The Martha Stewart case is almost as egregious. 298 00:40:13.020 --> 00:40:20.020 In that we had the leaking of testimony from congressional committees and also from the grand jury. 299 00:40:20.020 --> 00:40:21.020 and Jury. 300 00:40:21.020 --> 00:40:28.380 Those also were felonies and they were doing it in order to make hits so that Martha Stock 301 00:40:28.380 --> 00:40:32.420 and Martha Stewart's company would take a hit and they were trying to get her to come 302 00:40:32.420 --> 00:40:35.720 meet with them because she was not going to be meeting with investigators. 303 00:40:35.720 --> 00:40:37.700 She said, I have nothing to say. 304 00:40:37.700 --> 00:40:42.540 And so they kept illegally leaking things, of course, to the press and then her company 305 00:40:42.540 --> 00:40:46.560 would take a hit and then finally she did that to stop the bleeding. 306 00:40:46.560 --> 00:40:51.560 And of course we all know what followed afterwards and I always love it when James Comey, the prosecutor said, 307 00:40:51.560 --> 00:40:55.560 well I was just trying to protect the interests of her stockholders. 308 00:40:55.560 --> 00:40:57.560 Again, I don't think so. 309 00:40:57.560 --> 00:41:07.560 I think that what we had was another example of a very incestuous relationship between the press and the government. 310 00:41:07.560 --> 00:41:11.560 You know, I could go on and on with these kinds of stories. 311 00:41:11.560 --> 00:41:22.560 Certainly in the, you know, Mises understood the nature of bureaucracy and the idea of spreading bureaucracy. 312 00:41:22.560 --> 00:41:27.560 We have reporters all over the place. What do they do? You know, a lot of the, if you cover the EPA, what do you do? 313 00:41:27.560 --> 00:41:35.560 Well, you cover the, you know, you always are talking about the need for more bureaucracy. 314 00:41:35.560 --> 00:41:43.320 and that if there's ever criticism of these government agencies, it's that they're not really doing enough regulating. 315 00:41:43.320 --> 00:41:46.320 They need to do even more regulating than they're already doing. 316 00:41:46.320 --> 00:41:53.820 And again, you see this relationship that really thrives on the growth of government. 317 00:41:53.820 --> 00:42:01.560 Well, if you think of the power of the press and what a free press was supposed to mean, 318 00:42:01.560 --> 00:42:10.560 The idea that a quote free press would be a major engine in making government grow simply doesn't compute. 319 00:42:10.560 --> 00:42:17.560 It doesn't make sense. It certainly did not make a sense at the founding of this country. 320 00:42:17.560 --> 00:42:25.560 The founders of the United States did not want a situation in which government was just going to continue to grow and grow and grow. 321 00:42:25.560 --> 00:42:30.560 And certainly they saw having a press as a check on that. 322 00:42:30.560 --> 00:43:00.560 And, but once it became institutionalized and once it became a progressive era institution, then we saw that, we saw a whole, you know, a whole new direction being taken, one that supported the growth of government, one that supported regulatory agencies and the like, and in fact one that modeled that very incestuous relationship of the relationship between government and the private sector, this being government entities and the private sector. 323 00:43:00.560 --> 00:43:24.560 Press. But I would like to also say that there is some hope on the horizon. That we are finding, for example, that the breakup of these large press entities, and I'm not talking about just as businesses, but what I mean also, the breakup in influence. 324 00:43:24.560 --> 00:43:33.560 If you think of the influence that Walter Cronkite had, no journalist has anywhere close to that today. 325 00:43:33.560 --> 00:43:37.560 And there are just literally too many choices out there for people. 326 00:43:37.560 --> 00:43:42.560 Now, journalists complain about this and they blame the public for actually wanting choices. 327 00:43:42.560 --> 00:43:45.560 And they say, no, this isn't what you should be having. 328 00:43:45.560 --> 00:43:53.560 But also, the Internet has proven to be something far more powerful, I think, than anybody could have ever imagined. 329 00:43:53.560 --> 00:44:07.560 When we moved to Cumberland, Maryland in August of 2001, we had already adopted one child and we had two others that we were in the process of adopting that would be coming to us soon. 330 00:44:07.560 --> 00:44:12.560 And my wife and I decided not to get cable TV. 331 00:44:12.560 --> 00:44:20.560 And if you live in Cumberland, and Cumberland is right in the middle of a bunch of ridges, 332 00:44:20.560 --> 00:44:24.560 you don't have cable, you're not getting TV reception. 333 00:44:24.560 --> 00:44:33.560 And so we opted not to get TV reception, which is very tough for, I love college football, 334 00:44:33.560 --> 00:44:40.560 and so when my team is playing, sometimes I don't get to see them, that's tough, but I put up with that. 335 00:44:40.560 --> 00:44:53.560 Don't watch television news. Don't subscribe to a newspaper. How do I keep up? 336 00:44:53.560 --> 00:44:56.560 Well, it's pretty darn easy to be honest. It's a thing called the Internet. 337 00:44:56.560 --> 00:45:04.560 And what we're finding with the Internet is, in fact, to a certain extent, almost a return to the old days. 338 00:45:04.560 --> 00:45:17.560 Return to the Party Press and also a return to being able to get the story from a lot of different sources of what's going on. 339 00:45:17.560 --> 00:45:24.560 And you have some enterprising people who have jumped into this and I think they really are doing a great job. 340 00:45:24.560 --> 00:45:32.560 And so, you know, we're starting to see some real competition again that we hadn't seen in a long time. 341 00:45:32.560 --> 00:45:38.560 Of course, the big boys don't like it. The New York Times sure doesn't like it. 342 00:45:38.560 --> 00:45:44.560 I remember in the last election, Alex Jones, and I actually know Alex Jones because I used to work with him. 343 00:45:44.560 --> 00:45:49.560 And Alex was with the Times for many years. He got a Pulitzer Prize. 344 00:45:49.560 --> 00:45:54.560 Now he teaches journalism. Last time I checked in with him, he was teaching journalism at Duke University. 345 00:45:54.560 --> 00:46:00.560 And Alex just was kind of sniffing about the bloggers. 346 00:46:00.560 --> 00:46:08.560 What could they know that a trained journalist doesn't know and the like? 347 00:46:08.560 --> 00:46:16.560 Although I look at it, the same analogy is the dartboard and the trained stock picker. 348 00:46:16.560 --> 00:46:23.560 What they found over the years is that the dartboard works about as well as the supposedly highly trained securities expert. 349 00:46:23.560 --> 00:46:37.560 And certainly I think that the bloggers have done a very very good job. If you want to take a Hayekian view of it, what we now see is a way to connect knowledge and information from across a really wide spectrum. 350 00:46:37.560 --> 00:46:45.560 And be able to put it together in a way that wasn't being done before. So I really see this as a positive development. 351 00:46:45.560 --> 00:46:51.920 Now, you know, the growth of government continues and, you know, one can, you know, one can 352 00:46:51.920 --> 00:47:00.520 only hope, but in conclusion, I would like to say that certainly the old, like everything 353 00:47:00.520 --> 00:47:08.520 else that came out of the progressive era, that the press as an institution is finally 354 00:47:08.520 --> 00:47:15.320 running into market forces that are forcing people to take a very, very different approach 355 00:47:15.320 --> 00:47:16.320 and a bunch of things. 356 00:47:16.320 --> 00:47:22.280 Now, you're still going to have the staffs of the New York Times and the Washington Post 357 00:47:22.280 --> 00:47:29.200 basically having the fanciful views of somebody who's a member of a college of liberal arts 358 00:47:29.200 --> 00:47:30.200 someplace. 359 00:47:30.200 --> 00:47:36.120 But they're also going to be countered by a lot of other people. 360 00:47:36.120 --> 00:47:42.080 And they are not going to have the same control over what goes over airwaves and what goes 361 00:47:42.080 --> 00:48:00.080 Thank you very much.