WEBVTT NOTE The Quest for a Property-Based, Misesian Economics (video) 1 00:00:00.000 --> 00:00:04.000 The Theory of Money and Credit 2 00:00:30.000 --> 00:00:43.680 In the 1920s, Ludwig von Mises laid the foundation of economics on property. 3 00:00:43.680 --> 00:00:48.120 As he wrote in liberalism, quote, now we wish to consider two different systems of human 4 00:00:48.120 --> 00:00:51.340 cooperation under the division of labor. 5 00:00:51.340 --> 00:00:55.520 One based on private ownership of the means of production and the other based on communal 6 00:00:55.520 --> 00:00:58.820 ownership of the means of production, close quote. 7 00:00:58.820 --> 00:01:04.480 From this starting point, Mises demonstrated the nature of capitalism, socialism and interventionism 8 00:01:04.480 --> 00:01:06.740 in his monumental books. 9 00:01:06.740 --> 00:01:10.980 To commemorate his achievements and build on his foundation, we offer the Ludwig von 10 00:01:10.980 --> 00:01:13.740 Mises Memorial Lecture. 11 00:01:13.740 --> 00:01:17.580 We are delighted to have Josef Schima deliver this year's Mises Lecture. 12 00:01:17.580 --> 00:01:23.340 Dr. Schima is Associate Professor and Chair of the Economic Policy Department at the Prague 13 00:01:23.340 --> 00:01:30.340 from the Prague School of Economics and Director for Publications at the Liberolny Institute in Prague. 14 00:01:30.340 --> 00:01:36.340 He has translated 10 books including Power and Market and What Has Government Done to Our Money 15 00:01:36.340 --> 00:01:41.340 and assisted in the translation of Man Economy and State and Human Action. 16 00:01:41.340 --> 00:01:46.340 He is the author of numerous articles in all the major Czech refereed scholarly journals 17 00:01:46.340 --> 00:01:50.340 and scores of articles in popular venues. 18 00:01:50.340 --> 00:01:58.340 Dr. Simon has published two books and is the co-author of the most widely used textbook on the history of economic thought used in the Czech Republic. 19 00:01:59.340 --> 00:02:04.340 Dr. Simon will speak on the topic, The Quest for a Property-Based Misesian Economics. 20 00:02:04.340 --> 00:02:24.340 Thank you, Jeff. Thank you the organizers for having me. Thank you, Lew Rockwell, for being a great inspiration for me. 21 00:02:24.340 --> 00:02:45.340 Let me start by a little piece of geography. As you heard, I come from Prague, the Czech Republic, which is for many of you, I guess, a similar exotic place as is Iowa for me. 22 00:02:45.340 --> 00:03:04.340 So, Prague, at least geographically, is more western than Vienna, and by the way those two great cities are not that far away from each other at some 200 miles. 23 00:03:04.340 --> 00:03:28.340 So our, at least, geographical proximity to the Austrian school and the origin of the Austrian school is useful in our today's effort to revive the school because we can claim that we used to be part of it and we are part of it again. 24 00:03:28.340 --> 00:03:55.340 This morning, when Robert Hicks mentioned that one of his books is coming up in Czech language, some of you laughed a little bit, which I don't know exactly why, but I hope I will, and I will do my best to show you that the Czech Republic is actually a very miraculous country. 25 00:03:55.340 --> 00:04:03.340 Well, I'll start with something which always makes a student interested in it. 26 00:04:03.340 --> 00:04:13.340 In my country, beer is cheaper than water. 27 00:04:13.340 --> 00:04:22.340 I don't know how, because you start up with water, you put some stuff in it, and it gets cheaper. 28 00:04:22.340 --> 00:04:37.340 So, as you can see, there is not only room for a research program in anarchy, as Edward Stringham mentioned, but this calls for an explanation too. 29 00:04:37.340 --> 00:04:47.340 And from this you can derive the whole body of economics because if beer is cheaper than water, 30 00:04:47.340 --> 00:04:55.740 and you use the first sentence of every economics textbook saying that people respond to incentives, 31 00:04:55.740 --> 00:05:07.500 you can nicely show that it is not a coincidence that Czech people are number one drinkers of beer measured on per capita basis. 32 00:05:07.500 --> 00:05:15.500 Better than Germans and, you know, other countries, we are always happy to be better than them. 33 00:05:20.500 --> 00:05:35.500 But this is still not all. Not only economics is alive in my country, now also the Austrian School is a respected school of thought, 34 00:05:35.500 --> 00:05:48.140 or Respected Way of Approaching Economic Phenomena, and this is so because of this institution, 35 00:05:48.140 --> 00:05:50.420 Ludwig von Mises Institute. 36 00:05:50.420 --> 00:05:58.140 It is exactly ten years this year when I came here as a student at that time, attending 37 00:05:58.140 --> 00:06:08.620 the Summer University and that experience, that event completely changed my life as I 38 00:06:08.620 --> 00:06:18.120 learned here how to fight for an ideal and how and why to care about ideas and since 39 00:06:18.120 --> 00:06:27.280 Since then, step by step, this investment of Ludwig von Mises Institute into myself 40 00:06:27.280 --> 00:06:36.760 and a couple of my colleagues can be called responsible for the Austrian school revival 41 00:06:36.760 --> 00:06:41.440 in Prague and the whole of Central Europe and perhaps Europe. 42 00:06:41.440 --> 00:06:58.440 I'll give you a couple of examples in which my country is very special and in which Austrian school made it to where it is in these days. 43 00:06:58.440 --> 00:07:09.440 As Jeff mentioned, I translated Murray Rothbard's Power and Market, this is the Czech version, 44 00:07:09.440 --> 00:07:19.440 under the name Economics of State Interventionism together with Rothbard's paper on utility and welfare economics. 45 00:07:19.440 --> 00:07:29.440 And this book now is our textbook for a master course in Economics of State Interventionism which I teach. 46 00:07:29.440 --> 00:07:36.440 It is an obligatory course and hundreds of students had to read the book. 47 00:07:36.440 --> 00:07:50.440 Just this semester, this spring, 2006, I have in my class 230 students and all of them had to read Murray Rothbard, 48 00:07:50.440 --> 00:08:03.440 which I guess doesn't make sure that there will be 230 Austrians in the summer. 49 00:08:03.440 --> 00:08:12.800 However, at least some of them will, or all of them will learn about the ideas and many 50 00:08:12.800 --> 00:08:21.640 of them will become followers of or sympathizers with the Austrian School. 51 00:08:21.640 --> 00:08:29.760 We also last year published the Czech version of Man Economy and State, in Czech it's called 52 00:08:29.760 --> 00:08:48.760 Principles of Economics to make it a real alternative to the other principles books and it is again widely read by students and we have now after one year have a second print of that book. 53 00:08:48.760 --> 00:09:11.760 This year, in two months, Human Action will appear in Czech and we'll have in Prague Ron Paul helping us to book launch Human Action and again, it will not just be a new book published, 54 00:09:11.760 --> 00:09:23.760 The book will be widely read by students because we do not only work in a think-tank, the Liberani Institute, 55 00:09:23.760 --> 00:09:34.760 but we also control part of the Prague School of Economics, which is the biggest economic school of the country, 56 00:09:34.760 --> 00:09:44.760 with some 3,000 students entering the school every year and we control one-fifth of it. 57 00:09:44.760 --> 00:09:58.760 So some 600 students are under our direct control and we realize that this is a real asset. 58 00:09:58.760 --> 00:10:09.760 So, for example, those 600 people in the first semester of their undergraduate studies, they have to read Henry Hazlitt's economics in one lesson. 59 00:10:09.760 --> 00:10:17.760 And then it goes on and on through Mises, to Rothbard and other Austrians. 60 00:10:17.760 --> 00:10:41.760 Not only us are responsible for teaching Austrian ideas, but I invite everybody from the Austrian circles from around the world to come to Prague as a visiting professor 61 00:10:41.760 --> 00:10:49.760 to teach the course on Austrian Economics, both theory or applications. 62 00:10:49.760 --> 00:10:58.760 We had people such as Samuel Bostaff, we had Guido Hilsmann, we had Richard Abbelling, 63 00:10:58.760 --> 00:11:03.760 we will have Robert Hicks in a month to be in Prague with us for two weeks, 64 00:11:03.760 --> 00:11:06.760 delivering the whole course for hundreds of students. 65 00:11:06.760 --> 00:11:18.760 A few more things I want to mention before presenting my paper on Misesian economics. 66 00:11:18.760 --> 00:11:31.760 One of the events of the year in Austrian economics is our annual conference called 67 00:11:31.760 --> 00:11:38.080 called Prague Conference on Political Economy, organized for the first time last year and 68 00:11:38.080 --> 00:11:50.040 in a month there will be the 2006 conference with three named lectures, two after people 69 00:11:50.040 --> 00:11:56.800 from the Austrian School whose lives were connected to Prague, namely Friedrich von 70 00:11:56.800 --> 00:12:09.800 and Wieser, who taught in Prague before leaving to Vienna to take over Carl Menger's chair. 71 00:12:09.800 --> 00:12:21.520 The other man with Austrian school connection is Franz Chuhel, to whom Mises makes references 72 00:12:21.520 --> 00:12:30.460 in Human Action, in other words, Frank Chuhel who wrote a book on ordinal utility and actually 73 00:12:30.460 --> 00:12:37.260 Mises took it from him and then the whole of mainstream economics took it from Mises. 74 00:12:37.260 --> 00:12:43.300 This Frank Chuhel being of Czech origin is completely forgotten in my country and this 75 00:12:43.300 --> 00:12:53.060 This is our attempt to tell to the world that not only beer can be drank in Prague, but 76 00:12:53.060 --> 00:12:59.140 also we have some spiritual values to adhere to. 77 00:12:59.140 --> 00:13:03.680 And this year, Robert Hicks is having one of those lectures, and the second is given 78 00:13:03.680 --> 00:13:10.220 by Jesus Huerta de Soto, whose book on banking and business cycle just appeared in English. 79 00:13:10.220 --> 00:13:29.220 So, great people and hundreds of students of Austrian school, not only from the Czech Republic, but mostly from Central Europe or Europe in general, with numerous American attendees as well. 80 00:13:29.220 --> 00:13:35.220 Through this conference, I try to do what the Mises Institute did for me. 81 00:13:35.220 --> 00:13:49.220 Bring the ideas, have events to which people can come and meet the heroes of the school and start working in the tradition. 82 00:13:49.220 --> 00:13:57.220 For some of our Central and Eastern European friends, it is a little too costly to come to Auburn. 83 00:13:57.220 --> 00:14:11.220 So if I can substitute what the Mises Institute is doing here and do the same thing, or at least try to do the same thing in the heart of Europe, I guess we can only benefit from it. 84 00:14:11.220 --> 00:14:30.220 We also have an Austrian English referee journal called New Perspectives on Political Economy to which some of you already contributed. 85 00:14:30.220 --> 00:14:49.220 And our biggest project that is about to materialize within a month will be a European publishing house focusing on Austrian economics called Bohemian Academic Press. 86 00:14:49.220 --> 00:15:06.220 So I guess it's a way how we can give a platform for European, Austrian scholars to publish their work through us. 87 00:15:06.220 --> 00:15:15.220 Nothing of the above mentioned would not be possible and would not have happened 88 00:15:15.220 --> 00:15:31.220 without the afford of people from the Mises Institute and without, of course, Mises's great contribution to economic science and his inspiring work. 89 00:15:31.220 --> 00:15:48.220 However, not only my personal life and professional career changed, there were other changes as a result of Misesian scholarship as well. 90 00:15:48.220 --> 00:16:00.220 After the collapse of socialism one and a half decades ago, a general belief prevailed that socialism did not deliver 91 00:16:00.220 --> 00:16:10.220 and no one better than Ludwig von Mises explained that it could not deliver prosperity comparable to Western standards. 92 00:16:10.220 --> 00:16:22.220 Socialist planners simply were not able to do their homework and were not able to hide this blatant failure before the eyes of the masses anymore. 93 00:16:22.220 --> 00:16:33.220 Some sort of transition toward capitalism was therefore suggested and implemented in many countries, such as my own, the Czech Republic. 94 00:16:33.220 --> 00:16:38.220 Some prices were set free, some sectors privatized. 95 00:16:38.220 --> 00:16:50.220 After many years of socialist economic chaos, economic structure was given a chance to become meaningful, to get real. 96 00:16:50.220 --> 00:16:58.220 In the field of economic theory, we could witness an analogical development. 97 00:16:58.220 --> 00:17:05.220 It was hardly possible anymore to claim that Russia will soon outperform the United States, 98 00:17:05.220 --> 00:17:14.220 with some celebrating leading economists outrageously have claimed for many years. 99 00:17:14.220 --> 00:17:27.220 A complete economic disaster of socialist planning and millions of people in poverty send them a subtle signal that there might be something wrong with their models. 100 00:17:27.220 --> 00:17:32.220 And the whole way they approach economic phenomena. 101 00:17:32.220 --> 00:17:57.220 Hence, with the collapse of socialism, economists saw a challenge and wanted to get real too, to provide a scientific argument for possible real-world transition strategies toward capitalism, or, more importantly, different visions of the end states, different capitalisms. 102 00:17:57.220 --> 00:18:05.220 New schools emerged and felt confident to provide answers to the problem of the day. 103 00:18:05.220 --> 00:18:12.220 They do not solve the problem whether capitalism is better than socialism or not. 104 00:18:12.220 --> 00:18:21.220 They propose activism from within, that is, in the name of capitalism, for capitalism. 105 00:18:21.220 --> 00:18:30.220 Rising from the ashes of the original comparative economics, which loses its sense with the end of socialist experiment, 106 00:18:30.220 --> 00:18:39.220 there is nothing to compare to capitalism, we can read about new comparative economics coming from Harvard, 107 00:18:39.220 --> 00:18:50.220 whose aim is to choose the best capitalism, an optimal mix of disorder and dictatorship for the people. 108 00:18:50.220 --> 00:18:58.220 At the University of Chicago, we can witness how the new Chicago School, quote, 109 00:18:58.220 --> 00:19:06.220 identifies alternatives as additional tools for more, for a more effective activism. 110 00:19:06.220 --> 00:19:10.220 The hope is that the state can do more. 111 00:19:10.220 --> 00:19:15.220 The government must weigh the costs against the benefits 112 00:19:15.220 --> 00:19:22.180 and select the mode that regulates most effectively, end quote. 113 00:19:22.180 --> 00:19:29.560 Or if people make systematically bad decisions, quote, then we should be less willing to grant 114 00:19:29.560 --> 00:19:37.300 white freedom to adults to make unaided decisions involving the comparison of current benefit 115 00:19:37.300 --> 00:19:40.100 and future costs, end quote. 116 00:19:40.100 --> 00:19:46.900 This is how a scheme of state-for-saving system, which they call de-biasing people's behavior 117 00:19:46.900 --> 00:19:53.980 through governmental action, within a capitalist framework is justified by an increasingly 118 00:19:53.980 --> 00:19:58.340 popular behavioral law in economics. 119 00:19:58.340 --> 00:20:07.580 Shortly, economists do not want to be merely armchair theoreticians in Steve Medema's work 120 00:20:07.580 --> 00:20:14.580 as someone who knows a thousand ways to make love, but doesn't know any girls. 121 00:20:19.780 --> 00:20:26.780 To continue this analogy with the collapse of socialism, the Russian muzhik, socialism, 122 00:20:27.300 --> 00:20:33.780 does not pretend anymore to be more beautiful than a girl, capitalism, and economists do 123 00:20:33.780 --> 00:20:38.280 They do not pretend anymore to know how to generate his beauty. 124 00:20:38.280 --> 00:20:49.280 Economists now focus exclusively on girls, capitalisms, though they often do not have lost their ambitions to impose their beauty standards. 125 00:20:49.280 --> 00:20:56.280 They still want to plan, fine-tune the economy or mimic the market. 126 00:20:56.280 --> 00:21:07.280 Their arguments for state activism still exist, and to fight them is the major task of those who cherish free markets. 127 00:21:07.280 --> 00:21:09.280 Now how? 128 00:21:09.280 --> 00:21:18.280 Rather than following the spirit of the day and jump on the bandwagon to introduce once again new economics, 129 00:21:18.280 --> 00:21:27.280 A brand new modern school of thought with a new suggestion how to tackle new burning social problems. 130 00:21:27.280 --> 00:21:35.280 I would rather suggest to go back to the wisdom of those who are not surprised by the tragic failure of communism 131 00:21:35.280 --> 00:21:44.280 or Keynesianism or interventionism for that matter, who spend their lives trying to integrate economic science 132 00:21:44.280 --> 00:21:52.280 into a coherent body of knowledge rather than divided into hyper-specialized disconnected pieces 133 00:21:52.280 --> 00:22:02.280 who have kept emphasizing that scientists of law and economics are connected through the concept of property 134 00:22:02.280 --> 00:22:12.280 without which social order becomes meaningless, namely to the ideas of the giants of the Austrian School 135 00:22:12.280 --> 00:22:16.280 with Ludwig von Mises as its Dean. 136 00:22:16.280 --> 00:22:22.280 By the way, Austrian Law and Economics is together with Exploration of Anarchy, 137 00:22:22.280 --> 00:22:29.280 another neglected research program that has to be developed in detail. 138 00:22:29.280 --> 00:22:37.280 Ludwig von Mises was a man who famously gave us in his liberalism a one word summary 139 00:22:37.280 --> 00:22:46.280 A theory of what is the only workable system of human cooperation in a society based on the division of labor. 140 00:22:46.280 --> 00:22:51.280 Such a single word would have to read property. 141 00:22:51.280 --> 00:22:59.280 Socialism was ultimately based on the neglect of property, abolition of the private property of the means of production. 142 00:22:59.280 --> 00:23:11.280 Once socialism as a doctrine is fortunately dead, all countries that want to return to capitalism have to start respecting the property rights. 143 00:23:11.280 --> 00:23:25.280 Unfortunately, it is not what is happening in those countries, and again, my country, the Czech Republic, can be mentioned as one example of such a situation. 144 00:23:25.280 --> 00:23:50.280 The reason is that both practical economic policies of so-called capitalist countries and more importantly most of so-called free market economists could be called capitalist or free market 145 00:23:50.280 --> 00:23:56.280 only when compared to the reality of Soviet Socialism and Marxian economics. 146 00:23:57.280 --> 00:24:04.280 However, when judged against the benchmark of property, Mises so clearly set forth, 147 00:24:04.280 --> 00:24:13.280 we would have to call both policies and their intellectual bodyguards socialists or interventionists at best. 148 00:24:13.280 --> 00:24:28.280 Take first a few examples of how generally accepted strongest intellectual proponents of free markets treat property, law and economics school, and public choice school. 149 00:24:28.280 --> 00:24:57.280 Richard Posner, whose belief, together with Ronald Coase, to bring property back to economics, came up with the most ambitious theoretical aspect of the economic approach to law, the proposal of a unified economic theory of law in which law's function is understood to be to facilitate the operation of free markets. 150 00:24:58.280 --> 00:25:15.280 Hence, it is necessary, allegedly, in the name of markets to manipulate the limits of property rights in order to get an optimal, efficient level of economic output. 151 00:25:15.280 --> 00:25:42.280 Once again, as Posner says, the issue is rarely property rights or no property rights, but rather limited property rights or unlimited property rights with the limitation designed to induce the correct, not an insufficient or excessive level of investment. 152 00:25:42.280 --> 00:25:53.280 It sounds like another attempt to develop a general theory by a man who is not believed to be any great free marketeer. 153 00:25:53.280 --> 00:26:00.280 This suspicious is reinforced when we learn about Posner's macro view on economics. 154 00:26:00.280 --> 00:26:12.280 As he points out, economics is concerned with explaining and predicting tendencies and aggregates, rather than the behavior of each individual person. 155 00:26:14.280 --> 00:26:22.280 Shall this be an antidote to our socialist and collectivist approaches of the past? 156 00:26:22.280 --> 00:26:49.280 and all this especially when we saw how Posner's ambitious law and economics projects ended up with Posner after decades of studies suggesting that soundness of theoretical arguments is not to be any more decisive because the ultimate criterion should be pragmatic. 157 00:26:49.280 --> 00:26:57.280 We should not worry whether cost-benefit analysis is well grounded in any theory of value. 158 00:26:57.280 --> 00:27:03.280 We should ask how well it serves whatever goals we have." 159 00:27:03.280 --> 00:27:13.280 Well, this concept of we and whatever goals seem to be quite frightening in the post-socialist reality 160 00:27:13.280 --> 00:27:23.280 and do not seem by no means to give us a clear direction how to move from socialism toward capitalism. 161 00:27:23.280 --> 00:27:34.280 Public Choice is a school that came to revolutionize the perception of the state and attempted to demystify it. 162 00:27:34.280 --> 00:27:39.280 However, it doesn't seem to be of much help either. 163 00:27:39.280 --> 00:27:45.280 with its parallel between economic and political relations that allegedly both 164 00:27:45.280 --> 00:27:54.280 quote, represent cooperation on the part of two or more individuals and hence at base they are 165 00:27:54.280 --> 00:28:00.280 much the same, end quote, that means mutually advantageous. 166 00:28:00.280 --> 00:28:07.280 It is hard to find a principle argument against socialist or semi-socialist 167 00:28:07.280 --> 00:28:15.940 policies and governmental activities. Moreover if as Buchanan says the status 168 00:28:15.940 --> 00:28:21.780 quo always represents an existing implicit social contract and in the name 169 00:28:21.780 --> 00:28:28.000 of efficiency it might be justifiable to confiscate inheritance you are left with 170 00:28:28.000 --> 00:28:35.780 nothing to protect property as a keystone of viable social fabric. It is even more 171 00:28:35.780 --> 00:28:52.780 They were disturbing when we realized that both law and economics and public choice are supposed to be, unlike many other pseudo-economic schools, the friends of property and capitalism. 172 00:28:53.780 --> 00:29:02.780 How refreshing it is to read Mises' works and see what a really comprehensive theoretical approach means. 173 00:29:02.780 --> 00:29:21.780 His praxeology naturally encompasses both law and political markets and gives us tools such as economic calculation to evaluate their interconnection with other parts of social reality. 174 00:29:21.780 --> 00:29:35.780 Now look what the most market oriented practical economic policy reforms proposals are suggested by free marketeers. 175 00:29:35.780 --> 00:29:54.780 In countries such as my own, what people who want to move the country away from socialism come up with is compulsory social security system and flat tax. 176 00:29:54.780 --> 00:30:10.780 The reason for the first one, social security, is that we'll have higher savings, hence higher investments, and hence higher GDP, that is, we'll become somehow more efficient. 177 00:30:10.780 --> 00:30:22.780 The reason for the second is not to lower taxes, but to have more efficient tax collection. 178 00:30:22.780 --> 00:30:27.780 Again, the strange concept of efficiency is entering the scene. 179 00:30:27.780 --> 00:30:32.780 Efficiency is here to manipulate property rights. 180 00:30:32.780 --> 00:30:39.780 In the name of efficiency, politicians were told years ago 181 00:30:39.780 --> 00:30:43.780 by Milton Friedman to get rid of the gold standard 182 00:30:43.780 --> 00:30:49.780 and later by Posner and Coase to destroy property and property rights 183 00:30:49.780 --> 00:30:59.780 and redefine them anew by Buchanan to nationalize inheritance and now because of efficiency to semi-nationalize savings 184 00:30:59.780 --> 00:31:04.780 and redesign the tax system with the objective to collect more taxes. 185 00:31:04.780 --> 00:31:07.780 It is completely absurd. 186 00:31:07.780 --> 00:31:18.780 As Mises said in Human Action, there is no such thing as an appropriation of portions out of a stock of ownerless goods. 187 00:31:18.780 --> 00:31:23.780 The products come into existence as somebody's property. 188 00:31:23.780 --> 00:31:29.780 If one wants to distribute them, one must first confiscate them. 189 00:31:29.780 --> 00:31:35.780 It is certainly very easy for the government apparatus of compulsion and coercion 190 00:31:35.780 --> 00:31:39.780 to embark upon confiscation and expropriation. 191 00:31:39.780 --> 00:31:50.780 But it does not prove that a durable system of economic affairs can be built upon such confiscation and expropriation. 192 00:31:50.780 --> 00:31:59.780 The very basis of social order is rooted in the concept of property. 193 00:31:59.780 --> 00:32:10.780 Efficiency, if it means anything, cannot rest on expropriation and the use of force against peaceful people. 194 00:32:10.780 --> 00:32:19.780 It is a result of market operation through which entrepreneurs discover better ways of conducting transactions. 195 00:32:19.780 --> 00:32:26.780 Efficiency stems from consent. It is a result of market operation. 196 00:32:26.780 --> 00:32:34.780 It is not something that must first be calculated by experts and then implanted onto the economy. 197 00:32:34.780 --> 00:32:46.780 Mises' understanding of this kind of defense of market economy is upped as he pointed out again in Human Action. 198 00:32:46.780 --> 00:32:53.780 Even those specialists who do not openly side with a definite pressure group 199 00:32:53.780 --> 00:33:01.580 Group and who claim to maintain a lofty neutrality unwittingly endorse the essential creeds of 200 00:33:01.580 --> 00:33:04.620 the interventionist doctrine. 201 00:33:04.620 --> 00:33:11.760 Dealing exclusively with the innumerable varieties of government interference with business, 202 00:33:11.760 --> 00:33:16.660 they do not want to cling to what they call mere negativism. 203 00:33:16.660 --> 00:33:23.420 If they criticize the measures resorted to, they do it only in order to recommend their 204 00:33:23.420 --> 00:33:50.620 We do not seem to be able, neither here in the US nor in Europe, to, I'm quoting Mises, 205 00:33:50.620 --> 00:34:02.620 To bar such squanders from access to the universities and their articles from being printed in the periodicals of the associations of university teachers, 206 00:34:02.620 --> 00:34:17.620 that is already reality. We have to live in a world which is hostile to the concept of property, both on the theoretical front and in practical politics. 207 00:34:17.620 --> 00:34:26.620 However, I believe we can use the thorough experience with socialism to our benefit. 208 00:34:26.620 --> 00:34:33.620 We can show our students how crucial role economic understanding plays. 209 00:34:33.620 --> 00:34:41.620 We can show them that there were scholars who understood what is wrong with socialism. 210 00:34:41.620 --> 00:34:52.920 And we can use the same powerful economic logic to expose socialist or interventionist policies of today. 211 00:34:52.920 --> 00:35:03.920 Simply, we have Mises' property-based economics that can help us understand what is the way to go. 212 00:35:03.920 --> 00:35:10.920 Rather than as many other approaches suggesting a better socialist experiment, 213 00:35:10.920 --> 00:35:16.920 It identifies a viable alternative to our socialist past. 214 00:35:16.920 --> 00:35:21.920 As Mises pointed out in Human Action, 215 00:35:21.920 --> 00:35:30.920 whoever neglects to examine to the best of his abilities all the problems involved, 216 00:35:30.920 --> 00:35:37.920 voluntarily surrenders his birthright to a self-appointed elite of Superman. 217 00:35:37.920 --> 00:35:59.920 In such vital matters, blind reliance upon experts and uncritical acceptance of popular catchwords and prejudices is tantamount to the abandonment of self-determination and to yielding to other people's domination. 218 00:35:59.920 --> 00:36:14.920 As conditions are today, nothing can be more important to every intelligent man than economics, property-based economics indeed. 219 00:36:14.920 --> 00:36:16.920 Thank you for your attention. 220 00:36:16.920 --> 00:36:28.920 Applause 221 00:36:28.920 --> 00:36:34.920 Time for questions. 222 00:36:34.920 --> 00:36:44.920 What other schools of thought are being taught in your department? 223 00:36:44.920 --> 00:37:00.800 Well, we have the whole range of professors teaching other economic schools, we are still 224 00:37:00.800 --> 00:37:07.400 not the only department that teaches economics, so in teaching Austrian economics we might 225 00:37:07.400 --> 00:37:16.560 would have one lie, but the other faculty members teach it the old way, which is not 226 00:37:16.560 --> 00:37:27.040 Marxism anymore, but the old Marxists switch into being Keynesians in theory and pro-European 227 00:37:27.040 --> 00:37:37.480 and Union in Applied Policy, which makes our task easier because you don't need to use 228 00:37:37.480 --> 00:37:45.040 very subtle arguments to make students understand who is right and who is not. 229 00:37:45.040 --> 00:38:00.040 How is your government rebuilding and creating the local government? Are they giving your people more property rights? 230 00:38:15.040 --> 00:38:45.040 Restitution, simply the stolen property, stolen by communists, was given back to the original owners, by the way, what was stolen by Democrats before 1948, which was generally big firms, coal industry, mining, and these important sectors, they were not returned back because this is considered to be, you know, fine as 231 00:38:45.040 --> 00:38:58.240 Some people voted on it, but now the situation is getting a little depressive with the EU 232 00:38:58.240 --> 00:39:02.520 centralization project. 233 00:39:02.520 --> 00:39:07.640 One example, it was quite easy to start up a new business at the beginning of 1990s. 234 00:39:07.640 --> 00:39:09.640 Do you mind talking about Iowa? 235 00:39:37.640 --> 00:40:00.640 I would like to tell my students that we are somewhere where the United States were 100 something years ago when the federal income tax was suggested and first declared unconstitutional, however, when you try for a couple of times you typically succeed in these ventures. 236 00:40:00.640 --> 00:40:07.440 Now in Europe we are at that stage that, you know, something gets regulated centrally. 237 00:40:07.440 --> 00:40:14.080 Something is only in the form of a draft. 238 00:40:14.080 --> 00:40:21.040 We already got the European Center Bank the same or similar way you got your Center Bank 239 00:40:21.040 --> 00:40:23.680 100 years ago. 240 00:40:23.680 --> 00:40:31.000 So all the problems stemming from political centralization we can expect in Europe, and 241 00:40:31.000 --> 00:40:37.000 I would claim that they will be bigger and the centralization will proceed faster because 242 00:40:37.000 --> 00:40:41.860 we do not have this tradition of individualism which you have. 243 00:40:41.860 --> 00:40:48.760 We have socialist France with socialist Germany being behind the centralization, so it might 244 00:40:48.760 --> 00:40:54.620 have some short-term benefits, such as the people from the Czech Republic can go and 245 00:40:54.620 --> 00:41:03.620 work in Germany or France or Spain. However, new pressure groups are formed on the continent-wide 246 00:41:03.620 --> 00:41:12.660 level with now more than half of the new legislation already coming from Brussels with no way to 247 00:41:12.660 --> 00:41:25.180 to reverse it. So politics is now much more distant from people. Living in a small country 248 00:41:25.180 --> 00:41:30.780 has an advantage that at least sometimes you might meet your minister who does all the 249 00:41:30.780 --> 00:41:37.740 harm to you and tell it directly to him. But now if you do not even speak the same language 250 00:41:37.740 --> 00:41:58.740 When you have kids, how sort of interested do they get? When they have problems, what are their objections? 251 00:41:58.740 --> 00:42:05.740 It sounds like you have kids that at least seem to want to engage in material. What are the kinds of reactions you're getting? 252 00:42:05.740 --> 00:42:09.740 when exposing them to Austrian economics. 253 00:42:09.740 --> 00:42:13.740 Well, they like it, because they can understand it. 254 00:42:13.740 --> 00:42:19.740 It makes sense. This deductive method has the advantage 255 00:42:19.740 --> 00:42:27.740 that once they understand the basis, you don't need to force them to memorize the result. 256 00:42:27.740 --> 00:42:33.740 They will think themselves through it, and perhaps they are surprised at the beginning 257 00:42:33.740 --> 00:43:02.740 by what their brain is telling them but after a while they get it so we don't have complaints and especially if you approach them with a way in which they do not feel the pressure on them you tell them well this is the argument and I'll be very happy 258 00:43:02.740 --> 00:43:28.600 Professor Sima, could you comment on the 259 00:43:28.600 --> 00:43:57.600 Q. Professor Sima, could you comment on our President Wilson and the creation by interventionists of the unified state of Czechoslovakia after World War I? Was that a typical error of bureaucrats who have joined both the Czechs and Slovaks into one country? 260 00:43:57.600 --> 00:44:15.600 Well, definitely the project does not seem to be successful as Slovak used the first opportunity to leave and, by the way, Czechs were happy. 261 00:44:15.600 --> 00:44:45.360 so yeah fortunately it was you know the end of this nation of two brother nationalities living under one roof ended up peacefully and I can tell that this split of the state actually improved the relation between both both nations which is what 262 00:44:45.360 --> 00:44:51.260 What we would theoretically expect, but it's nice to see that it really works, that there 263 00:44:51.260 --> 00:44:58.460 is no animosities, nobody has this feeling that, you know, I pay taxes for the subsidies 264 00:44:58.460 --> 00:45:02.060 of somebody, somebody else somewhere else. 265 00:45:02.060 --> 00:45:07.060 When everybody pays its or his bill, you know, it makes people friends. 266 00:45:07.060 --> 00:45:32.120 Well, yeah, we have this phenomena of having a prime minister who read Mises and Hayek, 267 00:45:32.120 --> 00:45:56.120 which is not very common, however it's not helpful either. I mean it's, I would say that the only institutions that appreciate it are some of free market or libertarian think tanks in America such as the Cato Institute, 268 00:45:56.120 --> 00:46:12.120 because they believe that this is, you know, this is the way how you can change the world, that they can show a living example of a successful free market economist. 269 00:46:12.120 --> 00:46:21.120 However, and I wrote an article for Journal of Libertarian Studies on this fable of laissez-faire reform in the Czech Republic. 270 00:46:21.120 --> 00:46:48.120 It's simply not trustworthy when you have all banks in state hands, you have social health care and school system, you redistribute 50% of GDP and you have a prime minister who is celebrated as a great libertarian. 271 00:46:48.120 --> 00:47:00.120 who, in addition to it, approves draft and attacks everybody who are against draft. 272 00:47:00.120 --> 00:47:16.120 At the same time, as I said, he has friends such as Milton Friedman that is helpful in these circles. 273 00:47:16.120 --> 00:47:39.120 But, you know, some absurdities appeared. For example, Heritage Foundation produces this index of economic freedom and it was done at the beginning of 1990s as a sort of a questioner for free market people such as Milton Friedman to rank countries according to economic freedom. 274 00:47:39.120 --> 00:47:44.440 And with all banking sector in state hands and all these things I mentioned, because 275 00:47:44.440 --> 00:47:50.680 of Klaus being friend to Friedman, Czech Republic ranked, I guess, fifth. 276 00:47:50.680 --> 00:47:59.280 It was like Hong Kong, you know, New Zealand, and then the Czech Republic. 277 00:47:59.280 --> 00:48:25.280 So, of course you get all the problems of welfare state, unfortunately as people see it, the bad results are associated with your libertarian prime minister or president, so all the blame goes on libertarianism or free market, which is completely, you know, absurd. 278 00:48:25.280 --> 00:48:37.280 But I would rather have a socialist as a prime minister doing the same things and then you can at least claim correctly socialism for the failure. 279 00:48:41.280 --> 00:48:47.280 You criticized Posner and public choice and so on and so forth. 280 00:48:47.280 --> 00:49:05.280 It sounds like you're saying that the former socialists have taken interventionist ideas from not only free market thinkers and not taken the free market parts. 281 00:49:05.280 --> 00:49:08.280 I mean, is that a fair description of what you've experienced? 282 00:49:08.280 --> 00:49:25.280 Well, what I'm saying is that if you do not really preach pure free market, then the interventionist in power will misuse this weakness 283 00:49:25.280 --> 00:49:40.680 and will claim by practicing semi-socialist policies that even, you know, this school and that great free marketeer suggested this. 284 00:49:40.680 --> 00:49:57.680 So, you simply, you create problems within the economy that then are blamed on a wrong person, right? 285 00:49:57.680 --> 00:50:05.680 So, I understand that politics is based on compromise. 286 00:50:05.680 --> 00:50:12.280 so I'm not saying that you can like that change the country but at least if you 287 00:50:12.280 --> 00:50:18.960 want to be called a libertarian you should stick to some principle such as 288 00:50:18.960 --> 00:50:28.800 non-confiscation of property and then if the compromise arrives then you may say 289 00:50:28.800 --> 00:50:32.520 okay that's a compromise but if you start up with something that which is 290 00:50:32.520 --> 00:50:49.520 Do you have a political party called the Libertarian Party? 291 00:51:02.520 --> 00:51:21.520 After attending our summer programs, misunderstood what we are saying and went to politics, starting this venture, however, they will never make it to be anything else than just amusement for others. 292 00:51:32.520 --> 00:51:34.520 Thank you very much.