WEBVTT

NOTE Austro-Libertarianism as a Starfish

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Our next lecturer, Helio Beltrau, is the rarest of men, a financial and ideological entrepreneur

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who has been stunningly successful in both arenas while remaining uncompromising in his

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devotion to the principles of a free society as propounded by Ludwig von Mises and Murray

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Rothbard. Helio trained as an electrical engineer at Catholic University of Rio de Janeiro.

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He received his MBA from Columbia Business School, majoring in finance and graduating

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with honors. He was an investment banking executive at Banco Guarantia, the leading

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Brazilian investment bank in the 1990s. He was also a hedge fund manager and advisor

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for merger and acquisition transactions. He's currently a board member of several companies

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whose businesses range from fuel distribution, chemicals and logistics to women's fashion

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and education. He's a co-founder and board member of Instituto Millennium, a libertarian

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Initiative co-founded by leading owners and CEOs, both of media organizations and of some

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of the largest industrial firms in Brazil. Most important, he is the founder and president

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of Mises Brazil Institute. On a personal note, I had the pleasure of enjoying the wonderful

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hospitality of Helio and his lovely wife, Graciela, last year when he invited me to

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to speak at the first conference held by Mises Brazil.

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I'm also in his debt for introducing me

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to the Brazilian steakhouse, or Rodezio.

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Comparing a Brazilian Rodezio to an American steakhouse

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is like comparing Austrian economics to Keynesian economics,

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or even happiness research.

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So without further delay, I present you Helio.

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Guys, I apologize because I don't have any books or paper to present to you tonight.

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But I have submitted something to Joe, this, and he had accepted it.

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So in case you have any problem with my lecture, please take it up with Joe, his in the first

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It is... First, let me tell you a story. When I arrived at Atlanta Airport, I had a very nice conversation with the immigration officer that reminded me of Gary North's lecture last year, which was Keynes and his influence.

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And I guess the immigration officer really liked economics. He asked me, what are you doing in the US?

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And I said, I'm going to a conference. Where are you going to?

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So I said, the Mises Institute Scholars Conference.

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And he said, Mises? Who's this guy?

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An economist. Is he alive?

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I said, no, he was dead in 1973.

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He said, oh, so he must be a Keynesian.

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As I try to control myself as an immigration officer,

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I said, no, no, no, absolutely not.

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He's a free market guy.

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And he said, I don't understand, aren't Keynesians free-marketeers?

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And I asked him, do you have kids, sir?

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And he said, yes, I do.

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So do you think guys spending money in Washington

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and sending the bill to your kids, is that a free market?

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And the guy said, I guess not.

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And he said, do you have kids?

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I said, yes.

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So they are paying for it as well.

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And I said, well, but I'm in Brazil

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and they're doing a better job, and etc.

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And then he said, sir, we live in a globalized world.

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Your children are paying for it as well.

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And he won the argument.

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My only consolation was that, wait a minute, sir.

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How do you spell Mises?

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I want to look it up.

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And that was good.

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So it's the most privileged honor to be here with you.

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and deliver this Mises lecture.

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I don't know if you know, but it's Carnival in Brazil this week

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and Brazilians are right now pursuing their constitutional right to pursue the happiness

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in the biblical sense.

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But to me, the feast is happening here, so it's a pleasure to be here.

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I thank you for inviting me.

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Joel wanted me to speak about how Misesian ideals could

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change Brazil and Latin America.

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And I'll talk a little bit about that.

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But what I really want to talk about

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is Austro-libertarianism, that is our freedom philosophy,

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whose pillars are the non-initiation of force

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and Private Property, and related to two aspects.

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First of all, my experience as an executive

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of a performance-based organization,

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the one founded by Brazilian partners led by Jorge Paulo

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Lehmann, who are now the controlling shareholders

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of Unhauser-Busch in BEV, whose CEO is today's Carlos Brito,

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and they own several other companies,

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but that's the most famous one.

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So I want to relate to Austro-libertarianism

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to that experience and from these great guys,

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on the one hand.

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And on the other hand, I would like

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to relate Austro-libertarianism and our freedom movement

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to the book Starfish and the Spider.

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I don't know if you're familiar with it, so let me start with the flavor of the book.

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It's a five-year-old book that talks about what exactly is a decentralized organization,

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its strengths, its weaknesses, and the authors compare it to two animals whose structure superficially looks similar,

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the spider on the one hand and the starfish on the other.

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The spider has a central body, 8 legs. The starfish, central body, 5 arms.

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Internally, however, their biology is completely different.

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If you cut a leg of a spider, what you get is a 7-legged crippled spider.

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If you cut the head, though, it dies. It cannot live without its command center.

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We are familiar a lot with spider organizations, be it government, corporations and even traditional think tanks.

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They have boards, they have CEOs, hierarchies, headquarters, etc.

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Now, the starfish, if you cut an arm of a starfish, it will grow one back.

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And if you cut the starfish in half, an amazing thing happens.

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Two organisms survive. Two different starfish survive.

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There's even a species of starfish called the Linkea, that if you cut all five arms of it, it will grow five separate organisms.

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So, each arm has its own different organs.

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Each arm has its own stomach, its own muscles, its own way of feeding itself, and there's

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no central organ except for a nerve ring that connects the arms.

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That's a decentralized organization, organism in this case.

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When you look at the world today, there are more and more starfish organizations that

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are sprouting.

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And at our own Austrian libertarian freedom movement, I would argue that we are starting

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to behave like an adaptable, hard-to-combat starfish, with each institute or any other

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Organized Initiative, behaving as an arm of the starfish and the nerve ring being the Austrian libertarian doctrine, but I'll get back to that.

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First of all, let me say a few words about Brazil. Brazil has always had a status mentality.

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For example, why in the US you would ask a person how much do you make, in Brazil you

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would ask how much do you receive, as if it were a gift or a grant as opposed to the get

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what you give mentality in the US.

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My father used to say that Brazil is an island of initiative completely surrounded by government.

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Brazil also has an ingrained red tape mentality, and there's another sentence by my father.

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He used to say that Brazilians place more trust in the death certificate than in the

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presence of the dead body itself.

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We were famous, famous back in the 80s for holding a world record, and I bet Joe knows

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about that.

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It was the world record of inflation.

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And even between 1990 and 1994, less than 20 years ago, the average annual inflation

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in Brazil was above 1000%.

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At the peak, prices would rise 1% every day according to the official inflation index

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which had a daily adjustment.

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Of course, prices could rise a little bit more or less according to supply and demand,

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But everything would rise, all prices would rise according to the official inflation.

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So in all retail shops everything was being marked up every day.

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And also investments were being marked up every day.

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If you had any savings it would go up every day, even your current account.

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Wages though were adjusted only every month or every 15 days depending on the company

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you work for.

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So you see the wage earners were the losers in this process.

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And as they received their salaries, they would go straight to the huge hypermarkets

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we had in Brazil at the time to purchase non-perishables.

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That was the way that they used to defend themselves.

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But by 1994, after about 20 years or so of very high inflation, the Brazilian people

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So had had enough of this corrosive inflation of exchange rates, super devaluations and

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government surprise plans and packages to confiscate savings and that were usually accompanied

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by a week long bank holidays and demanded a halt.

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So politicians finally decided to act because they were suffering.

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We had presidents being impeached, central bank presidents were being changed every six

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In the last few weeks, months or so, everything was in chaos, so the government had to do something, so what they did, they increased taxes, which is bad, but they did that, and also balanced the budget, drastically decreased money creation, and floated the currency.

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Since then, we are now considered a normal country, that is like a social democracy with a big government, like a European country or so, because we took care, in Brazil, of the most pressing problems, which were very high inflation, government finances out of control, and balance of payment problems that would cause exchange rate super devaluations.

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We are now then reaping the benefits of that commitment for stability while the

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rest of the world on the other hand and also America is doing the exact opposite

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and running and the government governments running huge deficits and

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printing money like crazy and we Brazilians know very well that this is a

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The first organized effort in Brazil to promote the ideas of liberty was the founding of the Instituto Liberal in Rio de Janeiro back in 1982 by a construction businessman called Donald Stewart.

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He started the Instituto Liberal basically to translate and publish books, basically

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the books we like, the libertarian line, Mises, Austrian libertarian, etc.

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Donald himself translated Human Action and Interventionism.

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The Instituto Liberal was initially very successful, so business people from other capitals decided

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to start in a decentralized fashion their own Instituto Liberals in other capitals of

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of Brazil.

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And they had substantial funding, there are a few business people in six or seven capitals

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of Brazil that decided to do that.

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The problem was that most of those funders had a special interest agenda, their own interest,

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and didn't stick to the libertarian line as adopted by Donald Stewart.

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So the substantial money that they raised was spent in bad books and lavish headquarters.

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So the pseudo network of Instituto Liberais didn't have the libertarian nerve ring connecting

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the cells and capitulated to those special interests.

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So they share the same name but segregated into different creatures, not a single creature,

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losing its status as a functioning network.

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The Instituto Liberais in Rio is still around.

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It was always small but it has shrunk further and it's only a shadow of what it was in its

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at the same time in about 1983 a group of people from Porto Alegre in the south of Brazil started an elite study group for entrepreneurs an elite leadership study group for entrepreneurs should I say with a free market doctrine they also started an annual conference that is now on its 24th edition which is called the Fórum da Liberdade and which had last year

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6,000 people attending. It's definitely the largest libertarian gathering in Brazil and maybe South America.

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Mises Brazil was officially founded immediately with the conference, immediately before the last year's Forum da Liberdade.

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And it was a success with 200 people attending per day. We had two days.

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And there were mostly young people that already followed us through the site and through our publications.

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Lew, Joe, Mark, Tom were there. We had very positive coverage by the mainstream media.

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The two main weekly magazines in Brazil, with over 1.5 million copies in circulation weekly,

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had two full pages on us and two very positive stories on us.

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In the liberal libertarian spectrum, we are already the largest by following base, arguably the largest in Portuguese in the world, with over 3,000 people visiting our site every day.

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And we already published 17 books, either published or republished books that are long out of print.

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The Forum da Liberdade that was there had at its theme Mises and the economic policy

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book which we call in Brazil the Six Lessons.

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Each of the 6,000 participants got a copy of the Six Lessons.

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Tom spoke at the forum.

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Each panel of the forum was modeled after a chapter of the book, one of the lessons.

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And they also had a wonderful exhibit quoting Mises and heralding pictures and stories about

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his life.

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We are hosting our second conference next month where we have speakers Hoppe, Holzman,

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Murphy, Klein and others.

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And we expect a larger public than last year.

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So the mainstream media is beginning to pay attention to us.

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And in summary, we have huge, huge challenges. And we're just starting. We started basically

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last year. But we are on a roll. So that's great. So much for Mises Brazil. Let's get

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back to Austro-libertarianism and our big challenges.

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In my opinion, we have some of the best ideas and the best people developing ideas. So why

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How are we still a marginal fringe movement and school of economics?

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We are standing on the shoulders of giants like the scholastics of Bastiat, Menger, Mises,

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Rothbard, the present-day stars, Hayek.

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Our ideas have better explanatory power of the consequences of government intervention

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than any other competing theory.

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Our ideas are consolidated.

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They have been tested for over a hundred years, even more, so ideas are not holding us back.

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So which barriers are making us drag?

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What's more, we are small, we are bottom-up, we are voluntary, we are flexible, and the

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status organizations, starting with the government itself, but also the UN, the IMF, whatever,

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They are big, they are coercive, they are centralized, they are inefficient, slow, corrupt.

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Think of the Katrina reaction, the disastrous reaction of the government or the war on drugs

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or any other example that we might think they have behaved badly.

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So how come we do not dominate mainstream as we once did, maybe a hundred or so years

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ago?

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Let me first differentiate how we behave as individuals and how we behave as teams.

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What is the actual role played by organizations?

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I mean organizations such as Mises Institute, such as Mises Brazil, or any other organized

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effort to promote ideas.

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Do we actually need them?

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Can we have a starfish made only by individuals?

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Or in order to be a well-functioning starfish, we must work with organizations or teams or

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cells behaving as the arms. Can individuals behave as cells? I would argue it is very

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difficult to do so and it's an uphill battle for individuals. Freedom lovers and freedom

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fighting individuals, ourselves, participate in the ongoing battle of ideas. And there

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There are those who discuss and write every day. They are very important. However, individuals

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alone are not equipped with what's necessary to pursue objective goals in a systematic,

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organized and effective way. What we need is a great team of great people working together.

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A great organization, a company, an institute is formed by great people working together,

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period, not ideas, not books.

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It is formed by people that understand the social environment, that have insights, that

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know how to market the insights, that have the best connections, which helps with funding,

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and that translate all that behind the objectives.

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So what I mean by great people are those people that with some years and some training may

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may become better than me, Lou, Joe, Doug, everyone.

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So those are the guys who make a great team and we need to attract and retain those people.

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A team of great people needs to filter, to translate and transmit the ideas to journalists,

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to writers, to editors and other opinion leaders.

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And I call opinion leaders those of maybe 15 or 20 percent of the population that can

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Grasp and Act on an Idea.

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Those are our most obvious customers.

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Now, think about John Poppola and the Hayek vs.

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Keynes video and other short materials

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that we see from time to time on the internet and inspire us.

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Maria was telling me, reminding me

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this story, the video about love with Hayek.

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I'm in love with Hayek, which is also great.

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But these examples, I would argue, they are wonderful exceptions of individuals working

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without the support of a great team and doing the almost impossible, guided only by their

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dream and passion. But if a team of good people could do even more and systematically, for

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every popula, unfortunately, there are thousands that act individually, spend their time and

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and Energy, but are not able to effect change.

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Good organizations, they are systematic and they are effective.

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They avoid floating ideas in a disorganized way through channels and forms that might

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not work.

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And that happens because they are goal-based.

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They have metrics, they have goals, they measure them, they benchmark, they are slim, they

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They are adaptable and they localize, or as we say in Mises Brazil, we tropicalize the product and the strategy.

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In some places and times, a natural rights approach may be effective. In others, a value-free approach might be more appropriate.

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In some places, articles might work better than books. In other, radio shows or video clips might be better solutions.

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Imagine a beer company. Its product is beer. Our product is Austro-libertarianism.

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The beer company may have different flavors of beer, different labels of beer, and it's the same with us.

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Provided, however, there is no toxic substance. They have their quality standards, we have our quality standards.

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The product cannot be one that advocates the initiation of force or an attack of private property, of course.

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but it may have different flavors for different consumers.

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That's tropicalization.

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And tropicalization does not only affect ideas in the way we market ideas

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but also how you attract talents and funding.

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Brazil, for example, does not have a culture of donations by individuals

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nor do we get tax breaks for donations.

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So what we do at Mises Brazil, we go for sponsorships by big business

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Business, and we stay close to the mainstream media.

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The Brazilian controlling shareholders of the mainstream media in Brazil are very sympathetic

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to libertarian ideas.

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Veja, for example, the main weekly magazine, has recently announced they will always write

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state with a small S. They wrote a marvelous editorial justifying it, and that really took

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Because by surprise, and it's something we do at Mises Brazil as well, our editorial policy.

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But whatever we choose to do in terms of marketing and funding, we must always keep our quality

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standard of the product, as does the beer company.

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Otherwise, we will fail like the pseudo network of Instituto Liberais failed in Brazil back

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in the 80s.

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Okay, so we have ideas.

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We have different flavors and a team of great people working together.

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How do we manage the team?

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An organization the same as individuals need dreams.

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Dreams are natural.

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Dreams keep us going, be it being with a person, traveling to some place, being employed by

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some company, doing well at school, buying a car, whatever.

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So we need dreams.

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And thinking big takes the same amount of energy than thinking small.

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So we should always think big.

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But we need to set realistic dreams and goals.

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One must know about 80% how to get to those objectives and dreams and may learn 20% along

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the way.

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If it is the opposite, if you only know 20% how to get there and must learn 80% along

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the way, that's not an objective.

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That's an adventure.

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So it's not a realistic goal.

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Some individuals do have some goals such as, for example, end the state.

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If it were a goal for a real-life organization, it will be definitely an adventure.

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But it's okay if it is for an individual, it doesn't affect the team or others.

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The only downside may be that this person gets frustrated because there is a good chance

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that it may not happen in his lifetime.

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But for organizations though, it cannot be an adventure type goal.

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For our institute in Brazil, we need metrics, we use metrics, and those may be the reach

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of our ideas in the mainstream media and in internet, book sales, fundraising for projects,

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or any other performance indicator that correlates well with the objectives, with the efforts

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of the team.

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And what kind of pressure should we put on the future?

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What kind of pressure should we put on the team?

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What we know is that we have to constantly raise the bar.

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That's a given.

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Too much pressure is bad because people may panic.

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But too little pressure is bad as well.

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We are at our best when we are under pressure and we have deadlines.

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I bet that the people that made this conference perfect were working at their best over the

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last few days and weeks.

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I bet that people would be shutting off their Facebooks and not gossiping too much over

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the corridors.

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It was the same with me.

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I knew I was going to deliver this lecture for some time, but I really concentrated over

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Over the last few days during carnival, so that's the way human beings work.

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We need deadlines, we need pressure, we need goals like that.

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And as catalyst managers, team leaders, we need to apply that same kind of pressure all

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year round because then people would be at their best.

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It's like the high jump.

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If you put the bar here, which person would jump here?

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Nobody would jump here, because we are rational.

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We minimize our efforts and energy.

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We'll do like that.

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So we need to constantly raise the bar and keep the pressure.

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We also need meritocracy.

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We need candor, and we need informality.

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Meritocracy.

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We should reward the best.

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The best should be promoted to have more space,

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to have more responsibility, regardless of seniority, or even regardless of the strict commitment to our ideology.

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If a person is young, and does not yet agree 100% with our ideology, but is very talented,

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I think he or she should be promoted.

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We can always train this person with time, that's not a problem, as long as he or she helps we reach our objectives.

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and the risk is if we don't have the courage to do that, the real talented people would see through it and would probably leave the team and we may be stuck with a mediocre team and that's not how we may reach our goals.

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Candor. People must know where they stand. They always need constructive and

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respectful feedback, and they need that. Talented people especially. So you should

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be here, you're doing well, here you need to improve, etc. In the company I used to

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work for, the Jorge Paulo Lemon Company, actually the Banco Garantia, which was

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as a precursor to all his ventures, we used to do this twice a year, and we need to constantly have this feedback process operating, because we also know that the status quo is not our friend, that's exactly what we want to change, so if we need to achieve our dreams, we need this constant feedback working.

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Sometimes you may have a person who is not delivering.

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You might feel pity, you might delay the decision to let him or her go.

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You might say, well, he studied under Rothbard or she's such a nice girl.

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Let's wait some more time to see if he improves and delivers.

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It's not going to happen.

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So in this case, don't waste his or her time.

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Let her go, let her pursue her best in some place else which might fit better with her abilities.

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As a professor in a classroom, you would never do that with grades. Grades are grades.

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There can be no rationalizations. You have to grade people according to their ability because it's the best for the person as well.

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For scholarships, the same thing. So people are different, we are individuals. That's our philosophy, right?

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So we need to tackle that.

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Informality, I think that's something

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that we need that we do well because we are small still.

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And I think people should be able to speak

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their mind in open spaces, do not get behind closed doors

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and things like that.

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And I have an example of that.

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When we decided to start Mises Brazil, we didn't yet know Lou.

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So I sent an email asking whether we could translate material and publish material of the Mises Institute.

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And I got that typical one-liner by Ludwig just, please do translate.

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That's informality, very prompt email, quick response, right to the point.

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The Brazilians are not very used to that direct, and I love it.

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I love it.

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I'm getting used to it.

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A great team must also raise funds for the projects, be it a conference, books, whatever

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project we want to pursue.

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And funding for projects, in my experience, is much easier because the sponsor sees the

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result of his funding, the immediate result of it.

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But as importantly, we must raise funds to pay for the great team's work.

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Since we need a team of talented people, staying for a whole career, probably, they must know

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they will be rewarded and that they will have a good life doing this.

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So we need funding specifically for that as well.

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But that won't necessarily be endowment funds and I'll explain that with an example from

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From the Starfish and the Spider, the book.

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It's the story of the Apache Indians.

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When the Spaniards arrived in America back in 1519, they found huge empires.

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Cortes and his 80 men arrived at central Mexico and found Tenochtitlan, which was one of the

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largest cities in the world, second only to Constantinople.

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And it was a centralized empire with Montezuma II as supreme leader.

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Cortés had a meeting with Montezuma in which he said, give me all your gold and I won't

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kill you.

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Well what happened is Montezuma did give the gold.

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He was scared of the powers of the Spaniards and the different things they had, they might

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have even thought they were gods or something like that, so he gave his gold, but Cortes

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didn't fulfill his promise.

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He took Montezuma prisoner and then he killed Montezuma.

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And what happened is the Aztec people lost completely their drive after the death of

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Montezuma and crumbled.

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In a very short time, they were quickly defeated, a huge empire quickly defeated.

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The same happened in South America with the Inca Empire.

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Pizarro went there with the kill the leader, get the gold strategy and he killed Atahualpa

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and same result, a very quick defeat of the Inca Empire.

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Now further north in Mexico, they encountered the Apache.

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And the Apache were a much less sophisticated people than the Incas or the Aztecas.

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They had never built a pyramid, never built a paved road or built a town or anything like

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that.

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But they distributed political power.

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They weren't a coercive leader called the Schott's people like the Aztecas or the Incas.

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They worked voluntarily without a supreme leader.

390
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They had leaders, but they were spiritual leaders who led by example only.

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They were called the Nantans.

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And one of the famous Nantans was, of course, Geronimo, who never commanded an army.

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When he decided to fight, all Apaches joined him, not because Geronimo said so, but because

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they thought it was a good idea, because of his track record of having good ideas.

395
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But you didn't need to.

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That's the way the Apache made their decisions.

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When they planned a raid, for example, on the Spanish forces, decisions were made at

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different places.

399
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An attack might have been planned in one place, organized in another, and executed at a third

400
00:35:47.040 --> 00:35:49.040
place.

401
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There's an anthropologist called Tom Nevins that explains that the Spaniards then came

402
00:35:56.320 --> 00:36:00.680
came in and decided to pursue the same strategy of killing the leaders and started killing

403
00:36:00.680 --> 00:36:02.780
Nantans.

404
00:36:02.780 --> 00:36:08.240
But immediately after they started to kill Nantans, new Nantans emerged.

405
00:36:08.240 --> 00:36:11.240
And they also tried to put fire to the villages.

406
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And what happened is the Apaches became nomads.

407
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Try to catch them now.

408
00:36:17.900 --> 00:36:25.240
So the Apaches then unwillingly gained control over territory they didn't control before

409
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because of this attack by the Spaniards.

410
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So they resisted for 200 years.

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They defeated the Spaniards.

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The Mexicans came later.

413
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They defeated the Mexicans as well.

414
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And the Americans were able to defeat the Apache.

415
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And the way they did it, and they had already

416
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experimented that with the Navajo, which

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is an Apache tribe as well, they gave cattle

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to the Nantans, to the leaders.

419
00:36:54.400 --> 00:37:00.760
They gave resources to the leaders, so now the leaders were able to punish and reward

420
00:37:00.760 --> 00:37:02.180
tribe members.

421
00:37:02.180 --> 00:37:09.680
So the Nantans started fighting in city councils over control of the resources and built hierarchies

422
00:37:09.680 --> 00:37:19.560
and things like that and that eventually destroyed the Apache society because they became centralized.

423
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So that explains why I am skeptical of endowment funds, because with funds like that, people

424
00:37:31.600 --> 00:37:37.760
may join the organization to be chasing the funds, it's natural, and people would be looking

425
00:37:37.760 --> 00:37:39.280
at those funds over there.

426
00:37:39.280 --> 00:37:46.160
So that makes fundraising more difficult because it must be a full-time job, a continual full-time

427
00:37:46.160 --> 00:37:57.160
to pay for the team's efforts and to do the projects, but I would go for that instead of making the same mistake that the Apache made.

428
00:37:57.160 --> 00:38:07.160
Another interesting example from the book was the AA, the Alcoholics Anonymous, which is totally decentralized.

429
00:38:07.160 --> 00:38:14.160
of Money, Human Action, Man Economy and State, The Theory of Money and Credit

430
00:38:37.160 --> 00:38:48.160
He started creating different circles of AAA, different towns, and he had to make a decision whether to centralize the structure or let it go.

431
00:38:48.160 --> 00:38:57.160
And he decided to let it go, and the AAA became flexible, equal and mutating because of that.

432
00:38:57.160 --> 00:39:06.160
The Apaches mutated, becoming nomads, and the AAA also mutated and helps food addicts and gamblers today.

433
00:39:06.160 --> 00:39:14.400
Hey, they may even mutate to cure Charlie Sheen, who knows?

434
00:39:14.400 --> 00:39:20.000
Another example from the book is the record industry.

435
00:39:20.000 --> 00:39:25.920
When they faced Napster 10 years ago, it was tough for them to fight Napster, because Napster

436
00:39:25.920 --> 00:39:36.080
was very decentralized, but they still had central servers and identifiable CEO and manager

437
00:39:36.080 --> 00:39:48.320
And of course the music industry reacted with the P2P networks and etc. and further developed

438
00:39:48.320 --> 00:39:51.480
the P2P technology to become anonymous as well.

439
00:39:51.480 --> 00:39:56.480
So nobody would know who was trading the information.

440
00:39:56.480 --> 00:40:01.080
But in some of those initiatives, the customer's information was still centralized.

441
00:40:01.080 --> 00:40:08.560
So these guys were being chased like the Napster and eventually the music industry again decentralized

442
00:40:08.560 --> 00:40:14.920
and now we have Torrent and they can't get anyone.

443
00:40:14.920 --> 00:40:22.440
We don't recognize the industry as it was ten years ago because of this attack that

444
00:40:22.440 --> 00:40:26.200
provoked further decentralization.

445
00:40:26.200 --> 00:40:34.280
I would argue that Lew is like Bill Wilson of the AA, not on the alcoholic side.

446
00:40:34.280 --> 00:40:43.540
I mean, he catalyzed the idea, he built the main cell and got out of the way for the talents

447
00:40:43.540 --> 00:40:51.540
to rise and the cells to spring up, like Brazil and the other efforts that we are seeing today.

448
00:40:51.540 --> 00:40:56.380
At first, the Mises Institute might look like a spider.

449
00:40:56.380 --> 00:41:02.220
It has a board, it has a CEO, it has some hierarchy, a physical address.

450
00:41:02.220 --> 00:41:07.180
But look again, Auburn is not where the organization exists.

451
00:41:07.180 --> 00:41:10.780
Professors are spread all over the world.

452
00:41:10.780 --> 00:41:13.460
There's no formal hierarchy.

453
00:41:13.460 --> 00:41:18.220
And we have the Mises and Rothbard Institutes acting independently and at the same time

454
00:41:18.220 --> 00:41:20.020
as a network.

455
00:41:20.020 --> 00:41:26.420
So if you would thump the Mises Institute on the head, and I'm sorry, Lou, for that, would

456
00:41:26.420 --> 00:41:29.420
Austro-libertarianism die?

457
00:41:29.420 --> 00:41:30.980
No.

458
00:41:30.980 --> 00:41:35.540
Is there a clear division of roles among the cells?

459
00:41:35.540 --> 00:41:36.700
No.

460
00:41:36.700 --> 00:41:38.500
Is knowledge concentrated?

461
00:41:38.500 --> 00:41:39.820
No.

462
00:41:39.820 --> 00:41:44.260
Are the cells self-funded or are they centrally funded?

463
00:41:44.260 --> 00:41:49.880
I wish that Lou would throw some checks at us, at Brazil, but no, we're not centrally

464
00:41:49.880 --> 00:41:57.960
be funded. So, ladies and gentlemen, we then reach the conclusion that we are genuine starfish.

465
00:41:57.960 --> 00:42:03.200
As with the internet, if you would kill half the sites on the internet, it would survive.

466
00:42:03.200 --> 00:42:10.040
And the same happens with our movement. We are a cell-based, independent, underground

467
00:42:10.040 --> 00:42:16.280
network, and I hope on the ground not for long. We are building the network as we speak.

468
00:42:16.280 --> 00:42:22.080
And since it is an open system, more and more people want to join and contribute, first

469
00:42:22.080 --> 00:42:28.820
as individuals, and then, which I think is what really makes a difference, as part of

470
00:42:28.820 --> 00:42:31.460
teams or independent cells.

471
00:42:31.460 --> 00:42:37.200
And if we're talking about people that would like to start an Austrian libertarian organization

472
00:42:37.200 --> 00:42:43.980
or cell or something like that, you don't need more than to put up a site or start translating

473
00:42:43.980 --> 00:42:50.620
and Publishing Material or starting a podcast or whatever. Just do it. It's simple and virtually

474
00:42:50.620 --> 00:42:55.060
costless. We have done it in Brazil. Gabriel Calzada has done it in Spain. Vlad has done

475
00:42:55.060 --> 00:43:02.700
it in Romania. The Swedish mafia, the Joaquins have done it in Sweden, Poland, Japan, Chile,

476
00:43:02.700 --> 00:43:10.580
Russia, everywhere. To build a great team, of course, is much more of a challenge. But

477
00:43:10.580 --> 00:43:17.780
They are sprouting because we have the example of the Mises Institute and of Loo.

478
00:43:17.780 --> 00:43:24.000
When the network fully develops and the network effect kicks in, the network effect being

479
00:43:24.000 --> 00:43:29.560
as the network grows more and more people want to join and contribute, there will be

480
00:43:29.560 --> 00:43:31.160
no stopping us.

481
00:43:31.160 --> 00:43:35.460
The centralized statists won't be a match for us.

482
00:43:35.460 --> 00:43:36.460
That's it.

483
00:43:36.460 --> 00:43:58.160
With that, there are about 15 minutes for questions.

484
00:43:58.160 --> 00:43:59.160
Yes, sir.

485
00:43:59.160 --> 00:44:07.160
How do you think you have the support of the Brazilian media as opposed to here where they work stream?

486
00:44:29.160 --> 00:44:36.680
Some of them are immigrants and they made it in Brazil despite the government but I'm

487
00:44:36.680 --> 00:44:43.960
not sure what the answer is but I'm telling you, Global, which is the main media company

488
00:44:43.960 --> 00:44:51.280
in Brazil, their shareholders are very sympathetic to libertarian ideas, Abril, which is the

489
00:44:51.280 --> 00:44:58.840
owner of Veja, the second largest media company, they're also very sympathetic to the ideas

490
00:44:58.840 --> 00:45:05.840
but i'm not sure i don't know where it comes from

491
00:45:28.840 --> 00:45:52.120
Yes, the question was how Brazilians came to realize and came to react to the inflation

492
00:45:52.120 --> 00:45:58.800
problem and to compare that with the U.S. reality in which you still don't have that

493
00:45:58.800 --> 00:46:17.100
I think it's easy to explain the Brazilian side of it because it was twenty years of

494
00:46:17.100 --> 00:46:22.480
corrosive inflation, continual corrosive, actually started even before when they built

495
00:46:22.480 --> 00:46:25.520
with Brasilia back in the 50s.

496
00:46:25.520 --> 00:46:31.440
So they built Brasilia in the middle of nothing using printing money.

497
00:46:31.440 --> 00:46:35.000
And inflation really started there back in the 50s.

498
00:46:35.000 --> 00:46:42.120
And by the 80s, inflation was out of control and Brazilians, the Brazilian business people

499
00:46:42.120 --> 00:46:46.080
are very smart, so they adapt.

500
00:46:46.080 --> 00:46:49.640
And I explained the thing about indexing everything.

501
00:46:49.640 --> 00:46:54.680
And it behaves a little bit like the Einstein's Relativity Theory.

502
00:46:54.680 --> 00:47:00.760
If the bar is rising for everyone at the same time, of course you have when it's not neutral,

503
00:47:00.760 --> 00:47:05.960
but you have the impression that everything is sort of working.

504
00:47:05.960 --> 00:47:07.700
And of course it isn't.

505
00:47:07.700 --> 00:47:10.600
It takes time for people to understand that.

506
00:47:10.600 --> 00:47:17.920
And Brazil in the 50s, I think it had about 50% of the US per capita GDP.

507
00:47:17.920 --> 00:47:24.120
And still today it's like 40 after rising from 25% or so.

508
00:47:24.120 --> 00:47:31.400
So after this huge poverty that arose from that, I think the Brazilian people finally

509
00:47:31.400 --> 00:47:33.260
realized they had to act.

510
00:47:33.260 --> 00:47:35.800
And that's a problem you might have here.

511
00:47:35.800 --> 00:47:40.920
People may still need to see that it's not working for some time.

512
00:47:40.920 --> 00:47:56.360
No, no, no, the Brazilian people are not forgetting that at all.

513
00:47:56.360 --> 00:47:59.640
Inflation has risen a little bit, but our central bank, I don't know if you know the

514
00:47:59.640 --> 00:48:03.440
interest rate in Brazil, 11.75.

515
00:48:03.440 --> 00:48:07.520
Tell me how you're going to have bubbles with that interest rate.

516
00:48:07.520 --> 00:48:14.840
So it's Germanic central banking in Brazil.

517
00:48:14.840 --> 00:48:20.800
So they're not forgetting, politicians don't get elected if inflation really comes back.

518
00:48:20.800 --> 00:48:25.080
Of course, it's risen a little bit and it has risen recently because with the crisis

519
00:48:25.080 --> 00:48:29.880
in 2008, they decided to release some of the reserve requirements.

520
00:48:29.880 --> 00:48:31.800
They have now already taken it back.

521
00:48:31.800 --> 00:48:35.680
It takes some time to work through the process.

522
00:48:35.680 --> 00:48:40.640
They had done it like maybe four or five months ago, and they have already recent two times

523
00:48:40.640 --> 00:48:42.200
fifty basis points.

524
00:48:42.200 --> 00:48:44.520
So Brazilians have not forgotten that.

525
00:48:44.520 --> 00:48:45.520
That's not a problem in Brazil.

526
00:48:45.520 --> 00:48:46.520
Mateus.

527
00:48:46.520 --> 00:49:11.520
What advice would you give to the US for the US?

528
00:49:11.520 --> 00:49:19.880
The question was, what advice would I give for the US to react to what's going on and

529
00:49:19.880 --> 00:49:24.120
all this money printing, et cetera?

530
00:49:24.120 --> 00:49:27.280
And you also mentioned the success we had in Brazil.

531
00:49:27.280 --> 00:49:31.780
We didn't have any success in Brazil as far as Austrian libertarianism yet.

532
00:49:31.780 --> 00:49:39.560
We have been doing some good stuff recently in Brazil, but not much result.

533
00:49:39.560 --> 00:49:46.240
And what happened when we decided to stop inflation in 1994 was not an Austrian libertarian

534
00:49:46.240 --> 00:49:48.760
thing or anything like that, it was just enough.

535
00:49:48.760 --> 00:49:53.200
We had enough, like the Egyptian people or something like that.

536
00:49:53.200 --> 00:49:55.600
They had enough and Brazilians had enough.

537
00:49:55.600 --> 00:50:02.960
I think Venezuela might go through this process in a short time and even maybe the Cubans.

538
00:50:02.960 --> 00:50:05.520
So I don't know what advice would I give.

539
00:50:05.520 --> 00:50:13.720
I think my actions are the best I can say, I think what works is doing what we do, which

540
00:50:13.720 --> 00:50:21.000
is promoting ideas in an efficient way with the most talented people you can find.

541
00:50:21.000 --> 00:50:23.920
I think that's what works.

542
00:50:23.920 --> 00:50:25.920
And being connected as well is very important.

543
00:50:25.920 --> 00:50:26.920
Yes?

544
00:50:26.920 --> 00:50:39.920
Would you consider the Marxists and the progressive groups starfish and that they're all pulling together to pull out capitalism, and if you do think that they're starfish, how do you kill them?

545
00:50:56.920 --> 00:51:03.440
Yeah, there's a story about starfish in the coral reef in Australia, and they were not

546
00:51:03.440 --> 00:51:09.240
aware of how starfish behave, and they sent divers, because the starfish were killing

547
00:51:09.240 --> 00:51:17.560
the corals, or actually the, how do you call it, the shell-based animals in the corals.

548
00:51:17.560 --> 00:51:24.480
And they sent divers there to kill them, and actually they multiplied.

549
00:51:24.480 --> 00:51:25.480
It didn't work.

550
00:51:25.480 --> 00:51:31.480
I think yes, I think the Marxist movement is a starfish.

551
00:51:31.480 --> 00:51:40.480
Lew told me that in Brazil, that the two only global movements are Marxism and Austrian libertarianism,

552
00:51:40.480 --> 00:51:43.480
in terms of ideology, organized movements.

553
00:51:43.480 --> 00:51:49.480
How do you kill them? I suggest you read the book, Starfish and the Spider.

554
00:51:49.480 --> 00:51:55.480
It has very good ideas of how to deal with that, but I'll leave it at that.

555
00:51:56.480 --> 00:51:57.480
Yes?

556
00:51:58.480 --> 00:52:09.480
When you were talking about the independent self-working, I just thought, well that's how the Al-Qaeda and many of the Muslim terrorists self-work too.

557
00:52:09.480 --> 00:52:34.480
and so we favor smaller government and de-sexualization and no longer like properly fund things like the CIA or FBI or the military, how do you think these groups are going to go away or what do you do about this type of threat in the class of civilizations and all these other menaces that we have in the world today, in Iran and other countries?

558
00:52:39.480 --> 00:52:48.120
looks like, it behaves like a decentralized organization and what we then, since we support

559
00:52:48.120 --> 00:52:54.680
decentralized organizations, how do we deal with that sort of threat?

560
00:52:54.680 --> 00:53:01.120
And I think it's similar to what we are talking about the Marxists, in some way there are

561
00:53:01.120 --> 00:53:06.840
some starfish which we may consider enemies.

562
00:53:06.840 --> 00:53:10.880
And we need to understand how they work.

563
00:53:10.880 --> 00:53:13.240
Of course we have the best ideas on our side.

564
00:53:13.240 --> 00:53:14.240
That helps a lot.

565
00:53:14.240 --> 00:53:20.560
And if we have also the best management on our side, then I think it makes things much

566
00:53:20.560 --> 00:53:21.560
easier.

567
00:53:21.560 --> 00:53:25.040
It's very difficult to destroy a starfish.

568
00:53:25.040 --> 00:53:31.600
And the book, again, it mentions exactly which strategies you should use to do that.

569
00:53:31.600 --> 00:53:36.440
Actually one of the authors went to the US government to work for the US government for

570
00:53:36.440 --> 00:53:37.440
for some time.

571
00:53:37.440 --> 00:53:38.440
Then he became disappointed.

572
00:53:38.440 --> 00:53:44.160
Maybe he understood how centralized organizations worked and they wouldn't hear him.

573
00:53:44.160 --> 00:53:46.840
But I'm not answering your question.

574
00:53:46.840 --> 00:53:53.960
I don't know how to, first of all, if we should go about destroying other people or only do

575
00:53:53.960 --> 00:54:03.480
our jobs and if we for any reason decide to go after them, then we have to study and see

576
00:54:03.480 --> 00:54:04.480
the best we can do.

577
00:54:04.480 --> 00:54:09.360
But I think we have ideas and I hope to have the best people on our side.

578
00:54:09.360 --> 00:54:12.160
So that's what we can do today.

579
00:54:12.160 --> 00:54:13.160
There's one over there.

580
00:54:13.160 --> 00:54:21.160
Yes, earlier in your speech, you were describing the inflationary curbing in Brazil and the breaking interest rates and what not.

581
00:54:21.160 --> 00:54:31.160
You wish the United States what? I mean, considering, you know, the $3.7 trillion at this point,

582
00:54:31.160 --> 00:54:44.160
As the US dollar is a low reserve currency, isn't the Central Bank of Brazil going to take a hit if we enter our hyper-economic scenario here in the US?

583
00:54:44.160 --> 00:55:10.560
The United States is the World Reserve currency and the dollar is the World Reserve currency.

584
00:55:10.560 --> 00:55:19.560
So how does that relate to what the Central Bank of Brazil will do and how we'll react to it and if it's going to take a hit as well or not?

585
00:55:19.560 --> 00:55:29.560
Yes, that's a very good question, a very complicated question.

586
00:55:29.560 --> 00:55:37.560
I think things are definitely connected because, as you know, if the US prints money,

587
00:55:37.560 --> 00:55:51.560
This money travels to the rest of the world, for example to Brazil, and the export lobby of any country, Brazil also, would not want the currency to appreciate.

588
00:55:51.560 --> 00:56:01.560
So they would make the politicians in the central bank to inflate at the same rhythm. And that's what's the natural scenario.

589
00:56:01.560 --> 00:56:05.560
What's been happening in Brazil, it's not quite that yet.

590
00:56:05.560 --> 00:56:12.560
I think it may happen because the Brazilian currency was 4 to 1 dollar and now it's 1.65 to 1 dollar.

591
00:56:12.560 --> 00:56:22.560
So it's accepting an amount of shielding from the disaster management of Ben Bernanke.

592
00:56:22.560 --> 00:56:29.560
But it can't do that indefinitely. It's a huge pressure.

593
00:56:29.560 --> 00:56:30.560
Pressure.

594
00:56:30.560 --> 00:56:36.200
So the Brazilian central bank has been buying and has been increasing its foreign exchange

595
00:56:36.200 --> 00:56:40.840
currencies and trying, dollars, and trying to sterilize that.

596
00:56:40.840 --> 00:56:46.000
But we all know that sterilize is only to postpone the problem.

597
00:56:46.000 --> 00:56:48.080
And it's a dilemma.

598
00:56:48.080 --> 00:56:55.160
But I would say that one of the few areas that Brazil is good at is at central banking

599
00:56:55.160 --> 00:56:59.680
Management lately, at least over the last eight years or so.

600
00:56:59.680 --> 00:57:06.360
So I think it will happen, this scenario will happen to other countries first, and Brazil

601
00:57:06.360 --> 00:57:07.840
may be protected.

602
00:57:07.840 --> 00:57:13.920
And the Brazilian Central Bank, as you were saying, holds treasury bonds.

603
00:57:13.920 --> 00:57:22.680
And honestly, I don't see a better asset than you guys as collateral.

604
00:57:22.680 --> 00:57:25.680
Here are still the best, most productive guys in the world.

605
00:57:25.680 --> 00:57:28.280
So the Central Bank of Brazil is doing really well.

606
00:57:28.280 --> 00:57:32.080
They could have bought gold, would be even better, but nobody's doing that.

607
00:57:32.080 --> 00:57:36.600
I don't know if there's that much gold to buy around without moving prices.

608
00:57:36.600 --> 00:57:41.080
But the second best asset in the world are treasury bonds, believe it or not.

609
00:57:41.080 --> 00:57:47.960
I know that's being polemical here, but it's definitely the best asset that you can have

610
00:57:47.960 --> 00:57:50.960
have, because it's you and your children.

611
00:57:50.960 --> 00:57:54.440
Thank you very much.