WEBVTT NOTE Everything You Love You Owe to Capitalism 1 00:00:00.000 --> 00:00:05.680 I'm sure that you've all had this experience before or something similar to it. 2 00:00:05.680 --> 00:00:10.720 You're sitting at lunch in a nice restaurant or maybe a hotel, waiters are coming and going, 3 00:00:10.720 --> 00:00:15.880 the food is fantastic, the conversation about all things is going well. 4 00:00:15.880 --> 00:00:23.520 You talk about weather, music, movies, politics, health, trivialities in the news, kids, and 5 00:00:23.520 --> 00:00:28.880 so on, but then the topic turns to economics and things change. 6 00:00:28.880 --> 00:00:33.080 You're not the aggressive type so you don't immediately proclaim the merits of the free 7 00:00:33.080 --> 00:00:41.760 market. You wait and let others talk. Their biases against business appear immediately. 8 00:00:41.760 --> 00:00:48.640 In the repetition of the media's latest calumies, such as the gas station owners are causing 9 00:00:48.640 --> 00:00:54.720 inflation by jacking up gasoline prices to pad their pockets at our expense, while Walmart 10 00:00:54.720 --> 00:01:01.360 Heart is, of course, the worst possible thing that could ever happen to any community. 11 00:01:01.360 --> 00:01:06.940 You begin to offer a corrective, pointing out the other side, then the truth emerges 12 00:01:06.940 --> 00:01:13.520 in the form of a naive if definitive announcement from one person, well, I suppose I really 13 00:01:13.520 --> 00:01:16.560 am a socialist at heart. 14 00:01:16.560 --> 00:01:19.320 Others nod in agreement. 15 00:01:19.320 --> 00:01:21.840 On one hand, there really is nothing to say. 16 00:01:21.840 --> 00:01:25.160 You're surrounded by the blessings of capitalism. 17 00:01:25.160 --> 00:01:28.940 The buffet table, which you and your lunch partners only had to walk into a building 18 00:01:28.940 --> 00:01:34.520 to find, has a greater variety of food and quality of food at a cheaper price than that 19 00:01:34.520 --> 00:01:42.000 which was available to any living person, king, lord, duke, plutocrat or pope in the 20 00:01:42.000 --> 00:01:45.160 vast majority of the history of the world. 21 00:01:45.160 --> 00:01:49.400 But even 50 years ago, would this have been imaginable? 22 00:01:49.400 --> 00:01:56.440 All of history has been defined by the struggle for food, and yet that struggle has been abolished 23 00:01:56.440 --> 00:02:01.440 not just for the rich, but for everyone living in developed economies. 24 00:02:01.440 --> 00:02:06.840 The ancients peering into this scene might have assumed it to be Elysium. 25 00:02:06.840 --> 00:02:12.360 Medieval man conjured up such scenes only in visions of utopia. 26 00:02:12.360 --> 00:02:17.540 Even in the late 19th century, the most gilded palace of the richest industrialists required 27 00:02:17.540 --> 00:02:23.740 of Vast Staff, and immense trouble that come anywhere near approximating it. 28 00:02:23.740 --> 00:02:26.140 We owe this scene to capitalism. 29 00:02:26.140 --> 00:02:31.260 To put it differently, we owe this scene to centuries of capital accumulation at the hands 30 00:02:31.260 --> 00:02:36.500 of people who have put capital to work on behalf of economic innovations at once, competing 31 00:02:36.500 --> 00:02:42.460 with others for profit and cooperating with millions upon millions of people in an ever-expanding 32 00:02:42.460 --> 00:02:45.140 global network of the division of labor. 33 00:02:45.140 --> 00:02:55.140 The savings, investments, risks, and work of hundreds of years and unaccountable numbers of free people have gone into making this scene possible. 34 00:02:55.140 --> 00:03:05.140 Thanks to the ever-remarkable capacity for a society developing under conditions of liberty to achieve the highest aspirations of the society's members. 35 00:03:05.140 --> 00:03:13.140 And yet sitting on the other side of the table are well-educated people who imagine that the way to end the world's woes is through socialism. 36 00:03:13.140 --> 00:03:18.140 Now people's definitions of socialism differ and these people would probably be quick to say 37 00:03:18.140 --> 00:03:21.140 they do not mean the Soviet Union or anything like that. 38 00:03:21.140 --> 00:03:24.140 That was socialism in name only. 39 00:03:24.140 --> 00:03:28.140 I would be told and yet if socialism doesn't mean anything at all today 40 00:03:28.140 --> 00:03:33.140 it imagines that there can be some social improvement resulting from the political movement 41 00:03:33.140 --> 00:03:38.140 to take capital out of private hands and put it into the hands of the state. 42 00:03:38.140 --> 00:03:49.140 Other tendencies of socialism include the desire to see labor organized along class lines and given some sort of coercive power over how their employer's property is used. 43 00:03:49.140 --> 00:04:00.140 It might be as simple as the desire to put a cap on the salaries of CEOs, or it could be as extreme as the desire to abolish all private property, money, and even marriage. 44 00:04:00.140 --> 00:04:13.140 Whatever the specifics of the case in question, socialism always means overriding the free decisions of individuals and replacing the capacity for decision-making with an overarching plan by the state. 45 00:04:13.140 --> 00:04:24.140 Taken far enough, this mode of thought won't just spell an end to nice lunches. It will mean the end of all we know as civilization itself. 46 00:04:24.140 --> 00:04:29.140 It would plunge us back into a primitive state of existence living off hunting and gathering 47 00:04:29.140 --> 00:04:36.180 in a world with little art, music, leisure or charity, nor was any form of socialism 48 00:04:36.180 --> 00:04:41.180 capable of providing for the needs of the world's 6 billion people, so the population 49 00:04:41.180 --> 00:04:45.780 would shrink dramatically and quickly and in a manner that would make every human horror 50 00:04:45.780 --> 00:04:50.140 ever known seem mild by comparison. 51 00:04:50.140 --> 00:04:55.580 Nor is it possible to divorce socialism from totalitarianism, because if you are serious 52 00:04:55.580 --> 00:04:59.900 about ending private ownership of the means of production, you have to be serious about 53 00:04:59.900 --> 00:05:03.320 ending freedom and creativity too. 54 00:05:03.320 --> 00:05:09.340 You will have to make the whole of society, or what is left of it, into a prison. 55 00:05:09.340 --> 00:05:15.300 In short, the wish for socialism is a wish for unparalleled human evil. 56 00:05:15.300 --> 00:05:20.100 If we really understood this, no one would express support for an impolite company, who 57 00:05:20.100 --> 00:05:26.100 It would be like saying, you know, there really is something to be said for malaria and typhoid. 58 00:05:26.100 --> 00:05:30.100 Or perhaps about dropping atom bombs on innocents. 59 00:05:30.100 --> 00:05:33.100 Do the people sitting across the table really wish for this? 60 00:05:33.100 --> 00:05:35.100 Well, certainly not. 61 00:05:35.100 --> 00:05:37.100 So what has gone wrong here? 62 00:05:37.100 --> 00:05:41.100 We can see these people, why can these people not see what is obvious? 63 00:05:41.100 --> 00:05:45.100 Why can't people sitting amidst market created plenty, 64 00:05:45.100 --> 00:05:48.100 enjoying all the fruits of capitalism every minute of life, 65 00:05:48.100 --> 00:05:54.100 Not see the merit of the market, but rather wish for something that is a proven disaster. 66 00:05:54.100 --> 00:05:58.100 What we have here is a failure of understanding. 67 00:05:58.100 --> 00:06:02.100 That is to say, a failure to connect causes with effects. 68 00:06:02.100 --> 00:06:04.100 This is a wholly abstract idea. 69 00:06:04.100 --> 00:06:09.100 Knowledge of cause and effect does not come to us by merely looking around a room, 70 00:06:09.100 --> 00:06:14.100 living in a certain kind of society, or observing statistics. 71 00:06:14.100 --> 00:06:26.100 You can study roomfuls of data, read a thousand treatises on history, or plot international GDP figures on a graph for a living, and yet the truth about cause and effect can still be evasive. 72 00:06:26.100 --> 00:06:37.100 You might still miss the point that it is capitalism that gives rise to prosperity and freedom. You might still be tempted by the notion of socialism as savior. 73 00:06:37.100 --> 00:06:41.780 Let me take you back to the years 1989 and 1990. 74 00:06:41.780 --> 00:06:45.880 Those were the years that most of us remember as the time when socialism collapsed in Eastern 75 00:06:45.880 --> 00:06:46.880 Europe and Russia. 76 00:06:46.880 --> 00:06:52.180 Vents of the time flew in the face of all predictions on the right that these were permanent 77 00:06:52.180 --> 00:06:57.200 regimes that would never change unless they were bombed back into the Stone Age. 78 00:06:57.200 --> 00:07:02.540 On the left, it was why they believed even in these times that these societies were actually 79 00:07:02.540 --> 00:07:08.380 doing very well and would eventually pass the United States and Western Europe in prosperity. 80 00:07:08.380 --> 00:07:13.580 And by some measures, we were told, they were already better off than we were. 81 00:07:13.580 --> 00:07:14.580 And yet it collapsed. 82 00:07:14.580 --> 00:07:20.340 Even the Berlin Wall, that symbol of oppression and slavery, was torn down by the people themselves. 83 00:07:20.340 --> 00:07:25.820 It was not only glorious to see socialism collapse, it was thrilling from a libertarian 84 00:07:25.820 --> 00:07:29.260 point of view to see how states themselves can dissolve. 85 00:07:29.260 --> 00:07:35.160 They may have all the guns and all the power, and the people have none of those, and yet 86 00:07:35.160 --> 00:07:39.240 when the people themselves decide that they will no longer be governed, the state has 87 00:07:39.240 --> 00:07:45.460 few options left. It eventually disappears amidst a society-wide refusal to believe its 88 00:07:45.460 --> 00:07:48.080 lies any longer. 89 00:07:48.080 --> 00:07:53.580 When these closed societies suddenly became open, what did we see? We saw lands that time 90 00:07:53.580 --> 00:08:07.580 The technology was backward and broken. The food was scarce and disgusting. The medical care was abysmal. The people were unhealthy. It was also striking to see what had happened to the culture under socialism. 91 00:08:07.580 --> 00:08:16.580 Many generations had been raised under a system built on power and lies. And so the cultural infrastructure that we take for granted was not secure. 92 00:08:16.580 --> 00:08:32.580 Such notions as trust, promise, truth, honesty, planning for the future, all pillars of commercial culture, had been distorted and confused by the ubiquity and the persistence of the socialist curse. 93 00:08:32.580 --> 00:08:38.580 Why am I going through all these details about this period which surely most of you do remember? 94 00:08:38.580 --> 00:08:43.580 Simply to say this, that most people did not see what you saw. 95 00:08:43.580 --> 00:08:46.580 You saw the failure of socialism. 96 00:08:46.580 --> 00:08:49.580 That is what I saw. That is what Rothbard saw. 97 00:08:49.580 --> 00:08:52.580 That is what everyone who has been exposed to the teachings of economics, 98 00:08:52.580 --> 00:08:57.580 to the elementary rules concerning cause and effect in society, saw. 99 00:08:57.580 --> 00:09:00.580 But this is not what the ideological left saw. 100 00:09:00.580 --> 00:09:03.580 The headlines in the socialist publications themselves proclaimed 101 00:09:03.580 --> 00:09:10.580 have both proclaimed the death of undemocratic Stalinism and look forward to the creation of a new democratic socialism in these countries. 102 00:09:10.580 --> 00:09:16.580 As for regular people, neither attached to the socialist idea nor educated in economics, 103 00:09:16.580 --> 00:09:24.580 it might have appeared as if nothing more than a glorious vanquishing of America's foreign policy enemies had taken place. 104 00:09:24.580 --> 00:09:30.580 We built more bonds than they did, so they finally gave in, in the way a kid says uncle on the playground. 105 00:09:30.580 --> 00:09:37.580 Maybe some saw it as a victory of the U.S. Constitution over weird and foreign systems of despotism. 106 00:09:37.580 --> 00:09:45.580 Or perhaps it was a victory of the cause for something like free speech over censorship, or the triumph of ballots over bullets. 107 00:09:45.580 --> 00:09:52.580 Now if the proper lesson of the collapse had been conveyed, we would have seen the error of all forms of government planning. 108 00:09:52.580 --> 00:09:57.580 We would have seen that a voluntary society will outperform a coerced one anytime. 109 00:09:57.580 --> 00:10:07.580 We might see how ultimately artificial and fragile are all systems of statism compared to the robust permanence of a society built on free exchange and capitalist ownership. 110 00:10:07.580 --> 00:10:23.580 And there is another point. The militarism of the Cold War had only ended up prolonging the period of socialism by providing these evil governments the chance to stimulate unfortunate nationalist impulses that distracted their domestic populations from the real problem. 111 00:10:23.580 --> 00:10:35.580 It was not the Cold War that killed Socialism. Rather, once the Cold War had exhausted itself, these governments collapsed of their own weight from an internal rather than external pressures. 112 00:10:35.580 --> 00:10:52.580 In short, if the world had drawn the lessons that they should have from these events, there would be no more need for economic education, no more need even for the bulk of what the Mises Institute does. 113 00:10:52.580 --> 00:11:00.080 In one great moment of history, the contest between capitalism and central planning would have been decided for all time. 114 00:11:01.080 --> 00:11:08.580 I must say that it was more of a shock to me and my colleagues than it should have been that the essential economic message was lost on most people. 115 00:11:09.080 --> 00:11:12.080 Indeed, it made very little difference in the political spectrum at all. 116 00:11:12.580 --> 00:11:19.080 The contest between capitalism and central planning continued as it always had, and even intensified here at home. 117 00:11:19.080 --> 00:11:27.080 The socialists among us, if they experienced any setback at all, bounded right back, strong as ever, if not more so. 118 00:11:27.080 --> 00:11:39.080 If you doubt it, consider that it only took a few months for these groups to start convention about the horrible onslaught that was being wrought by the unleash of capitalism in Eastern Europe, Russia and China. 119 00:11:39.080 --> 00:11:48.080 We began hearing complaints about the rise of a hideous consumerism in these countries, about the exploitation of workers at the hands of capitalists, 120 00:11:48.080 --> 00:11:52.240 and Capitalists about the rise of the garish super-rich. 121 00:11:52.240 --> 00:11:57.440 Files and piles of news stories appeared about the sad plight of unemployed state workers 122 00:11:57.440 --> 00:12:01.720 who though loyal to the principles of socialism all their lives were now turned out on the 123 00:12:01.720 --> 00:12:05.080 streets to fend for themselves. 124 00:12:05.080 --> 00:12:10.000 Not even an event as spectacular as the spontaneous meltdown of a superpower and all its client 125 00:12:10.000 --> 00:12:14.680 states was enough to impart the message of economic freedom. 126 00:12:14.680 --> 00:12:20.200 The whole of our world is covered with lessons about the merits of economic liberty over 127 00:12:20.200 --> 00:12:22.160 central planning. 128 00:12:22.160 --> 00:12:26.760 Our everyday lives are dominated by the glorious products of the market, which we all gladly 129 00:12:26.760 --> 00:12:28.240 take for granted. 130 00:12:28.240 --> 00:12:33.360 We can open up our web browsers and tour an electronic civilization that the market created, 131 00:12:33.360 --> 00:12:37.720 and note that government never did anything useful at all by comparison. 132 00:12:37.720 --> 00:12:41.320 We are also inundated daily by the failures of the state. 133 00:12:41.320 --> 00:12:45.880 We complain constantly that the educational system is broken, that the medical sector 134 00:12:45.880 --> 00:12:50.600 is oddly distorted, that the post office is unaccountable, that the police have used their 135 00:12:50.600 --> 00:12:55.760 power, that the politicians have lied to us, that tax dollars are stolen, that whatever 136 00:12:55.760 --> 00:13:01.120 bureaucracy we have to deal with is inhumanly unresponsive. 137 00:13:01.120 --> 00:13:05.840 We note all this, but far fewer are somehow able to connect the dots and see the myriad 138 00:13:05.840 --> 00:13:14.840 are the three ways in which daily life confirms that the market radicals like Mises, Hayek, Haslett and Rothbard were correct in their judgments. 139 00:13:14.840 --> 00:13:20.840 What's more, this is not a new phenomenon that we can observe in our lifetimes only. 140 00:13:20.840 --> 00:13:32.840 We can look at any country in any period and note that every bit of wealth ever created in the history of mankind has been generated through some kind of market activity and never by governments. 141 00:13:32.840 --> 00:13:36.840 Few free people create, states destroy. 142 00:13:36.840 --> 00:13:39.840 It was as true in the first millennium after Christ. 143 00:13:39.840 --> 00:13:42.840 It was true in the Middle Ages and the Renaissance. 144 00:13:42.840 --> 00:13:46.840 And with the birth of complex structures of production and the division of labor in those years, 145 00:13:46.840 --> 00:13:52.840 we see how the accumulation of capital led to what may be called a productive miracle. 146 00:13:52.840 --> 00:13:54.840 The world's population soared. 147 00:13:54.840 --> 00:13:56.840 We saw the creation of the middle class. 148 00:13:56.840 --> 00:14:01.840 We saw the poor improve their plight and change their own class identification. 149 00:14:01.840 --> 00:14:09.840 The empirical truth has never been hard to come by. What matters are the theoretical eyes that see. 150 00:14:09.840 --> 00:14:16.840 This is what dictates the lesson we draw from events. Marx and Bastiat were writing at the same time. 151 00:14:16.840 --> 00:14:22.840 The former said that capitalism was creating a calamity and that abolition of ownership was the solution. 152 00:14:22.840 --> 00:14:29.840 Bastiat saw that statism was creating a calamity and said the abolition of state plunder was the solution. 153 00:14:29.840 --> 00:14:38.840 What was the difference between them? They saw the same facts, but they saw them in very different ways. They had a different perception of cause and effect. 154 00:14:38.840 --> 00:14:48.840 I suggest to you that there is an important lesson here as regards the methodology of the social sciences, as well as an agenda and strategy for the future. 155 00:14:48.840 --> 00:14:57.840 Concerning method, we need to recognize that Mises was precisely right concerning the relationship between facts and economic truth. 156 00:14:57.840 --> 00:15:03.060 If we have a solid theory in mind, the facts on the ground provide excellent illustrative 157 00:15:03.060 --> 00:15:08.660 material. They inform us about the application of theory in the world in which we live. They 158 00:15:08.660 --> 00:15:13.380 provide excellent anecdotes and revealing stories of how economic theory is confirmed 159 00:15:13.380 --> 00:15:19.860 in practice. But absent that theory of economics, facts alone are nothing but facts. They do 160 00:15:19.860 --> 00:15:25.620 not convey any information about cause and effectividely. They do not point a way forward. 161 00:15:25.620 --> 00:15:29.260 Think of it this way. Let's say you have a bag of marbles that is turned upside down 162 00:15:29.260 --> 00:15:35.100 on the ground and you ask people their impressions. The first one understands what numbers mean, 163 00:15:35.100 --> 00:15:41.060 what shapes mean, what colors mean. This person can give a detailed account of what he sees, 164 00:15:41.060 --> 00:15:45.860 how many marbles, what kinds, how big they are. This person can explain what he sees 165 00:15:45.860 --> 00:15:51.080 in different ways, potentially for hours. But now consider the second person we can 166 00:15:51.080 --> 00:15:56.640 Ludwig von Mises has absolutely no understanding of numbers, not even that they exist as abstract 167 00:15:56.640 --> 00:16:02.560 ideas. This person has no comprehension of shape or color. He sees the same scene as 168 00:16:02.560 --> 00:16:07.280 the other person, but cannot provide anything like an explanation of the patterns. He has 169 00:16:07.280 --> 00:16:12.720 very little to say. All he sees is a series of random objects. 170 00:16:12.720 --> 00:16:17.320 Both these people see the same facts, but they understand them in very different ways, 171 00:16:17.320 --> 00:16:21.320 owing to the abstract notions of meaning they carry in their minds. 172 00:16:21.320 --> 00:16:28.320 This is why positivism as a pure scientific method of assembling a potentially infinite series of data points 173 00:16:28.320 --> 00:16:30.320 is a fruitless undertaking. 174 00:16:30.320 --> 00:16:37.320 Data points on their own convey no theory, suggest no conclusions, and offer no truths. 175 00:16:37.320 --> 00:16:44.320 To arrive at truth requires the most important step that we as human beings can ever take, thinking. 176 00:16:44.320 --> 00:16:53.320 Through this thinking, with good teaching and reading, we can put together a coherent theoretical apparatus that helps us understand. 177 00:16:53.320 --> 00:17:01.320 Now we have a hard time conjuring up in our minds the likes of a man who has no comprehension of numbers, colors, or shapes. 178 00:17:01.320 --> 00:17:12.320 Yet I suggest to you this is precisely what we are facing when we encounter a person who has never thought about economic theory and never studied the implications of the science at all. 179 00:17:12.320 --> 00:17:15.600 The facts of the world look quite random to this person. 180 00:17:15.600 --> 00:17:19.040 He sees two societies next to each other, 181 00:17:19.040 --> 00:17:22.960 the one free and prosperous, the other unfree and poor. 182 00:17:22.960 --> 00:17:27.200 He looks at this and concludes nothing important about economic systems 183 00:17:27.200 --> 00:17:30.720 because he has never thought about the relationship between economic systems 184 00:17:30.720 --> 00:17:32.960 and prosperity and freedom. 185 00:17:32.960 --> 00:17:36.000 He merely accepts the existence of wealth in one place 186 00:17:36.000 --> 00:17:38.320 and poverty in the other as a given, 187 00:17:38.320 --> 00:17:40.960 the same way the socialists at a lunch table assume 188 00:17:40.960 --> 00:17:45.460 that the luxurious surroundings and food just happen to be there. 189 00:17:45.460 --> 00:17:48.460 Perhaps they will reach for an explanation of some sort, 190 00:17:48.460 --> 00:17:53.960 but absent economic education, it is not likely to be the correct one. 191 00:17:53.960 --> 00:17:58.960 Equally as dangerous as having no theory is having a bad theory 192 00:17:58.960 --> 00:18:04.460 that is assembled not by means of logic, but by an incorrect view of cause and effect. 193 00:18:04.460 --> 00:18:07.960 This is the case with notions such as the Phillips Curve, 194 00:18:07.960 --> 00:18:11.960 which posits a trade-off relationship between inflation and unemployment. 195 00:18:11.960 --> 00:18:17.960 The idea is that you can drive unemployment down very low if you're willing to tolerate high inflation. 196 00:18:17.960 --> 00:18:19.960 Or it can work the other way around. 197 00:18:19.960 --> 00:18:24.960 You can stabilize prices provided you're willing to put up with high unemployment. 198 00:18:24.960 --> 00:18:28.960 Of course, this makes no sense on the microeconomic level. 199 00:18:28.960 --> 00:18:32.960 When inflation is soaring, businesses don't suddenly say, 200 00:18:32.960 --> 00:18:35.960 hey, let's hire a bunch of new people. 201 00:18:35.960 --> 00:18:41.460 Nor do they say, you know, the prices we're paying for inventory have not gone up or have even fallen. 202 00:18:41.460 --> 00:18:44.960 Let's fire some workers. 203 00:18:44.960 --> 00:18:47.460 This much is true about macroeconomics. 204 00:18:47.460 --> 00:18:55.460 It is commonly treated like a subject completely devoid of any connection to microeconomics or even human decision making. 205 00:18:55.460 --> 00:19:00.960 It is as if we entered into a video game featuring fearsome creatures called aggregates. 206 00:19:00.960 --> 00:19:02.960 And the battle is to the death. 207 00:19:02.960 --> 00:19:09.460 So you have one creature called unemployment, one called inflation, one called capital, one called labor, and so on, 208 00:19:09.460 --> 00:19:15.060 and you can construct a fun and exciting game that is sheer fantasy. 209 00:19:15.060 --> 00:19:22.660 Another example of this came to me just the other day, a recent study claimed that labor unions increase the productivity of firms. 210 00:19:22.660 --> 00:19:24.660 How did the researchers discern this? 211 00:19:24.660 --> 00:19:30.760 Well, they found that some unionized companies tend to be larger with more overall output than some non-unionized companies. 212 00:19:30.760 --> 00:19:32.760 Well, let's think about this. 213 00:19:32.760 --> 00:19:36.760 Is it likely that if you close a labor pool to all competition, 214 00:19:36.760 --> 00:19:41.760 give that restrictive labor pool the right to use violence to enforce its cartel, 215 00:19:41.760 --> 00:19:45.760 permit that cartel to extract higher than market wages from the company, 216 00:19:45.760 --> 00:19:49.760 and to set its own terms concerning work rules and vacations and benefits, 217 00:19:49.760 --> 00:19:54.760 is it likely this would be good for the company in the long run? 218 00:19:54.760 --> 00:19:57.760 You would have to have taken leave of your senses to believe this. 219 00:19:57.760 --> 00:20:02.480 In fact, what we have here is a simple mix-up of cause and effect. 220 00:20:02.480 --> 00:20:06.400 Bigger companies tend to be more likely to attract a kind of un-preventable unionization 221 00:20:06.400 --> 00:20:07.920 than smaller ones. 222 00:20:07.920 --> 00:20:11.040 The unions target them with federal aid. 223 00:20:11.040 --> 00:20:13.600 It is no more or less complicated than that. 224 00:20:13.600 --> 00:20:19.520 It is for the same reason that developed economies have larger welfare states. 225 00:20:19.520 --> 00:20:23.480 The parasites prefer bigger hosts. 226 00:20:23.480 --> 00:20:27.680 We would be making a big mistake to assume that the welfare state causes the developed 227 00:20:27.680 --> 00:20:33.640 Economy. That would be as much of a fallacy as to believe that wearing $2,000 suits causes 228 00:20:33.640 --> 00:20:41.600 people to become rich. I'm convinced that Mises was right. The most important step economists 229 00:20:41.600 --> 00:20:46.600 or economic institutions can take is in the direction of public education and economic 230 00:20:46.600 --> 00:20:53.320 logic. There is another important factor here. The state thrives on an economically ignorant 231 00:20:53.320 --> 00:21:23.320 Republic. This is the only way we can get away with blaming inflation or recession on consumers or claiming that the government's fiscal problems are due to us paying too little taxes. It is economic ignorance that permits the regulatory agencies to claim that they are protecting us as versus denying us choice. It is only by keeping us all in the dark that it can continue to start war after war, violating rights abroad and smashing liberties at home in the name of spreading freedom. 232 00:21:23.320 --> 00:21:27.120 There is only one force that can put an end to the successes of the state, and that is 233 00:21:27.120 --> 00:21:30.000 an economically and morally informed public. 234 00:21:30.000 --> 00:21:35.160 Otherwise, the state can continue to spread its malicious and destructive policies. 235 00:21:35.160 --> 00:21:40.840 Do you remember the first time you began to grasp economic fundamentals? 236 00:21:40.840 --> 00:21:42.680 It is a very exciting time. 237 00:21:42.680 --> 00:21:47.840 It is as if people with poor eyesight had put on eyeglasses for the first time. 238 00:21:47.840 --> 00:21:51.560 It can consume us for weeks, for months, for years. 239 00:21:51.560 --> 00:21:56.440 We read a book like Economics in One Lesson and pore over the pages of human action for 240 00:21:56.440 --> 00:22:01.160 the first time we realize that so much of what other people take for granted is not 241 00:22:01.160 --> 00:22:07.200 true and that there are exciting truths about the world that desperately need to be spread. 242 00:22:07.200 --> 00:22:13.360 To consider just one example, look at the concept of inflation. For most people it is 243 00:22:13.360 --> 00:22:17.900 seen in the way primitive societies might see the onset of a disease. It is something 244 00:22:17.900 --> 00:22:21.440 Banking that sweeps through to cause every kind of wreckage. 245 00:22:21.440 --> 00:22:26.300 The damage is obvious enough, is obvious enough, but the source is not. 246 00:22:26.300 --> 00:22:29.500 Everyone blames everyone else, and no solution seems to work. 247 00:22:29.500 --> 00:22:34.020 But once you understand economics, you begin to see that the value of the money is more 248 00:22:34.020 --> 00:22:38.320 directly related to its quantity, and that only one institution possesses the power to 249 00:22:38.320 --> 00:22:44.900 create money out of thin air without limit, the government-connected central bank. 250 00:22:44.900 --> 00:22:50.900 This effect causes us to broaden our minds to look at the commerce of society from many different points of view. 251 00:22:50.900 --> 00:22:55.900 Instead of just looking at events and phenomena from the perspective of a single consumer or producer, 252 00:22:55.900 --> 00:23:00.900 we begin to see the interests of all consumers and all producers. 253 00:23:00.900 --> 00:23:04.900 Instead of thinking only about the short-term effects of certain policies, 254 00:23:04.900 --> 00:23:09.900 we think about the long run and the spin-off effects of government policies. 255 00:23:09.900 --> 00:23:15.540 This, of course, is the essence of Hazlitt's first lesson in his famous book. 256 00:23:15.540 --> 00:23:21.700 For a person who has read in economics, and I might just mention it's long been a dream 257 00:23:21.700 --> 00:23:27.540 of ours to be able to bring out a decent, well-priced, handsome version of economics 258 00:23:27.540 --> 00:23:30.460 in one lesson, and we've finally been able to arrange that. 259 00:23:30.460 --> 00:23:34.580 We have a huge shipment of books coming in from China, from a private publishing company 260 00:23:34.580 --> 00:23:50.680 For a person who has read in economics and absorbed its essential lessons, the world 261 00:23:50.680 --> 00:23:56.700 around us becomes vivid and clear, and certain moral imperatives strike us. 262 00:23:56.700 --> 00:24:00.240 We know now that commerce deserves defense. 263 00:24:00.240 --> 00:24:03.460 We see entrepreneurs as great heroes. 264 00:24:03.460 --> 00:24:08.680 We sympathize with the plight of producers. We see unions not as defenders of rights but 265 00:24:08.680 --> 00:24:14.920 as privileged cartels that exclude people who need work. We see regulation not as consumer 266 00:24:14.920 --> 00:24:20.700 protection but rather cost-raising rackets lobbied for by some producers to hurt other 267 00:24:20.700 --> 00:24:26.420 producers. We see antitrust not as a safeguard against corporate excess but as a bludgeon 268 00:24:26.420 --> 00:24:30.480 used by big players against smarter competitors. 269 00:24:30.480 --> 00:24:34.840 Detroit Economics helps us see the world as it is, and its contribution lies not in the 270 00:24:34.840 --> 00:24:40.960 direction of the assembly of ever more facts, but in helping those facts fit a coherent 271 00:24:40.960 --> 00:24:43.320 theory of the world. 272 00:24:43.320 --> 00:24:46.560 And here we see the essence of our job at the Mises Institute. 273 00:24:46.560 --> 00:24:53.560 It is to educate and instill a systematic method for understanding the world as it is. 274 00:24:53.560 --> 00:24:58.520 Our battleground is not the courts, not the election polls, not the executive branch, 275 00:24:58.520 --> 00:25:04.680 not the legislature, and certainly not the wicked arena of political payoffs. 276 00:25:04.680 --> 00:25:10.000 Our battleground concerns a domain of existence that is more powerful in the long run, concerns 277 00:25:10.000 --> 00:25:15.440 the ideas that individuals hold about the way the world works. 278 00:25:15.440 --> 00:25:20.720 As we get older and see ever more young generations coming up behind us, we are often struck by 279 00:25:20.720 --> 00:25:26.480 the great truth that knowledge in this world is not cumulative over time. 280 00:25:26.480 --> 00:25:31.280 What one generation has learned and absorbed is not somehow passed on to the next one through 281 00:25:31.280 --> 00:25:33.800 genetics or osmosis. 282 00:25:33.800 --> 00:25:36.880 Each generation must be taught anew. 283 00:25:36.880 --> 00:25:41.480 Economic theory, I'm sorry to report, is not written on our hearts. 284 00:25:41.480 --> 00:25:47.000 It was a very long process of being discovered, but now that we know it must be passed on, 285 00:25:47.000 --> 00:25:51.440 and in this way it is like the ability to read or to understand great literature, it 286 00:25:51.440 --> 00:25:56.720 is the obligation of our generation to teach the next generation. 287 00:25:56.720 --> 00:26:02.320 And here we are not merely talking about knowledge for knowledge's sake. 288 00:26:02.320 --> 00:26:05.280 What is at stake is our prosperity. 289 00:26:05.280 --> 00:26:06.640 It is our standard of living. 290 00:26:06.640 --> 00:26:10.860 It is the well-being of our children and all of society. 291 00:26:10.860 --> 00:26:16.080 It is freedom and the flourishing of civilization that stands in the balance. 292 00:26:16.080 --> 00:26:34.080 Whether we grow and thrive and create and flourish, or wither and die and lose all that we have inherited ultimately depends on the abstract ideas we hold concerning cause and effect in society. 293 00:26:34.080 --> 00:26:41.080 These ideas do not usually come to us by pure observation. They must be taught and explained. 294 00:26:41.080 --> 00:26:45.080 But who or what will teach and explain them? 295 00:26:45.080 --> 00:26:50.160 This is the crucial role of the Mises Institute, and not only to teach but to expand the base 296 00:26:50.160 --> 00:26:54.380 of knowledge, to make new discoveries, to broaden the reach of the literature and to 297 00:26:54.380 --> 00:26:59.600 add ever more abundantly to the corpus of freedom. We need to expand its proponents 298 00:26:59.600 --> 00:27:05.700 in all walks of life, not only in academia but in all sectors of society. This is an 299 00:27:05.700 --> 00:27:12.160 ambitious agenda, one that Mises himself charged his descendants with. You are helping us to 300 00:27:12.160 --> 00:27:19.160 to take up this task, and for this we are very, very grateful.