WEBVTT NOTE The Calamity of Anti-Capitalism: A Brief American History 1 00:00:00.000 --> 00:00:09.000 First of all, thank you all very much for coming, and thanks to Kurt and Laura Doolittle in particular for sponsoring this event. 2 00:00:09.000 --> 00:00:16.000 This is my first time ever in Seattle or in Washington State, so I'm very glad to be here, have the chance to visit, 3 00:00:16.000 --> 00:00:22.000 and I'm particularly happy that I'm here at an Italian restaurant, 4 00:00:22.000 --> 00:00:30.000 Because my wife's one flaw is that she does not like Italian food. 5 00:00:30.000 --> 00:00:34.000 Have you ever heard of anyone who doesn't like Italian food? 6 00:00:34.000 --> 00:00:39.000 But she is such a good human being, I mean, I in no way deserve this woman, in no way. 7 00:00:39.000 --> 00:00:41.000 She is such a perfect person. 8 00:00:41.000 --> 00:00:44.000 But yikes, this was still weighing in the balance, you know. 9 00:00:44.000 --> 00:00:47.000 Do I marry her or not? 10 00:00:47.000 --> 00:00:50.000 I mean, it couldn't even be grounds for annulment, I heard. 11 00:00:50.000 --> 00:00:55.000 So I'm glad to have a chance. And she says to me, she'll prepare Italian food for me. 12 00:00:55.000 --> 00:01:00.000 She's happy to go out to a restaurant with me, but it's no fun if she's not enjoying it. 13 00:01:00.000 --> 00:01:06.000 Anyway, I don't know. She grew up in Oklahoma. I don't think any Italians live in Oklahoma. 14 00:01:06.000 --> 00:01:09.000 She never had a chance to eat Italian food, really. 15 00:01:09.000 --> 00:01:14.000 Anyway, look, this is my own cross to bear. I shouldn't be imposing it on you poor folks. 16 00:01:14.000 --> 00:01:26.000 Well, when I saw the topic I was to address, because I think it's Jeff Tucker who kind of comes up with the, that's my suspicion anyway, comes up with the titles and then you're sort of left to pick up the pieces. 17 00:01:26.000 --> 00:01:36.000 How do I speak on this topic? I thought, you know, about the calamity of anti-capitalism, I thought there's so much one could say in American history. 18 00:01:36.000 --> 00:01:41.000 I mean, we could have several week seminar on the subject. I mean, one could just go on and on. 19 00:01:41.000 --> 00:01:46.000 And I'm going to speak of it really as a moral and intellectual calamity 20 00:01:46.000 --> 00:01:51.000 and speak perhaps incidentally about the price we pay for ignorance of the market. 21 00:01:51.000 --> 00:01:55.000 And it's not just ignorance half the time, it's malice, I think, as well. 22 00:01:55.000 --> 00:01:58.000 But where would I even begin, I thought to myself? 23 00:01:58.000 --> 00:02:02.000 I thought I could talk about the colonial period of American history 24 00:02:02.000 --> 00:02:05.000 when there was interference in the market. 25 00:02:05.000 --> 00:02:09.000 I could talk about Alexander Hamilton's economic program. 26 00:02:09.000 --> 00:02:18.000 I could take a page out of Tom DiLorenzo, who, by the way, has a book coming out, I think, in October, called Hamilton's Curse, which sounds very interesting. 27 00:02:18.000 --> 00:02:28.000 But Hamilton is sometimes thought, Alexander Hamilton, for those of you who don't know, was the first Treasury Secretary in American history, and some people portray him as the capitalist. 28 00:02:28.000 --> 00:02:36.000 See, Jefferson was the Domigrarian, supposedly, according to this thinking, and it was Alexander Hamilton who was the capitalist. And why is that? 29 00:02:36.000 --> 00:02:42.000 Well, because he favored protective tariffs. Honestly, historians say this. 30 00:02:42.000 --> 00:02:46.000 Because he favored a national bank. It just goes on and on. 31 00:02:46.000 --> 00:02:50.000 And I wonder about this. Do they not understand what capitalism is? 32 00:02:50.000 --> 00:02:55.000 That's one of the useful things about Tom B. Lorenzo's book, How Capitalism Saved America. 33 00:02:55.000 --> 00:02:59.000 He starts off by defining what capitalism is. 34 00:02:59.000 --> 00:03:04.000 And historians could stand to benefit from this, because when you think about it, 35 00:03:04.000 --> 00:03:12.000 If you think about it, there's no particular reason that support for a national bank or a central bank would be a capitalist position. 36 00:03:12.000 --> 00:03:20.000 I think the reason people, historians, just assume this is they think, well, banks have money in them and money has something to do with capitalism, 37 00:03:20.000 --> 00:03:25.000 so therefore supporting a central bank is a capitalist thing to do. 38 00:03:25.000 --> 00:03:31.000 And so when poor Tom's book came out, one guy on Amazon reviewed it, obviously not having read it. 39 00:03:31.000 --> 00:03:35.000 Can you believe some people review books on Amazon they haven't read? 40 00:03:35.000 --> 00:03:40.000 This happens. And the person spent half the review denouncing the World Bank 41 00:03:40.000 --> 00:03:43.000 as if Tom DiLorenzo would defend the World Bank. 42 00:03:43.000 --> 00:03:46.000 This is not a market institution, for heaven's sake. 43 00:03:46.000 --> 00:03:50.000 So likewise, Alexander Hamilton is not a capitalist, per se. 44 00:03:50.000 --> 00:03:54.000 I mean, he's not a socialist, but because he favors these interventions, 45 00:03:54.000 --> 00:03:56.000 that doesn't make him a capitalist. 46 00:03:56.000 --> 00:04:00.000 Every one of these interventions goes counter to the market. 47 00:04:00.000 --> 00:04:13.000 But I figure I'll leave this to Tom, he can tackle Hamilton. I thought about some of the utopian communities in the 19th century, some of the utopian reformist ideas that you began to see in the 19th century. 48 00:04:13.000 --> 00:04:27.000 A lot of times, particularly between 1820 and 1860, you would hear reformers arguing that really we were on the verge of achieving perfection in society, but there was just that one obstacle holding us back. 49 00:04:27.000 --> 00:04:42.000 So, for instance, Horace Mann, the educational reformer, believed that it was ignorance that was the problem in society and therefore the cure for ignorance would be government schools. 50 00:04:42.000 --> 00:04:56.000 And at one point, he actually estimated that 90% of the crimes now committed would vanish if we could have everyone educated in a government school. 51 00:04:56.000 --> 00:05:04.000 Little did he know that 90% of the crimes would actually be committed in the government space. 52 00:05:04.000 --> 00:05:11.000 We then had temperance reformers, too, who argued that it was alcoholic drink that was the source of it. 53 00:05:11.000 --> 00:05:14.000 And again, if you read their literature, they'll say this is the one thing. 54 00:05:14.000 --> 00:05:22.000 Alcoholic drink is the source, the proximate cause of so many of our problems, and if we could only get rid of this. 55 00:05:22.000 --> 00:05:27.520 this and incidentally a number of times when people couldn't manage to get 56 00:05:27.520 --> 00:05:32.240 complete prohibition passed in their locality they would try to pass laws 57 00:05:32.240 --> 00:05:38.680 requiring you to purchase alcohol in gigantic quantities so you might think 58 00:05:38.680 --> 00:05:42.320 well you know this is people just get drunker but of course the idea was they 59 00:05:42.320 --> 00:05:46.320 won't be able to afford the giant quantities but you know drinkers are very 60 00:05:46.320 --> 00:06:05.640 In New York, there was a community that argued that the one problem holding us from perfection 61 00:06:05.640 --> 00:06:11.480 really was the institution of monogamous marriage. That was John Humphrey Noyes, a former state 62 00:06:11.480 --> 00:06:20.320 legislator who argued that marriage, it encouraged exclusivity and jealousy, you 63 00:06:20.320 --> 00:06:25.400 know, my wife is prettier than yours and that sort of thing or only I can have 64 00:06:25.400 --> 00:06:29.000 intimate relations with my wife and this kind of selfishness really undermines the 65 00:06:29.000 --> 00:06:36.680 cooperative spirit we want in society. So he established a community whereby, to 66 00:06:36.680 --> 00:06:38.680 To quote his words, 67 00:06:38.680 --> 00:06:46.680 It will be like a Thanksgiving feast at which every dish is free to every guest. 68 00:06:46.680 --> 00:06:50.680 I'm not going to go any further with this. 69 00:06:50.680 --> 00:06:54.680 But again, we get rid of marriage and we have no more problems. 70 00:06:54.680 --> 00:06:57.680 But also there were communities, and here's my point, 71 00:06:57.680 --> 00:07:00.680 that argued that it wasn't marriage, it wasn't alcohol, it wasn't ignorance, 72 00:07:00.680 --> 00:07:05.680 it was private property, because that really encourages covetousness and so on and on. 73 00:07:05.680 --> 00:07:09.520 So we need to have communities in which everything is owned in common. 74 00:07:09.520 --> 00:07:13.600 And some of these were actually established, particularly in Pennsylvania. 75 00:07:13.600 --> 00:07:16.520 Not one of them lasted more than two years. 76 00:07:16.520 --> 00:07:20.560 But they're premised on the idea that private property is something wicked that needs to 77 00:07:20.560 --> 00:07:21.560 be eliminated. 78 00:07:21.560 --> 00:07:26.700 And if we do it one community at a time, we can illustrate to the country what the results 79 00:07:26.700 --> 00:07:29.120 would be and then everyone will want to adopt it. 80 00:07:29.120 --> 00:07:33.000 Well, when they saw what the results were, everybody decided they did not want to adopt 81 00:07:33.000 --> 00:07:34.000 it. 82 00:07:34.000 --> 00:07:35.320 But one could go on. 83 00:07:35.320 --> 00:07:40.000 We could talk about the antitrust laws and the economic fallacies behind them. 84 00:07:40.000 --> 00:07:44.400 We could talk about the 1890s, some of the utopian literature that was written, like 85 00:07:44.400 --> 00:07:51.400 Edward Bellamy's book, Looking Backward, in which he looks ahead to the 1980s, and 86 00:07:51.400 --> 00:07:55.760 he estimates, he tries to imagine what life is like. 87 00:07:55.760 --> 00:08:01.360 He describes a society in which everyone enjoys great abundance and people work very little 88 00:08:01.360 --> 00:08:05.960 and everybody shares and it's a common pool that everybody contributes to and the 89 00:08:05.960 --> 00:08:09.700 incentive comes from the desire to contribute to the common pool and receive 90 00:08:09.700 --> 00:08:15.360 back your equal share. That's where the incentive to produce comes from. Now 91 00:08:15.360 --> 00:08:19.880 Bellamy's books sold 300,000 copies in two years which is an astonishing feat 92 00:08:19.880 --> 00:08:25.300 for any book, much less one in the 1890s. There were nationalist clubs founded 93 00:08:25.300 --> 00:08:29.620 around the country to try to put Bellamy's program into practice but there 94 00:08:29.620 --> 00:08:34.980 There are other books too. Ignatius Donnelly's book, Caesar's Column, is an extremely disturbing 95 00:08:34.980 --> 00:08:41.420 book in which at the end about a quarter million of the exploiters of the people are not only 96 00:08:41.420 --> 00:08:48.700 murdered but then they're covered over with cement and they build a big monument on behalf 97 00:08:48.700 --> 00:08:53.540 of the oppressed to show what will happen to oppressors. Yikes, this is going on in 98 00:08:53.540 --> 00:08:58.060 the United States. Books like this are being published. Again, premised on the idea that 99 00:08:58.060 --> 00:09:03.060 and the free economy is something that's predatory and exploitative. 100 00:09:03.060 --> 00:09:06.060 Well, I take rather a different view. 101 00:09:06.060 --> 00:09:09.060 Walter always tells me before my talks, you know, 102 00:09:09.060 --> 00:09:12.060 quit your socialist claptrap this time. 103 00:09:12.060 --> 00:09:15.060 Try and take the free enterprise line for once. 104 00:09:15.060 --> 00:09:18.060 So I'm trying to do that this time. 105 00:09:18.060 --> 00:09:22.060 Well, let's start with one major calamity, 106 00:09:22.060 --> 00:09:26.060 and that is that when you look at World War I, 107 00:09:26.060 --> 00:09:31.560 You know, you're inclined to think, and I point, I talk about this in my 33 Questions book, 108 00:09:31.560 --> 00:09:35.560 you're inclined to think, you know, that it's people on the political right who are pro-war, 109 00:09:35.560 --> 00:09:40.060 and people on the left, you know, they just want to skip around in the meadow. 110 00:09:40.060 --> 00:09:46.560 But actually, the left was overwhelmingly in favor of World War I. 111 00:09:46.560 --> 00:09:50.560 It's very hard to find, I mean, you know, there are a few socialists who were against it. 112 00:09:50.560 --> 00:09:55.560 Poor Eugene Debs, you know, he was against it and he spoke out against it and went to jail. 113 00:09:55.560 --> 00:10:00.960 got a million votes by the way for president in 1920 while he was in jail 114 00:10:00.960 --> 00:10:09.200 and there was a campaign button that said for president convict number 0204 115 00:10:09.200 --> 00:10:14.160 but by and large the left went along with the war and in fact Murray Rothbard 116 00:10:14.160 --> 00:10:18.480 has an extremely important and useful article on this from the Journal of 117 00:10:18.480 --> 00:10:24.760 Libertarian Studies that was later published I think in the cost of war on the 118 00:10:24.760 --> 00:10:30.320 The Left and World War I, and one of the reasons The Left was so enthusiastic about the war 119 00:10:30.320 --> 00:10:36.720 was that they believed that wartime conditions would be particularly ideal for bringing about 120 00:10:36.720 --> 00:10:42.240 a planned economy, because in a war, of course, you have a single-minded focus, namely to 121 00:10:42.240 --> 00:10:46.320 win the war and prosecute it effectively, so therefore the government will need to take 122 00:10:46.320 --> 00:10:52.080 control of all the resources in society and direct them and determine their prices and 123 00:10:52.080 --> 00:10:54.000 the conditions of production and so on and so forth. 124 00:10:54.000 --> 00:11:03.000 So this was very exciting for the left. This would be a great opportunity finally to put that old-fashioned private property economy behind us forever. 125 00:11:03.000 --> 00:11:09.000 So one historian said, because war demanded paramount commitment to the national interest 126 00:11:09.000 --> 00:11:15.000 and necessitated an unprecedented degree of government planning and economic regulation in that interest, 127 00:11:15.000 --> 00:11:22.000 John Dewey saw the prospect of permanent socialization, permanent replacement of private and possessive interest 128 00:11:22.000 --> 00:11:26.000 by public and social interests both within and among nations. 129 00:11:26.000 --> 00:11:31.000 Dewey exalted just a few months after US entry into the war that 130 00:11:31.000 --> 00:11:36.000 quote, this war may easily be the beginning of the end of business. 131 00:11:36.000 --> 00:11:41.000 And he said that we are beginning to produce for use, not for sale. 132 00:11:41.000 --> 00:11:45.000 and the capitalist is not a capitalist in the face of the war. 133 00:11:45.000 --> 00:11:49.000 There is no reason to believe that the old principle will ever be resumed. 134 00:11:49.000 --> 00:11:56.000 Private property has already lost its sanctity, industrial democracy is on the way. 135 00:11:56.000 --> 00:12:01.000 The New Republic magazine, which is that consistent opponent of the Old Republic, 136 00:12:01.000 --> 00:12:06.000 said that the substitution of national and social and organic forces 137 00:12:06.000 --> 00:12:12.000 for the more or less mechanical private forces operative in peace was something to welcome. 138 00:12:12.000 --> 00:12:20.000 And although war and social reform had different purposes, quote, they are both purposes. 139 00:12:20.000 --> 00:12:26.000 And luckily for mankind, a social organization which is efficient is as useful for the one as for the other. 140 00:12:26.000 --> 00:12:33.000 So once we finish waging the war, we will turn these warlike energies toward the solving of, you know, 141 00:12:33.000 --> 00:12:39.000 The Municipal Garbage Problem or whatever, because if we can, this was the early version of we can put a man on the moon. 142 00:12:39.000 --> 00:12:47.000 If we can send a million men to fight World War I, then surely we can make sure that the garbage is collected. 143 00:12:47.000 --> 00:12:54.000 Now as the United States was on the verge of entering the war, again the New Republic predicted 144 00:12:54.000 --> 00:13:00.000 that the war would bring immense gains in national efficiency and happiness. 145 00:13:00.000 --> 00:13:08.000 Why should not the war serve as a pretext to be used to foist innovations upon the country, the war said? 146 00:13:08.000 --> 00:13:15.000 And this way, the war could lead the way toward abolishing, quote, 147 00:13:15.000 --> 00:13:21.000 the typical evils of the sprawling half-educated competitive capitalism. 148 00:13:21.000 --> 00:13:25.000 Well, I wouldn't throw that word half-educated around too much if I worked for the New Republic. 149 00:13:25.000 --> 00:13:29.000 Now, we have this common fallacy though, not just in World War I, 150 00:13:29.000 --> 00:13:34.080 that war is good for the economy is another another major anti-capitalist 151 00:13:34.080 --> 00:13:40.400 view because it betrays a complete misunderstanding of capitalism economics 152 00:13:40.400 --> 00:13:45.360 freedom I mean one one hardly knows where to begin and yet you still see 153 00:13:45.360 --> 00:13:49.480 this repeated Paul Krugman repeat this all the time yeah well you know it's 154 00:13:49.480 --> 00:13:53.640 really terrible that millions of people die but a lot of people went to work 155 00:13:53.640 --> 00:13:58.040 because of this I guess he must have liked the Great Plague the Black Plague 156 00:13:58.040 --> 00:14:02.200 Today, you know, in the 14th century, I mean, you know, a third of the European population 157 00:14:02.200 --> 00:14:06.440 perished, but, you know, hey, somebody's got to clean it up and bury the corpses. I mean, 158 00:14:06.440 --> 00:14:13.320 this is really not a normal person way of responding to a natural disaster, which really 159 00:14:13.320 --> 00:14:18.960 is what war is. And in my 33 Questions book, I actually have a whole chapter on why this 160 00:14:18.960 --> 00:14:25.240 is not true, why war, even World War II, was actually not good for the economy. But beyond 161 00:14:25.240 --> 00:14:31.240 We even have the argument that preparation for war, that is large military budgets, are good for the economy. 162 00:14:31.240 --> 00:14:39.240 And that if we were to reduce the military budget, I hate to say defense budget, by the way, for reasons that Walter pointed out. 163 00:14:39.240 --> 00:14:46.240 There's nothing defensive about this. I mean, if we had to establish a Department of Homeland Security in 2002, 164 00:14:46.240 --> 00:14:49.240 well, what was the Department of Defense doing all these years then? 165 00:14:49.240 --> 00:14:55.240 So we will just say that reducing the military budget, we are often told, by left and right Keynesians alike, 166 00:14:55.240 --> 00:15:01.240 will lead to terrible depression conditions, you know, because aggregate demand will be decreased, you know. 167 00:15:01.240 --> 00:15:07.240 What would people spend their money on if it weren't siphoned away from them to be spent on the military industrial complex? 168 00:15:07.240 --> 00:15:12.240 What would they do? You know, they just all sit there, confused what to do with this extra money. 169 00:15:12.240 --> 00:15:17.920 we should remember that when Frederick Bastiat wrote his essay on what is seen 170 00:15:17.920 --> 00:15:23.620 and what is not seen we all remember the broken window fallacy the kid throws the 171 00:15:23.620 --> 00:15:27.800 ball through the window window breaks the economist says no no this isn't a 172 00:15:27.800 --> 00:15:31.320 bad thing it's good because the repair of the window will put the window repair 173 00:15:31.320 --> 00:15:36.440 guy to work and so it helps the economy and so we all heard that we all know the 174 00:15:36.440 --> 00:15:40.320 fallacy behind that obviously if you didn't have to expend resources on 175 00:15:40.320 --> 00:15:43.120 Repairing the Window, you could have expended those on something else, 176 00:15:43.120 --> 00:15:46.020 so there's a net loss of wealth to society. 177 00:15:46.020 --> 00:15:49.020 But we often neglect, I think, an equally useful example, 178 00:15:49.020 --> 00:15:52.820 a military example that Bastiat gives later in the essay. 179 00:15:52.820 --> 00:15:57.120 He discusses the demobilization of 100,000 soldiers from the French army, 180 00:15:57.120 --> 00:16:00.220 and this is a prospect that many entertain with dread, 181 00:16:00.220 --> 00:16:04.220 because what will these men do for a living if they're not in the French army? 182 00:16:04.220 --> 00:16:08.120 Because certainly all our wants in society have been satisfied already, 183 00:16:08.120 --> 00:16:12.920 so what could they possibly do and so and what about the the stimulus that these 184 00:16:12.920 --> 00:16:17.560 men used to provide you know when they used to spend their money on wine or 185 00:16:17.560 --> 00:16:22.160 clothes or weapons that used to provide a stimulus what's going to happen when 186 00:16:22.160 --> 00:16:27.200 these people are demobilized well of course as Bastiat says they're focusing 187 00:16:27.200 --> 00:16:32.200 they're focusing on what is seen rather than what is not seen what about the 188 00:16:32.200 --> 00:16:36.800 possibility that the money that had previously been confiscated from the 189 00:16:36.800 --> 00:16:43.080 tax payers in order to support the soldiers will now be available for other purposes including 190 00:16:43.080 --> 00:16:49.200 expenditures on goods that these demobilized soldiers can now be employed to produce. 191 00:16:49.200 --> 00:16:55.640 Likewise, the money that the military used to spend on wine and clothes and well let's 192 00:16:55.640 --> 00:17:02.560 just say other things that the military sometimes spends money on, Walter mentioned one of them, 193 00:17:02.560 --> 00:17:04.280 can now be spent on other things. 194 00:17:04.280 --> 00:17:09.240 So here again, economic activity is none the worse for the soldiers' demobilization. 195 00:17:09.240 --> 00:17:15.400 But throughout the Cold War, you had politicians and intellectuals left, right and center warning 196 00:17:15.400 --> 00:17:21.800 of the catastrophic economic consequences of substantial reductions in military spending. 197 00:17:21.800 --> 00:17:27.200 It may be surprising to hear, but the radical left in particular, as part of its critique 198 00:17:27.200 --> 00:17:32.840 of American State Capitalism, which they mistakenly associated with, thought was laissez-faire. 199 00:17:32.840 --> 00:17:37.360 It was the radical left that really lent support to that position. For example, in their book, 200 00:17:37.360 --> 00:17:44.080 Monopoly Capital, Paul Baran and Paul Sweezy warned as follows, if military spending were 201 00:17:44.080 --> 00:17:50.460 reduced once again to second World War proportions, the nation's economy would return to a state 202 00:17:50.460 --> 00:17:56.480 of profound depression, characterized by unemployment rates of 15% and up, such as prevailed during 203 00:17:56.480 --> 00:18:02.160 in the 1930s. So the radical left is giving intellectual cover for this type of larceny 204 00:18:02.160 --> 00:18:07.740 of the American people. By the way, they had time to write this book, Monopoly Capital, 205 00:18:07.740 --> 00:18:12.800 in between writing articles about how wonderful it must be to live in Castro's Cuba, advice 206 00:18:12.800 --> 00:18:20.760 they themselves never actually took. Now it is during time of war, because war is in some 207 00:18:20.760 --> 00:18:25.340 ways the very opposite of the market. It's the opposite of cooperation. It's the opposite 208 00:18:25.340 --> 00:18:31.740 of Harmonies Existing Between Peoples. It typically does involve massive state planning 209 00:18:31.740 --> 00:18:38.700 and control of resources. Not surprisingly, war tends to lead to socialistic type reforms 210 00:18:38.700 --> 00:18:44.420 in the wake of the war. Robert Nisbet reminds us that it is in time of war that many of 211 00:18:44.420 --> 00:18:49.580 the reforms first advocated by socialists have been accepted by capitalist governments 212 00:18:49.580 --> 00:18:54.720 and made parts of the structures of their societies. Equalization of wealth, progressive 213 00:18:54.720 --> 00:19:00.480 of Taxation, Nationalization of Industries, the Raising of Wages and Improvements in Working 214 00:19:00.480 --> 00:19:06.360 Conditions, Worker Management Councils, Housing Ventures, Debt Taxes, Unemployment Insurance 215 00:19:06.360 --> 00:19:11.800 Plans, Pension Systems, and the enfranchisement of formerly voteless elements of the population 216 00:19:11.800 --> 00:19:16.000 have all been, in one country or another, achieved or advanced under the impress of 217 00:19:16.000 --> 00:19:17.000 war. 218 00:19:17.000 --> 00:19:23.480 Incidentally, it was during World War II that, by executive order, President Franklin Roosevelt 219 00:19:23.480 --> 00:19:34.860 managed to, albeit briefly, manage to get past a cap on all salaries in the United States above $25,000 a year. 220 00:19:34.860 --> 00:19:38.320 So you cannot, every dollar after that will be confiscated. 221 00:19:38.320 --> 00:19:45.980 The Congress eventually intervened and overturned that executive order, largely on the grounds that it would undermine the war effort. 222 00:19:45.980 --> 00:19:53.340 Obviously, we want people to produce and be rich so we don't want to take their money away, it might undermine the war effort. 223 00:19:53.340 --> 00:19:58.940 Now wartime planning, as I said, inspires peacetime planning. 224 00:19:58.940 --> 00:20:05.040 So when it came time for the New Deal programs of the Great Depression in the 1930s, 225 00:20:05.040 --> 00:20:09.240 what were the precedents that people looked to? They looked to World War I. 226 00:20:09.240 --> 00:20:16.640 In fact, wartime precedents existed for the Agricultural Adjustment Act, the Civilian Conservation Corps, 227 00:20:16.640 --> 00:20:21.740 the Tennessee Valley Association, housing programs, credit agencies, labor laws, 228 00:20:21.740 --> 00:20:24.180 and even the National Industrial Recovery Act. 229 00:20:24.180 --> 00:20:26.780 Sometimes the very same people who had staffed 230 00:20:26.780 --> 00:20:29.580 the World War I versions of these institutions 231 00:20:29.580 --> 00:20:32.980 came back to staff the peacetime versions in the 1930s. 232 00:20:33.980 --> 00:20:37.180 The rallying cry was we planned in war, 233 00:20:37.180 --> 00:20:40.060 so now therefore we shall plan in peace. 234 00:20:40.060 --> 00:20:43.100 War symbolism was ubiquitous in the imagery 235 00:20:43.100 --> 00:20:46.300 that was adopted by Franklin Roosevelt's New Deal 236 00:20:46.300 --> 00:20:47.940 and as Robert Nisbet says, 237 00:20:47.940 --> 00:20:50.640 in terms of frequency of use of such symbols 238 00:20:50.640 --> 00:20:55.640 by the National Government, not even Hitler's Germany outdid our propagandists. 239 00:20:55.640 --> 00:21:01.640 Now in the 1930s, as I'll get back to in a minute, there was an obsession with central planning. 240 00:21:01.640 --> 00:21:10.640 The thinking was that the free economies had failed because the diagnosis was that we were stuck with this rotten economy that was caused by freedom. 241 00:21:10.640 --> 00:21:14.640 So the free economy failed. So what we need is some kind of coordination. 242 00:21:14.640 --> 00:21:18.040 We need some kind of national coordination of the economy. 243 00:21:18.040 --> 00:21:25.340 We cannot leave this in private hands and the kind of haphazard activities that we see in the private sector. 244 00:21:25.340 --> 00:21:28.340 We need this kind of national planning. 245 00:21:28.340 --> 00:21:31.840 But we already saw that in the 1920s, believe it or not. 246 00:21:31.840 --> 00:21:36.340 You already start to see in the 1920s various business firms, 247 00:21:36.340 --> 00:21:40.940 and in fact you see major business magazines all echoing this type of rhetoric, 248 00:21:40.940 --> 00:21:44.240 arguing that, you know, the age of laissez-faire is really behind us. 249 00:21:44.240 --> 00:21:46.740 We need a cooperative age now. 250 00:21:46.740 --> 00:21:51.240 We need the various industries to get together and kind of regulate themselves 251 00:21:51.240 --> 00:21:54.740 so we don't have cutthroat competition among us. 252 00:21:54.740 --> 00:21:58.440 Now we hear this and we immediately understand that 253 00:21:58.440 --> 00:22:01.340 what are these people all about in the 1920s calling for things like this? 254 00:22:01.340 --> 00:22:02.540 They're looters. 255 00:22:02.540 --> 00:22:07.240 I mean, they're basically people who don't like to see new businesses come into the industry 256 00:22:07.240 --> 00:22:08.240 that will undersell them. 257 00:22:08.240 --> 00:22:13.040 So therefore, let's make it impossible for anybody to undersell anybody. 258 00:22:13.040 --> 00:22:18.640 Now, I was on the plane, I was actually reading Atlas Shrut that I hadn't read in 15 years and I thought, 259 00:22:18.640 --> 00:22:25.040 I have to force myself to do some pleasure reading once in a while, like all I ever do is read books for review. 260 00:22:25.040 --> 00:22:27.540 I want to read something I want to read just for enjoyment. 261 00:22:27.540 --> 00:22:31.240 So I was reading this and I totally, I realized I'd totally forgotten this whole book. 262 00:22:31.240 --> 00:22:39.040 But early on, there is a piece of legislation in that book called the anti-dog-eat-dog law. 263 00:22:39.040 --> 00:22:43.640 You know, arguing that competition is too severe, you know, we need to cut back on it. 264 00:22:43.640 --> 00:22:48.340 But at least in the book, everybody more or less understood the anti-dog-eat-dog law 265 00:22:48.340 --> 00:22:52.140 was started not by the average person, but by the businessman 266 00:22:52.140 --> 00:22:55.140 to reduce competition, of course that's what it's for. 267 00:22:55.140 --> 00:23:00.940 You know, and they figure that the idiots in the general public will just assume that 268 00:23:00.940 --> 00:23:06.040 well, that sounds good, anti-dog-eat-dog, I don't like dog-eat-dog competition, yeah, sure. 269 00:23:06.040 --> 00:23:12.040 But actually, it simply benefits certain business firms at the expense of others who lose. 270 00:23:12.040 --> 00:23:19.040 So in the 20s, you hear all these laments, things like, our profits are totally unprotected. 271 00:23:19.040 --> 00:23:23.040 Well, yeah, that's a free economy. That's right, you've got to stay on your toes, right? 272 00:23:23.040 --> 00:23:29.040 You can't say, hey, you know, I invented the popsicle 50 years ago and I'm going to keep resting on my laurels. 273 00:23:29.040 --> 00:23:32.040 No, don't you know we want popsicles with little stripes in them? 274 00:23:32.040 --> 00:23:35.040 We want Dora the Explorer popsicles? You've got to stay on your toes here. 275 00:23:35.040 --> 00:23:59.040 Now, another fallacy that has caused all kinds of mischief all over the world and particularly in American history is this idea of overproduction. 276 00:23:59.040 --> 00:24:08.040 Overproduction, overproduction slash underconsumption was argued to be the cause of the Great Depression and all other terrible calamities. 277 00:24:08.040 --> 00:24:13.040 The idea of overproduction is that the economy, the United States economy is so productive. 278 00:24:13.040 --> 00:24:18.040 It can produce so many goods that we would just be flooded with shoes and hats. 279 00:24:18.040 --> 00:24:22.040 Like the whole room would be filled with shoes and hats and nobody would know what to do with them. 280 00:24:22.040 --> 00:24:28.040 We can't buy all these shoes and hats. We only have two feet, right? What are we going to do with all these shoes? 281 00:24:28.040 --> 00:24:38.040 So the argument of the overproduction people is that the country could become so wealthy that we will all be poor. 282 00:24:38.040 --> 00:24:41.040 And that's really what the argument boils down to. 283 00:24:41.040 --> 00:24:45.040 We've produced too many refrigerators, everybody's going to be out on the street. 284 00:24:45.040 --> 00:24:48.040 I mean, that's basically the argument behind it. 285 00:24:48.040 --> 00:24:52.040 The argument is that people won't... there are two possible versions of the argument. 286 00:24:52.040 --> 00:24:56.040 One is, at some level, people don't want any more wealth. 287 00:24:56.040 --> 00:25:10.040 The other argument is they won't have the ability to buy the things, so that you'll have all these customers out there and they don't have enough money to buy your things. 288 00:25:10.040 --> 00:25:18.040 Well, I do want to at least, before proceeding on this line, at least try to answer this fallacy very, very briefly. 289 00:25:18.040 --> 00:25:23.040 I actually wrote an article about five years ago called There's No Such Thing as Overproduction. 290 00:25:23.040 --> 00:25:28.040 So I can only give like the one one hundredth of a sliver of the answer to this. 291 00:25:28.040 --> 00:25:33.040 But one of the arguments would be, suppose productive, and I borrow this from George Reisman, 292 00:25:33.040 --> 00:25:37.040 because I think he actually explains this overproduction thing very well. 293 00:25:37.040 --> 00:25:45.040 Suppose productive capacity in the United States doubled to the extent that every single industry now produced double what it used to, overnight. 294 00:25:45.040 --> 00:25:49.040 The resulting problem would not be overproduction per se, 295 00:25:49.040 --> 00:25:55.040 Rather, it would be overproduction of certain things at the expense of the underproduction of others. 296 00:25:55.040 --> 00:26:00.040 So for instance, suppose every single industry can now produce double what it used to. 297 00:26:00.040 --> 00:26:05.040 Wouldn't we necessarily want twice the table salt that we used to have? 298 00:26:05.040 --> 00:26:10.040 Wouldn't we necessarily say, oh, there's great abundance of tables, now I can really load it on there. 299 00:26:10.040 --> 00:26:14.040 I mean, I think most of us sort of feel like we've got all the table salt we need. 300 00:26:14.040 --> 00:26:23.040 So, if you have the productive capacity to produce twice the table salt, it would be a huge waste of resources to actually produce twice the table salt. 301 00:26:23.040 --> 00:26:29.040 You should instead maybe produce marginally more. I mean, I don't know, there's no non-arbitrary way of knowing. 302 00:26:29.040 --> 00:26:34.040 But you should take some of those resources and put them into areas where people would like to have more things. 303 00:26:34.040 --> 00:26:38.040 Like, for example, you know, better, more and better quality clothing. 304 00:26:38.040 --> 00:26:42.040 Or there'd be, for example, if you produced twice the macaroni and cheese. 305 00:26:42.040 --> 00:26:48.540 Okay, well maybe at that point, people don't want twice the macaroni and cheese, they'd like better quality food, so resources should shift away. 306 00:26:48.540 --> 00:26:56.540 So yes, there'd be overproduction over here, but only because other things that people demand more urgently are being correspondingly under-produced. 307 00:26:56.540 --> 00:27:01.540 But there are other examples as well. I mean, let's suppose, just a very quick example, suppose you have a barter economy. 308 00:27:01.540 --> 00:27:07.540 It's much easier to see this point than a barter economy. People are producing potatoes, apples and oranges. 309 00:27:07.540 --> 00:27:12.540 And let's suppose that in the potato industry somehow they're able to produce twice the potatoes. 310 00:27:12.540 --> 00:27:20.540 But let's suppose that with twice the potatoes, the price of potatoes drops dramatically to one-third of what it was before. 311 00:27:20.540 --> 00:27:25.540 But you have twice the potatoes, so really you're getting about two-thirds the money you used to get. 312 00:27:25.540 --> 00:27:32.540 So what's happening here? Is this a calamitous overproduction that's going to put everybody out on the street because we produce more potatoes? 313 00:27:32.540 --> 00:27:39.040 Well, no, because the apple and orange people are now spending only two-thirds of what they used to on potatoes. 314 00:27:39.040 --> 00:27:44.040 So what did they spend the other third on? Other things, other than potatoes. 315 00:27:44.040 --> 00:27:47.540 Apples and oranges, or whatever else might develop in this primitive economy now. 316 00:27:47.540 --> 00:27:53.540 So it's not like this just vanishes. This actually gives them the purchasing power to buy more things. 317 00:27:53.540 --> 00:27:58.540 They actually have the ability to buy more things because there are more potatoes. 318 00:27:58.540 --> 00:28:06.540 But anyway, one could go on with this. My point is that this idea that the productive capacity of the US was so great 319 00:28:06.540 --> 00:28:14.540 that the system was in serious, serious trouble seems to have occupied the minds of almost every politician in the 1890s 320 00:28:14.540 --> 00:28:26.540 and even some businessmen, such that the foreign policy goal that was shared by countless people was what became known as the large policy. 321 00:28:26.540 --> 00:28:33.540 The argument was we produce so many, we're just awash in things, and we produce so many we don't know what to do with them. 322 00:28:33.540 --> 00:28:39.540 So what we need to do is find foreign markets so we can get rid of all these extra shoes or whatever. 323 00:28:39.540 --> 00:28:46.540 Now it is true, of course, any business would like to be able to sell to more people at the price they're selling at. 324 00:28:46.540 --> 00:28:53.540 Of course they would like additional trade, but that's not the same thing as saying that without additional markets the system is bound to collapse. 325 00:28:53.540 --> 00:28:59.100 collapse. That's a fallacy. But this fallacy led to the idea that in the 1890s, starting 326 00:28:59.100 --> 00:29:04.540 then, the United States needed to acquire overseas colonies, or at the very least, needed 327 00:29:04.540 --> 00:29:10.580 to acquire places where you could establish coaling stations and naval bases on the wage 328 00:29:10.580 --> 00:29:15.940 of the prized markets in Asia, so that American firms could sell all their extra stuff without 329 00:29:15.940 --> 00:29:21.780 which the United States is just going to collapse. And so that, in fact, is one of the motivations 330 00:29:21.780 --> 00:29:25.780 behind the acquisition of the Philippines after the Spanish-American War 331 00:29:25.780 --> 00:29:29.680 and the acquisition of Guam and the acquisition of Hawaii. 332 00:29:29.680 --> 00:29:35.780 These were not random events. These things would give the United States government a forward position in Asia 333 00:29:35.780 --> 00:29:39.780 because if we don't have that, we don't have government involvement in promoting trade, 334 00:29:39.780 --> 00:29:48.580 we're just going to be drowning in our productive capacity at home because people are already sated in all their wants. 335 00:29:48.580 --> 00:29:53.580 Now this idea that the United States just produces too much, we're just too wealthy for our own good, 336 00:29:53.580 --> 00:29:58.580 we can't use all the things we produce, is absolutely everywhere in American economic thinking. 337 00:29:58.580 --> 00:30:03.580 Rexford Tugwell, who was one of the brain trusts in Franklin Roosevelt's administration, 338 00:30:03.580 --> 00:30:07.580 said that we have moved from the era of economic development 339 00:30:07.580 --> 00:30:12.580 to an era which confronts us with the necessity for economic maintenance. 340 00:30:12.580 --> 00:30:16.580 In this period of maintenance, there is no scarcity of production. 341 00:30:16.580 --> 00:30:21.580 Must be wonderful to live in that world. No scarcity of production. 342 00:30:21.580 --> 00:30:31.580 For today and for tomorrow, our problem is that of our national economic maintenance for the public welfare by, wait for it, governmental intervention. How else? 343 00:30:31.580 --> 00:30:45.580 Later on, we get John Kenneth Galbraith warning us the great challenge in the United States and soon in Western Europe is to cope with a threatened overabundance of the staples and amenities and frills of life. 344 00:30:45.580 --> 00:30:48.780 Oh my gosh, there are too many things to choose from. 345 00:30:48.780 --> 00:30:50.880 How will entrepreneurs ever cope with this? 346 00:30:50.880 --> 00:30:55.480 I'm sure they could never forecast demand or any such thing like that. 347 00:30:55.480 --> 00:30:59.880 According to Stuart Chase, another proto-New Dealer, 348 00:30:59.880 --> 00:31:06.480 the United States had moved beyond a condition of scarcity to one of abundance in the year 1902. 349 00:31:06.480 --> 00:31:10.780 Scarcity was a thing of the past as of 1902. 350 00:31:10.780 --> 00:31:22.780 As Stuart Chase said, what threatens to continue, unabated, in good times and bad, is technological unemployment with its three faces, the machine, the merger, the stopwatch. 351 00:31:22.780 --> 00:31:29.780 In four years, oil refineries increased output 84% and laid off 5% of their men while doing it. 352 00:31:29.780 --> 00:31:36.780 Tobacco manufacturing output climbed 53% in the same period, with 13% fewer men at the end. 353 00:31:36.780 --> 00:31:41.280 This is the trend throughout industry. It can mean only one thing. 354 00:31:41.280 --> 00:31:46.280 An equivalent tonnage of goods can be produced by a declining number of workers. 355 00:31:46.280 --> 00:31:48.780 That's a bad thing, according to Chase. 356 00:31:48.780 --> 00:31:54.280 And men must lose their jobs by the thousands, presently by the millions. 357 00:31:54.280 --> 00:31:59.280 Then it seems that we should rip up all the railroad tracks and destroy all the trains 358 00:31:59.280 --> 00:32:02.780 and have everybody carry their goods on their backs. 359 00:32:02.780 --> 00:32:05.280 Because that way, think of all the jobs that would create. 360 00:32:05.280 --> 00:32:09.440 that is he must have been horrified by the development of the railroad but this 361 00:32:09.440 --> 00:32:12.920 is this guy is considered to be a respectable economic commentator in the 362 00:32:12.920 --> 00:32:18.120 1930s now I can forgive novelists a little bit more I don't expect novelists 363 00:32:18.120 --> 00:32:23.920 to know economics I mean when even economists don't seem to know economics 364 00:32:23.920 --> 00:32:28.000 I can hardly blame a novelist for this which is why I have a friend who says 365 00:32:28.000 --> 00:32:34.720 that if you were to lay all the economists in the world end to end that 366 00:32:34.720 --> 00:32:41.600 That would be fun, except the Austrians. 367 00:32:41.600 --> 00:32:46.480 John Steinbeck in his book, The Grapes of Wrath, also warned that mechanization would 368 00:32:46.480 --> 00:32:51.840 throw people out of work, because once we no longer need laborers in agriculture, I guess 369 00:32:51.840 --> 00:32:54.960 there's nothing else in the economy for them to do, because we've already produced everything 370 00:32:54.960 --> 00:32:56.760 we need. 371 00:32:56.760 --> 00:32:59.940 It's interesting to note with regard to The Grapes of Wrath, by the way, that just last 372 00:32:59.940 --> 00:33:05.940 Last year, the New York Times observed that when the movie version of The Grapes of Wrath 373 00:33:05.940 --> 00:33:11.140 was screened in the Soviet Union in 1940, it was screened there for the purpose of showing 374 00:33:11.140 --> 00:33:15.500 Russians, you know, just how rotten it is to live under capitalism. 375 00:33:15.500 --> 00:33:19.060 Look at these people and how much they suffer. 376 00:33:19.060 --> 00:33:22.360 The Soviet population drew the wrong conclusion from the movie. 377 00:33:22.360 --> 00:33:28.860 What impressed them was the fact that these people had a car. 378 00:33:28.860 --> 00:33:31.860 The poorest people have a car? 379 00:33:31.860 --> 00:33:35.860 And then when things go badly for them, they can go somewhere and have some recourse? 380 00:33:35.860 --> 00:33:37.860 This is amazing! 381 00:33:37.860 --> 00:33:42.860 Well, the economist Simon Patton told us that how do we deal with all this surplus? 382 00:33:42.860 --> 00:33:46.860 He said, taxation should be placed not on particular forms of prosperity, 383 00:33:46.860 --> 00:33:48.860 but on general prosperity. 384 00:33:48.860 --> 00:33:50.860 We've got to tax all this prosperity. 385 00:33:50.860 --> 00:33:55.860 The state should not try to hunt up the individual who profits by each of the improvements it makes, 386 00:33:55.860 --> 00:34:03.220 makes, but should make taxation a reduction of the general surplus of society. Well, congratulations. 387 00:34:03.220 --> 00:34:07.620 We can conceive of the state as a factor in production and hence entitled to a share of 388 00:34:07.620 --> 00:34:13.420 the undistributed produce of industry. Oh, oh, good. Because the state has helped to 389 00:34:13.420 --> 00:34:18.780 promote general prosperity and therefore can demand a part of the surplus of society along 390 00:34:18.780 --> 00:34:24.020 with landlords, employers, capitalists and laborers. Well, the mafia couldn't have said 391 00:34:24.020 --> 00:34:30.060 any better. Chase, Stuart Chase and others, all these guys, what's necessary for this? 392 00:34:30.060 --> 00:34:34.740 Again, central planning. And this actually comes into play. We get the unbelievably 393 00:34:34.740 --> 00:34:40.260 anti-capitalist National Industrial Recovery Act of 1933 that a number of 394 00:34:40.260 --> 00:34:44.340 economists finally are now saying, you know what, maybe the recovery was delayed 395 00:34:44.340 --> 00:34:49.460 not in spite of, you know, maybe it was the New Deal programs that actually 396 00:34:49.460 --> 00:34:53.060 delayed the recovery. The National Industrial Recovery Act gave all these 397 00:34:53.060 --> 00:34:58.700 These intellectuals exactly what they want, reduced production, minimum prices, you can't 398 00:34:58.700 --> 00:35:00.660 undersell people, and so on and so on. 399 00:35:00.660 --> 00:35:06.540 We actually got this, we actually got this in the U.S., in effect, a kind of fascistic 400 00:35:06.540 --> 00:35:08.580 type economy. 401 00:35:08.580 --> 00:35:12.380 The administrator put in charge of the National Recovery Administration that was established 402 00:35:12.380 --> 00:35:18.320 by that act, Hugh Johnson, described it as, quote, the greatest social advance since the 403 00:35:18.320 --> 00:35:20.220 days of Jesus Christ. 404 00:35:20.220 --> 00:35:21.220 Yikes. 405 00:35:21.220 --> 00:35:24.220 That's kind of sick religion going on here. 406 00:35:24.220 --> 00:35:29.220 It's almost not fair to quote Susan Sontag, but I will anyway. 407 00:35:29.220 --> 00:35:35.220 She also was worried about surplus of goods and says that America is a cancerous society 408 00:35:35.220 --> 00:35:41.220 with a runaway rate of productivity which inundates the country with increasingly unnecessary commodities. 409 00:35:41.220 --> 00:35:47.220 This country has a surplus energy whose predatory overflow must be contained. 410 00:35:47.220 --> 00:35:55.720 So, of course, it's the exact opposite of the argument earlier, which was the socialism would produce more and the capitalist economy doesn't produce enough. 411 00:35:55.720 --> 00:36:04.220 Now the problem is it produces too much. And today, the variant on that today is it's making us all fat and materialistic and whatever. 412 00:36:04.220 --> 00:36:15.220 There's always some argument against it. Now, given that I started five minutes late, I'd like to take my five minutes if I can be excused, because I need to mention this. 413 00:36:15.220 --> 00:36:22.220 We've often heard about the intellectuals who went to the Soviet Union in the 1920s and 30s 414 00:36:22.220 --> 00:36:26.220 and came back talking about what a wonderful brave new world they had observed. 415 00:36:26.220 --> 00:36:32.220 But this is a far more twisted and perverse phenomenon when you really sit down and think about it 416 00:36:32.220 --> 00:36:35.220 than I think we've sometimes realized in the past. 417 00:36:35.220 --> 00:36:40.220 These were people who desperately wanted to be duped by the authorities. 418 00:36:40.220 --> 00:36:44.220 They wanted to believe that this type of economy would be superior 419 00:36:44.220 --> 00:36:49.220 to one in which people were allowed to make their own plans and their own decisions. 420 00:36:49.220 --> 00:36:55.220 The great British journalist Malcolm Muggeridge referred to these intellectuals and said, 421 00:36:55.220 --> 00:37:00.220 Their delight in all that they saw and were told and the expression they gave to this delight 422 00:37:00.220 --> 00:37:04.220 constitute unquestionably one of the wonders of our age. 423 00:37:04.220 --> 00:37:08.220 There were earnest advocates of the humane killing of cattle 424 00:37:08.220 --> 00:37:13.220 who looked up at the massive headquarters of the OGPU with tears of gratitude in their eyes. 425 00:37:13.220 --> 00:37:19.100 Prize, Ernest Advocates of Proportional Representation, who eagerly assented when the necessity for 426 00:37:19.100 --> 00:37:25.080 a dictatorship of the proletariat was explained to them, Ernest Clergymen, who walked reverently 427 00:37:25.080 --> 00:37:30.980 through anti-God museums and reverently turned the pages of atheistic literature, Ernest 428 00:37:30.980 --> 00:37:37.340 Pacifists, who watched delightedly tanks rattle across the Red Square and bombing planes darken 429 00:37:37.340 --> 00:37:44.160 in the Sky, earnest town planning specialists who stood outside overcrowded ramshackle 430 00:37:44.160 --> 00:37:50.780 tenements and muttered, if only we had something like this in England. The almost unbelievable 431 00:37:50.780 --> 00:37:56.980 credulity of these mostly university-educated tourists astonished even Soviet officials 432 00:37:56.980 --> 00:38:02.540 used to handling foreign visitors. William White was an American living in Moscow who 433 00:38:02.540 --> 00:38:10.040 A school teacher from Brooklyn was on a tour in one of the newspaper plants. 434 00:38:10.040 --> 00:38:17.040 She saw a machine which did wonders with the paper that was fed to it. 435 00:38:17.040 --> 00:38:19.540 Really, that is remarkable, she said. 436 00:38:19.540 --> 00:38:24.540 Such an amazing invention could be produced only in a country like yours for one end. 437 00:38:24.540 --> 00:38:28.040 I shall write a book about what I have seen. 438 00:38:28.040 --> 00:38:30.540 She was a little embarrassed though when she walked to the rear 439 00:38:30.540 --> 00:38:35.540 I came here and saw the sign made in Brooklyn, New York. 440 00:38:35.540 --> 00:38:40.540 Novelist Theodore Dreiser tells us of his experience, he said, 441 00:38:40.540 --> 00:38:44.540 There is no show, no luxury in the Soviet Union. 442 00:38:44.540 --> 00:38:46.540 I'm sure that was voluntary. 443 00:38:46.540 --> 00:38:49.540 You will see thousands who are comparatively poorly dressed 444 00:38:49.540 --> 00:38:52.540 to ten and most a hundred who are well dressed. 445 00:38:52.540 --> 00:38:55.540 And yet, generally speaking, a sense of well-being, 446 00:38:55.540 --> 00:38:58.540 none of that haunting sense of poverty or complete defeat 447 00:38:58.540 --> 00:39:03.500 The feat that so distressed one in Western Europe and America, it is not to be found. 448 00:39:03.500 --> 00:39:09.100 Yet in Moscow there is poverty, there are beggars in the streets, but Lord, how picturesque! 449 00:39:09.100 --> 00:39:13.780 The multicolored and voluminous rags of them! 450 00:39:13.780 --> 00:39:19.180 The philosopher Horace Callan said, all, regardless of party, acknowledge that the revolution, 451 00:39:19.180 --> 00:39:23.820 the Bolshevik Revolution, has awakened the millions that the government dictatorship 452 00:39:23.820 --> 00:39:33.820 has liberated their energies, animated them with an altogether unprecedented sense of personal dignity and inward worth, 453 00:39:33.820 --> 00:39:39.820 and opened to them hitherto sealed worlds of science and art and personal advancement. 454 00:39:39.820 --> 00:39:49.820 The president of the International Ladies Garment Workers Union said that the Soviet Union's workers appear to be ready to undergo all kinds of misery 455 00:39:49.820 --> 00:39:56.820 as a necessary sacrifice for the attainment of the ideal communistic state, which they believe is on the way now. 456 00:39:56.820 --> 00:39:59.820 In 1929, the editor of The Nation wrote, 457 00:39:59.820 --> 00:40:03.820 This, I repeat, is the most stupendous governmental feat ever undertaken, 458 00:40:03.820 --> 00:40:08.820 the social, moral, political, industrial, economic emancipation of a people 459 00:40:08.820 --> 00:40:12.820 and its reorganization upon the basis of service to the society and to the nation 460 00:40:12.820 --> 00:40:16.820 with the profit-making motive suddenly removed from the individual. 461 00:40:16.820 --> 00:40:28.820 He was sure that the minority which controls the destiny of Russia is on its way with extraordinary and completely unselfish devotion, with the fiercest determination to succeed at any cost. 462 00:40:28.820 --> 00:40:32.820 And to the complaint that the people running the Russian government were fanatics, he said, 463 00:40:32.820 --> 00:40:40.820 Well, who else but fanatics would have the course for the task or could be relied upon to drive through to the end without essential compromise? 464 00:40:40.820 --> 00:40:48.120 And it isn't really so bad, anyway, that it's a dictatorship, because they're all working for the good of the masses of the working people. 465 00:40:48.120 --> 00:40:53.420 And I have other quotations that, unfortunately, I can't get to. 466 00:40:53.420 --> 00:41:05.420 We could also talk about people taking trips to China during Mao's unbelievable reign and saying, you know, it's just wonderful here, you know, people are poor, but they're happily poor. 467 00:41:05.420 --> 00:41:08.720 One person compared China with Hong Kong and said, 468 00:41:08.720 --> 00:41:13.720 Behind me, the aggressive vendors, the gaudy clothes, the Coca-Cola. 469 00:41:13.720 --> 00:41:17.520 Ahead, a world which is sterner in its political imperatives, 470 00:41:17.520 --> 00:41:22.120 but which in human terms may be a simpler and more relaxed world. 471 00:41:22.120 --> 00:41:27.320 Now, again, it's not fair to quote Shirley MacLaine, but I'm going to anyway. 472 00:41:27.320 --> 00:41:29.420 Entering China, Shirley MacLaine said, 473 00:41:29.420 --> 00:41:32.220 There were no hawkers selling goods, no frenzied bargaining. 474 00:41:32.220 --> 00:41:34.920 Nobody was buying and nobody was selling. 475 00:41:34.920 --> 00:41:39.360 There were no billboards screaming out their false promises, no slums. 476 00:41:39.360 --> 00:41:43.960 Serene, I said to myself. That is the word. Serene. 477 00:41:43.960 --> 00:41:50.040 And it just goes on and on. The people live simply, but their spirit is impressive. Blah, blah, blah. 478 00:41:50.040 --> 00:41:53.440 Well, you might think maybe they just didn't know any better, whatever. 479 00:41:53.440 --> 00:41:57.640 Eugene Genovese was a former Marxist, and I'll wrap up with this. 480 00:41:57.640 --> 00:41:59.000 He was a former Marxist, 481 00:41:59.000 --> 00:42:01.800 he was a historian, a very good historian in the United States, 482 00:42:01.800 --> 00:42:08.300 and he wrote an article in 1994 in Descent magazine, or a journal, and it was called The Question. 483 00:42:08.300 --> 00:42:12.500 And the question was, what did you know and when did you know it? 484 00:42:12.500 --> 00:42:16.700 And it was a question he posed to his fellow people on the left. 485 00:42:16.700 --> 00:42:21.700 And he said, let's be honest, we all knew what was going on in the Soviet Union, we all knew it. 486 00:42:21.700 --> 00:42:27.700 Now, yes, we thought, you know, to make an omelette you have to break some eggs, but let's not pretend, oh, how could we have known? 487 00:42:27.700 --> 00:42:31.300 I know we knew, because I know all you people, we all talked about it. 488 00:42:31.300 --> 00:42:35.300 and he named names. You people knew about this. 489 00:42:35.300 --> 00:42:39.300 So it's very satisfying to see somebody finally admit he was wrong, 490 00:42:39.300 --> 00:42:44.300 that maybe the planned society in which one small sliver of the population, 491 00:42:44.300 --> 00:42:48.300 their plans are made to count, individual's plans are not, 492 00:42:48.300 --> 00:42:51.300 maybe that's not the ideal organizational society. 493 00:42:51.300 --> 00:42:53.300 Genovese had the honesty to admit, 494 00:42:53.300 --> 00:42:57.300 we ended a 70-year experiment with socialism with little more to our credit 495 00:42:57.300 --> 00:43:00.300 than tens of millions of corpses. 496 00:43:00.300 --> 00:43:04.300 Well, ladies and gentlemen, it's almost enough to make you give up on the human race. 497 00:43:04.300 --> 00:43:09.300 The evidence is all around us as to how to create a prosperous society. 498 00:43:09.300 --> 00:43:11.300 It's not like, it's not brain surgery. 499 00:43:11.300 --> 00:43:14.300 Just look around the world at the prosperous places. 500 00:43:14.300 --> 00:43:18.300 Look at the places in the world where the poor are doing the best. 501 00:43:18.300 --> 00:43:20.300 It's the same places. 502 00:43:20.300 --> 00:43:23.300 And yet we still get the same old ridiculous fallacies over and over again. 503 00:43:23.300 --> 00:43:46.300 I sometimes think that as an economist, I'm a historian, but as an economist you must have the most depressing job on earth because just as you're lying there on your deathbed, you hear your bedside nurse saying there was an earthquake today but at least it will put people to work and you think, what was it all for? 504 00:43:46.300 --> 00:43:52.300 But that's why we have to work all the harder, because once you do get through to people, 505 00:43:52.300 --> 00:43:57.300 once you are able to show them the three steps of logic necessary to understand the market, 506 00:43:57.300 --> 00:44:01.300 that the one step that superficially is anti-market is not sufficient, 507 00:44:01.300 --> 00:44:05.300 show them those three steps, they're goners forever, they're on board with us. 508 00:44:05.300 --> 00:44:09.300 And that's why I am so honored to be a resident scholar at the Mises Institute 509 00:44:09.300 --> 00:44:12.300 and to participate in this ongoing educational enterprise, 510 00:44:12.300 --> 00:44:19.300 because, in my mind, there are few things in the world that are more urgently necessary today, so thank you very much.