WEBVTT NOTE Applying Economics to American History 1 00:00:00.000 --> 00:00:09.600 My topic is a very broad one, so as with Bob, I'm going to sort of pick a number of topics 2 00:00:09.600 --> 00:00:16.000 that are relevant to American history that involve economics and just show how it's useful 3 00:00:16.000 --> 00:00:21.560 to have a sound economic understanding in order to understand American history. It enlightens 4 00:00:21.560 --> 00:00:26.880 you, it allows you to see things you wouldn't otherwise be able to perceive. I want to start 5 00:00:26.880 --> 00:00:56.880 I'll start off a little more generically, though, and just say that the impression I got when I was in high school and that maybe some of you are fortunate enough not to have gotten, but believe me, this is the standard view, is that if you have a free market economy and you don't have government intervention, the result is kids are working in mines and getting their arms blown off and everybody has to work like 120 hours a week for two cents an hour. 6 00:00:56.880 --> 00:01:11.880 The economy is dominated by short men with white moustaches carrying sacks of money with dollar signs on them. 7 00:01:11.880 --> 00:01:19.880 That is the view I got. I remember going through high school thinking, how could people be so stupid, not as sophisticated as I am? 8 00:01:19.880 --> 00:01:30.880 They don't understand that we need wise overlords to administer everything because otherwise we'd be at the mercy of these guys on the top of the monopoly package. 9 00:01:30.880 --> 00:01:36.880 What would it take to get people to realize the folly, the error of their ways? 10 00:01:36.880 --> 00:01:47.880 And so, of course, the standard view is that, well, thankfully, some unspecified government intervention has rescued us from this and we don't have these problems anymore. 11 00:01:47.880 --> 00:01:58.880 One of the assumptions is that labor unions must have probably solved this problem, because labor unions force employers to pay higher wages and that solves the problem. 12 00:01:58.880 --> 00:02:07.880 Well, at its height, labor unionism in the U.S. may have reached one out of three workers at its absolute height. 13 00:02:07.880 --> 00:02:15.880 The American workers have typically been the least unionized, at least among the lowest unionized in the developed world. 14 00:02:15.880 --> 00:02:28.880 Certainly compared to Europe, Europe's workers were much more heavily unionized, and yet somehow without the unions to protect them from the terrible exploiters, American workers consistently were the best paid and compensated. 15 00:02:28.880 --> 00:02:39.880 We see this in the 20s and really throughout American history. Well, that's not supposed to be possible, right? I mean, that's the opposite of what we're told. How could this have happened? 16 00:02:39.880 --> 00:02:56.880 So I want to just start off with a little thought experiment and then go from there to try to explain how it is that we have grown to enjoy and become accustomed to the standard of living we have and show it has absolutely nothing to do with government. 17 00:02:56.880 --> 00:03:05.880 The only thing the government can do in terms of the average standard of living is disrupt and diminish it. That's all it can do. 18 00:03:05.880 --> 00:03:14.880 It's entirely due to the free market, entirely due to the wicked private sector and the wicked exploiters that we have the standard of living we enjoy. 19 00:03:14.880 --> 00:03:22.880 And so the thought experiment runs like this. Let's suppose all the machinery that we use to produce things is just suddenly destroyed. 20 00:03:22.880 --> 00:03:30.880 Like there's some mad Unibomber who's got this incredible bomb that can destroy all productive machinery. 21 00:03:30.880 --> 00:03:36.880 The Theory of Money and Credit 22 00:04:00.880 --> 00:04:07.480 I mean you know try producing a trolley car from beginning to end by hand you 23 00:04:07.480 --> 00:04:10.920 get all get all the all the raw materials and resources do all that by 24 00:04:10.920 --> 00:04:17.320 hand can't be done right so let's imagine though we lose all the machines 25 00:04:17.320 --> 00:04:21.440 but we all decide you know what I think I'm just going to keep working 40 hours 26 00:04:21.440 --> 00:04:25.880 a week I'm just going to keep working 40 hours a week now let's compare how much 27 00:04:25.880 --> 00:04:32.040 What stuff we could produce working 40 hours a week with our bare hands, with no machines, 28 00:04:32.040 --> 00:04:38.600 no capital goods to help us, and compare that to what we could produce with these machines 29 00:04:38.600 --> 00:04:40.400 in 40 hours a week. 30 00:04:40.400 --> 00:04:44.600 Well obviously in 40 hours a week with these machines we can produce basically the abundance 31 00:04:44.600 --> 00:04:46.600 we see around us today. 32 00:04:46.600 --> 00:04:53.240 But if we've got 40 hours with these crummy hands of ours per week, how much stuff are 33 00:04:53.240 --> 00:04:54.240 we producing? 34 00:04:54.240 --> 00:05:01.280 And a tiny, tiny sliver, the tiniest sliver of what we used to produce. 35 00:05:01.280 --> 00:05:06.200 So when you get your paycheck in that situation, the non-machine economy situation, you get 36 00:05:06.200 --> 00:05:09.620 your paycheck, when you go out to spend it, what are you going to find? 37 00:05:09.620 --> 00:05:14.080 Everything is very expensive because everything is very scarce and so is commanding a very 38 00:05:14.080 --> 00:05:15.080 high price. 39 00:05:15.080 --> 00:05:20.580 You have to work very hard and very long to earn the purchasing power necessary to buy 40 00:05:20.580 --> 00:05:22.220 the things you want. 41 00:05:22.220 --> 00:05:28.420 Now, would that situation be the fault of the terrible exploiter who's employing you? 42 00:05:28.420 --> 00:05:32.340 Would that be his fault, that you can't get very much stuff with your paycheck? 43 00:05:32.340 --> 00:05:36.800 Do we need labor unions to get your pay to go up ten times? 44 00:05:36.800 --> 00:05:40.340 What would that help if there ain't no stuff to buy anyway? 45 00:05:40.340 --> 00:05:43.660 What if we paid you a hundred trillion, Zimbabwean dollars? 46 00:05:43.660 --> 00:05:45.420 Would that help the situation? 47 00:05:45.420 --> 00:05:50.140 If there ain't no stuff to buy, it doesn't matter, you can get your wages and keep going 48 00:05:50.140 --> 00:05:51.140 up and up and up. 49 00:05:51.140 --> 00:05:53.580 The problem is, the stuff isn't there. 50 00:05:53.580 --> 00:05:57.620 So this is not the fault of the exploiter, so-called, who's employing you. 51 00:05:57.620 --> 00:05:59.660 It's the fault of reality. 52 00:05:59.660 --> 00:06:04.900 It's the fault of the fact that the economy is so freaking primitive, it can't produce 53 00:06:04.900 --> 00:06:09.620 the physical stuff necessary to give you the standard of living you're accustomed to. 54 00:06:09.620 --> 00:06:14.880 Well, that is exactly the economy that people living in the early industrial revolution 55 00:06:14.880 --> 00:06:20.620 were living in, a very primitive economy with very primitive machines and still a lot of 56 00:06:20.620 --> 00:06:24.620 A lot of goods being produced by hand and people are sort of of the opinion that the reason 57 00:06:24.620 --> 00:06:29.820 workers weren't being paid very much in those days was that evil capitalists were keeping 58 00:06:29.820 --> 00:06:32.980 all the wealth to themselves. 59 00:06:32.980 --> 00:06:38.300 But the problem was that there wasn't much wealth in the first place, that's the problem. 60 00:06:38.300 --> 00:06:43.140 What that economy needed wasn't more government wealth redistribution, it needed more machines 61 00:06:43.140 --> 00:06:48.140 so that we can produce more stuff, so that the stuff will exist in greater abundance 62 00:06:48.140 --> 00:06:54.640 so that it's not so expensive and therefore my paycheck can stretch farther and farther 63 00:06:54.640 --> 00:07:00.640 to be able to purchase more and more stuff. That's what that economy needed. 64 00:07:00.640 --> 00:07:08.640 Whereas, if we simply were to persist in this situation where we've got very few machines, 65 00:07:08.640 --> 00:07:14.140 very, very primitive production process, and just hope that through agitation or legislation, 66 00:07:14.140 --> 00:07:19.580 Let's pass a law saying that everybody gets a TV set and a new hat and whatever. 67 00:07:19.580 --> 00:07:26.140 Well, again, the reason that the workers in that situation don't have TV sets and hats 68 00:07:26.140 --> 00:07:31.900 is not that the relatively very few rich people are hoarding all the television sets. 69 00:07:31.900 --> 00:07:34.300 It's that there aren't any television sets. 70 00:07:34.300 --> 00:07:39.980 It's not that the relatively few rich people are hoarding all the furniture and all the meat. 71 00:07:39.980 --> 00:07:43.180 It's that there is relatively little furniture and meat being produced. 72 00:07:43.180 --> 00:08:10.180 The moral problem is that stealing is probably a bad thing, but from a practical point of view, there aren't enough of these guys to go around anyway. 73 00:08:10.180 --> 00:08:15.940 So again, the problem is not that somehow greedy people in the midst of the darkness of the night, 74 00:08:15.940 --> 00:08:22.500 skulking around the edges of the night, leaped out and grabbed everything one night, they got all the TV sets. 75 00:08:22.500 --> 00:08:29.540 No, the problem is that we just simply need more investment in capital goods that can produce more stuff, 76 00:08:29.540 --> 00:08:31.540 make the economy more physically productive. 77 00:08:31.540 --> 00:08:33.700 That's what happens in a market economy. 78 00:08:33.700 --> 00:08:38.180 When you're not looting and stealing and condemning people as exploiters, 79 00:08:38.180 --> 00:08:43.780 is what they are instead doing, what they are allowed to do, is take their profits and 80 00:08:43.780 --> 00:08:49.460 pour them into investment in machinery that makes the productive process more productive, 81 00:08:49.460 --> 00:08:55.300 can produce more stuff and the greater abundance leads to lower prices and higher real wages 82 00:08:55.300 --> 00:08:56.620 for everybody. 83 00:08:56.620 --> 00:09:01.340 There is absolutely nothing whatsoever the government can do to assist in that process. 84 00:09:01.340 --> 00:09:06.460 All it can do is hamper that process by taxing these people, by taking their wealth away 85 00:09:06.460 --> 00:09:14.460 and thereby depriving us of the funds that society needs for the capital goods to allow us to be able to produce more stuff. 86 00:09:14.460 --> 00:09:19.460 There's nothing government can do to make this process any better. All it can do is make it worse. 87 00:09:19.460 --> 00:09:24.460 Now we can see this process going on in our lives today. 88 00:09:24.460 --> 00:09:33.460 That if you look, for example, at the mid-20th century and you compare it to the year 2000, so the end of the 20th century, 89 00:09:33.460 --> 00:09:42.460 How many minutes did you have to work to earn the money that would give you the purchasing power necessary to buy a loaf of bread? 90 00:09:42.460 --> 00:09:45.460 Well, it was six minutes in the middle of the 20th century. 91 00:09:45.460 --> 00:09:50.460 It was down to a little over half that, three and a half minutes by the turn of the century. 92 00:09:50.460 --> 00:09:55.460 Because your labor, thanks to the available machinery, was more productive. 93 00:09:55.460 --> 00:10:02.460 In the mid-twentieth century, you'd have to work 21 minutes to earn the money that would have the purchasing power necessary to buy you a dozen oranges. 94 00:10:02.460 --> 00:10:07.460 By the end of the twentieth century, instead of 21 minutes, it's like nine. 95 00:10:07.460 --> 00:10:10.460 So, less than half the time is necessary. 96 00:10:10.460 --> 00:10:16.460 Or if you want 100 kilowatts of electricity, now this is going to be a lot of money, 97 00:10:16.460 --> 00:10:23.460 you'd have to work 21 minutes to earn the money that would have the purchasing power necessary to buy you a dozen oranges. 98 00:10:23.460 --> 00:10:53.460 100 kilowatts of electricity, now this is going to be a little tricky now because of this little complication, but we'll just go from, you know, it's our friends, the new wonderful poison bulbs, it's now a bragging point that this bulb says, hey, no poison in it, no poison, you can see it's got no mercury, so let's leave aside the benefits of the 21st century and stick with the 20th, but 100 kilowatts of electricity, you'd have to work for two hours in 1950 99 00:10:53.460 --> 00:10:56.260 to earn the purchasing power to buy that. 100 00:10:56.260 --> 00:10:58.760 By the end of the 20th century, it was only 14 minutes. 101 00:10:58.760 --> 00:11:01.460 And it goes on and on and on. 102 00:11:01.460 --> 00:11:03.260 Like a pair of jeans. 103 00:11:03.260 --> 00:11:05.160 Well, at the beginning of the 20th century, 104 00:11:05.160 --> 00:11:08.960 you'd have to work nine hours to get that purchasing power, to buy that. 105 00:11:08.960 --> 00:11:11.060 By the middle of the century, it was four hours, 106 00:11:11.060 --> 00:11:13.960 and then by the end of the century, it was three. 107 00:11:13.960 --> 00:11:16.760 How about a three-pound chicken, you're all dying to ask me? 108 00:11:16.760 --> 00:11:19.560 Well, the answer to that is, 109 00:11:19.560 --> 00:11:34.560 Over two hours, nearly three hours in 1900, 71 minutes in 1950 and 24 minutes by the end of the 20th century to earn the money necessary that will give you the purchasing power to buy you a three pound chicken. 110 00:11:34.560 --> 00:11:41.560 Now what I've just described here is also relevant to the issue of child labor. This is another thing they throw against the market economy. 111 00:11:41.560 --> 00:11:52.560 Can't have free market because, you know, kids have to work and if we had a non-market economy the kids could just skip through meadows all day, you know, and that's the difference. 112 00:11:52.560 --> 00:11:58.560 But the question becomes why are the children working? So no one asked this question. 113 00:11:58.560 --> 00:12:07.560 The assumption is that if you have one of these third world countries where a lot of children work, the assumption is that all the parents in that country just stink. 114 00:12:07.560 --> 00:12:15.560 Like, this is like a country of stinko parents, like, we should just go in there and just take all these children away from these savages, you know, who don't know how to raise children. 115 00:12:15.560 --> 00:12:21.560 But we really should ask, I mean, try to understand the world around us, like, why are the kids working in the first place? 116 00:12:21.560 --> 00:12:31.560 It's because the society they live in is so physically unproductive that if the kids don't work, the family starves. 117 00:12:31.560 --> 00:12:37.560 That's why they work. That's why child labor has existed since the beginning of time. 118 00:12:37.560 --> 00:12:41.560 It's not like people said, okay, capitalism's here, kids, off to the mines. 119 00:12:41.560 --> 00:12:50.560 Kids have been working forever in every society. It never occurred to anyone that someday you could live in a society 120 00:12:50.560 --> 00:12:56.560 in which your labor was so productive, thanks to the capital goods at your disposal, 121 00:12:56.560 --> 00:13:03.560 that you could work and earn enough purchasing power so that your kids wouldn't have to. 122 00:13:03.560 --> 00:13:08.560 Never occurred to anyone. But look at what we have here. Look at it in our society. 123 00:13:08.560 --> 00:13:14.560 Think of how much more work one person can do with a steam shovel than he could do with a regular shovel. 124 00:13:14.560 --> 00:13:18.560 And multiply that, extract like that through our whole economy. 125 00:13:18.560 --> 00:13:24.560 But up till the free market came along, after the capitalist economy, everybody just assumed, 126 00:13:24.560 --> 00:13:29.000 Everybody assumed, okay, life consists of grinding poverty and then you're dead. 127 00:13:29.000 --> 00:13:30.160 Everybody assumed that. 128 00:13:30.160 --> 00:13:34.440 So nobody in the year 1100 is going around protesting poverty. 129 00:13:34.440 --> 00:13:35.440 No one. 130 00:13:35.440 --> 00:13:39.480 You will not find anyone protesting poverty or having a hunger strike or a candlelight 131 00:13:39.480 --> 00:13:43.680 vigil about poverty because everybody assumed, everybody assumed, of course you're going 132 00:13:43.680 --> 00:13:44.680 to be poor. 133 00:13:44.680 --> 00:13:45.680 That's the way life is. 134 00:13:45.680 --> 00:13:46.680 You're poor. 135 00:13:46.680 --> 00:13:47.680 Live with it. 136 00:13:47.680 --> 00:13:53.120 I mean, even the king, even the king has to urinate and then toss it out the window because 137 00:13:53.120 --> 00:13:57.120 The King, for heaven's sake! 138 00:13:57.120 --> 00:14:01.120 So you understand my point that it's only when the free market comes along 139 00:14:01.120 --> 00:14:06.120 and we see that poverty begins to diminish, that people become impatient with poverty 140 00:14:06.120 --> 00:14:11.120 and they say, wait a minute, they say for the first time it seems possible that poverty could be done away with 141 00:14:11.120 --> 00:14:13.120 then they start complaining about it. 142 00:14:13.120 --> 00:14:17.120 But what's the point complaining about it when you think it is a fixture of life? 143 00:14:17.120 --> 00:14:21.120 So in terms of the child labor issue, child labor goes away 144 00:14:21.120 --> 00:14:35.120 not because you pass a law saying children aren't going to work, it goes away because the economy, thanks to the free market, becomes capital intensive enough that it can produce enough stuff that mom and dad can work, the kids don't have to. 145 00:14:35.120 --> 00:14:44.120 That's what does it. Now you can say, but wait a minute, I know we've had child labor laws. Oh yeah, those things are just super. They work great. There's no evasion of those laws at all. 146 00:14:44.120 --> 00:14:45.120 All. 147 00:14:45.120 --> 00:14:46.120 Those are really well observed. 148 00:14:46.120 --> 00:14:53.040 In fact, in Bangladesh, the British charity Oxfam pointed out that when a bunch of Americans 149 00:14:53.040 --> 00:14:58.080 and Europeans were griping and complaining about child labor in Bangladesh, and I don't 150 00:14:58.080 --> 00:14:59.080 mean to make light. 151 00:14:59.080 --> 00:15:00.520 I mean, nobody likes child labor. 152 00:15:00.520 --> 00:15:04.160 The point is to say that we can just pass a law against it is like saying, we'll pass 153 00:15:04.160 --> 00:15:06.480 a law against gravity and then we'll all fly. 154 00:15:06.480 --> 00:15:10.640 I mean, I wish the world were that simple, like, yeah, gee, there's something about the 155 00:15:10.640 --> 00:15:11.640 world I don't like. 156 00:15:11.640 --> 00:15:13.120 I'll just pass a law and it'll just go away. 157 00:15:13.120 --> 00:15:16.080 How childish and juvenile is that? 158 00:15:16.080 --> 00:15:18.400 But anyway, that's how, unfortunately, 159 00:15:18.400 --> 00:15:20.940 a lot of our teachers seem to think. 160 00:15:20.940 --> 00:15:25.360 But anyway, so they've got this big campaign 161 00:15:25.360 --> 00:15:27.460 against child labor in Bangladesh. 162 00:15:28.400 --> 00:15:30.560 So what happens, did child labor go away 163 00:15:30.560 --> 00:15:32.000 when Bangladesh got rid of it, 164 00:15:32.000 --> 00:15:33.080 the Bangladesh government got rid of it? 165 00:15:33.080 --> 00:15:36.360 No, what happened was, as Oxfam reported, 166 00:15:36.360 --> 00:15:39.720 the children either went into prostitution instead, 167 00:15:39.720 --> 00:15:44.740 which is, you know, as bad as it is to work in a sweatshop, you know, obviously it could 168 00:15:44.740 --> 00:15:45.740 be worse. 169 00:15:45.740 --> 00:15:49.520 They either went into prostitution or they starved. 170 00:15:49.520 --> 00:15:50.520 That's what happened. 171 00:15:50.520 --> 00:15:54.580 Well, nice going, geniuses, way to solve that problem. 172 00:15:54.580 --> 00:15:57.640 But that was the approach. 173 00:15:57.640 --> 00:16:01.320 Even the International Labor Organization, which doesn't concede anything like this, 174 00:16:01.320 --> 00:16:06.040 admits that, okay, the reason the kids are working is that the society is so poor that 175 00:16:06.040 --> 00:16:09.220 they're contributing at least a quarter of the family income. 176 00:16:09.220 --> 00:16:12.820 And when you're living in a society like that, if you lose a quarter of the family income, 177 00:16:12.820 --> 00:16:13.820 you're dead. 178 00:16:13.820 --> 00:16:14.820 That's it. 179 00:16:14.820 --> 00:16:15.820 You're dead. 180 00:16:15.820 --> 00:16:16.820 That's it. 181 00:16:16.820 --> 00:16:21.780 So what they need is more capitalism, and that would sound like, no one would take this 182 00:16:21.780 --> 00:16:22.780 seriously, right? 183 00:16:22.780 --> 00:16:26.620 I mean, you know, on MSNBC or whatever, but that is obviously, when you think about the 184 00:16:26.620 --> 00:16:28.740 logic of it, that is obviously what they need. 185 00:16:28.740 --> 00:16:33.260 There is no other physically plausible solution. 186 00:16:33.260 --> 00:16:39.660 Now, one topic I talked about, sort of on this sort of theme, last year when we had 187 00:16:39.660 --> 00:16:45.780 a group of young people come hear us, involves the so-called robber barons, and I'll just 188 00:16:45.780 --> 00:16:47.180 say a brief thing about them. 189 00:16:47.180 --> 00:16:52.540 The robber barons are the industrialists of the 19th century who were, I mean, these really 190 00:16:52.540 --> 00:16:57.560 are the guys with the white mustaches and the sacks of money, and again, the impression 191 00:16:57.560 --> 00:17:02.900 you get in your textbooks is that, you know, these are terrible exploiters who took advantage 192 00:17:02.900 --> 00:17:19.520 Okay, now it's true, there were some bad industrialists, in the same way there are bad dentists, bad 193 00:17:19.520 --> 00:17:26.400 bookbinders, I mean, sure, no argument there, but we can distinguish between people who 194 00:17:26.400 --> 00:17:31.640 were bad businessmen who used the government in order to cripple their competitors. We 195 00:17:31.640 --> 00:17:34.040 And we can say, yeah, boo-hiss to them. 196 00:17:34.040 --> 00:17:38.080 But on the other hand, there were entrepreneurs who got to where they were because they produced 197 00:17:38.080 --> 00:17:41.280 something people wanted really inexpensively. 198 00:17:41.280 --> 00:17:48.600 So kerosene goes down in price 90% thanks to Rockefeller, which means people can afford 199 00:17:48.600 --> 00:17:52.600 to stay up late at night instead of having to go to bed because they can't see a thing. 200 00:17:52.600 --> 00:17:53.920 Because they can't afford whale oil. 201 00:17:53.920 --> 00:17:54.920 Yeah, whale oil. 202 00:17:54.920 --> 00:17:56.680 You can imagine how cheap that would be, right? 203 00:17:56.680 --> 00:17:58.440 Whale oil, that's what they had to use. 204 00:17:58.440 --> 00:17:59.840 You don't have to use whale oil anymore. 205 00:17:59.840 --> 00:18:29.840 The price of steel rails, basically under Carnegie's efforts, thanks to his efforts, decreases by 90 percent, and that is going to ripple through the whole economy, because everything either has steel in it, or uses steel in one way or another in the production process, so he can make everything, in effect, less expensive to produce and use and acquire. Government can never do that. It can take some money from you, buy it, buy it, buy it, buy it, buy it, buy it, buy it, buy it. 206 00:18:29.840 --> 00:18:34.640 by force with a gun and hand it to your neighbor. Big deal, right? I mean, any one of us could 207 00:18:34.640 --> 00:18:41.400 do that. But very, very few people have the organizational and technological knowledge 208 00:18:41.400 --> 00:18:48.800 and ability to do what these people did. Or another one is Cornelius Vanderbilt. And the 209 00:18:48.800 --> 00:18:52.640 difference between Vanderbilt and the others is that Carnegie and Rockefeller and some 210 00:18:52.640 --> 00:18:55.840 of these others were known for their philanthropy. I mean, they're just giving away money at 211 00:18:55.840 --> 00:18:59.440 the end of their lives. They're just throwing it at anything. You know, you've got a pulse, 212 00:18:59.440 --> 00:19:06.440 Robert Livingston and Robert Fulton had been granted by New York a monopoly of steamboat traffic, and Vanderbilt was hired, in effect, to keep the money. 213 00:19:06.440 --> 00:19:13.440 Vanderbilt put up the seed money for Vanderbilt University, but then basically he just decided to keep the money. 214 00:19:13.440 --> 00:19:24.440 But all the same, if you look at his career, it starts off in the steamboat industry, and that's what I'll basically talk about, but later on he got into railroads and other stuff. 215 00:19:24.440 --> 00:19:31.440 And Vanderbilt was hired, in effect, to run a steamboat in defiance of this monopoly. 216 00:19:31.440 --> 00:19:36.440 He's going to transport people between New Jersey and Manhattan, even though technically he's not allowed to. 217 00:19:36.440 --> 00:19:45.440 And he managed to evade capture and to charge only one quarter of what these monopolists were charging. 218 00:19:45.440 --> 00:19:52.440 Well, eventually the steamboat monopoly was overturned, so Vanderbilt can sort of legitimately get into the business. 219 00:19:52.440 --> 00:20:06.440 So, thanks to his efficiency, travelers going from New Brunswick to Manhattan were now paying six cents per trip instead of several dollars. 220 00:20:06.440 --> 00:20:15.440 They're paying six cents per trip. They ate for free. Look, just come on board, I'll give you like a hot dog or whatever. 221 00:20:15.440 --> 00:20:20.440 I don't know if they had hot dogs then, or they would probably be even more disgustingly produced than they are now. 222 00:20:20.440 --> 00:20:27.440 E. Edward Collins gets a grant from the government of $858,000 a year to provide mail delivery 223 00:20:50.440 --> 00:20:52.440 and Mail Delivery across the Atlantic. 224 00:20:52.440 --> 00:20:56.440 Well, Cornelius Vanderbilt is getting a big fat zero from the government, 225 00:20:56.440 --> 00:20:58.440 and yet he enters the field. 226 00:20:58.440 --> 00:21:02.440 He outperforms Collins in passenger travel and in mail delivery, 227 00:21:02.440 --> 00:21:05.440 and he does so with no subsidy at all. 228 00:21:05.440 --> 00:21:09.440 Congress eventually did away with this subsidy to Edward Collins, 229 00:21:09.440 --> 00:21:11.440 and Collins wound up going bankrupt. 230 00:21:11.440 --> 00:21:17.440 Meanwhile, Vanderbilt is also outperforming two steamship lines that are also subsidized 231 00:21:17.440 --> 00:21:24.440 and bringing passengers and mail to California, and they're charging $600 per passenger per trip. 232 00:21:24.440 --> 00:21:30.440 Vanderbilt, with no subsidy, charges $150 per passenger and delivers the mail for free. 233 00:21:30.440 --> 00:21:36.440 Now, at that time, of course, as today, people are envious of those who have more than they do. 234 00:21:36.440 --> 00:21:39.440 And so their complaints, oh, you know, Vanderbilt, what a crumb. 235 00:21:39.440 --> 00:21:43.440 And so Edward Atkinson, who was a famous Boston manufacturer at the time, 236 00:21:43.440 --> 00:21:46.440 tried to put Vanderbilt's achievement in perspective here. 237 00:21:46.440 --> 00:21:57.440 He said to people, he said, okay, Vanderbilt is making 14 cents profit on every barrel of flour shipped by his railroads. 238 00:21:57.440 --> 00:22:01.440 Eventually, Vanderbilt, as I said, moved into the railroad business. 239 00:22:01.440 --> 00:22:07.440 But Atkinson goes on to say, but at the same time, okay, sure, he's making 14 cents per barrel, 240 00:22:07.440 --> 00:22:12.440 but you're saving, thanks to him, $2.75 a barrel. 241 00:22:12.440 --> 00:22:15.440 What more does this guy have to do? 242 00:22:15.440 --> 00:22:18.440 Does he have to hold your hand to take you to the playground? 243 00:22:18.440 --> 00:22:23.440 What more does this guy have to do for you to get off his case? 244 00:22:23.440 --> 00:22:26.440 So in other words, this is worth thinking about. 245 00:22:26.440 --> 00:22:29.440 Maybe what we hear about these people in our history books 246 00:22:29.440 --> 00:22:33.440 might not be taking all factors into account. 247 00:22:33.440 --> 00:22:36.440 And I've also pointed out that my friend Tom DiLorenzo 248 00:22:36.440 --> 00:22:38.440 has done some interesting research on this. 249 00:22:38.440 --> 00:22:40.440 He looked at all the 19th century industries, 250 00:22:40.440 --> 00:22:52.440 In the late 19th century industries where people were saying this industry is monopolized by one firm or a few firms and it's terrible and they're raising prices and lowering their output. 251 00:22:52.440 --> 00:22:57.440 And he went and looked at them and said, well, why don't we look and check, right? The numbers are sitting right here. Why don't we just look? 252 00:22:57.440 --> 00:23:05.440 And he found that actually the firms that were accused or pardon me, the industries where the accusation of monopoly hovered over their heads 253 00:23:05.440 --> 00:23:13.440 where the firms where output was increasing, the fastest in the economy and where prices were going down the fastest in the economy. 254 00:23:13.440 --> 00:23:20.440 So, in other words, almost everything we're told about this is completely 100% a lie. 255 00:23:20.440 --> 00:23:25.440 I mean, and all you have to do is just look at the numbers. I'm not making this stuff up. You can just go check it yourselves. 256 00:23:25.440 --> 00:23:33.440 A couple other quick things to point out that I find interesting that have a kind of economic angle, and one of them is the story of the Wild West. 257 00:23:33.440 --> 00:23:34.440 The Wild West 258 00:23:34.440 --> 00:23:38.640 Now, we all know about the Wild West because we see Hollywood movies and we've read books 259 00:23:38.640 --> 00:23:43.880 about it, that in the Wild West everybody's got a gun and so therefore everybody's shooting. 260 00:23:43.880 --> 00:23:44.880 That seems to be the logic. 261 00:23:44.880 --> 00:23:48.440 If you've got a gun, well, naturally you're just going to start firing it. 262 00:23:48.440 --> 00:23:54.520 And it seems like the truth, though, in recent years, scholars have uncovered that our understanding 263 00:23:54.520 --> 00:23:57.960 of the Wild West is about 180 degrees wrong. 264 00:23:57.960 --> 00:24:01.360 And this is one of the 33 questions about American history you're not supposed to ask 265 00:24:01.360 --> 00:24:05.360 in my book 33 questions is how wild was the wild west and their historians are 266 00:24:05.360 --> 00:24:08.560 actually saying the wild west actually turns out to have been a great big bore 267 00:24:08.560 --> 00:24:13.320 believe it or not that when you actually look at it was actually a big bore Larry 268 00:24:13.320 --> 00:24:18.280 Schweikart from the University of Dayton has estimated that fewer than a dozen 269 00:24:18.280 --> 00:24:25.920 bank robberies occurred in the entire frontier west from 1859 to 1900 so this 270 00:24:25.920 --> 00:24:30.880 means that there are more bank robberies in modern-day Dayton Ohio where Larry 271 00:24:30.880 --> 00:24:42.380 Now, Buffalo Bill Cody went around telling people that he had been wounded in battles 272 00:24:42.380 --> 00:24:45.280 with the Indians 137 times. 273 00:24:45.280 --> 00:24:48.880 Wow, wow, there's a lot of violence going on out there. 274 00:24:48.880 --> 00:24:53.800 And then finally under pressure, he said, well, it wasn't really 137. 275 00:24:53.800 --> 00:24:59.140 It was one time, but it was really bad that one time, it was really bad. 276 00:24:59.140 --> 00:25:04.060 But it was that this sells dime novels better if you say you were wounded 137 times. 277 00:25:04.060 --> 00:25:09.480 So actually the consensus, evolving consensus seems to be that the Wild West was not really 278 00:25:09.480 --> 00:25:10.480 quite so wild. 279 00:25:10.480 --> 00:25:14.140 In fact there is a book called The Not So Wild Wild West that came out a few years ago 280 00:25:14.140 --> 00:25:21.020 from Stanford University Press elaborating on this and displaying some of this important 281 00:25:21.020 --> 00:25:22.020 scholarship. 282 00:25:22.020 --> 00:25:25.900 Well what's interesting about it is here's a place where you would think this is a disaster 283 00:25:25.900 --> 00:25:26.900 waiting to happen. 284 00:25:26.900 --> 00:25:29.900 People are rushing out there, by and large, because they want to get gold. 285 00:25:29.900 --> 00:25:31.900 It's been announced that there are gold discoveries there. 286 00:25:31.900 --> 00:25:35.900 People are rushing out there. Americans are going out there of all races. 287 00:25:35.900 --> 00:25:37.900 There are people from Europe going to California. 288 00:25:37.900 --> 00:25:41.900 There are people from China going to California to get gold. 289 00:25:41.900 --> 00:25:45.900 No one intends to make his home there. People are going to get their gold and get out. 290 00:25:45.900 --> 00:25:49.900 Now, the U.S. hadn't even set up a territorial government in California at that time. 291 00:25:49.900 --> 00:25:53.900 So you think, okay, so we've got potential racial animosity. 292 00:25:53.900 --> 00:26:00.900 You've got greed, you've got the fact that nobody intends to stay there, so there's going to be any longevity. 293 00:26:00.900 --> 00:26:05.900 None of these people know each other, so there's no pre-existing community camaraderie to build on. 294 00:26:05.900 --> 00:26:11.900 This is a freaking disaster waiting to happen, and yet, through basically free market institutions, 295 00:26:11.900 --> 00:26:19.900 people voluntarily established organizations that defined and defended property rights, that adjudicated disputes, 296 00:26:19.900 --> 00:26:23.580 And historians looking back on this can't really believe this. 297 00:26:23.580 --> 00:26:30.220 That yet in the absence of an overarching coercive institution, somehow people made this thing work. 298 00:26:30.220 --> 00:26:33.420 And it is quite an interesting story. 299 00:26:33.420 --> 00:26:38.220 Well, finally, the last little bit that I'll talk about is another thing we hear a lot about. 300 00:26:38.220 --> 00:26:42.220 And that is the American Indians were great environmentalists. 301 00:26:42.220 --> 00:26:47.420 And the usual implication of this is that you being non-native Americans 302 00:26:47.420 --> 00:26:50.500 are all pretty much terrible environmentalists 303 00:26:50.500 --> 00:26:54.220 and you should be ashamed of yourselves compared to these people. 304 00:26:54.220 --> 00:26:58.780 Now I'm not saying this to disparage or make light of or make fun of 305 00:26:58.780 --> 00:27:01.940 American Indians. That's not in any way my intention. In fact 306 00:27:01.940 --> 00:27:05.020 my view is that people who want to hold these 307 00:27:05.020 --> 00:27:08.940 people up as models of environmentalism are themselves 308 00:27:08.940 --> 00:27:11.620 really treating these people like children. I mean they're not treating them like 309 00:27:11.620 --> 00:27:12.540 human beings. 310 00:27:12.540 --> 00:27:16.020 They're treating them like cardboard cutouts that they can use 311 00:27:16.020 --> 00:27:18.700 as bludgeons to bash the rest of us over the head with it. 312 00:27:18.700 --> 00:27:20.580 They couldn't care less what the Indians actually did. 313 00:27:20.580 --> 00:27:22.580 They don't know anything about it, most of them. 314 00:27:22.580 --> 00:27:27.700 So, for example, one of the great scholars of environmentalism, Al Gore, 315 00:27:27.700 --> 00:27:31.740 was a, that was cheap, totally cheap. 316 00:27:31.740 --> 00:27:35.940 But Al Gore, in his book Earth in the Balance, 317 00:27:35.940 --> 00:27:37.780 which came out when I was in college, 318 00:27:37.780 --> 00:27:42.140 he cited a speech from the 19th century Chief Seattle, 319 00:27:42.140 --> 00:27:44.180 who was in the Pacific Northwest. 320 00:27:44.180 --> 00:27:48.900 And in this speech, Chief Seattle talks about every single pine needle, 321 00:27:48.900 --> 00:27:52.300 every bug being sacred to him and his people. 322 00:27:52.300 --> 00:27:55.740 And, you know, Al Gore saying, you know, if only we could get back to this. 323 00:27:55.740 --> 00:27:58.260 Well, it turns out this speech is totally phony. 324 00:27:58.260 --> 00:28:03.900 It was made up in the 1970s, the 1970s, like a hundred years later 325 00:28:03.900 --> 00:28:07.900 by a screenwriter named Ted Perry from Texas. 326 00:28:07.900 --> 00:28:12.100 Now, Perry just sort of, you know, made up the speech, 327 00:28:12.100 --> 00:28:15.100 how he imagined it would have been, what this guy might have said. 328 00:28:15.100 --> 00:28:19.100 And then he saw that people were using it as if they were Chief Seattle's words. 329 00:28:19.100 --> 00:28:22.100 So Perry spent the rest of his career going around telling people, 330 00:28:22.100 --> 00:28:26.100 I made that speech up. I'm really sorry to break this to you, but I made that speech up. 331 00:28:26.100 --> 00:28:30.100 Well, Gord doesn't know this, so he's repeating it like this is from Indian wisdom. 332 00:28:30.100 --> 00:28:37.100 And this one speech bears a tremendous amount of the argumentative burden 333 00:28:37.100 --> 00:28:40.100 to prove that the Indians were all environmentalists. 334 00:28:40.100 --> 00:28:45.100 This poor guy, Ted Perry, makes up this speech and he goes through his life thinking, 335 00:28:45.100 --> 00:28:48.100 well, maybe I've made good, I've tried to overturn this mistake. 336 00:28:48.100 --> 00:28:53.100 Well, there's a children's book that hits number five on the New York Times bestseller list called 337 00:28:53.100 --> 00:28:59.100 Brother Eagle, Sister Sky, written by some author, based on the phony Chief Seattle speech. 338 00:28:59.100 --> 00:29:01.100 He's going, oh, gosh, I can't. 339 00:29:01.100 --> 00:29:06.100 Then one day, Ted Perry is sitting in his own church and his pastor gets up and says, 340 00:29:06.100 --> 00:29:11.300 No, as Chief Seattle said, he said, I can't believe this is happening. This can't be happening. 341 00:29:11.300 --> 00:29:15.860 So it just keeps going on and on. Well, earlier versions of the speech that we have are dubious 342 00:29:15.860 --> 00:29:19.100 for reasons of their own that I don't have time to get into, but I do talk about in the 343 00:29:19.100 --> 00:29:24.500 33 Questions book. But when you look at it more closely, he's not saying, every inch 344 00:29:24.500 --> 00:29:30.260 of ground everywhere is sacred to my people such that we can only daintily touch it. He's 345 00:29:30.260 --> 00:29:34.940 not saying that. He's saying that specifically this land is sacred to us because our ancestors 346 00:29:34.940 --> 00:29:41.940 Well, that's a very different thing from saying that land in general is a holy and sacred thing and no one can touch or do anything with it. 347 00:29:41.940 --> 00:29:47.940 So were the American Indians environmentalists? Well, like most people, they were good in some areas and bad in others. 348 00:29:47.940 --> 00:29:57.940 They were not, in fact, cardboard cutouts. They were not, in fact, ideological little creatures to be exploited by leftists today. 349 00:29:57.940 --> 00:30:00.940 They were actually real human beings, believe it or not. They were actual people. 350 00:30:00.940 --> 00:30:02.940 So, yeah, they did do some bad things. 351 00:30:02.940 --> 00:30:05.940 They engaged in slash and burn agriculture. 352 00:30:05.940 --> 00:30:07.940 They wiped out entire animal populations, 353 00:30:07.940 --> 00:30:12.940 on the assumption that any animals that they killed in a hunt would be reanimated. 354 00:30:12.940 --> 00:30:14.940 So they didn't worry about killing animal populations. 355 00:30:14.940 --> 00:30:17.940 And they destroyed forests and grasslands. 356 00:30:17.940 --> 00:30:21.940 But at the same time, they were good environmental stewards 357 00:30:21.940 --> 00:30:23.940 in exactly the opposite way that we've been taught. 358 00:30:23.940 --> 00:30:26.940 We've been taught that the American Indians didn't know anything about property. 359 00:30:26.940 --> 00:30:28.940 We heard this a million times. 360 00:30:28.940 --> 00:30:32.940 and that the white man comes along and says this is mine and the Indian scratches his head. 361 00:30:32.940 --> 00:30:34.940 What could you mean mine? You know, everything is in common. 362 00:30:34.940 --> 00:30:37.940 Well, that's not true. 363 00:30:37.940 --> 00:30:41.940 First of all, American Indians are extremely diverse 364 00:30:41.940 --> 00:30:45.940 and have varying approaches to the idea of property, for one thing. 365 00:30:45.940 --> 00:30:48.940 But by and large, one of the reasons that you might see 366 00:30:48.940 --> 00:30:53.940 some Indians having a view of property that is relatively communal 367 00:30:53.940 --> 00:30:59.860 is that these were Indians who lived in areas of tremendous abundance so like 368 00:30:59.860 --> 00:31:04.180 right now air exists in such great abundance we don't have property rights 369 00:31:04.180 --> 00:31:07.420 in it we don't argue about it I don't say hey wait a minute you just breathe 370 00:31:07.420 --> 00:31:10.980 you were just breathing my air you jerk like we wouldn't say it doesn't make any 371 00:31:10.980 --> 00:31:16.020 sense well likewise if you're living in an extremely sparsely populated area you 372 00:31:16.020 --> 00:31:18.620 know who can't you know it's true you use that land I'll use this one who even 373 00:31:18.620 --> 00:31:23.900 cares but as things grow more and more scarce then you start to see various 374 00:31:53.900 --> 00:32:00.500 I'd better just go kill any animal I can, because any animal I don't kill will be killed by somebody else, and this is my only chance to get it. 375 00:32:00.500 --> 00:32:04.400 No one thinks about tomorrow. They just think, I've got to just get when the getting is good. 376 00:32:04.400 --> 00:32:10.600 But if my tribe has care of this area in terms of hunting, 377 00:32:10.600 --> 00:32:15.600 well, we have an incentive not to kill every single animal now, because then what are we going to do next year? 378 00:32:15.600 --> 00:32:18.400 We have an incentive to preserve some for the future. 379 00:32:18.400 --> 00:32:23.700 And so we guard our property rights. We make sure that other people, poachers, don't come in and just start killing arbitrarily. 380 00:32:23.700 --> 00:32:27.200 And they say, no, because that hurts us, because then we won't have anything for next year. 381 00:32:27.200 --> 00:32:33.260 So they used, basically, property rights, in effect, to conserve in areas like this, 382 00:32:33.260 --> 00:32:37.260 whether it was salmon or livestock or whatever. 383 00:32:37.260 --> 00:32:42.420 And so this is, and just one last thing on this point, and then I'll wrap up, is that 384 00:32:42.420 --> 00:32:47.780 very recently in Wyoming, the Arapahos on the Wind River Reservation in Wyoming have 385 00:32:47.780 --> 00:32:52.420 been riding around on all-terrain vehicles just killing animals everywhere and just wiping 386 00:32:52.420 --> 00:32:53.420 out animal populations. 387 00:32:53.420 --> 00:32:57.380 and so what happened to their spiritual kinship with nature well here's what 388 00:32:57.380 --> 00:33:00.100 happened to it there's no incentive for them not to do that there are no 389 00:33:00.100 --> 00:33:05.260 property rights in that land or or to those animals so might as well kill them 390 00:33:05.260 --> 00:33:09.300 all now because I can't since I can't privatize the land I can't reap the 391 00:33:09.300 --> 00:33:13.100 benefits of preserving anything for the future because it doesn't doesn't belong 392 00:33:13.100 --> 00:33:16.820 to me I got to just kill them all now so in other words the Indians responded to 393 00:33:16.820 --> 00:33:21.100 incentives again they're people they responded to incentives but they show us 394 00:33:21.100 --> 00:33:28.100 So it's in fact the very thing we're told the Indians knew nothing about, namely, private property rights. 395 00:33:28.100 --> 00:33:32.100 It's that very institution that they used to protect the environment. 396 00:33:32.100 --> 00:33:36.100 So they were environmentalists, but not in the way we're typically told. 397 00:33:36.100 --> 00:33:40.100 All right, well, I'm already over the time, so I'll just simply leave you with this. 398 00:33:40.100 --> 00:33:47.100 We haven't actually mentioned today that the Mises Institute promotes something called the Austrian School of Economics. 399 00:33:47.100 --> 00:33:50.100 promotes something called the Austrian School of Economics. 400 00:33:50.100 --> 00:33:53.700 It's a school, it's not a building, it's a school of thought 401 00:33:53.700 --> 00:33:58.900 that is the oldest consistently existing school of economic thought, 402 00:33:58.900 --> 00:34:02.200 probably the smallest right now but the fastest growing 403 00:34:02.200 --> 00:34:06.500 because we have the fewest stooges in the Austrian School, 404 00:34:06.500 --> 00:34:08.500 we have the fewest bootlickers, 405 00:34:08.500 --> 00:34:12.500 our economists don't want to go to Washington and tell them whatever they want to hear. 406 00:34:12.500 --> 00:34:14.200 We tell them the opposite of what they want to hear, 407 00:34:14.200 --> 00:34:16.900 which is why no one invites us to Washington. 408 00:34:16.900 --> 00:34:22.500 But the Austrian School, these are the economists who predicted the crash we're going through now, 409 00:34:22.500 --> 00:34:25.300 who predicted the Great Depression at a time when they were laughed at, 410 00:34:25.300 --> 00:34:28.700 when they were told that this is a time of permanent prosperity. 411 00:34:28.700 --> 00:34:33.300 In fact, Irving Fisher said that stocks had reached a permanently high plateau 412 00:34:33.300 --> 00:34:36.900 about three seconds before the stock market crash came. 413 00:34:36.900 --> 00:34:40.300 So there are people who are interested in what we're saying more and more. 414 00:34:40.300 --> 00:34:46.000 It's the Austrian School of Economics in particular that can help to keep you from being clueless, 415 00:34:46.000 --> 00:34:52.120 so that you won't be just another one of these drones who repeats what's said on MSNBC, 416 00:34:52.120 --> 00:34:55.620 who says, oh, we just need to give more power to our wise overlords. 417 00:34:55.620 --> 00:34:56.620 That's what they want you to be. 418 00:34:56.620 --> 00:35:01.440 Man, there is nothing they would like more than to see you young people become a bunch 419 00:35:01.440 --> 00:35:05.600 of drones who just repeat what they hear at some presidential press conference and say, 420 00:35:05.600 --> 00:35:08.640 oh, we must do whatever our wise leader says. 421 00:35:08.640 --> 00:35:09.920 That's what they want. 422 00:35:09.920 --> 00:35:10.920 Don't think. 423 00:35:10.920 --> 00:35:11.920 That's exactly what they want. 424 00:35:11.920 --> 00:35:19.920 But what the Mises Institute challenges you to do is the opposite, is to think, is to listen to people who are out of fashion because those are the ones who typically are right. 425 00:35:19.920 --> 00:35:24.920 The boot lickers are very much in fashion and they told us everything was just super in the middle of 2007. 426 00:35:24.920 --> 00:35:28.920 And they're telling us things are turning around and they're going to be just great within 10 minutes. 427 00:35:28.920 --> 00:35:34.920 You know, at some point you've got to say, I don't care what those people think. 428 00:35:34.920 --> 00:35:48.920 I want to follow the people who have said what is true, who have pursued the truth, regardless of what it meant for their careers, because they believe in the truth, and they want to understand the world as it really is, not how politicians want it to be. 429 00:35:48.920 --> 00:35:51.920 So I hope you'll join us. Thank you very much.