WEBVTT NOTE From Monarchy to Democracy 1 00:00:00.000 --> 00:00:11.000 Okay, the subject of this lecture is from monarchy to democracy. 2 00:00:11.000 --> 00:00:21.000 This is obviously one of the main subjects that I cover in my book about democracy, 3 00:00:21.000 --> 00:00:46.000 I talked about monarchs already in the previous two lectures, about the role of monarchs in feudal societies, 4 00:00:46.000 --> 00:00:55.000 which we can refer to as basically pre-state societies. 5 00:00:55.000 --> 00:01:07.000 And then in the last lecture about the position of monarchs as heads of state 6 00:01:07.000 --> 00:01:28.000 The period of state and the transition from the feudal stage to the monarchical state, roughly speaking historically and only talking about Europe in this case, 7 00:01:28.000 --> 00:01:44.000 The period of feudal monarchs is roughly the period from 1100 to 1500 and then from 1500 until the end of World War I. 8 00:01:44.000 --> 00:02:04.000 That is the period of monarchical states, the later stages, constitutional monarchical states, and in the earlier state what we refer to typically as absolute monarchies. 9 00:02:04.000 --> 00:02:19.000 As I said, the discussion during the last two lectures referred mostly to the development in Europe 10 00:02:19.000 --> 00:02:32.000 and I will come back to the European development, that is to Christian monarchies and the transition from Christian monarchs to democracy in a moment 11 00:02:32.000 --> 00:02:49.000 I want to say a few things about the institution of kings and monarchs in general, even outside of the European scenery. 12 00:02:49.000 --> 00:03:08.000 In a way, monarchs are, so to speak, the more typical form of rulership, whether pre-state or state rulers, than any other form. 13 00:03:08.000 --> 00:03:33.000 democracies, a very rare event in human history, and in a way it is easy to explain why that is, because patriarchy is, so to speak, one of the most natural institutions that you can imagine. 14 00:03:33.000 --> 00:03:53.000 You have, of course, fathers as the heads of households, and by and large the idea of kings was modeled after the structures that you find in households. 15 00:03:53.000 --> 00:04:15.000 Kings were typically regarded as the head of extended families, or the head of clans, or the head of tribes, or later on then, of course, the head of entire nations. 16 00:04:15.000 --> 00:04:33.000 But along the lines of the idea, this is, so to speak, a natural development similar to what we see in each family developing. 17 00:04:33.000 --> 00:04:54.000 All kings try to associate themselves with some sort of religious, or give themselves some sort of religious dignity and in many places on the globe, 18 00:04:54.000 --> 00:05:05.440 The kings were considered to be either gods or incarnations of gods or descendants of gods 19 00:05:05.440 --> 00:05:17.640 or as people who acquired godlike status after their deaths. 20 00:05:17.640 --> 00:05:29.920 And kings in all societies try to provide, in a way, two functions. 21 00:05:29.920 --> 00:05:41.440 On the one hand, the function as judge and priest, that is, so to speak, as the intellectual 22 00:05:41.440 --> 00:06:06.440 of larger groups of people, and on the other hand, the function as warrior and protector of their clans or tribes or whatever the group was of which they were considered to be the head. 23 00:06:06.440 --> 00:06:20.360 And while it was sometimes the case that these two functions, the priest-judge function and 24 00:06:20.360 --> 00:06:30.680 the warrior-protection function were separated and occupied by different individuals, there 25 00:06:30.680 --> 00:06:47.680 There was always an attempt made to combine the two, make the protector and warrior also at the same time the high priest. 26 00:06:47.680 --> 00:06:56.680 And of course in combining these two functions you would achieve far greater power 27 00:06:56.680 --> 00:07:06.680 if these two functions were somehow exercised by different individuals controlling each other. 28 00:07:06.680 --> 00:07:14.680 So frequently the king, actually outside of the West more typically is the case, 29 00:07:14.680 --> 00:07:26.680 The king was also considered to be the head of the religious organization or the head of the church. 30 00:07:26.680 --> 00:07:43.680 That was the case in places like Egypt or also in Japan, in the Islamic world with the Hindus and also in the case of China. 31 00:07:43.680 --> 00:08:10.680 The uniqueness of the West as I mentioned in previous lectures, the uniqueness of the Western civilization was precisely the relative strict separation of these two functions by different individuals and different institutions. 32 00:08:10.680 --> 00:08:39.680 This is not to say that that existed in the West throughout. It was certainly the case that the religious leaders, the Pope, tried to acquire also earthly powers and vice versa, that the earthly ruler, so to speak, tried to control the churches. 33 00:08:39.680 --> 00:09:08.680 But certainly from about a thousand or so, the separation between the two roles worked for quite some time in Europe, basically until the Protestant revolutions, when the combination also in the West between church on the one hand and state or earthly rulers on the other hand, 34 00:09:09.680 --> 00:09:17.600 and became increasingly closer again. 35 00:09:17.600 --> 00:09:30.520 This separation between the church leaders and the earthly worldly rulers did not of 36 00:09:30.520 --> 00:09:41.320 of course prevent that the various kings claimed some sort of elevated status for themselves. 37 00:09:41.320 --> 00:09:49.640 I mentioned in the previous lectures that the kings of England, for instance, tried 38 00:09:49.640 --> 00:10:02.160 try to trace back their own claims to the land to Adam and Eve and thereby present themselves 39 00:10:02.160 --> 00:10:14.680 so to speak as people whose position had been founded ultimately by God and that all of 40 00:10:14.680 --> 00:10:28.680 of their subjects were indeed nothing else but the offspring and following the tenets of them. 41 00:10:28.680 --> 00:10:42.680 Nonetheless, at least for the Christian world, even if kings claimed that they had this special 42 00:10:42.680 --> 00:11:09.680 and the historical dignity of having been installed by God directly or indirectly into their position precisely because in Christianity kings are not considered to be God-like figures and we have a transcendent God. 43 00:11:09.680 --> 00:11:18.680 Kings were always considered to be under the law, like everyone else. 44 00:11:18.680 --> 00:11:35.680 And because of this, in the West, the institution of regicide, killing the king, was always considered to be quite legitimate, 45 00:11:35.680 --> 00:12:01.680 not entirely undisputed, but for centuries, of course, considered to be something that was entirely all right if the king would not do what he was supposed to do according to the universal law laid down by the transcendent God. 46 00:12:01.680 --> 00:12:28.680 In addition, in Europe, the power of the king, at least in some parts of Europe, was always restricted by the fact that there existed other noble men who claimed to be the sole and exclusive owner of their land. 47 00:12:28.680 --> 00:12:49.680 not to have received their land as some sort of grant from the king but being maybe on a smaller scale but nonetheless an equally safe private property owner as the king was of whatever he claimed to be his. 48 00:12:49.680 --> 00:12:57.680 This is what we refer to as the elodial form of feudalism. 49 00:12:57.680 --> 00:13:13.580 And in so far, at least for the feudal king, he was recognized as a voluntarily acknowledged 50 00:13:13.580 --> 00:13:18.080 judge and military leader. 51 00:13:18.080 --> 00:13:26.760 And as I explained in the previous lecture, it took quite some time for him to secure 52 00:13:26.760 --> 00:13:42.840 and gain the position as a sovereign stripping these elodial feudal owners of their full 53 00:13:42.840 --> 00:13:56.080 and complete property rights and establishing himself as a compulsory monopolist. 54 00:13:56.080 --> 00:14:10.360 Now with the establishment of kings as states, we can almost from the very beginning discover 55 00:14:10.360 --> 00:14:24.240 the seeds of the destruction of dynastic monarchies in the following way. 56 00:14:24.240 --> 00:14:36.240 Let's talk about what I explained about the justification that was given for the existence of a state, the justification that Hobbes developed. 57 00:14:36.240 --> 00:14:52.240 There will be war of all against all and the only way that we can create peace is by having one monopolist on top of the social hierarchy 58 00:14:52.240 --> 00:14:57.240 being the ultimate judge equipped with taxes. 59 00:14:57.240 --> 00:15:10.240 Now interestingly, in this justification, you realize that it doesn't really matter for the Hobbesian argument who this monopolist is. 60 00:15:10.240 --> 00:15:23.240 It happened to be monarchs at the time because the institution of monarchy is, so to speak, a relatively natural institution. 61 00:15:23.240 --> 00:15:35.240 Just people who have more wisdom and riches accumulated and command more authority are looked up upon. 62 00:15:35.240 --> 00:16:01.240 So the first governments, the first states happened to be monarchs, but the argument for the state that monarchs of course used in order to establish themselves as a state makes no reference to it must be a king who is this monopolist. 63 00:16:01.240 --> 00:16:08.240 In principle, it can be anyone. It just must be a monopolist who does it. 64 00:16:08.240 --> 00:16:23.240 Because of this, for instance, the English kings were initially quite unsympathetic towards the Hobbesian argument. 65 00:16:23.240 --> 00:16:35.240 because they realized that it did not contain a specific justification or legitimation for the institution of dynastic monarchs. 66 00:16:35.240 --> 00:16:48.240 And Hobbes was even suspected to have some sort of republican sympathies 67 00:16:48.240 --> 00:17:00.240 and even as being somebody who might have secret sympathies for Cromwell. 68 00:17:00.240 --> 00:17:15.240 Whether that is true or not, it is irrelevant, but what is of importance is the fact that this justification of the state, 69 00:17:15.240 --> 00:17:30.240 This rational justification of the state embodies the seeds of the destruction of the institution of a monarchical state. 70 00:17:30.240 --> 00:17:38.240 Now this transition from monarchical state to a different form of state, to democracy, 71 00:17:38.240 --> 00:17:50.240 Again, it took several hundred years, just as the establishment of states out of pre-state orders took several hundred years. 72 00:17:50.240 --> 00:18:14.240 and the transition was driven not least by the very intellectuals that played an important role in securing the position of kings as states. 73 00:18:14.240 --> 00:18:43.240 Remember, states need legitimacy, need support, voluntary support in the public, and it was precisely intellectuals that were hired by the king that spread this idea about the necessity of a monopolist judge equipped with taxing power. 74 00:18:43.240 --> 00:18:56.240 But as intellectuals happen to be, they are always unsatisfied with their own position. 75 00:18:56.240 --> 00:19:07.240 Even though the position of their somehow improved being now somewhat employed or semi-employed by kings, 76 00:19:07.240 --> 00:19:19.240 These things, as soon as they had reached this position, they began to spread some sort of egalitarian views. 77 00:19:19.240 --> 00:19:35.240 And these egalitarian views simply pointed out to the fact that isn't that somehow unjust 78 00:19:35.240 --> 00:19:52.240 that there exist people who have privileges, that the king is guided by a different type of law than the rest of mankind is, 79 00:19:52.240 --> 00:20:06.240 that there are princely laws and privileges and then the laws and rules that apply to the rest of mankind. 80 00:20:06.240 --> 00:20:18.240 So the egalitarian propaganda took the form of an attack against privilege. 81 00:20:18.240 --> 00:20:26.480 privilege, how can privilege be squared with the idea that, with the Christian idea that 82 00:20:26.480 --> 00:20:42.320 we are all created equally by the same creator and so forth, and the alleged solution proposed 83 00:20:42.320 --> 00:20:55.800 to this seeming injustice was to say that there should be open entry into the position 84 00:20:55.800 --> 00:20:57.400 of government. 85 00:20:57.400 --> 00:21:00.500 Why should it be the king? 86 00:21:00.500 --> 00:21:09.400 After all, only a state was necessary in order to create law and order, and other people 87 00:21:09.400 --> 00:21:19.360 could do that just as well as some sort of hereditary king could do it. 88 00:21:19.360 --> 00:21:27.440 There were some people early on who recognized that the problem with the state king was in 89 00:21:27.440 --> 00:21:35.800 fact that the state king represented a monopoly and that what was necessary as a solution 90 00:21:35.800 --> 00:21:43.800 Everything was in a way to get rid of this monopoly power, again to have competing jurisdictions 91 00:21:43.800 --> 00:21:45.120 and so forth. 92 00:21:45.120 --> 00:21:55.440 But the overwhelming majority took the line that in order to abolish privileges, all we 93 00:21:55.440 --> 00:22:05.100 have to do is open up entry into the government to everyone. 94 00:22:05.100 --> 00:22:11.900 They called this, of course, equality before the law. 95 00:22:11.900 --> 00:22:21.500 Now let me point out from the outset that there is, of course, an error involved in this. 96 00:22:21.500 --> 00:22:30.900 By opening entry into the government agency to everyone instead of restricting it just 97 00:22:30.900 --> 00:22:43.940 to the members of some specific family, you do not abolish privileges. 98 00:22:43.940 --> 00:22:56.580 What you do instead achieve is you substitute now functional privileges for personal privileges. 99 00:22:56.580 --> 00:23:03.700 The king had a personal privilege and his successors a personal privilege. 100 00:23:03.700 --> 00:23:12.100 But if you open entry to the position of the government leader to everyone, you still have 101 00:23:12.100 --> 00:23:15.380 a functional privilege. 102 00:23:15.380 --> 00:23:25.180 Everyone can now acquire this privileged position, but there still exist privileged positions. 103 00:23:25.180 --> 00:23:35.020 In legal terms, we can say, instead of having a higher princely law and a lower law applying 104 00:23:35.020 --> 00:23:42.340 to the common man, we have now created, so to speak, public law. 105 00:23:42.340 --> 00:23:49.860 That is, the law that regulates the behavior of those who are in charge of the state and 106 00:23:49.860 --> 00:23:57.740 private law that applies to the rest of mankind. 107 00:23:57.740 --> 00:24:06.640 But public law is, again, superior over private law in the same way as princely law was, so 108 00:24:06.640 --> 00:24:16.900 to speak, superior over the law applying to common folks. 109 00:24:16.900 --> 00:24:26.260 Public law beats private law and that there are privileges in effect. 110 00:24:26.260 --> 00:24:35.340 You can simply see by the fact that as a public official you could do things that as a private 111 00:24:35.340 --> 00:24:38.340 individual you were not allowed to do. 112 00:24:38.340 --> 00:24:41.020 This is of course true up to this day. 113 00:24:41.020 --> 00:24:47.580 As a public official, you can, of course, take the property of others. 114 00:24:47.580 --> 00:24:52.740 As a private citizen, this would be considered to be a crime. 115 00:24:52.740 --> 00:24:56.620 As a public official, you can enslave people. 116 00:24:56.620 --> 00:25:01.560 You can draft them into the army and military and so forth. 117 00:25:01.560 --> 00:25:06.780 If you were just a plain private individual, then that same task would be considered to 118 00:25:06.780 --> 00:25:14.780 to be an outrage and would be a punishable offense. 119 00:25:14.780 --> 00:25:28.140 So privileges do not disappear by opening entry to government to everyone, and not everyone 120 00:25:28.140 --> 00:25:36.380 is equal before the law either, because there exist two types of law. 121 00:25:36.380 --> 00:25:42.100 If you are a public official a different law applies to you and protects you than if you 122 00:25:42.100 --> 00:25:50.100 are a private individual than you are only protected by a subordinate form of law that 123 00:25:50.100 --> 00:25:56.900 is private law. 124 00:25:56.900 --> 00:26:09.700 If we look at the change from monarchy to democracy described as a system where entry 125 00:26:09.700 --> 00:26:19.300 into the government is available to everyone from a purely economic point of view, what 126 00:26:19.300 --> 00:26:33.200 What happens in this case is that we substitute for a person who considers the entire territory 127 00:26:33.200 --> 00:26:41.300 over which he exercises monopolistic control, that we substitute for somebody who considers 128 00:26:41.300 --> 00:26:52.980 his realm as his private property that he can pass on to his offspring that we substitute 129 00:26:52.980 --> 00:27:06.260 for a person such as this, a temporary caretaker who is in charge for a certain period of time 130 00:27:06.260 --> 00:27:12.820 of the same territory. 131 00:27:12.820 --> 00:27:19.820 But this, being the owner of a territory 132 00:27:19.820 --> 00:27:25.340 or being a temporary caretaker of a territory, 133 00:27:25.340 --> 00:27:28.260 makes from an economic point of view 134 00:27:28.260 --> 00:27:32.340 a fundamental difference. 135 00:27:32.340 --> 00:27:43.260 Let me just illustrate that by using a very elementary example. 136 00:27:43.260 --> 00:27:51.300 I can give you a house and say, you are the owner of the house. 137 00:27:51.300 --> 00:27:55.620 You can sell this house if you want. 138 00:27:55.620 --> 00:28:01.540 You can pass it on to future generations 139 00:28:01.540 --> 00:28:07.460 If you want, you can sell part of it. 140 00:28:07.460 --> 00:28:12.180 You have the right to collect rent from it and so forth. 141 00:28:12.180 --> 00:28:17.380 And on the other hand, I give you a house and say, 142 00:28:17.380 --> 00:28:20.780 you are not the owner of the house. 143 00:28:20.780 --> 00:28:23.460 You cannot sell it. 144 00:28:23.460 --> 00:28:28.420 You cannot determine who will be the successor. 145 00:28:28.420 --> 00:28:36.460 can also not sell part of it, but you can use it to your own advantage for a certain 146 00:28:36.460 --> 00:28:44.400 period of time, that is the rent that you can get out of this house, you are free to 147 00:28:44.400 --> 00:28:50.540 do with this rental income whatever you want. 148 00:28:50.540 --> 00:28:58.100 Now ask yourself whether or not these two people will treat the house in the same way 149 00:28:58.100 --> 00:29:00.100 or Differently? 150 00:29:00.100 --> 00:29:03.820 And the answer is obvious. 151 00:29:03.820 --> 00:29:06.620 There will be a fundamental difference in the way 152 00:29:06.620 --> 00:29:11.980 that the house will be treated by these two individuals. 153 00:29:11.980 --> 00:29:16.740 The incentive for the owner is, yes, of course, 154 00:29:16.740 --> 00:29:20.500 I try to get as high a rental income as possible out 155 00:29:20.500 --> 00:29:21.580 of the house. 156 00:29:21.580 --> 00:29:26.500 But at the same time, I always take into consideration 157 00:29:26.500 --> 00:29:33.380 What happens to the value of the capital stock of which I am the owner? 158 00:29:33.380 --> 00:29:36.340 After all, I can sell the house. 159 00:29:36.340 --> 00:29:42.340 After all, I can pass the house on to future generations. 160 00:29:42.340 --> 00:29:46.980 And it is possible, for instance, to increase your rental income 161 00:29:46.980 --> 00:29:53.660 from your house in such a way that the value of the capital 162 00:29:53.660 --> 00:30:04.040 stock drops or falls more than my increase in rental income that I get. 163 00:30:04.040 --> 00:30:10.780 An owner would try to prevent something like this from happening. 164 00:30:10.780 --> 00:30:19.620 And if he doesn't do this, then he will be punished insofar as he will see that the value 165 00:30:19.620 --> 00:30:25.620 A new office property will fall in the property market. 166 00:30:25.620 --> 00:30:30.620 A caretaker's incentives are entirely different. 167 00:30:30.620 --> 00:30:35.620 A caretaker only owns the rental income. 168 00:30:35.620 --> 00:30:38.620 He does not own the capital stock. 169 00:30:38.620 --> 00:30:40.620 So what is his incentive? 170 00:30:40.620 --> 00:30:45.620 His incentive is to maximize my rental income 171 00:30:45.620 --> 00:30:55.340 regardless of what the repercussions are with respect to the value of the capital stock. 172 00:30:55.340 --> 00:31:04.980 Let's say I put, instead of one or two families in my house and collect rent from two families, 173 00:31:04.980 --> 00:31:17.300 I can also put 1,000 guest workers into my house and have one bed over the other, thereby 174 00:31:17.300 --> 00:31:26.380 I will definitely increase my rental income, but it is also easy to see what the price 175 00:31:26.380 --> 00:31:31.200 of this type of usage will be. 176 00:31:31.200 --> 00:31:39.440 is there will be a deterioration of the property taking place very quickly, the toilets will 177 00:31:39.440 --> 00:31:45.760 be plugged immediately, the carpet will be, the carpets will be dirty, there will be graffiti 178 00:31:45.760 --> 00:31:51.200 on the walls and all the rest of it and people come home drunk and smash the walls and who 179 00:31:51.200 --> 00:31:54.200 and who knows what. 180 00:31:54.200 --> 00:32:02.200 Again, if you know, I will be in charge of this house for four weeks. 181 00:32:02.200 --> 00:32:09.200 And the losses, so to speak, in terms of the capital value are not my losses 182 00:32:09.200 --> 00:32:13.200 because I don't own the thing in the first place. 183 00:32:13.200 --> 00:32:18.200 Your incentive will be to maximize my current income 184 00:32:18.200 --> 00:32:38.200 can be achieved by using this capital, even if it is the case that at the end of these four years, so to speak, the capital stock has been run to the ground and has completely been depleted. 185 00:32:38.200 --> 00:32:51.920 Now, on a large scale, so to speak, this is a difference between democratic caretakers 186 00:32:51.920 --> 00:33:03.200 of countries and kings as caretakers, as owners of countries. 187 00:33:03.200 --> 00:33:12.200 Ludwig Caretaker's incentive is, I have to loot the country as fast as possible, because 188 00:33:12.200 --> 00:33:19.120 if I don't loot it as fast as possible, then I will no longer be in power. 189 00:33:19.120 --> 00:33:28.320 I can make many, many friends if I just impose tremendous amount of taxes right now, and 190 00:33:28.320 --> 00:33:33.600 And what happens after I'm out of power, who cares? 191 00:33:33.600 --> 00:33:39.920 Whereas kings, at least by and large, had, of course, an interest in preserving the value 192 00:33:39.920 --> 00:33:54.320 of their dynastic property and pass on a valuable piece of property to future generations. 193 00:33:54.320 --> 00:34:04.960 No, I'm not saying that every king will, so to speak, automatically be equally good in 194 00:34:04.960 --> 00:34:14.200 terms of preserving his capital values, nor do I say that every single democratic care 195 00:34:14.200 --> 00:34:20.520 taker will precisely follow the scenario that I developed. 196 00:34:20.520 --> 00:34:27.040 But what I'm saying is the incentive structure is so different that we can expect that by 197 00:34:27.040 --> 00:34:34.040 and large, on the average, kings will have, so to speak, a longer planning horizon and 198 00:34:34.040 --> 00:34:39.940 a greater interest in the preservation of the capital stock, and democratic rulers by 199 00:34:39.940 --> 00:34:47.600 and large have a far smaller interest in the preservation of the capital stock and a far 200 00:34:47.600 --> 00:35:02.600 are greater interest in the current consumption of resources that you can press out of the existing capital stock. 201 00:35:02.600 --> 00:35:12.600 So the exploitation of a king is long run exploitation, foresighted exploitation, calculated exploitation. 202 00:35:12.600 --> 00:35:24.600 The exploitation of a democratic caretaker is short-run exploitation, non-calculating exploitation and so forth. 203 00:35:24.600 --> 00:35:32.600 Let me just illustrate this by looking just at three dimensions here. 204 00:35:32.600 --> 00:35:50.600 The subject of taxation, for a king, of course, he wants to tax, that's no question, everybody is tempted to do this, if you have the right to tax, of course you like to tax. 205 00:35:50.600 --> 00:36:09.600 But what he will bring into perspective is, if I tax too much right now, productivity of the population might go down in the long run, and I will be in the long run in power also. 206 00:36:09.600 --> 00:36:25.600 So he will more likely engage in moderate amount of taxation, always keeping in mind the disincentive to productive people that taxation implies. 207 00:36:25.600 --> 00:36:32.600 Compare this with a caretaker who is just in charge for a certain period of time. 208 00:36:32.600 --> 00:36:57.600 Again, for him, the fact that in the long run, productivity will decline if he currently engages in massive amount of taxation is a far lesser concern than it would be for a king, because after all, in the more distant future, he will likely not be in power. 209 00:36:57.600 --> 00:37:06.440 in Power, he is far more present oriented in this regard and discounts the fact that 210 00:37:06.440 --> 00:37:13.200 high taxation means a reduction in productivity on the part of the subject population to a 211 00:37:13.200 --> 00:37:18.240 greater extent than a king would do. 212 00:37:18.240 --> 00:37:45.240 If we look at the subject of debt, of state debt, a king is of course also inclined to incur debt, and they all did, especially for war finance and so forth. 213 00:37:45.240 --> 00:38:01.480 But kings typically, in order to get credit, had to pledge certain things as securities. 214 00:38:01.480 --> 00:38:10.920 And in addition, though that was somewhat disputed, there was always the possibility 215 00:38:10.920 --> 00:38:19.360 that the future generations were held responsible for the debt incurred by their own father 216 00:38:19.360 --> 00:38:22.320 or mother. 217 00:38:22.320 --> 00:38:31.520 That was not in all cases carried through, but it was hanging as a Damocles sword above 218 00:38:31.520 --> 00:38:42.320 of the head of a king that maybe the next generation is expected to pay off my debt. 219 00:38:42.320 --> 00:38:51.280 And again, he knows, of course, if his debt load is too high, this again has long run 220 00:38:51.280 --> 00:38:59.360 negative repercussions on savings rates and so forth, and he tries to avoid these long 221 00:38:59.360 --> 00:39:11.360 to a certain extent at least. Now consider a public caretaker and his attitude toward government debt. 222 00:39:11.360 --> 00:39:24.360 First of all, nobody of these people ever expects that any of them will be held personally responsible for the debt to be repaid. 223 00:39:24.360 --> 00:39:51.360 Look, Ronald Reagan, who indebted the United States more so than anybody before him, and now our beloved Bush Warrior, who again indebts this country to a tremendous amount, they do not, poor Reagan is not indebted as present, 224 00:39:51.360 --> 00:40:00.360 Nor will Bush have to fear that he will be jailed if he doesn't repay the debt. 225 00:40:00.360 --> 00:40:11.360 They just take up as much debt as they can and say some future suckers will have to pay for this. 226 00:40:11.360 --> 00:40:18.360 In addition, of course, they do not give any securities for it. 227 00:40:18.360 --> 00:40:44.360 That is, whereas major lenders to kings insisted, of course, but you see if you don't repay I get this castle or that castle or this little piece of land or that piece of land from you, there are no pledges of any securities whatsoever. 228 00:40:44.360 --> 00:41:03.360 If the government defaults on their debt, none of you are entitled to take over whatever the Grand Canyon or some place like this, so no security whatsoever. 229 00:41:03.360 --> 00:41:23.360 And again, you can, of course, imagine that the tendency of democratic governments to run up debts is far more pronounced than it would be under monarchical rule. 230 00:41:23.360 --> 00:41:29.360 The same applies to inflation. 231 00:41:29.360 --> 00:41:35.360 Yes, of course, kings loved inflation also, coin clipping and so forth. 232 00:41:35.360 --> 00:41:38.360 It enriches you. 233 00:41:38.360 --> 00:41:44.360 But, again, there are two concerns that you have. 234 00:41:44.360 --> 00:41:48.360 On the one hand, by inflating you increase your current income. 235 00:41:48.360 --> 00:42:02.360 On the other hand, you will get, of course, in future taxes, inflated money back for people who have a very short-run perspective. 236 00:42:02.360 --> 00:42:09.360 It is just what counts far more is the current advantage that you have in terms of inflating, 237 00:42:09.360 --> 00:42:18.360 The theory is that you can print the money and then buy yourself a Mercedes and a BMW or whatever you want. 238 00:42:18.360 --> 00:42:24.360 And then you realize, of course, how many friends you have that you were not even aware of, 239 00:42:24.360 --> 00:42:28.360 who also just realized that, man, these guys have some magic wand. 240 00:42:28.360 --> 00:42:33.360 They can just create wealth just by printing up paper money. 241 00:42:33.360 --> 00:42:48.360 Yes, of course you get inflated paper money in the form of future taxes back too, but again in the future you will not be there, you will not be the recipient of that inflated money that comes back in the form of taxes. 242 00:42:48.360 --> 00:42:58.360 So your attitude towards inflation is more generous, so to speak. You like inflation more. 243 00:42:58.360 --> 00:43:10.360 Again, for all of these predictions that I make, there exists of course ample empirical evidence that this is indeed the case. 244 00:43:10.360 --> 00:43:27.360 Let me just emphasize for instance that while kings tried several times to substitute paper monies for commodity monies such as gold and silver, 245 00:43:27.360 --> 00:43:41.360 However, all of these attempts were relatively short-lived attempts, and they had to go back to a gold or silver standard. 246 00:43:41.360 --> 00:43:51.360 Whereas it is typical for the democratic world, which begins essentially after World War I, 247 00:43:51.360 --> 00:44:20.360 And during this period, for the first time in all of mankind, it happens that commodity monies disappear entirely on a worldwide scale and wherever you go and walk, all you have is paper money and of course paper money inflation on a scale that was unheard of in previous centuries. 248 00:44:21.360 --> 00:44:35.360 There is also a different attitude among kings as compared to democratic caretakers when it comes to the redistribution of income. 249 00:44:35.360 --> 00:44:49.360 Both can take other people's property, but the king, if he takes the property of private individuals, runs an ideological danger. 250 00:44:49.360 --> 00:44:59.360 That is, he himself, vis-a-vis other kings, considers himself also to be a private property owner. 251 00:44:59.360 --> 00:45:08.360 He does not want to undermine the legitimacy of private property, because if he does, 252 00:45:08.360 --> 00:45:15.360 then of course his competitors, King George or King Henry or whatever, King Fritz, 253 00:45:15.360 --> 00:45:20.360 They might then be interested also in taking his property. 254 00:45:20.360 --> 00:45:32.360 So he is very much interested in maintaining the legitimacy of the institution of private property as such. 255 00:45:32.360 --> 00:45:46.360 So his forms of redistribution are rarely redistributions, so to speak, from the rich to groups of poor, 256 00:45:46.360 --> 00:45:55.360 but the redistribution activities through which he tries to achieve popularity and so forth 257 00:45:55.360 --> 00:46:09.360 are typically privileges, benefits that he gives to particular individuals and mostly to individuals who have achieved something. 258 00:46:09.360 --> 00:46:15.360 Just take the Habsburgs as an example. 259 00:46:15.360 --> 00:46:28.360 They ennobled people who were enemies of monarchies, say they usually ennobled other big ruffians like they were ruffians. 260 00:46:28.360 --> 00:46:33.360 But that is not really true, or in most of the cases at least it is not true. 261 00:46:33.360 --> 00:46:39.360 They ennobled in most cases indeed people who had achieved something. 262 00:46:39.360 --> 00:46:49.360 That's why the family of Ludwig von Mises was ennobled despite the fact, for instance, that he was Jewish. 263 00:46:49.360 --> 00:47:02.360 So they had also relatively little racial hatreds because all the noble houses were somehow interconnected 264 00:47:02.360 --> 00:47:14.360 and there was sort of a far more international orientation among the kings than about democratic caretakers who tend to be nationalistic jerks. 265 00:47:14.360 --> 00:47:24.360 The redistribution under democratic conditions is different. 266 00:47:24.360 --> 00:47:28.360 It's like you have to be re-elected all the time. 267 00:47:28.360 --> 00:47:37.360 And you have to be re-elected by masses, and the masses always consist of have-nots. 268 00:47:37.360 --> 00:47:44.360 There exists always more have-nots than haves, in every dimension of having that is worth having. 269 00:47:44.360 --> 00:47:51.360 That is, in terms of money, in terms of beauty, in terms of smarts, whatever it is, 270 00:47:51.360 --> 00:47:57.360 there always exists more dummies than smarts, there always exists more poor than rich and so forth. 271 00:47:57.360 --> 00:48:07.360 So what the strategy under democratic systems is of course the redistribution of income. 272 00:48:07.360 --> 00:48:20.360 First of all you don't have to legitimize this anymore because after all you are now operating no longer as somebody who defends the principle of private property. 273 00:48:20.360 --> 00:48:29.360 You are in favor of public property and consider public property to be superior, more important than private property. 274 00:48:29.360 --> 00:48:35.360 So taking private property is no ideological problem for you. 275 00:48:35.360 --> 00:48:47.360 And then, of course, you distribute it not to individuals but you distribute it to masses and by and large to the masses of have-nots. 276 00:48:47.360 --> 00:49:07.360 Then let me come to the argument that is frequently brought up in favor of democracy, that is, shouldn't we as free marketeers be in favor of free marketeers? 277 00:49:07.360 --> 00:49:36.360 democracy. That is, shouldn't we as free marketeers be in favor of free entry? After all, this is what we learn in economics. Monopoly is bad from the point of view of consumers because there is no longer free entry into every line of production. 278 00:49:37.360 --> 00:49:52.360 And if there is no longer free entry into every line of production, then the incentive of a producer to produce at the lowest possible cost is no longer in existence. 279 00:49:52.360 --> 00:50:03.360 Imagine this. If there exists free entry in a free market, everybody can become a car manufacturer, for instance. 280 00:50:03.360 --> 00:50:05.120 for instance. 281 00:50:05.120 --> 00:50:08.960 Then if I produce a car at cost that 282 00:50:08.960 --> 00:50:13.680 are higher than the minimum cost of producing this car, 283 00:50:13.680 --> 00:50:17.200 I basically extend an invitation to somebody else 284 00:50:17.200 --> 00:50:20.320 to go into competition against me, 285 00:50:20.320 --> 00:50:24.080 produce the same product at minimum cost, 286 00:50:24.080 --> 00:50:28.320 lower cost than my cost, and then be able, of course, 287 00:50:28.320 --> 00:50:31.280 to charge a lower price for the product 288 00:50:31.280 --> 00:50:34.800 and thereby drive me out of the market. 289 00:50:34.800 --> 00:50:39.440 On the other hand, if we have restrictions to free entry, 290 00:50:39.440 --> 00:50:44.720 then this pressure to produce at the lowest possible cost 291 00:50:44.720 --> 00:50:46.880 does no longer exist. 292 00:50:46.880 --> 00:50:50.480 This is, so to speak, the case that we make normally 293 00:50:50.480 --> 00:50:54.360 for why we are in favor of competition, 294 00:50:54.360 --> 00:50:58.700 meaning free entry into every line of production, 295 00:50:58.700 --> 00:51:11.700 and why we are against monopoly, meaning entrance into certain lines of production is either prohibited or obstacles are placed in the way of free entry and so forth. 296 00:51:11.700 --> 00:51:20.700 So the argument of some advocates of democracy goes then, yeah, isn't the same thing true here. 297 00:51:20.700 --> 00:51:37.700 The king that is restricted entry. And democracy, all of a sudden, entry is open. And isn't this a big advantage of democracy over monarchy? 298 00:51:37.700 --> 00:51:42.700 Now, the problem with this argument is this. 299 00:51:42.700 --> 00:51:58.700 The argument against monopoly in favor of competition that I presented before only holds insofar as we are considering the production of goods. 300 00:51:58.700 --> 00:52:06.700 The argument, however, does not hold if we consider the production of bads. 301 00:52:06.700 --> 00:52:11.700 And this is precisely what governments do. 302 00:52:11.700 --> 00:52:19.700 After all, those people who are taxed do not pay a price for being taxed. 303 00:52:19.700 --> 00:52:24.700 That is to say, they are not considering being taxed to be a good. 304 00:52:24.700 --> 00:52:42.700 Those people who are through legislative action stripped of their property or robbed of part of their property do not consider that to be a good that happens to them. They consider that to be a bad. 305 00:52:42.700 --> 00:53:00.700 Those people who see that the purchasing power of their money goes down as a result of paper money printing do not consider this the production of goods, they do consider that as a production of something bad. 306 00:53:00.700 --> 00:53:08.700 Now, do we want to have competition in the area of the production of bads? 307 00:53:08.700 --> 00:53:21.700 And the answer should be obvious. No. In the production of bats, we want to have at least as little competition as there can possibly be. 308 00:53:21.700 --> 00:53:29.700 We do not want to have competition who would be the most efficient commandant of a gas chamber. 309 00:53:29.700 --> 00:53:36.700 We would not want to have competition who would be the best whipper of slaves. 310 00:53:36.700 --> 00:53:48.200 There we would be perfectly happy if that slave whipping or gas chamber commandante occupation would be very restricted 311 00:53:48.200 --> 00:54:00.200 and we would be quite happy if very incompetent people exercise this power rather than looking for people who are particularly good at this. 312 00:54:00.200 --> 00:54:20.200 Now, continuing this argument, you might say, kings can of course, because they get into their position by accident of birth, can of course be evil guys. 313 00:54:20.200 --> 00:54:22.200 No question about it. 314 00:54:22.200 --> 00:54:51.200 But, if they are evil guys and pose a danger that through their activity, the possession of their dynasty, after all, they are head of a family, is threatened, then what typically happens is, of course, that one of their close relatives 315 00:54:51.200 --> 00:55:02.200 will be designated to make short shrift with this guy and chop off his head. 316 00:55:02.200 --> 00:55:17.200 That is, we have a way of getting rid of these people and don't even have to worry too much about the general public taking care of this problem. 317 00:55:17.200 --> 00:55:25.200 It is within the family of those weird kings themselves where they have the greatest incentive 318 00:55:25.200 --> 00:55:33.880 either to surround these weirdos with advisors who curtail their evil desires or if this 319 00:55:33.880 --> 00:55:44.440 doesn't work then have somebody hired out of their own family to kill this guy off. 320 00:55:44.440 --> 00:55:53.760 On the other hand, if you come into the position by accident, it is also possible that these 321 00:55:53.760 --> 00:56:02.960 people can be nice and decent people, like nice uncles, so to speak. 322 00:56:02.960 --> 00:56:08.960 They do not have to worry about being re-elected and so forth. 323 00:56:08.960 --> 00:56:18.960 They have been by and large trained for a long time to be the future king or queen and take care of the country. 324 00:56:18.960 --> 00:56:25.960 And believe me, I have met some members of royal houses. 325 00:56:25.960 --> 00:56:35.960 The upbringing of those people on the average tends to be an upbringing that most people would not like to suffer. 326 00:56:35.960 --> 00:56:49.960 That is to say, there is far more demanded of them in terms of decent good behavior and so forth than of the normal run-of-the-mill type people. 327 00:56:49.960 --> 00:56:58.960 I'm glad that I'm not one of the offsprings of a royal house. 328 00:56:58.960 --> 00:57:03.960 There is in most of these places relatively little fun in your life. 329 00:57:03.960 --> 00:57:13.160 In those monarchical families that have been deposed, they have become of course frequently playboys. 330 00:57:13.160 --> 00:57:23.960 That's true, because there is of course no preparation for anything anymore, they just have affairs and gamble and do this and that. 331 00:57:23.960 --> 00:57:29.760 But in those places where there is still the expectation that they will get into the position, 332 00:57:29.760 --> 00:57:34.760 I tell you, there is discipline that you have never seen in your own house before. 333 00:57:34.760 --> 00:57:42.760 On the other hand, look at democratic rulers, how they get to power. 334 00:57:42.760 --> 00:57:44.760 They have to be elected. 335 00:57:44.760 --> 00:57:53.760 And there it should be perfectly clear that under this condition, that is, with free entry, 336 00:57:53.760 --> 00:57:57.760 everyone can become president, senator, whatsoever. 337 00:57:57.760 --> 00:58:05.760 And these people are in the business of doing bad things, being capable of doing bad things. 338 00:58:05.760 --> 00:58:11.760 We have sort of a competition. Who is the smartest bad guy? 339 00:58:11.760 --> 00:58:21.760 Who is the most demagogic, best demagogic talent? 340 00:58:21.760 --> 00:58:28.760 who is a magnificent briber, liar, cheater and all the rest of it. 341 00:58:28.760 --> 00:58:33.760 Under democratic conditions, especially on the central level, 342 00:58:33.760 --> 00:58:42.760 it is almost impossible that a decent person will ever be elected to a higher rank. 343 00:58:42.760 --> 00:58:46.760 This might not be the case in a small village. 344 00:58:46.760 --> 00:58:52.760 In a small village there are still some sort of social constraints. 345 00:58:52.760 --> 00:59:03.760 The biggest, smoothest liar and so forth might not win an election in a village of 100 people where everybody knows what kind of jerk he is. 346 00:59:03.760 --> 00:59:10.760 But go to higher levels, state level, federal level and so forth, 347 00:59:10.760 --> 00:59:32.760 It is almost assured that a person who, out of conviction, doesn't lie, who says we should of course not rip off the poor, the rich, in order to give to the poor, but we should protect private property rights under all circumstances. 348 00:59:32.760 --> 01:00:00.760 Do you think part of the line comes from the simple scale, like a large scale that you're more of a liar because you're convincing people about things that you couldn't possibly do? 349 01:00:02.760 --> 01:00:06.760 The scale plays a tremendous role in it. 350 01:00:06.760 --> 01:00:16.760 Because of this, by the way, in history of political thought, you find practically no one who advocated democracy. 351 01:00:16.760 --> 01:00:22.760 Democracy was always considered to be a contemptible political system. 352 01:00:22.760 --> 01:00:32.760 The only few who advocated it, let's say like Rousseau or so, have only considered to be democracy possible in small places, 353 01:00:32.760 --> 01:00:41.760 where it is precisely social control, knowing what type of people these people are, 354 01:00:41.760 --> 01:00:49.760 and where it is far more difficult to advocate, so to speak, stealing, robbing, taxing to the hilt, 355 01:00:49.760 --> 01:01:10.760 of the Hill, people that live next door to you, of whom you know that they acquired their property in perfectly reasonable way, and that they were, that they deserve to own what they own, and it was their own ambition and energy that were responsible to have this nicer house. 356 01:01:10.760 --> 01:01:15.400 and then meeting him on the street and saying, you know, I know that you are a perfectly 357 01:01:15.400 --> 01:01:21.240 honest man and never betrayed anybody, but nonetheless, I vote in favor of your house 358 01:01:21.240 --> 01:01:22.960 should be taken away. 359 01:01:22.960 --> 01:01:29.280 That's difficult to do, but if you have these large scales, you don't know who's proper 360 01:01:29.280 --> 01:01:30.280 to you. 361 01:01:30.280 --> 01:01:31.280 You rip off. 362 01:01:31.280 --> 01:01:32.280 You never meet these people. 363 01:01:32.280 --> 01:01:39.960 It's completely anonymous, and of course, as more anonymous it is, the lower are the 364 01:01:39.960 --> 01:01:59.960 And the inhibitions that you have against engaging in these types of immoral activities, activities that on a small scale, you would not want to look in the mirror yourself and see yourself for what you have advocated, but on a big scale, no problem whatsoever. 365 01:01:59.960 --> 01:02:29.960 In quest for an a priori to apply to like the spread or this growth in support of democracy, can we say that it kind of stems from the dis-utility of labor from the standpoint that basically people see these redistributions and you know I guess well from the same point that we see these artificial booms you know given what you had mentioned about you know control of the money supply and what not that it's kind of it all goes back to this sort of 366 01:02:29.960 --> 01:02:34.960 Is human tendency to have a disability of labor, as Rothbard would say? 367 01:02:59.960 --> 01:03:04.960 You can't just simply grab the things of other people. 368 01:03:04.960 --> 01:03:12.960 You find a quick fix for everything, rather than working out a solid solution to a problem. 369 01:03:12.960 --> 01:03:14.960 So I'm not quite sure if I understand. 370 01:03:14.960 --> 01:03:23.960 You might want to address that question afterwards again in private. 371 01:03:23.960 --> 01:03:29.960 Let me just make a few more remarks. 372 01:03:29.960 --> 01:03:37.960 There is also far more resistance against raising taxes if you have monarchs in place. 373 01:03:37.960 --> 01:03:52.960 Because everybody sees this is a monarch, I cannot be the monarch, I'm just a regular guy. 374 01:03:52.960 --> 01:03:57.960 And why should he tax me? 375 01:03:57.960 --> 01:04:06.960 So there will be resistance against being taxed because you realize you will never benefit from this sort of stuff. 376 01:04:06.960 --> 01:04:15.960 On the other hand, as soon as everybody has a chance to become president, senator, whatever it is, 377 01:04:15.960 --> 01:04:21.960 you do not like if you are taxed as long as you are, so to speak, outside of government. 378 01:04:21.960 --> 01:04:41.960 But there is a consolation price. The consolation price is maybe at one point I'm at the other end of all of this, and that makes me put up with the taxation more easily than I otherwise would. 379 01:04:41.960 --> 01:04:52.960 Lastly, another important argument is this. Again, recall, kings that overdo it, they quickly lose their heads. 380 01:04:52.960 --> 01:05:01.960 Democrats, even if they are far more evil than kings ever would be, 381 01:05:01.960 --> 01:05:09.960 because you think, maybe in four years we can get rid of this SOB, will rarely be killed. 382 01:05:09.960 --> 01:05:25.960 and imagine how nice it would be if this institution of regicide would also be expanded to democratic side or something of that nature. 383 01:05:25.960 --> 01:05:35.960 Let me just end on some offside remarks. 384 01:05:35.960 --> 01:05:50.960 The first one has something to do with the fact that, or explains somehow how I developed these ideas about monarchy. 385 01:05:50.960 --> 01:05:57.960 The person who made me interested in the subject in the first place was Eric von Kühnelt-Ledin, 386 01:05:57.960 --> 01:06:07.880 Jean, with whom I was somewhat frenzied, was of course far older than I am, before that 387 01:06:07.880 --> 01:06:14.080 I, like most people, I always thought, monarchy, what an idiotic thing to say. 388 01:06:14.080 --> 01:06:17.760 How can you even talk about this subject? 389 01:06:17.760 --> 01:06:21.400 So he convinced me that that was something worthwhile thinking about. 390 01:06:21.400 --> 01:06:30.800 I think he did not have nearly as convincing arguments as I develop and I'm not boasting 391 01:06:30.800 --> 01:06:33.080 because he himself admitted that. 392 01:06:33.080 --> 01:06:39.760 I mean he has written, before he died he wrote still a few articles and in every one he quotes 393 01:06:39.760 --> 01:06:44.560 me and says that I have of course developed this stuff far further than he ever thought 394 01:06:44.560 --> 01:06:45.560 possible. 395 01:06:45.560 --> 01:07:15.560 so it is not that I just boast about this. The idea that I stumbled across first from which I then developed this was having observed that in the former Soviet Union, in contrast to most places on earth, in the last few decades, life expectancy 396 01:07:15.560 --> 01:07:41.560 fell. And having traveled extensively in the East Block, because my parents came from East Germany, were expropriated there, and I had relatives there and visited these places, I always noticed also the bad health conditions of these people, despite the fact that they had, of course, free health care. 397 01:07:41.560 --> 01:07:49.560 They had everything was free, except nothing was ever available of these allegedly free things. 398 01:07:49.560 --> 01:08:00.560 And I asked myself what could explain this, that life expectancy falls everywhere else, it seems to be going up. 399 01:08:00.560 --> 01:08:10.560 And another striking observation was the massive amount of people that the Soviet Union killed 400 01:08:10.560 --> 01:08:16.340 and Work to Death, even during peacetime. 401 01:08:16.340 --> 01:08:20.200 And then it came upon me as actually a very simple 402 01:08:20.200 --> 01:08:22.480 explanation for this. 403 01:08:22.480 --> 01:08:25.320 And the explanation is simply this. 404 01:08:25.320 --> 01:08:28.600 There exists two types of slavery. 405 01:08:28.600 --> 01:08:31.920 There exists the old run-of-the-mill type slavery 406 01:08:31.920 --> 01:08:35.680 that we are familiar with in the United States. 407 01:08:35.680 --> 01:08:39.920 You Americans are familiar with that and guilty for it. 408 01:08:39.920 --> 01:08:51.680 So I, of course, not...Germans have done other things, but not that. 409 01:08:51.680 --> 01:08:56.840 So well, you have private ownership in slaves. 410 01:08:56.840 --> 01:09:04.680 And in the Soviet Union, and in these East Bloc countries, you also had a form of slavery. 411 01:09:04.680 --> 01:09:07.720 Because slavery is characterized by two marks. 412 01:09:07.720 --> 01:09:15.880 On the one hand, you cannot run away. If you run away, they catch you, kill you, and whatever. 413 01:09:15.880 --> 01:09:21.640 And the second characteristic, Marcus, they can assign you to work. No, this they could 414 01:09:21.640 --> 01:09:25.240 do in the Soviet Union. You could not run away. They would shoot you dead if you tried 415 01:09:25.240 --> 01:09:31.240 to do this. And of course, you could not hang around. If you were just hanging around, they 416 01:09:31.240 --> 01:09:44.240 would take you and put you to work at some place, but the slaves in the Soviet Union were, of course, not privately owned slaves. 417 01:09:44.240 --> 01:09:53.240 That is, Lenin and Stalin, Gorbachev and whatever, they did not, could not sell these people in the slave market 418 01:09:53.240 --> 01:10:04.240 They didn't pocket the money or rent them out for a few hours and then finance their beers from the rental money that they got and so forth. 419 01:10:04.240 --> 01:10:12.240 No, they were just public owners, public caretakers of these slaves. 420 01:10:12.240 --> 01:10:21.240 They could exploit them, so to speak, to the hilt, but they did not own the capital in them. 421 01:10:21.240 --> 01:10:50.240 Once they did not own the person, and once you realize this, then it is perfectly clear that a private slave owner who can sell the slave in the slave market, who can rent it out, who can pass it on to his son, will of course by and large treat his slave far more humanely than somebody who is a public slave owner. 422 01:10:51.240 --> 01:11:00.240 Because the private slave owner of course sees if he mistreats the slave, the value of the slave will fall. 423 01:11:00.240 --> 01:11:06.240 What private slave owner would just for the joy of it kill the slave? 424 01:11:06.240 --> 01:11:16.240 The answer is that it's a very rare event, just like a farmer doesn't kill his horses and cows just for the fun of it. 425 01:11:16.240 --> 01:11:28.240 After all, they represent his capital goods. But in the Soviet Union, in those places where you had public slavery, this is precisely what happened. 426 01:11:28.240 --> 01:11:43.240 People did not take care of their slaves. Life expectancy fell. If these slaves dropped like the flies, no problem, you just got new supply just around the corner. 427 01:11:43.240 --> 01:12:13.240 corner. So if you would have the choice, so to speak, you must be a slave. You can't be a free man. What would be your choice? Would you want to be a privately owned slave or would you want to be a gulag slave? And I think the answer is perfectly clear. I rather want to be a privately owned slave than a gulag 428 01:12:13.240 --> 01:12:34.240 If you cannot be a free man, if you cannot have a natural order that respects private property, but you have to be ripped off by somebody, 429 01:12:34.240 --> 01:12:47.240 Would you rather want to be ripped off by some dynasty of kings or by some randomly elected caretakers? 430 01:12:47.240 --> 01:12:54.240 And I think the answer to this question is also relatively clear. 431 01:12:54.240 --> 01:13:23.240 And the last thing I want to do is, again, give you an example that I always also give to my students and based on their reaction, always find very instructive, explaining, so to speak, the effects of democracy. 432 01:13:23.240 --> 01:13:33.240 You know that during the 19th century, the right to vote was extremely restricted. 433 01:13:33.240 --> 01:13:39.240 In many countries it didn't exist at all, early on in the 19th century. 434 01:13:39.240 --> 01:13:44.240 And then it was gradually expanded, successively. 435 01:13:44.240 --> 01:13:49.240 First, of course, people only thought about male franchise. 436 01:13:49.240 --> 01:14:03.240 Females were considered to be just appendixes of men, voting just like their husband does. Unfortunately, they don't do that anymore either. 437 01:14:03.240 --> 01:14:07.240 Do you mean not allowing the voter or vote like the husband? 438 01:14:07.240 --> 01:14:35.240 and vote like the husband and interestingly the country for instance that introduced the male franchise first gave almost full male franchise happened to be the country that gave the right to vote to women last, that was Switzerland and since that time Switzerland is also in very iffy conditions. 439 01:14:35.240 --> 01:14:44.240 I mean, they were already in great danger before, but the danger has dramatically increased since that time. 440 01:14:44.240 --> 01:14:49.240 But as you realize, of course, I have nothing against women at all. 441 01:14:49.240 --> 01:14:56.240 I'm a lover of women. I'm just in favor of nobody should have the right to vote. 442 01:14:56.240 --> 01:15:04.240 But in any case, in the 19th century, gradually the franchise was expanded 443 01:15:04.240 --> 01:15:23.240 And parallel to the expansion of the franchise, the classical liberal movement died out and social democratic and socialist parties came to power and even those parties who called themselves liberal are no longer liberal in the previous classical sense. 444 01:15:23.240 --> 01:15:27.240 They have become social liberal parties. 445 01:15:27.240 --> 01:15:42.240 In order to illustrate this tendency to make people understand this as almost a necessary consequence of expanding the franchise, I always use two examples. 446 01:15:42.240 --> 01:15:52.240 The first example is, imagine we have a world democracy, one man, one woman, one vote on a worldwide scale. 447 01:15:52.240 --> 01:16:02.240 So what will the result of that be? There will be an Indian-Chinese coalition government simply by virtue of numbers. 448 01:16:02.240 --> 01:16:12.240 What will this Indian-Chinese coalition government do in order to be re-elected in the next round? 449 01:16:12.240 --> 01:16:25.240 They will of course initiate a massive redistribution, income and wealth redistribution program from the United States and Western Europe to those regions. 450 01:16:25.240 --> 01:16:30.240 Does anybody have the slightest doubt that that will be the result? 451 01:16:30.240 --> 01:16:37.240 I have not found any student in my classes who ever had the slightest doubt that that is what is going to happen. 452 01:16:37.240 --> 01:16:46.240 And then you point out, look, what do you think happened when they expanded the franchise in your own country? 453 01:16:46.240 --> 01:16:51.240 And then they begin to realize, oh, that probably exactly the same thing happened there too. 454 01:16:51.240 --> 01:16:56.240 Maybe not as drastically because the population was more homogeneous, 455 01:16:56.240 --> 01:17:04.240 the difference between income levels were not as pronounced as they are now between India and the United States or places like this. 456 01:17:04.240 --> 01:17:07.640 Of course the same thing has happened there. 457 01:17:07.640 --> 01:17:18.360 The second example is in the 19th century the age when people could vote was relatively 458 01:17:18.360 --> 01:17:26.180 high and by and large they had also of course property restrictions. 459 01:17:26.180 --> 01:17:28.940 But look just at the age. 460 01:17:28.940 --> 01:17:35.220 So there were many places like Italy or so forth, while the age was 29 years, in a country 461 01:17:35.220 --> 01:17:38.540 with a life expectancy of 45. 462 01:17:38.540 --> 01:17:43.020 So only old men could vote at that place. 463 01:17:43.020 --> 01:17:50.280 That would be nowadays like only people above 75 would be allowed to vote. 464 01:17:50.280 --> 01:17:57.020 And then it was of course gradually reduced to currently 18. 465 01:17:57.020 --> 01:18:24.020 Now, we have to admit that 18 is, of course, a completely arbitrary date. Why not 12? In many places of the world, people can write with 12. In the United States, that is not always clear, but in many places, it is known of people that they are able to write. 466 01:18:24.020 --> 01:18:35.020 Why not 12? Now what would then happen? I would not predict that a 12 year old would then be elected to be president or something like this. 467 01:18:35.020 --> 01:18:49.020 But what you can predict is of course that every political party would on their platform have something about the legitimate concerns and rights of the children. 468 01:18:49.020 --> 01:19:07.020 Just as we are nowadays greatly concerned about the elderly, that we treat them right because we know they have the most time on their hands and tend to go and schlep out to these elections, whereas other people sometimes have to work, can't go. 469 01:19:07.020 --> 01:19:16.020 So we would be greatly concerned about their well-being and what would these platforms then likely contain? 470 01:19:16.020 --> 01:19:40.020 At least one visit to Toys R Us per month, free videos from Blockbuster, as many as you want, at least one square meal at McDonald's or Burger King per day, and a big gulp for every kid at all times. 471 01:19:40.020 --> 01:19:43.020 Okay, with this I end my lecture. Thank you. 472 01:19:53.020 --> 01:19:55.020 I'll take a few questions. 473 01:19:58.020 --> 01:20:08.020 Help me understand why what the framers thought they were putting in place a republic. Why that's such a rotten idea and why it can't happen? 474 01:20:08.020 --> 01:20:22.020 Let me begin this way. All the framers were anti-democrats. There was nobody who was in favor of democracy. 475 01:20:22.020 --> 01:20:33.020 Democracy had a connotation of being, so to speak, a moderate form of communism. I think the most democratic one was Jefferson. 476 01:20:33.020 --> 01:20:40.020 I do not see Jefferson quite as positive as people in the United States see Jefferson because of that. 477 01:20:40.020 --> 01:20:48.020 I also do not see Andrew Jackson quite as positive as many Americans, especially libertarian Americans, 478 01:20:48.020 --> 01:20:56.020 because I think Jackson is the next big step forward towards democracy. 479 01:20:56.020 --> 01:21:17.020 But if you accept the idea of a republic, you have basically accepted the idea that everyone can be president, senator, prime minister, and so forth. 480 01:21:17.020 --> 01:21:25.020 And if you have accepted that idea, then it is very difficult somehow to say, 481 01:21:25.020 --> 01:21:33.020 yeah, but why should not everybody also have some say about who that should be? 482 01:21:33.020 --> 01:21:42.020 So the dam has already been broken and once the dam is broken, then I think it is almost irresistible 483 01:21:42.020 --> 01:21:45.020 that you will also have to accept the democratic principles, 484 01:21:45.020 --> 01:22:09.020 Even though they try to make a distinction between a republic and democracy, but you admit in a way the principle that everyone is equal and can get into the position and this leads you then to one man, one vote, almost inescapably, I think. 485 01:22:09.020 --> 01:22:18.020 Well, our experience would absolutely show that limited government does not work. 486 01:22:18.020 --> 01:22:28.020 Yeah, no, of course, as I explained, you know, once you accept the idea of there is a monopoly judge and the monopoly judge has a right to tax, 487 01:22:28.020 --> 01:22:35.020 then the prediction is the monopoly judge will just pass laws that are in his own favor 488 01:22:35.020 --> 01:22:41.020 and he will always try to increase taxes and in fact work less and less. 489 01:22:41.020 --> 01:22:48.020 That follows simply from the definition of what a state is. 490 01:22:48.020 --> 01:22:54.020 One other little remark which I learned from my friend Kühner-Ledin, 491 01:22:54.020 --> 01:23:00.020 which in some circles also works well as an anti-democratic argument. 492 01:23:00.020 --> 01:23:04.020 In other circles it is just simply laughed off. 493 01:23:04.020 --> 01:23:20.020 But let me try it. So he said, you know, who are the most, two most important figures in, in, for Western civilization? 494 01:23:20.020 --> 01:23:28.020 According to him, we tend to agree, it is Jesus and Socrates. 495 01:23:28.020 --> 01:23:34.020 And then the next question was, who killed Jesus and who killed Socrates? 496 01:23:34.020 --> 01:23:40.020 And the answer is, democracy killed Jesus and democracy killed Socrates. 497 01:23:47.020 --> 01:23:56.020 In the Soviet Union, it seems to me that only the most severely enslaved were in the gulag. 498 01:23:58.020 --> 01:24:15.020 Yes, of course that was, but that difference is somehow as a difference between a house slave and a field slave when it went to look at private slaves, right, not all slaves were even under that system equally well treated. 499 01:24:15.020 --> 01:24:25.020 You would prefer to be a house slave rather than somebody who has to just push the horses and cows around and whatever, pick cotton and who knows what. 500 01:24:25.020 --> 01:24:39.020 So, those people who worked in regular enterprises in the Soviet Union were, of course, the, so to speak, the house slaves, and those who were in the gulag, those were the field slaves. 501 01:24:39.020 --> 01:24:46.020 Even an American slave, you remember you're going with the wind when he says, but Mr. Garland, we're house servants. 502 01:24:46.020 --> 01:25:02.020 I think that's what the run-of-the-mill Soviets said also when they met the Gulag people. 503 01:25:02.020 --> 01:25:31.020 In my classroom of former Soviets, when I would use this example about them being public slaves, and then they'd say, some of them would say we weren't. Then they would get into an argument among themselves about whether they were or not. Because they'd say, well, I could work any place I want, and others would say, well, no, maybe you did, but you had special privilege, and others did not. So, that's... 504 01:25:31.020 --> 01:25:41.020 By and large, you could not freely choose, not even your place of residence in these places. 505 01:25:41.020 --> 01:25:47.020 I mean, people in the East Bloc, of course, they prefer to move to the capital cities 506 01:25:47.020 --> 01:25:52.020 because the capital cities were always somewhat better supplied with consumer goods 507 01:25:52.020 --> 01:25:57.020 because you had foreign diplomats living there and tourists going there, 508 01:25:57.020 --> 01:26:00.020 so they wanted to make the stores look a little bit nicer. 509 01:26:00.020 --> 01:26:11.020 And there was huge numbers of applications to move, whatever, to Berlin or to Prague or to Bratislava or to Belgrade or whatever the capitals were. 510 01:26:11.020 --> 01:26:20.020 And most of these countries had internal passports. You could not just move wherever you wanted. 511 01:26:20.020 --> 01:26:30.380 If you lived in whatever, in Mint score, Irkutsk score, whatever it was, you stayed there. 512 01:26:30.380 --> 01:26:31.380 That was it. 513 01:26:31.380 --> 01:26:39.940 Unless they just decided that now they need somebody here and then they transported you 514 01:26:39.940 --> 01:26:40.940 to a different place. 515 01:26:40.940 --> 01:27:10.940 I wonder if you would just say a word about another argument you raised against democracy, I think in the theory of socialism and capitalism, where you say that democracy can't represent some kind of absolute moral imperative because the person who is committed to the value of democracy would have to admit that if the majority votes to transform the democracy into a monarchy or some sort of totalitarian regime, that itself would be fully consistent with democracy. 516 01:27:10.940 --> 01:27:12.940 and the Democratic Idea. 517 01:27:12.940 --> 01:27:14.940 Right, right. 518 01:27:14.940 --> 01:27:16.940 I don't have to say anything 519 01:27:16.940 --> 01:27:18.940 besides that you are absolutely right. 520 01:27:18.940 --> 01:27:20.940 Yeah. 521 01:27:20.940 --> 01:27:22.940 Last question. 522 01:27:22.940 --> 01:27:24.940 Given a democratic system, 523 01:27:24.940 --> 01:27:26.940 do you think the effect of 524 01:27:26.940 --> 01:27:28.940 term limits on officeholders 525 01:27:28.940 --> 01:27:30.940 raises or lowers the time preference? 526 01:27:30.940 --> 01:27:32.940 I think it 527 01:27:32.940 --> 01:27:34.940 raises the time preference. 528 01:27:34.940 --> 01:27:36.940 Okay. 529 01:27:36.940 --> 01:27:38.940 Thank you so much. 530 01:27:38.940 --> 01:27:40.940 Thank you very much.