WEBVTT

NOTE Free Trade

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I'd like to incorporate some techniques that I use in my own classes.

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And one of them is that we start with a moment of silence to reflect on whatever we'd like to reflect on.

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So could we just have a moment of silence?

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I started doing that because in the last 15 years, I've taught at two Jesuit universities for 10 of those years.

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And I'm not a Catholic, I'm not a Jesuit, I'm not even religious, but I feel I should sort of pay back my hosts in that way.

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And that was one way I thought to do it. And it sort of stuck. So I'd like to use that as each session.

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Also, I find that I lose students after about an hour. So I'm going to take a break at around 50, 55 minutes, just a two minute break,

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get up stretch get a drink of water whatever and then we'll continue the

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last half hour and also since economics and libertarianism are inherently boring

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I try to I try to tell a joke at this time but I give you warning you know it's

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sort of like when a bear plays the violin you don't ask how well he plays

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you know just the fact that he can play is wonderful so when an economist tells

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Well, it's a joke. You don't ask, is it a good joke? You shut up and laugh.

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I'd like to thank Stephen Berger for providing money for support of this seminar.

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I'd like to thank Lew Rockwell and his staff for providing a Mises Institute in which we can have this seminar.

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I'd like to thank you people also. It's an honor to be here in this position to try to share with you some of my limited knowledge.

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I think you people are amongst those who will be the future for freedom and prosperity if ever we attain that.

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And it's an honor for me to have some small part in the development of you in that regard.

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One of the problems I face is that it's a heterogeneous group.

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There's a high school student, someone who just graduated high school, hasn't been to college yet.

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There are undergraduates who are non-econ majors.

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There are professors of economics.

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So it's hard to, you know, I was asking myself, well, how should I pitch this?

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And the way I figured I'd pitch it is I'd start slowly and sort of build up toward more radicalism,

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and more challenging stuff.

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And I can just say for the people who are graduate students,

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you too will have to teach this stuff one day.

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And even if I don't teach you anything new on free trade,

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absolute advantage, comparative advantage,

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I don't think I'll be able to.

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Perhaps you can use this pedagogically.

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And as I say, I'll be increasing the severity

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or the complexity or something as the week goes on.

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So, hopefully, I'll be able to cover all interests.

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In preparing actually 15 lectures, because I'll be at the Mises Institute, the Mises University next week,

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so I had to prepare 15 lectures, 10 for this week and five for the next.

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I sort of had a chance to look over my stuff and, you know, think about what I've been doing and what I'm doing.

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And I realized that calling it radical Austrianism, radical libertarianism is maybe only half correct.

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In terms of libertarianism, I really am a weirdo, you know, it's amazing.

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I've come up with some stuff that will shock you and all that,

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and some of it which will be very challenging toward the end,

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and a lot of that stuff I haven't published yet, so I might be wrong,

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and heck, I can be wrong on stuff I've published too,

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so always feel free to chip in because we want to do better and improve ourselves.

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In terms of Austrianism, I don't think I'm quite that radical,

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Although I've done one or two things

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and I'm in the midst of doing something

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which will be to attack the triangle,

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which is the mainstay of Austrian business cycle theory.

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So that might qualify and I'll get to that.

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I'm gonna stick that in in the last day.

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I'll have a lot to say this afternoon

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on the distinction between Austrianism and libertarianism.

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Let me just say that we can illustrate this perhaps

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I'm going to use this with a Venn diagram and call this Austrianism and call this, no, I'm screwing it up, let me start again, I'm now into my Austrian stuff in economics and there is a distinction between Austrian economics and not libertarianism but rather mainstream or neoclassical economics

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Neoclassical economics, call it mainstream economics, Chicago economics, whatever you want to call it.

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The reason I pick out Chicago is because product differentiation, they're sort of the closest to us Austrians in some ways,

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in the sense that there are really two free market schools of thought, Austrians and Chicagoans.

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The rest of the profession isn't quite as free market.

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and under Chicagoism I suppose I can include the public choices and a few other schools of thought that are pretty free enterprise but not as consistently so.

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So what I want to say is that there are certain areas called area A where only Austrians reside, praxeology for example, and as I say I'll do a little bit more this afternoon on this.

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There are some areas where Austrians don't tread and that's just the neoclassical types.

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But there is an overlap and I shall be talking about some things on which there's an overlap.

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For example, there's a great overlap on free trade. There's a great overlap on minimum wage.

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There's a great overlap on 10 or 15 other subjects.

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of the subjects.

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But just because we agree

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and the neoclassicals take those views

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doesn't mean that Austrians too

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can't contribute to these areas.

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And indeed, usually when we do,

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there are subtle differences which I will bring out

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or attempt to bring out between us and them,

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even on areas where we agree.

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For example, on free trade,

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it's the rare Austrian who does not favor

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full and free and complete free trade

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and unilateral declarations thereof.

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Whereas the Chicagoites or the profession might say,

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well, let's have a NAFTA or a CAFTA

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and let's negotiate something like that.

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So there will be some subtle differences in this regard.

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Okay, let me, with these introductory remarks,

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get into the subject of free trade.

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I'll have some critical things to say about Milton Friedman but I wanted to share a little story with you that puts him in a very positive light and made me proud to be not just an Austrian economist but an economist in the general profession.

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And what he said, and this is a paraphrase, I don't remember the exact words, but it was something along these lines that we economists, ever since Adam Smith, have all been pretty much 98% in favor of free trade.

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And because of all of us, probably the tariff rate is one tenth of a percent lower than it would otherwise be.

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And here's the punchline. And because of that, we've paid for our salaries a hundredfold.

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Isn't that interesting? I mean, we're so few compared to the multitude of the population.

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And we have had some small effect on reducing tariffs. And with it, we've paid our salaries a hundredfold.

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so it shows that we're making some sort of contribution and here I include

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certainly not just the Austrians but all economists who are pretty much the free

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traders certainly the econ department at any university would be much more free

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trade than the sociology department or the Marxist department well I repeat

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myself okay I'm going to I said I wasn't too radical on economics but here I will

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This presentation will have frontal nudity and sexual perversion.

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So those of you who are a little squeamish, when I put those things up on the board, just sort of avert your eyes or something.

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The way I'll be illustrating this is with a book.

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The book came out in Canada. I was at the Fraser Institute for many years.

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And the book was created by a bunch of anti-free traders.

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They didn't want to get into NAFTA and the only reason we got into NAFTA,

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and at the beginning was just the US and Canada,

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the only reason we got into it is because the conservative party which wanted free trade got the yes vote

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and the other two split the no vote for free trade.

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So the yes for NAFTA got in even though a majority of Canadians were against it.

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You don't hear anyone saying in Canada that we should get out of NAFTA.

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So it's sort of lucky that we were in there.

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And here is the rest of it.

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The case against free trade, while you lose your job, the quality of your life will deteriorate,

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you'll lose your cultural heritage, will disappear, if Brian Mulroney has his way.

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Brian Mulroney was the Prime Minister of Canada at the time.

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So I'm going to approach this through sort of Canadian eyeglasses, if I can put it in that way.

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One, it's sometimes good to see things through the eyes of the other guy.

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We always use American examples so it's good to see it from the eyes of Canada.

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So I'm now appointing you all Canadians.

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By the way, do you know how to tell a Canadian?

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It's very difficult to tell them apart from an ordinary boring white person.

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That's another joke on Canada and there are plenty of them.

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How do you get 500 Canadians out of the swimming pool?

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You just say, all Canadians out of the swimming pool.

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They all get out because they're very, very obedient.

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I was brought up in New York City and they have those walk and don't walk signs.

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Don't Walk Signs, and I always thought, you know, everyone just ignores them, but in Canada they actually stand there when the light is green and it says don't walk. It's the most amazing thing.

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I once got a jaywalking ticket for just walking. I mean, an RCMP guy grabbed me and said, didn't you see that? Don't Walk Signs? What Don't Walk Signs?

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They're very different, but you're now honorary Canadians.

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There's a horror scenario with free trade that a lot of people have, and that is that the Japanese or the Mexicans, for two different reasons, are going to take over the country, Canada.

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The Japanese, because they're so bloody efficient and they'll do everything better than us and there'll be no jobs left for Canadians.

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The Mexicans, not because they're so efficient, but because they are willing to work so cheaply.

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So there's this horror story that if we have free trade with anyone, they'll get us Canadians.

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We're afraid that we can't compete on TVs and VCRs and food and clothing

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and now the Chinese are coming with textiles or something

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and everyone can out-compete us.

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Ross Perot ran for office and got a ton of votes

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based on his giant swishing sound,

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which was all American jobs disappearing down in Mexico

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because they would out-compete us.

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So you get lots of horror stories

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And you get buy American crusades, where, you know, they'll have little signs, buy American.

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In Florida, there was a lawmaker who suggested that if there were layoffs in the state university system,

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that employees with non-American cars should be let go first.

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The Howard tenure, if you buy a Toyota, you're out. It's just crazy.

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One of the, another horror story is that the U.S. flag is made in Japan, you know, isn't that horrible?

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And here's some more of your horror files.

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100% of all baseballs used in the professional baseball league, American League and National League are made in Costa Rica.

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90% of the batting gloves worn by major leaguers are made in the Far East.

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90% of the shoes worn by baseball players, of the 23 giant video displays, screens in major league stadiums,

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19 were made by Japanese companies, 3 by a Swiss and only one by an American firm, which is now out of business,

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thanks to the evil imports of these screens, 17% of the players were not born in the U.S., you know, foreign players playing.

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Isn't that horrible? I mean, it's the American game, you know.

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We shouldn't be allowing these foreigners in because, you know, they take American jobs and all.

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Even the NBA has now got a lot of foreign basketball players, Yao Ming from China.

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Who the hell is he? Why should we let him come in here?

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Just because he can play baseball, baseball, basketball, is the view that many people have.

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It's, you know, various cities have tried to ban the import of tractors made out elsewhere,

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but nowadays a tractor or a car have got components from, you know, 10 different countries.

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And it's hard to, you know, be against foreign stuff when half of the car is foreign and half is domestic.

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And, you know, it's hard to get the blood boiling.

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but there are people that are good

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at getting blood boiling at the idea of imports.

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Okay, let's look again at the sign here,

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which says Canada is not for sale.

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The idea is that if we have free trade,

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someone else will buy Canada.

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Well, should we sell Canada?

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The economist who has a cash register for a heart and dollar signs on his eyeballs is going to ask the question,

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well, at what price?

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There's this joke about a man asks a woman,

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will you go to bed with me for a million dollars?

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And she starts thinking, well, you know, not that kind of woman, but a million dollars.

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And he says, well, will you go to bed with me for five dollars?

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And she gets very indignant, how dare you, you know, and me go to bed with you?

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Certainly not. And he says, well, we've already established the principle.

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And we're just dickering over the price.

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So what I'd like to do is establish the principle that Canada, or the US, or whatever country you're from,

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is for sale and it only depends upon the price.

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I mean, suppose I said, look, let's sell Canada, and you get the whole rest of the world, namely, everyone else in the rest of the world has to come to Canada, and we Canadians can now own everything, you know, the people in Africa, in Asia, in South America, they all have to come to Canada, there's plenty of room there, a lot of it's cold, but what the heck, we'll stick them in there, we can get the rest of the world, we can get Paris, London, how about if I throw in a cure for AIDS?

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or a cure for cancer, or life forever, or the whole solar system.

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I mean, the point is that there's nothing intrinsically pure and wonderful about the soil, the pure Canadian soil.

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There's some price that most people would say, sure, let's sell it.

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I mean, the whole question is a little silly because it's sort of a whole bunch of people and, you know, you can't all decide on whether to sell it.

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But you get the principle, there's nothing wrong with selling the whole bloody country if need be, if it came to that.

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But it's not coming to that, free trade doesn't mean you sell the country.

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But that's the way these people put it to bring about the case against free trade.

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Well, what is free trade?

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Free trade is, I give you something, you give me something in return.

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There was this wonderful Norman Rockwell Saturday evening post, front cover.

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anyone see that I guess it's a little bit before the before your time Norman

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Rockwell was a famous artist and he would illustrate them well he wasn't no

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van Gogh but he was you know sort of an American kind of an artist and what he

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had was a picture of a milkman and a pie man with the two of them sitting in

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front of their trucks and each holding a bottle of milk and a pie and you know

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what happened was that the milkman gave the the pie man a bottle of milk and the

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The pie man gave the milk man a pie, and they each gained, because you know, this one had a ton of milk, he could swim in it, he was up to his armpits in milk, but he had no pie, and this one had all the pies in the world, but you can't just keep eating pies without having milk, and the two were a combination.

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So this sort of illustrates what free trade is. I give you something, you give me something. Free trade is that government makes no law abridging freedom of trade.

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Now, this usually applies for adults, not kids.

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With kids, any parents know that kids are a special problem.

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They're a special problem in life and in economics and in everything.

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So, you know, if you have a contract with a three-year-old to give him,

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you know, he gives you his lollipop or something, you know, this might or might not be considered...

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In other words, if a law was passed saying that kids have to have special protection in contracts,

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We wouldn't say that's a denial of free trade.

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Similarly, we're not talking about selling military secrets or atom bombs or anything like that.

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We're speaking usually when we speak about the case for free trade of ordinary commercial kinds of raw materials or finished processed goods or what have you.

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And also, although I'll say when I get to drugs and porn and things like that and use body parts that

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we don't usually think of free trade in those terms, but free trade would apply there.

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Namely, if you had a law against trading in those things, that too would be a violation of free trade.

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Well, there's a case for free trade on the moral and the economic grounds.

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I'll spend most of the time on the economics of it,

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but just let me spend a little time on the ethics of free trade and my claim is that there's a human right to engage in commerce

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and that trade rights are just part and parcel of property rights. If you don't really own, if you really own something then you have a right to trade it.

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If I own this pen I have a right to trade it. If I don't have a right to trade it then to that extent I don't really own it.

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So a denial of free trade is a denial of property rights.

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There's a famous statement from Norman Malcolm talking about his teacher Ludwig Wittgenstein,

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who I think was a cousin of Hayek.

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And what Wittgenstein said is,

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I'll give you this car or this tree or something,

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provided that you do nothing with it and you don't prevent the previous owner from doing whatever he wants with it.

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Well, in what sense can you be said to own it if you can't do anything with it or prevent other people from doing it?

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In other words, the essence of owning is to be able to do with it what you want.

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And one of the things that you could possibly want to do with it is to trade it.

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So a denial of trade is a denial of private property rights.

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And Nozick's very famous phrase, it's a capitalist act between consenting adults.

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I love that phrase because, you know, the lefties are always talking about sexual acts between consenting adults and you pull this one on them, you know, how about a capitalist act between consenting adults and all of a sudden, you know, they're sort of...

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Another line I like to use on my lefty friends is when they say they're socialists, I say, well, what kind of socialists are you, a coercive one or a voluntary one?

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Voluntary one being in a commune or something and a coercive one being the one that they are.

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But if you can sort of, you know, link coercion to socialism, you have a leg up on them, and they usually haven't heard that one,

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so I offer this for your consideration when you next meet your next socialist buddy.

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A second part of the moral case for trade is peace.

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Historically, countries trade or fight, and if they trade, they don't fight.

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I don't say there are no counter examples to this, but I think if you look over the broad sweep of history you'll see that the more integrated a country is with another country, trade relations, they get to know each other, they visit each other, they have dinner with each other, they don't see each other with horns or, you know, monsters or what have you, so it's harder to have a war, and wars are not really great things.

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Okay, so much for the very limited case of ethics.

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This is an economic section.

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What I'll be doing is in the morning, the economics,

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and in the afternoon, the ethics or law or libertarian theory.

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So let me get to the economics of it.

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And that is that trade benefits all parties to it

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in the ex-ante sense.

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If I trade you my tie for your pen,

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it must mean that I value your pen more than my tie.

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And I gain the difference to me subjectively between how I value the pen and how I value the time.

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You on the other hand, if you're willing to make the trade, value this great Ludwig von Mises time more than the pen.

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And you gain. We each profit. We each exploit the other.

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Well, that's the way the Marxists would say it. We know that that's that's not true.

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Later on, when I get into drugs, I'll say that I'm against taking drugs, but I'm going to toke up right now.

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I keep going in this way.

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Notice that this is only ex ante in the sense of anticipation.

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Possibly later, you might regret your trade, and usually you don't.

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So ex post, usually trades you make, you don't, unless you buy a lemon car or something.

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You know, I bought this wristwatch for 10 bucks.

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Even if it punks out after a year, oh, so I'll buy another one.

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You know, usually you're not disappointed after the fact.

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But we're not talking about after the fact, we're talking about in prospect

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or in anticipation. Here we say necessarily

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there's a benefit. Now right here there's a difference between Chicagoans or the

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mainstream economists and the Austrians.

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No one but an Austrian would say what I just said, that it's necessarily

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apodictically, undeniably true, that whenever you have a trade, there's mutual benefit in the ex ante sense.

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The neoclassicists are going to want to say, well, not so fast, tut-tut-tut, this is cultish, you know, this is unscientific, you have to test this.

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If you don't test it empirically, you can't believe it.

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Well, my view is, I mean, how are you going to test this?

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If you know the English language, you know that what trade means is you want to improve your situation.

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Another aspect of this is human action.

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Human action is an attempt to trade a future which is less desirable for a future that is more desirable by acting now.

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So we act now for future benefits and we think that if we trade the tie and the pen, we'll benefit.

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Now, the motivations might be all screwed up.

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It might be that the reason you're willing to make this trade is you think that if you make the trade, I'll give you an A.

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But I'm not going to give you an A.

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I'm not going to mark you, you know, so it would be foolish on your part.

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So you'll be bitterly disappointed in retrospect if you make the trade, thinking that I'll give you an A when I'm not even marking you for this week.

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So that, but that's only ex post. Ex ante, you're intending to buy this lousy type because you think it'll give you an A.

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you don't really want it you don't wear ties you're a bunch of hippie t-shirt

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when it wears whatever maybe you use it as a belt but you'd rather have leather

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but you're only doing this to butter me up so you're wrong ex post but ex ante

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you're anticipating incorrectly but still you're anticipating that you'll

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benefit from having the tie giving up your pen another objection well what

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What about a hostile takeover? I just said there's mutual benefit in all trade, but we've all heard about hostile takeovers, haven't we?

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Well, the truth of the matter is that there is no such thing as a hostile takeover.

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What a hostile takeover really means is that some third party objects.

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In other words, I'm Michael Milken and I buy a share of stock from you intending to take over the company.

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Do you have to share stocks from you for a thousand bucks?

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Were you willing to sell me the thousand dollar shares? Sure.

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You benefited, otherwise you wouldn't have done it. I benefited. Who then

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sees hostility? The person that sees hostility is other shareholders.

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So there cannot be any

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hostility between the trading partners. Third parties might object.

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Look, you bought that t-shirt,

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The blue with Levi's right on the front of it, you could have bought it at a different t-shirt store.

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So we could say that Maximilian engaged in a hostile takeover of that t-shirt, if we're going to use this logic.

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Because some other t-shirt person sensed hostility. You didn't buy it from him, so he doesn't like you.

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Tough on him, but the point is that hostile takeover

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does not, is not a successful objection

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to the thesis that I'm offering.

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Even the idea of takeover.

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Takeover seems like, you know, I'm grabbing something,

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but it's not, it's a mutual agreeable capitalist act

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between consenting adults.

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Okay, here is the first cartoon

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to illustrate how these guys see trade. What you have is a big fat kid labeled

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the United States and he said and there's a little kid labeled Canada he

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has a maple leaf on his chest so you can tell he's a Canadian and the little

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Canadian kid says I got two marbles what do you got obviously he's offering a

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trade and the big fat kid hits him in the head and answers I got the two

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And that's the way these people see free trade. It's preposterous, but we're in the minority.

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I mean, if you had an election on free trade, we would lose it. So, invincibly ignorant are people.

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So, when you people get your PhDs in econ and go out and teach, the freshmen students you get are all going to believe that this is what free trade is.

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I once had this honors class at Loyola, and it wasn't on this subject, it was on the minimum wage, and finally after about six weeks I got through to them and they finally saw the point, and one girl, a very bright girl, she won all sorts of honors, she said, I see what you mean, but I don't like it.

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I don't like it.

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Well, if she was sitting here and she hadn't changed her mind, she would say,

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well, I see what you mean, but I don't like it.

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They have this sort of visceral thing that free trade is bonking someone and grabbing their stuff.

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They don't distinguish between theft and free trade.

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How can you reason with people like that?

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It's tough.

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You people who go on into academia will have a tough row ahead.

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Later on I'll offer socio-biological theories why people are predisposed against the market.

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But let me now just establish, if you need establishment of this, that there is a predisposition against the market.

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Suppose I offer a penny for your car. Is this an insult? Well, maybe.

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But did I do any hostile takeovers? No, you could just refuse.

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So I haven't harmed you by offering a very low price, you're free to reject it.

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Okay, let's move on.

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Another fear is that there's this profound paternalistic fear that Canadian owners won't get a good price for their property.

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There was a case in the US where, anyone know what Rockefeller Center is?

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It's in New York City, it's a whole bunch of buildings, maybe 10, 12 buildings, some of them only 10 stories high, the bigger ones 40, 50, 60 stories high.

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Japan bought Rockefeller Center, I think it was in the 90s, when real estate was sort of, well, let me not get into that, but they bought it.

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And there was vicious and bitter wailing and gnashing of teeth.

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You know, we fought, we beat them in World War II fair and square, didn't we?

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And now they're coming and buying stuff?

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You know, what do we have to do, nuke them again?

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I mean, how much convincing do they need that they shouldn't mess with America?

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That was the attitude.

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You know, how dare these Japanese people take over Rockefeller Center?

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Rockefeller Center, it's sort of like buying an American flag or something, there was just bitter tears at this, what happened is a few years later they sold it at a great loss, so they didn't make out ex post but ex ante they made out, as we've seen, but obviously the owners of Rockefeller Center must have figured that the several billions of dollars that they got for selling it were worth more than the Rockefeller Center itself, and they could buy half of Tokyo,

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So that's what they wanted or whatever it is that they wanted eventually the money would get back to Japan, right?

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So I'm not a real big fan of the fear that they're taking over or something like that.

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There's another one from the Godfather, I think it was the first Godfather movie, but they all sort of run in, I couldn't say.

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But I remember one, there was a guy wearing glasses on a massage table, remember this one?

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It was in Las Vegas, yeah, it was in Las Vegas, and the mafioso, there were two mafiosos,

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one was getting a massage and the other was trying to buy his hotel in Las Vegas,

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and the guy who was offered to sell his hotel or the New Yorker who wanted to buy his hotel,

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The Las Vegas guy felt insulted.

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He said, you buy me out? No, I'll buy you out.

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And they shot him right through the glasses.

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I remember that scene.

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But this is just economic ignorance.

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You know, I buy you out, you buy me out.

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It's a mutual thing.

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You don't win if you buy someone out and he loses if he gets bought out.

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That's just economic illiteracy.

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Okay, here's another cartoon illustrating this.

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You have Ronald Reagan, who's carving up the free-trade turkey.

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Brian Mulroney has got a big chin, so whenever the artists, the cartoonists illustrate him,

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they give him a much bigger chin than even he has.

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And he's panting and offing because, you know, he's trying to get the table scraps.

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It's just another way of saying that we'll be tenants in our own house

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If we amalgamate with the Americans?

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Well, let's consider that for a minute, tenants in our own house.

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The idea would be that the Americans would buy up the Canadians houses and then rent it to them.

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So I ask, which is it better, to be an owner of a house or a renter?

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How many say owner? Raise your hand.

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Two or three. How many say renter?

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Two or three.

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What's the right answer?

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It depends. And what does it depend on?

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Depends upon the prices.

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I mean, suppose I have a choice of buying a middle class house of, oh,

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2500 square feet in a front yard and a back yard for, I don't know, a quarter of a million dollars.

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Or renting it for a penny a month.

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Which is better? Well, obviously, it's better to rent it, because you could take your quarter million, put it in a bank, get interest, even at a low rate of interest, it'd be more than a penny a month.

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On the other hand, if they're willing to sell you the house for $10,000 and the rent is $5,000 a month, obviously, you buy it.

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And in equilibrium, it shouldn't make any difference, because if it's much better to be a tenant than a landlord, the prices will change in such a way as to equilibrate these things.

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There's a tendency. Here again, there's another difference between us and the mainstream.

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We say a tendency. They say, you know, we'll always be at equilibrium or at least the unsophisticated of them say that.

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So the right answer is there's nothing wrong with being a tenant in your own house if the rental price is low enough and the sale price was high enough.

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And you sold it and you bought a whole bunch of stocks or you bought 10 other houses or whatever it is.

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So there's no reason to fear being a tenant in your own house.

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Here's another one to pull on your unwary students.

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In order to see the benefits of trade more clearly, let's assume that there was no trade allowed.

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But not only no trade between countries, no trade between states or provinces in the Canadian system,

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no trade between cities, no trade between neighborhoods, no trade between families, no trade between individuals.

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We each were self-sufficient. Self-sufficiency is sort of a leftist ideal, you know. Canada must be self-sufficient.

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We shouldn't import anything because, you know, it's impure or something like that.

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Well, if we were all self-sufficient, we'd have to produce food and clothing and shelter and medicine and shoes and everything.

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Life would be nasty, brutish and short. You couldn't live very long if you couldn't trade with people.

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We owe our very lives to the fact that we can trade with people. If we couldn't trade, we'd be like Robinson Crusoe's, each on his own island.

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And that would be a horrible situation. I mean, suppose you've got a toothache.

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You don't know anything about the industry. What do you do? Punch yourself in the mouth or something?

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You know, suppose you need penicillin. You don't know how to make penicillin.

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You know, there was once this, I forget the name of the movie, but what the movie was, was they were in England and there was a banker and his wife and five kids and they had a butler.

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And the first half hour was, you know, the banker was a great guy and he had a horse and a carriage and the butler had a scrub this and that and the other.

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And then they went on a trip by boat and they capsized and they got lost on a desert island.

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And now all of a sudden the roles changed and the banker couldn't do squat.

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He didn't know how to make a fire, he couldn't collect wood, he couldn't shoot a rabbit or anything, whereas the butler was good at all this stuff.

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So the balance of power between them started to shift and you know now the butler was giving the banker orders.

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And then they got rescued and they went back to England and now all of a sudden you got back the old model.

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model, and some people draw the conclusion that somehow to be a butler is better than

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to be a banker because the butler can do more things. Well, on a desert island, okay. And

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if you want to be on a desert island, fine, try to become a butler. But if you want to

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live in civilization where we cooperate with each other, you have to specialize and engage

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and Division of Labor, because we owe our lives to specialization and division of labor.

400
00:37:52.540 --> 00:37:57.940
If we couldn't specialize and we couldn't divide labor, and we each had to specialize

401
00:37:57.940 --> 00:38:03.620
in everything or, you know, be jacks of all trade and everything, most of us would die.

402
00:38:03.620 --> 00:38:08.580
We would make Darf War or wherever it is, Ethiopia, where they're killing each other

403
00:38:08.580 --> 00:38:38.580
I mean, if you want to become a good surgeon or a concert pianist, you have to play the piano or the violin 8-10 hours a day, and you have to practice surgery all the live long day, you can't be worried about making shoes and making sure you have food. That's why everyone has a role to play. That's why the guy who asks you, do you want fries with that? That's why everyone has a role to play. That's why the guy who asks you, do you want fries with that? That's why everyone has a role to play.

404
00:38:38.580 --> 00:38:43.300
that is making a very important contribution to society because if he

405
00:38:43.300 --> 00:38:46.780
weren't asking you if you want fries with that you couldn't be specializing

406
00:38:46.780 --> 00:38:51.900
in what you're doing you'd have to get your own fries or your own burger you

407
00:38:51.900 --> 00:38:55.820
couldn't be doing the scientific work that you'll be doing so we have to

408
00:38:55.820 --> 00:39:00.580
appreciate everyone making a contribution to society from the

409
00:39:00.580 --> 00:39:06.580
from the highest to the lowest.

410
00:39:06.580 --> 00:39:11.580
Okay, let me show you another cartoon.

411
00:39:11.580 --> 00:39:19.580
Here's the William Tell.

412
00:39:19.580 --> 00:39:22.580
You know, the American is the eagle.

413
00:39:22.580 --> 00:39:24.580
The Canadian is the beaver.

414
00:39:24.580 --> 00:39:27.580
And the Canadian beaver puts the free trade apple over his head.

415
00:39:27.580 --> 00:39:33.580
And you notice where the hole is? It's right in the middle of him.

416
00:39:33.580 --> 00:39:35.580
So Ronald Reagan missed. He didn't hit the apple.

417
00:39:35.580 --> 00:39:42.580
And what free trade means is you'll get shot holding the apple on your head.

418
00:39:42.580 --> 00:39:50.580
Aren't these great cartoons? I mean, if ever you guys want to teach a course as a TA or something on this

419
00:39:50.580 --> 00:39:55.580
and want to give a lecture on trade, I certainly will make all of these cartoons available.

420
00:39:55.580 --> 00:39:59.820
you practically don't need notes just show these cartoons and just they're

421
00:39:59.820 --> 00:40:05.020
just such wonderful cartoons illustrating a frame of mind of our

422
00:40:05.020 --> 00:40:10.060
intellectual enemies on the free trade issue okay let's do some more serious

423
00:40:10.060 --> 00:40:16.580
stuff let's do the absolute advantage what's going on with absolute advantage

424
00:40:16.580 --> 00:40:20.580
I'm using this as an illustration.

425
00:40:26.580 --> 00:40:35.580
I'm assuming that there are two goods, bananas and maple syrup, and there are two countries, Canada and Costa Rica,

426
00:40:35.580 --> 00:40:41.580
and that there are two seasons or two days of production, and I'm assuming you can add these things up,

427
00:40:41.580 --> 00:40:47.580
Namely, a unit of bananas equals a unit of maple syrup and you can add it up into some sort of GDP.

428
00:40:47.580 --> 00:40:59.580
Notice I'm making all sorts of simplifying assumptions that are certainly a violation of all Austrian strictures but I want to illustrate this in a very simplified way

429
00:40:59.580 --> 00:41:09.580
and I can't think of a better way to do it or that hasn't already been done so I'm offering this and sometimes students like numerical examples.

430
00:41:09.580 --> 00:41:17.580
Okay, so Canada can't make a banana to save itself. How do they make bananas in Canada?

431
00:41:17.580 --> 00:41:21.580
How could they make bananas in Canada?

432
00:41:21.580 --> 00:41:23.580
Greenhouse.

433
00:41:23.580 --> 00:41:31.580
In other words, all Canadians together, if they worked on bananas they could fetch out five bananas

434
00:41:31.580 --> 00:41:36.580
because they're pitifully horrible at bananas because bananas need warm weather and you don't have that in Canada.

435
00:41:36.580 --> 00:41:45.580
But when it comes to maple syrup, the Canadians are great, and the Canadian GDP is 10,005.

436
00:41:45.580 --> 00:41:50.580
Whereas in Costa Rica, they're pretty good at bananas. They've got bananas growing out of their ears.

437
00:41:50.580 --> 00:41:55.580
You know, you just sort of drop a banana peel, and then sort of like a jack-in-the-bean stalk, and you get bananas,

438
00:41:55.580 --> 00:42:01.580
and you sort of have to run away lest the bananas attack you or something.

439
00:42:01.580 --> 00:42:08.380
But when it comes to maple syrup, they're a little weak on maple syrup theory.

440
00:42:08.380 --> 00:42:12.080
How do they make maple syrup in Costa Rica?

441
00:42:12.080 --> 00:42:16.980
What's the southern equivalent of a hothouse?

442
00:42:16.980 --> 00:42:22.980
A big refrigerator, a 200-foot tall refrigerator.

443
00:42:22.980 --> 00:42:28.780
Very expensive to get a maple syrup unit out of that, but they can do it.

444
00:42:28.780 --> 00:42:37.780
And the Costa Rican GDP is 15,020 because we add horizontally.

445
00:42:37.780 --> 00:42:40.780
How many bananas are there given that there's no trade?

446
00:42:40.780 --> 00:42:43.380
Well, there are 15,005 bananas.

447
00:42:43.380 --> 00:42:45.380
How many maple syrup units are there?

448
00:42:45.380 --> 00:42:48.080
Well, there are 10,020.

449
00:42:48.080 --> 00:42:50.080
And what is world GDP?

450
00:42:50.080 --> 00:42:54.280
25,025, everyone see the genesis of the numbers.

451
00:42:54.280 --> 00:43:02.680
Now, if there's trade, each one will specialize in that which it has an absolute advantage.

452
00:43:02.680 --> 00:43:08.680
Namely, each country will pour both days, not one day into each, but they'll specialize in one,

453
00:43:08.680 --> 00:43:12.760
and they'll specialize in the one for which they have an absolute advantage.

454
00:43:12.760 --> 00:43:20.360
Namely, the Costa Ricans will make bananas, and since they can make bananas at the rate of 15,000

455
00:43:20.360 --> 00:43:43.360
and they have two seasons, they'll get 30,000 bananas and the Canadians who can make maple syrup at the rate of 10,000 units will put both seasons to that end and will get 20,000 and the world GDP will go from 25025 to 50,000.

456
00:43:43.360 --> 00:43:54.360
And it's a nice numerical example. I wouldn't push it. It's not theoretically justified, but I think it's a good illustration of absolute advantage.

457
00:43:54.360 --> 00:44:01.360
And sometimes, you know, with students, you have to say things in three different ways.

458
00:44:01.360 --> 00:44:06.360
Because, you know, some students will be, they'll see the point from the ethical point of view.

459
00:44:06.360 --> 00:44:10.360
Some will see it from the theoretical point of view. Some will see it from a numerical point of view.

460
00:44:10.360 --> 00:44:15.720
so if you hit all three you might get some and a lot of times what I'll do and

461
00:44:15.720 --> 00:44:19.600
I want to get back into pedagogy just a little bit is I'll ask students do you

462
00:44:19.600 --> 00:44:25.520
get it and if they don't you know you know if I see students starting to nod

463
00:44:25.520 --> 00:44:31.520
off I'll say you what do you think of this or whatever and if they don't get

464
00:44:31.520 --> 00:44:35.560
it what I'll do is try to say it in a different way but there are only so many

465
00:44:35.560 --> 00:44:40.560
Are there any ways that I can say it? Because I'm me, right?

466
00:44:40.560 --> 00:44:45.560
Sometimes what I'll do is I'll get a student who really understands because he just got it from me

467
00:44:45.560 --> 00:44:50.560
and I'll say you say it and that student can get it across to the student who doesn't get it better than I can

468
00:44:50.560 --> 00:44:54.560
because he's saying it a different way with different body English or something.

469
00:44:54.560 --> 00:44:58.560
So it's just another technique for getting ideas across to students.

470
00:44:58.560 --> 00:45:02.560
You don't have to be the only one to say it. You can get them to say it to each other.

471
00:45:02.560 --> 00:45:08.560
And sometimes by hearing it from them and then hearing it from you again, they get it in a better way.

472
00:45:08.560 --> 00:45:17.560
Okay, that is absolute advantage. Here's another cartoon.

473
00:45:17.560 --> 00:45:23.560
What free trade, notice that the US is a bigger guy than the Canadian again, big fat guy.

474
00:45:23.560 --> 00:45:29.560
The game is five card free trade poker, everything is wild, six card draw.

475
00:45:29.560 --> 00:45:37.560
It's my deal, my cards, my rules, my game and we play with your money. That's free trade.

476
00:45:37.560 --> 00:45:48.560
Okay, now we do comparative advantage. And again we have two days or two seasons, two countries, two goods.

477
00:45:48.560 --> 00:45:56.560
And this time it's wheat and cars and this time it's Canada and Japan. And Canada is pretty good at wheat,

478
00:45:56.560 --> 00:46:13.560
Very good at wheat compared to cars. So you've got a Canadian GDP of 38, Japan's GDP is 180. How many wheats are there? 115. Now I'm adding vertically. How many cars? 103.

479
00:46:13.560 --> 00:46:25.560
Okay, well now that's no trade and world GDP is 218 which you can add either vertically or horizontally. Everyone with me on this? Okay.

480
00:46:25.560 --> 00:46:55.560
Well, now we have trade and each one specializes not in what it has an absolute advantage because Japan has an absolute advantage in both but in what they have a comparative advantage in and Japan is only twice as good as Canada, roughly twice as good as in wheat but Japan is 33 times better than Japan in cars or looking at it the other way Canada is fully one-third as efficient as Japan

481
00:46:55.560 --> 00:47:20.560
Japan and wheat, but only 3% as good as in cars, so Japan will specialize in cars and produce 200, Canada will specialize in wheat and produce 2 times 35 or 70 and now world GDP goes up from 218 to 270, so it's just another numerical illustration

482
00:47:20.560 --> 00:47:32.560
in a way of defending the point that free trade is a reasonable way to go about these things.

483
00:47:32.560 --> 00:47:43.560
Now, I told you that there would be perversions, and those of you who are squeamish, avert your eyes.

484
00:47:43.560 --> 00:47:54.560
Notice here is Brian Mulroney and notice that he's got his hands on his knees and notice that he's got his lips puckered

485
00:47:54.560 --> 00:48:03.560
and Ronald Reagan is standing right in front of him. See, I'll leave the rest to your imagination.

486
00:48:03.560 --> 00:48:09.560
Okay, now for those of you who are squeamish, you can open your eyes.

487
00:48:09.560 --> 00:48:28.560
Here's another way to illustrate this absolute advantage. You get a lawyer and a typist, and the lawyer is a better lawyer than the typist, and the lawyer is a better typist than the typist, and the lawyer can earn $1000 a day, the typist can earn $150 a day.

488
00:48:28.560 --> 00:48:35.060
When the lawyer trades, he gets two days as a lawyer, but he has to pay the typist two days.

489
00:48:35.060 --> 00:48:41.160
I'm assuming that for every day of lawyering, there's a day of typing that has to be done.

490
00:48:41.160 --> 00:48:47.260
So if the lawyer trades, he makes $2,000, but he has to pay $300 or he makes $1,700.

491
00:48:47.260 --> 00:48:51.960
Whereas if he doesn't trade and he does everything himself, he makes $1,000 for one day,

492
00:48:51.960 --> 00:48:55.960
and then he saves the typist's fee of $150 the other day,

493
00:48:55.960 --> 00:49:01.560
and he makes a grand total of $1,150 in two days and since $1,700 is better than $1,150,

494
00:49:01.560 --> 00:49:09.660
this shows that even if we are better than you, we can still trade with you.

495
00:49:09.660 --> 00:49:16.760
See, most people, if you give them the absolute advantage business with bananas and maple syrup,

496
00:49:16.760 --> 00:49:20.260
even the most die-hard people are going to say,

497
00:49:20.260 --> 00:49:24.260
Okay, okay, we'll make an exception for tropical fruits, fine.

498
00:49:24.260 --> 00:49:30.260
And their view is, okay, tropical fruits, fine.

499
00:49:30.260 --> 00:49:34.260
But that's it, because otherwise you're taking away Canadian jobs.

500
00:49:34.260 --> 00:49:38.260
So you can't just rely on the absolute advantage case.

501
00:49:38.260 --> 00:49:42.260
You have to rely on comparative advantages as well,

502
00:49:42.260 --> 00:49:47.260
and show that even if we are better than the others at both things,

503
00:49:47.260 --> 00:50:06.260
Still, it pays to trade, and even if the Japanese are supermen, or even if the Mexicans are willing to work for a penny an hour, still it pays to economically integrate with other people.

504
00:50:06.260 --> 00:50:17.260
The radical left position on this, I guess, would be no trade at all, maybe with the exception of tropical fruits if they're a little weak on theory, but maybe not.

505
00:50:17.260 --> 00:50:26.260
The moderate view would be absolute advantage, fine, but not comparative advantage, that is the moderate left view, the view of, say, Ted Kennedy.

506
00:50:26.260 --> 00:50:33.660
The moderate right view is to have NAFTA or Schnafta or CAFTA or all sorts of negotiations

507
00:50:33.660 --> 00:50:42.260
and there's a public choice oriented reason, and by the way Mises anticipated the public choices in many important respects.

508
00:50:42.260 --> 00:50:48.760
The idea here is that if you have a negotiation, where do you have the negotiation? In a Motel 6?

509
00:50:48.760 --> 00:50:55.460
No. You have a negotiation in a five-star restaurant or a five-star hotel with a swimming pool and a golf course

510
00:50:55.460 --> 00:51:00.100
and you have a meeting of maybe a half hour a day and the rest of the time you're on the golf course

511
00:51:00.100 --> 00:51:06.020
or you're sucking up the whatever it is that you're sucking up and the thing goes on for a month

512
00:51:06.020 --> 00:51:10.580
and you know they negotiate and they keep negotiating it's a lot of fun to negotiate

513
00:51:12.420 --> 00:51:17.140
whereas you know some moron like Mises would say well you know let's just have a unilateral

514
00:51:17.140 --> 00:51:25.220
declaration of free trade where's the negotiation you know what's in it for us so this is seen as

515
00:51:25.460 --> 00:51:41.460
And yet, Hong Kong, before it became part of China, was a unilateral declaration of free trade.

516
00:51:41.460 --> 00:51:48.460
Whereas, what NAFTA is, is really a customs union. They shouldn't use the word free trade.

517
00:51:48.460 --> 00:51:52.460
I got into a lot of trouble when I worked at the Fraser Institute for saying things like this.

518
00:51:52.460 --> 00:52:22.460
And things like this, they told me to shut up, because it was too radical, I was seen as a maniac, you know, to attack NAFTA, I mean, NAFTA was great, but it's just the customs union, what a customs union is, is free trade within the customs union, but you raise the tax to the rest of the world, that's not really free trade, then you have all sorts of exceptions in these negotiated things, you know, they have to now have minimum wages and unions,

519
00:52:22.460 --> 00:52:26.460
and Labor Protections and Environmental This and That.

520
00:52:26.460 --> 00:52:30.460
One of my sessions will be devoted to the environment.

521
00:52:30.460 --> 00:52:34.460
And then, child labor in the sweatshop.

522
00:52:34.460 --> 00:52:38.460
I got into a debate in Loyola. There's this priest there

523
00:52:38.460 --> 00:52:42.460
who's about 6'10". He weighs about 400 pounds

524
00:52:42.460 --> 00:52:46.460
and his fingers are about as big as a banana.

525
00:52:46.460 --> 00:52:50.460
And he was shaking his finger at me.

526
00:52:50.460 --> 00:52:54.580
My karate moves, it's been a while, because I thought he was going to come at me, but

527
00:52:54.580 --> 00:52:58.740
happily he was peaceable, but he was getting red in the face and getting very angry and

528
00:52:58.740 --> 00:53:05.100
he was saying, could Cathy Lee Gifford pay more for her sweatshops? I said, yeah, she

529
00:53:05.100 --> 00:53:10.860
could pay more. If she was charitable, instead of paying twice or three times the prevailing

530
00:53:10.860 --> 00:53:16.180
wage, she could pay ten times the prevailing wage. But now answer me a question. Is she

531
00:53:16.180 --> 00:53:22.180
Is she a force for good or bad for the people in the third world countries?

532
00:53:22.180 --> 00:53:25.180
Remember that she's paying only triple the prevailing wage.

533
00:53:25.180 --> 00:53:30.180
She's a skinflint, you know, she's trying to exploit them by paying only triple.

534
00:53:30.180 --> 00:53:34.180
I said to him, look, there are only three wages that she could be paying,

535
00:53:34.180 --> 00:53:37.180
either higher, lower or the same as the prevailing wage.

536
00:53:37.180 --> 00:53:39.180
If she paid lower, would anyone work for her?

537
00:53:39.180 --> 00:53:43.180
I mean, if it was a dime a day and she paid a nickel a day, no one's going to come work for her.

538
00:53:43.180 --> 00:53:48.180
If she paid the same amount, probably she wouldn't get much of her staff unless there was unemployment.

539
00:53:48.180 --> 00:53:57.180
She's offering triple, well we don't know that it's triple, but she's offering a lot more as shown by the fact that everyone is lining up and dying to work for her.

540
00:53:57.180 --> 00:54:04.180
But he wouldn't answer that question. He wouldn't say whether she was a force for good or bad. It's just, could she pay more?

541
00:54:04.180 --> 00:54:12.180
I had to say, yeah, therefore she was evil because she wasn't paying more. It's hard to reason with them.

542
00:54:12.180 --> 00:54:38.180
What I usually do in my classes at this time is I tell jokes because I find that it livens things up more and I'll share a few with you and one of the reasons I do this is because some students are late coming in and this way if I tell jokes they come back quicker and also they don't miss anything and I start joking around that these jokes will be on the exam and they won't be.

543
00:54:38.180 --> 00:54:46.180
Okay, now you've heard a lot of blonde jokes. I'm going to reverse things and tell things that are payback for blonde jokes.

544
00:54:46.180 --> 00:54:51.180
How many honest, intelligent, caring men in the world does it take to do the dishes?

545
00:54:51.180 --> 00:54:55.180
Both of them.

546
00:54:55.180 --> 00:54:58.180
Why did the man cross the road?

547
00:54:58.180 --> 00:55:03.180
He heard the chicken was a slut.

548
00:55:03.180 --> 00:55:14.180
Why does it take one million sperm to fertilize one egg? They won't stop and ask for directions.

549
00:55:14.180 --> 00:55:21.180
On another pedagogical point, what I've done is I've given out handouts which are incompatible with each other.

550
00:55:21.180 --> 00:55:26.180
On the one hand, I gave out handouts with the numbers that I put on the screen,

551
00:55:26.180 --> 00:55:30.180
so that you wouldn't have to write down the numbers and you could focus on what I'm saying.

552
00:55:30.180 --> 00:55:37.180
On the other hand, I gave out things to fill in, which is the opposite technique.

553
00:55:37.180 --> 00:55:42.180
And I'm not sure which is best. And maybe we can have that as one of the discussion points.

554
00:55:42.180 --> 00:55:48.180
Because I don't think that anything I've said is very controversial here in this group, but we'll see.

555
00:55:48.180 --> 00:55:54.180
Okay, the next question I want to address is, but what about the poor workers who lose their jobs?

556
00:55:54.180 --> 00:55:58.180
What about the poor Canadian banana workers?

557
00:55:58.180 --> 00:56:02.180
See, he's a capitalist pig.

558
00:56:02.180 --> 00:56:06.180
He has no feeling for the downtrodden.

559
00:56:06.180 --> 00:56:11.180
I say, what about the Canadian banana workers or the Costa Rican maple syrup workers?

560
00:56:11.180 --> 00:56:13.180
And he laughs.

561
00:56:13.180 --> 00:56:15.180
The hell with them.

562
00:56:15.180 --> 00:56:17.180
Typical capitalist pig.

563
00:56:17.180 --> 00:56:20.180
Man after my own heart.

564
00:56:20.180 --> 00:56:26.180
I paid him five bucks to do that.

565
00:56:26.180 --> 00:56:40.180
Well, the answer I give to people who make this objection is based on expertise of tasks.

566
00:56:40.180 --> 00:56:48.180
If you're sweeping out a banana industry, you can, without any loss in productivity,

567
00:56:48.180 --> 00:57:16.180
The real people who lose out when the Canadian banana industry goes belly up are not the low-life people with no specialized training, but rather the banana biologist or the owner of the glass house or the guy that makes glass, namely people who have an investment either in human capital or in physical capital, namely the rich.

568
00:57:16.180 --> 00:57:23.180
So, you can tell your students who are filled with the milk of human kindness and who worry about the underdog

569
00:57:23.180 --> 00:57:28.180
that the people who lose when you have these switches are not the people at the bottom of the heap

570
00:57:28.180 --> 00:57:31.180
but rather the people at the top of the heap.

571
00:57:31.180 --> 00:57:39.180
And that tends to undermine their hatred for free trade because, you know, they're always in favor of the underdog

572
00:57:39.180 --> 00:57:45.180
and, you know, we are in favor of the overdog supposedly, which isn't true, you know, we're just in favor of human rights.

573
00:57:45.180 --> 00:58:15.180
But you know, at this point, I had a friend in high school whose father was an engineer and he was an engineer of something, I never caught on what it was, and this was in the late 50s, early 60s, and he was making a thousand a week, which, 50,000 a year, which was a very, very good salary for those days, and he had as many weeks as a consultant as he wanted, and then somebody invented something different.

574
00:58:15.180 --> 00:58:20.180
I think that the import here is not from another country, but from our brains, but it's the same principle.

575
00:58:20.180 --> 00:58:25.180
It could have been an import, but it was an import from our minds instead of from another country.

576
00:58:25.180 --> 00:58:32.180
But the point is that as the years went on, instead of being able to get 50 weeks at 1,000,

577
00:58:32.180 --> 00:58:43.180
it was 40, 30, and 20 weeks at 800, 600, 400, and then toward the end it was 2 or 3 weeks at 100 or 2.

578
00:58:43.180 --> 00:58:54.180
Now this guy was a real macho type and he didn't want to retrain because he'd have to go learn stuff from people who he had looked down upon because he was at the top of the heap.

579
00:58:54.180 --> 00:59:02.180
He could have been a TV repairman which was way beneath his dignity because he was mechanically inclined, as you can imagine, an engineer.

580
00:59:02.180 --> 00:59:11.180
And what he did is he just sort of went unemployed and he made my friend and his family's life miserable, making sure that my friend never threw out a pair of socks or stuff like that.

581
00:59:11.180 --> 00:59:24.180
So there is human tragedy involved in the Canadian banana industry going belly up and we shouldn't, when we're being serious, we shouldn't, you know, just ignore that.

582
00:59:24.180 --> 00:59:33.180
But the point is that it's the people who are at the top of the heap that are going to suffer, but still there could be human tragedy in a personal psychological sense.

583
00:59:33.180 --> 00:59:40.180
Because I mean this guy was a top engineer. He wasn't pushing a broom and yet there are tragedies.

584
00:59:40.180 --> 00:59:48.180
Now, one of the points I want to make is that the market benefits all participants.

585
00:59:48.180 --> 00:59:54.180
Well, haven't I just contradicted myself? Haven't I just said that the market benefits all participants?

586
00:59:54.180 --> 00:59:59.180
But what about the Canadian banana industry and my friend's father?

587
00:59:59.180 --> 01:00:04.180
Have I contradicted myself? On the one hand, there is human tragedy.

588
01:00:04.180 --> 01:00:08.180
On the other hand, the market benefits all participants.

589
01:00:08.180 --> 01:00:13.180
What's the reconciliation? How do I save myself from the contradiction charge?

590
01:00:13.180 --> 01:00:24.180
The answer is that the Canadian banana industry and my friend's father, after the fact, are no longer part of the market.

591
01:00:24.180 --> 01:00:31.180
Because to be part of the market isn't honorific. Not any jerk can be part of the market.

592
01:00:31.180 --> 01:00:35.180
To be part of the market, you have to be able to make an offer.

593
01:00:35.180 --> 01:00:39.180
Now remember that offer I made of a penny for your house?

594
01:00:39.180 --> 01:00:41.180
Was I part of the market then?

595
01:00:41.180 --> 01:00:47.180
No, because to be part of the market you have to make an offer that someone else is willing to accept.

596
01:00:47.180 --> 01:00:52.180
And after free trade comes up or after this invention comes up,

597
01:00:52.180 --> 01:00:58.180
the Canadian banana manufacturer and the Costa Rican maple syrup people

598
01:00:58.180 --> 01:01:07.780
And the Canadian wheat people and the, no, rather the Canadian TV people and the Japanese wheat people are all out of the market.

599
01:01:07.780 --> 01:01:12.420
They're no longer part of the market.

600
01:01:12.420 --> 01:01:17.140
So that would be the reconciliation.

601
01:01:17.140 --> 01:01:20.300
Okay, what else do we have here?

602
01:01:20.300 --> 01:01:23.300
Yet another way to look at this.

603
01:01:23.300 --> 01:01:27.300
And again, what I'm doing here is giving you numerous examples on the theory that if

604
01:01:27.300 --> 01:01:30.500
something doesn't hit your students, something else will.

605
01:01:30.500 --> 01:01:36.000
So, ask your students, suppose you pay $500 for a Japanese TV.

606
01:01:36.000 --> 01:01:40.500
What are the Japanese going to do with the money?

607
01:01:40.500 --> 01:01:44.800
They're going to have to send it back here because they don't use dollars over there.

608
01:01:44.800 --> 01:01:49.500
If you're getting about the intermediation of the banks, just make it very simple.

609
01:01:49.500 --> 01:01:52.600
They're going to have to send it back here and what are they going to buy?

610
01:01:52.600 --> 01:01:58.600
Something, and the people that used to make US TVs or cars or whatever will now make these things that the Japanese want.

611
01:01:58.600 --> 01:02:03.600
Maybe Rockefeller Center. They build a lot of Rockefeller Centers. Who knows?

612
01:02:03.600 --> 01:02:09.600
But some bright kid will say, well, suppose the Japanese don't spend it back here.

613
01:02:09.600 --> 01:02:15.600
Those sneaky, crafty Japanese, you know, they're trying to get us.

614
01:02:15.600 --> 01:02:17.600
Well, what else can they do with the money?

615
01:02:17.600 --> 01:02:22.600
Well, one thing they do with the money is go to India or China or Britain or Italy and spend it there.

616
01:02:22.600 --> 01:02:26.600
But then, what do those guys do with the money? Well, they could spend it elsewhere.

617
01:02:26.600 --> 01:02:33.600
And then you have the, what is it, Eurodollar, or the dollar is floating around there.

618
01:02:33.600 --> 01:02:41.600
And what's happening is we're giving them, adding zeros to pieces of paper, and they're giving us TVs and stuff.

619
01:02:41.600 --> 01:02:52.600
Another thing those lousy, rotten, nasty Japanese can do is put the money in their mattress or burn it.

620
01:02:52.600 --> 01:03:00.600
I mean, they're shifty. They're likely to do this. They're so disgusting.

621
01:03:00.600 --> 01:03:06.600
But if they did that again, it would be the same old thing. We're giving them a piece of paper. They're giving us stuff.

622
01:03:06.600 --> 01:03:17.600
Then there's this thing about dumping. When I first heard dumping, what I figured it was was some big airplane filled with Volkswagens or Toyotas.

623
01:03:17.600 --> 01:03:25.600
And what they do is they drop them out at around 30,000 feet and, you know, they hit us.

624
01:03:25.600 --> 01:03:31.600
That's where I thought dumping was. Because, you know, dumping is bad and, you know, what could be dumping?

625
01:03:31.600 --> 01:03:36.600
If we could be dumping, they'd drop cars on us or drop TV sets like little missiles.

626
01:03:36.600 --> 01:03:39.600
But that's not at all what dumping means.

627
01:03:39.600 --> 01:03:50.600
What dumping means, of course, is selling a product at a price below which the competitors think is a fair price.

628
01:03:50.600 --> 01:03:53.600
Okay.

629
01:03:53.600 --> 01:03:57.600
Now, I told you there'd be frontal nudity.

630
01:03:57.600 --> 01:04:11.600
Well, there's Simon Reisman, who was the Canadian negotiator of NAFTA, and Peter Murphy.

631
01:04:11.600 --> 01:04:20.600
Now, you can see that Simon Reisman, except for a strategically placed maple leaf, is totally frontally nude.

632
01:04:20.600 --> 01:04:26.600
So keep your eyes closed. Whereas notice that Peter Murphy has got two suits.

633
01:04:26.600 --> 01:04:31.920
see he's got a striped suit and a gray suit and he's got two ties and and you

634
01:04:31.920 --> 01:04:36.040
can see his fly is open so there's a gray suit gray pants under there that

635
01:04:36.040 --> 01:04:43.940
marvelous that was the free trade negotiation between Canada and the US so

636
01:04:43.940 --> 01:04:49.880
I've acquitted my promise of frontal nudity and perversion and now I'm going

637
01:04:49.880 --> 01:04:54.780
to consider a whole bunch of objections to the thesis the first one is that we

638
01:04:54.780 --> 01:05:04.780
We should have fair trade, not free trade, and this resonates because we do have an idea of fairness in sports.

639
01:05:04.780 --> 01:05:09.780
For example, at halftime, the football teams switch sides,

640
01:05:09.780 --> 01:05:16.780
lest there be a slight uphill or downhill, or maybe the sun's in these guys' eyes or that guy's eyes, right?

641
01:05:16.780 --> 01:05:22.780
And in basketball, they switch sides, and in volleyball, they switch sides, and in tennis, they're forever switching sides.

642
01:05:22.780 --> 01:05:29.780
And again, they want to have fairness, because at the end of the day, they want to say that a better team won.

643
01:05:29.780 --> 01:05:39.780
But trade is not a game. Game theoreticians to the contrary notwithstanding, trade is a mutual benefit.

644
01:05:39.780 --> 01:05:48.780
You don't want fairness in that sense, of the sports sense, because if you had fairness, there'd be no trade.

645
01:05:48.780 --> 01:05:57.780
In other words, if what fairness means is getting rid of absolute and comparative advantage, which seems to be what they mean, then we'd have no trade.

646
01:05:57.780 --> 01:06:04.780
See, there's all the world of difference between games and the economy. Take the game of monopoly.

647
01:06:04.780 --> 01:06:11.780
When I land on boardwalk that you own and you've got a hotel there and I have to pay $2,000, is there a mutual gain?

648
01:06:11.780 --> 01:06:32.780
Mutual gain? No, I'm losing. I stayed at this Auburn Hotel the other night, I forget what I paid, Lew's going to pay for it, hopefully, so I didn't even look, but it was a mutual beneficial thing.

649
01:06:32.780 --> 01:06:42.780
If I didn't get in there, I'd have slept on the sidewalk or somewhere, so I gained, you know, I paid 80 bucks and I valued it more than 80 and they valued me there because the room would have been empty.

650
01:06:42.780 --> 01:06:48.780
So it was mutual gain. Whereas in monopoly, it's not mutual gain. I'm losing when I buy.

651
01:06:48.780 --> 01:07:01.780
So the analogy between sports and economics is something that you have to take with a grain of salt, with a big grain of salt, because there's a disanalogy.

652
01:07:01.780 --> 01:07:10.780
A thing that resonated with Canadians, Canadians are always afraid of being ewers of wood and drawers of water.

653
01:07:10.780 --> 01:07:13.780
Ewers of wood and drawers of water.

654
01:07:13.780 --> 01:07:19.780
Namely, Canada, for all intents and purposes, is a suburb of the US.

655
01:07:19.780 --> 01:07:24.780
You know what I'm saying? I mean, it's a big country geographically,

656
01:07:24.780 --> 01:07:29.780
but in terms of the people, it's only 30 million people, about as big as California,

657
01:07:29.780 --> 01:07:34.780
and they're all huddled within about a hundred miles of the U.S. because it's cool up there.

658
01:07:34.780 --> 01:07:38.780
They have this city called Winnipeg, I call it Winterpeg.

659
01:07:38.780 --> 01:07:45.780
I once gave a lecture there in November or December, it was like 50 below.

660
01:07:45.780 --> 01:07:50.780
It was amazing, you know, all I had to do was go from the airport to a car about 30 feet

661
01:07:50.780 --> 01:07:55.780
and it hurt to breathe, it was so cold, it was really cold there.

662
01:07:55.780 --> 01:08:01.780
So most of it is just sort of useless. Land, the land.

663
01:08:01.780 --> 01:08:05.780
Well, why shouldn't they be ewers of wood and drawers of water?

664
01:08:05.780 --> 01:08:11.780
I mean, the people in Iowa are farmers. What's wrong with that?

665
01:08:11.780 --> 01:08:15.780
I mean, do you have to really be rich? Let me put it this way.

666
01:08:15.780 --> 01:08:20.780
Do you have to really be into manufacturing in order to be rich?

667
01:08:20.780 --> 01:08:24.780
No. There are areas in the United States like Iowa where it's pretty rich

668
01:08:24.780 --> 01:08:45.780
And if it were ever such that you had to have manufacturing and you made a lot of profit in manufacturing and in drawing wood and being resource-based, being on the periphery was very low profit, well people would leave this and go there until things started equalizing.

669
01:08:45.780 --> 01:08:49.780
So there's nothing intrinsically bad about resources.

670
01:08:49.780 --> 01:09:03.780
I mean these Christian types who are always writing bishop statements and papal encyclicals on the economy, somehow they have the idea that if you're in the center you're good and if you're in the periphery you're bad.

671
01:09:03.780 --> 01:09:13.780
But that's just economic illiteracy. Profits tend to equalize all over the place, geographically, across industries, across everything.

672
01:09:13.780 --> 01:09:25.780
Now, when the government stops the flow of goods and capital, then yes, but in a free enterprise society, just like before we said, which is better to be a renter or an owner?

673
01:09:25.780 --> 01:09:36.780
And the answer is, it depends on what you're getting. Well, so does it, you know, which is it better to be a manufacturer of a car or a farmer of corn?

674
01:09:36.780 --> 01:09:41.980
it depends on the price and and if the prices get out of line there'll be some

675
01:09:41.980 --> 01:09:51.380
sort of equilibration process okay here's another cartoon Trojan Horse this

676
01:09:51.380 --> 01:10:00.540
is free trade notice that chin there and that's his advisor it looks okay to me

677
01:10:00.540 --> 01:10:06.660
very as I say these cartoons alone when I saw that book I said oh that book is

678
01:10:06.660 --> 01:10:14.660
Another objection that the Canadians had who didn't want NAFTA is they feared political integration.

679
01:10:14.660 --> 01:10:18.660
They feared being taken over by the U.S. and being made the 51st state.

680
01:10:18.660 --> 01:10:23.660
I mean, most Americans don't even know that Canada exists.

681
01:10:23.660 --> 01:10:31.660
We have no ambitions to take over, but they're paranoid.

682
01:10:31.660 --> 01:10:38.660
I remember when I first moved to Vancouver, I asked some of my friends, are there any libertarian Austrians in Vancouver, and they gave me addresses in Toronto.

683
01:10:38.660 --> 01:10:46.660
Vancouver is near Seattle, Toronto is near Buffalo, you know, like they didn't know, and these are intelligent buddies of mine.

684
01:10:46.660 --> 01:10:55.660
I didn't know before I got there, you know, it's just a vast wilderness, whereas they know everything that goes on here.

685
01:10:55.660 --> 01:11:01.660
Because all their TV stations are American, except for the CBC, which is...

686
01:11:01.660 --> 01:11:12.660
Don't get me started on the CBC. It's sort of like the PBS on steroids. It's just horrible.

687
01:11:12.660 --> 01:11:21.660
So even George Bush has no ambitions to take over Canada. What more can I say?

688
01:11:21.660 --> 01:11:26.960
Hey! I mean, he's taking over everywhere else. Well, they'll probably be insulted.

689
01:11:26.960 --> 01:11:30.660
Why? He doesn't want to take us over? Aren't we as good as Iraq?

690
01:11:30.660 --> 01:11:38.660
The point is that the U.S. could take over militarily anytime they wanted to.

691
01:11:38.660 --> 01:11:45.660
I mean, the Canadian Army consists of, I don't know, a police car.

692
01:11:46.660 --> 01:11:49.660
The Canadian Navy consists of three rowboats.

693
01:11:51.660 --> 01:12:03.660
Political integration, at the time I wrote it, didn't occur in the EEC, although now it seems to be becoming more politically integrated, but it need not be.

694
01:12:03.660 --> 01:12:14.660
The European Economic Community could have gone on forever without any political integration, and even though the US is bigger than Canada,

695
01:12:14.660 --> 01:12:21.660
Britain, France and Germany are way bigger than Liechtenstein, Portugal and Netherlands, Belgium.

696
01:12:21.660 --> 01:12:30.660
The Scandinavian free trade, Sweden is much bigger than Norway and Finland, which together are much bigger than Iceland and they never got politically integrated.

697
01:12:30.660 --> 01:12:39.660
So the two are very separate. You don't have to be politically integrated just because you're economically integrated.

698
01:12:39.660 --> 01:12:59.660
Notice that the Canadian has reindeer antlers on his head? Agreed. Canada will corner the North American market on hand-carved Haida chess pieces, Haida is an Indian tribe, and boards while the U.S. controls oil. Another indication.

699
01:12:59.660 --> 01:13:06.360
Tariff protection can be justified on monopoly and monopsony grounds.

700
01:13:06.360 --> 01:13:09.860
I'm going to later talk about monopoly and monopsony, so I don't want to do it here.

701
01:13:09.860 --> 01:13:16.560
But it's interesting that it's technically correct according to the neoclassical theory, which is wrong,

702
01:13:16.560 --> 01:13:20.260
but it's incompatible with antitrust law.

703
01:13:20.260 --> 01:13:25.760
In other words, they're being logically inconsistent with their own views in offering this argument,

704
01:13:25.760 --> 01:13:40.760
Because on the one hand they're against so-called monopoly and on the other hand they're using, you know, the fact that the US is bigger than Costa Rica or something as a monopolistic element.

705
01:13:40.760 --> 01:13:45.760
Then the word protectionism is interesting.

706
01:13:45.760 --> 01:13:52.260
Who is protected? Not the Canadian or the American or the Costa Rican or the Japanese consumer,

707
01:13:52.260 --> 01:13:58.760
but rather the producer who is competing with imports.

708
01:13:58.760 --> 01:14:06.260
Tom DiLorenzo and Tom Woods will tell you that the main reason for the war of northern aggression,

709
01:14:06.260 --> 01:14:11.760
or the war to prevent southern secession, sometimes called mistakenly the Civil War,

710
01:14:11.760 --> 01:14:25.760
was over protectionism. The North had manufacturing, much more expensive than England, and the South wanted to import from England.

711
01:14:25.760 --> 01:14:33.760
And the North didn't want them to import from England, they wanted them to import from New England or the northern colonies.

712
01:14:33.760 --> 01:14:43.760
That's just another indication of tariffs lead to war. Not always, but certainly in that case.

713
01:14:43.760 --> 01:14:47.760
Then there's the infant industries argument. What's the infant industries argument?

714
01:14:47.760 --> 01:14:56.760
The infant industries argument is, okay, look, we agree protectionism is no good, free trade is good, but not right now.

715
01:14:56.760 --> 01:15:02.760
First we got to get these infants to get on their feet, then we'll have free trade.

716
01:15:02.760 --> 01:15:15.760
So let the manufacturing in New Jersey or New York or Massachusetts, let them have a little tariff protection for five or ten years, and then we'll open it up.

717
01:15:15.760 --> 01:15:29.760
There are lots of problems with this. One of them is you get hundred-year-old infants because, you know, the infants are protected and they can come down to Washington and bribe everyone,

718
01:15:29.760 --> 01:15:35.680
because they have a great reason the bribe because they'll make a lot of

719
01:15:35.680 --> 01:15:39.840
money from having a tariff protection whereas each of us will just cost a

720
01:15:39.840 --> 01:15:45.080
penny or two or three on rubber bands or paper clips or whatever it is so

721
01:15:45.080 --> 01:15:50.880
there's a concentration of producers vis-a-vis consumers so the natural way

722
01:15:50.880 --> 01:15:54.240
of these things is that the infants get organized and and you never get rid of

723
01:15:54.240 --> 01:15:59.520
the infancy but let's suppose you do get rid of it isn't it true that every

724
01:15:59.520 --> 01:16:03.520
Is every startup company is an infant when it first starts?

725
01:16:03.520 --> 01:16:07.520
Look, I come to Auburn and I open up a hot dog stand.

726
01:16:07.520 --> 01:16:10.520
Am I an infant? Yeah, I'm an infant. No one's ever heard of me.

727
01:16:10.520 --> 01:16:14.520
I have to get the word out. I have to give out balloons or something.

728
01:16:14.520 --> 01:16:22.520
So I'm an infant. So shouldn't the Auburn city subsidize me because I'm just an infant?

729
01:16:22.520 --> 01:16:26.520
In other words, what I'm trying to say is that the infant industry's argument for a country

730
01:16:26.520 --> 01:16:33.220
applies to every new company. So if you believe it for the nation and you want to be logical,

731
01:16:33.220 --> 01:16:39.720
you should believe it for every individual company. Bill Gates started up Microsoft,

732
01:16:39.720 --> 01:16:46.420
they should have given him a subsidy. Maybe I shouldn't keep going on like this because they'll get ideas.

733
01:16:46.420 --> 01:16:50.920
They'll say, yeah, you know, we never thought of that. Got to subsidize every new company just for, you know,

734
01:16:50.920 --> 01:16:54.720
10 years or so, which is fascism.

735
01:16:54.720 --> 01:16:59.220
The point is, though, that if my hot dog stand makes that well and I make a profit,

736
01:16:59.220 --> 01:17:01.560
who gets that profit? I do.

737
01:17:01.560 --> 01:17:06.280
So why should you people be forced to pay for the infancy?

738
01:17:06.280 --> 01:17:08.120
Every company has to start up.

739
01:17:08.120 --> 01:17:14.220
I mean, the first day I open, it took me a month to, you know, rent the store or buy the store,

740
01:17:14.220 --> 01:17:19.820
put in a hot dog dispenser, a mustard dispenser, whatever it is.

741
01:17:19.820 --> 01:17:24.260
Before I even opened, I took in not one penny, and all I did was pay.

742
01:17:24.260 --> 01:17:28.340
And now, the first day I opened, I'm going to finally get some money back.

743
01:17:28.340 --> 01:17:33.660
But in my infancy, I was losing money.

744
01:17:33.660 --> 01:17:44.220
So far I've showed you a lot of cartoons from the wrong book. Here's a good cartoon.

745
01:17:44.220 --> 01:17:57.220
Mr. and Mrs. Average Canadian, watches Bill Cosby, an American on Sony, Japanese TV, eats Big Macs, Kentucky Fried Chicken, and Chinese, evil Chinese takeout,

746
01:17:57.220 --> 01:18:13.660
wears Levi's and Calvin Klein's, thinks free trade will destroy the unique Canadian identity, drinks bug, Coke or Pepsi, sits on Scandinavian furniture, drives a Honda, walks on English wallabies.

747
01:18:13.660 --> 01:18:21.220
Isn't that great? I mean, the hypocrisy. Needless to say, this cartoon did not come from that book.

748
01:18:21.220 --> 01:18:27.100
This one I grabbed from somewhere.

749
01:18:27.100 --> 01:18:33.100
Okay, here's another argument. It goes as follows. Okay, look, we buy the free trade argument.

750
01:18:33.100 --> 01:18:35.340
You're right. You're right. You're right. We admit you're right.

751
01:18:35.340 --> 01:18:41.580
However, those dirty rascals, they've got protectionism.

752
01:18:41.580 --> 01:18:51.380
So we're only doing it in retaliation. In other words, it's bad to hit, but if someone hits you, you can hit back, right?

753
01:18:51.380 --> 01:19:01.480
I mean, we're not pacifists. We believe in defense. So if they're going to have a tariff protection against our goods, shouldn't we have one against their goods?

754
01:19:01.480 --> 01:19:10.080
What's fair is fair. And the answer that I offer for your consideration on this is if there are two guys in a rowboat and one shoots a hole in it,

755
01:19:10.080 --> 01:19:13.880
Should the other guy shoot another hole?

756
01:19:13.880 --> 01:19:18.680
It's problematic, to say the least.

757
01:19:18.680 --> 01:19:21.880
And it's looking at things in terms of the nation.

758
01:19:21.880 --> 01:19:26.880
Because if Japan, to pick out the evil Japanese,

759
01:19:26.880 --> 01:19:35.280
if Japan is stupid enough not to allow us to export to them,

760
01:19:35.280 --> 01:19:38.680
why should we be stupid enough to not allow us people

761
01:19:38.680 --> 01:19:49.680
In other words, the American or the Canadian importers or the populace is innocent, so you're punishing innocent people for the crime of those guys.

762
01:19:49.680 --> 01:20:00.680
Now don't get me wrong, I think it's wrong for them to have a tariff against our product, but it's silly for us to retaliate and have one against them.

763
01:20:00.680 --> 01:20:11.680
Okay, there's a whole, boy, I've got a whole bunch of more stuff on this, but I'm almost out of time, and I didn't leave much time, because I didn't think there'd be many questions or discussions here.

764
01:20:11.680 --> 01:20:27.680
In future times, I'll leave more time for discussion, and we can always talk around lunch or whatever, but are there any questions or comments or feedback?

765
01:20:27.680 --> 01:20:39.680
Nothing? Well, I don't believe in wasting time. I've already wasted three minutes, so I'll give you more objections.

766
01:20:39.680 --> 01:20:49.480
Ah, the Canadian culture. The Canadian culture will disappear if the U.S. is allowed to export stuff.

767
01:20:49.480 --> 01:20:55.080
Here's where the CBC comes in. What the CBC does is have Canadian content laws.

768
01:20:55.080 --> 01:21:05.000
In other words, if any station in America or any magazine in America has an American anything, they have to have a Canadian something.

769
01:21:05.000 --> 01:21:08.960
So we have protectionism for Canadian artists.

770
01:21:08.960 --> 01:21:17.560
So you get a whole bunch of movies like Lesbian Workers on a Railway or something.

771
01:21:17.560 --> 01:21:22.440
Very, very boring.

772
01:21:22.440 --> 01:21:32.600
You see, look, you know, every time the Olympics occurs, the Canadians are dismayed at the fact that the U.S. wins more medals than they do.

773
01:21:32.600 --> 01:21:36.840
But the U.S. has got almost 300 million people. They've got almost 30. It's 10 to 1.

774
01:21:36.840 --> 01:21:44.400
What they ought to do is say, okay, how do our medal count compare to, say, Ohio and Indiana's or something like that?

775
01:21:44.400 --> 01:21:51.240
Because it's got about as many people there. Then it would be, you know, roughly equivalent.

776
01:21:51.240 --> 01:22:00.520
On this importing of Canadian culture or importing foreign stuff, Bach and Mozart were foreigners.

777
01:22:00.520 --> 01:22:04.120
The Beatles were foreigners to not be highbrow on this.

778
01:22:04.120 --> 01:22:07.800
If we're going to be consistent about not importing foreign culture,

779
01:22:07.800 --> 01:22:13.680
we shouldn't allow stuff to come in from, you know, Bach, Mozart, the Beatles,

780
01:22:13.680 --> 01:22:19.720
I don't know, Van Gogh, whatever, Bram Brant, all these guys were dirty foreigners taking away drops from...

781
01:22:19.720 --> 01:22:32.720
My view is that there's no demonstration that there's a distinct Canadian culture.

782
01:22:32.720 --> 01:22:35.720
Most of what goes on there is subsidized.

783
01:22:35.720 --> 01:22:37.720
Artists are very, very heavily subsidized.

784
01:22:37.720 --> 01:22:40.720
It's sort of like a welfare class of artists.

785
01:22:40.720 --> 01:22:43.720
Whereas happily in the US, they don't do that.

786
01:22:43.720 --> 01:22:48.720
I mean, if you're going to be an artist, you have to make it on your own except for museums and stuff like that,

787
01:22:48.720 --> 01:22:52.200
Stuff like that, which is a state publication.

788
01:22:52.200 --> 01:22:56.480
The only artists that Canada has produced are maybe Mordecai,

789
01:22:56.480 --> 01:23:00.120
Rickler, Tony Anly and Glenn Gould, who is one of my favorites.

790
01:23:00.120 --> 01:23:01.960
Glenn Gould was magnificent.

791
01:23:01.960 --> 01:23:07.040
But how many world-class people do you get?

792
01:23:07.040 --> 01:23:11.440
Then there's the argument, well, OK.

793
01:23:11.440 --> 01:23:17.000
If we let the other guys do the weed or whatever is the TV sets,

794
01:23:17.000 --> 01:23:29.000
Because what they'll do is they'll do it, and then after we get rid of all of our Canadian banana manufacturing, they'll triple the price.

795
01:23:29.000 --> 01:23:36.000
And the answer I have is, well, if you're so worried about that, keep your greenhouse going in case.

796
01:23:36.000 --> 01:23:40.000
Or, you know, you could do the same thing domestically.

797
01:23:40.000 --> 01:23:46.000
Don't let the Wal-Mart come in for different reasons, namely keep your own garden going because Wal-Mart, you know, one day might jack up the prices.

798
01:23:46.000 --> 01:23:51.000
I mean, it's just a silly argument, but people do have it.

799
01:23:51.000 --> 01:23:56.000
Okay, so in conclusion, I want to say that we have a free trade,

800
01:23:56.000 --> 01:24:01.000
or stick our head in the sand like an ostrich,

801
01:24:01.000 --> 01:24:07.000
be nationally self-sufficient, suspicious of foreigners, buy Canadian or buy American,

802
01:24:07.000 --> 01:24:12.000
and I think the better way to go is to specialize, have a division of labor and trade,

803
01:24:12.000 --> 01:24:18.000
and we can achieve peace, prosperity and abundance in that way. So thank you for your attention.