WEBVTT NOTE Fears of a Free Market 1 00:00:00.000 --> 00:00:05.000 Fears of a Free Market 2 00:00:06.000 --> 00:00:17.000 I think most of us are well aware of the fact that we need a marketplace from which we can obtain the goods and services that we want. 3 00:00:18.000 --> 00:00:22.000 However, as we talk to other people and listen to what they have to say, 4 00:00:22.000 --> 00:00:28.640 Today, we discover that most people today are very much afraid of the idea that there 5 00:00:28.640 --> 00:00:35.080 could be a free market operating without some kind of government regulation. As a matter 6 00:00:35.080 --> 00:00:42.960 of fact, there are movements afoot now, and they have been afoot for many years, to increase 7 00:00:42.960 --> 00:00:49.160 the number of laws passed by government to intervene in the market and to regulate things 8 00:00:49.160 --> 00:00:55.000 in terms of making the market safer and better for everybody. 9 00:00:55.000 --> 00:01:03.160 The general consensus appears to be that we must have government in a position of dominance 10 00:01:03.160 --> 00:01:09.640 over the market or everyone is going to be cheated, exploited, taken advantage of and 11 00:01:09.640 --> 00:01:11.560 so on. 12 00:01:11.560 --> 00:01:13.960 Where do we get this idea? 13 00:01:13.960 --> 00:01:20.280 Actually, we really don't have a good basis of comparison today, because what people are 14 00:01:20.280 --> 00:01:26.380 looking at isn't a free market. And they see things happening today that ought not to 15 00:01:26.380 --> 00:01:33.380 be happening, and they always presume that what is happening that is wrong is the result 16 00:01:33.380 --> 00:01:40.380 of a lack of government control. And so whenever they find something breaking down, when they 17 00:01:40.380 --> 00:01:49.060 When they find an instance of criminality or fraud or some other malfunction manifest, 18 00:01:49.060 --> 00:01:58.460 they almost invariably conclude that the reason for this failure is that the government hasn't 19 00:01:58.460 --> 00:02:00.820 done enough. 20 00:02:00.820 --> 00:02:06.740 So actually they are thinking and reasoning from a position where the government has already 21 00:02:06.740 --> 00:02:12.020 be done of a very great number of things. And we are not thinking in terms of a free 22 00:02:12.020 --> 00:02:18.660 market. It would be important to understand what a free market really is and to try to 23 00:02:18.660 --> 00:02:24.340 figure out what the fears are that people have in relation to it. 24 00:02:24.340 --> 00:02:32.460 Now let me give you what I believe would be a pure concept of a free market. If we had 25 00:02:32.460 --> 00:02:35.480 a really true free market. 26 00:02:35.480 --> 00:02:38.820 This would be what has been called a laissez-faire market. 27 00:02:38.820 --> 00:02:45.420 That's a French expression, laissez-faire, which means in effect, leave it alone, let 28 00:02:45.420 --> 00:02:50.580 it go, let it go as it will, laissez-faire, leave it alone. 29 00:02:50.580 --> 00:02:57.620 To have such a market would mean that there would be no government intervention for any 30 00:02:57.620 --> 00:02:59.300 reason whatever. 31 00:02:59.300 --> 00:03:05.560 In other words, the government would not help anybody, it would not injure anybody, it would 32 00:03:05.560 --> 00:03:13.940 not seek to control anybody, it would permit the marketplace to function as it would with 33 00:03:13.940 --> 00:03:20.160 benefits accruing wherever they accrue, with damage accruing wherever that would accrue. 34 00:03:20.160 --> 00:03:27.060 It would simply be a free market where anybody could provide any good and service he wanted 35 00:03:27.060 --> 00:03:31.640 at any price that he wanted, he could make as much or as little as he was capable of 36 00:03:31.640 --> 00:03:34.660 making and there it would be. 37 00:03:34.660 --> 00:03:42.340 Well now that idea frightens people. It seems to them to smack of anarchy. It sounds as 38 00:03:42.340 --> 00:03:49.860 if everything is out of control and that there would always be a few people who would take 39 00:03:49.860 --> 00:03:55.980 advantage of the situation and we would be at their mercy. Because in general people 40 00:03:55.980 --> 00:04:02.100 People tend to look at government as their friend and at the businessman as their enemy. 41 00:04:02.100 --> 00:04:07.740 They look at the businessman as a fellow who's going to make profits from them, and consequently 42 00:04:07.740 --> 00:04:12.860 they distrust him because they figure, if he can make a profit on me, he's got to be 43 00:04:12.860 --> 00:04:16.460 taking advantage of me somehow, and I'm afraid of that. 44 00:04:16.460 --> 00:04:20.380 But then they look at the government as their friend because they recognize that the government 45 00:04:20.380 --> 00:04:26.900 isn't making a profit, and therefore they feel that the government is really on their 46 00:04:26.900 --> 00:04:33.820 side in the matter. And so that's the way public opinion tends to drift, and in fact 47 00:04:33.820 --> 00:04:41.300 it tends to become concretized, it's locked in cement, and that's about the way it goes. 48 00:04:41.300 --> 00:04:49.140 Now let me take up the basic fears that people have. I hear these expressed all the time 49 00:04:49.140 --> 00:04:55.140 in various ways, there are certain areas where these fears constantly are brought to the 50 00:04:55.140 --> 00:05:02.140 surface. I would suppose that probably the basic fear that people have of a free market 51 00:05:02.140 --> 00:05:06.740 – now I'm not talking about any other type of fear, I'm only talking about the fears 52 00:05:06.740 --> 00:05:11.420 people have of a free market, that is a market where there would be no government control 53 00:05:11.420 --> 00:05:17.580 or intervention at all. So they are afraid of this, and the fear tends to appear this 54 00:05:17.580 --> 00:05:26.680 The first fear is the fear of high prices. I presume that is the number one terror that 55 00:05:26.680 --> 00:05:34.460 people have considering a marketplace that is unregulated. It is certainly a well-known 56 00:05:34.460 --> 00:05:38.980 fact—and no businessman has ever denied it—that the reason you go into business 57 00:05:38.980 --> 00:05:46.220 is to make a profit. That's the idea. And therefore the fear runs this way, that given 58 00:05:46.220 --> 00:05:53.060 In a market without any government, the businessmen who are seeking profits, and they admit to 59 00:05:53.060 --> 00:05:58.620 seeking profits, would have no reason not to raise prices. 60 00:05:58.620 --> 00:06:04.740 And so if you had a free market, the prices would trend upward, upward, upward. 61 00:06:04.740 --> 00:06:11.780 There would be nothing to hold them down, because in theory, it is well known that profits 62 00:06:11.780 --> 00:06:17.820 Profits are those sums that accumulate after all the bills have been paid. So you would 63 00:06:17.820 --> 00:06:24.820 have an ever-widening gap between cost of production and selling price. And that widening 64 00:06:24.820 --> 00:06:30.060 gap would be the area of expanding profits, and the businessman would be making more and 65 00:06:30.060 --> 00:06:35.340 more profits. And who could say no to him? You see, what would happen—and this is the 66 00:06:35.340 --> 00:06:42.020 The fear, you understand, would be that the businessman would simply want to make profits, 67 00:06:42.020 --> 00:06:45.940 and as he began making them, he'd want to make more, and so what he would tend to do 68 00:06:45.940 --> 00:06:51.160 would be to just constantly raise his prices, and you and I would be compelled to pay for 69 00:06:51.160 --> 00:06:56.640 whatever he asked, and there would be nothing to hold him down, and the consequence is we 70 00:06:56.640 --> 00:07:01.420 couldn't afford to meet these payments, and we would then move into an area of complete 71 00:07:01.420 --> 00:07:09.380 – lack, we would suffer poverty and deprivation of every sort just so that a few greedy, grasping 72 00:07:09.380 --> 00:07:14.980 businessmen could maximize their profits and just take advantage of us up and down and 73 00:07:14.980 --> 00:07:16.340 backwards and forwards. 74 00:07:16.340 --> 00:07:23.860 This is the general fear. It happens to be really – and I hope you won't resent my 75 00:07:23.860 --> 00:07:29.340 saying this, but that's an old wives' tale. It just isn't so. That isn't the 76 00:07:29.340 --> 00:07:34.700 the way the market works, although let me concede at once that there probably isn't 77 00:07:34.700 --> 00:07:41.020 a businessman but what would like to do it. This is true. The businessman would undoubtedly 78 00:07:41.020 --> 00:07:47.360 like to make as much profit as he can, and if that meant raising his prices, he probably 79 00:07:47.360 --> 00:07:53.060 would raise his prices. Well, now just take a moment and look at things and you'll see 80 00:07:53.060 --> 00:07:57.440 that businessmen, although they might like to raise their prices, all other factors remaining 81 00:07:57.440 --> 00:08:02.920 Have you ever found this happening? 82 00:08:02.920 --> 00:08:08.500 Here comes a union leader to a businessman, and he says, I'd like to raise the wages 83 00:08:08.500 --> 00:08:10.600 of the people here. 84 00:08:10.600 --> 00:08:14.760 And the businessman, of course, says, gee, I'm glad you got here. 85 00:08:14.760 --> 00:08:19.000 I've been wanting to raise my prices for a long time, but I couldn't justify it. 86 00:08:19.000 --> 00:08:23.500 Now with you here, I can justify an increase and we'll both make a lot more. 87 00:08:23.500 --> 00:08:27.900 So I'm going to put my prices up very high, and that will make it possible for me to grant 88 00:08:27.900 --> 00:08:32.500 the wage increase that you want, and I'll immediately put my prices way above that, 89 00:08:32.500 --> 00:08:34.340 and let's do that right away. 90 00:08:34.340 --> 00:08:35.460 Gee, what took you so long? 91 00:08:35.460 --> 00:08:37.300 Why weren't you here last week? 92 00:08:37.300 --> 00:08:39.460 Have you ever found businessmen saying this? 93 00:08:39.460 --> 00:08:40.460 I don't think so. 94 00:08:40.460 --> 00:08:45.980 You'll usually find the businessmen squaring off toe-to-toe with the labor boss and saying, 95 00:08:45.980 --> 00:08:52.020 no, I don't want to raise wages because if I do, I've got to raise prices. 96 00:08:52.020 --> 00:08:56.860 Well, why doesn't the businessman want to raise a price? 97 00:08:56.860 --> 00:09:03.020 You see, the fear that we have that businessmen really want to raise prices isn't really 98 00:09:03.020 --> 00:09:08.700 carried out in fact, although let me concede that they probably do. 99 00:09:08.700 --> 00:09:13.220 But faced with a free market, they probably wouldn't be able to. 100 00:09:13.220 --> 00:09:19.060 We're going to get into an examination of that a little further on to see just what 101 00:09:19.060 --> 00:09:21.060 does happen in a free market. 102 00:09:21.060 --> 00:09:27.060 I'm only concerned at the moment with focusing on the fears that people have. And certainly 103 00:09:27.060 --> 00:09:33.780 it is true that most people have a belief, a fear. Actually, it's a superstition. They 104 00:09:33.780 --> 00:09:39.620 don't really understand how the market works. And they presume that because of the desire 105 00:09:39.620 --> 00:09:45.900 of businessmen to maximize their profits, that every businessman, without any government 106 00:09:45.900 --> 00:09:51.320 and Overseer would simply be engaged in raising his prices as high as he could in order to 107 00:09:51.320 --> 00:09:53.080 maximize his profits. 108 00:09:53.080 --> 00:10:00.800 Now there are some corollary fears that extend from this. If it is true that businessmen 109 00:10:00.800 --> 00:10:06.980 would be constantly trying to put higher prices on their goods, it would also follow that 110 00:10:06.980 --> 00:10:14.380 businessmen would be trying to lower wages. And so in addition to the fear of high prices, 111 00:10:14.380 --> 00:10:19.480 There is a corresponding fear of low wages. Now that's an interesting thing in itself, 112 00:10:19.480 --> 00:10:25.900 because in point of fact, if you want to analyze it, a wage is nothing but a price paid for 113 00:10:25.900 --> 00:10:32.680 the commodity of labor. So why don't people fear that businessmen would also raise wages 114 00:10:32.680 --> 00:10:37.140 since they believe that businessmen are going to raise all the prices? Why wouldn't the 115 00:10:37.140 --> 00:10:42.940 businessmen also raise the price of labor? Well, the reason people don't think so is 116 00:10:42.940 --> 00:10:48.940 is because they view the price of labor as a cost factor in production, but the selling 117 00:10:48.940 --> 00:10:56.460 price as a profit factor. And so they see the businessman as a being of great power, 118 00:10:56.460 --> 00:11:04.580 who is able to set prices and set wages. And therefore they are afraid of the businessman 119 00:11:04.580 --> 00:11:11.180 because they view him as a creature of power who can impose on their lives and reduce the 120 00:11:11.180 --> 00:11:16.260 the amount of wages that they get if they're a wage earner and increase the amount that 121 00:11:16.260 --> 00:11:21.540 they have to pay for the goods and services made. They don't trust this man, whom they 122 00:11:21.540 --> 00:11:27.740 presume to have power, but they do trust the government, which has corresponding power, 123 00:11:27.740 --> 00:11:33.300 and so they tend to trust the government to get in and hold down the businessman so that 124 00:11:33.300 --> 00:11:38.540 he can't, one, lower wages or, two, raise prices. 125 00:11:38.540 --> 00:11:46.480 Now there are still other areas that touch in this same context. One would be the concept 126 00:11:46.480 --> 00:11:53.980 of excess profits. What is an excess profit? Well, I don't really know. The word excess 127 00:11:53.980 --> 00:12:01.020 is a general term. It means too much. Well, how much is too much? I don't know. It's 128 00:12:01.020 --> 00:12:06.800 sort of like some of the ambiguous terms that we use today that tend to be emotive but they 129 00:12:06.800 --> 00:12:12.960 They don't mean too much, like saying, well, that man is rich and this other man is poor. 130 00:12:12.960 --> 00:12:20.120 Well, how rich is rich and how poor is poor? I don't know. A rich man is always somebody 131 00:12:20.120 --> 00:12:26.320 that has more than I have and a poor man is me and everybody else in my situation or in 132 00:12:26.320 --> 00:12:32.520 a situation that's worse than mine. So poverty always begins with me and riches always begins 133 00:12:32.520 --> 00:12:39.440 with the other fellow. But what does that mean? It doesn't mean anything. I know people 134 00:12:39.440 --> 00:12:45.440 who look down on me because economically speaking, financially speaking, I can't measure up 135 00:12:45.440 --> 00:12:49.120 to them at all. I couldn't begin to. So they look down on me. But I know other people look 136 00:12:49.120 --> 00:12:55.160 up to me because they think I've got a lot. It's a comparative proposition. You are rich 137 00:12:55.160 --> 00:13:01.520 or poor in terms of other people who are richer or poorer. That's what it means. It means 138 00:13:01.520 --> 00:13:25.880 We've taken surveys around the country to find out what the opinion of students in high 139 00:13:25.880 --> 00:13:31.960 School and the University hold in respect to the amount of profits they think businessmen 140 00:13:31.960 --> 00:13:40.240 are making. And the bulk of the opinion today has it that businessmen are making anywhere 141 00:13:40.240 --> 00:13:51.020 from 50 to 80 percent profit. Well, actually, that is absolutely ridiculous. A very, very 142 00:13:51.020 --> 00:13:58.140 Every successful firm today may be making 3 or 4 percent profit. 143 00:13:58.140 --> 00:14:03.700 Many firms feel delighted if they can make a 1 percent profit. 144 00:14:03.700 --> 00:14:13.420 There are, of course, very few highly risky endeavors that may make 6 or 7 percent profit. 145 00:14:13.420 --> 00:14:20.380 But the idea that you're making anywhere from 50 to 80 percent is pure poppycock. 146 00:14:20.380 --> 00:14:29.380 It just isn't so, yet that's what people think. You see, when a man goes to work, say, 147 00:14:29.380 --> 00:14:38.460 in a department store, what he sees is the inflow of customer's money and the outflow 148 00:14:38.460 --> 00:14:45.080 of his wage, and that's about all he sees. He doesn't see the cost of the department 149 00:14:45.080 --> 00:14:51.480 Store. He doesn't see the overhead. He doesn't see the advertising bills. He doesn't see 150 00:14:51.480 --> 00:14:57.280 the entire payroll. He doesn't see the insurance cost. He doesn't see the interest rates on 151 00:14:57.280 --> 00:15:04.840 borrowed money. He doesn't see any of these things. What he sees is an influx of thousands 152 00:15:04.840 --> 00:15:11.840 of dollars a day from customers who are buying merchandise, and he is getting paid maybe 153 00:15:11.840 --> 00:15:19.420 Money, $20 a day. So he sees thousands of dollars coming in every day and $20 going 154 00:15:19.420 --> 00:15:27.620 out to him. And he sort of makes a quick conclusion. You know, the fellow that owns this is pocketing 155 00:15:27.620 --> 00:15:33.160 the difference. Well, of course, the fellow isn't pocketing any major portion of that 156 00:15:33.160 --> 00:15:40.300 at all. In fact, on that day he may lose money. It's only in the overall, including the rush 157 00:15:40.300 --> 00:15:47.180 business at Christmas and in other types of special promotional affairs that enough profit 158 00:15:47.180 --> 00:15:51.900 will be accrued and that profit has to take care of all of the rest of the operation throughout 159 00:15:51.900 --> 00:15:56.140 the year, which may simply be so marginal that there's no profit at all most of the 160 00:15:56.140 --> 00:16:02.540 time. You're doing well if you just meet expenses most of the time. Now, anybody in 161 00:16:02.540 --> 00:16:08.620 business who knows what I've said or has heard what I've said knows what I'm saying is true. 162 00:16:08.620 --> 00:16:14.340 But people who are not in business don't understand this. They think that business is a very simple 163 00:16:14.340 --> 00:16:21.420 process of taking in a lot and spending a very little. It's actually just the reverse. 164 00:16:21.420 --> 00:16:27.220 Business is the process of spending a great deal and taking in enough so that actually 165 00:16:27.220 --> 00:16:32.540 you do end up with a little more than you spent. And that's the way it really works. 166 00:16:32.540 --> 00:16:36.260 But people don't understand that. So they have this idea that there will be surplus 167 00:16:36.260 --> 00:16:43.820 Plus profits, and of course there really isn't any such thing. The profit that a person could 168 00:16:43.820 --> 00:16:49.640 make in today's business world wouldn't be surplus no matter what you did. But this 169 00:16:49.640 --> 00:16:56.300 is one of the reasons people fear a free market. They fear that somehow the businessman is 170 00:16:56.300 --> 00:17:00.760 just going to make a bundle and he's going to make it at your expense and my expense and 171 00:17:00.760 --> 00:17:04.480 therefore something has to be done to hold him in check. 172 00:17:04.480 --> 00:17:09.560 Now there's still another fear in this same area, and that's the fear that if businessmen 173 00:17:09.560 --> 00:17:15.700 can't take and raise their prices for any reason, if any reason should appear, then 174 00:17:15.700 --> 00:17:22.200 at least they can lower the quality. And by this process they will cut costs and be able 175 00:17:22.200 --> 00:17:30.040 to maximize their profits. You see, always they view the businessman as being the arch-villain. 176 00:17:30.040 --> 00:17:36.540 He is in a central position where he can manipulate all around the periphery of his activities 177 00:17:36.540 --> 00:17:44.240 and injure everybody in process so that he can take advantage of them all the way around. 178 00:17:44.240 --> 00:17:49.460 This is one of the fears. Of course, it would be important to examine that to see whether 179 00:17:49.460 --> 00:17:54.420 or not that is so, and I intend to do that. 180 00:17:54.420 --> 00:17:59.060 Here is another one of the fears that we have in the market in addition to the fear of high 181 00:17:59.060 --> 00:18:12.060 and the fear of monopoly. For it is a well-known fact that every businessman wants to be a monopolist. 182 00:18:12.060 --> 00:18:19.060 And here is what the fear is, that given a free market without any government intervention, 183 00:18:19.060 --> 00:18:26.060 there would be one or maybe two businessmen who would be very good, very efficient, 184 00:18:26.060 --> 00:18:34.060 and they would engage in the process of becoming more and more efficient and these people would 185 00:18:34.060 --> 00:18:39.980 lower their prices. The reason they would lower their prices would be to defeat their competition. 186 00:18:40.540 --> 00:18:47.340 They would simply operate with an ever-lowering price until they drove all their competition out, 187 00:18:47.980 --> 00:18:53.500 at which point they would have a monopoly. Now having a monopoly, they would simply raise their 188 00:18:53.500 --> 00:18:56.980 Without their price to the skies, there would be nothing to hold them back because their 189 00:18:56.980 --> 00:19:01.340 competition is gone. And without government in there, why, that's what you'd have. 190 00:19:01.340 --> 00:19:07.460 This is the fear. Without government to intervene in the market, the most efficient men would 191 00:19:07.460 --> 00:19:13.700 become monopolists. And once they became monopolists, then they would have the ability of imposing 192 00:19:13.700 --> 00:19:19.720 what could be called a monopoly price. So if you analyze this, you discover that really 193 00:19:19.720 --> 00:19:26.280 The fear of monopoly isn't a fear of monopoly. It's a fear of a high price. It's the fear of 194 00:19:26.280 --> 00:19:33.240 a high price sustained through a monopoly practice. And so, again, it's the same fear that people have 195 00:19:33.240 --> 00:19:40.440 the fear of a high price, this time obtained in a very special way, the special way being a monopoly. 196 00:19:41.320 --> 00:19:47.960 Now there is another fear that people generally have, and this is the fear of the business cycle. 197 00:19:47.960 --> 00:19:57.960 There is a well-known belief that the free market itself tends to operate cyclically. 198 00:19:57.960 --> 00:20:05.640 It has its periods of ups and downs because there is something inevitable about this. 199 00:20:05.640 --> 00:20:13.320 You have a period of time when market activities accelerate, conditions are good, a lot of 200 00:20:13.320 --> 00:20:18.280 Money is in circulation. People are buying and spending and working and everything is great. 201 00:20:19.240 --> 00:20:26.440 And then you have the recession. The market slows down. The flow of money is retarded. 202 00:20:27.000 --> 00:20:34.360 And everything tends to go downhill. And this is something we don't like. We would like to always 203 00:20:34.360 --> 00:20:40.040 live in paradise. We would like everything to be on the upside, not the downside. 204 00:20:40.040 --> 00:20:46.360 and the consequences. We fear this and given a free market, we are led to believe that 205 00:20:46.360 --> 00:20:52.280 this kind of behavior would eventuate constantly. We would simply be in kind of an economic 206 00:20:52.280 --> 00:20:58.120 elevator that would rise and fall at the behest of the businessman who is going to take advantage 207 00:20:58.120 --> 00:21:02.920 of it whether it's going up or down and we are going to be the poor suckers who are caught 208 00:21:02.920 --> 00:21:07.800 in the middle and we're going to have to pay for it and so we resent that and we're afraid of it 209 00:21:07.800 --> 00:21:11.960 and this is why people call for the government to come in and intervene. 210 00:21:11.960 --> 00:21:15.720 So all of these are fears of a free market. 211 00:21:16.840 --> 00:21:21.880 Now to substantiate the fears of the free market that you hear on every hand, 212 00:21:23.240 --> 00:21:32.120 there are several historical periods of time or events which are usually brought forward as 213 00:21:32.120 --> 00:21:41.400 arguments to justify the fears of the market that you've heard expressed. One of these, 214 00:21:41.400 --> 00:21:48.720 and I haven't heard this talked about too much lately, but at one time this was a very, 215 00:21:48.720 --> 00:21:53.680 very prevalent one, and of course among people who are studying economics and certainly on 216 00:21:53.680 --> 00:22:00.360 your campuses today you'll find this argument offered quite a bit, it will be said something 217 00:22:00.360 --> 00:22:07.320 Okay, you people who believe in a free market, well great, it sounds good. But don't forget 218 00:22:07.320 --> 00:22:13.080 there was a time when that's what you had. There was a time when government did not intervene 219 00:22:13.080 --> 00:22:19.000 in the economy. The only reason that government did begin to intervene is because the people 220 00:22:19.000 --> 00:22:25.140 in the market demonstrated conclusively that they were kind of a shifty lot and you had 221 00:22:25.140 --> 00:22:29.820 had to have intervention, otherwise everybody would have been exploited. 222 00:22:29.820 --> 00:22:32.960 Don't forget the Industrial Revolution, for instance. 223 00:22:32.960 --> 00:22:38.120 Back at the time of the Industrial Revolution, the government hadn't begun yet to intervene. 224 00:22:38.120 --> 00:22:39.120 And what happened? 225 00:22:39.120 --> 00:22:47.800 Well, you had a number of these greedy, grasping capitalists, these big industrialists emerge, 226 00:22:47.800 --> 00:22:52.160 and they finally discovered how to mass produce goods. 227 00:22:52.160 --> 00:22:58.480 And the results was, of course, that they built sweatshops, they forced men and women 228 00:22:58.480 --> 00:23:03.760 and even little children to come in these miserable places that they built, because 229 00:23:03.760 --> 00:23:06.920 they wouldn't lay out the money, you see, to build a decent factory. 230 00:23:06.920 --> 00:23:12.320 They just brought them into these dark, depressing surroundings. 231 00:23:12.320 --> 00:23:14.920 There wasn't enough light, there wasn't enough air. 232 00:23:14.920 --> 00:23:18.640 In the summer, the rooms would be just terribly hot. 233 00:23:18.640 --> 00:23:21.320 In the winter, they wouldn't be properly heated. 234 00:23:21.320 --> 00:23:24.320 Sometimes they were too wet, sometimes they were too dry. 235 00:23:24.320 --> 00:23:28.120 People got sick, they were even crippled. 236 00:23:28.120 --> 00:23:32.640 Sometimes they were even killed in these factories because the owner of the factories just didn't 237 00:23:32.640 --> 00:23:34.220 care about them at all. 238 00:23:34.220 --> 00:23:38.660 He just was only interested in one thing, and that is maximizing his profits. 239 00:23:38.660 --> 00:23:40.660 And so that's what you had. 240 00:23:40.660 --> 00:23:45.360 You had a decline of human well-being. 241 00:23:45.360 --> 00:23:47.640 People's health was ruined. 242 00:23:47.640 --> 00:23:49.840 More people were killed and injured. 243 00:23:49.840 --> 00:23:54.640 In fact, the whole moral fiber of society began to break down. 244 00:23:54.640 --> 00:24:00.360 But finally, the government awoke to the danger that existed in the factories and then they 245 00:24:00.360 --> 00:24:01.360 began to intervene. 246 00:24:01.360 --> 00:24:07.120 And of course, this is where the modern labor union got started and the union also got in 247 00:24:07.120 --> 00:24:12.040 and began to intervene and to punish the businessmen and these industrialists that were taking 248 00:24:12.040 --> 00:24:13.780 advantage of the situation. 249 00:24:13.780 --> 00:24:18.880 And golly, if it hadn't been for the government and the union intervention, why by now there 250 00:24:18.880 --> 00:24:26.240 just be a handful of men who had all of industry in their hands and we would all be their victims. 251 00:24:26.240 --> 00:24:34.000 We would just be a bunch of little puppets being maneuvered and crushed and bled white 252 00:24:34.000 --> 00:24:40.000 just to satisfy the greed and avarice of these subhuman monsters who are the great industrialists. 253 00:24:40.000 --> 00:24:44.880 Now you've heard something like that, possibly not with all of the color that I've given it, 254 00:24:44.880 --> 00:24:57.200 But actually, you know, that's not true. What I've just said is the report. That's the superstition. 255 00:24:58.000 --> 00:25:06.720 In fact, what we want to do is to take the time to get into that area and examine it historically 256 00:25:06.720 --> 00:25:14.720 and see what really did happen. Because what we're examining right now relates to the fears alone 257 00:25:14.720 --> 00:25:21.600 and I'm not trying to explain the truth of the matter. I'm only reciting what the fears are and 258 00:25:21.600 --> 00:25:27.760 certainly this is one of the fears that people have. That there was a time historically where 259 00:25:27.760 --> 00:25:35.200 governments didn't intervene and at that time the businessmen behaved like subhuman fiends and simply 260 00:25:35.200 --> 00:25:39.600 took advantage of the situation and exploited everybody and so you have to have some kind of 261 00:25:39.600 --> 00:25:44.760 of Intervention. Now that's the popular belief. Now there is another period of history 262 00:25:44.760 --> 00:25:50.340 that is trotted out to sustain this same type of fear. And this is called the Age of the 263 00:25:50.340 --> 00:25:57.340 Robber Barons. And what we hear in this case is much the same. It will be said, all right 264 00:25:57.340 --> 00:26:02.900 you people who believe in a free market, sure, it sounds good. But don't forget there was 265 00:26:02.900 --> 00:26:08.320 a time in this country where we didn't have much in the way of government intervention. 266 00:26:08.320 --> 00:26:16.400 Why you have this group of the big moguls, so-called, the giants of industry, commerce 267 00:26:16.400 --> 00:26:24.800 and finance, who emerge and they form cartels and they seek monopolies and they simply get 268 00:26:24.800 --> 00:26:30.520 a stranglehold on the economy, just a handful of men really, and they begin to drive all 269 00:26:30.520 --> 00:26:37.480 their competition into bankruptcy and they take a position of power and influence obtained 270 00:26:37.480 --> 00:26:43.840 by their dominance of the market but fortunately before they could completely take it over 271 00:26:43.840 --> 00:26:48.120 the government caught on to what they were doing and we had the Sherman Antitrust Law 272 00:26:48.120 --> 00:26:54.440 passed in 1890 and other subsequent bits of legislation that helped to hold these big 273 00:26:54.440 --> 00:26:59.680 moguls in check so now you don't get that thing anymore because the government does 274 00:26:59.680 --> 00:27:05.280 intervene but if you had a free market without government intervention what would prevent 275 00:27:05.280 --> 00:27:08.280 the appearance of some more of these giant moguls. 276 00:27:08.280 --> 00:27:11.280 Why, there's just a whole lot of them waiting in the wings. 277 00:27:11.280 --> 00:27:16.280 But fortunately, they can't get started because the government is restraining them and holding them back, you see. 278 00:27:16.280 --> 00:27:22.280 So this is the fear that is expressed in this area, and that is that given a free market, 279 00:27:22.280 --> 00:27:32.280 you would have these giant people, cruel, rapacious, greedy, with no redeeming human characteristics, 280 00:27:32.280 --> 00:27:50.880 There is one further historical period that is trotted out and dusted off in order to 281 00:27:50.880 --> 00:27:56.760 confirm all of our worst suspicions about a free market, and this is of course the so-called 282 00:27:56.760 --> 00:28:02.440 Great Depression, for it is a well-known fact, quote and unquote, that the Great Depression 283 00:28:02.440 --> 00:28:09.000 occurred because of the greed and avarice of a limited number of businessmen who simply 284 00:28:09.000 --> 00:28:15.640 went to work and overproduced. And when they had a lot of stockpiles of goods and services 285 00:28:15.640 --> 00:28:20.480 that people weren't able to buy at the high prices that they demanded, why then the businessmen 286 00:28:20.480 --> 00:28:25.280 simply closed their factories and wouldn't produce anymore until they could sell the 287 00:28:25.280 --> 00:28:27.480 and the surpluses they'd already produced. 288 00:28:27.480 --> 00:28:32.280 And that meant that thousands of men were thrown out of work just to sustain the high 289 00:28:32.280 --> 00:28:36.240 prices and the high profits of these greedy industrialists. 290 00:28:36.240 --> 00:28:40.180 And if it hadn't been for the labor unions and, of course, for the government intervening, 291 00:28:40.180 --> 00:28:47.280 why by now the whole country would be in the hands of a small cartel of greedy, grasping 292 00:28:47.280 --> 00:28:50.960 monsters, and that would be the situation we face. 293 00:28:50.960 --> 00:28:55.020 But fortunately, the government saw what was happening, and so did the unions, and they 294 00:28:55.020 --> 00:29:01.340 They moved in, they intervened, they established public welfare and other benefits to the workers 295 00:29:01.340 --> 00:29:06.300 who had been thrown out of work and by this process they brought us out of the depression 296 00:29:06.300 --> 00:29:11.460 and of course that's why you have to have government intervention in the market. 297 00:29:11.460 --> 00:29:17.140 And what I have now done is just simply recite quickly some of the major fears that people 298 00:29:17.140 --> 00:29:21.380 have of the marketplace that is of a free market. 299 00:29:21.380 --> 00:29:34.380 So what I want to do is to consider those areas with some detail and you want to be sure to get in on it because it's a very, very interesting area. Thanks very much.