WEBVTT NOTE Our Wise Overlords Are Just Here to Serve Us 1 00:00:00.000 --> 00:00:03.840 When I first heard that we were going to have an event called the Delusion of Good Government, 2 00:00:03.840 --> 00:00:11.680 I had in mind exactly what I would talk about. I am going to address this topic head on. 3 00:00:11.680 --> 00:00:16.880 Let me first, and by the way, Christie who's monitoring this, now it starts now, okay? 4 00:00:16.880 --> 00:00:22.920 My time starts as of right now, okay. First of all, I want to join Doug in urging you 5 00:00:22.920 --> 00:00:27.560 to check out the Mises Academy. We have a little flyer about it out there on the table. 6 00:00:27.560 --> 00:00:33.940 The Mises Academy is an interface by which we can offer online courses, live, delivered 7 00:00:33.940 --> 00:00:38.240 to you in your own home by our faculty. 8 00:00:38.240 --> 00:00:41.980 And you can interact with people who are of like mind and get to know people. 9 00:00:41.980 --> 00:00:45.820 You can do a lot of interesting readings, you can watch some videos and really get something 10 00:00:45.820 --> 00:00:46.820 out of it. 11 00:00:46.820 --> 00:00:51.880 In fact, I'm doing a course this very minute on the Great Depression and the New Deal. 12 00:00:51.880 --> 00:00:55.820 And so we're, in fact, using the Rothbard text we used for a couple of weeks and now 13 00:00:55.820 --> 00:01:05.820 And now we move on to other ones, but it's great fun, and I think nobody feels like it's been a waste of time or a waste of his money. We're all very happy with it, and I hope you will be, too. 14 00:01:05.820 --> 00:01:14.820 I think Bob Murphy and I may want to do a reprise of the zombie thing as a promo for the Mises Academy. 15 00:01:14.820 --> 00:01:21.820 Like, what I envision is the zombie just droning on and on with all these sort of platitudes that you got in seventh grade, 16 00:01:21.820 --> 00:01:26.320 and then me coming up and saying, you don't want to be like this guy, do you? 17 00:01:26.320 --> 00:01:28.820 Come on now, study at the Mises Academy. 18 00:01:28.820 --> 00:01:30.820 Don't go your whole life like a drone. 19 00:01:30.820 --> 00:01:33.820 And then toward the end, you know, he becomes like a real guy. 20 00:01:33.820 --> 00:01:35.820 You know, it'd be really something. 21 00:01:35.820 --> 00:01:38.820 So I haven't broken this to Bob yet, that this is our plan. 22 00:01:38.820 --> 00:01:41.820 And any of you who don't have any idea what the heck I'm talking about, 23 00:01:41.820 --> 00:01:44.820 I'll just say this so as not to take any more time on this. 24 00:01:44.820 --> 00:01:48.820 When you go home, just do this as a personal favor to me. 25 00:01:48.820 --> 00:01:57.500 type in this website name interviewwithazombie.com just type that in I'll say no more interviewwithazombie.com 26 00:01:57.500 --> 00:02:03.480 and believe it or not that domain name was available so I snatched that baby up so Doug 27 00:02:03.480 --> 00:02:09.540 is right last year I came here I talked about meltdown this year my the book that I've got 28 00:02:09.540 --> 00:02:16.760 is called Nullification and I was just yesterday in Salt Lake City at the annual conference 29 00:02:16.760 --> 00:02:20.920 of the Association of American Physicians and Surgeons. 30 00:02:20.920 --> 00:02:25.880 So by default, by the way, on my nametag, they put Tom Woods MD. 31 00:02:25.880 --> 00:02:31.240 And so I basked in that prestige for a while, but I thought eventually they're going to 32 00:02:31.240 --> 00:02:32.240 be on to me. 33 00:02:32.240 --> 00:02:35.840 Like they'll ask some basic thing about, you know, white blood cell counts or something, 34 00:02:35.840 --> 00:02:38.240 and I don't even know what the heck they're saying. 35 00:02:38.240 --> 00:02:42.520 So I had to expose myself as being, you know, just a PhD. 36 00:02:42.520 --> 00:02:47.960 But what was interesting was that this crowd, you know, professional association, physicians, 37 00:02:47.960 --> 00:02:50.420 they snapped up copies of this book like crazy. 38 00:02:50.420 --> 00:02:55.600 They are so ready to nullify attempts to interfere with health care delivery. 39 00:02:55.600 --> 00:02:59.560 I was astonished at this. 40 00:02:59.560 --> 00:03:06.840 Nullification, by the way, is the Jeffersonian idea of the use of the state governments. 41 00:03:06.840 --> 00:03:09.480 You know, they might as well make them good for something. 42 00:03:09.480 --> 00:03:12.000 You know, I mean, they're run by sociopaths, half of them. 43 00:03:12.000 --> 00:03:27.000 The State is saying to the federal government, well, in this state we're not doing X, Y or Z because we never delegated you that power in the first place. 44 00:03:27.000 --> 00:03:33.000 And this is this sort of below-the-radar movement that's sort of taking root around the country. 45 00:03:33.000 --> 00:03:43.000 And the only major television talk show host who isn't, you know, a little pansy, who actually will talk about this on the air, is Judge Napolitano. 46 00:03:43.000 --> 00:03:49.000 The other ones, you know, oh yeah, yeah, yeah, let's, we got to take America back and all this. But then you talk about this, they run in the other direction. 47 00:03:49.000 --> 00:03:54.000 So good for the judge and good for all you folks. I'm amazed at how many of you have already read this thing. Thanks. 48 00:03:54.000 --> 00:03:59.840 Thanks, but I just want to reiterate, just to help the Mises Institute, that it costs 49 00:03:59.840 --> 00:04:04.560 them money to ship these books here, and it costs them money to ship them back. 50 00:04:04.560 --> 00:04:06.960 So you just draw your own conclusion about that. 51 00:04:06.960 --> 00:04:11.120 But what I'm going to talk about today, though, is different from both of these, because I 52 00:04:11.120 --> 00:04:15.280 have a book coming out next year, which was the book I was working on when I got the bright 53 00:04:15.280 --> 00:04:16.280 idea to do nullification. 54 00:04:16.280 --> 00:04:21.160 Instead, nullification, I think, was actually just a procrastination mechanism. 55 00:04:21.160 --> 00:04:23.000 I was like, I didn't want to do this, other things. 56 00:04:23.000 --> 00:04:46.000 The New Book is called Rollback with a suitable subtitle. 57 00:04:46.000 --> 00:04:49.800 People ask me, what is this new book going to be about? 58 00:04:49.800 --> 00:04:50.800 What's it about? 59 00:04:50.800 --> 00:04:54.800 I kept stumbling as I would try to give a good response to that. 60 00:04:54.800 --> 00:04:58.800 And I decided the best answer is, the book is about this, 61 00:04:58.800 --> 00:05:02.800 everything needs to be abolished and here's why. 62 00:05:02.800 --> 00:05:06.800 That's what it's about. 63 00:05:06.800 --> 00:05:10.800 Alright. 64 00:05:10.800 --> 00:05:14.800 So first I guess I want to start off with examining 65 00:05:14.800 --> 00:05:18.800 some of the myths that we're taught about government and good government 66 00:05:18.800 --> 00:05:24.980 and what it can do for us and so on that are still taught to 7th grade kids, I'm sure, 67 00:05:24.980 --> 00:05:27.840 and that most people go through their lives more or less believing, you know, well, you 68 00:05:27.840 --> 00:05:31.680 know, the government is us after all and it's just looking out for our good and sure there 69 00:05:31.680 --> 00:05:34.780 are a few bad apples once in a while, but don't worry, our system provides for that. 70 00:05:34.780 --> 00:05:39.340 We vote them out, we get the good guys in there and everybody goes through kind of buying 71 00:05:39.340 --> 00:05:41.240 this more or less. 72 00:05:41.240 --> 00:05:43.560 So the government pursues the public good. 73 00:05:43.560 --> 00:05:44.560 That's why it's there. 74 00:05:44.560 --> 00:05:47.240 It is to pursue the public good, whatever that term means. 75 00:05:47.240 --> 00:05:51.040 But nevertheless, that's part of the job description. 76 00:05:51.040 --> 00:05:56.040 Private entities, on the other hand, are really looking only to provide for themselves. 77 00:05:56.040 --> 00:05:58.940 And in practice, that's all they do, is they just provide for themselves. 78 00:05:58.940 --> 00:06:02.500 But the government provides for all of us. 79 00:06:02.500 --> 00:06:05.440 So those two things we get told. 80 00:06:05.440 --> 00:06:11.700 We get likewise told that we would suffer unimaginably were it not for the wise public 81 00:06:11.700 --> 00:06:30.700 The poor in particular would suffer the most. Only government can rescue us. Good government can rescue us from poverty and misery and child labor and all the rest of it. 82 00:06:30.700 --> 00:06:37.700 Again, everybody's taught this, and so I don't go around saying that people who believe this are just incorrigible idiots and there's no hope for them. 83 00:06:37.700 --> 00:06:41.700 I would be amazed if people got through school and didn't believe these things. I don't blame them. 84 00:06:41.700 --> 00:06:47.700 This is only what they've been taught day in and day out, 24 hours a day, their whole educational lives. 85 00:06:47.700 --> 00:06:56.700 By the way, every time, sorry, every time I glance downward, I am mesmerized by this Rothbard head tie. 86 00:06:56.700 --> 00:07:03.700 And if any of you are wondering, you know, man, I didn't think this guy could get any cooler, but that tie, it's just right through the roof. 87 00:07:03.700 --> 00:07:06.700 Where can you get this tie? Well, wouldn't you like to know? 88 00:07:06.700 --> 00:07:10.700 Well, you know, go online and go to the Mises store, and they sell this tie. 89 00:07:10.700 --> 00:07:16.700 In fact, I think we made one of these ties, and there was some thought that, nah, this tie isn't going to go anywhere. 90 00:07:16.700 --> 00:07:23.700 And a few of us said, what? I would step over my own grandmother to get that tie, and sure enough, we got it. 91 00:07:23.700 --> 00:07:25.700 Alright, that has nothing to do with anything. 92 00:07:25.700 --> 00:07:29.700 But it does go to show, by the way, the voluntary sector provides, right? 93 00:07:29.700 --> 00:07:32.700 It was a voluntary sector that realized there was this need. 94 00:07:32.700 --> 00:07:34.700 So what in fact happens, though? 95 00:07:34.700 --> 00:07:36.700 Alright, so we got the mythology. 96 00:07:36.700 --> 00:07:39.700 What in fact happens in the actual governments in this world? 97 00:07:39.700 --> 00:07:43.700 Not in some dreamland, but the governments in this world that we live in. 98 00:07:43.700 --> 00:07:44.700 What in fact happens? 99 00:07:44.700 --> 00:07:48.700 Well, what in fact happens is that they create little fiefdoms. 100 00:07:48.700 --> 00:07:53.940 fiefdoms that seek to perpetuate themselves and keep the flow of money and 101 00:07:53.940 --> 00:07:58.460 lucre moving in their direction. And I'll give you an example of such a fiefdom. 102 00:07:58.460 --> 00:08:05.140 Namely, the military-industrial complex. That was Eisenhower's term. Now, I remember 103 00:08:05.140 --> 00:08:07.660 there was a time in my life when I used to think that if you were going to be 104 00:08:07.660 --> 00:08:12.460 critical of the military budget, what are you, some kind of commie? It's a military 105 00:08:12.460 --> 00:08:15.980 budget. There's no problem there. I mean, just go cut out school lunches and be done 106 00:08:15.980 --> 00:08:22.980 The Military Budget 107 00:08:45.980 --> 00:09:01.980 When new weapons systems are introduced, which these days tend to be very technology heavy, there are two methods that are used to push them forth. 108 00:09:01.980 --> 00:09:07.980 The first of them is called front-loading and the second of them is called political engineering. 109 00:09:07.980 --> 00:09:15.980 Front-loading first. This refers to the practice of understating the ultimate cost of the device 110 00:09:15.980 --> 00:09:23.980 and typically overstating its technical capabilities. So this thing, you know, it's going to be able to avoid all radar, no one's going to see it, 111 00:09:23.980 --> 00:09:29.980 it's going to be like paper thin, it's going to be like a newspaper, you know, you could probably juggle them, 112 00:09:29.980 --> 00:09:35.980 and it's unbelievable to be able to deliver nuclear missiles everywhere, whatever, like whatever it is, 113 00:09:35.980 --> 00:09:40.380 can drop bombs on people and no one will even see, even if you have bombs on it, you won't 114 00:09:40.380 --> 00:09:44.740 be able to detect it with radar, it's going to be amazing, unbelievable, paper thin, weigh 115 00:09:44.740 --> 00:09:47.260 as much as a paper clip, it's going to cost like ten bucks. 116 00:09:47.260 --> 00:09:54.660 Alright, now they don't quite go that far, but they do typically way overstate what these 117 00:09:54.660 --> 00:09:58.540 things will actually be able to deliver and way understate the cost, that's called front 118 00:09:58.540 --> 00:09:59.540 loading. 119 00:09:59.540 --> 00:10:01.740 So you think to yourself, alright, well eventually they're going to be caught at this, right, 120 00:10:01.740 --> 00:10:04.620 when they eventually turn around and sheepishly say, remember we told you about that thing 121 00:10:04.620 --> 00:10:13.620 It's going to cost $10. It's going to cost like $10 trillion times a gazillion. 122 00:10:13.620 --> 00:10:18.620 That's not a real number. How do they get away with that? 123 00:10:18.620 --> 00:10:21.620 You figure, now the game's up, surely, right? 124 00:10:21.620 --> 00:10:26.620 And it turns out it can't actually do anything, and it's the size of Saudi Arabia. 125 00:10:26.620 --> 00:10:29.620 So what do they do now? How do they get out of this? 126 00:10:29.620 --> 00:10:43.620 The answer is the second platform of the scam, and that's political engineering, which is the idea of taking a project like this and spreading the jobs and the money across as many congressional districts as possible, 127 00:10:43.620 --> 00:10:57.620 so that no politician dares to shut down the program, even though it's completely looting the public, its goals can't possibly be met, it's become a complete joke, it's probably even obsolete by this point, 128 00:10:57.620 --> 00:11:01.620 Because the enemy it was designed for no longer exists, and yet you can't stop it. 129 00:11:01.620 --> 00:11:10.620 No politician dares to stop it. And in fact, in July 1989, when a coalition developed to cancel the B-2 bombers, 130 00:11:10.620 --> 00:11:21.620 the B-2 bombers, $60 billion, Northrop Corporation, which was the chief contractor, retaliated with a not very subtle tactic. 131 00:11:21.620 --> 00:11:35.620 It released what was previously classified information showing the tens of thousands of jobs and hundreds of millions in profits in nearly 400 congressional districts in all but a few states that would be lost along with the program. 132 00:11:35.620 --> 00:11:38.620 Subtle these people are not. 133 00:11:38.620 --> 00:11:46.620 Front loading also lends artificial encouragement to complex, technologically demanding systems over simpler and more straightforward ones. 134 00:11:46.620 --> 00:11:48.620 Well, why would that be? 135 00:11:48.620 --> 00:11:56.620 Well, the more complex a system is, the more difficult it is at the outset to anticipate all the difficulties, and therefore the easier to frontload. 136 00:11:56.620 --> 00:12:07.620 And of course, complex systems are typically composed of all kinds of sub-systems, which will require sub-contracts, each of which can be spread around more important congressional districts. 137 00:12:07.620 --> 00:12:10.620 So, in other words, making possible more political engineering. 138 00:12:10.620 --> 00:12:15.620 Chuck Spinney spent an awful lot of time at the Pentagon and said this, 139 00:12:15.620 --> 00:12:21.620 Front loading and political engineering encourage immoral behavior at all levels within the Defense Department. 140 00:12:21.620 --> 00:12:25.620 We exaggerate the threat to justify larger budgets. 141 00:12:25.620 --> 00:12:30.620 We use deceitful, if not illegal, accounting tricks to hide the true costs of programs. 142 00:12:30.620 --> 00:12:37.620 We reduce the changes of weapons being terminated for poor performance by designing success-oriented operational tests. 143 00:12:37.620 --> 00:12:41.620 In other words, it's like the fire department test that everybody gets a hundred on. 144 00:12:41.620 --> 00:12:43.620 We just design tests like that. 145 00:12:43.620 --> 00:12:46.620 And by rushing weapons into production before they are fully tested, 146 00:12:46.620 --> 00:12:50.620 we obscure future costs behind the cloak of excessive secrecy. 147 00:12:50.620 --> 00:12:53.620 We tolerate cost overruns and bad management practices, 148 00:12:53.620 --> 00:12:56.620 some of which are spilling over into the civilian economy 149 00:12:56.620 --> 00:13:00.620 and damaging our international competitiveness. 150 00:13:00.620 --> 00:13:03.620 But isn't this supposed to be the sector of the economy, 151 00:13:03.620 --> 00:13:06.620 pardon me, the sector of the economy, the sector of the government, 152 00:13:06.620 --> 00:13:12.620 This is looking out for our own good, right? This is the fundamental governmental role, is to protect you against aggression. 153 00:13:12.620 --> 00:13:18.620 Surely we can entrust the government with at least this. I mean, yeah, we know milk subsidies don't work, but surely we can entrust them with this. 154 00:13:18.620 --> 00:13:26.620 And yet this is the biggest mess of all. The Defense Department is the only one that's not required to be subjected to an audit. 155 00:13:26.620 --> 00:13:33.620 In fact, they were explicitly exempted from it when it became clear that nobody can possibly figure out where any of the money is going. 156 00:13:33.620 --> 00:13:38.780 So they can't, it's not that they can't pass an audit or you know that the auditors come in and say oh my gosh 157 00:13:38.780 --> 00:13:41.180 What a mess. I can't believe you blew all this money on X Y and Z 158 00:13:41.180 --> 00:13:46.140 They don't know what the money was blown on and this is the most fundamental governmental role 159 00:13:46.780 --> 00:13:51.480 This is it. This is this is level one and level one we get this we get 160 00:13:52.100 --> 00:13:58.060 Historical costing which says if we build a tank and it turns out that this tank winds up costing 161 00:13:58.060 --> 00:14:03.620 and three times as much as was anticipated, then that three times cost becomes the baseline 162 00:14:03.620 --> 00:14:05.380 for future tank building. 163 00:14:05.380 --> 00:14:10.640 So there's built in a natural upward trend in cost, even at a time when, as things get 164 00:14:10.640 --> 00:14:15.540 more technologically advanced, it tends to lower costs, not so in this sort of situation. 165 00:14:15.540 --> 00:14:20.040 And one could go on and on and on with examples like this, but I bring to your attention the 166 00:14:20.040 --> 00:14:22.300 various attempts that have been made at reform. 167 00:14:22.300 --> 00:14:24.780 Well, why don't we just reform the process, right? 168 00:14:24.780 --> 00:14:26.260 I mean, that's what I learned in seventh grade. 169 00:14:26.260 --> 00:14:31.060 If you do have some problem, we'll just have a blue ribbon commission and it'll go away. 170 00:14:31.060 --> 00:14:35.060 Okay, well, they have tried that a handful of times. 171 00:14:35.060 --> 00:14:41.460 And let me just run down with you the handful of times that they have indeed tried this. 172 00:14:41.460 --> 00:14:47.260 We have the 1971 Fitzhugh Commission, the 1977 Stedman Review, 173 00:14:47.260 --> 00:14:52.660 the 1981 Carlucci Acquisition Initiatives, the 1986 Packard Commission, 174 00:14:52.660 --> 00:15:16.940 The 1986 Goldwater-Nichols Department of Defense Reorganization Act, the 1989 Defense Management Review, the Defense Science Board's 1990 Streamlining Review, the 1993-94 Report of the Acquisitions Streamlining Task Force, and of the Defense Science Board, and the Air Force's Total System Performance Responsibility Initiative. 175 00:15:16.940 --> 00:15:21.260 They all draw exactly the same conclusions about what's wrong. 176 00:15:21.260 --> 00:15:24.020 And what's been done about this? 177 00:15:24.020 --> 00:15:24.780 Nothing. 178 00:15:24.780 --> 00:15:26.060 A big nothing. 179 00:15:26.060 --> 00:15:31.740 In October 2000, Bill Clinton signed legislation to set up a 12-member commission 180 00:15:31.740 --> 00:15:37.060 whose job it was to recommend improvements to the relationship between the federal government 181 00:15:37.060 --> 00:15:40.220 and the aerospace and defense companies. 182 00:15:40.220 --> 00:15:41.220 Okay. 183 00:15:41.220 --> 00:15:42.380 Again, nothing. 184 00:15:42.380 --> 00:15:43.180 Nothing comes out of this. 185 00:15:43.180 --> 00:15:47.460 So unsuccessful was each of these major commissions 186 00:15:47.460 --> 00:15:50.500 that every single time we get a new one, 187 00:15:50.500 --> 00:15:54.020 It's starting as if there had never been a previous one. 188 00:15:54.020 --> 00:15:57.020 Thomas Carlisle spent half a century with the Pentagon 189 00:15:57.020 --> 00:16:01.060 and was the Defense Department's most senior official for testing weapons, 190 00:16:01.060 --> 00:16:02.660 said this a few years ago. 191 00:16:02.660 --> 00:16:05.100 After all these years of repeated reform efforts, 192 00:16:05.100 --> 00:16:09.300 major defense programs are taking 20 to 30 years to deliver 193 00:16:09.300 --> 00:16:11.620 less capability than planned. 194 00:16:11.620 --> 00:16:13.940 So it takes longer to give less. 195 00:16:13.940 --> 00:16:18.820 Very often, at two to three times the costs and schedules planned. 196 00:16:18.820 --> 00:16:23.620 Ernest Fitzgerald was only saying what many others were saying privately when he said 197 00:16:23.620 --> 00:16:29.940 government officials from the majestic office of the president to the lowest sleaziest procurement 198 00:16:29.940 --> 00:16:35.560 office lie routinely and with impunity in defense of the system. The combination of 199 00:16:35.560 --> 00:16:43.560 loose procurement rules and government acquiescence in ripoffs leaves many a crook untouched. 200 00:16:43.560 --> 00:16:47.400 Now I mention this first because as I say I'm sure a lot of people are the way I used 201 00:16:47.400 --> 00:16:53.400 which is that this is the one untouchable area and you assume it must be fine and you can't criticize it because we all love America. 202 00:16:53.400 --> 00:16:58.400 That's exactly what they count on, that misplaced patriotism will lead you not to ask these sorts of questions. 203 00:16:58.400 --> 00:17:02.400 Well, you know, it seems to me that you ought to be asking them. 204 00:17:02.400 --> 00:17:08.400 Okay, but then we think about things that we associate with government as well, like providing for the welfare of the people. 205 00:17:08.400 --> 00:17:12.400 And here I mean specifically welfare programs. 206 00:17:12.400 --> 00:17:21.400 Even here, we see fiefdoms being established that are not, I think, so much aimed at improving the well-being of the general population, 207 00:17:21.400 --> 00:17:26.400 but rather improving the standard of living of the people who happen to work in that bureaucracy. 208 00:17:26.400 --> 00:17:35.400 So, for example, the author of an excellent book from the 1990s called Overcoming Welfare is a guy named James Payne. 209 00:17:35.400 --> 00:17:38.400 He describes this, I think, extremely well. 210 00:17:38.400 --> 00:17:44.320 Mises, welfare today is an enormous industry, much larger than the defense establishment 211 00:17:44.320 --> 00:17:47.400 or the tobacco industry or chemical companies. 212 00:17:47.400 --> 00:17:55.400 It supports over 700,000 social workers, 420 schools of social work, thousands of special 213 00:17:55.400 --> 00:18:02.240 interest groups, non-profit organizations and commercial firms and some 43 million beneficiaries. 214 00:18:02.240 --> 00:18:07.680 Day in and day out, welfare leaders work to expand their industry, expand their industries 215 00:18:07.680 --> 00:18:10.740 So notice he is not speaking to you like a seventh grade teacher. 216 00:18:10.740 --> 00:18:12.080 He's looking at it realistically. 217 00:18:12.080 --> 00:18:15.720 What's really happening here is people are feathering their nests. 218 00:18:15.720 --> 00:18:18.320 And I'll get back to the welfare subject again later. 219 00:18:18.320 --> 00:18:21.920 Right now, I'm just focusing on the fiefdom aspect of all this. 220 00:18:21.920 --> 00:18:24.160 Let's think about the war on drugs. 221 00:18:24.160 --> 00:18:29.200 Whether the war on drugs is the most wonderful idea ever proposed in the history of mankind 222 00:18:29.200 --> 00:18:32.800 or whether it's a giant boondoggle, the point is this. 223 00:18:32.800 --> 00:18:37.040 As with any government program, the bureaucracies to which it gives rise 224 00:18:37.040 --> 00:18:43.400 become self-perpetuating and people who work on their behalf become addicted to the money. 225 00:18:43.400 --> 00:18:49.640 A U.S. judge reports that two California congressmen confided to him that every federal agency 226 00:18:49.640 --> 00:18:53.560 he could think of was getting extra funding in the name of the war on drugs, not just 227 00:18:53.560 --> 00:18:58.760 the DEA or the military or the State Department as you might think, but also agencies people 228 00:18:58.760 --> 00:19:02.760 would never think of like the Department of Agriculture, the Bureau of Indian Affairs 229 00:19:02.760 --> 00:19:06.120 and the Bureau of Land Management, Department of Land Management. 230 00:19:06.120 --> 00:19:11.920 These agencies, this judge was told, are addicted to the funding provided by the War on Drugs 231 00:19:11.920 --> 00:19:15.360 and they do not want to give up that money. 232 00:19:15.360 --> 00:19:22.240 As long ago as 1992, already some 19,000 state and local police officers were pursuing the 233 00:19:22.240 --> 00:19:28.700 drug war full-time, with another 11,000 engaged in it part-time. 234 00:19:28.700 --> 00:19:33.400 This is a fiefdom, so if you want to argue against it, it's not just a matter of winning 235 00:19:33.400 --> 00:19:35.600 an intellectual argument. 236 00:19:35.600 --> 00:19:39.600 for people whose entire livelihoods are absolutely bound up in this. 237 00:19:39.600 --> 00:19:43.600 This is what makes our jobs particularly difficult. 238 00:19:43.600 --> 00:19:47.600 Education. Now, education is very interesting. 239 00:19:47.600 --> 00:19:51.600 I'm just going to make one quick point about this. Larry Lindsay was a 240 00:19:51.600 --> 00:19:55.600 supply-side economist in the 1980s, and he was interested in getting to the bottom 241 00:19:55.600 --> 00:19:59.600 of how many bureaucrats do you find in the typical city 242 00:19:59.600 --> 00:20:03.600 educational system. So he went to New York City, and he did a little digging around. 243 00:20:03.600 --> 00:20:21.600 So he tried to place calls to the central bureaucratic phone lines, and he got to six different people before he could find anybody who knew the answer. 244 00:20:21.600 --> 00:20:25.600 The sixth person said, I know the answer, but I'm not allowed to tell it to you. 245 00:20:25.600 --> 00:20:31.600 So that was another half dozen calls. After a dozen calls, he finally reaches somebody who both knows the answer and can reveal it. 246 00:20:31.600 --> 00:20:37.600 I'm sorry, it was at least 6,000. It could have been more. At least 6,000 bureaucrats in the system. 247 00:20:37.600 --> 00:20:40.600 I wish I could remember the exact figure, but at least that. 248 00:20:40.600 --> 00:20:44.600 Okay, so then he checks out the relevant figure for the city's Catholic schools. 249 00:20:44.600 --> 00:20:47.600 Now it's true, the Catholic schools educate only about one-sixth as many students. 250 00:20:47.600 --> 00:20:51.600 So by the same proportion, they should have a thousand bureaucrats. 251 00:20:51.600 --> 00:20:54.600 So he places his calls. He starts placing them. 252 00:20:54.600 --> 00:20:57.600 First call he gets, he says, so how many bureaucrats do you have in the system? 253 00:20:57.600 --> 00:21:00.600 And the person says, I don't know. He says, oh, here we go again. 254 00:21:00.600 --> 00:21:08.600 But, the woman puts him on hold and says, wait a minute, let me count. 255 00:21:08.600 --> 00:21:11.680 The answer was 26. 256 00:21:11.680 --> 00:21:18.880 And yet, all the time, we are always told the budget is just down to the bone. 257 00:21:18.880 --> 00:21:20.880 We can't cut anywhere, people. 258 00:21:20.880 --> 00:21:23.680 It is just that lean, man. 259 00:21:23.680 --> 00:21:25.100 We can't possibly cut. 260 00:21:25.100 --> 00:21:31.460 So whenever you try to talk about cuts, you get the government going into its old method 261 00:21:31.460 --> 00:21:33.660 called the Washington Monument Syndrome. 262 00:21:33.660 --> 00:21:37.780 I don't know if any people have heard this, but the Washington Monument Syndrome is a 263 00:21:37.780 --> 00:21:42.380 term that was developed when the Park Service was threatened with budget cuts. 264 00:21:42.380 --> 00:21:47.500 And of course, as with all these agencies, I'm sure that budget was as lean as could 265 00:21:47.500 --> 00:21:48.500 be. 266 00:21:48.500 --> 00:21:50.960 I mean, they couldn't get rid of one garbage can to save money there. 267 00:21:50.960 --> 00:21:54.300 So what did the Park Service do when they were threatened with budget cuts? 268 00:21:54.300 --> 00:21:59.300 Well, if you cut our budget, the first thing we're going to do is shut down the Washington Monument. 269 00:21:59.300 --> 00:22:04.300 Because when people come to town, they want to see the Washington Monument. 270 00:22:04.300 --> 00:22:09.300 And if they're told, now wait a minute, sorry, budget cuts meant that we had to close the Washington Monument, 271 00:22:09.300 --> 00:22:14.300 you know what's going to happen. There's going to be a huge outcry, restore this budget, double the budget, in fact. 272 00:22:14.300 --> 00:22:18.300 So let's not even have this fight, because we win because of the Washington Monument. 273 00:22:18.300 --> 00:22:22.300 So in other words, you go immediately to the thing that people most want, 274 00:22:22.300 --> 00:22:26.380 and you threaten to cut there because really where else could we cut, right? 275 00:22:26.380 --> 00:22:30.220 So the same thing goes on at the local level, oh my gosh, if we cut these local taxes, you're 276 00:22:30.220 --> 00:22:32.460 not going to have garbage pick up anymore. 277 00:22:32.460 --> 00:22:35.540 Garbage is just going to be accumulating in the streets. 278 00:22:35.540 --> 00:22:37.720 Our budget is just so lean. 279 00:22:37.720 --> 00:22:40.660 And if you're getting mugged in the middle of the night, no one's going to come help 280 00:22:41.660 --> 00:22:43.700 Whereas now if you're getting mugged in the middle of the night, we're there within a 281 00:22:43.700 --> 00:22:46.540 good 45 minutes, we're right there. 282 00:22:46.540 --> 00:22:50.100 But we're not even having that. 283 00:22:50.100 --> 00:22:56.040 So it's exactly a reflection of what I've been talking about. 284 00:22:56.040 --> 00:23:00.980 It's all fiefdoms, but yet covered over by this mythology that it's all in the public 285 00:23:00.980 --> 00:23:04.420 good and because this is all being done for the public good, how could there be fat in 286 00:23:04.420 --> 00:23:05.680 these budgets, right? 287 00:23:05.680 --> 00:23:08.820 We wouldn't do that because that would be in opposition to the public good, blah, blah, 288 00:23:08.820 --> 00:23:09.820 blah, blah, blah. 289 00:23:09.820 --> 00:23:13.540 Okay, so another thing is, another sort of myth, when the government intervenes, it always 290 00:23:13.540 --> 00:23:19.940 does so, again, for the public good and it's certainly not doing so on behalf of established 291 00:23:19.940 --> 00:23:28.940 What kind of a cynic are you people? Really? The government intervening on behalf of private interests? It's just trying to look out for you and me, man. 292 00:23:28.940 --> 00:23:35.940 Well, we could have a whole conference on just that, but just one example that I'm particularly fond of giving, 293 00:23:35.940 --> 00:23:42.940 even though I assure you, and there will be some in the book on this, but I assure you there are a great many examples, 294 00:23:42.940 --> 00:23:53.940 But I like this. A company called Unical in California got a U.S. patent for its method of reducing harmful emissions from gasoline-powered vehicles. 295 00:23:53.940 --> 00:23:58.940 Well, several months after receiving this patent, Unical got even more good news. 296 00:23:58.940 --> 00:24:04.940 Guess what? The California Air Resources Board had released its final clean gasoline rules, 297 00:24:04.940 --> 00:24:09.940 and it turns out that in order to comply with them, you had to use, wait for it, 298 00:24:09.940 --> 00:24:16.020 for it, the very method of emissions reduction for which Unical had just received a patent. 299 00:24:16.020 --> 00:24:23.780 Now how did the California Air Resources Board know this was the best way of reducing emissions? 300 00:24:23.780 --> 00:24:26.660 Unical told them so. 301 00:24:26.660 --> 00:24:31.100 Unical helped to draft California's clean air rules at the very moment it had a patent 302 00:24:31.100 --> 00:24:34.700 pending on the method it was proposing for universal adoption. 303 00:24:34.700 --> 00:24:39.060 I know, I'm sorry, I mean, you could never go to guess that in a million years, right? 304 00:24:39.060 --> 00:24:42.060 What the hell had something to do with drafting that regulation, huh? My gosh. 305 00:24:42.060 --> 00:24:47.060 How unprogressive we are at being skeptical of regulation. This is just our wise overlords trying to help us. 306 00:24:47.060 --> 00:24:54.060 And that in turn meant that Unical is demanding licensing fees from anybody legally excelling oil in California. 307 00:24:54.060 --> 00:25:00.060 Exxon, Mobil, Chevron, Texaco, Shell and other refiners tried to file a lawsuit. 308 00:25:00.060 --> 00:25:04.060 This came to naught because Unical successfully countersued. 309 00:25:04.060 --> 00:25:09.980 Unical also benefited because this disproportionately harmed its smaller competitors despite the 310 00:25:09.980 --> 00:25:13.760 longer period of time they had been granted to comply with the new rules and Unical had 311 00:25:13.760 --> 00:25:17.460 lobbied against even this minor allowance, needless to say. 312 00:25:17.460 --> 00:25:23.360 We also have something that, not an Austrian but still an important figure, George Stiglitz 313 00:25:23.360 --> 00:25:28.580 identified as the capture theory of regulation, that is to say that these regulatory bodies 314 00:25:28.580 --> 00:25:33.900 aren't just these sort of disembodied angels who almost don't even dwell in this world, 315 00:25:33.900 --> 00:25:44.620 from the beginning or with the passage of time, they wind up being dominated by or even 316 00:25:44.620 --> 00:25:49.940 staffed by members of the industry itself, and this has happened more times than we can 317 00:25:49.940 --> 00:25:50.940 count. 318 00:25:50.940 --> 00:25:54.040 This is not allowed for in the seventh grade model. 319 00:25:54.040 --> 00:26:01.100 Or we have, just take some simple examples, Rothbard has a very good lecture series on 320 00:26:01.100 --> 00:26:07.060 Mises.org and I want to borrow a little bit of storytelling from one of those that I want 321 00:26:07.060 --> 00:26:11.940 to supplement with some of my own stuff in just a moment. But Rothbard talks about just 322 00:26:11.940 --> 00:26:16.120 looking at things that no one even knows about or would think about, just innocent little 323 00:26:16.120 --> 00:26:20.620 things that go on in the world that the government has penalized over the years and he begins 324 00:26:20.620 --> 00:26:25.820 with the traveling salesman. Now we hear about traveling salesman, we laugh and we make jokes 325 00:26:25.820 --> 00:26:34.020 The Traveling Salesman was a threat to established interest because the Traveling Salesman could, 326 00:26:34.020 --> 00:26:38.660 with very little overhead, walk around and visit all the retailers in a particular area 327 00:26:38.660 --> 00:26:42.260 and show the goods that he had and all the retailers could decide if they want to carry 328 00:26:42.260 --> 00:26:43.260 them in their stores. 329 00:26:43.260 --> 00:26:47.060 Well, a lot of wholesalers who lived in that area didn't like this form of competition. 330 00:26:47.060 --> 00:26:52.700 They got this big bulky storefront and a big warehouse and meanwhile this guy is sneaking 331 00:26:52.700 --> 00:26:56.700 Moving into their town and bringing stuff around and moving in on their business. 332 00:26:56.700 --> 00:26:59.700 So naturally, what has to be done in this situation? 333 00:26:59.700 --> 00:27:02.700 Well, naturally, we've got to impose high licensing fees on traveling salesmen. 334 00:27:02.700 --> 00:27:05.700 Now, that's being done for the public good, you understand. 335 00:27:05.700 --> 00:27:11.700 Because we were all suffering under the terrible, terrible, Stalinesque regime of traveling salesmanship. 336 00:27:11.700 --> 00:27:14.700 How would we have survived without the government intervening there? 337 00:27:14.700 --> 00:27:20.700 So, I mean, this is obviously, obviously a sop to particular wholesalers. 338 00:27:20.700 --> 00:27:22.940 I assume I don't need to elaborate on this. 339 00:27:22.940 --> 00:27:26.860 And this is particularly why jokes about traveling salesmen 340 00:27:26.860 --> 00:27:31.140 developed, because traveling salesmen came to be associated 341 00:27:31.140 --> 00:27:33.940 with sort of the very edges of legality. 342 00:27:33.940 --> 00:27:35.600 Because most of these salesmen couldn't 343 00:27:35.600 --> 00:27:39.140 afford to pay the licensing fees for being in particular towns. 344 00:27:39.140 --> 00:27:41.900 So they would sort of sneak in, do their dirty work, 345 00:27:41.900 --> 00:27:43.660 you know, of trying to alert people 346 00:27:43.660 --> 00:27:45.900 to the existence of new products, 347 00:27:45.900 --> 00:27:48.100 and then get out of town before they could be detected. 348 00:27:48.100 --> 00:27:49.940 And so because they were viewed as being 349 00:27:49.940 --> 00:27:57.420 The only reason they were in that situation was because of the government itself. 350 00:27:57.420 --> 00:28:05.060 Or likewise, we have the example of department stores, which were attacked as unfair competition. 351 00:28:05.060 --> 00:28:09.500 Department stores, they're selling goods on more than one floor. 352 00:28:09.500 --> 00:28:12.940 The world is going to end, and they're selling a variety of products. 353 00:28:12.940 --> 00:28:15.580 Oh my gosh, and then it was mail order. 354 00:28:15.580 --> 00:28:18.180 How dare these people sell by mail order. 355 00:28:18.180 --> 00:28:23.180 We've got to put restrictions on that. Mail order? How am I supposed to compete with mail order? 356 00:28:23.180 --> 00:28:27.180 They're just sending catalogs everywhere. How do I compete with that? 357 00:28:27.180 --> 00:28:32.180 So there were retailers that actually held ritual bonfires at the Sears Roebuck catalog 358 00:28:32.180 --> 00:28:37.180 to indicate where your loyalty ought to be if you're a good American. The heck with that. 359 00:28:37.180 --> 00:28:42.180 Then the chain stores. The chain stores have got to be crushed. Let's go after A&P. We've got to crush A&P. 360 00:28:42.180 --> 00:28:46.180 But then A&P was almost completely put out of business, as usually happens. 361 00:28:46.180 --> 00:28:52.680 In the market, no matter how entrenched somebody seems to be, the market has a way of either keeping that firm on its toes or driving them out. 362 00:28:52.680 --> 00:28:56.680 A&P was almost driven out by self-service supermarkets. 363 00:28:56.680 --> 00:29:01.680 Well, then the villain became the so-called discount houses, particularly in the 50s. 364 00:29:01.680 --> 00:29:09.680 So what you'd have is you'd have a big store that would sell a lot of products, but there were laws in a lot of states that said 365 00:29:09.680 --> 00:29:17.680 A retailer is not allowed to sell a product for a price lower than what the manufacturer's retail price is. 366 00:29:17.680 --> 00:29:20.680 So, like, we all know. We see manufacturer's retail price. We laugh at that. 367 00:29:20.680 --> 00:29:23.680 We say, what kind of sucker is going to pay this price, right? 368 00:29:23.680 --> 00:29:27.680 If it's not at least 33% off of that, at least, we're not even going to look at. 369 00:29:27.680 --> 00:29:30.680 That was illegal. That was illegal. You can't do that. 370 00:29:30.680 --> 00:29:33.680 The retailers obviously wanted to impose a situation like this. 371 00:29:33.680 --> 00:29:37.680 Again, do I even need to explain? Because it keeps prices high for all of them. 372 00:29:37.680 --> 00:29:42.680 Now, you don't have to worry about the retailer next door underselling them. Everybody's going to sell at the ripoff price. 373 00:29:42.680 --> 00:29:48.680 Now, it doesn't matter to the actual manufacturer what price his product sells at. 374 00:29:48.680 --> 00:29:52.680 As long as it's, I mean, once he sells it to the retail, it doesn't matter to him, as long as they sell. 375 00:29:52.680 --> 00:29:57.680 So the manufacturers themselves weren't so wedded to this particular practice. 376 00:29:57.680 --> 00:30:02.680 They went along with it because they didn't want the retailers to boycott them, because the retailers really wanted it. 377 00:30:02.680 --> 00:30:04.680 So you got these various laws. 378 00:30:04.680 --> 00:30:09.080 So what began to happen was that we got the establishment of so-called discount houses. 379 00:30:09.080 --> 00:30:14.780 We have discount houses where places where they were selling below the manufacturer's suggested retail price. 380 00:30:14.780 --> 00:30:16.980 Can they do that? 381 00:30:16.980 --> 00:30:19.580 Well, in some cases, they were enjoined from it. 382 00:30:19.580 --> 00:30:23.280 The courts, these bigger firms would go and take them to court and say, 383 00:30:23.280 --> 00:30:24.780 you've got to stop doing that. 384 00:30:24.780 --> 00:30:27.780 You've got to jack your prices back up. 385 00:30:27.780 --> 00:30:32.680 There were companies like Masters was enjoined at least a hundred times 386 00:30:32.680 --> 00:30:38.560 by some of these envious competitors. Masters eventually moved to Washington, D.C. where 387 00:30:38.560 --> 00:30:42.200 there were no such laws and started a mail order company. So there's two strikes against 388 00:30:42.200 --> 00:30:47.240 them right there. Unbelievable villain, opponent of mankind and all the rest of it. Well, it's 389 00:30:47.240 --> 00:30:53.400 interesting that Life Magazine wrote an article about the discount houses in the 1950s. And 390 00:30:53.400 --> 00:30:57.600 Life Magazine is sort of treating this like some bizarro thing. They're lowering their 391 00:30:57.600 --> 00:31:02.600 prices below the manufacturer's retail price? I mean, what? Don't they understand fair competition? 392 00:31:02.600 --> 00:31:09.600 Don't they understand? These regulations are imposed for our own good in order to keep the economy functioning smoothly. 393 00:31:09.600 --> 00:31:13.600 They're going to bring about cutthroat competition. How would we ever survive that? 394 00:31:13.600 --> 00:31:17.600 How would the consumer survive that? 395 00:31:17.600 --> 00:31:21.600 Well, you know, I got some thoughts. I somehow think it would turn out alright. 396 00:31:21.600 --> 00:31:27.600 But here's Life Magazine. It's almost like one of the major retailers wrote this article. 397 00:31:27.600 --> 00:31:36.600 The discount houses sell their merchandise in cramped, ill-lit, unswept aisles. 398 00:31:36.600 --> 00:31:39.600 Oh, no! 399 00:31:39.600 --> 00:31:46.600 Gee, I'm saving 20 bucks, but I have to step on some sawdust. 400 00:31:46.600 --> 00:31:52.600 The displays were arranged as a glorified pushcart display. 401 00:31:52.600 --> 00:31:55.600 It's just so typical, the arrogance of these people. 402 00:31:55.600 --> 00:32:10.600 So, in other words, the average person who just wants to save some money, desperately trying to save some money, is being viewed as this creature like a cockroach, you know, who steps through garbage on the floor and looks at a pushcart display to get his crummy items. 403 00:32:10.600 --> 00:32:19.600 And it's customarily presided over by a group of horse misanthropic clerks. Rude people, right? 404 00:32:19.600 --> 00:32:25.600 All right, but even Life Magazine had to admit that the discounters were actually playing an important role, 405 00:32:25.600 --> 00:32:29.600 forcing traditional retailers to become more competitive. 406 00:32:29.600 --> 00:32:35.600 And it gives examples of local retailers finally researching what the discount houses were doing 407 00:32:35.600 --> 00:32:39.600 and basically saying, having ads saying, throw your discount card away, 408 00:32:39.600 --> 00:32:42.600 come on over to my furniture store and I'll match their prices. 409 00:32:42.600 --> 00:32:45.600 And within weeks, they had tripled their sales. 410 00:32:45.600 --> 00:32:49.800 so it you know this is actually not the end of the world as it turns out my 411 00:32:49.800 --> 00:32:53.660 favorite example though because by the 1960s the regulations imposed on discount 412 00:32:53.660 --> 00:32:57.320 on discounting these laws against discounting which were sometimes 413 00:32:57.320 --> 00:33:02.100 enforced sometimes they look the other way were abolished and it was clear they 414 00:33:02.100 --> 00:33:06.640 had always been special interest pieces of legislation all along everybody knew 415 00:33:06.640 --> 00:33:10.600 that but supposedly this is to keep the economy on an even keel because if 416 00:33:10.600 --> 00:33:14.440 there's too much competition you know who knows what will happen I don't I 417 00:33:14.440 --> 00:33:34.440 The Sunbeam Corporation enjoins him from selling its products below the manufacturer's suggested retail price, or what was referred to at the time as the fair trade price. 418 00:33:34.440 --> 00:33:39.440 Well, Phillips just went on doing it. Like, go ahead, send the goons into my store and drag me out. 419 00:33:39.440 --> 00:33:44.440 He just kept on doing it, but what he wound up doing was he said, okay, here's what we'll do. 420 00:33:44.440 --> 00:33:51.440 I'll sell at your so-called manufacturer's retail price, but I'm also going to put my price beneath it. 421 00:33:51.440 --> 00:33:56.440 And when I take the money from the customer, I'm going to take the difference and I'm going to say to the customer, 422 00:33:56.440 --> 00:34:00.440 which charity of yours would you like me to donate the difference to? 423 00:34:00.440 --> 00:34:05.940 And having made his point to Sunbeam Corporation, he then dropped the whole Sunbeam line altogether. 424 00:34:05.940 --> 00:34:11.440 So there are heroes hidden in our history whom we know nothing about, but whom Life Magazine, 425 00:34:11.440 --> 00:34:15.440 quite in spite of itself, alerts us to, in fact. 426 00:34:15.440 --> 00:34:19.440 Okay, now let's see. So we've talked about things that most people don't think about, 427 00:34:19.440 --> 00:34:22.440 and we could talk about the Civil Aeronautics Board, which was happily abolished, 428 00:34:22.440 --> 00:34:29.440 which was clearly a cartel for the airlines and to tamp down on any competition. 429 00:34:29.440 --> 00:34:59.440 to talk about occupational licensing, I mean it's weird enough that florists would need to be licensed or in some states fortune tellers need to be licensed and all these other things but you really can tell that this is a scam, this is not just for the public good because who's demanding that the licensing come into existence, not the public but the regulated industry itself and secondly when they come up with new requirements to get a license to be a florist or whatever you notice they 430 00:34:59.440 --> 00:35:13.440 They only impose those new requirements on the would-be florists. They don't say, now, to be fair, because we do want to protect the public, that's the only reason we're imposing this, it's only sensible that we would retroactively impose these new requirements on the existing florists, too. 431 00:35:13.440 --> 00:35:23.440 That never happens. The existing florists are trying to minimize the number of florists. They don't want to have these new regulations imposed on them. It's only imposed on the newcomers. 432 00:35:23.440 --> 00:35:30.440 So the public interest propaganda version seems not in fact to hold water. 433 00:35:30.440 --> 00:35:36.440 And then finally, we would all suffer without them, right? Without them, where would we all be? 434 00:35:36.440 --> 00:35:41.440 Well, I'll tell you where we'd be. We'd all be crawling around in the dirt, searching for worms, 435 00:35:41.440 --> 00:35:45.440 trying to sustain ourselves in one way, looking for nutrients in the dirt, 436 00:35:45.440 --> 00:35:52.440 because that's where we'd be without government. And again, I know we're all taught this. I mean, I learned it. 437 00:35:52.440 --> 00:35:56.440 Because here's basically the story that you get. Now, by my watch, I got another 10 minutes, 438 00:35:56.440 --> 00:35:58.440 because we had like a 5 minute thingy, so I got about 10 minutes. 439 00:35:58.440 --> 00:36:03.440 The version of things you get is, well, we all learned about the Industrial Revolution, right? 440 00:36:03.440 --> 00:36:09.440 And during the Industrial Revolution, two things seemed to happen simultaneously. 441 00:36:09.440 --> 00:36:14.440 The thing that you hear about in school is like, everybody suffered unspeakably and died, 442 00:36:14.440 --> 00:36:18.440 but secondly, population increased faster than it ever had in the past. 443 00:36:18.440 --> 00:36:21.440 Now, how are those things compatible? Of course, they are not. 444 00:36:21.440 --> 00:36:24.440 They're compatible by not telling you the second part of that story. 445 00:36:24.440 --> 00:36:29.440 Now, what I want to start off by saying is that nobody in the year 2010 446 00:36:29.440 --> 00:36:33.440 would want to change places with a factory worker in 1820. 447 00:36:33.440 --> 00:36:36.440 We all understand that. We all understand that these people, 448 00:36:36.440 --> 00:36:42.440 in no way making light of their situation, these people worked in unspeakable conditions. 449 00:36:42.440 --> 00:36:45.440 But it's not enough to say they worked in unspeakable conditions, 450 00:36:45.440 --> 00:36:49.440 therefore the free market caused this, and therefore moving away from a free market 451 00:36:49.440 --> 00:36:52.880 A pure free market is the only way to protect other people from it, and if we established 452 00:36:52.880 --> 00:36:57.800 a pure free market in labor right now, we would revert immediately to these conditions. 453 00:36:57.800 --> 00:37:02.800 This is wrong for a variety of reasons, not the least of which is that if we look at the 454 00:37:02.800 --> 00:37:05.760 conditions people lived in in the Industrial Revolution and we compare it to what they 455 00:37:05.760 --> 00:37:09.080 lived in before, that would be the relevant metric. 456 00:37:09.080 --> 00:37:10.880 How were they living before? 457 00:37:10.880 --> 00:37:15.680 How many people could the economy support before? 458 00:37:15.680 --> 00:37:17.840 What level of caloric intake did they have? 459 00:37:17.840 --> 00:37:22.840 How much living space per capita did they have? How many changes of clothes did they have? 460 00:37:22.840 --> 00:37:27.840 And in all these ways, people's standard of living, even the most miserable factory worker 461 00:37:27.840 --> 00:37:31.840 of the Industrial Revolution, increased and were improved. 462 00:37:31.840 --> 00:37:36.840 This is why people left agriculture. It was precisely because there were better opportunities elsewhere. 463 00:37:36.840 --> 00:37:42.840 Not that these are wonderful, but at a time when the economy was still extremely primitive, 464 00:37:42.840 --> 00:37:45.840 this was all the economy could afford. 465 00:37:45.840 --> 00:37:53.840 What the free market makes possible is this, that a business makes profits, the profits are invested in the company in capital equipment. 466 00:37:53.840 --> 00:38:04.840 The capital equipment makes it possible to produce far more goods, far more widgets or whatever than could ever have been produced before, with fewer hands. 467 00:38:04.840 --> 00:38:13.840 And thereby there are more hands that are released into the economy to produce other things that we were deprived of in the past because the economy couldn't afford to spare the labor. 468 00:38:13.840 --> 00:38:24.840 Now we have labor-saving machinery. We can spare the labor to produce still more things, to create still more wealth, and with the increased abundance comes lower money prices. 469 00:38:24.840 --> 00:38:33.840 Now we don't see that so much today because the Fed is always keeping the money prices rising, but that is still the effect, is lower money prices with respect to wages. 470 00:38:33.840 --> 00:38:42.840 Competition lowers these prices so that everybody enjoys this windfall. So we have an increased supply of goods thanks to all this investment, a roughly stable money supply. 471 00:38:42.840 --> 00:38:46.080 Money Supply, the prices are going to come down. It would be like if we had a stable 472 00:38:46.080 --> 00:38:49.640 amount of goods and an increased money supply, we'd have rising prices. We'd have just 473 00:38:49.640 --> 00:38:54.880 the opposite. We have lowering prices in terms of wages precisely because businesses are 474 00:38:54.880 --> 00:39:00.720 free to invest their profits in capital equipment and investment. It is not because the government 475 00:39:00.720 --> 00:39:04.780 took from the factory owners and gave to the workers. There weren't nearly enough factory 476 00:39:04.780 --> 00:39:09.760 owners to make any difference whatsoever in the lives of these workers. If you divided 477 00:39:09.760 --> 00:39:17.600 All of their extra furniture by a thousand and handed it out to 999 people, each person 478 00:39:17.600 --> 00:39:20.940 would wind up with like one-fiftieth of an extra table leg. 479 00:39:20.940 --> 00:39:23.680 That is not going to improve his condition. 480 00:39:23.680 --> 00:39:28.000 What's going to improve his condition is making the economy more physically productive so 481 00:39:28.000 --> 00:39:32.200 that the things it produces are less dear and therefore he can acquire more of them 482 00:39:32.200 --> 00:39:33.480 with less effort. 483 00:39:33.480 --> 00:39:38.760 That is exactly the history of Europe and the United States since the 19th century. 484 00:39:38.760 --> 00:39:41.880 Precisely what has happened, that is how real wages have risen. 485 00:39:41.880 --> 00:39:47.560 That is how working conditions have improved without government involvement. 486 00:39:47.560 --> 00:39:50.560 Working conditions is one of these areas we think, well, you'd have to be some kind of 487 00:39:50.560 --> 00:39:55.540 stooge of industry to think that without some kind of government involvement, working conditions 488 00:39:55.540 --> 00:39:56.540 could ever be improved. 489 00:39:56.540 --> 00:39:59.340 Well, there are two little points about this. 490 00:39:59.340 --> 00:40:04.200 The first is if there's an improvement in working conditions that pays for itself, like 491 00:40:04.200 --> 00:40:10.600 leads to fewer workplace accidents, greater productivity, well then obviously a profit-seeking 492 00:40:10.600 --> 00:40:14.600 enterprise will adopt that without any coercion. But suppose there's a workplace improvement 493 00:40:14.600 --> 00:40:18.520 that does not immediately pay for itself in that way, what possible reason would business 494 00:40:18.520 --> 00:40:24.860 ever have for adopting it? And the answer is what some economists call compensating differentials. 495 00:40:24.860 --> 00:40:30.180 Think about two factories that are identical, except one has air conditioning and one doesn't. 496 00:40:30.180 --> 00:40:33.200 You would have to be paid a little bit more to work at the non-air-conditioned factory 497 00:40:33.200 --> 00:40:40.200 So there's a compensating differential at the other factory where they'd have to pay you more to say, 498 00:40:40.200 --> 00:40:44.200 OK, look, I know it stinks in here, so we'll pay you a little bit more to work here. 499 00:40:44.200 --> 00:40:46.200 That's a compensating differential. 500 00:40:46.200 --> 00:40:49.200 Now, as people become more and more to value the comfort of air conditioning, 501 00:40:49.200 --> 00:40:52.200 that compensating differential gets greater and greater. 502 00:40:52.200 --> 00:40:57.200 Eventually it reaches a point at which it would be cheaper for the firm to get rid of the differential and just install air conditioning. 503 00:40:57.200 --> 00:41:02.740 So that's how we know that workplace improvements are not coming at so fast a pace that they're 504 00:41:02.740 --> 00:41:05.320 dis-employing more people than they're helping. 505 00:41:05.320 --> 00:41:08.280 Everyone would love to have air conditioning from the first day it was invented, but that 506 00:41:08.280 --> 00:41:10.140 would have dis-employed everybody. 507 00:41:10.140 --> 00:41:14.200 How do we know what is the correct pace to introduce these improvements that doesn't 508 00:41:14.200 --> 00:41:17.120 do so disproportionately to the benefit gained? 509 00:41:17.120 --> 00:41:21.960 Because ultimately there is no logical end to where we would all like to see our working 510 00:41:21.960 --> 00:41:22.960 conditions be. 511 00:41:22.960 --> 00:41:27.960 and the United Auto Workers, they would like to have a masseuse come in. 512 00:41:27.960 --> 00:41:30.960 That was one of their demands. They wanted massages during the day. 513 00:41:30.960 --> 00:41:36.960 Well, there is no logical end to this, but you have to weigh it against costs and benefits 514 00:41:36.960 --> 00:41:37.960 so that you don't get thrown out of work. 515 00:41:37.960 --> 00:41:40.960 If we had to assign masseuses to every single worker, 516 00:41:40.960 --> 00:41:43.960 a lot of people would find it very hard to get hired. 517 00:41:43.960 --> 00:41:45.960 Where would we get all the masseuses from? 518 00:41:45.960 --> 00:41:48.960 There would be a lot of practical problems with this. 519 00:41:48.960 --> 00:41:50.960 And then finally, child labor. What's the matter with you? 520 00:41:50.960 --> 00:41:54.960 Do you want some seven-year-old working in a copper mine or something? What's wrong with you? 521 00:41:54.960 --> 00:41:58.960 Okay, well, how did child labor go away? Did child labor go away because they legislated it away? 522 00:41:58.960 --> 00:42:04.960 Child labor went away simply because of this very process, that the economy became so productive 523 00:42:04.960 --> 00:42:08.960 that parents didn't feel like they needed the labor of their children just to survive. 524 00:42:08.960 --> 00:42:11.960 That's precisely the problem, is that these economies are so primitive, 525 00:42:11.960 --> 00:42:16.960 they haven't had time for the free market to transform them, they can't produce enough stuff to feed the family. 526 00:42:16.960 --> 00:42:25.960 It's not like whole countries in the world today are just full of bad parents. It's not that. By amazing coincidence, all the bad parents are in Bangladesh. 527 00:42:25.960 --> 00:42:31.960 It's that they can't afford this. If they lose 20% of their income, they don't eat. 528 00:42:31.960 --> 00:42:38.960 And so precisely in Bangladesh, we saw when, thanks to Western campaigns, Bangladesh got rid of child labor. 529 00:42:38.960 --> 00:42:45.960 We have thousands and thousands of young kids starving or going into prostitution. Same thing in the carpet industry, in Nepal. 530 00:42:45.960 --> 00:42:50.320 The same thing. They go right into prostitution. So what you need to do is make this economy 531 00:42:50.320 --> 00:42:55.160 as productive as possible. And so this is exactly what we've seen, this exact process. 532 00:42:55.160 --> 00:42:58.680 And then typically what will happen is there'll be like 10% child labor left and then the 533 00:42:58.680 --> 00:43:02.360 legislation will do away with that and they'll take credit for the whole thing when it was 534 00:43:02.360 --> 00:43:08.000 the free market that did the first 90%. And then what about welfare, the welfare of the 535 00:43:08.000 --> 00:43:11.800 people? Don't we need government intervention here? I mean, surely private sources are not 536 00:43:11.800 --> 00:43:15.880 sufficient for this. Well, look at what the free market has done. Look at what it's done. 537 00:43:15.880 --> 00:43:23.240 In 1820, 85% of the world population, roughly, was in a condition that economists referred 538 00:43:23.240 --> 00:43:25.920 to as absolute poverty. 539 00:43:25.920 --> 00:43:30.480 By 1950, that was down to 50%, and by the 1980s, that was down to a third. 540 00:43:30.480 --> 00:43:33.840 And that's just the operation of the market. 541 00:43:33.840 --> 00:43:39.400 From 1981 to 2001, we had a particularly interesting set of two decades, because we saw absolute 542 00:43:39.400 --> 00:43:45.320 poverty in the developing world drop from 40% to 21%, and the global rate drop from 543 00:43:45.320 --> 00:43:51.480 33 to 18 percent. We had not just the percentage but also the absolute number of people in 544 00:43:51.480 --> 00:43:56.580 poverty fall. This has never happened before in the history of the world, and it happened 545 00:43:56.580 --> 00:44:03.280 in any two-decade period or ever, and it happened then. In the United States, we had poverty 546 00:44:03.280 --> 00:44:09.600 falling by a percentage point per year from 1950 to 1968 with extremely modest anti-poverty 547 00:44:09.600 --> 00:44:14.680 programs in effect. 1968 was the year that we really start to see the war on poverty 548 00:44:14.680 --> 00:44:19.780 programs actually getting substantial funding, and then we see poverty stagnate. 549 00:44:19.780 --> 00:44:26.600 Between that year and 1994, per poor person, the amount spent on these programs quadrupled, 550 00:44:26.600 --> 00:44:28.200 and just like this. 551 00:44:28.200 --> 00:44:34.780 Moreover, when you consider how inefficiently, and this is good, government collects taxes, 552 00:44:34.780 --> 00:44:42.120 it takes them like a $1.67 of effort to collect $1 in taxes, and about two-thirds of all 553 00:44:42.120 --> 00:44:46.680 The money that goes to these welfare bureaucracies is eaten up in overhead. 554 00:44:46.680 --> 00:44:51.400 It actually takes five dollars in spending to get one dollar of results. 555 00:44:51.400 --> 00:44:53.680 And what's the incentive for these institutions? 556 00:44:53.680 --> 00:44:56.060 For their caseloads to go up, not down. 557 00:44:56.060 --> 00:44:57.640 That's how they get budget increases. 558 00:44:57.640 --> 00:45:00.440 What voluntary institution can possibly survive like that? 559 00:45:00.440 --> 00:45:05.520 Who's going to keep getting donations when their pitch is, well, nobody's making any 560 00:45:05.520 --> 00:45:06.880 progress who's at our shelter. 561 00:45:06.880 --> 00:45:07.880 I mean, they're just sitting here. 562 00:45:07.880 --> 00:45:10.440 I mean, we haven't been able to employ any of them. 563 00:45:10.440 --> 00:45:11.880 So keep on giving us money. 564 00:45:41.880 --> 00:45:48.880 is promoting an uncompromising but extremely attractive and compelling social vision 565 00:45:48.880 --> 00:45:53.880 that argues that we don't have to live under a system like this. 566 00:45:53.880 --> 00:46:01.880 That it is a lie, it is slander against the human race to say that this is the only way for social relations to be organized 567 00:46:01.880 --> 00:46:09.880 in which we are ruled over by a group of fiefdoms who also monopolize our education, 568 00:46:09.880 --> 00:46:13.600 who tell us that living under fiefdoms is the best and only way to live, 569 00:46:13.600 --> 00:46:16.920 and anybody who objects to this has probably got some kind of thing wrong with them. 570 00:46:16.920 --> 00:46:21.240 No, there's got to be some other way. There's got to be some other way of organizing society 571 00:46:21.240 --> 00:46:24.160 than some people get to loot other people 572 00:46:24.160 --> 00:46:28.400 and then badger and condemn those other people as the enemies of mankind. 573 00:46:28.400 --> 00:46:31.960 There has to be some other way. And we see what that other way is. 574 00:46:31.960 --> 00:46:36.280 Naturally, it is the free market. It's a free society where all the initiative comes from, 575 00:46:36.280 --> 00:46:39.160 the inventions, the improvements in our standard of living, 576 00:46:39.160 --> 00:46:43.760 all of which are completely unsung. Nobody knows that any of the statistics that I share 577 00:46:43.760 --> 00:46:48.440 with you today but they're sitting right there in official sources. I mean I'm quoting statistics 578 00:46:48.440 --> 00:46:52.480 from the World Bank. I wasn't taking these statistics from the Tom Woods wicked free 579 00:46:52.480 --> 00:47:00.300 market statistical bank. These are all sitting right there. Now the first person you can 580 00:47:00.300 --> 00:47:05.760 improve is of course yourself. We are always learning, right? We've always got more to 581 00:47:05.760 --> 00:47:35.760 and a lot of people feel like I want to know more about Austrian economics because Austrian economics, in addition to being an elegant scientific body of knowledge that helps us to understand how the world works, it also has very interesting implications because what it implies, without saying so directly, is precisely that society can manage its own affairs without a Barack Obama or a John McCain, that society can indeed manage its own affairs and so how do I learn about this? I want to be one of these cool people who can, you know, like Peter Schiff, get on TV, 582 00:47:35.760 --> 00:47:46.760 And so one of the things I did was, because there's so much on the Mises Institute website, 583 00:47:46.760 --> 00:47:51.760 it is one of the great benefactors of mankind, and that website's unbelievable. 584 00:47:51.760 --> 00:47:56.760 What I've done is I've put together like a list, most of which is links to various Mises sources, 585 00:47:56.760 --> 00:48:01.760 but sort of organized by, you know, what would you read if you had never read anything at all but you just want to get started? 586 00:48:01.760 --> 00:48:12.760 And then broken down into subject matter and I've got audio and video and all this stuff so you can listen to it in your car if you want to, you can read on your own. 587 00:48:12.760 --> 00:48:16.760 Most of the books I'm linking to are available for free on the Mises website. 588 00:48:16.760 --> 00:48:21.760 All this stuff is just sitting there and you can take it as far as you have the time to go with it. 589 00:48:21.760 --> 00:48:26.760 So that is at, I actually bought this domain name, LearnAustrianEconomics.com. 590 00:48:26.760 --> 00:48:30.760 Why was that available? I don't know, but I bought that thing. 591 00:48:30.760 --> 00:48:34.760 Learn AustrianEconomics.com because I thought every time somebody emails me, what should I read? 592 00:48:34.760 --> 00:48:39.760 Well, why keep reinventing the wheel? I did this to help along. 593 00:48:39.760 --> 00:48:44.760 But ultimately, what this boils down to is that every platitude you learn about the government 594 00:48:44.760 --> 00:48:51.760 is the opposite of the truth. And every one of these platitudes is taught in school 595 00:48:51.760 --> 00:48:57.760 and is intended to create a race of drones that sits back and raises no objection 596 00:48:57.760 --> 00:49:00.760 when it's treated like garbage by this institution. 597 00:49:00.760 --> 00:49:04.760 My friends, we can do better as a race of mankind. 598 00:49:04.760 --> 00:49:06.760 I mean, we can do better than this. 599 00:49:06.760 --> 00:49:10.760 And so what I urge you to do is join the Mises Institute, 600 00:49:10.760 --> 00:49:13.760 not only because you get a free book, which is a great book, 601 00:49:13.760 --> 00:49:17.760 but because you will be doing yourselves and posterity a great favor 602 00:49:17.760 --> 00:49:22.760 by helping out what I consider to be the institution that is on the front lines 603 00:49:22.760 --> 00:49:26.760 of improving our society and leading us toward a system 604 00:49:26.760 --> 00:49:32.160 is really and truly fitting for human beings to live in. 605 00:49:32.160 --> 00:49:33.040 So thank you very much.