When I first heard that we were going to have an event called the Delusion of Good Government,
I had in mind exactly what I would talk about. I am going to address this topic head on.
Let me first, and by the way, Christie who's monitoring this, now it starts now, okay?
My time starts as of right now, okay. First of all, I want to join Doug in urging you
to check out the Mises Academy. We have a little flyer about it out there on the table.
The Mises Academy is an interface by which we can offer online courses, live, delivered
to you in your own home by our faculty.
And you can interact with people who are of like mind and get to know people.
You can do a lot of interesting readings, you can watch some videos and really get something
out of it.
In fact, I'm doing a course this very minute on the Great Depression and the New Deal.
And so we're, in fact, using the Rothbard text we used for a couple of weeks and now
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.
I think Bob Murphy and I may want to do a reprise of the zombie thing as a promo for the Mises Academy.
Like, what I envision is the zombie just droning on and on with all these sort of platitudes that you got in seventh grade,
and then me coming up and saying, you don't want to be like this guy, do you?
Come on now, study at the Mises Academy.
Don't go your whole life like a drone.
And then toward the end, you know, he becomes like a real guy.
You know, it'd be really something.
So I haven't broken this to Bob yet, that this is our plan.
And any of you who don't have any idea what the heck I'm talking about,
I'll just say this so as not to take any more time on this.
When you go home, just do this as a personal favor to me.
type in this website name interviewwithazombie.com just type that in I'll say no more interviewwithazombie.com
and believe it or not that domain name was available so I snatched that baby up so Doug
is right last year I came here I talked about meltdown this year my the book that I've got
is called Nullification and I was just yesterday in Salt Lake City at the annual conference
of the Association of American Physicians and Surgeons.
So by default, by the way, on my nametag, they put Tom Woods MD.
And so I basked in that prestige for a while, but I thought eventually they're going to
be on to me.
Like they'll ask some basic thing about, you know, white blood cell counts or something,
and I don't even know what the heck they're saying.
So I had to expose myself as being, you know, just a PhD.
But what was interesting was that this crowd, you know, professional association, physicians,
they snapped up copies of this book like crazy.
They are so ready to nullify attempts to interfere with health care delivery.
I was astonished at this.
Nullification, by the way, is the Jeffersonian idea of the use of the state governments.
You know, they might as well make them good for something.
You know, I mean, they're run by sociopaths, half of them.
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.
And this is this sort of below-the-radar movement that's sort of taking root around the country.
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.
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.
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.
Thanks, but I just want to reiterate, just to help the Mises Institute, that it costs
them money to ship these books here, and it costs them money to ship them back.
So you just draw your own conclusion about that.
But what I'm going to talk about today, though, is different from both of these, because I
have a book coming out next year, which was the book I was working on when I got the bright
idea to do nullification.
Instead, nullification, I think, was actually just a procrastination mechanism.
I was like, I didn't want to do this, other things.
The New Book is called Rollback with a suitable subtitle.
People ask me, what is this new book going to be about?
What's it about?
I kept stumbling as I would try to give a good response to that.
And I decided the best answer is, the book is about this,
everything needs to be abolished and here's why.
That's what it's about.
Alright.
So first I guess I want to start off with examining
some of the myths that we're taught about government and good government
and what it can do for us and so on that are still taught to 7th grade kids, I'm sure,
and that most people go through their lives more or less believing, you know, well, you
know, the government is us after all and it's just looking out for our good and sure there
are a few bad apples once in a while, but don't worry, our system provides for that.
We vote them out, we get the good guys in there and everybody goes through kind of buying
this more or less.
So the government pursues the public good.
That's why it's there.
It is to pursue the public good, whatever that term means.
But nevertheless, that's part of the job description.
Private entities, on the other hand, are really looking only to provide for themselves.
And in practice, that's all they do, is they just provide for themselves.
But the government provides for all of us.
So those two things we get told.
We get likewise told that we would suffer unimaginably were it not for the wise public
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.
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.
I would be amazed if people got through school and didn't believe these things. I don't blame them.
This is only what they've been taught day in and day out, 24 hours a day, their whole educational lives.
By the way, every time, sorry, every time I glance downward, I am mesmerized by this Rothbard head tie.
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.
Where can you get this tie? Well, wouldn't you like to know?
Well, you know, go online and go to the Mises store, and they sell this tie.
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.
And a few of us said, what? I would step over my own grandmother to get that tie, and sure enough, we got it.
Alright, that has nothing to do with anything.
But it does go to show, by the way, the voluntary sector provides, right?
It was a voluntary sector that realized there was this need.
So what in fact happens, though?
Alright, so we got the mythology.
What in fact happens in the actual governments in this world?
Not in some dreamland, but the governments in this world that we live in.
What in fact happens?
Well, what in fact happens is that they create little fiefdoms.
fiefdoms that seek to perpetuate themselves and keep the flow of money and
lucre moving in their direction. And I'll give you an example of such a fiefdom.
Namely, the military-industrial complex. That was Eisenhower's term. Now, I remember
there was a time in my life when I used to think that if you were going to be
critical of the military budget, what are you, some kind of commie? It's a military
budget. There's no problem there. I mean, just go cut out school lunches and be done
The Military Budget
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.
The first of them is called front-loading and the second of them is called political engineering.
Front-loading first. This refers to the practice of understating the ultimate cost of the device
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,
it's going to be like paper thin, it's going to be like a newspaper, you know, you could probably juggle them,
and it's unbelievable to be able to deliver nuclear missiles everywhere, whatever, like whatever it is,
can drop bombs on people and no one will even see, even if you have bombs on it, you won't
be able to detect it with radar, it's going to be amazing, unbelievable, paper thin, weigh
as much as a paper clip, it's going to cost like ten bucks.
Alright, now they don't quite go that far, but they do typically way overstate what these
things will actually be able to deliver and way understate the cost, that's called front
loading.
So you think to yourself, alright, well eventually they're going to be caught at this, right,
when they eventually turn around and sheepishly say, remember we told you about that thing
It's going to cost $10. It's going to cost like $10 trillion times a gazillion.
That's not a real number. How do they get away with that?
You figure, now the game's up, surely, right?
And it turns out it can't actually do anything, and it's the size of Saudi Arabia.
So what do they do now? How do they get out of this?
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,
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,
Because the enemy it was designed for no longer exists, and yet you can't stop it.
No politician dares to stop it. And in fact, in July 1989, when a coalition developed to cancel the B-2 bombers,
the B-2 bombers, $60 billion, Northrop Corporation, which was the chief contractor, retaliated with a not very subtle tactic.
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.
Subtle these people are not.
Front loading also lends artificial encouragement to complex, technologically demanding systems over simpler and more straightforward ones.
Well, why would that be?
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.
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.
So, in other words, making possible more political engineering.
Chuck Spinney spent an awful lot of time at the Pentagon and said this,
Front loading and political engineering encourage immoral behavior at all levels within the Defense Department.
We exaggerate the threat to justify larger budgets.
We use deceitful, if not illegal, accounting tricks to hide the true costs of programs.
We reduce the changes of weapons being terminated for poor performance by designing success-oriented operational tests.
In other words, it's like the fire department test that everybody gets a hundred on.
We just design tests like that.
And by rushing weapons into production before they are fully tested,
we obscure future costs behind the cloak of excessive secrecy.
We tolerate cost overruns and bad management practices,
some of which are spilling over into the civilian economy
and damaging our international competitiveness.
But isn't this supposed to be the sector of the economy,
pardon me, the sector of the economy, the sector of the government,
This is looking out for our own good, right? This is the fundamental governmental role, is to protect you against aggression.
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.
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.
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.
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
What a mess. I can't believe you blew all this money on X Y and Z
They don't know what the money was blown on and this is the most fundamental governmental role
This is it. This is this is level one and level one we get this we get
Historical costing which says if we build a tank and it turns out that this tank winds up costing
and three times as much as was anticipated, then that three times cost becomes the baseline
for future tank building.
So there's built in a natural upward trend in cost, even at a time when, as things get
more technologically advanced, it tends to lower costs, not so in this sort of situation.
And one could go on and on and on with examples like this, but I bring to your attention the
various attempts that have been made at reform.
Well, why don't we just reform the process, right?
I mean, that's what I learned in seventh grade.
If you do have some problem, we'll just have a blue ribbon commission and it'll go away.
Okay, well, they have tried that a handful of times.
And let me just run down with you the handful of times that they have indeed tried this.
We have the 1971 Fitzhugh Commission, the 1977 Stedman Review,
the 1981 Carlucci Acquisition Initiatives, the 1986 Packard Commission,
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.
They all draw exactly the same conclusions about what's wrong.
And what's been done about this?
Nothing.
A big nothing.
In October 2000, Bill Clinton signed legislation to set up a 12-member commission
whose job it was to recommend improvements to the relationship between the federal government
and the aerospace and defense companies.
Okay.
Again, nothing.
Nothing comes out of this.
So unsuccessful was each of these major commissions
that every single time we get a new one,
It's starting as if there had never been a previous one.
Thomas Carlisle spent half a century with the Pentagon
and was the Defense Department's most senior official for testing weapons,
said this a few years ago.
After all these years of repeated reform efforts,
major defense programs are taking 20 to 30 years to deliver
less capability than planned.
So it takes longer to give less.
Very often, at two to three times the costs and schedules planned.
Ernest Fitzgerald was only saying what many others were saying privately when he said
government officials from the majestic office of the president to the lowest sleaziest procurement
office lie routinely and with impunity in defense of the system. The combination of
loose procurement rules and government acquiescence in ripoffs leaves many a crook untouched.
Now I mention this first because as I say I'm sure a lot of people are the way I used
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.
That's exactly what they count on, that misplaced patriotism will lead you not to ask these sorts of questions.
Well, you know, it seems to me that you ought to be asking them.
Okay, but then we think about things that we associate with government as well, like providing for the welfare of the people.
And here I mean specifically welfare programs.
Even here, we see fiefdoms being established that are not, I think, so much aimed at improving the well-being of the general population,
but rather improving the standard of living of the people who happen to work in that bureaucracy.
So, for example, the author of an excellent book from the 1990s called Overcoming Welfare is a guy named James Payne.
He describes this, I think, extremely well.
Mises, welfare today is an enormous industry, much larger than the defense establishment
or the tobacco industry or chemical companies.
It supports over 700,000 social workers, 420 schools of social work, thousands of special
interest groups, non-profit organizations and commercial firms and some 43 million beneficiaries.
Day in and day out, welfare leaders work to expand their industry, expand their industries
So notice he is not speaking to you like a seventh grade teacher.
He's looking at it realistically.
What's really happening here is people are feathering their nests.
And I'll get back to the welfare subject again later.
Right now, I'm just focusing on the fiefdom aspect of all this.
Let's think about the war on drugs.
Whether the war on drugs is the most wonderful idea ever proposed in the history of mankind
or whether it's a giant boondoggle, the point is this.
As with any government program, the bureaucracies to which it gives rise
become self-perpetuating and people who work on their behalf become addicted to the money.
A U.S. judge reports that two California congressmen confided to him that every federal agency
he could think of was getting extra funding in the name of the war on drugs, not just
the DEA or the military or the State Department as you might think, but also agencies people
would never think of like the Department of Agriculture, the Bureau of Indian Affairs
and the Bureau of Land Management, Department of Land Management.
These agencies, this judge was told, are addicted to the funding provided by the War on Drugs
and they do not want to give up that money.
As long ago as 1992, already some 19,000 state and local police officers were pursuing the
drug war full-time, with another 11,000 engaged in it part-time.
This is a fiefdom, so if you want to argue against it, it's not just a matter of winning
an intellectual argument.
for people whose entire livelihoods are absolutely bound up in this.
This is what makes our jobs particularly difficult.
Education. Now, education is very interesting.
I'm just going to make one quick point about this. Larry Lindsay was a
supply-side economist in the 1980s, and he was interested in getting to the bottom
of how many bureaucrats do you find in the typical city
educational system. So he went to New York City, and he did a little digging around.
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.
The sixth person said, I know the answer, but I'm not allowed to tell it to you.
So that was another half dozen calls. After a dozen calls, he finally reaches somebody who both knows the answer and can reveal it.
I'm sorry, it was at least 6,000. It could have been more. At least 6,000 bureaucrats in the system.
I wish I could remember the exact figure, but at least that.
Okay, so then he checks out the relevant figure for the city's Catholic schools.
Now it's true, the Catholic schools educate only about one-sixth as many students.
So by the same proportion, they should have a thousand bureaucrats.
So he places his calls. He starts placing them.
First call he gets, he says, so how many bureaucrats do you have in the system?
And the person says, I don't know. He says, oh, here we go again.
But, the woman puts him on hold and says, wait a minute, let me count.
The answer was 26.
And yet, all the time, we are always told the budget is just down to the bone.
We can't cut anywhere, people.
It is just that lean, man.
We can't possibly cut.
So whenever you try to talk about cuts, you get the government going into its old method
called the Washington Monument Syndrome.
I don't know if any people have heard this, but the Washington Monument Syndrome is a
term that was developed when the Park Service was threatened with budget cuts.
And of course, as with all these agencies, I'm sure that budget was as lean as could
be.
I mean, they couldn't get rid of one garbage can to save money there.
So what did the Park Service do when they were threatened with budget cuts?
Well, if you cut our budget, the first thing we're going to do is shut down the Washington Monument.
Because when people come to town, they want to see the Washington Monument.
And if they're told, now wait a minute, sorry, budget cuts meant that we had to close the Washington Monument,
you know what's going to happen. There's going to be a huge outcry, restore this budget, double the budget, in fact.
So let's not even have this fight, because we win because of the Washington Monument.
So in other words, you go immediately to the thing that people most want,
and you threaten to cut there because really where else could we cut, right?
So the same thing goes on at the local level, oh my gosh, if we cut these local taxes, you're
not going to have garbage pick up anymore.
Garbage is just going to be accumulating in the streets.
Our budget is just so lean.
And if you're getting mugged in the middle of the night, no one's going to come help
Whereas now if you're getting mugged in the middle of the night, we're there within a
good 45 minutes, we're right there.
But we're not even having that.
So it's exactly a reflection of what I've been talking about.
It's all fiefdoms, but yet covered over by this mythology that it's all in the public
good and because this is all being done for the public good, how could there be fat in
these budgets, right?
We wouldn't do that because that would be in opposition to the public good, blah, blah,
blah, blah, blah.
Okay, so another thing is, another sort of myth, when the government intervenes, it always
does so, again, for the public good and it's certainly not doing so on behalf of established
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.
Well, we could have a whole conference on just that, but just one example that I'm particularly fond of giving,
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,
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.
Well, several months after receiving this patent, Unical got even more good news.
Guess what? The California Air Resources Board had released its final clean gasoline rules,
and it turns out that in order to comply with them, you had to use, wait for it,
for it, the very method of emissions reduction for which Unical had just received a patent.
Now how did the California Air Resources Board know this was the best way of reducing emissions?
Unical told them so.
Unical helped to draft California's clean air rules at the very moment it had a patent
pending on the method it was proposing for universal adoption.
I know, I'm sorry, I mean, you could never go to guess that in a million years, right?
What the hell had something to do with drafting that regulation, huh? My gosh.
How unprogressive we are at being skeptical of regulation. This is just our wise overlords trying to help us.
And that in turn meant that Unical is demanding licensing fees from anybody legally excelling oil in California.
Exxon, Mobil, Chevron, Texaco, Shell and other refiners tried to file a lawsuit.
This came to naught because Unical successfully countersued.
Unical also benefited because this disproportionately harmed its smaller competitors despite the
longer period of time they had been granted to comply with the new rules and Unical had
lobbied against even this minor allowance, needless to say.
We also have something that, not an Austrian but still an important figure, George Stiglitz
identified as the capture theory of regulation, that is to say that these regulatory bodies
aren't just these sort of disembodied angels who almost don't even dwell in this world,
from the beginning or with the passage of time, they wind up being dominated by or even
staffed by members of the industry itself, and this has happened more times than we can
count.
This is not allowed for in the seventh grade model.
Or we have, just take some simple examples, Rothbard has a very good lecture series on
Mises.org and I want to borrow a little bit of storytelling from one of those that I want
to supplement with some of my own stuff in just a moment. But Rothbard talks about just
looking at things that no one even knows about or would think about, just innocent little
things that go on in the world that the government has penalized over the years and he begins
with the traveling salesman. Now we hear about traveling salesman, we laugh and we make jokes
The Traveling Salesman was a threat to established interest because the Traveling Salesman could,
with very little overhead, walk around and visit all the retailers in a particular area
and show the goods that he had and all the retailers could decide if they want to carry
them in their stores.
Well, a lot of wholesalers who lived in that area didn't like this form of competition.
They got this big bulky storefront and a big warehouse and meanwhile this guy is sneaking
Moving into their town and bringing stuff around and moving in on their business.
So naturally, what has to be done in this situation?
Well, naturally, we've got to impose high licensing fees on traveling salesmen.
Now, that's being done for the public good, you understand.
Because we were all suffering under the terrible, terrible, Stalinesque regime of traveling salesmanship.
How would we have survived without the government intervening there?
So, I mean, this is obviously, obviously a sop to particular wholesalers.
I assume I don't need to elaborate on this.
And this is particularly why jokes about traveling salesmen
developed, because traveling salesmen came to be associated
with sort of the very edges of legality.
Because most of these salesmen couldn't
afford to pay the licensing fees for being in particular towns.
So they would sort of sneak in, do their dirty work,
you know, of trying to alert people
to the existence of new products,
and then get out of town before they could be detected.
And so because they were viewed as being
The only reason they were in that situation was because of the government itself.
Or likewise, we have the example of department stores, which were attacked as unfair competition.
Department stores, they're selling goods on more than one floor.
The world is going to end, and they're selling a variety of products.
Oh my gosh, and then it was mail order.
How dare these people sell by mail order.
We've got to put restrictions on that. Mail order? How am I supposed to compete with mail order?
They're just sending catalogs everywhere. How do I compete with that?
So there were retailers that actually held ritual bonfires at the Sears Roebuck catalog
to indicate where your loyalty ought to be if you're a good American. The heck with that.
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.
But then A&P was almost completely put out of business, as usually happens.
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.
A&P was almost driven out by self-service supermarkets.
Well, then the villain became the so-called discount houses, particularly in the 50s.
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
A retailer is not allowed to sell a product for a price lower than what the manufacturer's retail price is.
So, like, we all know. We see manufacturer's retail price. We laugh at that.
We say, what kind of sucker is going to pay this price, right?
If it's not at least 33% off of that, at least, we're not even going to look at.
That was illegal. That was illegal. You can't do that.
The retailers obviously wanted to impose a situation like this.
Again, do I even need to explain? Because it keeps prices high for all of them.
Now, you don't have to worry about the retailer next door underselling them. Everybody's going to sell at the ripoff price.
Now, it doesn't matter to the actual manufacturer what price his product sells at.
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.
So the manufacturers themselves weren't so wedded to this particular practice.
They went along with it because they didn't want the retailers to boycott them, because the retailers really wanted it.
So you got these various laws.
So what began to happen was that we got the establishment of so-called discount houses.
We have discount houses where places where they were selling below the manufacturer's suggested retail price.
Can they do that?
Well, in some cases, they were enjoined from it.
The courts, these bigger firms would go and take them to court and say,
you've got to stop doing that.
You've got to jack your prices back up.
There were companies like Masters was enjoined at least a hundred times
by some of these envious competitors. Masters eventually moved to Washington, D.C. where
there were no such laws and started a mail order company. So there's two strikes against
them right there. Unbelievable villain, opponent of mankind and all the rest of it. Well, it's
interesting that Life Magazine wrote an article about the discount houses in the 1950s. And
Life Magazine is sort of treating this like some bizarro thing. They're lowering their
prices below the manufacturer's retail price? I mean, what? Don't they understand fair competition?
Don't they understand? These regulations are imposed for our own good in order to keep the economy functioning smoothly.
They're going to bring about cutthroat competition. How would we ever survive that?
How would the consumer survive that?
Well, you know, I got some thoughts. I somehow think it would turn out alright.
But here's Life Magazine. It's almost like one of the major retailers wrote this article.
The discount houses sell their merchandise in cramped, ill-lit, unswept aisles.
Oh, no!
Gee, I'm saving 20 bucks, but I have to step on some sawdust.
The displays were arranged as a glorified pushcart display.
It's just so typical, the arrogance of these people.
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.
And it's customarily presided over by a group of horse misanthropic clerks. Rude people, right?
All right, but even Life Magazine had to admit that the discounters were actually playing an important role,
forcing traditional retailers to become more competitive.
And it gives examples of local retailers finally researching what the discount houses were doing
and basically saying, having ads saying, throw your discount card away,
come on over to my furniture store and I'll match their prices.
And within weeks, they had tripled their sales.
so it you know this is actually not the end of the world as it turns out my
favorite example though because by the 1960s the regulations imposed on discount
on discounting these laws against discounting which were sometimes
enforced sometimes they look the other way were abolished and it was clear they
had always been special interest pieces of legislation all along everybody knew
that but supposedly this is to keep the economy on an even keel because if
there's too much competition you know who knows what will happen I don't I
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.
Well, Phillips just went on doing it. Like, go ahead, send the goons into my store and drag me out.
He just kept on doing it, but what he wound up doing was he said, okay, here's what we'll do.
I'll sell at your so-called manufacturer's retail price, but I'm also going to put my price beneath it.
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,
which charity of yours would you like me to donate the difference to?
And having made his point to Sunbeam Corporation, he then dropped the whole Sunbeam line altogether.
So there are heroes hidden in our history whom we know nothing about, but whom Life Magazine,
quite in spite of itself, alerts us to, in fact.
Okay, now let's see. So we've talked about things that most people don't think about,
and we could talk about the Civil Aeronautics Board, which was happily abolished,
which was clearly a cartel for the airlines and to tamp down on any competition.
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
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.
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.
So the public interest propaganda version seems not in fact to hold water.
And then finally, we would all suffer without them, right? Without them, where would we all be?
Well, I'll tell you where we'd be. We'd all be crawling around in the dirt, searching for worms,
trying to sustain ourselves in one way, looking for nutrients in the dirt,
because that's where we'd be without government. And again, I know we're all taught this. I mean, I learned it.
Because here's basically the story that you get. Now, by my watch, I got another 10 minutes,
because we had like a 5 minute thingy, so I got about 10 minutes.
The version of things you get is, well, we all learned about the Industrial Revolution, right?
And during the Industrial Revolution, two things seemed to happen simultaneously.
The thing that you hear about in school is like, everybody suffered unspeakably and died,
but secondly, population increased faster than it ever had in the past.
Now, how are those things compatible? Of course, they are not.
They're compatible by not telling you the second part of that story.
Now, what I want to start off by saying is that nobody in the year 2010
would want to change places with a factory worker in 1820.
We all understand that. We all understand that these people,
in no way making light of their situation, these people worked in unspeakable conditions.
But it's not enough to say they worked in unspeakable conditions,
therefore the free market caused this, and therefore moving away from a free market
A pure free market is the only way to protect other people from it, and if we established
a pure free market in labor right now, we would revert immediately to these conditions.
This is wrong for a variety of reasons, not the least of which is that if we look at the
conditions people lived in in the Industrial Revolution and we compare it to what they
lived in before, that would be the relevant metric.
How were they living before?
How many people could the economy support before?
What level of caloric intake did they have?
How much living space per capita did they have? How many changes of clothes did they have?
And in all these ways, people's standard of living, even the most miserable factory worker
of the Industrial Revolution, increased and were improved.
This is why people left agriculture. It was precisely because there were better opportunities elsewhere.
Not that these are wonderful, but at a time when the economy was still extremely primitive,
this was all the economy could afford.
What the free market makes possible is this, that a business makes profits, the profits are invested in the company in capital equipment.
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.
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.
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.
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.
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.
Money Supply, the prices are going to come down. It would be like if we had a stable
amount of goods and an increased money supply, we'd have rising prices. We'd have just
the opposite. We have lowering prices in terms of wages precisely because businesses are
free to invest their profits in capital equipment and investment. It is not because the government
took from the factory owners and gave to the workers. There weren't nearly enough factory
owners to make any difference whatsoever in the lives of these workers. If you divided
All of their extra furniture by a thousand and handed it out to 999 people, each person
would wind up with like one-fiftieth of an extra table leg.
That is not going to improve his condition.
What's going to improve his condition is making the economy more physically productive so
that the things it produces are less dear and therefore he can acquire more of them
with less effort.
That is exactly the history of Europe and the United States since the 19th century.
Precisely what has happened, that is how real wages have risen.
That is how working conditions have improved without government involvement.
Working conditions is one of these areas we think, well, you'd have to be some kind of
stooge of industry to think that without some kind of government involvement, working conditions
could ever be improved.
Well, there are two little points about this.
The first is if there's an improvement in working conditions that pays for itself, like
leads to fewer workplace accidents, greater productivity, well then obviously a profit-seeking
enterprise will adopt that without any coercion. But suppose there's a workplace improvement
that does not immediately pay for itself in that way, what possible reason would business
ever have for adopting it? And the answer is what some economists call compensating differentials.
Think about two factories that are identical, except one has air conditioning and one doesn't.
You would have to be paid a little bit more to work at the non-air-conditioned factory
So there's a compensating differential at the other factory where they'd have to pay you more to say,
OK, look, I know it stinks in here, so we'll pay you a little bit more to work here.
That's a compensating differential.
Now, as people become more and more to value the comfort of air conditioning,
that compensating differential gets greater and greater.
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.
So that's how we know that workplace improvements are not coming at so fast a pace that they're
dis-employing more people than they're helping.
Everyone would love to have air conditioning from the first day it was invented, but that
would have dis-employed everybody.
How do we know what is the correct pace to introduce these improvements that doesn't
do so disproportionately to the benefit gained?
Because ultimately there is no logical end to where we would all like to see our working
conditions be.
and the United Auto Workers, they would like to have a masseuse come in.
That was one of their demands. They wanted massages during the day.
Well, there is no logical end to this, but you have to weigh it against costs and benefits
so that you don't get thrown out of work.
If we had to assign masseuses to every single worker,
a lot of people would find it very hard to get hired.
Where would we get all the masseuses from?
There would be a lot of practical problems with this.
And then finally, child labor. What's the matter with you?
Do you want some seven-year-old working in a copper mine or something? What's wrong with you?
Okay, well, how did child labor go away? Did child labor go away because they legislated it away?
Child labor went away simply because of this very process, that the economy became so productive
that parents didn't feel like they needed the labor of their children just to survive.
That's precisely the problem, is that these economies are so primitive,
they haven't had time for the free market to transform them, they can't produce enough stuff to feed the family.
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.
It's that they can't afford this. If they lose 20% of their income, they don't eat.
And so precisely in Bangladesh, we saw when, thanks to Western campaigns, Bangladesh got rid of child labor.
We have thousands and thousands of young kids starving or going into prostitution. Same thing in the carpet industry, in Nepal.
The same thing. They go right into prostitution. So what you need to do is make this economy
as productive as possible. And so this is exactly what we've seen, this exact process.
And then typically what will happen is there'll be like 10% child labor left and then the
legislation will do away with that and they'll take credit for the whole thing when it was
the free market that did the first 90%. And then what about welfare, the welfare of the
people? Don't we need government intervention here? I mean, surely private sources are not
sufficient for this. Well, look at what the free market has done. Look at what it's done.
In 1820, 85% of the world population, roughly, was in a condition that economists referred
to as absolute poverty.
By 1950, that was down to 50%, and by the 1980s, that was down to a third.
And that's just the operation of the market.
From 1981 to 2001, we had a particularly interesting set of two decades, because we saw absolute
poverty in the developing world drop from 40% to 21%, and the global rate drop from
33 to 18 percent. We had not just the percentage but also the absolute number of people in
poverty fall. This has never happened before in the history of the world, and it happened
in any two-decade period or ever, and it happened then. In the United States, we had poverty
falling by a percentage point per year from 1950 to 1968 with extremely modest anti-poverty
programs in effect. 1968 was the year that we really start to see the war on poverty
programs actually getting substantial funding, and then we see poverty stagnate.
Between that year and 1994, per poor person, the amount spent on these programs quadrupled,
and just like this.
Moreover, when you consider how inefficiently, and this is good, government collects taxes,
it takes them like a $1.67 of effort to collect $1 in taxes, and about two-thirds of all
The money that goes to these welfare bureaucracies is eaten up in overhead.
It actually takes five dollars in spending to get one dollar of results.
And what's the incentive for these institutions?
For their caseloads to go up, not down.
That's how they get budget increases.
What voluntary institution can possibly survive like that?
Who's going to keep getting donations when their pitch is, well, nobody's making any
progress who's at our shelter.
I mean, they're just sitting here.
I mean, we haven't been able to employ any of them.
So keep on giving us money.
is promoting an uncompromising but extremely attractive and compelling social vision
that argues that we don't have to live under a system like this.
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
in which we are ruled over by a group of fiefdoms who also monopolize our education,
who tell us that living under fiefdoms is the best and only way to live,
and anybody who objects to this has probably got some kind of thing wrong with them.
No, there's got to be some other way. There's got to be some other way of organizing society
than some people get to loot other people
and then badger and condemn those other people as the enemies of mankind.
There has to be some other way. And we see what that other way is.
Naturally, it is the free market. It's a free society where all the initiative comes from,
the inventions, the improvements in our standard of living,
all of which are completely unsung. Nobody knows that any of the statistics that I share
with you today but they're sitting right there in official sources. I mean I'm quoting statistics
from the World Bank. I wasn't taking these statistics from the Tom Woods wicked free
market statistical bank. These are all sitting right there. Now the first person you can
improve is of course yourself. We are always learning, right? We've always got more to
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,
And so one of the things I did was, because there's so much on the Mises Institute website,
it is one of the great benefactors of mankind, and that website's unbelievable.
What I've done is I've put together like a list, most of which is links to various Mises sources,
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?
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.
Most of the books I'm linking to are available for free on the Mises website.
All this stuff is just sitting there and you can take it as far as you have the time to go with it.
So that is at, I actually bought this domain name, LearnAustrianEconomics.com.
Why was that available? I don't know, but I bought that thing.
Learn AustrianEconomics.com because I thought every time somebody emails me, what should I read?
Well, why keep reinventing the wheel? I did this to help along.
But ultimately, what this boils down to is that every platitude you learn about the government
is the opposite of the truth. And every one of these platitudes is taught in school
and is intended to create a race of drones that sits back and raises no objection
when it's treated like garbage by this institution.
My friends, we can do better as a race of mankind.
I mean, we can do better than this.
And so what I urge you to do is join the Mises Institute,
not only because you get a free book, which is a great book,
but because you will be doing yourselves and posterity a great favor
by helping out what I consider to be the institution that is on the front lines
of improving our society and leading us toward a system
is really and truly fitting for human beings to live in.
So thank you very much.