WEBVTT NOTE 80 Years Later: Parallels Between 1929 and 2009 1 00:00:00.000 --> 00:00:06.120 My talk today is on the similarities and differences between the Great Depression and the current 2 00:00:06.120 --> 00:00:12.760 depression. And I'm writing a paper with my good friend and many times co-author, Bill 3 00:00:12.760 --> 00:00:18.320 Barnett. Speaking of co-authorships, I remember Tom Woods was once at an Austrian Scholars 4 00:00:18.320 --> 00:00:22.500 Conference and there was a room of about 200 or 300 people and he said, well, I'm the only 5 00:00:22.500 --> 00:00:26.440 one in the room who's never co-authored an article with Walter Block. Happily that's 6 00:00:26.440 --> 00:00:38.440 That's changed. Tom and I are now one of my co-authors. My email address is wblock.loino.edu. 7 00:00:38.440 --> 00:00:42.960 If you didn't get it now, I'll mention it later. And you can get my email address through 8 00:00:42.960 --> 00:00:48.560 the Mises Institute web. The reason I'm mentioning it is that this paper is sort of a work in 9 00:00:48.560 --> 00:00:52.440 progress and we need all the help we can get. So if you've got any ideas to help us with 10 00:00:52.440 --> 00:00:56.820 of this paper. There was a young lady who was talking about demographics and that was 11 00:00:56.820 --> 00:01:01.920 very helpful. Hi. So if other people have other suggestions as to how we can improve 12 00:01:01.920 --> 00:01:06.920 this, that would be very welcome. 13 00:01:06.920 --> 00:01:13.680 Before I get into it, two more introductory kinds of things. First, we have to figure 14 00:01:13.680 --> 00:01:18.120 out what to call this modern depression. I mean, if we can't call it something, then 15 00:01:18.120 --> 00:01:25.120 You know, we're in trouble. We already have the Great Depression, so what is the one that we now have? 16 00:01:25.120 --> 00:01:34.120 I've got some notes here and I need a lot of help. Should it be the Greenspan-Bernanke Depression? 17 00:01:34.120 --> 00:01:39.120 Should it be the Bush-Obama Depression? Should it be the Grand Kahuna Depression? 18 00:01:39.120 --> 00:01:43.120 How about the gigantic depression, the mother of all depressions? 19 00:01:43.120 --> 00:01:50.120 You can see that Bill Barnett and I have been working hard to try to figure out this very important, crucial question. 20 00:01:50.120 --> 00:01:58.120 How about the financial panic? How about the yes, we can depression? 21 00:01:58.120 --> 00:02:03.120 Or the change depression? I think we've got to work with this and we need all the help we can get. 22 00:02:03.120 --> 00:02:08.120 So please get those cards and letters or emails in to me if you can come up with a better idea 23 00:02:08.120 --> 00:02:12.120 because we must have a good name for this depression. Otherwise, I don't know. 24 00:02:12.120 --> 00:02:22.620 The other preliminary thing I wanted to say before I get into the parallels and some dissimilarities is to just sort of go over a little bit about the us guys and them guys. 25 00:02:22.620 --> 00:02:30.620 Us guys are the Austro-libertarians and them guys are I guess the Keynesians or the ignorant economists or I don't know what. 26 00:02:30.620 --> 00:02:37.620 Oh, another name. You've all heard about girls gone wild. Well, how about economists gone wild depression? 27 00:02:37.620 --> 00:02:44.700 or another one is all economists accept austral libertarians gone wild depression 28 00:02:44.700 --> 00:02:49.700 it's a little long but you know we have to work with that well in in the view of 29 00:02:49.700 --> 00:02:54.140 the bad guys the Keynesians and these other people that what causes 30 00:02:54.140 --> 00:02:59.660 depression is either it sort of hits like a bolt from the blue or it's due to 31 00:02:59.660 --> 00:03:04.580 capitalism you know capitalism is evil and it's just intrinsically a part of 32 00:03:04.580 --> 00:03:08.700 Capitalism that have depressions or it's animal spirits and you people aren't 33 00:03:08.700 --> 00:03:13.060 spending enough and you know go out and spend by the way you could go out and 34 00:03:13.060 --> 00:03:17.660 spend and buy this book that that's a different issue I think that that would 35 00:03:17.660 --> 00:03:22.860 be an exception we're all Keynesians now so I hereby say that the way to get us 36 00:03:22.860 --> 00:03:27.460 out of this depression is to buy this book don't buy 20 copies now this will 37 00:03:27.460 --> 00:03:31.900 run out but buy one copy each and then order 20 copies to give to 19 of your 38 00:03:31.900 --> 00:03:50.900 So that's their view. Our view is that it's due to central banking and fiat currency and the fractional reserve banking system and the lack of the gold standard, namely, it's due to the violation of free enterprise. 39 00:03:50.900 --> 00:04:00.900 Nowadays, the latest thing is the reason we have this depression is because of a failure of capitalism. Nonsense. We don't have capitalism now. We have a mixed economy. 40 00:04:00.900 --> 00:04:30.900 and the part of the mixed economy that's most responsible for creating this is the Federal Reserve System or the Central Bank in general, which lowers interest rates, artificially encourages earlier stages of production investment, namely in heavy industry and in machinery and housing and cars, which are now in trouble and the recession or the depression is the cleansing of these malinvestments that have been made before and if the government just 41 00:04:30.900 --> 00:04:37.900 This just keeps its bloody mitts out and maybe lowers taxes and gets back on the gold standard and other good things, gets rid of unemployment insurance. 42 00:04:37.900 --> 00:04:43.900 We can get out of this depression in a matter of, I don't know, months, weeks? Maybe that's a little too optimistic. 43 00:04:43.900 --> 00:04:55.900 But if we had laissez-faire capitalism now, if Ron Paul had won and the speakers at this meeting were the head of the Fed, the Fed would be gone in a week. 44 00:04:55.900 --> 00:05:05.900 If Tom DiLorenzo was the head of the Council of Economic Advisers, we'd get some good economic advice along these lines, I'm sure. 45 00:05:05.900 --> 00:05:17.900 So, with those preliminary remarks, I now want to talk a little bit about the similarities, the great similarities and some differences between the two events. 46 00:05:17.900 --> 00:05:30.900 In both cases, the earlier case and the present case, there was a Republican president followed by a Democratic president. In the earlier time it was Hoover followed by Roosevelt, now it's Bush followed by Obama. 47 00:05:30.900 --> 00:05:44.900 That's a parallel. In both cases, especially the earlier case, Hoover was seen as a free enterprise capitalist maniac, you know, laissez-faire, and the reason we had the depression is Hoover didn't do enough. 48 00:05:44.900 --> 00:05:51.900 That's the usual view. And Roosevelt was a good guy because he got the government involved and he made us get out of the depression. 49 00:05:51.900 --> 00:05:59.900 That's the view that you get from the New York Times and other such reliable sources of information. 50 00:05:59.900 --> 00:06:05.900 And in the present you have an ominous parallel to use the title of a book in a different sense. 51 00:06:05.900 --> 00:06:11.900 And that is that Bush was no free enterpriser and neither was Reagan while I'm on the subject. 52 00:06:11.900 --> 00:06:15.180 And Reagan was great on rhetoric, a lot better than Bush, but you know, when he was governor 53 00:06:15.180 --> 00:06:20.260 of California, budgets rose, when he was president, budgets rose, you know, if this is laissez-faire 54 00:06:20.260 --> 00:06:28.460 capitalism, we're all socialists now, but you know, we're against that. 55 00:06:28.460 --> 00:06:34.180 In both cases, there was a prior boom, followed by an inevitable depression, and we're now 56 00:06:34.180 --> 00:06:37.500 in the depression. 57 00:06:37.500 --> 00:06:40.540 Let me read you a quote from Lew Rockwell who says, 58 00:06:40.540 --> 00:06:45.140 All Obama has done is extend the corporate fascist policies of George Bush the same way 59 00:06:45.140 --> 00:06:49.140 that FDR extended the corporate fascist policies of Hoover. 60 00:06:49.140 --> 00:06:51.740 You couldn't say it better than that. 61 00:06:51.740 --> 00:06:53.660 Hoover and Bush were no free enterprises. 62 00:06:53.660 --> 00:06:54.660 They were Republicans. 63 00:06:54.660 --> 00:06:58.580 They were supposed conservatives, but we all know what that means given how Ron Paul was 64 00:06:58.580 --> 00:07:05.260 treated in the Republican recent run up to the presidency. 65 00:07:05.260 --> 00:07:07.340 Here is a quote from Murray Rothbard. 66 00:07:07.340 --> 00:07:12.180 Hoover's role as the founder of a revolutionary program of government planning to combat depression 67 00:07:12.180 --> 00:07:14.780 has been unjustly neglected by historians. 68 00:07:14.780 --> 00:07:20.100 Franklin D. Roosevelt in large part merely elaborated the policies laid down by his predecessor. 69 00:07:20.100 --> 00:07:26.340 To scoff at Hoover's tragic failure to cure the depression as a typical example of laissez-faire 70 00:07:26.340 --> 00:07:29.620 is drastically to misread the historical record. 71 00:07:29.620 --> 00:07:33.140 The Hoover route must be set down as a failure of government planning and not of the free 72 00:07:33.140 --> 00:07:34.300 market. 73 00:07:34.300 --> 00:07:38.620 To portray the interventionist efforts of the Hoover administration to cure the depression, 74 00:07:38.620 --> 00:07:43.140 we made, quote, Hoover's own summary of his own program during his presidential campaign 75 00:07:43.140 --> 00:07:49.140 of 32. And now what I'm going to do is read what Hoover himself said about his program. 76 00:07:49.140 --> 00:07:55.540 Quote, from Hoover, We might have done nothing. That would have been utter ruin. Instead, 77 00:07:55.540 --> 00:08:01.300 we met the situation with proposals to private business and the Congress of the most gigantic 78 00:08:01.300 --> 00:08:06.060 A program of economic defense and counter-attack ever evolved in the history of the republic. 79 00:08:06.060 --> 00:08:10.780 We put it into action. No government in Washington has hitherto considered that it held so broad 80 00:08:10.780 --> 00:08:15.580 a responsibility for leadership at such times. For the first time in the history of depression, 81 00:08:15.580 --> 00:08:20.260 dividends, profits and the cost of living have been reduced before wages have suffered. 82 00:08:20.260 --> 00:08:23.820 They were maintained until the cost of living had decreased and the profits had practically 83 00:08:23.820 --> 00:08:29.660 vanished. They are now the highest real wages in the world, propping up wages. What Roosevelt 84 00:08:29.660 --> 00:08:35.260 What was given credit for, credit in quotes, Hoover was doing, continuing the quote from 85 00:08:35.260 --> 00:08:39.380 Hoover, creating new jobs and giving to the whole system a new breath of life. 86 00:08:39.380 --> 00:08:43.860 Nothing has ever been devised in our history which is done more for the common run of men 87 00:08:43.860 --> 00:08:45.060 and women. 88 00:08:45.060 --> 00:08:48.500 Some of the reactionary economists urged that we should allow the liquidation to take its 89 00:08:48.500 --> 00:08:52.660 course until we had found bottom, that is allow bankruptcies. 90 00:08:52.660 --> 00:08:57.340 But we determined that we would not follow the advice of either the bidder and liquidationist 91 00:08:57.340 --> 00:09:00.540 and see the whole body of debtors the United States brought to bankruptcy and the savings 92 00:09:00.540 --> 00:09:04.700 of our people brought to destruction. 93 00:09:04.700 --> 00:09:12.100 So this is I think a clear statement that Hoover was no free enterpriser and I think 94 00:09:12.100 --> 00:09:14.700 it's very clear that Bush was no free enterpriser either. 95 00:09:14.700 --> 00:09:19.540 Even nowadays there are conservatives that are not that happy with Bush because he spent 96 00:09:19.540 --> 00:09:22.660 like a drunken sailor. 97 00:09:22.660 --> 00:09:25.340 So it's hard to say free enterpriser Bush. 98 00:09:25.340 --> 00:09:30.140 I mean, if even Reagan wasn't a free enterprise, the Bush certainly wasn't. 99 00:09:30.140 --> 00:09:36.940 And now we have Roosevelt and Franklin Delano Obama, who's now in charge. 100 00:09:36.940 --> 00:09:38.900 And there are many, many parallels. 101 00:09:38.900 --> 00:09:43.700 Take international trade as one area where there can be parallels. 102 00:09:43.700 --> 00:09:50.500 Well, we have the Smoot-Hawley tariff in the, I guess that was in the 30s, early 30s, which 103 00:09:50.500 --> 00:09:54.100 just put the kibosh on free trade. 104 00:09:54.100 --> 00:10:04.100 You see, the idea is, if you want to have the depression cure the previous prior misallocative boom, 105 00:10:04.100 --> 00:10:10.100 the last thing that you want to do is create problems, because it's a big adjustment. 106 00:10:10.100 --> 00:10:15.100 And look, the market doesn't work perfectly, it doesn't work instantaneously. 107 00:10:15.100 --> 00:10:23.100 We're not people who believe we're always at equilibrium, namely we're Austrian economists, we're not mainstream economists. 108 00:10:23.100 --> 00:10:28.280 Economists. So it would take time and the last thing you want to do is to put the 109 00:10:28.280 --> 00:10:32.340 kibosh on the economy and mess it up in another way. In other words, the natural 110 00:10:32.340 --> 00:10:36.780 tendency of the economy is to move back toward where it should be. That's the 111 00:10:36.780 --> 00:10:41.480 impetus of laissez-faire capitalism. But every time you set up a roadblock, you 112 00:10:41.480 --> 00:10:44.960 slow down that process and the Smoot-Hawley tariff was a gigantic roadblock. 113 00:10:44.960 --> 00:10:50.060 It just put the kibosh on international trade. There was much more unemployment 114 00:10:50.060 --> 00:10:54.140 that you had to overcome because of the Smoot-Hawley Tariff, then there would have been had there 115 00:10:54.140 --> 00:11:00.320 not been a Smoot-Hawley Tariff. Well, what have we got today? We got Barack Obama saying 116 00:11:00.320 --> 00:11:05.460 that the Mexican trucks can't come here. Why? Because they're not safe. Okay. Well, if that's 117 00:11:05.460 --> 00:11:09.780 really true, then what he would have done is said, okay, Mexican trucks and truckers, 118 00:11:09.780 --> 00:11:15.060 whatever, you have to pass the more stringent US safety regulations. Not that I'm in favor 119 00:11:15.060 --> 00:11:19.660 of that. I have a book coming out about how we should privatize roads and all. I won't 120 00:11:49.660 --> 00:11:54.660 The United States, the truck has to pass and the driver has to pass our more stringent requirements. 121 00:11:54.660 --> 00:11:58.660 And then any Mexican is free to come or whatever the NAFTA rules are. 122 00:11:58.660 --> 00:12:00.660 But no, he didn't say anything like that. 123 00:12:00.660 --> 00:12:10.660 Instead he's saying that we should keep the Mexicans out and as a result the Mexicans are now putting tariffs on our things. 124 00:12:10.660 --> 00:12:15.660 And this is carrying on the Bush thing, the Bush had tariffs on steel. 125 00:12:15.660 --> 00:12:28.660 So we're moving in a smooth, holy direction. We haven't got there, but a lot of his bailout proposals have this extra little twist that if you export jobs, you know, we penalize you. 126 00:12:28.660 --> 00:12:38.660 So he's a real buy local kind of person. I mean, he's even putting in, what is it, corn and beans in the White House lawn so that he can eat local. 127 00:12:38.660 --> 00:12:51.660 I mean, it's the sort of this lefty craze, you know, against transportation and, you know, where that is heading, if you take that to its logical conclusion, is total self-sufficiency. 128 00:12:51.660 --> 00:12:57.660 Namely, we each produce everything that we need. We don't trade with anyone else because trade is necessarily exploitative, you know. 129 00:12:57.660 --> 00:13:03.660 If I trade you a wristwatch for a tie, you know, I give you this tie for the wristwatch. 130 00:13:03.660 --> 00:13:11.460 It's not true that you value the time more than the wristwatch and it's not true that I value the wristwatch more than the tie, rather it's mutual exploitation. 131 00:13:11.460 --> 00:13:22.560 That's the way these people think, that trade is inherently exploitative and what you should do is grow your own and be local. 132 00:13:22.560 --> 00:13:27.760 Well, the point is that the reason that this earth can now support six billion people is because we can trade. 133 00:13:27.760 --> 00:13:31.760 If we had to be self-sufficient, if we had to produce everything we needed for ourselves, 134 00:13:31.760 --> 00:13:36.760 95% of the population in the world would die, maybe 98%, 135 00:13:36.760 --> 00:13:40.760 which would be good because, you know, the environment and, you know, 136 00:13:40.760 --> 00:13:44.760 and people are the enemy of the environment. I'm just kidding on that. 137 00:13:44.760 --> 00:13:49.760 I don't want people to quote me and say Block comes out in favor of murdering 98% of the people. 138 00:13:49.760 --> 00:13:54.760 That's those other guys. I'm just, I'm sort of putting myself in their position to 139 00:13:54.760 --> 00:14:24.760 So Mexico retaliated by raising tariffs on some 90 U.S. exports, and according to the Wall Street Journal, which I sometimes think of as the War Street Journal, W.A.R., although they're somewhat good on economics sometimes, as the U.S. and the U.K. press the case for greater government stimulus to lift the global economy, they have encountered stiff resistance from European leaders, forcing U.S. officials to downplay the targets, the 20 nations that have been targeted by the U.S. 140 00:14:24.760 --> 00:14:29.240 where Obama is now messing with while promoting free trade have also had to 141 00:14:29.240 --> 00:14:32.840 face their own perchance for protectionism with many recently moving to 142 00:14:32.840 --> 00:14:36.400 guard their own economies and companies from the downturn so this is just one 143 00:14:36.400 --> 00:14:40.120 more roadblock so here's the situation first the government messes up and 144 00:14:40.120 --> 00:14:44.800 misallocates resources then the market is trying to fix things and then they're 145 00:14:44.800 --> 00:14:48.640 interfering with the markets fixing of things by setting up new roadblocks to 146 00:14:48.640 --> 00:14:55.280 To Create New Unemployment. Taxation. How do we compare the earlier days and the present 147 00:14:55.280 --> 00:15:02.280 days? Well, Hoover's Revenue Act of 32 included huge increases in the income tax and by adding 148 00:15:02.280 --> 00:15:07.280 additional brackets to the upper end made it all more progressive. You know, there are 149 00:15:07.280 --> 00:15:12.920 some people that hate progressive taxes. They think progressive taxes are the enemy of everything. 150 00:15:12.920 --> 00:15:16.960 And, you know, I sort of agree progressive taxes aren't good. But, you know, which would 151 00:15:16.960 --> 00:15:24.960 It would be better to have a progressive tax of two, four and six percent for the poor, the middle class and the rich. 152 00:15:24.960 --> 00:15:27.960 Or a flat tax of fifty percent. 153 00:15:27.960 --> 00:15:33.960 Obviously, you know, progressivity isn't the only thing that we have to worry about taxes, 154 00:15:33.960 --> 00:15:36.960 although when you get up the highest bracket is ninety percent. 155 00:15:36.960 --> 00:15:41.960 I understand in Sweden that one time the highest bracket was like a hundred and ten percent. 156 00:15:41.960 --> 00:15:45.960 That means if you earn an extra hundred thousand you would pay taxes of a hundred and ten thousand. 157 00:15:45.960 --> 00:15:51.960 I mean, you have to be a genius to think of that. I mean, you know, the ordinary bureaucrat can't do that. 158 00:15:51.960 --> 00:15:57.960 And I think as a result, Bjorn Borg, who was a Swedish tennis player, very wealthy guy, moved to Monaco, 159 00:15:57.960 --> 00:16:01.960 because, you know, who wants to pay 110% marginal taxes? 160 00:16:01.960 --> 00:16:04.960 Well, our man Obama is also into this. 161 00:16:04.960 --> 00:16:11.960 Notice he's going to lower taxes for all the good people and raise them for the bad guys. 162 00:16:11.960 --> 00:16:24.960 Well, who are the bad guys? The bad guys are the ones that are creating the wealth in the country. The bad guys are the Randian heroes, the businessmen, the people who are creating the engines of creation, and he's going to get them. 163 00:16:24.960 --> 00:16:35.960 Well, that's not going to help us. So my view is that progressive taxes aren't the only thing that we have to worry about, but I'm not in favor of progressive taxes, and they're both doing that. 164 00:16:35.960 --> 00:16:42.120 Okay, how do we compare them both on Keynesianism? How do we compare Hoover Roosevelt on the 165 00:16:42.120 --> 00:16:49.760 one hand and Bush Obama on the other hand with the Keynesianism business? Well, what 166 00:16:49.760 --> 00:16:54.640 the Keynesians are trying to do is to uphold wages. Roosevelt was big into this. We can't 167 00:16:54.640 --> 00:17:00.200 allow wages to fall. And yet, when you have unemployment, it means that the supply of 168 00:17:00.200 --> 00:17:12.700 If labor is greater than the demand for labor, anyone who has the, what do you call it, the supply and demand, who's taken basic economics, knows that if you have massive unemployment, as they did in the Great Depression, 169 00:17:12.700 --> 00:17:26.200 wages have to come down if you want to cure the unemployment. So if you keep wages up, like take the minimum wage, the minimum wage unemploys people who have a productivity lower than the minimum wage, and they keep wanting to raise it. 170 00:17:26.200 --> 00:17:35.200 What they think is that the higher the wage goes the more rich people get or the higher the wage people will actually get but this is just, this is just silly. 171 00:17:35.200 --> 00:17:43.200 Rather it's like a barrier over which you have to jump in order to get a job in the first place and the higher you raise it the harder it is to get a job. 172 00:17:43.200 --> 00:17:50.200 Look, if we had a minimum wage law of $100 an hour, we'd have a lot more unemployment than we do now. 173 00:17:50.200 --> 00:17:57.200 Yet, according to their logic, we'd all be making a hundred dollars an hour, which is just excruciatingly silly. 174 00:17:57.200 --> 00:18:03.200 There's this guy, Stiglitz, who won a Nobel Prize at Columbia University. 175 00:18:03.200 --> 00:18:06.200 And in his textbook, he's got this. He's got it clear. 176 00:18:06.200 --> 00:18:12.200 And yet, he signed this, him and 600 other people signed this thing about getting the minimum wage going. 177 00:18:12.200 --> 00:18:19.200 And he was asked about, well, how do you reconcile signing this petition to raise the minimum wage with what you say in your textbook? 178 00:18:19.200 --> 00:18:24.720 and he talked and he said words and I understood each of the individual words 179 00:18:24.720 --> 00:18:29.200 but I couldn't understand what he was saying. It was the most amazing thing 180 00:18:29.200 --> 00:18:34.800 and he's sort of deprecating the value of my PhD. I got one at Columbia and I might have to sue him. 181 00:18:34.800 --> 00:18:40.160 Any lawyers in the group here will see me afterward. We'll have to sue this guy. 182 00:18:40.160 --> 00:18:47.360 Well, what is Obama doing? He's not doing that explicitly but he's doing it implicitly. 183 00:18:47.360 --> 00:18:51.360 How is he doing it implicitly? By encouraging unionism. 184 00:18:51.360 --> 00:18:56.360 Unionism is the par excellence way of raising wages above productivity levels. 185 00:18:56.360 --> 00:18:59.360 I mean, we need not look any further than the Rust Belt. 186 00:18:59.360 --> 00:19:03.360 I used to teach at the College of Holy Cross in Worcester, Mass. 187 00:19:03.360 --> 00:19:12.360 And there were these factories, you know, six, eight stories high, a quarter of a mile by a quarter of a mile, gigantic things, all empty. 188 00:19:12.360 --> 00:19:19.360 They didn't make steel, but they made ball bearings and ball peen hammers and things made out of metal. 189 00:19:19.360 --> 00:19:26.360 And the unions just raised wages above productivity levels and the companies either went broke or they went down south. 190 00:19:26.360 --> 00:19:33.360 They went down to Alabama, Mississippi, Louisiana, South Carolina, places like that, that are a little rougher on unions. 191 00:19:33.360 --> 00:19:35.360 Well, what is Obama doing? 192 00:19:35.360 --> 00:20:05.360 What he wants to do now is right now in order to get a new union certified what you have to do is get some percentage I think it's 50% but I'm not sure of all the workers in the group and they all have to sign and then you have a secret ballot election and all the workers are intimidated so they all sign it and then when they vote they all vote against the union because they're not stupid they realize the rust belt and they realize they're gonna lose their jobs so what's Obama gonna do is say well once you get 50% that's it 193 00:20:05.360 --> 00:20:13.360 You don't have to have a secret ballot. So now there'll be very great intimidation and the man is supposed to be in favor of democracy. 194 00:20:13.360 --> 00:20:23.360 Well, how is it democratic? Not that I'm a big fan of democracy. One of the great books on this is Hans Hoppe's The God That Failed. 195 00:20:23.360 --> 00:20:29.360 Democracy, I forget the exact title, but something like that. The God That Failed. It's an attack on democracy. 196 00:20:29.360 --> 00:20:45.360 So I'm not a big fan of democracy, but Obama is, and he's being hypocritical here. If he's supposed to be supporting democracy and he's just giving over the entire working class to the tender mercies of the unions. 197 00:20:45.360 --> 00:20:56.360 At one time unionized labor force was some 30-35% of the labor force and now it's down, at least the private labor force, down a single digit, eight or nine percent. 198 00:20:56.360 --> 00:21:03.360 What do you call it? Unions that are organized who are working for government is a different thing. 199 00:21:03.360 --> 00:21:10.360 And the whole idea is that those unions shouldn't even exist because the ethos of this is that capitalists will exploit workers. 200 00:21:10.360 --> 00:21:17.360 Fair enough. Okay, capitalists exploit workers. We need unions. Remember, I'm just kidding. I'm not saying this. 201 00:21:17.360 --> 00:21:21.360 I'm trying to get into the minds of our friends on the left. 202 00:21:21.360 --> 00:21:29.360 Okay, but the public, the municipality, they're not capitalist pigs, they're not greed mongers, you know. 203 00:21:29.360 --> 00:21:35.360 So how can you justify civil servants unions? The whole thing is preposterous and that's the big growth in unions. 204 00:21:35.360 --> 00:21:40.360 Okay, so right now to get back to the private sector unions, it's eight or nine percent. 205 00:21:40.360 --> 00:21:47.360 Well, with this Obama thing, it's going to start shooting up toward 20, 30, 40 percent, which means wages are higher, 206 00:21:47.360 --> 00:21:51.440 which means that it's more difficult to solve the unemployment problem than it 207 00:21:51.440 --> 00:21:55.240 would be had they not set up this one more barrier. So we have an international 208 00:21:55.240 --> 00:22:01.160 trade barrier, we have wage raise barriers, things like that. The next thing 209 00:22:01.160 --> 00:22:11.220 is the bailouts. Well there was plenty of that stuff in the early days and we've 210 00:22:11.220 --> 00:22:16.040 got our share now. I mean they're bailing out everything of above a certain size 211 00:22:16.040 --> 00:22:33.040 and all these massive balance which all they're doing now is taking capital away from companies that are viable and giving it to these GUL, G-H-O-U-L kinds of companies. 212 00:22:33.040 --> 00:22:39.040 And how is that helping the reconstitution of the economy? 213 00:22:39.040 --> 00:22:45.040 Remember what we want to do is to get back to where we would have been had the government not misallocated resources in the first place. 214 00:22:45.040 --> 00:22:50.840 and the way to get there is to get rid of the bad companies and allow the good 215 00:22:50.840 --> 00:22:53.040 companies to get the capital and if they're going to support the bad 216 00:22:53.040 --> 00:22:57.680 companies it's at the cost of the good companies. So again they're setting up 217 00:22:57.680 --> 00:23:04.080 barriers. Now the argument that they use is well they're too big to fail. We've 218 00:23:04.080 --> 00:23:10.200 heard this and the idea is well if General Motors goes belly up then 219 00:23:10.200 --> 00:23:14.120 all the people who were in General Motors are now going to stop spending on 220 00:23:14.120 --> 00:23:19.400 on groceries, on bicycles, on piano lessons for their kids and on shoes and then all the 221 00:23:19.400 --> 00:23:23.920 people who had piano lessons and shoes and bicycles and groceries will stop spending 222 00:23:23.920 --> 00:23:31.080 and will get into a depression. Well, that's the lefty view. Totally wrong. I mean, Studebaker, 223 00:23:31.080 --> 00:23:37.160 where is Studebaker? There was no depression because of Studebaker or Pan Am or you look 224 00:23:37.160 --> 00:23:43.740 at the Fortune 500 every 10 years back from now and the last 10 years there are familiar 225 00:23:43.740 --> 00:23:58.740 The point is that we have this turnover in companies. There's nothing that says that a company has to exist. Just because it exists, it has to exist forever. 226 00:23:58.740 --> 00:24:10.740 Here's an example I usually give my students. I say, look, suppose I now discover a cure for tooth decay. I'll tell you what it is. It's one part aspirin, one part salt, and you mix in rubber bands. That's it. 227 00:24:10.740 --> 00:24:13.740 That's it. You take that and you never have tooth decay. 228 00:24:14.740 --> 00:24:17.740 Am I an enemy or am I a friend of the economy? 229 00:24:17.740 --> 00:24:23.740 Well, according to Keynesians, I'm an enemy because right away all the dentists lose their jobs. 230 00:24:23.740 --> 00:24:30.740 I don't know how many dentists there are in the country, but, you know, a couple of tens of thousands of dentists in the whole country. 231 00:24:30.740 --> 00:24:38.740 And they lose their jobs and their nurses lose their jobs and the equipment that, you know, those drills and stuff, the people that make that lose their jobs 232 00:24:38.740 --> 00:24:51.740 And then you have the secondary depression because all the things that the dentists used to buy and all the things that the nurses used to buy and all the things that these manufacturers of drills, etc. used to buy will stop buying all these other things and we'll have a depression. 233 00:24:51.740 --> 00:24:59.740 That's silly. I mean, that's absolutely lunacy to think that I'd be the enemy of the economy if I invented a cure for tooth decay. 234 00:24:59.740 --> 00:25:07.240 Rather, the correct way to look at it is, at any given time, we have a wish list. We all want things. 235 00:25:07.240 --> 00:25:12.740 How far down the wish list can we get depends upon how hard and how smart and how much capital we work with, 236 00:25:12.740 --> 00:25:18.740 and how well we cooperate with each other, which can only be done through the price system. 237 00:25:18.740 --> 00:25:26.740 Well, if I now free up 30,000 dentists, we can now have more things than we could have had before, 238 00:25:26.740 --> 00:25:31.520 before, because we no longer need these very bright people to produce dental services. 239 00:25:31.520 --> 00:25:38.020 Now they can be, I don't know what, doctors or, I don't know, sculptors or whatever it 240 00:25:38.020 --> 00:25:45.780 is that they can do. In other words, we freed up this labor. Let me give you another example. 241 00:25:45.780 --> 00:25:52.220 The Swiss family Robinson, they're on this island and they have a lot of things to get. 242 00:25:52.220 --> 00:25:56.300 They have to get a fence to keep them away from wild animals. They have to get a fishing 243 00:25:56.300 --> 00:26:12.940 and now you have this bright kid who was told to fish and he would hang a fish with a worm 244 00:26:12.940 --> 00:26:17.140 at the end of a string and he'd get one fish a day and the kid made a net and now he gets 245 00:26:17.140 --> 00:26:18.140 ten fish a day. 246 00:26:18.140 --> 00:26:22.780 Did the parents say, you rotten kid, you know, you're ruining our economy? 247 00:26:22.780 --> 00:26:27.780 No, they say, thank God we got a bright kid and now instead of just fishing, he can do something else. 248 00:26:27.780 --> 00:26:30.780 We can get a little further down on our wish list. 249 00:26:30.780 --> 00:26:36.780 So this idea that it's too big to fail and we have to prop them up, as Tom Woods says in his book, 250 00:26:36.780 --> 00:26:41.780 we've got to, you know, let every bankruptcy occur. 251 00:26:41.780 --> 00:26:48.780 To put it in Uncle Mao terms, let a thousand flowers bloom, let a thousand bankruptcies bloom. 252 00:26:48.780 --> 00:26:56.780 Bankruptcies are good for the economy. It's like getting rid of the dead cells in the in the body. If you don't get rid of the dead cells, you don't make room for more live ones. 253 00:26:56.780 --> 00:27:07.780 Okay, what else do we have here? Hoover pushed for and got the bankruptcy laws changed to provide more favorable treatment for debtors at the expense of creditors. 254 00:27:07.780 --> 00:27:14.780 The US government provided loans to state governments for what they called relief programs. The current bailout provides the same sort of loans. 255 00:27:14.780 --> 00:27:19.480 However, some governors are even turning them down. 256 00:27:19.480 --> 00:27:23.280 Hoover restricted immigration to save American jobs for Americans, 257 00:27:23.280 --> 00:27:27.480 pressure is being put on firms to reduce or eliminate outsourcing. 258 00:27:27.480 --> 00:27:31.380 You know, I outsource a lot of stuff to Walmart. 259 00:27:31.380 --> 00:27:34.680 My balance of payments with Walmart is horrible, you know. 260 00:27:34.680 --> 00:27:36.680 I don't get any money from them, I just give them money. 261 00:27:36.680 --> 00:27:39.880 And also McDonald's and other places. 262 00:27:39.880 --> 00:27:43.880 It's just sort of economic lunacy after economic lunacy. 263 00:27:45.880 --> 00:27:49.880 Hoover started the Home Loan Bank to spur the housing industry. 264 00:27:49.880 --> 00:27:52.880 Well, we've got the CRA, we've got Fannie, we've got Freddie. 265 00:27:52.880 --> 00:27:55.880 The parallels are just all over the place there. 266 00:27:55.880 --> 00:28:00.880 Hoover allowed a wider variety of types of firms to discount at the fractional reserve banks. 267 00:28:00.880 --> 00:28:02.880 Well, the same thing is occurring now. 268 00:28:02.880 --> 00:28:08.880 Hoover started Reconstruction Finance and we're doing the same thing with regards to the bailouts. 269 00:28:08.880 --> 00:28:15.880 There is one difference. The government is now taking an ownership role in these banks, which is very ominous. 270 00:28:15.880 --> 00:28:23.880 I mean, if you define socialism as government ownership at the means of production and fascism as government control, 271 00:28:23.880 --> 00:28:30.880 you don't have to have a swastika to be a fascist. You can do economic fascism, which is heavy government control. 272 00:28:30.880 --> 00:28:37.880 Well, what we've got is fascism and socialism with a little bit of free enterprise. 273 00:28:37.880 --> 00:28:52.880 Okay, there are many other parallels, but I'm running out of time, so let me talk about something else, and that is, these are the external things that I've just been going over. 274 00:28:52.880 --> 00:29:05.880 What about the internal? How are we, the Austro-libertarian people, the free enterprises, how are we situated to combat all this stuff compared to how we were situated to combat all this stuff in the earlier period? 275 00:29:05.880 --> 00:29:13.760 Everyone get what I'm getting at? Namely, what weapons do we now have compared to what weapons we had then? 276 00:29:13.760 --> 00:29:25.240 Well, the weapons we had then were Garrett Garrett, Benjamin Morton Anderson, Lionel Robbins, Gottfried Habler, Friedrich Hayek, Ludwig von Mises, Henry Hazlitt. 277 00:29:25.240 --> 00:29:33.320 There were others and if you could send me other names that I'm leaving out, please help me out. Who were the good guys then? 278 00:29:33.320 --> 00:30:03.320 Well, who are the good guys now? Well, high up on my list of good guys is the Mises Institute and Jeff Tucker will tell you about how, maybe not at this session, but he has another one where he talks about just how well they're doing, how many books are getting out, how many hundreds and thousands of people are reading this stuff, how well the Mises blog is doing compared to other blogs like the UN blog or, I don't know, the Council of Economics blog or other competing places like that. 279 00:30:03.320 --> 00:30:08.220 So the Mises Institute has to be one of the weapons that we now have that we didn't have then. 280 00:30:08.220 --> 00:30:11.520 So that's one point for the present. 281 00:30:11.520 --> 00:30:14.620 What else do we have? Well, we have Ron Paul. 282 00:30:14.620 --> 00:30:17.020 We didn't have a Ron Paul then. 283 00:30:17.020 --> 00:30:19.320 I mean, we talked about Burt Blumen passing away. 284 00:30:19.320 --> 00:30:25.220 Well, Ron Paul wrote this beautiful elegy to Burt Blumen and he put in the Congressional record. 285 00:30:25.220 --> 00:30:31.620 I don't think we had a congressman or a senator in the 30s who we had some better ones than and worse ones. 286 00:30:31.620 --> 00:30:36.760 But we didn't have a Ron Paul. We also have a Tom Woods. We have this book, which is one 287 00:30:36.760 --> 00:30:40.900 of the most magnificent books that's ever been written. I was going to read a long quote 288 00:30:40.900 --> 00:30:44.780 from it, but I'm running out of time. The long quote I was going to read on the parallels 289 00:30:44.780 --> 00:30:50.100 are on page 106. So if you've got the book, look at page 106, and he's got a lot of parallels 290 00:30:50.100 --> 00:30:53.100 there. 291 00:30:53.100 --> 00:31:00.700 What else do we have? Well, Patrick Buchanan wrote a nice piece on lewrockwell.com, and 292 00:31:00.700 --> 00:31:06.700 If you people aren't reading lewrockwell.com every day, I'm going to take Brownie points away from you. 293 00:31:06.700 --> 00:31:10.700 Read that. He had a very nice article talking about Tom Woods' book. 294 00:31:10.700 --> 00:31:18.700 If that's all we had, I'm not sure which way the thing goes. 295 00:31:18.700 --> 00:31:23.700 I mean, Mises and Hayek are pretty tough to meet. 296 00:31:23.700 --> 00:31:28.700 I have to sort of maybe vote for the earlier session. 297 00:31:28.700 --> 00:31:48.700 Notice I didn't mention Rothbard. When I first met Murray Rothbard in 1966, he knew every libertarian on the earth, on the planet, and I was an intimate of his, it was an amazing story, and there must have been 25 in the whole world, maybe 30. 298 00:31:48.700 --> 00:31:59.700 What happened is I made a trip all across the country from New York out to California and each city he would give me two or three names and the people didn't know each other. 299 00:31:59.700 --> 00:32:06.700 It was, I mean it was amazing, like somebody would be in Columbus, Ohio, three different people in Columbus, they never heard of each other. 300 00:32:06.700 --> 00:32:10.700 So I was sort of like a Johnny Appleseed getting people together. 301 00:32:10.700 --> 00:32:26.700 But nowadays the Mises Institute does that, the fact is that you know each other here, you'll be sitting at tables with like-minded people, you'll trade cards, you'll trade business cards, you'll make new friends, that's one of the benefits of a session like this. 302 00:32:26.700 --> 00:32:35.700 Well, my thought is that we're in better shape than that because we stand on the shoulders of those guys. 303 00:32:35.700 --> 00:32:42.700 So it's not that we have to compare what we have now with Mises and Hayek and these other people and say, well, you know, they sort of get the nod. 304 00:32:42.700 --> 00:32:52.700 Rather, we have Mises and Hayek to stand on the shoulders of and we can see further and do more thanks to them and also, obviously, Murray Rothbard. 305 00:32:52.700 --> 00:32:56.400 It's true the bad guys stand on the shoulders of bad guys. Obama can stand on the 306 00:32:56.400 --> 00:33:00.980 shoulders of Keynes, but those shoulders are mushy, they'll fall through, it's not 307 00:33:00.980 --> 00:33:02.940 going to help much. 308 00:33:02.940 --> 00:33:06.700 I'm out of time. I just wanted to say it's an honor and a privilege to be here 309 00:33:06.700 --> 00:33:07.560 among 310 00:33:07.560 --> 00:33:11.660 friendly people. I've had a lot of trouble with Tom DiLorenzo inviting me 311 00:33:11.660 --> 00:33:14.420 to Baltimore, where it wasn't such a friendly audience. 312 00:33:14.420 --> 00:33:17.260 I was accused of racism and sexism. 313 00:33:17.260 --> 00:33:20.920 It's also on the Mises web. Everything worthwhile knowing is on the Mises web, so 314 00:33:20.920 --> 00:33:23.920 So if you're interested in that, look it up. Thanks for your attention.