I'm curious, actually, how many, because Doug said something about the Jetsons and I heard a few people go,
oh yeah, sure, sure, sure, but they were both, I should say, people my age.
So I'm wondering how many of, how many people in the room know about the Jetsons?
Oh, so, well, how many people don't know about the Jetsons?
Oh, you don't know about, you don't know about the Jetsons? And you don't know about the Jetsons? Okay, well, I highly recommend the Jetsons.
You know, I often say, well, look, it's like a Jetsons world, you know, we've got these great gizmos and things, you know.
The other day I was, sometimes we use gizmos just because it's fun to do it, you know,
instead of just using plain old things. Like, for example, the other day I needed to call
a friend and I could have just picked up my phone and called him, but I thought, no, that's just too,
you know, boring. So I pulled up my Skype app, you know, oh, Skype app, you know, and so I'm going
to stop like, don't do this, right, don't play with your iPhone while you drive. Okay, so I'm playing
I open up my Skype app and I try to video chat with him, you know, and so after a long
series of interchanges, whatever, we were finally talking on the phone, and I'm driving
like this, and he said, well, I've just got to, you know, I'm looking at him, you know,
whatever, and he's looking at my car, you know, and there's a stoplight or something.
So he said, well, Jeff, I just have one question.
Why are we doing this weird video chat Skype thing, actually?
and it would have been easier just to give you a call. I said, no, it's like the Jetsons,
you know, and we've got video. So he said, well, I can see the point, but can you just
maybe at the next stop like cut this off and give me a plain normal phone call like the
old days? Okay. Some people say to me, well, look, it's not like the Jetsons because we
don't have flying cars. Okay, well, that's, to me, that's a superficial criticism of my
My thesis, you know, come on, we don't have flying cars. In fact, there are flying cars,
we don't use them, it's true. But why? Maybe it's because the government owns all the streets
and has this kind of lockdown system where we have to, you know, get in these cars that
they've given permission for us to use and they're configured a certain way and we've
got central planners telling us how we have to get from here to there, we sit at stoplights
and Wait Forever, talking about our Skype apps, you know. I mean, all of this stuff,
you know, we don't know what the world would actually in fact look like if it were fully
privatized. We don't know. And that's one of the problems that's presented by economics
is that so much is focused on imagining the way the world would be in the absence of things
just that you see. So we have to think about opportunity costs all the time. It's all the
choices that are below the one you've currently chosen, they're invisible to you. But you
You have to think about them. It's abstract. You have to think about what the world would
be like without government regulators, you know, all the things that we would have that
don't exist because the government has made it impossible for those things to exist. It
requires a certain level of abstract thought to think about economics. It's a difficult
science. I once asked my friend Tom Woods, why is it so difficult for people to understand
such, you know, easy things like, for example, the minimum wage law,
you know, makes it more difficult for marginal workers to get hired and increase unemployment.
He said, Jeff, there's an easy answer to why that's so, because it requires two steps of logic
and that, you know, rules out the vast majority of humanity right there, you know.
So anyway, you're interested in economics, that puts you in a
and a special category of person, you know, so if you learn a few things here today
you can know for sure that you're wiser than your fellows.
I very much appreciated Mark's lecture. I don't know how many of you
have followed anything I've written
over the last few years, but I get very excited about these consumer product issues,
you know, like this ring around the collar thing that he was...
I mean, I was sitting there in the back just getting angry, you know,
I don't know, did you feel that sense of... Mark didn't seem sufficiently angry about it, actually, I must say.
It was a great presentation, but you weren't just riled up about it.
I was just fuming as I was hearing this story, you know, and I can think of a thousand other stories like this.
Because, you know, the fate of the consumer is in many ways the fate of civilization itself.
Ludwig von Mises, during his last 30 years or so, and he died in 1973, so all throughout
the 1950s and 1960s, he was often asked to write articles for popular publications. And
back in those days, there was a big debate, if you can believe it, about whether or not
that we should have capitalism or communism, you know.
Actually, rumor has it that that debate is still going on
at the university here, but in any case,
for most of mankind, that debate's been largely settled,
but in those days, it was a big deal.
So he was often asked, could you please share your insights,
Professor Mises, you know, this aging professor,
and almost all of the articles he wrote... Mark, do you remember what he would often write in these years? It was very interesting.
He quite often returned to the same theme again and again. Now, you might say, why would he keep writing the same thing again and again?
Well, there wasn't the World Wide Web where people could check this stuff, right?
I mean, so, he wrote for one publication and it reached like, you know, a few hundred people and that was it.
The article just stopped, you know, so then some other publication would write you and say we'd like you to write an article
So you'd write another article on the same theme and that reached another, you know, a few thousand people and it would stop
That was the way the old world worked, you know, the world the words just kind of like hit a hit a wall and like fell
Down and crashed. I mean that was the end of it, you know
It's not like today where everything you write is just instantaneously swirls around the world and keeps doing this forever and ever
So it's that's why Mises would write the same thing again and again
And the theme that he makes sense that here you've got this amazing aging professor, great economic genius of the world, and he has one chance to tell people in one sector of society one thing that he thinks is the most important thing, what did he constantly go back to again and again, which I assume to his mind was the most important thing that he could possibly tell anybody. And again and again, he retains that.
Let me turn to the theme that capitalism is mass production for the masses, that under capitalism, the consumer is king, he would put it like this, the consumer is sovereign, and he was very clear, he said, you know, this doesn't make the consumer, it doesn't have power, like in the way a king has, a real king has power, the consumer is, has power in the sense that all production that goes on in the market
Economy is directed towards the well-being of the consumer.
And who is the consumer?
Well, the consumer is every one of us and really everyone on the planet.
So he said, in that sense, capitalism is the system that serves the whole of society in
the best possible way it can be served.
And he continued to make this point again and again.
And there are other points surrounding this issue, like it always annoyed him when people
He would talk about the power of the capitalist, you know, the owner or the producer, and he says, you know, like, for example, people will say, oh, well, the Hershey company is the king of chocolate, and he'd say, well, it's not really the king, really, I mean, you can talk about, like, maybe being the number one distributor of chocolate or whatever, but a king has power, can tax, inflates, send people to war, chop off people's heads who, you know,
The Chocolate King can't do any of that. In fact, The Chocolate King is a complete slave to the petty consuming public.
The consuming public can make or break into any enterprise just solely on the decisions that people make on how they're going to use their money.
It's a remarkable thing and I can't ever quite get over thinking about how profound this really is,
Mises says that we have a system where every living person is in a position to influence
what is done with the world's resources in every second, every day, all over the world.
It sounds like, to my way of thinking, a utopian system.
Mises was convinced that people didn't really understand it or else they would support the
system we call capitalism.
That's why he kept explaining it and again and again to people and I've reflected on
this realizing that of course he was exactly right and maybe one of the reasons he had
to constantly explain it again and again was because of the very name capitalism, right?
This term capitalism sounds like a system that puts capitalists in charge, meaning those
people who own the productive resources, the big machines or the land or whatever, you
You know, have the most money, that they're in charge of society. This is, in fact, a terrible term for what Mises was describing, which is a system of mass production for the masses, where the whole of society, every unique individual in society has a chance to influence the direction of the course of affairs of civilization, which is what capitalism really is. But I don't know what the alternative word is. I mean, Mises might have proposed, what would you say? What would be an alternative to the word capitalism? I mean, consumerism? Yeah, okay.
Well, but, I mean, that doesn't have a very good reputation either, right?
The term consumerism? Consumerism? We're against that, too, right?
Oh, well, too consumerist, you know.
So we're against capitalism because, you know, whatever, and then we're against consumerism.
I don't know what the alternative is, really.
The right term, probably, is just free society.
It would be the right term that we should use instead of consumerism or capitalism.
Nonetheless, I kind of like this term consumerism.
If by that you mean the system in which consumers are running the world, meaning all of us.
But let me stop right there and go back to a scene that occurred to me a couple of weeks ago
at Walmart, which is my favorite little miniature utopia in this world. I love Walmart.
So I needed a set of headphones. I thought, where can I get them? Walmart, of course.
and of course, well, you know, you don't know where to get something, get it at Walmart.
So I drove to Walmart, sure enough they had a set of headphones, but before I got to the
headphones, I got to the vegetable aisle where they have every kind of like amazing fruits
and vegetables from all over the world and there was a guy going through the vegetable
stand and he was hurling vegetables, you know, from the stand and fruits from the stand into
a big basin, you know, he was hurling that, you know, boom, they were landing in this
Basin and I just stopped and I tracked that this is unbelievable this is food
what's going on here was this by God is buying all this stuff or what no it's
throwing it away why is he throwing it away because it's a little bit old right
it's got some like brown spot or something like the apples got a mushy
thing or the bean has got a little thing on it or whatever so throwing all this
Why is he doing this? Because Walmart is wasteful? No. Because the consumer doesn't want to see that stuff. You don't want rotten fruit. You don't want rotten fruit at the grocery store. That's why he's throwing it away.
We're living in a civilization where we throw things away that are imperfect. It's an amazing thing. You see what's happened here?
I mean, the whole history of humanity has consisted mostly, entirely, of the struggle to get enough to eat.
That's the whole, if you want a summary of the whole history of humanity, that's it.
How do I get enough to eat? That's what we're trying to do. We're trying to get enough to eat.
Not a problem anymore, right? No, we throw it out if it's slightly imperfect. We want perfect things to eat.
I mean, you're driving along and you get a hankering for a hamburger, so you just buzz
up to the fast food place and you say, yes, please, I would like some beef from Argentina
nicely ground up and mushed into a small patty and put it in there, and then some wheat grown
in maybe Kansas and processed carefully to remove all imperfections and then fluffed
We think nothing of it. What's the system that makes this possible? It's the system of the free market.
And we think nothing of it. No! Contrary to nothing, we think ill of it, right?
I mean, Google up fast food. I mean, everybody is against fast food, apparently.
You know, I mean, all the intellectuals. Oh, this is terrible, you know, what they're doing.
You're killing us by feeding us or whatever their theory is. I don't know.
Oh, it's terrible. Look how fat we are. This is a disaster of humanity. We're fat.
Well okay, you know, go on a run. I don't know what to tell you. But don't deny it's a system that provides this amazing food to the multitudes. This is a miracle happening.
Anyway, back to my story of the headphones. I buy my headphones, by the way, on the way to the headphones I bought some apples and some t-shirts and a few other things. I fall for every marketing gimmick out there. I'm all for them.
So I get it back, and so it's in this hard plastic container. Do you know the term wrapperage?
Wrapperage. So I'm in there in the kitchen experiencing wrapperage. And I said, Mark,
I think it's like, Mark Thornton, I said, Mark, it's like there's a market failure.
Why can't they make this stuff easier to open? He said, well, in fact, there's a market reason
The reason for that is it prevents tampering, I think was your view, what is it? Oh shoplifting, yeah not tampering, shoplifting. How does that prevent tampering? You have to tell me about that later.
Anyway he had some complicated theory, explained to me the reason why things are packaged the way they are. Oh because it makes the package bigger. Right, okay, there you go, and you can't haul the thing out.
I'm fed up with this. I got a knife and I began to saw it. You can't believe it. I got it out of the package, got it up to my office and realized I had cut the cord in half with my knife. I just sliced right through it. I'm an idiot.
Okay, so, I don't know what the deal is with cords these days.
They're very, I mean, what do they contain, like, fiber optics or something?
I mean, you can't, so when I was young, if you cut a cord, it was no problem at all.
You know, you just kind of, like, remove some insulation and tie them back together,
use a little scotch tape and, you know, stick it back together, and it worked again.
Okay, that's apparently not true anymore.
Because I'm embarrassed to even admit it, but I tried it and I thought, well, it's not a problem, you know, and I kind of opened it and I thought, well, there's some complicated stuff in there, you know, but anyway, surely it works, and I put some scotch tape. Of course it didn't work.
And so I sat there, just as bad off as I was before, for a few hours thinking, I still have to get my headphones. This doesn't work. How am I going to explain this? I was nervous to have to explain this even to Doug because I had actually spent, I think, 20 bucks or something at the Institute money on this thing because I had justified it. So he said, well, go take it back. I thought, well, this is embarrassing. Am I going to go back to Walmart with my thing?
I thought, well, I've got to at least attempt it and my boss, after all, told me to go take it back, so I'm going to take it back, so I went back and I'm standing in line, so I'm at this weird area of Walmart, this is not vegetables, this is not t-shirts, this is not electronics, this is returns, okay, so this is a very interesting place because they've got like two or three cash registers with these employees that just, whatever they're paid, it's not enough and there's people standing behind the register and
And they're carrying, just lugging on all this junk. I mean, toys that the kids were playing with or something, and then they stepped on it or spilled syrup on it or whatever, and they're bringing it back.
Clothes that clearly a person wore the night before to their special party or whatever, now they're going to get their money back on them.
Idiots who, when opening their headphones, cut the cord.
and so anyway I stand there dutifully you know feeling like and I got up to
the register I said look I don't know why I'm here this this is entirely my
fault I sliced right through this cord open it up is nothing you did I was
reckless and I totally understand if you don't want to take this back but I feel
like I just have to perform this ritual in a perfunctory way she's oh sure glad
to take it back you know and bring it up and in a matter of you know 20 seconds I
I have my money back. And that was it. She said, go pick out another one and ring it up like you normally would.
And I walked away from this just stunned. And I hung around a little bit longer and just kind of observed what all the consumers were saying to the return people.
Now, consumers are remarkable people. They really do believe that they are running the world, the consuming public.
It's like, you know, the guy drives off from the amazing fast food place and complains they didn't get one pickle instead of two or whatever, you know, we're just, we just demand so much from the producers.
And so it was at Walmart with all these people standing in line there, and every one of them is, you know, basically they're lying, a lot of them are lying, but Walmart pretends to believe their lies and gives them their money back, and then time after time after time.
Now, I'm looking at the scene. Now, where else have you seen a scene where you've got two, three, four people seemingly in charge, you know, behind some counter and lines lined up against them in a long thing like this?
Okay, my mind went back to the last time I took a flight, right? How many of you have flown an airplane, right? So we've got the TSA, right? We've got the TSA, a very similar setup.
Physically, they're basically the same, you know, just people in charge behind counters
and then people lined up behind them, but two very different kind of dynamics at work.
And one, at Walmart, the people behind the counter are there, you know, in a slavish
way serving the masses, and the masses are in charge, you know, the person who gets up
there, you know, is clearly in charge of the situation in this kind of retail environment.
The TSA on the other, and they're very demanding, and they mouth off, you know. If it takes
too long, hey, why are you taking so long? You know, everybody's got, you know, angry
words sometimes for the person at Walmart. The TSA is completely different. These are,
presumably, it could be the same people, but we behave completely differently. It's like
there's an awareness that the consumer is not sovereign in this case. We're afraid.
You know, we spend a long time in lines getting up to the TSA, then the person looks at our
documentation with this careful magnifying glass and checks our, you know, a little infrared
thing.
It's probably all fake, but anyway, they do all this weird stuff, you know, and they're
looking at our papers, making sure that everything's aligned right, or whatever.
Then they give us permission and we say, oh, thank you, you know, and we don't dare say
anything else.
Like you would never insult the person.
Hey, why are you taking so long? I've been waiting in this line 10 minutes.
I mean, what do you risk if you do something like that?
I've been here waiting 15 minutes for you jerks, you know.
What if you said that to the TSA? To the end of the world.
I mean, no telling what would happen to you.
You know, you can look on YouTube and see the results of this stuff.
I mean, it's a complete opposite system.
I mean, it's like an inversion. It's like Alice in Wonderland or something.
It's like a complete inversion of the capitalist system.
And so it is in every situation where you encounter the public sector, essentially.
Now, this is not to say there aren't some very nice, sweet bureaucrats and some very wonderful
driver's license bureaus somewhere, I mean, you know, but they're very volatile.
They're always on the verge of tipping into being a sort of Nazi-like, you know, at every moment.
I remember I was trying to get my little girl, a driver's permission thing or whatever, and I was over at the DMV and I arrived up at 9 a.m. and I stood there for a very long time observing what seemed chaos, you know, like everybody was just milling around, there was a guy in charge, somebody behind a desk who wasn't speaking to anybody, everyone was like a growl or something,
I stood there for a long time. I mean, nobody comes up to you, like, at the clothing store,
a guy comes up to you and says, can I help you, sir? And we say, get away from me, you parasite,
trying to get me to spend my money on things. You know, I just want to look for myself, all right?
Now, while driving through the Bureau, nobody's coming up to you going, can I help you, sir? No,
that doesn't happen. So, I sought somebody out who was in charge. I said, I'm sorry, I'm vaguely
I'm really confused about what's going on in this building.
I don't really know what to do.
He said, take a number.
Believe it or not, they have one of these wheels that spins
with paper tickets coming out of it. So I have to go over to the corner
and I'm ready to take a number and the number was something like 89.
And right before I pulled the 89 number, I heard
So, I asked somebody, I said, some person who like had cobwebs on them, you know, sitting
in a chair like this, how long have you been here?
He said, oh, well, we got here at 6 a.m. this morning, you know, and what number are you?
Well, I'm like number 31.
So I took my little girl, I said, we've got to think of something else to do, you know,
The State is built by regular people. The same people who are working at Walmart could also be working for the DMV or the TSA or anywhere else. It's not a difference in human nature. It's not like bad people in the state, good people in the private sector. These are all just people. It's not like we are in charge of the world when we're returning our goods after destroying them.
and you know to the Walmart returns counter and then suddenly we arrive at TSA and we
feel you know like slaves and we behave like slaves, we have a personality transplant.
No, the only difference is an institutional difference. In one institution, the market,
the consumer is in charge of all productive activities and the other in the state, the
state is in charge of everything, whether it's productive or not and mostly it's not.
So that's the only difference between the two systems, and those are the only two systems really that exist, that's essentially our choice, and has always been our choice from the beginning of time.
Now reflect on what it is that economics contributes by observing the existence of a system in which the masses, the whole of society, all individuals in society are essentially in charge of the shape of civilization, what gets produced, how much gets produced.
I mean, by observing this, economics discovered something unbelievable and unprecedented in all of human history.
If you go to your political science classes, you're going to learn what every political philosopher has said since the beginning of the printed world, from the ancient world to the present.
And almost all of them get it wrong.
They all believe that the right means to the just, beautiful, prosperous, moral society is somehow changing, manipulating, adjusting the state in some respect.
And very few have ever bothered to look outside of that and notice that all the goals that they want,
A just society, a free society, a prosperous society, a moral society is achieved not within
the state structure but completely outside of it.
This is an essential problem, intellectual problem, of the history of the printed word.
I'm just now reading a book by Francis Fukuyama called, this is his new book, it's number
eight on the New York Times bestseller list, it's called, you know, something like the
The origin of political order, okay, so I'm plowing through this gigantic book, 800 pages,
which ends by saying that there's going to be a volume two, which, you know, I do this
and I'm still not finished, you know.
There's not a page in this thing that actually addresses this key problem.
He, like most all political flossers in all of human history, have tried to solve all
the problems of humanity by looking at the wrong sector of society.
They're looking at the state and failing to notice the market.
You know, it's like political philosophers are like people who observe, you know, something
like a house having been built and trying to understand how that came to be and thinking,
well, you know, we need a society of these houses.
And then some one of them observes that, you know, it seemed to have gone up in the spring.
During springtime, this house seemed to have emerged from the ground.
What can we do to make sure that spring lasts a little longer, maybe begins a little earlier,
and maybe lasts a whole year, and they spend all the rest of their time puzzling about
the weather?
I mean, it's essentially a failure to understand cause and effect, you know, without understanding
that no, actual humans built the house and they did it for a reason, you know.
That's essentially what economics addresses, and that's its great contribution.
Now, I would like to return finally to what is essentially the burning question in our
times today, since nobody is actually proposing that the state run all of society, although
some people do, and very few apart from those associated with the Mises Institute advocate
that the market run the whole of society.
Most people believe that we need something in between.
So we need like some kind of intermediary force between the producer and the consumer.
And I would deny, as with Mises, that this is true at all, and that the more things you
put between the producer and the consumer, the more regulations, the more tools of coercion
you put between those two things, the worse off the system is going to be.
And the more direct the connection is between the producer and the consumer, especially
if the intermediaries are voluntary institutions like Consumers Reports or reviews on Amazon
or whatever it may be, the more efficient and wonderful the relationship between the
producer and the consumer is.
Because it's in the interest of all producers to serve the consumer in the best possible
way.
This simple claim is denied constantly and always.
I mean, after all, we have a thousand regulatory bureaucracies in Washington erected on the
belief that it's not true that producers are desperate to serve consumers. And I tell you,
they do nothing but menace in this world. And Mark mentioned one of them. They've destroyed
our ability to keep our clothes clean. Alright? This is a problem. This is a problem. That's
That's only the beginning. I wish I had time to go into it, but Doug has failed to give me three hours to talk, but I would like to talk at some point about the problem of dirty dishes, a very serious matter, whether or not we're eating off clean dishes or not.
And a small regulatory change that has taken place within the last 12 months have made it nearly impossible for us to get our dishes clean, if you can believe it.
And I know people who have replaced their dishes thinking, I guess my dishes are just permanently dirty.
I better buy some new ones.
Or they replace their dishwashers and say, well, I guess my machine mysteriously broke over the last 12 months.
and they replace it with a machine that works even less well because regulations make it
consume even less water and this has happened to millions of Americans and very few people
have noticed that the problem lies not with the machine or with their dishes but with
their dish washing detergent which on the back of the bottle prints in very small letters
This is very bad. Phosphorus-free is very bad. It means that your dishwashing detergent will not work.
It means that it will make your dishes much dirtier.
Now, I was listening to some guy on the television the other day.
He says, well, we have to have phosphorus-free detergent because we have to keep the fish healthy.
And I'm thinking, okay, like, you know, I'm imagining this. So, the fish are supposed to be healthy and happy, probably eating off clean plates and clear crystal, you know, in the bottom of the lake or whatever, but we're up here, you know, eating off dirty, bacteria-ridden, gritty things, you know, and this is the world you want, you know, this is what your beloved regulations are creating for us, happy, civilized fish, dissatisfied, uncivilized human beings, you know.
There's something wrong with this system. In any case, it turns out to be a myth that there's any relationship between phosphorus and the health of fish.
In any case, I was very pleased to be able to go to Walmart, actually, and discover that you can buy phosphorus on your own.
A little box, about a five-pound box, brought it home, cut off the corner of it, put a little tablespoon into my dishwasher, and like magic.
I felt like my childhood restored. I held up the glass to the light and observed the beautiful glass at long last.
So you have to do this in life. You have to find the work around to these idiotic barriers that the state has put up in front of us to ruin our lives.
Be smart about them. Think about them. Understand cause and effect. Find the work around and you can live a prosperous, happy, healthy life.
because you can, on your own, help restore this relationship between the producer and the consumer.
But, if you don't understand economics, and you're not alert to what it teaches,
you can go about your life with wringing around the collar, with gritty, dirty dishes,
and, even worse, a state of unbelievable ignorance about what it is that causes civilizations to rise
and civilizations to fall, which is why I'm grateful for your presence here today.
Thank you so much.