WEBVTT NOTE Rothbard, Mises, Rand, and Me 1 00:00:00.000 --> 00:00:06.360 Walter Block is the Harold E. Wirth eminent scholar, endowed chair in economics at Loyola 2 00:00:06.360 --> 00:00:13.720 University. Of course, he's a scholar at the Mises Institute and the Hoover Institute, author 3 00:00:13.720 --> 00:00:20.360 of Defending the Undefendable, Privatization of Roads and Highways, which we have here, 4 00:00:20.360 --> 00:00:26.320 Labor Economics with Free Market Perspective, which is on sale out front employing the undefendable. 5 00:00:26.320 --> 00:00:33.400 And it goes on and on and on, as you've heard, he's the author of thousands of articles, 6 00:00:33.400 --> 00:00:41.200 who knows how many refereed articles, this man has been nothing but a machine of production 7 00:00:41.200 --> 00:00:45.240 since he took up this cause many, many years ago. 8 00:00:45.240 --> 00:00:52.720 And I think he said numerous times, and hopefully talks about it in his talk, that he had a 9 00:00:52.720 --> 00:00:59.520 The man who very much inspired him and showed him the way, a guy named Murray Rothbard. 10 00:00:59.520 --> 00:01:07.300 And I am so pleased to be awarding this award tonight because I think Murray looks down 11 00:01:07.300 --> 00:01:14.960 upon both of us right now with a big smile on his face and says, that a boy to Walter 12 00:01:14.960 --> 00:01:17.240 and myself. 13 00:01:17.240 --> 00:01:26.480 And anybody who's been to Mises University will know that after a grueling day of classes 14 00:01:26.480 --> 00:01:33.400 from 8 in the morning till 8 at night, probably somewhere around 9 o'clock, somewhere either 15 00:01:33.400 --> 00:01:41.320 in the bookstore or somewhere in the building, you're gonna see a covey of people, a circle 16 00:01:41.320 --> 00:01:46.880 School of People, and you're going to know who's, and these people are students, still 17 00:01:46.880 --> 00:01:52.600 there, very hungry for knowledge, plenty of questions, and you absolutely know who's in 18 00:01:52.600 --> 00:01:59.240 the middle of that circle, and it's the man to my right, Walter Block. And he has taken 19 00:01:59.240 --> 00:02:06.620 up a tradition, I think, that Murray started, that as long as there were questions, as long 20 00:02:06.620 --> 00:02:12.940 As long as there were students to be asking those questions, he was there to answer them. 21 00:02:12.940 --> 00:02:17.920 I've called him many times the Pied Piper of Austrian economics. I've called him the 22 00:02:17.920 --> 00:02:24.980 Father Flanagan of Austrian economics because he tends to get a very diverse group that 23 00:02:24.980 --> 00:02:33.820 you just saw follow him around to pursue economics as a profession. And there is really no one 24 00:02:33.820 --> 00:02:40.340 There is no one else in our movement who has done this like Walter Block. 25 00:02:40.340 --> 00:02:49.260 There is no one who has produced what is now a thousand points of light, Austrian lights, 26 00:02:49.260 --> 00:02:52.940 like Walter Block has, and he has done it the old-fashioned way. 27 00:02:52.940 --> 00:02:59.620 There is probably no one other than Murray Rothbard who was more low-tech than Walter 28 00:02:59.620 --> 00:03:07.920 Walter Block. But one person at a time that he influenced has turned into dozens, has 29 00:03:07.920 --> 00:03:13.980 turned into hundreds, and now those hundreds teach thousands. And those thousands have 30 00:03:13.980 --> 00:03:19.180 technology that who knows, they are going to change the world. This is a guy who's 31 00:03:19.180 --> 00:03:26.280 changed the world. I agree with Dan D'Amico. Walter Block has set the standard for what 32 00:03:26.280 --> 00:03:30.920 The Gary G. Schlarbom Award should be going forward. 33 00:03:30.920 --> 00:03:39.880 And it is my pleasure, with the help of Deanna Forbush, my wife, Pat Sajak has Vanna, I 34 00:03:39.880 --> 00:03:49.920 have Deanna, to award Walter Block the 2011 Gary G. Schlarbom Award. 35 00:03:56.280 --> 00:04:03.280 This medal is as heavy as a manhole cover. So believe me, Walter is in great shape. 36 00:04:26.280 --> 00:04:34.520 always has been, just had a little work on his hip, I guess, but he's certainly very, 37 00:04:34.520 --> 00:04:41.500 very deserving. Walter, take it away. 38 00:04:41.500 --> 00:04:47.040 Thank you, thank you very much. It's an honor to get the Schlabarm Award. I just wanted 39 00:04:47.040 --> 00:04:54.120 to mention the FAST company that I'm in with by winning this award. Otto von Hopsburg, 40 00:04:54.120 --> 00:05:04.120 1999, Ralph Reiko, 2000, Anthony Flew, 2001, Bettina Biengraves, 2002, Ron Paul, 2003, 41 00:05:04.120 --> 00:05:13.360 Hans Sennholz, 2004, William Peterson, confidant of Mises, 2005, Hans Hoppe, 2006, Robert Higgs, 42 00:05:13.360 --> 00:05:22.440 my buddy down here, 2007, Pascal Salon, 2008, Jesus Huerta de Soto, 2009, Jim Rogers, 2010, 43 00:05:22.440 --> 00:05:28.820 And I'm very, very happy and delighted to be part of this august company. 44 00:05:28.820 --> 00:05:35.120 To give a retrospective talk as opposed to a substantive talk, you have to have accomplished 45 00:05:35.120 --> 00:05:37.120 something. 46 00:05:37.120 --> 00:05:41.620 And the way we tell whether you've accomplished something or not, modern day, is, is there 47 00:05:41.620 --> 00:05:43.920 a t-shirt in your honor? 48 00:05:43.920 --> 00:05:49.260 And I'm happy to say that there's not only one t-shirt, but two t-shirts in my honor. 49 00:05:49.260 --> 00:06:11.260 The first one is Old Guy's Rule. That was meant for me. The other is my first book in 50 00:06:11.260 --> 00:06:18.820 1976, which is still selling, so go out and buy some. Not only you have to have something 51 00:06:18.820 --> 00:06:48.820 In order to be accomplished, you have to be old. And I'm now old. I just turned 70. I used to be the Enfant terrible. I don't know what happened. I'm an old guy. I get on a plane and these young guys that want to put my luggage up on the top of the thing, and I feel like smacking them, but they're way bigger and stronger than me, so I better not. I'm trying to put groceries in the car and they try to help me. It's sort of like I'm an old doffer or something. It's just horrible. I can't even pick stuff off the floor. The floor has gotten lower. 52 00:06:48.820 --> 00:06:55.820 every year. And this is before my hip operation. Now, you know, I can just sort of wave at the floor. It's just horrible. 53 00:06:55.820 --> 00:07:04.820 Not only am I getting old physically, but I'm, well, I was going to say I'm getting old mentally, but I think I've always been old mentally, even when I was young. 54 00:07:04.820 --> 00:07:15.820 I sort of have this intellectual solipsism or incest or something weird, like I'll write a lot of stuff and I'll forget what I wrote, and I'll start reading it, and I'll forget that I wrote it. 55 00:07:15.820 --> 00:07:30.820 I've had two experiences that I have to share with you. 56 00:07:30.820 --> 00:07:35.820 One is this guy, Brooks, who criticized me on Coase and Demsets, and I wrote a rejoinder. 57 00:07:35.820 --> 00:07:39.820 And then six months later, I forgot that I wrote that rejoinder, and I wrote another rejoinder. 58 00:07:39.820 --> 00:07:46.820 That's amazing. And then I wrote two book reviews of William Easterly's book, White Man's Burden. 59 00:07:46.820 --> 00:07:50.820 And I didn't realize that I'd written one before. I wouldn't write two of them if I'd known. 60 00:07:50.820 --> 00:07:57.820 And those are the only two I'm aware of. I mean, there might be others. I don't know. 61 00:07:57.820 --> 00:08:02.820 But I'd better not keep continuing with my four balls, otherwise they'll take this award away from me. 62 00:08:02.820 --> 00:08:05.820 They'll say, what? What a maniac. You know, give us back that award. 63 00:08:05.820 --> 00:08:35.820 Award. So, I'm going to stop right now on that. I want to give three topics. I've been assigned a half hour, so I'm going to try to do 10 minutes each. I haven't given the speech, so I don't know how it'll work out, but let me try. I want to give my personal story. I want to talk a little bit about me and libertarianism, and then a little bit about me and Austrian economics. I justify the first on the grounds that being old, I actually 64 00:08:35.820 --> 00:08:42.820 I've actually touched hands or shook hands with people like Mises, Rothbard, Rand, Friedman, Hayek. 65 00:08:42.820 --> 00:08:46.820 I once played chess with Hayek. I've got a picture of me playing chess with Hayek. 66 00:08:46.820 --> 00:08:52.820 Hutt, people like that. So if you come up and shake my hand, I can channel these people for you. 67 00:08:52.820 --> 00:09:01.820 You know, you shake my hand, you're shaking Mises' hand. I haven't washed my hand. No, I've washed my hand since then. 68 00:09:01.820 --> 00:09:09.100 Murray Rothbard has been, for me, the inspiration, and I've got a lot of similarities with Murray. 69 00:09:09.100 --> 00:09:14.780 We're both short, fat Jews from New York City. We both married Christian girls. Murray Betts, 70 00:09:14.780 --> 00:09:22.980 say hello. There's my wife. We both had PhDs from Columbia University in economics. We 71 00:09:22.980 --> 00:09:28.940 both had trouble with Arthur Burns there. Murray's trouble with Arthur Burns was Arthur 72 00:09:28.940 --> 00:09:47.940 My problem with him is I had to pass a macro prelim and he was teaching and all he was talking about is his days with Nixon, so I never learned macro. 73 00:09:47.940 --> 00:09:52.740 We both have silly senses of humor. We're both Austro-libertarians and co-capitalists. 74 00:09:52.740 --> 00:09:58.180 We both publish a lot. Now, I won't compare my publications with Murray in terms of quality, 75 00:09:58.180 --> 00:10:01.620 but in terms of quantity, I'm getting close because I do publish a lot. 76 00:10:03.220 --> 00:10:08.180 Usually, in my early career, I would keep track of how many pages I published in a day, 77 00:10:08.180 --> 00:10:13.540 and if I did five a day, that is double-spaced typewritten pages of 300 words or 1,500 words 78 00:10:13.540 --> 00:10:25.540 I did 23 pages. It took me 8 in the morning until 2 in the morning. I called up Murray and said, 79 00:10:25.540 --> 00:10:31.540 How many pages do you do? Murray goes, Who keeps track of a thing like that? 80 00:10:31.540 --> 00:10:38.540 Doug was kind enough to call me various things about the movement. I'm also the Jewish mother of the movement. 81 00:10:38.540 --> 00:10:46.540 And as Jewish mother, I'm a great whiner, and I have threats. I can throw good filter fish at you, or, you know, wine, stuff like that. 82 00:10:46.540 --> 00:10:50.540 So I was very pestery with Murray. I said, Murray, I'm not getting off the phone until you tell me. 83 00:10:50.540 --> 00:10:59.540 He's at eight pages an hour. Eight pages an hour. I mean, my whole, my biggest day of work was like three hours of his. 84 00:10:59.540 --> 00:11:07.540 Now, a professional typist could type faster than that, but Murray is creating stuff right out of the top of his head at that rate. 85 00:11:07.540 --> 00:11:24.540 I think I'm the only person who have ever co-authored anything with Murray. I've co-authored a lot of stuff, and of course I'm the most proud that I've co-authored stuff with him. 86 00:11:24.540 --> 00:11:34.540 I also channel him in some weird ways. He stole a lot of my ideas. It's true, he published them 20 years before I even thought of them, but still he stole my ideas. 87 00:11:34.540 --> 00:11:39.540 Because I thought of them independently and then I go read about him saying it. 88 00:11:39.540 --> 00:11:42.540 Here's something very interesting. 89 00:11:42.540 --> 00:11:49.540 I wrote a review essay of the book by Eleanor Ostrom, who just won the Nobel Prize governing the Commons. 90 00:11:49.540 --> 00:11:52.540 And what I said was, this is an evil book. 91 00:11:52.540 --> 00:11:55.540 I use that pejorative advisedly. 92 00:11:55.540 --> 00:11:59.540 He's also a basically mistaken volume, but we'll get to that in a moment. 93 00:11:59.540 --> 00:12:04.540 Why is it a wicked publication, a description rarely applied to a dry term in economics? 94 00:12:04.540 --> 00:12:07.140 That's my opening statement on the Ostrom book. 95 00:12:07.140 --> 00:12:15.500 Here is Murray on Hayek's Constitution of Liberty as written by Roberta Madugno in these 96 00:12:15.500 --> 00:12:17.780 secret letters that just came out. 97 00:12:17.780 --> 00:12:21.500 And I swear I wrote my thing on Ostrom before I read this thing in Madugno. 98 00:12:21.500 --> 00:12:23.100 Here's Murray on Hayek. 99 00:12:23.100 --> 00:12:28.300 F.A. Hayek's Constitution of Liberty is surprisingly and distressingly an extremely bad and I would 100 00:12:28.300 --> 00:12:31.300 I would even say, evil book. 101 00:12:31.300 --> 00:12:33.300 Who writes like that? 102 00:12:33.300 --> 00:12:35.300 I don't know of anyone else, except me and Murray. 103 00:12:35.300 --> 00:12:39.300 We're sort of, I don't know, weirdly connected. 104 00:12:39.300 --> 00:12:44.300 Another motto I've adopted from Murray is, hatred is my muse. 105 00:12:44.300 --> 00:12:47.300 And what Murray would mean like that, he'd say he'd read something and say, 106 00:12:47.300 --> 00:12:49.300 I'm going to get this if it takes me the rest of my life. 107 00:12:49.300 --> 00:12:52.300 I'm not going to let that stand without a rejoinder. 108 00:12:52.300 --> 00:12:56.300 And a lot of my writing is based on hatred. 109 00:12:56.300 --> 00:13:15.300 Another parallel, you know, I've written a book, Defending the Undefendable, where I have a whole bunch of articles defending people who are a little off the beaten track, to say the least, but they're compatible with a non-aggression axiom and they're reviled or illegal. 110 00:13:15.300 --> 00:13:24.220 Well, I just read in Murray, the demagogue. The demagogue is hero. Now, I've been thinking 111 00:13:24.220 --> 00:13:29.100 about that, but he stole that from me. He wrote it many years ago, but the demagogue 112 00:13:29.100 --> 00:13:36.940 is hero. It's just so defending the undefendable-ish, and he beat me to it again. Murray had great 113 00:13:36.940 --> 00:13:41.940 patience with me. When I first met him, and I'll tell you how I got to him in a second, 114 00:13:41.940 --> 00:13:47.060 When I first met him, he converted me to anarchism in about five minutes. 115 00:13:47.060 --> 00:13:50.860 Austrianism took a little longer, and I saw a picture of Mises on his wall, and I said, 116 00:13:50.860 --> 00:13:52.700 Murray, how can you have a picture of Mises on his wall? 117 00:13:52.700 --> 00:13:53.700 He's not an anarchist. 118 00:13:53.700 --> 00:13:56.220 He believes in government opera or something. 119 00:13:56.220 --> 00:13:59.500 And Murray just smiled very patiently at me, whereas a lot of people would have kicked 120 00:13:59.500 --> 00:14:03.100 me out of their apartment or something, you know, saying, why do you have a picture of 121 00:14:03.100 --> 00:14:04.100 Mises? 122 00:14:04.100 --> 00:14:05.780 Isn't that a little pushy? 123 00:14:05.780 --> 00:14:11.020 But you know, we Jewish mothers, we're pushy. 124 00:14:11.020 --> 00:14:41.020 I also had some interaction with Mises. I attended Mises' last seminar at NYU, because Murray took a whole bunch of us living room crowd people there, and Mises was very elderly then, and he could hardly hear, and Percy Graves had to translate both ways, but it was still an honor and a pleasure to be in the same room with Ludwig von Mises. I regard Ludwig von Mises and Murray Rothbard as two of the greatest economists that ever lived, ever wrote. 125 00:14:41.020 --> 00:14:51.020 Let me tell you about Ayn Rand. I was a pinko, commie Jew in Brooklyn, which is sort of redundancy because everyone I knew was like that. 126 00:14:51.020 --> 00:14:56.020 The big question in my family was, well, do you actually carry a commie card or are you just a fellow traveler? 127 00:14:56.020 --> 00:15:00.020 That was sort of the level of discourse in my family. 128 00:15:00.020 --> 00:15:06.020 I was at Brooklyn College and I heard Ayn Rand is coming to lecture and I said, oh, I'm going to boo her and hiss her because she's evil. 129 00:15:06.020 --> 00:15:11.020 She believes in free enterprise and, you know, there'll be dead babies in the street and stuff like that. 130 00:15:11.020 --> 00:15:17.020 And so I came and I listened to her and I booed lustily and there must have been about 3,000 of us in the audience. 131 00:15:17.020 --> 00:15:23.020 And afterward the Ayn Rand Study Society or whoever was the host and invited her said, 132 00:15:23.020 --> 00:15:28.020 well, there's going to be a luncheon in her honor and anyone can come to the luncheon even if you disagree. 133 00:15:28.020 --> 00:15:32.020 And I haven't had enough of booing and hissing at her and I really wanted to smash her. 134 00:15:32.020 --> 00:16:02.020 So I came to the lunch and there was this long, long table, maybe 50 people on a side, and there was Ayn Rand sitting over there, and Nathaniel Brannon, and Alan Greenspan, and a few others of her at Coterie, and I was relegated to the foot of the table over here, and I turned to my neighbor and I said, what is this capitalist crap, you know, socialism is the way to go, and he says, well you know, I don't really know about that, but the people who do are over there. So I was a chutzpahnik in those days, still am, and I stuck my head between Ayn Rand's and Nathan's, and I said, 135 00:16:02.020 --> 00:16:06.020 And he said, you know, there's a socialist here who wants to debate someone on socialism and capitalism. 136 00:16:06.020 --> 00:16:12.020 And they said, who was that? And I said, me. I was a senior in college. I was, you know, 21 and, you know, filling my oats. 137 00:16:12.020 --> 00:16:18.020 And Brandon was very generous. He said, I'll come to the other end of the table and I'll talk to you during lunch on two conditions. 138 00:16:18.020 --> 00:16:24.020 One, you don't allow this conversation to lapse and be the end of it, but we keep going until we settle this. 139 00:16:24.020 --> 00:16:28.020 And two, you read two books that I'll recommend to you. 140 00:16:28.020 --> 00:16:33.220 Well, the two books were Atlas Shrugged and Economics in One Lesson by Henry Hazlitt. 141 00:16:33.220 --> 00:16:37.120 And I read that Atlas Shrugged. It took me one week and I couldn't put it down. 142 00:16:37.120 --> 00:16:41.520 It's 1,100 pages of small type. It just sort of blew me away. 143 00:16:41.520 --> 00:16:48.420 And I read Hazlitt and I went to Ayn Rand's apartment several times and I was sort of a classical liberal. 144 00:16:48.420 --> 00:16:52.220 I was a libertarian, not an anarchist, but a classical liberal. 145 00:16:52.220 --> 00:16:55.420 The problem with the Rand, it was really cultish. 146 00:16:55.420 --> 00:16:59.420 You couldn't, you know, the typical question that you could ask after the event was, 147 00:16:59.420 --> 00:17:04.420 well, Miss Rand, on page 456 you said this, could you please expound? 148 00:17:04.420 --> 00:17:08.420 Well, you know, that's really a softball. You can't say, well, you said over here on page 727, 149 00:17:08.420 --> 00:17:13.420 here on page 32, and they're contradictory. How do you account for that? 150 00:17:13.420 --> 00:17:17.420 I always encourage my students to argue with me, but she didn't. 151 00:17:17.420 --> 00:17:20.420 And, you know, if you asked her a tough question, she would just kick you out. 152 00:17:20.420 --> 00:17:28.420 So it wasn't really very nice. It wasn't academic. It wasn't intellectual. It was a little cultish. 153 00:17:28.420 --> 00:17:37.420 But these were the only people I knew that were free enterprises. And then I met Larry Moss, who was a student at Columbia with me. 154 00:17:37.420 --> 00:17:44.420 And he said, you've got to meet this guy, Murray Rothbard. He's an anarchist. And I said, oh, an anarchist? That's crazy. I don't want to meet Murray Rothbard. 155 00:17:44.420 --> 00:17:53.420 But somehow Larry Moss and Jerry Wallow, his roommate, prevailed upon me to go meet Murray, and then, as I said, in about five minutes, he converted me. 156 00:17:53.420 --> 00:17:59.420 You know, I would say, well, how can we have armies, courts and police privately? He said, well, how about the post office? 157 00:17:59.420 --> 00:18:05.420 And the post office will have competition, the usual argument, and that was it. I was an anarchist. 158 00:18:05.420 --> 00:18:13.420 It took me a lot longer to become an Austrian because I had a vested interest. I was now getting my PhD in mainstream economics. 159 00:18:13.420 --> 00:18:18.420 and, you know, you ask those guys about Austrianism and they think that's a cult. 160 00:18:18.420 --> 00:18:24.420 So I had a hard time getting my hands around the idea of monopoly and a few other things, 161 00:18:24.420 --> 00:18:27.420 and certainly praxeological stuff. 162 00:18:27.420 --> 00:18:30.420 But finally I did become an Austrian. 163 00:18:30.420 --> 00:18:37.420 I want to mention another person in addition to Murray Rothbard, Ludwig von Mises, 164 00:18:37.420 --> 00:18:45.500 on Rand, who've affected my persona, my abilities, my career, and that's my buddy Bill Barnett. 165 00:18:45.500 --> 00:18:50.100 He mentioned that we have offices next door to each other, and a lot of times we'll pound 166 00:18:50.100 --> 00:18:57.740 on the door, which is a signal for me to go scurrying into his office to see what he wants. 167 00:18:57.740 --> 00:19:04.700 I got to Loyola University in 2001, and I just looked it up, and I had 135 publications 168 00:19:04.700 --> 00:19:10.700 and Referee Journals, and now I have 395, so I published 260 in the last ten years, 169 00:19:10.700 --> 00:19:18.700 an average of 26 each, each year. I'm sort of a workaholic. Bill had about 10 articles 170 00:19:18.700 --> 00:19:23.020 or maybe five or eight or something like that before I came, and now he's got about 60, 171 00:19:23.020 --> 00:19:28.860 so he did 50 in the interim, roughly. These are rough numbers. And a lot of people think, 172 00:19:28.860 --> 00:19:34.300 well, he never published squat before I got there, now he publishes a lot, a lot in co-authorship 173 00:19:34.300 --> 00:19:40.220 with me and therefore he is riding on my coattails. Well, the very opposite is the truth. He's 174 00:19:40.220 --> 00:19:44.400 been my mentor. I've learned more from him than I've learned from anyone else with the 175 00:19:44.400 --> 00:19:50.220 exception of Mises and Rothbard, especially in macroeconomics and it's been a delirious 176 00:19:50.220 --> 00:19:56.220 pleasure for me to be part of Loyola University mainly because of Bill. I have two other good 177 00:19:56.220 --> 00:20:01.420 colleagues, Dan is one of them, John Levin is another and a few other good people, but 178 00:20:01.420 --> 00:20:05.060 Without Bill, it wouldn't be the same. There was a week where we didn't have lunch. We 179 00:20:05.060 --> 00:20:10.260 have lunch every day, pretty much. And it was, the wind sort of fell out of the balloon 180 00:20:10.260 --> 00:20:15.860 a little bit. So I think that you've heard Bill before. You can see his knowledge of 181 00:20:15.860 --> 00:20:21.000 what's going on with Austrian economics. He's been my tutor, my mentor, and I'm deliriously 182 00:20:21.000 --> 00:20:23.940 happy with him. 183 00:20:23.940 --> 00:20:30.600 Oh, another thing in addition to being the Jewish mother of the movement, I'm also known 184 00:20:30.600 --> 00:20:45.600 I'm not a full anarchist. I've agreed that the government has got to step in. There is one market failure, and that is that not everyone has read Atlas Shrug, Man Economy and State, and Human Action. 185 00:20:45.600 --> 00:20:57.600 And the sole function of the government is to coerce everyone to read those three books. But apart from that, I'm an anarchist. So you see, I'm really moderate. I'm not an extremist. I'm a moderate anarchist. 186 00:20:57.600 --> 00:21:11.600 Okay, I think I've given you a little bit of my personal stuff, and I said I would do that for the first third, and now I want to talk very briefly about my connection with libertarianism, and then a little bit about my connection with Austrianism. 187 00:21:11.600 --> 00:21:18.600 In libertarianism, I think my most famous book is Defending the Undefendable. 188 00:21:18.600 --> 00:21:25.600 Let me tell you how I came to write that. What happened was I was writing my PhD dissertation on rent control for Gary Becker. 189 00:21:25.600 --> 00:21:33.600 He was my thesis advisor and I hated it. I absolutely hated it because all it was was math and stat and econometrics and stuff like that. 190 00:21:33.600 --> 00:21:41.600 And the whole thing was sort of neoclassical because what I'm supposed to show is that rent control screws up housing. 191 00:21:41.600 --> 00:21:46.600 And I had an econometric equation model and most of the time I got the right signs 192 00:21:46.600 --> 00:21:50.600 and most of the time I got significant t-values and all was well. 193 00:21:50.600 --> 00:21:56.600 But every once in a while I'd get the wrong sign, and every once in a while the wrong sign would be statistically significant. 194 00:21:56.600 --> 00:22:03.600 And I'd show it to Gary Becker, and you'd think if he were consistent with his own neoclassical view, he would say, 195 00:22:03.600 --> 00:22:08.600 wow, I've got this genius block who's going to change everything we know about the rent control. 196 00:22:08.600 --> 00:22:13.600 Instead he said, block you moron, go out and do it again until you get it right. 197 00:22:13.600 --> 00:22:19.600 So what's testing what? Is the theory testing the econometrics or is the econometrics testing the theory? 198 00:22:19.600 --> 00:22:24.600 So the whole experience was, if anything, worse than my experience with Arthur Burns. 199 00:22:24.600 --> 00:22:30.600 But I had to get the dissertation because my alternative was to go be shot out in Vietnam or shoot people, 200 00:22:30.600 --> 00:22:34.600 and I didn't want to do that, so I was churning it away. 201 00:22:34.600 --> 00:22:39.600 But I had to come up with a reward system. So every time I did one more equation or I found one more thing, 202 00:22:39.600 --> 00:22:44.400 And one more thing, I would reward myself with a whole day to do anything I wanted. 203 00:22:44.400 --> 00:22:45.400 And what would I do in a day? 204 00:22:45.400 --> 00:22:50.640 I'd write about what a great guy the pimp was or what a great guy the drug pusher was 205 00:22:50.640 --> 00:22:55.560 or something like that or how blackmailers really should be legalized and the blackmailer 206 00:22:55.560 --> 00:22:57.440 is a great guy. 207 00:22:57.440 --> 00:23:04.120 And at the end of the dissertation, I had like 35 of these essays and I put them together 208 00:23:04.120 --> 00:23:08.280 in a book and that was the Defending the Undefendable, so that was my reward for getting through 209 00:23:08.280 --> 00:23:15.600 with a PhD. Murray wrote one sentence about blackmail and man economy and state for which 210 00:23:15.600 --> 00:23:22.120 he was severely excoriated by reviewers. I have written a lot more, not more wisely, but 211 00:23:22.120 --> 00:23:28.020 a lot more. I must have written maybe 35 journal articles on why blackmail is great and why 212 00:23:28.020 --> 00:23:32.940 everyone who says blackmail is bad is wrong, and I'm coming out with a book of all these 213 00:23:32.940 --> 00:23:41.940 So that's one of my things in libertarianism. Another is on abortion and evictionism, pro-life, pro-choice. 214 00:23:41.940 --> 00:23:48.940 What I'm trying to say is that the usual view is this pro-life and pro-choice, but the true libertarian view is a third view. 215 00:23:48.940 --> 00:23:54.940 It's a completely distinct view and it's called evictionism. I believe that life starts with the fertilized egg, 216 00:23:54.940 --> 00:24:00.940 but the unwanted fetus is a trespasser because the mother owns the womb. It's a little complicated. 217 00:24:00.940 --> 00:24:06.940 This is complicated, you have to get into it. If you're interested, email me and I'll give you some stuff on that. 218 00:24:06.940 --> 00:24:14.940 By the way, I'm associated with very good colleagues here, John Lavendis, Bill Barnett, Dan D'Amico, 219 00:24:14.940 --> 00:24:19.940 and talk about creation of students. When I was at Holy Cross, I was the only one, 220 00:24:19.940 --> 00:24:24.940 and the other econ professors would tell the students not to take my courses. 221 00:24:24.940 --> 00:24:33.940 Here, we're a team, and I can produce a lot more with three colleagues who are sympathetic to me than with others who are not. 222 00:24:33.940 --> 00:24:39.940 Of course, the people over in sociology tell their students not to take any economics, but that's a whole different question. 223 00:24:39.940 --> 00:24:48.940 The point I'm getting at is we do have seminars on Friday afternoon, twice a month. We have seminars on Thursday lunches. 224 00:24:48.940 --> 00:25:03.940 So if you want to be on my list of people to notify of events, libertarian events that occur, like the Mises Institute coming here or Ron Paul, email me and I'll put you on my email list and I will notify you of upcoming events. 225 00:25:03.940 --> 00:25:16.940 Another thing I did was punishment theory. Two teeth for a tooth plus cost of capture and scaring. My view there. We're very draconian. We don't like crime. 226 00:25:16.940 --> 00:25:21.640 So suppose I steal your TV. Well, the first thing to do is I've got to give you your TV back. 227 00:25:21.640 --> 00:25:24.840 And if I broke it, I have to give you an equivalent amount of money. 228 00:25:24.840 --> 00:25:30.740 But if all I do is give it back, well, that's hardly a utilitarian punishment, I have to give you one of mine. 229 00:25:30.740 --> 00:25:36.140 I have to give you my TV. But even there, that's not very draconian. 230 00:25:36.140 --> 00:25:43.840 And if what I did after I stole your TV is I turned myself into the police and I said, 231 00:25:43.840 --> 00:25:48.440 Hey, sorry, I stole a TV. It was a moment of weakness. Here I am. Do with me what the law requires. 232 00:25:48.440 --> 00:25:50.440 Well, then there are no costs of capture. 233 00:25:50.440 --> 00:25:56.440 But if I worsen my crime by not only stealing your TV but then trying to hide, 234 00:25:56.440 --> 00:26:00.840 well, then anyone who's been deputized to look for me, I've got to pay them too. 235 00:26:00.840 --> 00:26:04.240 But when I stole your TV, I scared you. 236 00:26:04.240 --> 00:26:07.240 Your feeling for private property is lessened. 237 00:26:07.240 --> 00:26:09.040 So we've got to scare me. 238 00:26:09.040 --> 00:26:12.040 And how are we going to scare me? Go boo or something like that? No. 239 00:26:12.040 --> 00:26:16.240 You make me play Russian roulette with the number of bullets in a number of chambers 240 00:26:16.240 --> 00:26:19.160 proportionate to how badly I scared you, the average man. 241 00:26:19.160 --> 00:26:22.620 I mean, you know, Arnold Schwarzenegger isn't going to be too scared because he's macho, 242 00:26:22.620 --> 00:26:24.120 but the average guy. 243 00:26:24.120 --> 00:26:25.840 So this is a very draconian thing. 244 00:26:25.840 --> 00:26:30.480 It's been very controversial among libertarians, but what the heck? 245 00:26:30.480 --> 00:26:31.840 I sort of like controversy. 246 00:26:31.840 --> 00:26:36.140 I don't know if you got that yet, but I do. 247 00:26:36.140 --> 00:26:39.400 Another one is voluntary slavery. 248 00:26:39.400 --> 00:26:44.680 My child has a dread disease. It will cost five million to cure him. I don't have five 249 00:26:44.680 --> 00:26:49.000 million, but I love him. Whereas Doug over here has long wanted me to be his slave and 250 00:26:49.000 --> 00:26:53.840 he's very rich, so Doug pays me five million. I give the five million to the doctors and 251 00:26:53.840 --> 00:27:00.200 now I become Doug's slave. Is this justified in libertarian law? Well, the only other person 252 00:27:00.200 --> 00:27:04.880 that I've found who agreed with me is Robert Nozick, which is sort of wonky because he's 253 00:27:04.880 --> 00:27:09.240 not really, I'm not a big fan of his. Every other libertarian disagrees, including Murray 254 00:27:09.240 --> 00:27:39.240 Murray Rothbard, but that's my view, and all I can say is, you know, I've got a paper trail on this, and if you don't like it, get off your rear end and write something about it. You know, let's get it on. Not physically, but that's the way you get to the truth. You write something, somebody else writes something else. I'm involved with Andy Young in an article or two or three, I forget how many, where we're disputing a real business cycle and other things, and that's the way you get closer to the truth. You never get fully there, but you move in that direction. 255 00:27:39.240 --> 00:27:47.240 So, my open invitation is to those who disagree, I've got a paper trail, don't just say I'm wrong, write something about it, write a rejoinder. 256 00:27:47.240 --> 00:27:54.240 I'm forever writing criticism to people like Coase and Friedman and Buchanan and Hayek, and Mises and Rothbard. 257 00:27:54.240 --> 00:27:58.240 We're not a cult, we're allowed to criticize each other. 258 00:27:58.240 --> 00:28:05.240 That's the academic way of trying to get that one inch closer to the truth. 259 00:28:05.240 --> 00:28:12.040 Other areas that I've contributed a little bit to, libertarianism or on immigration. 260 00:28:12.040 --> 00:28:20.440 I don't usually attack lefties, it's sort of like shooting fish in a barrel, so I usually go for other libertarians or conservatives. 261 00:28:20.440 --> 00:28:26.040 Okay, that's my bit on libertarianism. I now want to do a little bit of substance with you. 262 00:28:26.040 --> 00:28:31.140 I realize it's late in the day, but the hell with it. We're going to kick some butt here. 263 00:28:31.140 --> 00:28:40.140 These interest rate tables? Everyone got one? If you don't have one, I've got a few extras, and there's going to be a quiz after this. 264 00:28:40.140 --> 00:28:52.140 You're not going to be allowed out of the room unless you answer these correctly, so you better have one. 265 00:28:52.140 --> 00:28:58.140 Are there any people that don't have one? I've got extras here. No? Everyone's got one? 266 00:28:58.140 --> 00:29:07.140 Okay, so let's get to it. I have made some contributions to Austrian economics, mostly as Bill Barnett's junior partner. 267 00:29:07.140 --> 00:29:16.140 We've really ripped in Roger Garrison and Hayek on his triangle. Roger had a very interesting response when I asked him about it. 268 00:29:16.140 --> 00:29:22.140 He said, triangles yesterday, triangles today, triangles tomorrow, triangles forever. 269 00:29:22.140 --> 00:29:26.140 He's from Alabama, so you can understand why he would say that. 270 00:29:26.140 --> 00:29:32.140 also on fractional reserve banking, borrowing, short lending, long, optimal amount of currency. 271 00:29:32.140 --> 00:29:35.140 These are some other articles that I've done with Bill Barnett. 272 00:29:35.140 --> 00:29:43.140 Okay, on to the interest rate tables and I think this is very complementary, 273 00:29:43.140 --> 00:29:47.140 building on what Joe Salerno said. Joe Salerno said there was a misallocation 274 00:29:47.140 --> 00:29:55.140 and I'm going to try to illustrate Austrian business cycle theory misallocation of resources based on interest rate tables. 275 00:29:55.140 --> 00:30:02.140 It's sort of a way of putting numbers on it, because not only do we Austrians have numbers on the pages for the page numbers, but we actually do look at numbers. 276 00:30:02.140 --> 00:30:14.140 We do look at econometrics. It's just we have a different interpretation. We say that econometrics illustrates, or not, economic law. It doesn't test economic law. Economic law comes first. 277 00:30:14.140 --> 00:30:22.260 Okay, the top thing on the compound interest multiplier, that's if you take a dollar and 278 00:30:22.260 --> 00:30:26.700 you put it in the bank and you leave it for any number of years at various rates of interest, 279 00:30:26.700 --> 00:30:29.540 how much will you have at the end of the time period? 280 00:30:29.540 --> 00:30:36.860 So for example, if you leave a dollar in the bank for four years at 4% interest rate, you 281 00:30:36.860 --> 00:30:39.900 will have how much at the end of the time period? 282 00:30:39.900 --> 00:30:43.720 $1.17, everyone with me? 283 00:30:43.720 --> 00:30:51.880 If you leave money in the bank at 8% for 30 years, you'll have $10.06. 284 00:30:51.880 --> 00:30:59.880 If you leave $10 in the bank for 2 years at 2%, you'll have not $1.04 but $10.40 because 285 00:30:59.880 --> 00:31:01.640 you move a decimal point over. 286 00:31:01.640 --> 00:31:04.160 Okay, that's the easy one. 287 00:31:04.160 --> 00:31:09.000 That's just the ordinary stuff that little kids are told when they're 5 years old about 288 00:31:09.000 --> 00:31:13.480 interest rate tables and you see the lights perk up in their eye about greed and, you 289 00:31:13.480 --> 00:31:28.480 The second part is present discounted value. What's present discounted value? Present discounted value is the value that you place now on money receivable in the future. 290 00:31:28.480 --> 00:31:38.480 In order to make things simpler, I'm going to assume that you get the money for sure and that there's no inflation, just to abstract from those problems. 291 00:31:38.480 --> 00:31:50.480 So, what would be the profit maximizing bid for a dollar receivable in 10 years at 10% interest? 292 00:31:50.480 --> 00:32:01.480 The right answer is minus infinity, namely, I have to pay you an infinite amount of money to take this off my hands, right? 293 00:32:01.480 --> 00:32:07.480 But, what would be the present discounted value of the thing where you'd make no profit? 294 00:32:07.480 --> 00:32:16.480 In other words, I'm offering you in 10 years that I'll deliver you a dollar, and the interest rate is 10%. 295 00:32:16.480 --> 00:32:27.480 If you bid this amount, you'll make no profit off the deal. And what's that amount? 38.6 cents. Everyone with me there? 296 00:32:27.480 --> 00:32:33.480 You look in the 10-year column and the 10% column. Why is this? 297 00:32:33.480 --> 00:32:42.480 Why is it that you'll make no profit if you did 38.6 cents for a dollar receivable in 10 years at 10% interest rate? 298 00:32:42.480 --> 00:32:49.480 Because if you would have put 38.6 cents in the bank and leave it in the bank for 10 years at a 10% interest rate, 299 00:32:49.480 --> 00:32:55.480 guess how much the bank would give you? A dollar. So that's present discounted value. 300 00:32:55.480 --> 00:32:59.480 Let's take one more case. What's the present discounted value? 301 00:32:59.480 --> 00:33:14.480 The value, namely the value right now of money receivable in three years at 3%, 91.5 cents. Yes, everyone? Okay. I want more enthusiasm. Yeah, yeah, right on. Okay, good. That's better. 302 00:33:14.480 --> 00:33:28.480 That means that if you put 91.5 cents in the bank and leave it there for three years at 3%, they'll give you a dollar. So the value of the thing receivable in three years from now at 3% is 91.5. 303 00:33:28.480 --> 00:33:35.480 Now that I've given you the preliminary, let me give you the Austrian take on the business cycle. 304 00:33:35.480 --> 00:33:43.480 Suppose that the Fed, in its glory and in its wisdom, lowers the rate of interest from 5% to 3%. 305 00:33:43.480 --> 00:33:47.480 The Fed lowers the rate of interest from 5% to 3%. 306 00:33:47.480 --> 00:33:52.480 And let's think of an investment that has only a one-year duration. 307 00:33:52.480 --> 00:34:04.480 Well, at 5%, if the interest rate were 5%, what would the value of a dollar receivable or an investment made now where the fruits of it would come through in a year, what would it be worth right now? 308 00:34:04.480 --> 00:34:12.480 What is the present discounted value of a dollar receivable in a year at 5%? 95.2. 309 00:34:12.480 --> 00:34:18.480 But we lower the rate of interest to 3% and now the value of it is 97 cents. 310 00:34:18.480 --> 00:34:33.480 So by lowering the rate of interest, we've made an investment of one year worth 2% more than it was before, give or take, without rounding numbers, namely 97 is 2% more than 95 cents. 311 00:34:33.480 --> 00:34:40.480 So there will be a slight misallocation of resources toward investment made for a one year duration. 312 00:34:40.480 --> 00:34:53.480 Now come down with me to 40 years, what is the present discounted value of an investment that will come to fruition or bear fruit in 40 years at 5%? 313 00:34:53.480 --> 00:35:00.480 14.2 cents, but now we lower the rate of interest to 3% and what's the value of it? 314 00:35:00.480 --> 00:35:05.480 30.7 or 31 cents, roughly double? 315 00:35:05.480 --> 00:35:11.480 So, if you have a slight teeny incentive to start investing more in short-term stuff, 316 00:35:11.480 --> 00:35:18.480 you've got a gigantic, stupendous incentive to invest in a 40-year project, or in a 50-year 317 00:35:18.480 --> 00:35:24.480 project, when it goes from 8 cents to 22 cents, which is almost triple. Do you see that? 318 00:35:24.480 --> 00:35:30.480 So, what a lowering of the rate of interest. You see, the mainstream, when they think of a lowering of the rate of interest, 319 00:35:30.480 --> 00:35:41.480 They don't realize that interest rates intermediate present and future money or investments. 320 00:35:41.480 --> 00:35:48.480 So what happens is that you have, when you lower the rate of interest and they've lowered it to, I don't know, a couple of basis points, 321 00:35:48.480 --> 00:35:53.480 they've lowered it practically down to zero and they're complaining that they can't go below zero. 322 00:35:53.480 --> 00:36:05.480 What this means is that they've given an incentive to make long-range investments very heavy and very, very slightly for short-range investments, so is it any wonder that we have too many houses and too many cars? 323 00:36:05.480 --> 00:36:13.480 Because it takes a long time to make a house and a car if you start with the mining of the stuff and the making of the bricks and the pipes for the house and all sorts of stuff. 324 00:36:13.480 --> 00:36:43.480 and all sorts of stuff. Now, yes, there is the CRA, the Community Reinvestment Act, and there's Fannie, and there's Freddie, and there's HUD, and they also pushed us toward too much housing. I don't deny that. But everyone knows that, or even a mainstream economist would realize that. But it's only the Austrians that see that this, too, is another cause pushing us in the direction of heavy investment. That's the misallocation or the boom. I think it was Joe Salerno who said that, I forget who it was, Tom, 325 00:36:43.480 --> 00:36:51.480 In the recession, Bob Higgs was saying that the recession is a cleansing of these misallocation, misallocative investments. 326 00:36:51.480 --> 00:36:58.480 Okay, I've done a little of my personal story, I've done a little bit of libertarianism, I've done a little bit of Austrian economics. 327 00:36:58.480 --> 00:37:05.480 I thank you from the bottom of my heart for the Schlabam Award. I am just delighted to be a winner of that award. Thank you. 328 00:37:05.480 --> 00:37:07.480 Thank you very much.