Episode Transcript
Speaker 0 00:00:00 All right. So, um, welcome. Everybody looks like maybe clubhouse was, uh, having some server issues, which I guess is, um, bad and good they're growing. So, uh, given that we had a late start on this, it would be great if, um, all of you could share this, um, use the share button below, share it to clubhouse, share it to others. Please help me ping some people into the room and, um, and we will get started. So I'm going to invite some people up on the stage. Uh, we have our founder here, David Kelly. Um, Lawrence, did you have a question for Richard?
Speaker 1 00:00:45 I did. Hi Richard. Um, hello. I had a question. This is actually about an article that you had written, uh, I think another, uh, week or two back for a I E R about rent selling countries and corruption. And I was reading through it and I was curious, you use CISM as your definition there. And I know that, you know, when we come to these words, I sometimes get them confused in my own head, you know, there's cronyism and then some people say crony capitalism, and then other people say, well, no, those two aren't the same. So I was wondering if you could maybe give a little bit of clarification on those terms.
Speaker 2 00:01:20 Yeah. I would be glad to the, uh, relevant essay as you mentioned, is that, uh, a I E R so if you just put Salzman at a I E R that's the acronym for the group American enterprise for economic ER, uh, American Institute for economic research? Yeah, the, well, the first thing Lawrence to note is that, uh, rent seeking or rent selling, which is in the, um, literature rent does not mean apartment rents, rents to an economist means an abnormal, uh, Mo uh, uh, profit or gain, but particularly related to some kind of favoritism, some kind of political favoritism. So, um, the literature, however, the reason I wrote this and the reason I'm focusing on it, and I'm preparing a more academic journal article on it is 90% of the discussion is on rent seeking. In other words, it indicts the private sector for lobbying.
Speaker 2 00:02:19 What's presumed to be, you know, an otherwise selfless, uh, public servant, the government for favors. And, and my focus is on rent, selling namely a mixed economy by its nature creates, um, rents creates favors, franchises, monopolies, all the things I ran talked about. And so the origin of corruption or cronyism, isn't on the private sector side, but on the government side, but particularly a type of government that abandons, uh, the rule of law abandons equal treatment before the law. If you think about it, it's precisely unequal treatment, disproportionate treatment called it discriminatory discriminatory treatment that invites lobbying, uh, just as an obvious example, if you had a tax rate that was the same for everyone of what's called a flat tax a 10%, um, there would be no reason to lobby the government for tax breaks, cuz everyone has the same tax rate, but if the wealthiest pay 80% and the middle class pays 50% and then the lower groups pay 20%.
Speaker 2 00:03:28 Well now you invite, um, people trying to get that 80% rate down either by tax, uh, tax credits or wealth and, and precisely they are the richest and the wealthiest most likely to be able to do so now you're right on the terminology. Uh, the way we would put it is crony capitalism is a contradiction in terms why, because capitalism by our view of it is equal treatment before the law. Now, unfortunately the standard definition of capitalism out there is that it's a, uh, political economic system for the benefit of capitalists. See, they can, they cannot conceive. This is the Marxist theory. Actually, they cannot conceive of any kind of government that isn't in the pay of some kind of group, you know, in Britain, they held the labor party. What, you know, the idea of a, of a subgroup, you know, having a political party, it's a very common view.
Speaker 2 00:04:18 We need to, to push back and resist that by the way, etymologically, this may sound weird, but the whole concept of crony capitalism didn't start until 1980. So it's a very recent, uh, uh, term, it, it, it showed up in a time magazine article actually about the Philippines and the Philippines were corrupt, you know, under, um, oh, I forget his name now, Marcos and what's interesting is the word crony actually comes from the British, um, uh, university system crony coming from chronological or time Croy meant a long term friend and cronyism in Britain meant over the course of your career, uh, benefiting or hiring or staying in touch with friends. But when it was combined with political corruption, it was the idea that government's role was to help friends. So you could think of cronyism as extended nepotism nepotism of course, is favoritism to family members. And if you extend the family members to friends, now it becomes cronyism, but it really in the mixed economy is favors not just to family members or friends, but to pressure groups and the pressure groups themselves of course are phenomenon of the mixed economy. So I, I hope that helps. I, I use in that essay, cronyism and a related term corruption and favoritism almost, uh, interchangeably, but, um, I, I hope that helps.
Speaker 1 00:05:46 It does. Thank you very much.
Speaker 0 00:05:51 All right. Um, David, I'm seeing that you don't have a mute button on, so I am worried that you may need to, um, sign out and sign back in unless you can try to speak up otherwise, uh, wanted to see if Scott or professor Jason Hill, if you a question for Richard,
Speaker 4 00:06:14 I'll just pop in real quick with, uh, thoughts on the economy, the market, uh, you know, even, uh, you know, Bitcoin, hasn't been an inflation hedge, but, uh, just more about the market and the economy.
Speaker 2 00:06:29 Well, I, I believe the combination of the anti-energy policy, which Biden started almost right away, closing down pipelines and, and other things, um, that plus threats of, um, higher tax rates, um, that plus I think this surprised people, it didn't surprise me so much. The one, uh, Trump policy, he did not immediately reverse was a tariffs. So there are still 25% tariffs on imports. So it negative in the sense of the market, I believe expected him to reverse those and, and he hasn't, but I really think, and, and the NA, if you look at the numbers, the NASDAQ, I think is down 30%, the S and P down 17, 18%. The last time I checked the economy contracted in the first quarter, uh, so things are going badly, but the more, the more recent phenomenon, I think that just really hurting the economy is the, uh, possibility of the us going to war.
Speaker 2 00:07:30 Now, I think the us is actually at war, it just approved a 40 billion package for Ukraine, half of it military. So, um, in effect, the, I think the market is trying to figure out whether this will expand into a wider war. And I think the Biden administration does want that, but they don't want to be explicit about it. Uh, uh, countries do when they don't know what they're doing, do stumble into wars. Uh, that does happen historically. This is what the markets are trying to figure out all else equal. If this was just a, uh, normal situation of recovering, uh, from two years of COVID and the COVID lockdowns, the economy should be recovering. And, and it was actually in the, uh, year or half year or so before Biden got in the Biden policies are just thoroughly anti-capitalist on every level, more regulation explicitly saying, we're gonna get rid of fossil fuels, almost gleeful that the oil price is up, you know, because they're and the gasoline price, you know, so instead of saying, well, this is a problem to be cured.
Speaker 2 00:08:34 They're, they're languishing it, they're loving it on the grounds. This is a wonderful opportunity. They say to, uh, shift into what Alex Epstein calls, the unreliables, uh, wind and solar and whatnot. So there was a kind of, uh, gleeful destructiveness about the Biden policies that the markets I are are, are trying to, uh, absorb as well. I believe so. That's my take, I mean, as to the future, uh, I think, I think, uh, I'm not actually sure the Republicans will do well in the midterm election. So that's a relevant thing. If you think the markets will improve because of that, I'm not so sure about that, but, um, I have a hard time believing that the economy will become robust, uh, anytime in the next two or three years, if this policy continues.
Speaker 0 00:09:25 All right. Thanks for that, Richard. Um, Jason
Speaker 5 00:09:30 Are
Speaker 5 00:09:33 No, I have a question I wanted ask, uh, hi, Jason. Hey, how you doing? I'm doing well. Thank you. So, uh, Rob just came up with his book, which I just ordered on, um, on history, uh, which is a very, you know, positive view on, um, the things that have gone right in history and the things that we should be celebrated. I Rand, um, <laugh> when you read from the, from the early iron Rand to the, the journals, to the letters of iron Rand, to her S I don't think from the minute she landed in the United States, that she was ever satisfied with the culture. I mean, she called the, she called the culture of bankrupt that it was in her 1978 Ford, Ford hall forum lecture on a cultural update. She said the culture was not only, uh, it was not militantly bankrupt. It was routinely bankrupt in the 1966 lecture, the foot forum, she had an essay talk or cultural value deprivation.
Speaker 2 00:10:36 Deprivation. Yeah.
Speaker 5 00:10:37 Yeah. She, she always thought that I don't think there was that ever moment in her life where she was ever satisfied, but the culture, the culture was always bankrupt and, and, and so on. And then Rob comes up with this, this book that I'm eager to read my question. So there, there are these two polar opposite views of, of looking at at, they may not be reconcilable. I guess my question for you is, um, what do you see as the, almost nearly dangerous irreversible trend in our culture today? That is just bad for our culture. I mean, we, we look out and we see a lot of things. Um, you talked about the regulations from the Biden administration, the, the, um, cancellation of fossil fuel. We look at trans ideology. We look at what culture, what do you think is the most dangerously irreversible, either set of trends or one trend that that could either contribute to the, if one ascribes to the decline, this philosophy that, that we face in America today?
Speaker 2 00:11:48 That's a great question. I'm not sure I'm fit to answer it, but I have a couple thoughts. First of all, the polar the, the polar nature of what you're talking about, I've noticed as well. The, my take on this is that, um, optimism is put it this way. If the theory is that philosophy moves history, let's stipulate that, and that good philosophy would lead to good results. There's there are lags, there's a lag time, you know, between from the philosophers, the intellectuals to the, and the, the techn call it, the economic technological wonders that we're seeing today, we would agree is a manifestation, a re residual of past enlightenment period and rule of law. But, uh, if so, if you look at the philosophy now, though, it's pretty bad. And so we would project outward that in time, the technological slowdowns we'll look at, I mean, in Atlas drug, it's not just technological slowdown or stagnation, it's collapsed.
Speaker 2 00:12:51 It's, it's eroding, it's people, it's bridges, collapsing, and blackouts and things like that. And that could happen. And, and the, the puzzle to people would be, Hey, we know how to do electricity. Why is it collapsing? Because people hate fossil fuels. It isn't an issue of, we don't know the technology anymore. So, uh, I haven't read Rob's book, but the optimism I see in people like Steven Pinker and others, where the data sets are, they are real data sets. There's no doubt about it. Julian Simon, same thing that the late Julian Simon used to issue books about how everything's getting better standards of living, uh, things like that, uh, eradicating diseases. True. True, true, true, true. But, uh, if it's a trailing effect of enlightenment ideas from the 17, 18 hundreds, then we, uh, with a lag, then we have something to worry about because the coming century will not be so good, technologically, but it's interesting what you name like if I were to, in terms of fields or areas in terms of irreversibility, I wouldn't say it's a total irreversibility, but I, I, I see what you're saying, Jason, if it's the kind of thing that it's like a point of no return, then there's these tipping points.
Speaker 2 00:14:01 And if something gets so bad, it's hard to revive it. If I were to name what that is, I wouldn't name what a typical economist would say. Sometimes they'll say the monetary system is too far gone. The fiscal pro is too far gone. You know, we're ultimately gonna go financially bankrupt. Uh, and the hatred of energy. I don't think it, those are bad, but I would name, uh, schooling. I, I would name education. I think the most worrisome thing to me is whether the universities, the school systems, okay. You and I are in this, you and I, and Steven Hicks and others, uh, that worries me most, that it is so bad that I, I don't know how that's reversible. And, um, I, I, I mean, I heard you to say one time in recent months, the universities are gone. I mean, I think they are mostly gone.
Speaker 2 00:14:54 Um, we are in it. So we're, we can't say it's totally gone, uh, because there are pockets of rationality and enlightenment, but, uh, I, I would say that one, and even things like homeschooling private schools, alternative universities, we are beginning to see those, but, and that's good, but those are, to me, those are, um, not to be negative about those. They're so small relative to the hoards hoards of students coming out of Ivys and elsewhere, which hate capitalism reason and egoism that's, that's the one that worries me most, um, not these more economic, uh, ones like monetary energy or otherwise. What do you think, Jason, I'm curious what I'd love to hear what you think on this as
Speaker 5 00:15:37 Well. Oh, I, I totally agree with you. I mean, I have been writing on this, you know, you know, for a long time calling her university's cults, national security threats, producers, producers of enemies, of the state, and as the conveyor belt of, of, of Villa really mm-hmm <affirmative>, mm-hmm <affirmative> um, because they, they areand is right. The intellectuals and the universities are the transmission belt of, of culture. And so all the, the, the, the extent to which cultural relativism has been elevated to the level of a national cult, um, and ethical relativism, really, and the attack on reason and logic, um, as, as the constructs of racist, white Imperial men, and as, as not proper adjudicators among disputing truth claims, but rather the, and the primacy of feelings and emoting as, as, as justification for, for truth. So I, I definitely think the, the, both the K through 12 and the academy, but the academy rated because the universe is, are the training growns for the teachers. Um, the education, especially the education departments in, in the universities are the training grown for the teachers who, who teach these kids from K K through 12. So I, I completely agree with you wholehearted down that I think that's a very, very worrisome texting
Speaker 2 00:17:02 And, and, and, and Jason, I used to think, uh, this phenomenon does occur in other fields. I used to think, and I think others did that a, uh, field can so, um, hurt itself and kill itself that it becomes impotent. And, uh, irrelevant. I remember in the eighties and nineties, people used to say, okay, so the universities are gone, but at least we have, you know, think tanks and alternative this and alternative that. And it, but I don't see that I think there are alternatives, but the university still have an enormous influence. And, uh, I, one way I would put it is, uh, on the woke thing you mentioned, I think 20 years ago, if, if you ask people where's the wokeness, uh, they would say in the universities a little bit in Hollywood, a little bit in the media, uh, okay. So those are three institutions, but if you look now, it's in C-suites, it's in corporate suites, it's in the Pentagon, it's in public schools, it's at Disney, it's at, you know what I'm saying? And I, I think to myself, there's no way it could spread into every other field, had it not come from the universities, uh, because they're the ones, I mean, they're training business school, they have business schools, they have the same kind of thing going on in business schools. So that's another, I think, point to show the power of the universities in this case for ill, but the, the kind of spreading cancer that, that it would get into every institution means that's this more fundamental level of universities. And,
Speaker 5 00:18:30 Yeah. And just one, just one last thing, when you see a, a corporation like Coca-Cola yeah. Having as part of its mission statement, the decentering of whiteness, which is an total anti total Anticon and meaning, you know, uh, be less certain, be less arrogant. Um, the implicit also understanding is be less punctual, um, uh, just a sort of nonsensical set of mandates. Um, you know, that there's no lower place to go in terms of moral depravity that's coming out of the universities. Yeah.
Speaker 2 00:19:01 Agreed. Thank you, Jason.
Speaker 0 00:19:04 All right. Um, I'd love to hear from, uh, David and I just want to two things, one remind all of you who are in the room, please. Um, raise your hand, we'll bring you up on stage to ask a question. Really have any of our scholars. And we have four scholars, uh, in the room, professor Salzman, professor hill. Uh, we have, uh, of course our founder, David Kelly, and, uh, professor Steven Hicks. So please, um, share this room, uh, ping people into it. Um, wanna make sure as many people as possible, have the opportunity to, uh, join in the discussion. So, David,
Speaker 6 00:19:44 Uh, thanks, Ja and, and thanks. Uh, Richard and, um, Jason, for that, raising this topic, I just wanna make a, a point, um, I've, I've been aware of and thought about and concerned about the same, you know, polarity or dichotomy that you have of, uh, watching the culture decline while you know, some great things are happening. Um, and you know, both in science, if you think about all the, uh, the, you know, the vast, um, yeah, increase in knowledge and everything from biomedicine to archeology, um, and all the fields in between, and versus the state of the culture, the state of education, um, I mean, 10 years ago, 12 years ago now during the financial meltdown, um, out the shrug became one of best seller people saying we're living in the we're living in the now. Um, but on the other hand, and I've, I've, I've wrestled with different ways of trying to understand this, but let me just ask Richard, um, more economic question about it.
Speaker 6 00:21:06 We know that that, um, regulations transfer payments, um, tax taxations all diminish the, uh, ability of, of people in private business and private life to create value. But we've seen a huge amount of value created despite now a century or more of, of Caribbean government and ex accelerating government. So here's the question, how I, I consider this dead rate on the, and the dead weight being carried by the productive people. And my question is how would we, how, how much dead weight can an economy can, the productive people who drive an economy, how much dead weight can they carry? When is there such a thing as the final straw on the camel's back that we'll just break it.
Speaker 2 00:22:06 <laugh>, uh, that's a great question, David. Uh, Mike quick answer will, would be no, that if we're looking for, I, I I've seen these kind of scenarios over the years, you know, utter collapse, uh, the, the wire breaks and the whole system crash. It does happen sometimes, but not an entire system, even in the Soviet union. Um, you know, they, they, uh, very quickly and rapidly socialized and nationalized everything I remember. And then there was like an immediate, it was kind of an immediate crash. And then Lenon referred, went backward to the new economic policy. It was called NEP, and it was a move back toward capitalism for vet five years or so. And then they recovered and then they, and then they said, well, we need to, I guess, slowly nationalize and socialize everything <laugh> you should, you shouldn't do it quickly. Japan is another example, Japan for 30 years now, I guess 30.
Speaker 2 00:23:09 Yeah. Since 1990 has gradually slowly stagnated. There isn't any obvious, you know, crash or terrible period. There's a couple of periods here and there, but, um, Japan who older, the older ones in the room will remember, everyone was saying Japan in 1988. Oh my gosh, Japan just gonna surpass the United States. There's so of this and that. And, uh, so they adopted a series of Kasian interventionist policies and anti capitalist policies, but it's stagnation rather than, um, immediate collapse. So I think of it as, um, not a heart attack, Dave, it's not, the analogy is not a heart attack or, or it's a series of strokes, you know, not a one, one off heart attack that puts the whole entity out of business or a cancer. And that's what these are the regs, the transfers, the taxes, when you said there's a cent, it is true.
Speaker 2 00:24:07 Yes. There's a century of this and it's almost like you're saying, okay, why doesn't it just stop? Why didn't it just collapse under the weight of this thing? The, the, the, the answer to that also would be, there are these periods of respite, like the Reagan years, uh, you know, where there are tax cuts or deregulation or less trust busting. And that helps the system survive a little bit as well, longer than it would otherwise. But, um, that's my best answer to that. Um, I think actually the lo the search for, or the expectation of the dramatic event, the dramatic collapse actually takes people's eyes off the ball of this longer term, uh, stagnation that occurs. And then that is definitely, uh, traceable in the numbers. Someone mentioned, uh, my essays at a I E R there's another one. If you go to that site, there is another one documenting the long term slowdown in us, economic growth caused by the burden of government. So it's definitely noticeable in the numbers.
Speaker 6 00:25:13 So thank you. Thank you, Richard. That's, that's really interesting. It's, uh, what we're dealing with is not a heart attack, but what, something he used to be called a wasting disease.
Speaker 2 00:25:23 Yeah. Right. Yeah. And, and another way looking at this is when you find crises and acute attacks on the, like the financial crisis, the first thing to look for is whether people attributed to the status elements in the mix, or whether they attributed instead to the healthy elements, the capitalist elements. And although it's true that the financial crisis of oh 8 0 9 led to, uh, boom in sales of Iran's books. The sad thing also is the probably 95% interpretation of that was wall street, greed, deregulation, uh, that kind of thing. They blame capitalism, uh, not, uh, the government's policy of promoting home ownership, uh, to people who couldn't afford it. So that's very sad. It's like, well, there's a patient and they're having strokes, but the doctor is a quack and has no idea that the stroke, you know, that the stroke is due to drinking and smoking. He attributes the stroke to, you know, the guy's sex life and, and joy level is just, this is very sad.
Speaker 6 00:26:36 Thanks.
Speaker 7 00:26:38 This is John. Um, one thing that with reference to education, I was in another room a few days ago, and someone referenced American public education as the American Holocaust. And I thought that was a little bit extreme, but there's some accuracy to it, but then changing subjects back to what you're talking about in terms of the economy. I think we're looking at the result of a chronic egalitarian mindset that is anti achievement. It's anti winners. It's, anti-capitalist, it's, anti-market, it's the triumph of envy. It's the defeat of jealousy being the Anny of envy. Another thing that's going on is a failure to recognize the efficiency of markets and of, uh, I think biology, uh, is, is a source of history. Um, I know this is a little different than philosophy or as a source of history or, um, thinking, I, I think that, that bio fundamental driver of history, perhaps not in a interesting way, and then with regard to regulation, um, I think that as, um, frustrated and frustrated envy, um, if I can't tax it and take it from you, then by, gosh, I'll regulate it and I'll leave it at that.
Speaker 2 00:28:20 Thank you, John. The, um, this particular issue of egalitarianism, and I will differ with you a little bit on some other interpretations, but another essay I wrote at a, I R back in 2018 was called, um, we should celebrate diversity and wealth too. So the point I made in there was in academia, at least there's lip service given to, uh, we love diversity. We, we love, uh, variety and blah, blah, blah. Yeah. Except it's mostly having to do with skin color and genitals and things like that. Um, but I also pointed out that it is somewhat celebrated in things like sports, uh, arts and scientists, you know, the academy award championships and stuff, but not in business. Why is diversity of performance and outcome basically unequal outcomes? Why aren't that? Why aren't those celebrated in business? And, uh, I'm not gonna go into the whole theory there, but some of it has to do with the physicalness of the performance.
Speaker 2 00:29:21 You see a basketball player, um, like, uh, Michael Jordan performing. And, um, you, you know, realize that his success enormously also has to do with his intelligence and how he manages his career and has discipline and stuff like that, all the virtues, it isn't just physicalist. And, um, even I CA I think in a case of like why relative to Romney was Trump celebrated and, and admired as a businessman where as Romney, wasn't just quant businessman, cuz Trump builds buildings that people can see and his name is on it. It's very concrete bound in a way it is an achievement, but that's, people's interpretation of it. What did Romney do? Um, uh, venture capital finance people have no idea what finance is. This is a mystery to them. They don't think it's actually inter production of wealth. So I think that's relevant as well. So the, uh, the egalitarianism, you're talking about the, the idea of not equal, uh, treatment before the law, but we want equality of result.
Speaker 2 00:30:20 Yes. That is a real problem in terms of what people want and, and, but their egalitarian, uh, desires seem to be somewhat selective. The crazy part of the going on today of course, is egalitarianism in literally physiology in genitals and gender and things like that. But that's not my field. I'm just noticing it. Um, last thing on regulation, I have a quite, I think I have a different take on regulation. I mean, objective is generally capitalist generally or suspicious of regulation, but sometimes you see them at speaking. Okay. You know, they're just like too much regulation. They'll say I, I believe that a, uh, uh, a court system, which we uphold as a legitimate function of government, a civil matters where there are damages and torts, a perfectly legitimate way of handling torts and wrongs and things like that with monetary settlements, that the problem with the whole regulatory state is it violates jurisprudent assumption of, um, innocent until proven guilty
Speaker 7 00:31:24 Agreed hundred percent. Yes, yes, yes.
Speaker 2 00:31:27 The whole regulatory state assumes you're gonna do bad and, and, and engages in what's called prior restraint. We assume you're going to hurt the consumer. Therefore we will write a law ahead of time, but it's not just that. It also violates the principle of separation of powers of, you know, between executive legislative and judicial, the, the regulatory agencies, all the alphabet agencies have, uh, judge, jury and execution are within. So it's, it's, it's, it's wrong on like it's wrong on every level in terms of justice. Um, but I think also part of the it's, it's a necessary part of a system that is throwing out equality before the law a Sy a system is throwing that out or eroding. It will necessarily have to substitute in its place, this, the, the kind of rule making, which is tyrannical.
Speaker 7 00:32:18 Yes. Um,
Speaker 2 00:32:18 Not just rule, not just rule making
Speaker 7 00:32:21 In the history of law. We had a situation when, um, expert testimony was not allowed, was not admitted. And when things like, uh, proving that the guy up the river was the cause of killing the fish in your below is impossible legally and also technically. And so with advances in science technology, and, uh, I, if you, if you will, regulatory science or causation, then the science of causation in pollution, uh, your point about, uh, Def the administrative bureaucracy deferring to the courts and to juries and to people closer to the ground is, is excellent. Thank you.
Speaker 2 00:33:10 All right. Thank you, John Clark.
Speaker 0 00:33:12 Thanks for your patience. Clark. You wanna unmute yourself? There you go.
Speaker 8 00:33:20 Oh, yes, yes. Thank you, Ja. Thank you. Um, yeah, I guess just to cover the same territory, maybe from a slightly different angle, uh, Richard, I'm just curious, I mean, you know, will, will the next recession be worse than the oh seven and oh eight one? And, and, you know, I, I know you've kind of answered a lot of this already, but I mean, I guess I'm just very concerned that, that the America's just not what, you know, we, we, ain't what we used to be. We're not nearly as strong as, you know, the great depression, the great depression almost 90 years ago, at least we had, you know, a hundred years of freedom and, and prosperity and wealth creation and, you know, we're just, the economy is just so sclerotic now that, and, and all the, all the stimulus and quantitative easing that that's gone on. I think a lot of people just don't realize it's, it's just, we ain't, you know, we, ain't what we used to be. And so I guess, you know, are, are we gonna be like Weimar America? You know, if, if we do have another really great recession, uh, and so I guess that's just to wrap up, I mean, how bad will it be? And, you know, I mean, will we turn the way Germany did a hundred years ago to just, you know, the road to blood toil, tears and sweat?
Speaker 2 00:34:44 Well, the, one of the, just to stick to the thank you Clark, just to stick to the, uh, economics of it, uh, one of them stand out pathologies of V a was hyperinflation. So I mean, quite apart from the corruption of the universities, which peak off and others documented in the ominous parallels and in other books, um, that has not occurred in the us, uh, yet. I mean, there was a hyperinflation during the continental period before the civil war, but, uh, before the revolutionary war, but the highest inflation experience in the United States, uh, since, um, well say in the last a hundred years, there was a bit of it in world war. I, it was something like 15 or 18%, but then it went back down and we went back on the goal standard. And then in the seventies, some of us will remember it got as high as 14 or 15%.
Speaker 2 00:35:41 So now it's 8%. Well, that's not hyperinflation, but the, the only way to get to hyperinflation is through moderate inflation. You have to go through this period where there's moderate inflation. Now here's what you asked is the next recession gonna be as bad as the past ones. It doesn't have to be, but here's, what's definitely true. There are no balanced budgets anymore. There just aren't any, the last time that ever happened was 2000 to 2001 for about three or four years. And what that means is there is chronic deficit spending. And what that means is that there's chronic debt buildup the us. Debt's now 30 trillion double what it was 10 years ago. That is a fast increase. And now here, the kicker really is, uh, if you can't for fund the welfare state, the burgeoning welfare state by taxes, because there'll be tax revolts nor by borrowing alone, then you resort to money printing.
Speaker 2 00:36:37 And the last three recessions in the us have involved unprecedented amounts of money printing. It's just a fact. I mean, there were many, many recessions between world Wari and 2000, but they did not involve Gargan increases in the money supply that did occur in 2000. When the fed panicked about, um, what was it called Y2K, remember the turn of the, then they did it again after nine 11, they just printed money just panicking. They did it again in 2000 8 0 9 feeling the financial system would collapse. They did it again under COVID when, uh, the government, you know, mandated shutdowns of the economy, and yet people still had to pay their bills. So those are four in a row, four occasions in a row where the federal reserve has so increased the money supply. Now, originally, initially we all know inflation didn't go up that much because people were hoarding the money.
Speaker 2 00:37:37 So they were hoarding it as fast as the government was spending it, but now they're spending it. And that leads to a decline in the value of money. So short answer to your question. Uh, it's not so much the next recession that worries me, although I prefer not to have recessions. It's the reaction to recessions now is to massively borrow and print money, and that will ultimately dissolve the dollar into it'll make the dollar unreliable and unbelievable, and the incredible, and when ES become that way, the, the cost of living skyrockets people. Now notice people now are really hurt by a cost of living going up eight to, you know, 12% a year. Imagine it going up a hundred percent a year. Um, it isn't impossible. The, the only thing holding it back is that the us dollars still has a worldwide, uh, credibility it's eroded enormously, but it still has relatively more credibility than other currencies. But the historical parallel for this is the British currency. The British pound a hundred years ago, used to be widely respected, and then it was completely eroded and lost its credibility. So they went from going from great Britain to plain old Britain. Uh, they lost the empire, they lost almost everything. So that is, it is possible for that to happen to the us over the next 50 years.
Speaker 0 00:39:00 Thank you. Um, and we did get started a bit late. Uh, Richard, are you able to give us 10 more minutes in, in the room so that we'd have another 20 minutes to go?
Speaker 2 00:39:11 That'd be great. I, I can do that. Yes.
Speaker 0 00:39:14 Okay. And, um, I am gonna get to buck, but I do give, uh, precedence when we have, uh, our scholars or faculty in the room. So, uh, Steven Hicks, would you like to comment or ask a question?
Speaker 9 00:39:29 I just following up on David's question and the question of dead weight, whether, uh, you know, the amount of in the nation, we would reach a tipping point and it would collapse, recessions, depressions and so on. So it's one thing to go through and say, there's been an increase in various kinds of regulations increase in dead weight and para, but don't, we also, and this is an economics question, have to, uh, measure that against the productivity gains. So to put it crudely, if we can say, you know, over the course of the last, uh, century, every year, there's been on average, an increase in 2% of dead weight, uh, and that's bad. We can itemize all the ways in which the dead weight is, is, is, is wrong. And at principle absolute and real costs. But if on average, in that same stretch of time, productivity gains have been 3%. Then there's gonna be disco locations and bumps along the way, but we're still getting better and we're never going to reach a point of collapse. And so then the question is going to be not over the course of the next, say, 10 years or 15 years, uh, only that there's going to be an increase say in the absolute amounts of dead weight, but whether that absolute amount of dead weight is greater or less than the, uh, anticipate gains to productivity over that same period of time,
Speaker 2 00:40:54 Steven, I think that's a perfectly fine way of looking at it and a perfectly fine way of explaining why, uh, the context matters that while dead weight costs rise and maybe at varying rates. So does productivity, the, I guess the thing I would say is that the gap between the two and is what I've noticed is narrowing so that, um, whereas a 50 years ago, the productivity gains might be 4% a year. And the dead weight is, you know, one now the productivity gains are, you know, 3% a year and the dead weight is two. So the is shrinking. And of course there's an interrelationship between the two, but the dead weight regulations, taxation, inflation, erode the capital base. And that's the origin of productivity. I mean, aside from the mind, the creative brainiacs giving us productivity gains, the, the base of it is capital capital equipment, the quality of capital equipment.
Speaker 2 00:41:58 And it's not as if that's stagnating, but it is growing at a lesser rate than it used to. So, um, but I agree with you, that would be one way of looking at how can this keep going? Um, well, one, one answer would be you can't look only at dead weight losses. I, I think another thing I would say Steven is, uh, people underestimate, uh, how clever producers are not just at producing, but at evading in a good sense, evading, uh, uh, regulations and burdens. So, I mean, some of this has to do with hiring tax attorneys and accountants and what, what I'm brand used to call bodyguards, you know, from watching. But, um, I'm over the years, the more I study this and I see regulation going up with this and that I'm impressed at how it's unfortunate. They have to spend time doing this, but, um, at the, but, but the producers, some of them are as equally clever, or they have assistance clever at, um, you know, moving their capital around to avoid some of these dead weight burdens and losses. Um, and it, isn't just a matter of, you know, lobbying for special favors and things. It's more call it evasive action so that they can keep producing. There. There are many dramatizations of this in Atlas actually, but you know, it eventually though you can't escape it when it becomes total, total totalitarian right now, it's not totalitarian. And so there are pockets of, you know, action where you can say, well, I'm gonna move my money around and get away from this burden. And that's, I think another thing that keeps the system going,
Speaker 0 00:43:37 All right, thank you, buck. Appreciate your patience. Um, do you have a question for professor?
Speaker 10 00:43:46 Yes, I do. Thank you. Um, I really appreciate the opportunity to, uh, ask this question to some scholars because I must confess my understanding of objectiveism is more colloquial than academic. One of the things that I notice when I frequent rooms and, and listen to folks who describe themselves as objectiveness, is that they're quite comfortable with, um, um, monopolies, uh, as long as they are not the product of government intervention or the government itself. And it strikes me as, uh, um, problematic in that, uh, the value of markets is the ability to, to, to trial different strategies and to de detect information from the market. And I think that is lost when you have, uh, monopolies or cons heavy consolidation. So can I ask, um, am I wrong in that understanding that, you know, monopoly busting is, is sort of anathema to objectiveism or, or is that part of, um, making sure that that function of markets, uh, has the integrity and, and vibrancy that we need?
Speaker 2 00:44:48 Well, it, uh, in the objective literatures, there's extensive and I think justify criticisms of antitrust and not just criticisms of it application, but it should be abolished. I agree with that entirely. I think the entire going down to the economics of it, the entire theory of monopoly is, is wrong. And some of it is Marxist oriented, but instead of just getting into the name, calling the theory is that, um, there is a necessary profit motive in becoming huge. Now in economics, you'll learn that there's something called economies of scale, scale, meaning size wherein the bigger you become, the lower your unit costs. And if you can lower your unit costs, you can lower the price you charge to customers and still be profitable, all leading to the idea that there's gonna be mass production and mass affordability and bigness becomes well. I'm big, cuz I have a huge satisfied customer base.
Speaker 2 00:45:57 Well, so far I'm thinking what's the problem with any of that. And if mono means one, there are actually very rare cases of this, but we might as well defend. The few that we see OA is a perfect example. Alco became 95%. I think at one point of the aluminum market. Now the standard view in economics is the monopolist is price, gouging, charging, whatever the hell they want, restricting output. That's not what Alco did. Um, and, and standard oil and all the other cases, Microsoft, my IBM, all the other case in the history almost to a, to a case show massive increases in output by these companies lowering of price because they could lower unit costs. And the opposite of the principles of economies of scale are dis economies of scale. Meaning sometimes companies get too big, they become unwielding. They become, sometimes they'll become conglomerates and they'll go the other way and start breaking up precisely because they're not profitable at some level.
Speaker 2 00:46:58 So there's an optimal size of companies, you know, having to do with, uh, you know, their surrounding context. But, um, so I don't wanna say too much more on that. I don't wanna take up the whole thing, but one last thing there is still, still believe it or not in microeconomics, a platonic notion of perfect competition and the perfect competition model basically is anti-competitive it doesn't allow for winners of competitions. It wants every comp company to be small, many companies, small market shares, no pricing power, no above normal profits, no barriers to entry. It's a totally egalitarian, not just platonic in the sense of unreal, a totally egalitarian standard for what competition should look like. And that drives and motivates a lot of the trusts busting as well. So there's, there's bad philosophy, not just bad economics at the root of this government monopolies. Sure, certainly should not be allowed, but, but those are the ones that are really abusive. The ones where government gives special favors franchise and privileges to certain companies. But if it's earned on a free market, the history has been that these are great companies and shouldn't be trust busted professor. That was excellent. Thank you. Thanks buck. Thank you, buck.
Speaker 0 00:48:17 Okay. Uh, we're gonna take a couple more questions. Um, thank you, professor Sal for staying a little longer with us and again, apologies for the technical difficulties we had, um, earlier on, uh, Macay hope I'm not mispronouncing your name.
Speaker 11 00:48:35 Oh, I like the French pronunciation. Thank you. It's Micki <laugh>
Speaker 11 00:48:40 So thank you so much for this, uh, this space. Um, and, uh, professor Salzman for this question. Um, my question to you is I have a unique perspective over the economy. Um, I'm in wealth management, um, Houston, Texas, where everyone is a millionaire and we work with a lot of ultra high net worth clients. So when I hear people compare this economy to 2008, um, you know, first of all, being home to AIG, I understand what happened there. So can you kind of explain a little bit about why people tend to compare this to 2008, especially in terms of what is happening with the stock market? Because from our perspective, we have people that are literally sitting on millions of dollars in cash because the corporations made out like abandoned, um, in those two years, um, after that Q1, uh, 2020 with COVID and we basically have people just looking for income, um, there's so much liquidity in the market right now that people are holding onto cash. So I would just like to hear from your perspective, why that comparison still persists when, in my opinion, um, you know, that there really is no comparison, especially with all the growth from the past two years, even with inflation in the market, you know, um, playing Russian roulette, no pun intended on a daily basis. Thank you so much.
Speaker 2 00:50:07 Thank you, Micki. I, I'm not sure why people are paralleling the two, but the, if I were to pick one common element and this was true at the end of 99 as well, when the stock market was doing well, whenever the stock market does very well, uh, there are people on all sides, not just, uh, Kasians and socialists, but Austrian economists are free market econom. They think it's a bubble. They call it a bubble meaning. And the analogy of course is an unsustainable inflated thing about to pop. And, uh, then say, I don't believe in, I don't believe in bubbles. I don't think that markets are stupid and easily fooled into overpaying for stuff self-interest says, pay what you can, but don't overpay now. Now it's not that markets don't go up and then crash. My theory is they crash when government imposes punitive policies, and then we could debate what those are, whether it's monetary tax regulatory or whatever.
Speaker 2 00:51:08 But that is the only thing I could name as to why people might say, you know, before this year began, Hey, it's a bubble. It's unsustainable, it's too high. And when they see Meki, I think when they see it accompanied by money printing, now that is the plausible, uh, complaint. Uh, if it's going up and at the same time, the government is printing a lot of money. They put two and two together and say bubble. So that could be why, but of course they would say, well, it just went down 30%. So I must have been right. Look, it went down 30% in the last, uh, five months. So I was right. The bubble is popping. Um, I, I, I would just leave it at this, uh, I'm in the same business you are I'm, I am in academia, but I also run a, an investment research and consulting firm.
Speaker 2 00:51:51 So I'm talking with investors, uh, and writing for them all the time as well. I'm my impression over the last two decades has been that the more the government intervenes in the economy and all sides of the spectrum agree that it's doing. So they only differ on whether they endorse it or not. I do think it makes people justifiably say the, uh, stock market is not connected to reality. It's not connected to the economy. There's because there's so much manipulation going on that it can't be. Then the only question is they can't figure out how disconnected it is. Now. I actually think this is a good thing because if people thought government intervention and manipulations were good and, and not causing a disconnect, then I would be even more worried. But, but they mostly realize that there's a disconnect. So I think that's the other thing that becomes, you've probably noticed if you're in this business, it becomes more and more difficult to gauge the valuation of stocks and things like that when public policy is so arbitrary and capricious.
Speaker 11 00:52:54 Thank you so much for that explanation. Super appreciate that. Thank you.
Speaker 2 00:52:58 Thank thank you, Micki. Thank you.
Speaker 0 00:53:01 All right. Uh, Jordan, we're so honored to have you in the room. We'd, uh, we'd like to unmute and chime in.
Speaker 12 00:53:09 Uh, thank you, Jennifer. Yeah, I, in fact, I was formulating my question based on the blog host, but I, I lost it. So, uh, I hate to yield to someone else, but, um, I sent you a message to see if I could get that, cuz that was kind of part of my question, but I hadn't read the whole thing.
Speaker 0 00:53:27 Okay. I'll uh, shoot it to you on the back channel.
Speaker 12 00:53:30 Thank you. And you can yield to, to someone else.
Speaker 0 00:53:36 Thanks JP.
Speaker 13 00:53:41 Thank you, Jennifer. Um, I prepared my question this morning. Uh, soon as I, I realized that there was going to be an ANMA this morning, uh, for full disclosure. I have a talk to give on the subject matter on Monday. So this is why I wanted to pick an objectives brain. Um, but, uh, Richard, if, if, if, if, if you have one, what is your take or anyone here, um, on the potential of the blockchain technology for civil change, um, any scholars equate it to the impact, the internet and, uh, and government and governance being among the top height applications for its thank you. Well,
Speaker 2 00:54:30 Thank you, JP. This is somewhat of a technical question and I would refer you to, uh, if you go to the Atlas society website, uh, in the past events, um, I did interview a couple of brainiacs on, uh, crypto and blockchain and other things. So for a deeper, more detailed discussion of that, I'd highly recommend that I specifically interviewed at a fellow named Jack Kreel K R I E SEL on one of my morals and markets seminars. I would just say this quickly, cuz it's probably too technical for the audience. I don't believe even though I'm impressed by technological advances like this, I don't believe at the end of the day, if it's an impediment to a government that wants to seize more power, that it will survive. That same thing happened with the gold standard. It was a wonderful, great monetary system. But to the extent it got in the way of the us government wanting to, you know, have propagate finance, it just, it just got rid of the gold standard.
Speaker 2 00:55:34 It's not the gold standard failed on its own. And the gold standard was not something that institutionally could handcuff the government. If the government wanted to get it out or get rid of it. It did. And I think the same would happen to the blockchain and the whole crypto, uh, space. It, if it's something that helps us liberate ourselves payment wise and otherwise show status regimes, that's good as so far as it goes. But if these status regimes really want to crack down on it criminalize, it, it, it, it can do so. So I'll just leave it at that.
Speaker 13 00:56:08 Thank you.
Speaker 2 00:56:10 Thanks JP.
Speaker 0 00:56:13 Okay. Uh, Jordan, I don't know if you got the article and if you had enough time to take a look at it.
Speaker 12 00:56:20 Yeah, I was just gonna say that. Um, and thank you. This is a fascinating conversation and thank you, Richard. I, I, um, I had recently interviewed, uh, um, uh, Iran con's, uh, ex-wife uh, the former prime minister of Pakistan and it was fascinating. We were talking about, um, and, and maybe this is such a dramatic shift here, but it, it was fascinating to me, um, uh, with regard to the, the cronyism, uh, in politics and obviously the, the blatant corruption, but there, there was a article mentioning work by, uh, or a survey from trans, um, transparency international that really, uh, pointed out much of what is discussed in the article. And I didn't really have a specific question for you, but was just going to comment in that and I hadn't quite finished the article, but thank you so
Speaker 2 00:57:15 Well, um, thank you. Uh, thank you, Jordan. Uh, just quickly transparency international is where I got in my essay, which I think Ja as, um, Ja earlier linked to on, uh, rent selling and corruption, transparency does have a corruption index and, um, it's not perfect, but it's better than nothing. And they rank all the countries of the world by level of corruption. And, and in that essay, I basically, uh, with data and showing graphs, interpreted corruption as related to, uh, how much government intervention there was in the economy and there's a direct relationship. So there are Cato and others have measures of economic freedom and the countries with less economic freedom can be interpreted as there's a bigger mix of stateism in the economy, right? Well, there's a correlation between that and corruption. So corruption tends to go up as government intervention in the economy goes up. And, and so I think that is, um, I think that's an important way of looking at it. If you can put numbers to this, it makes more sense to people.
Speaker 12 00:58:18 Thank you.
Speaker 0 00:58:21 Okay. Definitely not least. Roger we've missed you. It's good to have you back in the room.
Speaker 14 00:58:28 Yeah, no, I've, I've been busy. Uh, I'm currently, uh, with over a thousand libertarians hanging out in Reno at the libertarian convention. Um, what, what I wanted to ask and I'm glad you guys are doing this right now is when it comes to, you were talking earlier about, uh, you know, the economy and inflation and, and you mentioned Austrian, uh, you know, economists and, and, and their take on some of this stuff. I, I have a question on like, why is the Austrians the only school of free market economics that people now wanna embrace? Like what, like where did Chicago school fall out of favor? Is it just because of Milton Friedman, uh, ha instituting the payroll deduction tax? Or is there more to it? Like what, like, like, and is there a chance for the Chicago school to bounce back?
Speaker 2 00:59:23 Well, <laugh>, that's a great question, Roger, by the way, in the future, when I, uh, I've been, uh, saying, ask me anything, it's too broad in the future. I'll do ask me anything about capitalism. Ask me anything about Austrian economics. It could get too narrow. We might have three people in the room, but no, it's an important point. I would name the top in the last 50 years, the, um, four or five free market schools in academia, uh, Austrian, which is not the biggest market share Chicago. You mentioned Chicago in the monetarism supply side, which was really not an academic thing, but a, a popular thing and rational expectations. Now, I think the only reason Chicago faded was because Friedman mostly promoted the idea of monetarism and monetarism more narrowly says the inflation rate will go up as much as the money supply. And that didn't happen in the eighties and nineties.
Speaker 2 01:00:17 And it was totally discredited. I mean, it's, it's sad to say actually, cuz Friedman's a giant, but, but he, he, he used to say, if my predictions are no good, I don't have a scientific theory. And they did predict the monitor is Dan Friedman that with the money supply going up in the eighties and nineties, they predicted very, very high inflation and it, it went the opposite. So some of it was, they just shot themselves on the foot by holding out prediction as the sin Quan, uh, whether it was a science or not supply side, I'm a supply side or I am a big advocate of art laugher, Bob Mande and the whole supply side group. And they used to fight with the Mon monetarists cuz the monetarists were against the gold standard and the supply siders were for the gold standard and various other things having to do with tax rates.
Speaker 2 01:01:00 But as you know, the supply side thing is, is, is ridiculed as trickled down is ridiculed precisely because it works so well. I think frankly, and that it was focused on entrepreneurs and money makers and things like that and said, stop, punishing them, stop taxing them. That the laugher curve effectively is an Atlas shrug theme that when you punish the producers, they disappear. So, um, the, I don't, I'm not sure I would agree with your original comment that the Austrians are the only ones heralded today. They're they're I don't know who heralds them that they're not, they deserve more heralding I suppose, but they're not widely endorse. So sorry. I can tell maybe you're just saying within the libertarian movement, Roger, that that's for that's for sure.
Speaker 14 01:01:47 Yeah. Within my circle, that seems to be, that seems to be, you know, everyone, everyone wants to follow in Milton Friedman's son's, uh, footsteps at Murray Rothbart and consider themself an and cap. Uh, but yet when you walk 'em through their, their actual belief system, they're, they're Aus through and through, but, um, I, I, I, I digress.
Speaker 0 01:02:08 <laugh> all right. Well, thank you everyone. Um, also just wanted to let you know, I think we had a question on, uh, cryptocurrency and I put a link, uh, up there to an interview. I did a while back with Michael sailor, and if we have any Michael sailor fans, then please, uh, sign up for updates at the apple society. We have some very big news coming up about Michael sailor. So, um, thank you, everybody appreciate the patience that you've had with us today and with clubhouse today. Um, hope to see you tomorrow. Professor Jason Hill is gonna be back on with part two moral defense of elitism and meritocracy, and, uh, we have a big week next week. We've got, and ask me anything with Rob TRUS. Uh, also another one with, uh, uh, professor Steven Hicks, and then I'm gonna be interviewing Spencer, Jacob, uh, on Wednesday. He, he was written about the game start, um, frenzy and, uh, helping us gain insight into what happened there. So, uh, again, appreciate everyone and hope to see you tomorrow.
Speaker 2 01:03:26 Jennifer, may I add just one thing?
Speaker 0 01:03:28 Yeah, please.
Speaker 2 01:03:29 Tonight morals and markets, if you know students, uh, if you know of a student would be interested in listening to this, uh, eight o'clock Eastern tonight till nine 30, my morals and market session will be on economic sanctions, whether economic sanctions work, whether they're moral, proper allow, all that kind of thing. So, um, so I just want to do a plug that
Speaker 0 01:03:51 Okay. I will. I'm gonna, um, put that link up there. I didn't plug it because I know we are trying to, uh, to really try to get more young people in that room. Yeah. So, um, so if you are, do not fall into that category, please, you're welcome to come and audit, but please just keep your, your camera off. So thanks
Speaker 2 01:04:11 Everyone. Thank you, Jennifer. Thanks everyone.
