How Capitalism Saved America | Thomas J. DiLorenzo



well I guess we should get started so you can all make it up to bodegas as soon as it stops raining or uptown this is supposed to be informal so all of you who are in chairs sit on the floor get that incident no just kidding disk in this game don't do that Oh what I'm what I thought I'd do is since I'm a shameless self-promoter I'm going to talk a little bit about my new book that's coming out on Tuesday August 10th it's called them how capitalism saved America subtitle is the untold history of our country from the pilgrims to the present and my publisher chose that it makes it seem like I wrote a ten thousand page book but it really is a short book now i just have the uncorrected page proofs here right hand the print is very small so the actual both will be bigger than this and you know that but it does have nice artwork they have a picture of the pilgrim ship landing on Kennedy compound in Hyannis Massachusetts here otherwise known as Plymouth Rock and so ends up but the genesis of it was it's probably a year and a half or so ago after the Enron scandal I was lucky enough that a publisher I was working with in a division of Random House had a small cabal of conservative free market people who actually worked with this for random house and so and they said that well in light of the Enron scandal all this there are going to be a lot of books coming out trashing capitalism and making the argument that this sort of behavior is inherent in capitalism it's not just the an aberration of a few these crooks and some of these companies that this is just business as usual and sure enough that's come true and and they liked my Lincoln book because it made them tons of money and so so so they asked me to if I would write another book is sort of a defensive capitalism to counter all these other books that were sure to come out from a historical perspective and so what I did was if some of you might be familiar with Iran's old book called cap ilysm the unknown ideal is published in 1962 and it's a collection of essays alan greenspan is in there back before he became the wizard of oz he was a he was a pretty good guy in Ron Paul when he was here loud was last year told us that there's this essay by Greenspan in this book and it's a defense of the gold standard and Ron Paul said at one of the congressional hearings where Greenspan was in front of him in front of Ron he brought him this essay from 1962 and asked a few an autograph it and asked him if he still believed in what he wrote in 1962 and he said Greenspan said sure I believe every word of it still and even though he's a central banker now but but anyway this so this book is sort of modeled after that I wanted to write a book that is a readable available to a wide audience it could be used by college students or any anybody even Joe Sixpack might be able to comprehend hopefully the book and so that's sort of the model of a book I'm not talk for an hour or anything like they were supposed to only talk for 10 or 15 minutes and then open up to any questions comments but I started I started with a quote from ron paul who really touches the on the the purpose or the book he says he said this in an article in lieu rockwall calm said ignorance as well as disapproval for the natural restraints placed on market excesses that capitalism and sound markets impose cause our present leaders to reject capitalism and blame it for all the problems we face if his fallacy is not corrected and capitalism is even further undermined the prosperity that the free market generates will be destroyed end quote and I think it's a very true statement ron has a knack for really hitting the nail on the head there and so you know why so much anti-capitalism my belief is one that just ignorance as ron says and so the first chapter is a same title as Iran's first chapter what is capitalism and said I'm not going to explain it to this group with them so so what is capitalism because I think a lot of the confusion is in the popular press and apartment media especially is they equate capitalism with mercantilism and they'll look at some cozy relationship between some corporation and government where they're granted a monopoly somewhere in the cable business and they'll say aha that's the failure of capitalism but it's not and and really you don't need to be the Progressive Era of them of the early 20th century the progressives had a point because after 1865 when the the federal government really spent started spending big money on building the Transcontinental railroads and we had all this corporate welfare for the railroad corporations and others there was tremendous corruption the grant administration's after the American Civil War were so corrupt that even his vice president was in trouble the the ambassador to England had to flee the country because he was involved in a stock swindle and it was in all this rotten corruption there was the direct result from this cozy relationship between business and government that was initiated in those years and so the progressives had a point that's what they thought was capitalism was was this rotten corruption that we did get and but they were confused it wasn't capital as it wasn't free market capitalism that was mercantilism that's just the opposite of capitalism and so so that's part of the confusion another reason for all the anti-capitalism is done utopianism and I brought some I'm going to read a few juicy quotes to you about some utopians and I mention my other lecture on tuesday i called this the nirvana fallacy where the old practice of comparing the free market to some sort of utopian ideal and the free market always comes up short of course and now there's a real interesting book called political pilgrims is anyone's ever read that book or seen Nova political pilgrims heard about Paul Hollander he's a sociologist at the University of amber's I don't know if he's still there or not if he's retired but he took a look at the beginning at the big early years of the Soviet Union Western intellectuals that traveled to the Soviet Union and Eastern Europe Cuba any communist country and they would come back to the US or to whatever to England wherever and write glowing reports about how they had found utopia in these countries and so this search for utopia I think another reason for the so much content condemnation of capitalism because capitalism of course is not utopia it's the real world one example a Walter durante of the New York Times a famous reporter the New York Times in 1930s he went to Russia and he said that the Russian greeneries were overflowing with grain the cows were plump and contented and of course this is a time when six million Ukrainians died in many of the starve to death and George Bernard Shaw George Bernard Shaw went to Russia and said there was not and could not be a food shortage in the USSR and of course they claimed that they had 70 years of drought didn't they bad weather with all the food shortages and in that year when George Bernard Shaw rah rah wrote that Stalin's forced collectivization in the Ukraine caused the deaths of millions of people in the same time w eb Dubois said that although Stalin was a perfect gentleman he was very gentleman who quote asked for neither adulation nor vengeance he was reasonable and conciliatory that nice guy this thought Jordan Edmund Wilson famous literary critic Edmund Wilson he said this there has been in our times no parallel to the position of Gorky in the Soviet Union that's probably true in past a clerk and passed a close friend of lemon he is at present a kind of commissar of literature and is perhaps closer to sharing the glory of Stalin than any one public man a little glory Paul Baran the Marxist economist wrote about Cuba years later many years later as a garden paradise where agricultural problems would melt away with a gigantic economic surplus and Nepal sweezy who jeff tucker sang about the other night Paul Paul sweezie was in there the songs they were singing he was similar he thoughts about Cuba he's sayin uh he went there and he came back and said with my faith in the human race restored because of the Cubans purifying and liberating experiences and he's talking about communism in Cuba and the theater draper if he admitted that Cuban economic policy was in his words murderous mendacious brutal and arbitrary but it still should be admired because quote it is still socialist so this plugin is Theodore draper famous writer and now the final one here to see two more the the executive director of PBS in the 70s Frank mankiewicz interviewed Castro for his PB audit PBS audience and then wrote a whole book about what a great guy Castro was over so it's totally a praiseworthy Norman Mailer swooned over Castro saying this so Fidel Castro I announced to the city of New York that you gave all of us some sense that there were heroes in the world you were the first and greatest hero to appear in the world since the Second World War that this was when Castro was in New York City at the United Nations and he was addressing himself and the final one I'll give his George McGovern senator it when he was a senator who also met Castro and he described him as a genius who responds knowledgeably on almost any subject from agricultural methods to marxist dialectics end quote what could be better than that something could do that and so and so this book political pilgrims is filled with stories like that their other books more up-to-date this was published that probably 25 years ago on the utopians why there's always been this utopian pension to look at these eyes these phony ideals communism in theory being wonderful or socialism and comparing it to real world capitalism and it comes up short and the macys book the anti capitalistic mentality is always be one of my favorites bro because I'm lazy and I like short books I don't like big long boats and uh but I don't you if you know it's pretty cheap you can buy I'm stink Lou still hasn't for sale in here but and it's not real heavy to put in your suitcase when you get home but but me caes has a real insightful thoughts on why why this anti capitalistic mentality exists and my second chapter is called anti-capitalism but first one is what is capitalism and one is ignorance again on people who amassed large sums of money the critics of this just simply don't understand that the way to a bass large sums of money is to please large numbers of people and one another great book Li you should all read is liberalism by von Mises which is online of course the other ones probably online too so but you still spend your money on on it while you're here you might not have this chance again spend your money but in liberal one of the one of the really good points that means he's made in liberalism and many other places was that all of the things that we ordinary ordinary people enjoy like refrigerators originally were only available to the the aristocracy but the wealthier estaca see because there were not economies of scale yet in production of these things and only the rich can afford them but then that's not how to get rich if you're a business person you don't get rich by selling fifty refrigerators to the King of England and his family you get rich by selling 50,000 or fifty million rewrites how you get really really rich and so things that were always initially luxuries for the aristocracy capitalism produces them for the masses of the masses eventually enjoy these things that's why every person in this room lives a better life than the King of England did at the time of the American Revolution he didn't even have indoor toilet indoor plumbing for his toilet steadiness and so and so and it's all dude most people don't understand that resentment over frustrated ambition is another reason me sees gifts for the hentai capitalistic mentality a couple of good quotes from from the book they don't mention briefly here and he said the resentment over frustrated ambition can be pervasive capitalism grants to each the opportunity to attain the most desirable position which of course can only be attained by a few such as the attitude of the Tramp against the man with a regular job the factor hand against the foreman the executive against the Vice President the Vice President against the company's president the man who was worth $300,000 against the millionaire and on and on and on so resentment over our betters and just some proportion of the population and also scapegoating for your own shortcomings I quoted him in a book like co offered in 1985 saying that that the met one of main reasons for the anti capitalistic mentality is that we all have our shortcomings I discovered my first just yesterday this is a matter of fact and if it's not human it's human nature to try to blame someone else in capitalists especially successful people at as Gavin successful capitalist or easy scapegoats for all this and then also I talk about mercantilists than some of the worst enemies of capitalism are business people who get in bed with government and destroy the free market through by adopting mercantilism and also me caes has some religious ting comments on popular culture and how why it is so anti market anti capitalistic and I'd like to see a lot more work done on that it's kind of intriguing topic but there's been very little done on why it is that the popular culture is so anti market and and and the effects of that and he talks about the truth that if you're a say your movie star the public is fickle they might love your latest movie then you make the next one with JLo and they hate it and and so you're a big star academy award all the money and then you're you know you go to buy groceries and all the tabloids are trashing you as you go yeah yeah and so who do you blame we're not you you're a star so you blame the system you blame the the market capitalism that's that's what me caes has say about that and then the final group that I talked about as far as the enemies of capitalism is environmentalists who are I believe are generally the enemies of civilization not conservationists these are people who want to defend protect duck habitat and things like that trout unlimited but the environmentalists are basically enemies of civilization that's why they're always want to shut down production of any kind of goods services oil that's why they're all aunt their anti oil industry anti-nuclear anti natural gas and staff I any kind of energy because they understand energy is the lifeblood of used to be anyway much more of life of capitalism that's why they've always been endeavoring to shut down the energy industry so I deal with that also in a book and the second part of the book is a series of fairly short chapters illustrating the myths of capitalism so it's sort of a myths vs. reality of capitalism that have been built up by all of these anti-capitalist propagandists and just to give you a few examples you know I have a chapter called how the hell capitalism enriched the working class which is kind of fun to write because because I know there are a lot of a lot of the lefties out there like to make everybody believe that the workers are absolutely miserable under capitalism it I know at my school and at the Walter blocks school Loyola a big big thing there big crusade for the living wage sort of a super minimum wage and if you read some of this literature makes it sound like getting it you know get a job and you're just absolutely miserable the worst thing you could do to go and work and work at a job and I always ask these people why are you so stingy why don't you why don't you call this the living high on the hog wage and make it a thousand dollars an hour why ten dollars an hour there they're always with it but these people are always trying to convince workers that there they should be miserable working so but so I deal with that and look at how capitalism has enriched the working class baby on anyone's belief 100 years ago there's chapter on the myth of the robber barons some of the American industrialists in the post-civil war area era were robber barons and that they were mercantilists they were in bed with the government they got government subsidies a good example I write a good bit about the the building of the Transcontinental railroads and there was one Transcontinental Railroad in America that was built without government subsidies without even land grants and it was the Great Northern by built by James J Hill who was a real role of villain in the eyes of the academic left and he and he bragged in his own biography that he never took a dime from the government and not even land he paid the Indians rights of what for rights away across Indian land in either cattle or coronor money whereas the subsidized railroads called in general sherman and the army and just killed all the Indians and in my Lincoln book i quote sherman as saying we're not going to let a few ragged thieving Indians stand in the way of the railroads he said that after the Civil War one his job three months after the Civil War ended Sherman was put in charge of killing all the Indians in the play of the Plains Indians or capturing them putting them on I call them concentration camps but most people call them reservations and so but that was it was sort of veiled corporate welfare for the railroad industries but then you had James J Hill who did it who did it on his own private financing he his business partners in his investors and they built the better railroad they build a quicker med and if you read the history of the Transcontinental railroads in America you can understand why the progressives were so successful in bashing capitalism because this was colossal corruption they would do such things as since they got a per-mile subsidy from the government they would build on top of ice packs in the winter and then when the ice would melt the tracks would all collapse but that was a good thing because you had paid per mile now so the more tracks you built the more subsidy classement from the front of government and and also politics meant that any member of Congress who wanted a line an extension or an appendage of the railroad down to his hometown where maybe two people per month would ride the train if you wanted his vote you had to do that you to build that and so these these railroads became notoriously inefficient and whereas James J Hills did not and and then it's an interesting part of his story is that after the turn of the century after he'd been so successful for so many years his company was sued for allegedly violating the antitrust laws and and it was it was one of the very first federal antitrust cases that was called the northern securities case his holding company was called northern security to that at that time so I've suspected it was sort of revenge for making the government railroads government subsidized roars look bad I can't really prove that there's the myth of any trust the story we're told about antitrust is that markets run amok and create monopolies I've done a lot of historical research over the years and what I found is that all via the industries that were accused of being monopoly is in the late 19th century in America we're all expanding output dropping prices innovating much faster than any other industries in the country prices were for this is a period of deflation and so antitrust was always anti-competitive in my view from the very beginning there's a protectionist law and then also I go into the capitalism caused the Great Depression everyone assumes it did but no one except the people who attend me caes university seem to know that Herbert Hoover was a statist everyone seems the standard story is that Herbert Hoover was a advocate of lace a fair and that's what got us into trouble caused the Great Depression and thank goodness FDR came along with big government and saved us saved capitalism from itself that's that's sort of that other books with that title saving capitalism from itself and now but Hoover was such a statist that I quote Franklin Roosevelt's top economic adviser for the duration from 1932 until nineteen forty-five was a man named rexford tugwell and harvard harvard economist retro tugwell and he says this the idea is embodied in a New Deal legislation were a compilation of those which had come to maturity under President Herbert Hoover's ag's we all of us owed much to Hoover so pretty much said FDR copied what Hoover was was doing and another quote that will offer you about Herbert Hoover this is from a biography by John Hoff Wilson raag Hoover and she just he's describing his economic beliefs his economic beliefs was this in capitalism there was too much lawlessness destructive competition and economic waste too much unemployment and repetitiveness and factory work the 12-hour day was too long labor lack the guarantee of collective bargaining child labor still existed despite pre-war progressive legislation education was inadequate most people were making too much money far beyond the needs of stimulation to initiative whatever that is and so he was a big idiot when it comes to economics even though you know now we have the Hoover Institution at Stanford and most people think is yeah Milton Friedman is there but it's named after somebody whose policies milton friedman i'm pretty sure would disagree with almost everything the hoover herbert hoover did as Commerce Secretary in the 20s and then as president you know among the things he did was he sort of implicitly threatened the major corporations in America with who-knows-what IRS audits and so forth if they if they dropped wages during the recession which is exactly what you want to have if you want to minimize unemployment you want to wages to be flexible so he brought all the major corporation executives in in and persuaded them to not drop wages he started big public works programs to try to stimulate the economy of course ignoring opportunity costs he raised taxes he he started up the farm cartel business by paying farmers not to grow food and raise crops he signed the smoot-hawley tariff the big protectionist tariffs he started the reconstruction Finance Corporation which diverted eventually 50 billion dollars in capital directed by the government into various government favorite enterprises and away from the private sector and this lasted until nineteen fifty-five the RFC and it was finally disbanded when it became a scandal that the the government was funding strip joints at that that's literally how how the reconstruction Finance Corporation came to become defunct in 1955 when but I quote we have the guy who ran it for a Hoover and then later Roosevelt as bragging that they were even lending money to people who had droves of reindeer in Alaska so so any any votes that you could buy with government money they would they would try to do it and so Hoover was a big statist and of course monetary expansion that occurred during the twenties I also talked about how Murray Rothbard I think had it all right in his book America's Great Depression in terms of what caused the real the robust of the depression and then in the next chapter it's called see what is what I call it i forget what i call it it's been such a long time soon it's on sometimes the publisher changes it around it's how the New Deal crippled capitalism how the New Deal crippled capitalism and it's a compilation a lot of research that's been done over the past several decades by economists about how Roosevelt's New Deal actually made the great depression worse and longer and a great book on this is out of work by veteran galloway if you want to read up on this and and of course Jim Powell's new book FDR's folly incorporates a lot of this this research too and for example unemployment in nineteen thirty eh was nineteen percent still 1939 it was seventeen point two percent so the Great Depression didn't end when World War two started World War two started and what some was at sixteen million men were sent overseas that's hardly a way to end a recession send everybody over to get blown up and killed possibly in a war and one of the really striking facts that most people don't know is that the great the Great Depression in America anyway it didn't really end until there was a tmobile demobilization of the military after World War two when the federal budget went from a roughly ninety five billion to 35 billion in two years and so and all the Keynesian were terrified that this would cause another Great Depression because of that big reduction in aggregate demand by that might as well 65 million dollar but but of course you just got all this money that had been wasted on bombs and you know not wasted but you know from an economic perspective war is the opposite of capitalism war is about blowing things up killing people and so forth and you get all these resources there were more used to blow things up and kill people and put them back in the pockets of of the people and the economy took off after in the postwar years and so that's so what ended the Great Depression was The Taming of big government that was initiated by the war and by and by Roosevelt but we still live with the legacy of destruction of the the New Deal years and I don't want to go much further there's much more good stuff I in the book with a big trashing of Michael Moore at the very end and and in this idiotic book by barbara ehrenreich nickel and dime things like that so and so a lot of the people of my school probably like Walter blocks school just swooned over these books a nickel and dimed but she's the PhD biologist who writes for Time magazine and places like that who pretended to be an indigent immigrant I guess and worked at fast-food joints and then wrote up a whole book about how she made the great scientific discovery that fast food joints don't pay much that's that's a fast-food investor her discovery and this is all a part of the campaign for the so-called living wage the super minimum wage that's the point of that book was at the end that she makes a big pitch for for these four for an another wonderful thing more public housing she's she makes a pitch for more public housing or dilapidated hellholes to house their low-income people and in and of course the super minimum wage and Michael Moore was much the same in his book stupid white men and downsize this sort of finished by with a review of both of these and they know nothing at all about economics they confuse mercantilism with capitalism and more make some good criticisms of businessmen who are in bed with with government but but calls at capitalism and on and then argues for even more government more government intervention which will lead to more of the same thing will lead to less corruption it will lead them more of the same thing they doesn't seem to get that so his movie on the war was a lot better than his book on the on economic but maybe I'll stop there I don't want to give the whole thing away because I want you people to buy it and but I'll stop there and everybody has a questions or declarations to make or anything like that weather reports who would you talk to you wanted to write a book nobody you sit down and you write the book you can't write and talk at the same time well the rule realistically the wait I sort of the way I walked into this is like the publisher of this book is crowned forum which is a division of Random House and Random House the biggest commercial publisher in the country and they published my Lincoln book but they called me they had read my article on lincoln in the independent review and asked me do you want to what would you like to turn this article into a book and this will happen that I had just finished doing that and so and I hadn't even looked for a publisher yet and so then so then they asked me to write the second book but and so that's how I got a relationship with a commercial publisher but what most people do is who are starting out and you want to write a book for a commercial publisher you write you have to write the manuscript in to write the book and then you find a literary agent and you can go on Random House calm and they live a link to dozens and dozens of literary agents because the major commercial publishers will not look at a manuscript unless it comes from a literary agent if it comes from an author they won't even go throw in a trash it's just their policy very few of them will ever do that and the literary agent is generally somebody who will uh they'll be your marketing agent though if they like this and think it's it's a saleable manuscript they'll get they'll ask you for either a fee or a percentage of the advance a commercial publishers will say if they pay you a ten-thousand-dollar advance the agent might one fifteen percent of that is their fee for finding that but it's all negotiable so like like that so so you know if you want to write a book and have it published by a commercial sure I think that's the route that you need to take unless you have some personal contact with somebody no my attention that other cat I don't know I I asked him to send him a copy to case they might want to review it on their website or something like that but I'll see why would draw attention and I just I want them to help me promote it because and so in the very first page as chapter 1 the chapters called what is capitalism I quote I have a little blurbs at the beginning of each chapter and the top is one by Murray Rothbard defining capitalism and then Iran defining capitalism and I have on the back of the book will be blurbs by George Riesman Lew Rockwell Ron Paul and Marie Weeden bomb who was reagan's chairman of the Council of Economic Advisers so I'm gonna have recent on the back saying nice things about the book and I quote on r and on page one so so they can't be too angry with other what's that they don't okay well maybe out maybe I should change it then I ask but I don't care who are they anyway I mean oh so so it's kind of odd if if they claim to be pro-capitalist and they don't like competition that's very odd to me it seems to me it should be pro competition yeah but I bet gonna send them one for sure how the compliment of the luxury good friend Federation private spaceflight oh sure I wouldn't you know the guy with the pointy ears would ask that question just kidding you don't have pointy ears eyes sure thing is mr. Spock yeah why not that's been the whole history of capitalism is that you know by macys mentions things like nylon stockings were only available to the Queen of England at first and then by the time he was writing is it was you know ordinary working girls could buy as many nylon stockings they wanted it and it's you know that refrigerators to automobiles that's been the whole history of capitalism and great inventions or my first personal computer when I bought an IBM PC in around nineteen eighty-two or something like that was four thousand dollars and in 1982 four thousand dollars a good piece of change for a personal computer that was probably you know less than one ten-thousandth is powerful is my laptop today and so and so that's so the same thing that happens everywhere I don't know why it's basically if spaceflight is privatized sure that's that I expect that be happy that's what happened go for it go for a spin maybe we can finally succeed after all oh it would be cheaper to just put Congress on the spaceship and said send them away yeah well I would gladly do that I would gladly sell my house and finance that but I was yeah one of the one day I remember I was in a really good mood because I've written a paper some years ago that the United States Senator Jake Garn was sent up in outer space in a spaceship and I thought that was just such a neat thing that we got rid of one politician for a couple of days like that he was a chairman of the committee that funded NASA I think at the time and then John Glenn but he did that after he was out of the Senate but somebody else had a handout for somewhere what what part of a party what part of my least proud of and most proud of now you really should read the whole book because it's a short book is a lot of big not a big long book yeah I don't know I think that's all pretty pretty equally if I can if I already guess what is going to be criticized the most if it's an unabashed defense of capitalism and in fact I already had some criticism on amazon there's some outfit called Publishers Weekly it claims to be the gatekeeper of all books that get published and so they write little blurb reviews all over the place on new books coming out and it was real sort of sour puss type of language on this little blurb on Amazon about you know since there's a defense of capitalism no excuses and so they got it wrong they had incorrect statements of fact about what's in the book already and ipods up on amazon now and then there was a second one that was pretty good it was from the American Library Association which is a big organization and they actually it was complimentary and it was a straightforward and so so I expect my measuring rod would be whichever chapter gets attacked the most is that what I'm most proud of and I suspect it might be the one on antitrust because I call it a protection is fraud from day one and that's one of that's one of the key stones of the attack on cut on capitalism the notion that left on their own corporations will become monopolies and they therefore they need to be regulated and antitrust is that sort of a proxy for all regulation of business and so fun i argue for a complete abolition of all antitrust and so that's probably the one will be the attacked the most I suspect that end plus the one saying FDR made the great depression worse and not better because that's what everyone has taught in elementary school the lie that he saved us from capitalism so see the man in the back there Castle earlier wonder what your not need is it well that you can't buy a cigar why can't you buy cigars you mean you can't buy Cubans well yeah we live in a pro it's yeah what is your question though well you know other countries all over the world can go to Cuba and supply Cuba with goods that we don't supply them with so it doesn't seem to have worked much Castro has been in power for a long time hasn't he and since since the early 60s he's been the iron grip the embargo doesn't seem to have done much but entertained the Cubans in Miami they they they feel very strongly about it but realistically I'll because that much effect Castro is still there he's as powerful as ever he's totally ruined his country our friend Yuri multiple is in Cuba last year and gave a talk at the Austrian scholars conference about life in Cuba and he said the idea the average person in Cuba is given an income by the government of the equivalent of ten dollars a month and they might have relatives in Miami or somewhere who will send them a hundred dollars a month so therefore they have no incentive whatsoever to work and that's a big problem so just that has stuck totally ruined their but work ethic in Cuba and the amount of food they're giving rations of food in Cuba and so the embargo I it doesn't seem to have had any effect this this is what it's been like for all these years so embargoes were always gotten around anyway and when we supposedly were I had an embargo on South Africa years ago before the apartheid was dismantled but my friend Jim Bennett went there on some government boondoggle I think the us information agency offered to send him on a trip around the world somewhere and so he looked at his way of getting some of his tax money back so he went and and he told me that you know all these countries that claim that they weren't shipping goods to South Africa were but they were just put the putting the goods on on ships with different flags with you know somebody from the next country next to South you know Rhodesia or some place would have their flag but it would be goods from the US or somewhere and so these barga embargo has never work that well anyway you can buy Cubans anywhere in the in the Caribbean if you're really dying to have Cuban cigars or Miami for that matter I think so you don't have to get a grip curry what's that oh yeah Key West yeah yeah I don't really like I don't like Cubans myself too harsh so so we know we have a Volvo driving cigar-smoking libertarian back here yeah the next book I've been thinking about for a long time it had been when you write a book it's a big commitment and I wanted to sell I want a commercial publisher to sell it for me and so the title title so far the title sounds a lot better than what the book that looks like was a book I'm ready yet but the revolution of 1913 because we've got we've got the Fed the income tax in a 17th amendment all in that one year and a 17th amendment allowed for the direct election of senators they used to be appointed by state legislatures and so that was a disastrous year and and I think it would be a good thing to explain there's a long debate but the American founders didn't have an income tax on purpose there was good reasons anyone taxes on income thomas jefferson in his first inaugural address defined what he thought good government and a part of it was that people should keep all of the fruit of their labor which none of it should be taxed away and so the whole then we had the first income tax during the civil war in the Lincoln administration then that was ended several years later and then Grover Cleveland when he was president later in this century there was an income tax debate we finally got in 1913 I think that a whole story of why there was opposition to the income tax and then what it is done you know the effects of the income tax since then the same with the Fed why was there a big debate from the very beginning of the Republic over central banking and there was a big victory in the same year the Fed was enacted and then say something about the disastrous effects of the fed since then in the same with the 17th amendment it destroyed it was sort of the last nail in the coffin of states rights the 17th amendment because at least when it was set when state legislatures which can be as corrupt as any government appointed senators at least they would worry about voting for laws that would be directly harmful to the people in their state but now they don't have to worry about that I I gave a speech at a big convention in California and it was a political thing and there were senators and congressmen from probably all 50 states out in California raising money for the reelection why because that's where the money is maybe that's what they're saying it was Silicon Valley and a lot of wealthy computer entrepreneurs that's so if you're from Massachusetts that's where you want to go raise your campaign it wasn't like that always and so uh so I think that's what I have in my next the revolution of 1913 too because I see that as a major breaking point in statism in America we couldn't have entered world war one without the Fed and income tax we couldn't finance the American involvement in World War one and Jim Powell has a new book coming out in the spring on Wilson and in how Wilson's American intervention into world war one led to World War two it makes the case that there wouldn't have been a World War two had it not been for Wilson's decision to he wanted to get us get Americans into world war the world war one and so and that couldn't happen without the Fed new contacts because it costs a lot of money to do that but the give working our 17th amendment get taken out again you think that would have any more a good effect on campaign finance but those a negative the negative campaign fine as long as uh as long as we since we no longer have any constitutional restraints on government politicians will find a way to take bribes to pass laws in return for the bribes of the 17 getting rid of this energy the amendment will help because there will be a price to pay for voting for legislation that directly harms the people in your state in a special interest legislation so they can be a little help but I'll see it as any magic you know if you want evidence that politicians in America no longer pay attention the Constitution the example I I've been given for a few years I needs updated that's kind of old was when Joycelyn elders was the US Surgeon General do you remember why Clinton fired her she wanted to start up a federal masturbation education project so and so so when I heard that I thought well the people of Washington think the Constitution allows for masturbation education funded by taxes there are no limits to what taxes can fund that's assisted every anything anybody dreams up in there feverish mind is a legitimate thing and so that's how they if that was even too much for Bill Clinton if you can believe that not that not that he wouldn't have enjoyed being one of the instructors but but politically it didn't fly he would lasse you that he lost too many votes in the south if he went through with that I think he would have wanted us in Massachusetts I'm sure how'd we get to that question for mom then i was i was a bit optimistic when cut when communism fell and it's still it's still alive and well in American universities but I mean Soviet Union and these country but because i thought you know if communism can end maybe we can get rid of our rotten system here in this country but then the reality of it was the neo-cons took over the government the big government conservatives totally took over the republican party you're probably the party took over all three branches of the government and they proclaim to be welfare status at home and imperialists abroad that's what they that's what they're about it and so they've gotten us into this crazy unnecessary war this spending is run amok you know we have 15 billion dollars to send Africa for AIDS things you know while with a 500 billion dollar deficit and all that so so i don't think so i think tough politics today is either the Democrats who are socialists or the Republicans who are socialists enough for the most part socialist and imperialists the Republicans have become worse than a Democrat that there are at least some Democrats who are are against this crazy war in Iraq and so so they're both in favor of an expanded welfare state but at least but the Democrat Party is now actually better than the Republicans as far as limiting government and the Republican Party always has been a party and big government of this myth that the Republicans were the party of small government it did be it all during the late 19th century it was the Democrats who are the party of free trade and limited government and then they were ruined by woodrow wilson never said then I Everest and then ruined even further by by Roosevelt at the same time Hoover Herbert Hoover you know he was a big government guy where has there been a limited government vote maybe Calvin Coolidge was it was okay didn't do much you know Calvin Coolidge and people like that but other than that there have been and Grover Cleveland was a Democrat and they've always been the party of corporatism mercantilism graft under the disguise of morality disguise by talk of morality so I don't see much hope for nothing these are long-term research projects hundreds of years no one should be funding that no that no I see no role whatsoever a private sector the private sector does a better job of funding the right projects I mentioned one of my talks there's a book by Antonio Martino called science funding about the politicization of R&D funding by the government anyway the reality even the amount of R&D spending by the government is a tiny fraction of private R&D spending it's something like two to three percent something like that so we don't even though it's a lot of money and absolute dollars @ % percentage-wise compared to all the R&D funding that goes on Bill Gates spends three to five billion a year on research and development in his own computer industry and so are defunding by the government is always going to be determined by politics and one of my talks yesterday I oppose question of if you were on a congressional panel and in charge of R&D funding for the computer industry in 1978 and here are your choices of who to fund IBM the company that's located in the district of the chairman of the House Ways and Means Committee or six dorky-looking hippies hanging out and Bill Gates's dad's garage who would you put your money behind if you're a politician you're gonna put IBM because it's safe you're going to win yourself political points by funding the company in the district of the chairman of the House Ways and Means Committee and there's no way on earth you would put money behind Microsoft it'd be a lunatic as a politician but venture capitalists did real venture capitalists did put their money behind Microsoft and not IBM and not the politically connected company but that's how government R&D words I mean well surely if the government spends enough money it has to produce some things there's always the opportunity cost so what's what's not seen is what would have been created had that money been spent elsewhere all those engineers all those people who were induced to get degrees in autumn in the aerospace engineering would have been doing something else had we not been sending rocket ships to the moon to collect rocks they would have been they would have been doing things that human beings actually benefited from you know beyond that I the Dean of the business school where I once thought once worked at NASA and his background was marketing and he told once told me that when he was there they did a study that showed that all of the increase in GDP during the 1960s was due to the NASA budget all of a hundred percent one hundred percent so you get a lot of phony or research out of these agencies that do this funding to that you know things like that but you know I'm a historical example would be people think that the government was necessary for the Transcontinental railroads to be built because at the time there was no Transcontinental Railroad in 1862 when they started building this but James J Hill did start around ten years later after the government what Rose were being built but he he would have started earlier had he not had government subsidized competition to contend with and the fact the fact that he started later rather than sooner so what you know why is it why is it necessarily good thing that we had a Transcontinental Railroad in 1870 instead of instead of 1875 you know and he ended up building a road much better much more efficient no corruption because it was private money and so yes you could say that these inventions that the government funds of whether it's the internet or whatever they probably would have been invented by the private sector a few years later but it's not I'll see why's this early good thing that they were invented sooner rather than later that the government had its hand in it with the internet it wasn't it was only once the private sector got a hold of it that it really became useful to people and then became what it is today once the government DARPA was the acronym for the Defense Department bureaucracy had it they do what bureaucracies do and just sort of did nothing with it then you know played with it play games with it apparently but every one happens to be involved in it will all say and without the government we and what we did it on the government hello the internet useful get something union about the government all we do pray not let some fielder or mean when put in that field and the Nazis can seem as though well sure if a government had taken over the shoe industry 200 years ago I guarantee you people today would be saying well we have to have the government make shoes who will make shoes if the government doesn't make shoes people get used to that and that's one of the values of economic education is that it gets you to think of opportunity costs the alternatives but if that's that's the way to think is you know the government has been doing it for a long time but what's the alternative and sometimes we don't know the alternatives because entrepreneurs will tell us what the alternatives are if they're allowed the freedom to develop the internet or the railroads or whatever in retrospect we see that the private building of railroads was it was a huge benefit much better than the government building of railroads i also have a chapter in his book called highways of capitalism where I look at the the arguments that were made that the free rider problem was so severe that you need a government to build roads and that was not true in the early days of America anyway because there were there were hundreds of private road building companies that build they call them Turnpike's it build roads everywhere the Mormons built private railroads in Utah there are private railroads built in Vermont before any government money was ever put into them so we have a historical record that this is a lot this is just not true that we don't need government money for these things but most people have been led to believe that we do the government always has to be involved in roads railroads all these things but if you dig a little bit you find this these are usually fairy tales any other brilliant declarations by anybody out there other than something like beer is half price at one of the local bars of pounds I don't know that I think this supposed to end at eight o'clock isn't it okay well then that will call that night




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