 One of the questions I think in social sciences where we've got the most data and actually have I believe a definitive answer regarding, and they're not a lot in social sciences where this is true of, is this question of capitalism and socialism. We've been running this experiment for 250 years. We've tried different degrees of capitalism, different degrees of socialism. We've tried them in different parts of the world with different groups of people and no matter where you try them, no matter whatever you try them, no matter who tries them, you get the same results. To the extent that you practice capitalism, and I'll define what I mean by capitalism in a minute, but to the extent that you practice capitalism, you get wealth creation, success, longer life, generally a happy and more prosperous people. And to the extent that you practice socialism, you get the exact opposite. Ultimately you get starvation, death, and destruction if you do it consistently enough. And there really no exceptions to this. It's truly stunning and amazing that there are really no exceptions to this because the reason it's stunning and amazing is that you would think it was the other way around. Because I'd say for the last hundred years, but certainly for the last few years, there's ever increasing interest in socialism and ever increasing dismissal of capitalism, even on the right. I don't think Donald Trump is anything close to being a capitalist. He wants tariffs and he wants to control where you start your plans and who you employ. He wants to control immigration, you know, as if workers are a threat. So capitalism is being dismissed even though it works. And socialism is being embraced even though he doesn't. And you go, what is going on? And to me that's the biggest mystery in our political, economic, social lives today. Why is this happening? So we're gonna try tonight, I will try, to give you an explanation of why I think it's happening. But let me first give you a little bit of evidence that the claim I just made is true. Because I don't expect you to take me on faith. I expect to be able to produce evidence to suggest that capitalism indeed succeeds. So let me ask you, I think I might have asked you two years ago the same question, how many people 250 years ago, before capitalism, for capitalism and socialism, before how many people 250 years ago were really, really extremely poor. Like extremely poor by the UN, United Nations definition is $3 a day or less. What percentage of the world population was under, was living on under $3 a day or less? 300 years ago, 250 years ago. Take a guess. Yeah. That's good. That's a good guess. 95%. That's about right. And by the way, when I ask you a question, don't raise your hand. Just yell it out. We're not in class. Right? So 95%. Almost all of humanity was poor. Poor beyond what we would recognize as poor. Because nobody in England lives on $3 a day or less. You'd have to go to places in Africa, you'd have to go to places in Asia to see that kind of poverty. Where there's no electricity, no running water, and you're barely surviving. But everybody was like that. 250 years ago. And then something miraculous happened. Because after 100,000 years, where basically nothing changed. It's pretty amazing when you think about it. You were born with the same stuff you died with. Your children were born with the same stuff they would die with. Nothing changed for generation and generation and generation. You know, we all expect our children to do better than us. We expect economic growth. But for 100,000 years, there was no economic growth, basically. Or very little. $3 a day or less. For 100,000 years. And it continued and continued and continued. And then suddenly it went through the roof. And when did it start going through the roof? It started going through the roof in the late 18th century, early 19th century. And it only started going through the roof in certain parts of the world. In those parts of the world, primarily the United States, the United Kingdom, parts of Europe, that adopted certain ideas. Ideas about individual freedom. Ideas about property rights. Ideas articulated quite effectively by John Locke, the great philosopher. And those countries that adopted these ideas, their economies just took off, even though Locke was not an economist. He was a philosopher. Free trade, specialization. But they're sensual characteristic of all of that. Free trade, specialization, private property, all of that basically sums up into one idea. And that is the idea of freedom. The idea of freedom. But of course, you can go in front of any audience in the world, no matter what the audience thinks, right? They could be left wing, right wing, middle, fascist, communist, whatever. And you ask the audience, do you believe in freedom? And every hand goes up. Because one of the clever tricks we always do is we never define our terms. We never actually say what we mean by the word. So people mean very different things by the term freedom. So what do we mean? What should we mean by the term freedom? What would John Locke think the term freedom actually meant? Somebody want to yell it out? Liberties of people. So you've done a trick they replaced freedom with the word liberty. What does that mean? What does it mean to be free? Yeah. So the ability to act as one chooses provided one doesn't inhibit on other people's ability to act. Yes, up to a point. But what the left, many leftists would say is if I'm hungry, if I have an empty stomach, my ability to act is limited, right? I can only, I can pursue food. I can't even think anymore because I'm so hungry. So unless you give people food, and this is by the way their justification, for welfare status, unless you give them food, they can't be free. But is that really what we mean by freedom? Certainly not what John Locke meant by freedom. What do we mean by freedom? And it's interesting because freedom is actually a negative concept. It doesn't tell us something positive, as you just articulated. It actually tells us something negative. Freedom is the absence of coercion. Freedom is the absence of force. Freedom is the absence of authority. And in the absence of, you are free to pursue your life, to pursue your values, as long as you don't infringe on the freedom, in other words, use coercion against somebody else. So freedom is the absence of coercion. And in many countries, not enough in my view, but in a few countries, starting in the late 18th century and into the 19th century, they allowed for some freedom. In the United States, if you were male and if you were white, you were about as free as any human being has ever been on planet Earth. But if you were black or if you were woman, not so much. But during that century of the 19th century, we were freed up. Suddenly, for the first time in human history, your life didn't belong to... Who did your life belong to before this revolution happens? Who did your life belong to? The state. The state in one form or another. The king, the tribe, the pope, the collective, somebody else. But part of this revolution, part of this idea of freedom as your life belongs to you, you get to pursue your life. And once that is established, that sense of individualism, coupled with the idea that we have the tool to take care of ourselves, which is reason, economies just took off. And wealth was created on a scale never before seen, not even close. Rome didn't come close to this. Greece didn't come close to this. The Ottoman Empire didn't come close to this. Never. And China didn't come close to this. It just took off. And since then, every country that has adopted some freedom in the realm primarily of economics, in other words leaving people free to produce what they want, to consume what they want, to charge whatever prices they want, to pay for labor what they want or what the market facilitates. Every place that has adopted this has gone like this. If you look at Asia, Asia for the most part stayed really, really, really poor for a long time, well into the 20th century. In China, in the 1960s, between 40 to 60 million people died of starvation. Some of the most fertile land in the world and they died of starvation. And then, they got a little bit of economic freedom. Sometime around, I tell you, 1978, Mao Zedong is dead and the economy takes off. And today, you've got a massive middle class in China. You've got hundreds of millions of people have come out of poverty. You've got a relative dynamic economy, which is struggling right now because they've moved away from those principles of freedom, but to the extent that they practice them, it goes like that. India struggled. Post-colonialism, post-independence, struggled to create any kind of economy. Stayed dirt poor for decades. And then in about 1992, they decided to liberalize the economy, to open up markets, to allow people again. The economic freedom that we, I think, for the most part take for granted. And the Indian economy went like this. And this happened in South Korea. Do you know South Korea, North Korea? You ever seen that satellite picture? South Korea is all lit up and North Korea is completely dark. There's no electricity in North Korea because they're so poor. It's real. But the reality is that after the Korean War, right after the Korean War, South Korea was actually poorer than North Korea. And yet today, it's hundreds if not thousands of times richer. All because they liberalized the economy a little bit. Taiwan, Hong Kong, Singapore, even places like Thailand and other places in Southeast Asia that did maybe less liberalizing. Vietnam now, which is supposedly communist, but is really liberalizing the economy and opening it up and allowing for free markets is taking off. What has been created, even if you go to Africa, places like Rwanda, Botswana have done the same thing, established private property, allowed people the freedom to make choices, and their economies for the first time in African history, doing really, really well. It works everywhere. And the flip side is socialism. Everywhere it tried. It fails. Everywhere. Take Sweden. Sweden's everybody's favorite example. I just came from Stockholm a few days ago. Sweden used to be, before 1870, the poorest country in Europe. They were really, really poor. Many of the Swedes emigrated to America as a consequence of they were starving. And then they adopted private property. And they adopted principles of free markets. And within 50 years, Sweden became, on a per capita GDP basis, the richest country in Europe. Because it was actually had the freest market in all of Europe. It was the most capitalist economy in Europe. And they went on around 1960. The Swedes decided that they were going to experiment with socialism. And they started taking all that wealth that they had accumulated and started redistributing it. And even nationalizing some of the industries and nationalizing certain parts of their economy. And what happened to the Swedish economy? They got into more and more and more debt. Their growth rate slowed and slowed and slowed. And by 1994, Sweden was on the verge of bankruptcy, just like Greece was recently. And in 1994, Sweden started reversing. They started undoing a lot of the socialism. They started reducing the amount of taxes. Reducing the amount of government spending. Actually cutting government spending. We don't know what that is in America. We think cutting government spending is reducing the rate of growth of government spending. But they literally cut government spending. They cut regulations. They privatized all the government run businesses. And today, Sweden's a pretty good economy. It's not the richest in Europe. But it's pretty good. Anybody know who the richest economy in Europe? Put aside Luxembourg, which is too small to count. Who's the richest economy in Europe in terms of per capita GDP? Germany? No. Germany's kind of middle of the road. On a per capita base. It's the biggest economy in Europe. But it's on a per capita basis, not that wealthy. Anybody know? Vatican City. Not really, because they don't have GDP. I don't think they have a GDP. I don't know what they produce exactly. Yeah, I think it's actually an insult to you guys. The richest country in Europe, and the first economy, or the second first economy in Europe, is actually an insult to you. So who would that be? Ireland. Ireland is richer than you guys. On a per capita GDP basis, significantly richer than you guys. Because what's Ireland done? They cut taxes. They flattened copper taxes at the lowest copper tax rate. I think I'm on western countries. A lot of countries have tried to match it. They deregulated. They freed up the economy, and they've done fantastically well. Again, same thing. You know when they built a wall between east and west Germany? I have to tell this to young people. It was not to prevent people from escaping capitalist west Germany to wonderful socialist east Germany. It was the other way around. Because in socialist east, life was miserable. It was poor. It was horrific. Socialism. Venezuela. We'll just do Venezuela quickly, because it's in the news. Venezuela used to be the richest country in Latin America on a per capita GDP basis. Richest country. And there was another country in Latin America called Chile. Chile was the poorest country in Latin America on a per capita GDP. This is, let's take it back to the 1970s. 1970s. Chile is the poorest. Venezuela is the richest. Venezuela also sits on the largest oil reserves in the world. They have more oil than Saudi Arabia. It's harder to get to because it's primarily in the ocean. But they have it. It's theirs. And between the 1970s to today, two interesting things have happened. Chile has become the richest country in Latin America. And Venezuela has become the poorest country in Latin America by far. And we're talking about a relatively poor region. And Venezuela is not poorer than the poorest. And what's the difference between the two countries? The fundamental difference between the two countries is that Chile adopted free market policies. The free market was organized, if you will, by what were called the Chicago boys. These were economist trains at the University of Chicago by people like Milton Friedman. And they did superbly well. They have become the richest country in Latin America. Venezuela voted in a committed socialist, Hugo Chavez. And Chavez nationalized farming. He nationalized the land. He gave it to collective farms. He nationalized the food industry, the whole supply chain of food. All of that is now owned by the state. And the consequence, nationalized the oil. Oil was already nationalized when he took over. But he nationalized all the supply chain across the oil industry. It used to be just the oil itself and the oil wells. He had nationalized everything. And what happened? Well, what happens whenever you do this? Whenever you implement socialism. Food, right? Stop growing. Magically. It turns out the collective farms don't work. It turns out that we all own property together. Nobody owns it. Nobody takes care of it. And nothing happens. The oil industry didn't innovate. There was no capital investment. And the oil, it's expensive to pump out. They aren't pumping any out. There's no revenue. And people are literally, I mean, it's hard, I think, to sit here, to imagine how bad things are in Venezuela. A country that used to be rich. Three million refugees. Two million in Colombia and in Brazil. Not rich countries that you want to escape to. And yet, people escaped Venezuela to go there. Literal starvation in the streets. Babies dying for lack of food. There are no pets in Caracas because they've eaten them. There are no zoo animals because they've eaten them. Because when you're desperate, you'll eat anything. And that's what's going on. They're desperate. Socialism. Because what socialism means, the two primary characteristics of socialism, one is massive redistribution of wealth from those who have the wealth to those who don't. But the second characteristic of socialism, and you can see this in Jeremy Corbyn's rhetoric, is the nationalization of the means of production. Or handing over the means of production to the workers, rather than from the capitalists or from the entrepreneurs or from the management class, as they call them. So two features of socialism. Redistribution and nationalization. And that's exactly what happened in Venezuela. Massive redistribution, nationalization, poverty. That's what happens every time socialists do it. It happened in Sweden. It happened everywhere. Capitalism, on the other hand, is characterized by 100% private property. Ideal capitalism, capitalism, pure capitalism. Everything would be privately owned. You'd have a government that did only one thing, and that is protect us. Protect our rights. Our right to life, liberty, property, and the pursuit of happiness. A government that is a police, a military, and a judiciary system, and that's it. That's capitalism. To the extent we move towards that direction, we have economic growth, poverty gets reduced, and we have success. To the extent that we go towards the path of socialism, we have the opposite. Over the last 30 years, we said 95% of people 250 years ago had income of below $3 a day. How many today? How many people today, as a percentage of the world population, live on less than $3 a day? 20%. Anybody else? What's that? 40? What's that? Five. Okay, five is the closest. Eight. Eight percent of the world population today lives on less than $3 a day. 30 years ago, 30 years ago, it was 30%. Today, it's 8%. Over the last 30 years, 1.1 billion, with a B, people have come out of extreme poverty. Not because of foreign aid, not because of redistribution of wealth. By the way, all those numbers are UN numbers. You can check them on the United Nations website. Not exactly. I'm not a fan of the United Nations, but in this case, they have the numbers. Not because of any of those things, because countries like India and China and other Asian countries and some African countries have adopted some, a little bit, of capitalism. 1.1 billion people we should be celebrating. We should be out in the streets. We should be committing ourselves to more capitalism because it works. And yet we're doing exactly the opposite. Your generation is probably, I don't know, feels, at least to me, like your generation, probably the most pessimistic. You think 40% of the world is good, poor. It's just not true. You think the world is going to end soon for a variety of different reasons? And your generation is enamored with socialism. It's probably not in the school, but out there in the world. So we're back to the question of why. Why is it? So let me ask you this question, and please just yell out the answer if you want. What is capitalism about? What are markets about? You go into the marketplace. Why are you doing it? What's the purpose? So suddenly on one side of it, it's to make a profit. So why did Steve Jobs build one of these iPhones to make a profit? He made a lot of money on this. He became a billionaire. Apple became the biggest company in the world based on market cap. So a big part of going into the marketplace as a producer, as a seller, is to make a profit. Is it only about profit that Steve Jobs get up every morning and say, I'm going to go make a profit today? Is that what got him excited? Maybe a little bit, but what else? Yeah, innovation, right? He loved doing this. Steve Jobs loved innovating and making beautiful things. He loved going out there every day and challenging himself and pushing himself and doing the best that he could do. But at the end of the day, who did Steve Jobs build this for? Really? I mean, he didn't ask me what I wanted. He didn't do any focus groups. Never did consumer surveys. And in the morning, did he wake up and say, I wonder what consumers want. I'll give them that today. Who did Steve Jobs build this for? For Steve Jobs. He loved doing this. Steve Jobs was motivated by Steve Jobs. He was motivated by making money, but primarily he was motivated by love. Love of producing beautiful things. Love of making amazing technology. Love of innovating. He did it for himself. He lived a pretty full, engaged, passionate life. On his death bed, he was talking about this stuff. Still giving advice to the engineers on what they should be doing, because he loved it. Now, I like to say, when I went and bought my first iPhone, it was 2008, and the economy in the U.S. was spiraling downwards. We're going into recession. And I went to buy the iPhone because I wanted to help stimulate the economy. Because that's why you guys go shopping, right? Because you care about your fellow man. You want to make sure they have jobs. You want to make sure that they have a job, and they keep working and everything like that. And the economy, we're told by Keynesian economics that consumption fuels the economy. So you want to consume because you care about the economy, right? Anybody shopped for that reason? It's always one. Why do you go shopping? Why did I buy the iPhone? Really? Yeah, it makes my life easier. In this case, I think it makes my life better. I love my iPhone. Costs a thousand bucks. How much do you think I get out of it? How much do you think this is worth to me if I paid a thousand bucks? What's that? No, if it was worth a thousand bucks, I wouldn't bother. I'd be indifferent. Yeah, a thousand bucks in my pocket and iPhone, I wouldn't care. But I cared. I ran to the store. I got one of the first ones. Why? Because I believe it's worth much more than a thousand bucks. Indeed, I think this is worth tens of thousands of dollars to me. I can face time with my kids when I'm traveling around the world. I can read emails at any time, anywhere, including up in an airplane. I can watch movies. I can access every piece of music ever composed, any time of day, at a marginal cost of zero. I love music. That to me is unbelievable. I mean, you guys take it for granted. I know it's nothing for you because you've been born with this. But this is an amazing piece of technology. I can access all the information that's ever been produced by humankind pretty much at a relatively low marginal cost through this. So I go into the marketplace to buy an iPhone because it's going to make my life better. You might go and buy a nice pair of shoes because you think those shoes will make your life better because you like the shoes because they make you feel good. But the point is, when we go into the marketplace, we're going there to do what? To pursue what? To pursue pleasure, to some extent. But it's not just pleasure. What else are we trying? What are we pursuing when we go into the marketplace? Broader than pleasure. Self-interest. Self-interest. Capitalism is about self-interest. It's about the pursuit of self-interest. Nobody in capitalism is thinking, oh, this will be good for society. It's not how we think when we engage in production and consumption. We're thinking about making money, making our lives better, doing stuff we love and enjoy. We're thinking about buying stuff that'll make our life better, make our family happy. We're all in the marketplace. And every marketplace is like that. If you go to certain parts of the world, we haggle because everybody wants the best deal because you want to make the best deal for you. You're not there for the guy who's selling you the stuff. You're there for yourself. Capitalism essentially is about self-interest. That's what makes it work. That's what makes it run. That's the beauty of it. And Adam Smith, in the wealth of nations and in theory of moral sentiments, recognizes this. He says, the baker doesn't bake the bread for you. The baker doesn't care about you. He bakes the bread because he's trying to put food on his family's table. He's trying to make a living. He's trying to make his life better. And everybody in a capitalist economy is trying to make their own life better. But what do we mean, Todd, about self-interest? What does everybody tell us about self-interest? I mean, I grew up in a good Jewish, you know, with a good Jewish mother. And my mother taught me since I was this big, this big. She said, think of others first. Think of yourself last. Virtue, morality, the good, the noble is about sacrificing. It's about thinking of others. It's about doing for others and expecting nothing in return. We build statues for saints. And saints have done what? They have suffered for others' benefit. Not for their own. We believe it's kind of almost in our DNA that self-interest is bad. When we call a kid in the playground, he's selfish. What do we mean? Does it mean he takes care of himself? No, what do we mean? He doesn't share, okay? But more than that. So he doesn't share as one, but that's kind of the mild form. When we call a kid selfish, what do we mean? What's that? He only cares about himself, which means he'll do what? What will he do? At the expense of others, always at the expense of others. He will lie, cheat, steal. He'll do whatever it takes to get his way. He doesn't care about anybody else except himself in that sense. And we associate behavior, affiliated with selfishness, with lying, cheating, stealing. That's what we think of selfish self-interest of behavior. So here we have a category. We have capitalism, and we think capitalism is about self-interest. We all know this. Everybody knows that capitalism about self-interest. Companies are there to make a profit. People are there to buy stuff that makes their lives better. So we know that that's about self-interest. And yet we also have this category of self-interest, the same category of self-interest. And that category says self-interested behavior is bad. It's not noble, it's not virtuous, it's not good, and it almost always leads to lying, stealing, and cheating. So really bad behavior that we can all agree is not good. Okay, so capitalism is self-interest, self-interest is bad, therefore capitalism is bad. Because capitalism encourages, rewards, promotes, self-interest. If self-interest is bad and that's what being rewarded and promoted, then capitalism must be bad. Now Adam Smith knows this. He understands this in the wealth of nations. So he has a little trick. I don't think anybody buys the trick, but he has a little trick. And he says, look, it's true that self-interest is bad. Mullily. But it turns out that economically, it's actually quite good. And if you add up the self-interest of all the people in a society and through the invisible hand, society is better off. It's true by some definitions of what means to be society is better off. So what he's saying is, morally, if you will, that if you add up all the little vices, all the baker caring about himself and the grocer caring about himself and the consumer caring about himself, if you add up all these vices together, you sum them up, you get a virtue. Now that's magic. And nobody believes it. Nobody believes it. We know deep down, most people know deep down, capitalism is immoral. It works. Yes, everybody knows it works. Even the socialist knows it works. Marx, Marx, Karl Marx, knew capitalism worked. He writes about it. He writes about it. It's the only thing that's ever raised people into into middle-class students. The only thing that's ever produced any will. But Marx also knows, knows and has conveyed it to all of us and that it's immoral because he says capitalism is about self-interest. And self-interest is bad. I'll give you an example. Steve Jobs, not Steve Jobs. I always get them confused. Bill Gates. Bill Gates used to be the richest man in the world. Who's the richest man in the world now? Jeff Bezos, at least until he gets his divorce. Then he's going to have less than half of what he used to have. Bill Gates. Bill Gates built a company called Microsoft. And Microsoft is the most successful company ever up until Apple. And how do you become successful? How do you become a billionaire? How does it happen? How do you become so successful? What do you have to do to make billions and billions and billions of dollars? Anybody know? What's that? Solve a problem everybody has? Yeah, in a sense. So you have to produce a product or service that everybody wants. I mean, I mean everybody. Hundreds of millions of people, maybe even billions. But they don't only want it. They're willing to pay for it more than what it costs you to produce. Now, why are they willing to do that? Why are you willing to pay somebody something more than they could produce it for? Because you believe it's worth to you more than the cost. Same reason I paid $1,000 for my iPhone. And you're able to do this over and over and over again, a sense of the buying product over and over and over again every year, every two years, every three years. That's exactly what Microsoft did. They created software that changed the world. I would argue, I think it's obvious. Changed the world for the better. People bought it over and over and over again because they believed that it would make their life better every time they bought it. And they're willing to pay a lot of money because it was making their life significantly better. So Microsoft, via Steve Jobs, by Bogues, made the world dramatically better. Dramatically. I mean, the computer revolution is so radical. It's hard to imagine how much better we are. And he touched. He touched. Every human being on the planet, I believe, is better off because of Bill Gates. Because even people who are getting aid in Africa, who are too poor to use a computer, are benefiting from the fact that the logistics to get them to aid is run by a computer and they're more efficient and they can get more aid for the same dollars. So Bill Gates has made the world a better place. He's bought more people out of poverty. He's helped the world in more ways through Microsoft than probably anybody. So how much moral credit did he get for all of that help that he gave when he was at Microsoft? How much moral credit? Building statues for him? Paintings and museums? Naming streets after him? Yes, no. We like him morally. Not just businessmen. Businessmen we all admire him. But as a moral person? And the answer is no. He gets no moral credit. Zero. Actually a little negative. We actually dislike him a little bit. Why? Yeah, because while he was helping the world, while he made the world a better place, he was ultimately doing it in his own self-interest. And what's the expression of the fact that he was doing it in his own self-interest? He became the richest man in the world. Now it's interesting. I use Bill Gates because Bill Gates then went through kind of a transformation. He left Microsoft. And he started a foundation. And he put all his money into the foundation. And he started giving the money away through charity. That's a good charity. He probably does it very well. And he probably changed the lives of maybe tens of thousands of people. But not billions. Not hundreds of millions. And yet now, he's a good guy. Now we love Bill Gates. Now morally, he's cool. He's changing the world less. But now he's not making anything. He's not benefiting from it. He's not profiting from the fact that he's helping the world. That's an interesting transformation. You've got to build, create something, change the world. And if you make a profit, you don't count morally. But give it away, all the wealth that you created. Give it away. And ask nothing in return. Now you're morally good. Something's wrong there. That can't be right. And if the standard is helping other people, which we're told is the standard of virtue, then shouldn't he be a saint because of Microsoft? Didn't he help more people there? But it turns out that the standard is not just helping other people. It's what you get. You know, Kant said, Emmanuel Kant, the philosopher said, that you must help other people. And if in helping the other, you even think about it and make me feel good to help other people. It's not moral anymore. Because you get a benefit from it. You're motivated by the benefit. Now I think this is perverse. I think there's something wrong with the moral code we hold. I mean, to put it bluntly, why should I sacrifice? Why should I live for others? Why is my life not as important as anybody else's life? I've got one life, at least, I believe, as you were told, I am an atheist. So I believe this is it. You've got one life. And why not make the most of it? Why not live the best life that you can live? Right here on earth. Making the most of the time you're here. Achieving the best things in life as a human being. Now what would that require? What would it require to live a good life? To live a really full life, a passionate life, a life that encompasses all it means to be human? You think that involves to be really what I consider really self-interested? You think that involves lying, cheating, stealing? Anybody know Bernie Madoff? Bernie Madoff? Yeah. I need to update my examples. I'm getting old. Bernie Madoff ran the biggest pyramid scheme in history. He stole something like $60 billion from his investors. You know what a pyramid scheme is? You get money and you promise a very high return, but you can't generate it, so you get money from these people and give it to those people. And now you have to pay these people back, so you have to get a bigger group over here to give you money and give it to those people. And constantly you're paying out the high return, but you're doing it by getting money from other people. Somebody might have created this massive pyramid scheme. He lied to everybody. Most of the people who gave him money were friends of his. He was caught ultimately. Not by the government. They're not that competent. He was caught by a son who turned him in. He's in jail today. He has a real, he's a guy who made, who had $60 billion. He was rich. He had anything he wanted. And yet today in prison, he says, I'm happy in prison than I was before he was caught. And I believe him because lying, cheating, stealing does not lead to a good life. It does the opposite. It destroys goodness. I mean, lying is destructive to who you are and what you are, to your capacity to really live. It's faking. What's the way in which you're being survived? What is the tool that makes all the values around us here possible? From the technology we're using, I guess to videotape this, to the chairs you're sitting on, to the beautiful building we have, everything, everything you have, the clothes you wear. Where does that come from? What's that? Trust? Yeah, trust is an aspect of it. But how did, anybody here have the gene for hunting? Even in Britain, nobody has a gene for hunting. How do we hunt? When we were hunter-gatherers, how do we get meat if we don't have the gene for hunting? What's that? We learned it from whom? And where do they know it from? And where do they know it from? Experience. Experience. From where? How do we get an iPhone from experience? Well, somebody had to invent the tools of hunting. Somebody had to invent a bow and arrow. Somebody had to invent the sphere. Somebody had to invent traps. Somebody had to invent strategy, hunting strategies. Somebody had to use his mind to figure stuff out and solve a problem. Probably killed them. We don't like people who shake our world up too much. But at the end of the day, every step in human progress is a consequence of somebody thinking, creating, inventing, innovating, producing. We don't know how to do agriculture until somebody discovers how to do agriculture. We don't know how to hunt until somebody discovers how to hunt. We don't know how to build buildings until somebody figures it out and does it, and teaches us. And yes, then we learn. But all of that is a product of human reason. Our mind is our most important and most valuable tool for surviving as a species. Because physically, we're pathetic. Look around the room. It's supposed to be a joke. It didn't work. We're weak. We're slow. We have no fangs. We have no claws. You try running down a bison and biting into it. You can't do it. So we have to use our minds. Our minds are our most valuable tool. And to use our minds, we have to accept facts of reality. We have to accept, you know, there's a term in computers, garbage in, garbage out. You put into your mind garbage, you get garbage out. So we need to accept facts of reality. We need to accept truth. And lying pollutes ability to think. Lying is incredibly destructive as is stealing, as is cheating, as is all of these activities. That's not its self-interest. Self-interest is about using your mind to pursue the best life you can live, and being the best human being that you can become. Now, I believe in a moral theory that says that that is the good. Going back, it goes back to Aristotle. Aristotle believed that morality, that ethics, was the study of those virtues that made us as human beings the best that we could be. Noble, great. But it wasn't about what we did with others. That was just one aspect of morality. It wasn't the essence of morality. The essence of morality was about what we could do with ourselves, what we made of our own lives, what choices we made to make our life the best that it could be. Now, I think only a morality like that, started with Aristotle, Ein Rand, maybe a most important contribution, is in that field. It's only a morality like that. They can justify capitalism. Because to me, Bill Gates is a hero. I mean, I would build a statue to him, named Streets After Him. Much rather do that than do it after politicians, who I don't produce, build anything. Whereas this guy actually changed the world. He applied himself. He applied his mind to a problem, solved it over and over again, lived a full, complete life, embraced and loved what he was doing. That's what life should be about. That's what capitalism is about. But as long as we look down on self-interest, as long as we look down in creation, production, and the passion and love of work, as long as we think those are ignoble ideas, and we think the nobility is all about sacrifice and giving and charity, then capitalism is not the system for us. So to me, if you want capitalism, maybe you don't, but those of us who want capitalism, which really required to attain capitalism, is not so much teaching more economics. We know the economics. We've got great economists that have solved, pretty much given an answer to every objection possible to capitalism. Friedman and Hayek and Mises and many, many of them. It's about changing our approach to morality. It's about changing our approach to ethics. It's about viewing self-interest as the essentially moral thing in life. Self-interest properly understood. Self-interest is rational and long-term. What really has to happen in the world around us is not an economic political revolution, but a moral revolution. Thank you all. I'll take questions, and if there's a strong young man who can do this, I appreciate it. Open. On anything. I think it's a fallacy to think of economic growth as the only source of life standard. I think of life standards. Above a certain threshold in developed countries, the extra GDP that you get doesn't actually affect life standard as much. By following this blind utilitarian logic, you just tend to disregard a lot of societal issues that arise, such as the massive longevity gradients in developed countries like the US, where the low end lives significantly shorter than the higher end. I just can't conceive of a moral system which glorifies solely the individual and encourages the disregard of other people. I think that's fundamentally against ethics in general. Good. So you said a lot there. I'm not a utilitarian, so let's get that clear. I don't believe in sacrificing my minority. For a majority, I believe the only standard is the individual, so I'm not into utilitarian math. I think GDP, growth in GDP has enormous benefits in terms of standard of living, including primarily for the poor, more than anybody else. It's true that an extra billion dollars of Bill Gates or any of these billionaires makes no difference to his standard of living, zero. Because he's not spending it. What's he doing with the billions of dollars? Investing it, saving it, but he's not spending it. So there's no impact on his standard of living. But every little increment of added income, every little increment of better services, every little increment of cheaper products, which is a big way in which capitalism manifests itself with regards to a higher standard of living, has a huge impact on somebody who's poor, who somebody who doesn't have a lot, because every little bit matters. So as GDP grows, the benefit most of the benefit accrues to the poorest people, even if you can't measure it in terms of income. And the smallest benefit accrues in terms of standard of living, not in terms of money. Money, they get most of money, the rich. But in terms of standard of living, because the extra billion or the extra million doesn't make any difference at the top. But it makes a huge difference at the bottom. And we don't know how to measure this as economists. I mean, this is one of the sad things about economics, but it's part of the nature of economics. So you can't measure how valuable this is to me. All an economist can tell you is this is worth more than a thousand dollars to me. But the fact that this has improved my life by tens of thousands of dollars, there's no measure of that. I'll give an example with regard to inequality, right? So everybody read Harry Potter? He hasn't read Harry Potter. Harry Potter's great, so you should all read Harry Potter. Harry Potter's fine. Anyway, I figured that I spent about $3,000 on Harry Potter over the years. I had to buy every book twice for both my sons who were about Harry Potter's age. And as the books came out, then I had to buy an audio copy for myself. And then there's just all the other stuff that's related to Harry Potter that you buy. So I became, over this period, according to any economist who actually measures this stuff, I became poorer by $3,000. Literally $3,000 left my bank account and went directly, almost directly, into whose bank account? What's that? JK Wallace, bank account. She became a billionaire. I mean, this is horrible. Inequality went up. I got poorer and she got richer. But did I get poorer? Why did I buy? Why did I spend $3,000 on Harry Potter? Because it made my life richer, better, more fun, spiritually more. I got huge spiritual values from reading Harry Potter, right? And I happily gave up $3,000 to get those spiritual values. And she got rich. Great. Good for her. I didn't get poorer. It's not a zero-sum game in life. It's an ever-increasing game. So, no, I don't think you should minimize GDP growth indeed. If you want to help poor people, the one thing that most helps poor people is rapidly increasing GDPs. As I said before, 1.1 billion people have come out of poverty over the last 30 years. That's not something to sneeze about. That's not trivial. That's major. 1.1 billion souls now are not starving. And how? Because GDP went to 12, 15 percent in places like India and China. That's great. And in developing countries, it's still true that the poor people and the middle-class people and the rich people, and we could all be living better. Why not live better? I'm always for better than worse. And what they've got to ethics, most of the world agrees with you, right? Most of the world believes that thinking about yourself and a morality of self-interest is not moral. It's not morality. This is where we fundamentally disagree. I think that's the essence of morality. Iron Man wrote a book which has a shocking title, but I encourage you to read it because even if you disagree with it, it'll challenge you. It'll cause you to think and defend your own moral stand. And the book is called The Virtue of Selfishness. But it's not the selfishness of doing whatever you feel like doing. It's not the selfishness of lying, cheating, stealing. It's not the selfishness of getting drunk and snorting cocaine. It's the selfishness of living a full, complete, virtuous whole life as a human being by the application of your reason. So again, you don't have to agree with it, but a little bit of challenge is always good. Again, following the Aristotle's tradition. So Aristotle thought that kind of life was virtuous. He was pretty smart. Okay, somewhere here. If you're against state control, et cetera, why what do you think would happen to the minimum wage if the capitalist was selfish? Because obviously you could argue that it would be in their interest to drive them up for skilled labor. But if every single business owner would drive them down together, wouldn't that be in all of their self-interest? What would happen to the minimum wage, or what would happen to the lowest wages, let's say, under capitalism? I don't know. I mean, I suspect that if you converted the world right now to a capitalist economy, I think the bottom wages would rise dramatically. Because the only thing that drives wages is not what the employer wants to pay you. And you'll discover this when you go out into a job. The employer can want to pay you the lowest he can get away with. But if you're worth more than that, what will you do? Better learn this quick, guys. You won't take the job and what will you do? Because you have to work. You'll get a different job. You'll go convince this competitor that you're worth $1 extra than what the previous person had. So in a competitive market, which is what essentially capitalism is, the employers, we're talking about every company in the UK, don't get together and decide what they're minimum wages. They compete. And they compete for the best workers. So if you're actually, if you're getting paid $7 an hour, and you can actually produce $15 an hour, I'm hiring you for $13. Because I can make money off of you. Nobody's ever going to hire you unless they can make money off of you. Just nobody's going to pay you more than you're worth. And you're worth, in the economy, your worth is measured by how much you produce. If you produce 10, nobody's going to pay you more than 10, which is why a minimum wage, control, what's the minimum wage in the UK, seven pounds, 40, something like that? What if you are, what's that? 783, thank you, 783. What if your kid grew up in a lousy family, very poor, you got a lousy education, and you can't produce at 783. You can produce at five. What you actually produce is five pounds an hour. Nobody will ever employ you, ever, because then I'm going to lose money on you. Employers don't do that. So basically what a minimum wage does, a minimum wage by government does, is take the poorest of the poor and tells them you will never have a job. And that's exactly what happens. I know, I don't know much about the UK in terms of these things, but in the United States, if you're in a city youth and you haven't finished high school, and you can't produce at seven bucks 25, and now they're raising it to $15 an hour, you will never have a job. You're institutionalized into poverty for the rest of your life. Why not let the kid get a job at five dollars an hour, five pounds an hour, and learn a little bit skills and become more productive, and then get to seven, and then learn a little bit more skills and then get to nine, and one day he could be running the joints. But if you don't give him that first opportunity to get that first wage, then he's never going to have an opportunity to rise and be successful in life. But it makes us feel good. We're middle class. We feel good. We've done our bit today. We raised the minimum wage. People are making more money today. Oh, we can all go to bed early and feel good about ourselves. We did our moral duty. No, I can't think of a law which is more insidious, more evil, more destructive. And I get angry about this because I care about that kid in the inner cities. Then the minimum wage law, which basically prices out a whole group of people that we never think about, that we don't want to know about, that we send them a welfare check and we turn our backs on them because we don't really care what happens to them. But if you care about individuals, I care about individuals, not groups, and I care about that kid, then I say give them a job for two dollars an hour. It's better than nothing. And let them learn and let them advance and let them get better. So if I were in charge, the first thing I would eliminate, first thing would be the minimum wage law. Okay, so sticking with the theme of like government intervention in the market, it could arise that there could be failures within the economy. So for instance, if you take as an example, smoking, people who like smoke could have an effect on the NHS, which would cost the government, and that sort of, just as an example, money. But would you, seeing as you're advocating a completely free market, be alright with people suffering the consequences on their health of smoking if there wasn't any way for a government to intervene? Yeah, so this is a problem, right? And this is one of those topics I can't talk about because it's, in the UK it's like religion, right? You know, the NHS. One of the reasons, one of the reasons I despise socialized medicine, and the NHS in particular, is because it creates those kind of trade-offs. If I'm paying into the system that gives you health care, then I want you to be healthy. And now I have to care about your life, I have to care whether you smoke, I have to care whether you exercise, I have to set your diet. You think the government's not going to start telling us we shouldn't eat so much meat, we shouldn't do this, finding us if they catch us eating some bacon in the morning? Because the NHS, the NHS will go bankrupt because you're getting obese or you're getting high blood pressure or anything. The beauty of a private health care system is that I get to pay for my expenses. And if I live a healthy lifestyle, my insurance rates will be very, very low. And if you choose to smoke, and if you teach to eat badly, and if you choose not to exercise, your insurance rates would be very, very high. In other words, I'm paying for my risk, you're paying for your risk, I don't now have to intervene in your life. You want to ruin your life by smoking? Smoke? I can think of even worse things that I allow you to do in my free market. Your life is yours. You don't, you want to ruin it? I certainly don't encourage it, I teach against it, but it's your choices. Personal responsibility. In a real sense, the NHS destroys personal responsibilities. It makes us all our brother's keeper. I'm not my brother's keeper. Not my real brother and not my pretend brothers. It's hard enough to keep myself. It's hard enough to take care of yourself and figure out what's good for you. It's hard enough to avoid smoking yourself. Never mind worry about other people smoking. But now the government, the government has this incentive. We have to keep people healthy. So we have to intervene in all their day-to-day activities and all their lives. I think that's authoritarianism and that's very dangerous and that's a product of socialized medicine. You've spoken very damningly about nationalization of services so far. I wondered if you could make a brief exception to geographical monopolies that are particularly lazy and inefficient. For example, the UK train service whereby there is only one option per railway line and they have basically got themselves into a position where quite frankly they can be late, inefficient, expensive and there's not really very accountable. Yeah, I mean, I wish I knew a lot more about the UK train system. I don't know that much and about the privatization of it but let me just say I'm not going to make any exceptions. I'm not going to make any exceptions. Even if the train system today is bad, I don't know how many, I mean maybe some of your teachers were alive when it was run by the government in the 1970s but it was much worse. Not a little bit worse. It was much worse. And the fact is that the train system was not truly privatized. It was sold to private enterprise but it is heavily, heavily regulated and controlled. And much of the land that you would need in order to actually compete with the train system or build a new train system or build a high-speed rail is controlled by government and government tells you what you can and cannot do and how to do it. So in a free market, if the train system was really that bad, somebody would compete them out of existence and competition is possible in almost any realm of human endeavor. So no, I don't believe there is such a thing as natural monopolies. I think there are no monopolies in a free market. There's always competition. There's always the potential of competition. There are always substitute products. There's always price pressure. There's no example that I know of in history. In a truly free market, or as close to free market as we've come historically, where a monopolist actually behaves like what you're taught, a monopolist does. What does a monopolist do? Raise price as low as quality. But that doesn't happen when you leave markets free. Now the rail system again is not free. It's heavily controlled and regulated by, I don't know, the transportation ministry or whoever the minister is and the department that it is. In the United States, railroads were the first things to be regulated in the 19th century. So every example I know of what seems like a monopoly, again, in a free market. Prices always come down. Quality always goes up. Look at Standard Oil in the 1870s. Look at Alcoa Steel. Look at IBM. Look at Monopoly after Monopoly after Monopoly that actually improved our lives, lowered prices, improved quality because they knew there was competition. It's only when the government shields them through regulations from competition or through the control of land in the sense of railroads do you get the bad quality and the bad service and the bad pricing and it's still better than it was run by the government. Well, Yaron, thank you so much for answering those questions so expertly. I know you're all very tired boys and I sense that, but you've done very well indeed. I think Yaron is impressed by the questions as he always is at Radley. And also Yaron is very tired as well because he's been on tour. Are you going back to the States, sorry, back to Puerto Rico soon or not? I go, I soon. I go to Prague tomorrow. Oh, that's right. And then I fly to Puerto Rico on Sunday. So maybe I'll go to the beach on Monday. Sound good? Well, we wish you well. And again, a final comment. I don't care if you agree or not. I'm certainly not, we're not selling Aaron Yaron's ideas at all, but you have been able to go through the spectrum of ideas here about economic ownership and value and so on. And these things are going to be important for you for the rest of your lives. And so start thinking about them now. We could, for example, in Britain have a general election over the next few months where these issues will be absolutely at the center of the debates. They certainly are in the United States at the moment. And they're going to be in the European elections, for example, in May, where we're going to see all sorts of interesting things happen there. I can almost guarantee it. So Yaron, thank you so much for coming. A great pleasure.