 We do have one there's one written question left that I'll start with it was and I'm going to address it to Lucas first And it's the criticism the question says Ask how do we respond to a very a criticism that you often hear directed against Austrian business cycle theory? It's the criticism that the theory assumes that entrepreneurs make systematic errors You know sort of in this Consistently in the same direction that if entrepreneurs know the boom is artificial Why do they invest anyway? Why can't we avoid the business cycle? If entrepreneurs are rational then why would they Malinvest when the interest rate is artificially lowered and Lucas addressed this in one of those lectures and then maybe some others can comment sure sure Yeah, I'll say that there are basically two answers right to this question I one would be that when we look at the business cycle in the Austrian view, right? It's all Initiated by this decrease in interest rates from the credit expansion It's so one explanation would be that normally Interest rates are a pretty good signal that entrepreneurs can trust rice They develop this habit of trusting this particular signal when it gets pushed down artificially They don't know they should stop trusting it Right and so they just react to it like they normally would Despite the fact this is an unsustainable decrease. So that's one possibility. I actually don't like that explanation that well For various reasons and I think that really doesn't answer Really the objection right the objection is that entrepreneurs should be really good at foresight in the Austrian view So they should actually be able to figure out that this is an artificially low interest rate That is going to correct and they should account for this and that's normally the way this is presented by people like Brian Kaplan So I would add in a different approach And suggest that there's a heterogeneity in entrepreneurs And so some entrepreneurs are really really good at foresight These are the people that typically would control resources in the economy because they can earn profits on a regular basis Other people are generally lousy entrepreneurs They would lose money and therefore end up losing control of resources in the economy I said normally that's what would happen So entrepreneurs that are actually entrepreneurs over long periods of time are really good at what they do But then what happens it when we start an Austrian business cycle, right? Those entrepreneurs that are really good at what they do See what's happening? Realize that they don't want to be part of the bust right so they start backing out especially as we get toward the Right, so the really good entrepreneurs start backing out They exercise less control over resources This then frees up resources for those people that are normally not very good entrepreneurs to then take control of the economy And so the reason that we see lots of errors isn't that our entrepreneurs who are brilliant start becoming idiots It's that the people that are idiots that are normally not allowed to be entrepreneurs are allowed to be entrepreneurs Once you get to a certain phase in the business cycle One thing also Austrian business cycle theory is a theory trying to explain the business cycles that occur if Investors didn't Use the extra money available through the Expansion of bank credit then there wouldn't be a cycle that isn't a problem with Austrian business cycle theory That would just be saying there wasn't a cycle that was a point incidentally that the Mises may there's a Ludwig Lachmann raised Similar objection and Mises had an article in economic in 1943 called elastic expectations in the trade cycle or gave this response You know in the standard way of expositioning the Business cycle with on the chalkboard and so on You typically start out with the Fed lowers interest rates And this creates an artificial boom and then the the naysayers look at it and say well Why don't all these dodo heads entrepreneurs? Take the bait. Why don't they figure out? You know as time goes by this doesn't work but historically It turns out that and this is true even with the episode of the Great Depression That you don't have any as dramatic lowering of interest rates what you have is technological Innovations that put upward pressure on interest rates, but the Fed Keep takes the upward pressure off by pumping in new money. So in other words, they're lowering it Relative to what would it would have been Had they let the interest rate rise, okay? And then you could hardly expect Entrepreneurs to catch on to this They're not gonna catch that they would have to be better economists than most economists Okay, there's only Austrians that are privy to that and then in in real time Even the Austrians aren't likely to pick that up. It's going to be Looking at a historical record after the fact to see what what happened. I've heard several expositions where somebody who is Suspect the Austrian theory is wrong almost make a parody out of it You know that interest rate lowers and nobody understands what it means, you know and so on and that's that's just not Not the right way to look at it. And by the way, I think I might have said this in an earlier lecture, but In some give and take with Milton Friedman on the issue of business cycles He sent one letter that had attached to it A plot of movements of the interest rate during the boom and his whole point was see it didn't change much You know so that so so much for the Austrian theory in the business cycle when when the issue really is that it would have changed it would have risen as As Technological developments cause entrepreneurs to want to borrow more money to take advantage of those developments And for that reason we got a business cycle I want to add Something about behavioral economics, which I've been convinced as time has gone on it's important when it's Used within the framework of sound theory. So there's an economist Brendan Brown who's written on number of books that are very Austrian oriented and he points out that in every cyclical Upturn there is a very convincing story that is told that entrepreneurs buy into And first of all, they don't know Austrian economics, right? They don't have a model of the economy in which the Austrian theory applies in their heads And so in the 1990s after 1995 that speculative story Which was accepted and then and disseminated by Greenspan was that we're living in a new economy Where productivity is increasing tremendously and entrepreneurs bought into this? I mean, they're they're they're not economists And in many economists bought into this and then later on with with the tech bubble in 1998 1999 There was another speculative story to support Investing in companies that hadn't returned any profits whatsoever for for the last two or three years and then in the mid 2000s before the two the During the run-up of housing prices. There was a speculative story about the insatiable appetite of Chinese and others for for US capital and that Saving glut was going to keep keep the boom going and entrepreneurs that they read the papers that they read the Media and they buy into those things and and those are things that can cause the boom to be longer or shorter And I think that's important to look at this stuff. There's a very good book by Brendan Brown called The global curse of the Federal Reserve in which he shows that the Fed set off these two booms in the 90s and 2000s and What speculative stories were told he has a number of them keep the boom going Mises alludes to this very point in the 1943 article too. He says something like you know The reason entrepreneurs are not better than they are at anticipating You know the boom is because they've been taught Keynesian economics I mean because Keynesianism in 1943 is this is what they have been taught This is what they have learned or or non Austrian business cycle theory. So it's like entrepreneurs The criticism that the questioner raises assumes that the behavior of entrepreneurs is independent of Education independent of what theories are popular independent of the culture and so on I mean if we believe in this criticism that should simply make us want to double our efforts to teach sound economic theory So other other questions or comments Jonathan Joe do you want to start with that? Well, I think the Hayek to this there was a Economist Terrence Hutchison who came up with that see what had happened was Hayek of course started as an Austrian economist under the influence of Mises and Hutchison claim it see in the 1940s when Hayek was a professor at the London School of Economics at Karl Popper I think after World War two became professor there also and he and Hayek were friends So I think Hutchison claimed that Hayek had rather converted to poppers philosophy, which is very different from praxeology So that's the Hayek to Hayek three Some people say that there I think there was a Cambridge writer Fleetwood who said that Hayek had abandoned methodological individualism and he was more interested in the complex structures of organizations I tend to be rather skeptical of these various changes I think Hayek Maintained at least his version of Austrianism throughout and I can tell you when I was in his class in 69 he certainly didn't abandon methodological individualism that was fairly late in his career If you Jeremy Shirmur has written on that also he would be a good one to read on that David is your skepticism. Is that Gordon one or Gordon two? Well, I see you've got my number, but I'm not sure which one it is I want to add something to that. I mean, I think many of us would think that the Hutchison the Hutchison distinction is a little bit superficial anyway that as relates to what David said Joe has written some good pieces on on Hayek Gita Holtzman has done a very nice exposition of this point in his Mises biography that you know Hayek from the from his earliest days was not completely a Misesian as we would as most of us are that Hayek and Hayek's contemporaries were highly influenced by Schumpeter More influenced by Schumpeter than by Mises at least kind of methodologically and I mean there's a sense in which you can call the early Hayek's work sort of praxeological, but It's still very Volrasian And what isn't that your term Joe that Hayek is a Volrasian verbal general equilibrium. Yeah Yeah, the visor yeah from the very beginning he was a student of visor whereas Mises was a student of Bombavark and Hayek was already Trained economists when he came to Mises he said that that when he began to work for Mises He was already a trained economist for the PhD heavily influenced by this great man Frederick visor who was a sort of verbal general equilibrium economist and no doubt Hayek was also influenced by Mises and But the seeds of Hayek to in my view were within Hayek In you know from the very beginning and then they blossomed when he came to London School of Economics There he urged bright young British student John Hicks and One other student It was Abel Lerner to read Pareto who was a mathematical general equilibrium theorist and That was very unfortunate because it led to Revolution and economic theory that by 1939 had completely submerged the mangarian tradition of Karl Manger and I think went further than Hayek wanted it really to go Because I think you know later interview he said something like well if you like that kind of thing Paul Samuelson has you know is a culmination of all this and Samuelson's book on foundations was completely mathematical so Hayek was trying to isolate the part of economics he called the Theory of choice Pure logic of choice so he thought that there was he wasn't a complete general equilibrium theorist But he thought that there was some general equilibrium out there at the market economy would always be moving towards and the way that it was Moved towards that he came up with these Articles on knowledge use of knowledge in society they say for some very interesting things But he's trying to break out of the Valerian box and show that what we're really not an equilibrium But but equilibrium does sort of guide us in some sense. So he's very complicated his thought and I think There is a Hayek one and two but but the Hayek one came roaring back in the 1970s after he won the Nobel Prize He started attacking Keynesianism and he was The tax were very very provocative and he had stopped doing that in the 1940s Okay Jonathan does that help? But you also asked I think I did Mises expressed any view on the Yeah, I'm not recalling that Rothbard ever said anything about the Hayek one two or possibly three he was Tended to be quite critical of Hayek's views especially some of his later work. He tended to view Hayek as Rather any rationalist that Joe is written on this It's all Yeah There was a footnote in one of Hayek's articles. I can't remember if it was a 37 article economics and knowledge It may have been that article Which means is like very much And and Hayek later on in his autobiography or his sort of memoirs Said something like well Mises didn't realize that What I was saying in that footnote was really Attacking his position. So Murray was not very happy with that So he made me made some remarks about you know Hayek not being fully ingenuous When he you know wrote that footnote Yes, please Is Used rationality it's in the street Oh the question was is in praxeology. Is it assuming that people are Motivate attack by rationality or by desires Praxeology have anything to say on that question. Well the way Mises used the concept of Rationality it's extremely easy to satisfy. He thought all action is rational because the actor has a Goal and he's using means that he thinks is Appropriate appropriate to attain that and even if they aren't or not I don't think there'd be any contrast with desires now on one way to Understand action, which is popular philosophy. I think Mises accepted that except to the standard to Explain an action. You have to have the Actors beliefs plus his desire. So all action would involve Zyers that wouldn't be any contrast between reason and desire there Yeah Yeah, please hear and then what my question is also on praxeology I don't understand why it has to be broken down to a single individual like each individual has conflicting desires and things They have to weigh and so would a government for example, and I thought the idea was To see what actions are taken so I used to like a game theory where you can compare people or governments or something So I think I've missed some theoretical part of that or some kind of curious I'm not saying your question you say is Why you would have to explain everything just by reference that one actor Well, it's always individuals who are acting but it isn't that Everything that you're explaining is in terms of what one individual does. I mean you can have Is it happen that involve all sorts of different individuality in any Sale, there is a buyer in a seller that's too individual. I mean is your question you think that praxeology would just be one individual Well, I mean they would you would certainly have you could certainly have Governments doing things but that would have that would have to be cashed out in terms of Individuals who are active, but you would certainly have it certainly have cases where you have to bring the institution into the explanation That's quite there may be particular. I mean, there may be particular problems where the level of or you don't need What level of reductionism you need may sort of depend on the problem So just for shorthand, you know, we say all the time oh the Fed lowered the money supply I mean technically speaking that would be a violation of methodological individualism if we If we said well the Fed is a single actor no the Fed doesn't act But that's just shorthand for saying well the open market committee met and they're this number of members and this is how they vote Then they gave it voted then they gave instructions to other Fed employees who clicked certain buttons on their computer and so forth I mean, but but you know sort of between friends We know that's what we mean when we say the Fed Lowered the interest rate and it doesn't really it's not harmful to our explanation, but is that what you mean or But as I said Yeah, philosophic. I mean in one sense, it's really not a full explanation. It just We all understand what we mean by that that shorthand and and exactly If if Roger Garrison is giving his business like a lecture and he says well the Fed Lowers the interest rate the following consequences occur. I mean the exact mechanisms by which we got to the Fed's decision In terms of the specific beliefs and actions of all the people who work at the Fed is not relevant That's just not interesting or important for telling the story that Roger wants to tell But you can imagine another applied problem where we want to know why do the regional presidents disagree with Other members of the board and how is Fed policy set? Well, if that's the question then obviously we cannot treat the Fed as a single actor Yeah, I was gonna say something about Murray Rothbard once wrote an article after the collapse of South Vietnam in which he said, you know on One day there was a South Vietnamese army meaning all the people adopted same goals as the South Vietnamese government And it was I think it was the fifth largest army in the world There were millions of men in it very next day. There was no South Vietnamese army. They stopped Adopting the values of the government Saigon when they realized that it was going to fall And so people you no longer could talk about this this organization Because there wasn't a commonality of goals, but there was individuals who were participating in the army and and then who were participating and following other goals later on What one thing I think also very important is exposing your explaining why the Fed lowered interest rates it if you're giving a Explanation System methodological individuals and it doesn't follow that you can get rid of the Fed and just say well forget about the Fed We're going to talk about the individual. You have to go through the stages. This is a point Bob knows it made in his article on Austrian methodology you can have stages of an explanation where you can't get rid of the stages that it have the institution, but then they're Inducible to actions of individuals. I remember once in conversation. It was funny. There was a book. He was talking about by Alan Garfinkel called Hormes of social explanation. I think Garfinkel had just visited him and Harvard he was saying he thought Garfinkel was stupid Because he missed that point Industry They have a right to invest Some specific industry and then generally it's Kogashiki pretend the Shiyatoshi is Saint-Fran. So I think Kogashiki now try to create a new industry and and to be a new visionist, and my friends at the branch think they are right to get there, such as from the propaganda. But actually, so the program is, as the economy can create, the economy of scams is such as from the propaganda. And how is the appropriate way to find it? So are you asking, do we think that a kind of like infant industry argument with increasing returns is a valid justification for state subsidies for industries? So what's your question? So the point is, like a Boeing or Microsoft needs some big budget to begin new business because they can't begin, they can't create an airplane or a computer with a very short budget. So then they need some appropriate big budget to do it together since they need a subsidy from the government. Yeah, I mean, if I'm understanding this correctly, I think it doesn't follow from the fact that you need a big capital fund to start a particular line of production, that you need a subsidy, right? Because frankly, the capital funding always comes from the world capital markets. Whether the government floats a bond and then gets the funding and provides a subsidy or whether it's just done directly to the business. And the world capital markets are something like $212 trillion. And so there's plenty of funding, in other words, to build a new airline or to start a new auto company and we see this sort of thing all the time. So I don't think it's a very good argument to justify government subsidies. Was that the question? This is a very specific problem for us, but people can't get a direct degree in business because if we want to begin new business, then we have to just buy it and borrow money from the bank in direct requirements. So in the Japanese bank, we have no talent to be states kind of. But you're just describing a particular institutional framework where there's some, the barriers that prevent Japanese entrepreneurs from accessing some of this global capital that Jeff is talking about. But I want to challenge another aspect of what I think is a premise behind this kind of argument. I mean, it's true that to build an airplane takes a lot of, an airplane is expensive. But it's not the cases people sometimes argue from kind of an industry structure perspective that Microsoft is huge and unless Donald Trump or Richard Branson or somebody decides to throw all of his resources into creating a software company, you know, in one moment it's impossible for anyone to compete with these firms. They have a de facto monopoly simply because of their size. Therefore we have to break them up with antitrust or whatever. I mean, I was just thinking about airlines. I mean, that argument assumes that the only form of competition is sort of full direct head-to-head multi-market competition in every market in which the incumbent is currently active. But of course you can have all kinds of small competition that kind of nibbles around the edges and potential competitors can get very large and successful by doing that. Even if you think about airlines, I mean, the only profitable U.S. airlines are Southwest and JetBlue and some of the small regional carriers that do not compete head-to-head with the legacy government subsidized carriers. If you think about airplanes themselves, I mean, yeah, in the market for gigantic wide-body jets, there's two companies Boeing and Airbus, both of them heavily subsidized by governments. But I mean, if you look at smaller planes, there are, you know, firms that started out making the little regional planes like Embraer and the Canadian one, I mean, they get government subsidies too, but they now are building bigger and bigger planes that compete head-to-head with the smaller planes made by Boeing and Airbus, and there's no reason in principle why those smaller companies could not, if they want to, begin to build jumbo jets, larger jets and so forth. And they started out with nothing, they started out small. So there already were powerful incumbents, but new firms entered the market, started doing small things, competing on some margins with the incumbents, but doing it very well and being more profitable and growing, and then eventually they get to the point where maybe they topple the incumbent. So not only do you not need a subsidy to be in that business, but you don't need a subsidy or, you know, government antitrust, an antitrust lawsuit to get into the industry where you could eventually compete more head-to-head. Please. So throughout this week we've been taught about what the Austrian schools come up with and like they found out, and my question is, what are Austrians still trying to figure out to this day about like how the world works and like what new fields of economics like we sort of want to touch on? I think one of the, I guess one of the interesting questions that the world will face, at least it appears that the world is going to face pretty soon, is monetary reform? Is some, what exactly will the configuration of the world's monetary system, now how will this develop? And, you know, will we get a variety of sort of speak experiments on the part of states in various or private initiatives that would, you know, try to address the problems of the dollar system or the problem that the euro's been facing and so on. So I think that's a pretty live area for us to continue to think about and to research with respect to, you know, a variety of different possible entrepreneurial ventures that would provide a solution to the monetary problems of the world. Following up on what Jeff said, this war on cash that states have undertaken, particularly Scandinavian states, but also Italy and France, under the cover of the war on terror, I think we have to talk about that. I think we have to analyze the long run effects of that. There's now, you know, Ecuador sponsors, is the only country that has a state-sponsored electronic money system in which people can use cards or mobile phone to mobile phone means to pay. And all banks are forced by law to provide that service. So what they're trying to do is to digitalize all money and then get rid of cash. That's pretty clear. And they're doing that for two reasons. One, they want to track all of you. They want to spy on you. And all of us. And second, they want to prop up their unsound banking systems which are shot through with moral hazard. And so if there's cash that you can withdraw, then you can bring these large banks to heal. But once all transactions have to go through the banking system, then reserves have just moved around. There isn't any way to drain the reserves out of the banking system and to rein them in. So I think this is a very important area of research for economists. So far, I've really been one of the few that have been doing it. And I've also noticed that journalists are picking up on this and the word war on cash term, war on cash is being used more and more. Two areas that I have in mind kind of fall into one broad category. That is, how does the knowledge that we have as Austrian economists interact with some current fields that are more mainstream? So I think something I've just gotten interested in recently is the interaction between what urban economics or land use economics, what insights do we have as Austrian economists that know about business cycle theory, how does that then interact with, say, land prices and the like in the way that's often treated by the mainstream? I would also include under that, as Dr. Salerno mentioned, what does behavioral economics tell us about people's behavior? In a sense, it's not doing economics strictly speaking as praxeology, but it does tell us something about the way people behave and make decisions. And I think thinking about how these things relate is a useful field. One thing I think has changed about application of the Austrian theory is the concept of just where the new money goes when the interest rate is lower. And I've sort of caught on to this when I had some student somewhere, I don't remember where it came from, but a question out of the blue had to do with the Fritz Mocklump's exposition of business cycles, and he says that new money through cheap loans always goes into fixed capital. This is a more roundabout process in long-term, durable, and so on. And that was probably about all you had to say at that stage in the game. But in recent years, we've needed to broaden the idea about where that money goes. It goes into interest-sensitive areas for sure, and of course fixed capital used to be the paradigm case of that. But more recently, it could go into all sorts of software uses. And I say that because I remember the dot-com boom, which sometimes even the Austrians say that's a different kind of cycle because it wasn't heavy industry. But in fact, it was an Austrian business cycle in the sense that these companies had to build market. That was the term that was used. You had to build market, which means essentially you've got to operate with losses until you can get your software to be more widely used in order to make it profitable. And you do that by absorbing those costs with borrowed funds. And so simply building market constitutes long-term investments. And so a lot of it is just realizing how that Austrian theory applies depending on just what the economy looks like. And so these are all macro business cycle topics. But just on the micro side, I thought a little bit about how would production theory and our analysis of the productive process be changed by some of the very interesting kinds of technological innovation that we see, nanotechnology. What about 3D printers? A lot of times when we analyze industries and we analyze the effect of changes in demand on industries, I think this was in one of the exam questions. Usually we treat human labor as a relatively less specific factor than many kinds of capital goods. And labor is more mobile than most kinds of capital goods. And so we think that, for example, when demand decreases, wages will not fall as much as rental prices of capital goods because labor can move to other uses and so on. Well, what if most of the capital is produced by 3D printers or something? Maybe a 3D printer is actually less specific than most kinds of skilled labor. And so in trying to analyze the effects of different kinds of industry changes on wages and on capital goods prices, it may be that we have different kinds of capital goods now that have different properties from the sort of more conventional ones. They have many more potential uses that typically kinds of specific, the narrower set of uses. How does that affect the structure of production in the economy? There may be some business cycle implications for this more kind of flexible capital. I don't know that anyone has really thought this through in a very systematic way. I mean, notice that nothing that anybody has talked about yet is about sort of fundamental alterations in the underlying theory, but how the theory applies to different contexts. So there's always changing and so there's always new problems to be solved because of institutional changes and political changes and technological changes and so on. This gentleman was next, I think. So my question is, I've been hearing this term and I guess I just don't know very much about it. What is quantitative easing and what are some like, I assume there's some sort of Austrian fatigue. Roger? There you go. Yeah, that's a term that sort of rubs me the wrong way for some reason. But typically before quantitative easing, when the interest rates were up around maybe three or four percent or something like that, you could, the Fed could push those interest rates down by pumping in money. And they did that to the point where interest rate just got as low as it could go. And so if they tried to pump in more, they could pump in more, they did pump in more, but it didn't change the interest rate. It was already right down there against zero. And so that's when they started calling it quantitative easing. In other words, it was just as they're going to push more money out there despite the fact that it doesn't have any effect on interest rates. So that's literally what the term means. Normally when they say they're going to ease, they meant they're going to lower interest rates. But now they can't lower interest rates anymore. They're still going to ease. There's more money at the same low rates. So that's just a terminological thing that's an issue here. Also, there was an augmentation of the Fed's use of a wider variety of securities in their purchases, right? So the typical open market operation of the Fed would be confined to U.S. Treasuries. So they'd instruct the New York Fed to purchase U.S. Treasuries and then provide the liquidity to the financial markets from that purchase. With QE, they widened this out and they bought almost $2 trillion worth of mortgage-backed securities as an example. They bought a lot of Treasuries, too. So QE, that tends to be what we think of also, at least empirically, when the term QE is used, it tends to also have this implication that the Fed is widening the scope of securities that it will purchase or sell. Yeah, just as an aside, the Federal Reserve Act and the other documents, the statutes that have amended the regulations, the rules that enable and constrain the Fed specifically limited the Fed's balance sheet to holding Treasuries. The Fed was only legally allowed to hold U.S. Treasuries, but there was this little escape clause, except for unusual circumstances. In an emergency, the Fed can hold other assets. Well, I mean, that's a loophole that you can wide enough to drive through a semi-truck or whatever, and so they jumped upon that in 2008 and started adding, you know, all kinds of securities in huge quantities to the balance sheet. Yes, please. You said earlier about 3D printing. Does 3D printing decrease the amount, the quantity of the stages of production? And if so, do the high-end triangles allow for a decrease in the stage of production to add to the increase in the growth in economy? That's a question for Roger Garrison. I'm not sure I understood this. 3D printing. So if, yeah, I mean, immediately produce any complex good in one step, pushing one button. Well, before you say that, you have to look to see what's the whole process of creating the 3D printer. Obviously, once you have the 3D printer, then it's just no time that you can get an output from a certain input. But overall, you'd have to look at what are the inputs to the 3D printer, and that could well lengthen the structure of production. But, of course, it involves a change in technology so we really can't say whether it lengthens or shortens until we look at the particulars. I'm just giving my biggest input is software, and it may be that it takes a long time to write the code that enables the 3D machine to produce some complex piece of machinery or whatever. Other questions? Yes, please. So, both of you, two of you mentioned the behavioral promise, and my view is actually, I think, been very easy on this, in that generally I think they are trying to looking at some of these actual preferences and trying to describe judgments to them as far as, well, you shouldn't have bought that, you should have bought something else. But I guess I can see from an entrepreneurial trying to explain the stakes, kind of stand point why we might want to study that, so I'm curious if there's any scope that you think that has in this or where we can avoid starting making judgments about other people's actions, you shouldn't have done that. Does that make any sense? Yeah, so Mises wrote a book called Theory and History in 1956 that I highly recommend, and it talks about how you really apply economics to history, and he talked about, he used the term phymology to indicate that not only do people have insights into one another when they act in the real world, that is they have to understand one another, but that when the historian or the applied economist is doing economics, we have to understand the goals and the ideals and even the quirks and so on of, let's say, Alan Greenspan in the way he runs the Fed or Ben Bernanke. And I think behavioral economics, when it's properly used, can deepen our insights in some cases, as in the case of these speculative stories that I think are very important to keeping the boom going. Add to that, there's a lot of truth in the way that it's actually used. Behavioral economics is a science in trying to get into what are people's preferences actually like, I find generally unobjectionable. It's basically a version of the phymology. But then what really ends up happening a lot of the time is that people have taken moral imperative that people should act rationally according to the neoclassical definition, and then the behavioral economists prove that people don't. Some of the question is, what can we do to trick people into acting rationally? Rather than just accepting, maybe people are loss averse because they really eat losses, and that's okay. Maybe there's nothing wrong with this. So seeing behavioral economics as a critique of this mainstream definition of rationality I think is very useful. Using it to try to understand human behavior is very useful. Once we start adopting that mainstream notion of rationality as a moral imperative, that's where we start running into problems. I also want to add, I agree with what my colleagues have said about behavioral economics per se, and how it can be useful, but I just want to add to be a little more cynical. As a sort of empirical institutional matter, the current field of behavioral economics I think is massively bloated. There's a lot of malinvestment in that field. It's a fad. And a lot of the research that's coming out of behavioral economics is coming up with bizarre laboratory scenarios to reach conclusions that are either uninteresting, not useful, or totally obvious to anyone who has done any thymology whatsoever. Like Dan Ariely, I think his stuff is pretty useless. But he specializes in trying to use clever lingo to act as if he's come up with some new insight that in fact anybody in that specialized field of applied economics has already known for 50 years. So that's a good note to close on.