 I'm very grateful to be here and thanks for all of you for coming. I'm actually from Brooklyn, Massachusetts, so it's very nice to be able to be speaking here. The title of the seminar is the real economy, what political candidates can't and won't address. And I was thinking, am I going to have to actually talk about political, something as unseemly as political candidates? And so what I'm going to do is try and not talk about politics and politicians. I think some of you might have heard the joke from the Soviet Union where the pessimists and the optimists meet each other. And the pessimist says, oh, things are so bad. They can't get any worse. And the optimist says, don't be so pessimistic. Things can get a lot worse. Some of you also might have heard that two main candidates have raised $480 million. This is not counting what the other candidates have raised. This is not counting what their mouthpieces, such as CNN, are spending on the election. But of all the things that people, where they want to give their money, they could be writing Jeff a check. Instead, they're giving a check to these main political candidates. And this is a common question that people have been asking, but isn't there a cheaper way, $480 million, isn't there a cheaper way to find the worst person in the United States? Now, let me get off the topic of politics and to something a little bit more seemingly, which is economics. I think economics is much more hopeful and much more positive. But economics sometimes is a little bit misunderstood. So a lot of people who don't understand economics criticize economists for not being able to know certain things, like not being able to predict future interest rates or future stock prices. Lots of people always ask me, you're an economist, what is the stock market going to be doing next month? And I say, if I knew, I wouldn't tell you. Now, in economics, according to the Austrian school, economics is about the study of human action. So people make choices to better them. People interact to better each other. Things like trade, it's mutually beneficial, ex ante. We know that because people would not be engaging in trade. If it weren't mutually beneficial. So certain things like that, it's the logic of choice, the logic of human action. We can be studying these things from a common sense perspective and then adding together some of these ideas and sometimes coming to results that might not be so intuitive. So maybe the United States benefits when we buy goods from China. Maybe American companies benefit when they can manufacture their phones in China. So those are the kind of non-intuitive things from economics that we can get to by studying the logic of choice. Now, there's a lot of misconceptions out there about economics where they'll people say like, oh, economics, it's not a real science. The critics of economics is not a real science. You can't predict, you didn't predict the economic downturn with certainty or you didn't predict this. And that's basically a non-Austrian conception of what economics is. People like Murray Rothbard said economics is not a predictive science. It's a study of human action, but we don't have crystal balls. We can't say, oh, here's what's going to happen. And then now when we can't find out what's happening, now all of a sudden economics is wrong. I think that's a very poor conception of what economics is. But I'm going to make one exception. I'm going to predict the future with 100% accuracy. Mark my words. People want to know who's going to win the election with 100% certainty. The winner of the election will be disappointing. In Hayek's Road to Serfdom, he talked about this theory based on also Frank Knight. And in it, he said, why in politics the worst get on top? And unfortunately, I think it's sad, but true. And basically the analogy is this. Imagine somebody who is working on a slave plantation, a slave driver, and who are the people who are going to be applying to be the job as the slave driver? Is it going to be the nice little gentle person? Or is it going to be the person who actually wants to exercise that authority? The person who actually wants to be ruling over fellow men by force? So Mother Teresa is not going to apply for that job as slave driver. So the people who get attracted to certain professions are the ones who want to exercise power. And it's the same thing in many areas of government. Same is true of cops. I just had an article, nearly two pages, in the Wall Street Journal a couple of months ago on is America facing a police crisis? And in it, I just went through and looked at some of the statistics of police violence in the United States. And I'm going to compare government, unaccountable government officials, the people who are attracted to becoming part of government with markets, voluntary sector. And it turns out that police represent one 360th of the population. So one out of 360 people in the United States are police. It turns out they killed one out of 12 people. One out of 12 people who are killed in the United States per year are killed by police. So this is kind of a very, very stark contrast to the homicide rate of the average person. They're killing at a much, much higher rate than the average person. Also interesting fact, I looked it up. The average police officer is victimized at a rate of 4.6 per 100,000, which is almost the exact same as the average American, which is victimized at a rate of 4.5 out of 100,000. So the same victimization rate, except for their committing a much higher amount of killings. And why is that? Well, the difference between police or government officials, I'll be getting back to the politicians, my second least favorite group of people in a minute, the difference between these people who are attracted to government and people who are attracted to business is people attracted to government don't have accountability. They don't have to serve their customers. They don't have to say, what do you want? You the customer, what do you want? How can I better serve you? And that's really the beauty of the private sector, where you see people serving their fellow man. In contrast with government officials, they can be doing all types of things, sometimes very violent things, and they don't lose business. In fact, many of them don't even lose their job even after doing terrible things. And so now I'm going to get back to politicians. Politicians in theory, elections are there to select people who are smart, people who understand the economy, people who understand the future of what's needed in society. And then in theory, we're going to say, okay, we're going to have this runoff, we're going to pick from among the best people here, among the best people there. And then, oh, okay, great. Now we've got the two best people. It really doesn't matter at that point. But in practice, that's not how politics works. Politics attracts people who often have zero understanding of economics. Or in many cases, they have an understanding, but they don't want to let on to other people that they actually understand things. And instead, they cater to people's base misconceptions and misunderstandings of economics. So politicians have an incentive to cater to people who don't understand things. They have an incentive to scare people, people who don't really realize that trade is mutually beneficial. Well, okay, let's cater to their fears. You're going to lose your job if you don't enact my policies. It's very common that people use bad economics as a ruse for implementing bad policies and then blaming the market for any time anything goes bad. So when I was a kid in Brookline, and I grew up in the 70s and 80s, when I was a kid, I always remember people talking about the famine in Africa. Remember, we are the world and things like that. And people always used to talk about Ethiopia. Ethiopia, it's just these terrible things have just been happening there. It's unfortunate. There's been bad weather. There's a famine. And now I study economics. I'm like, no, it's not, it's not the weather. It's because it's run by a bunch of commies. That's the problem. And we've got the same problem in the United States. There's always people who have an incentive to kind of scare people, cause problems, and then scare people and say, look, the market did it. So we've been hearing, I heard Robert Higgs for the first time at the Mises Institute probably 20 years ago when I was just a, just a child and a 20, 21 or 22 year old. And he always talked about the crisis is a terrible, no, no, he says governments will create crises and then use that to ratchet up the size of the government. And it was always intuitively made sense to me, but there's a little bit of conspiracy theory in it, but I think it's true. But we now know that after the last economic downturn, the government officials were actually going around explicitly saying a crisis is a terrible thing to waste. So it's like as if they're reading Robert Higgs book as a how to manual, like, okay. So when the government destabilized the economy through things like crazy monetary policy, various regulations, especially after things started showing up manifesting themselves, they started implementing even more regulations, going into more debt. And that has the tremendously negative consequences on the market. But what do government officials do? The market, the market did it. Occupy Wall Street, the bankers, you did it. I spent a lot of time in New York and it was just very curious. I noticed the Occupy Wall Street people. It was so curious that they had been so these some of these same people presumably had been so anti-war during the Bush administration. And then once he was no longer in office, bankers, we need to go after the bankers. So this is the types of conspiracy theories that that they want to advance, because they can't the government can't look in the mirror and say, gosh, I messed up. Our bad policy just destabilized the economy. There are people during what was called the great moderation who are arguing, oh, central banking, it's fine. We figure it out how to moderate the economy. We know how to do it. Don't worry. Even a lot of free market economists were agreeing with that position. As we now see all these things that they say they can do, they just don't have the ability to manage the economy in the way that they predicted. So the result now is let's have more regulation. We didn't have enough regulation the first time. Let's have more regulation. And I have another prediction with 100% accuracy is after the next economic downturn, I don't know when it's going to be. I guess you're maybe more pessimistic than me, but I don't know when it's going to be, but I can also guarantee that after the next economic downturn, they're going to be like, the problem was we didn't have any regulations. That's what the problem was. We need more, we need Dodd-Frank on steroids. Dodd-Frank wasn't long enough, 25,000 more pages. It just needs to be 25 times longer than that. So we have an increase in government, increase in government control of our economy. And the result is a strangling business, strangling financial sector, strangling Wall Street. A lot of people say, oh, you know, these special interests on Wall Street have been benefiting from these financial regulations. It turns out they've been underperforming relative to other sectors of the economy because they're getting dragged down by all of these regulations. I applied for a mortgage a few years ago, and it was basically close to impossible to get this mortgage. I ended up getting it, but it just took months and months and months. And the mortgage broker, she said, she said, if I had one wish in life, it would be to repeal Dodd-Frank. So that says something where she's just, you know, having to deal with this all the time. Ben Bernanke, our great friend, Ben Bernanke, you're a fan, right, Jeff? He applied for a mortgage and he couldn't get one. I mean, that says something. That's what the regulations are doing. The regulations are making it hard for everybody to get mortgages. Even if Ben Bernanke can't get a mortgage, it's much more difficult for people who are less, less rich. Okay? So government here, it's not on the side of poor people. They're preventing them from getting loans. Government here is not on the side of rich people. They're preventing them from getting loans too. They're not on the side of bankers. They're preventing bankers from getting loans. So without the ability to assess risk and make loans based on expected payoffs, that's socializing a very important area of our economy. And that's not on the side of anybody. My favorite economist, Murray Rothbard, wrote, he says, we must therefore, this is in from the anatomy of the state, I just love this book, pamphlet, he says, we must therefore emphasize that we are not the government. The government is not us. The government does not in any way accurate sense represent the majority of the people. I'm going to go on to quote from another book, the Four New Liberty by Rothbard, where he says what the government is and what they do. And he basically describes, I really like your your description, Mark, it's perfect. He says, the state is the aggressor against the persons and the mass of the public. He says, for centuries, the state has robbed people at the bayonet point and called a taxation. For centuries, the state has enslaved people in its armed Italians and called it conscription, coercion and violence by the direct threat of confiscation or imprisonment. This is taxation. So by the way, the Mises Institute has done a lot of great things over the years. I think putting a lot of these old books online for free is just fantastic. And one of the really cool things they did was make a lot of audio books. And one of the audio books was narrated by Jeff Rickenbach. And he narrated this book for New Liberty. And I don't know how many of you have seen this, but it turns out there was a kid, a teenager. How many people know this person, Porter Robinson? Okay, there was a kid in North Carolina, presumably listening to this audio book, and he's an aspiring, he ended up becoming a DJ, and he created a dub, that's called dubstep, electronic music about Murray Rothbard. And I'm like, wait a minute. This, none of this is possible, but you can listen to it where he goes through and is like, for centuries, and it just keeps getting better. And then it ends as the sting. So just, just check it out. He's been featured in the Wall Street Journal as one of the top new electronic people, I guess out of whatever they're called, electronic DJs. That album, when it came out, reached number one on the, one of the music charts. So this was like, really neat that Murray Rothbard can be writing this book in some apartment somewhere in the 60s and 70s published in the early 70s. And then 40 years later, Mises Institute puts it online as an audio book. And then some kid in North Carolina is making a music song about it, has two million views on YouTube. So kind of cool. We don't know, nobody knew this ahead of time. And that's just what can happen. Okay, so this is going to lead me to my more optimistic part of my talk. I've been talking about how sad politicians are. But the more optimistic part of my talk is as follows. We can look at politics and say, oh, you know, it's so bad. We can also look at the world and say, it's just, you know, government is everywhere, government is so big, it's so pervasive. And a few years ago, I published an article in the Quarterly Journal of Austrian Economics called, if a pure market economy is so good, why does it not exist? Okay, so people in this room, we probably, most people in this room would agree, markets are good. And leviathan is not necessary. And so, but it is the case that we don't have a pure free market anywhere. And so a lot of people look to this and they say, well, that's just proof that markets are inferior. It's proof that we have government because it's doing something good. And or we have government because most people want it. And I kind of agree with a small part of that, but I disagree with most of it. And it's the following thing. According to mainstream or neoclassical economics, preferences are basically fixed. So if people want something, that is, you know, that's their preference function. And there are then public choice economists, mainstream or neoclassical public choice economists, who then look at special interests and they say, well, our government policy is shaped by the combination of special interests in society. And whether we like it or not, whether advocates of like markets like it or not, we're going to have this combination of policies. But I'm going to contrast this with the views of Bastiat, with the views of Mises, who argued that for good or bad, the world is shaped by public opinion. And in Austrian economics, we don't have the assumption that preferences are fixed. Preferences can change. Ideas can change. And so if we have people supporting X and Y today, maybe we'll have X and Y today. But if people withdraw their support, change their support to something else, then people can withdraw. They're not going to be propping up existing policies, existing politicians. So Mises stated, he says, the flowering of human society depends on two factors, the intellectual power of outstanding men. I think he was talking about me there, right? To conceive of sound and economic, sound social and economic theories. And then he says, too, the ability of them to make these ideologies palatable to the masses. So economics, I think is true. Economics makes sense. But a lot of people, as Jeff was mentioning, they just don't study it. They don't know the basics about it. And so it's very easy for a sophist to kind of, you know, get people confused to be supportive of something that is bad for economics. But here's where economics comes in, Austrian economics specifically. If we can change ideas, if we can educate people, if we can educate enough people, then when government is going to be proposing a silly policy, then the public will say, that doesn't make any sense. So I was shocked personally to hear a few years ago, even in Massachusetts, even in Massachusetts, voters agreed to end rent control. So if people, as dull as the typical Massachusetts voter is, can understand that rent control is not good for housing markets, then I think that gives us reasons for optimism. Now, there's a lot of more complicated things that are going to take a little while. But Jeff, am I allowed to quote a politician in a positive way? Okay, all right. So Eisenhower, I think, was right to say, pessimism never won any battle. So we could look at the world and say, well, because people don't understand economics, now they're never going to understand economics. And I don't think that is right. I think if we look back in time, there are plenty of cases where public ideas have changed and public ideas have changed society. And one great example that I'll mention from a Bostonian is from John Adams. He said this is about the American Revolution. He says this radical change in the principles, opinions, sentiments, and affections of the people was the real American Revolution. So you have people like Thomas Paine and others circulating basically pro-liberty messages. And as enough people started watching this, being aware of it, they started thinking, well, maybe we don't need to be following the British government forever. And maybe we'll join the American cause as well. So we've got the American Revolution as a great example of this before that 100 years before that was the Dutch. Well, actually more than that. But yeah, 200 and 150 years was the Dutch revolt. And that too had a lot of the sentiments that you could hear in the American Revolution. They were making arguments about economic liberty, about religious liberty. And they said, we're not going to follow the Spanish Empire anymore. So as enough people start changing their minds to support markets, to support change, then we can see it. And there's a great book called The Island at the Center of the World by Russell Shorto. And he argued that we in the United States have inherited a lot of these freedom-loving things from New Amsterdam, from New York City, where you have people being tolerant of business, people being more tolerant of different religions. So you see that as more people become more accepting of markets, you can have more markets. Now the next best book that I'll talk about, you should all buy it right now. It's my book. It's called Private Governance. I published it with Oxford University Press last summer. And in it, I basically go through the history of markets and talk about how they are self-regulating. They've come about through entrepreneurs figuring out different ways to do things independent of what government says. So my topic today is beyond politics. I think if we look to politicians to solve our problems, to create markets, we're just never going to have markets ever. They don't understand markets. They're often hostile to markets. But nevertheless, if you look throughout history, I talk about stock markets in London a couple hundred years ago, New York a couple hundred years ago, Boston as well, these markets were basically self-regulating organizations. In the London Stock Exchange used to be a club which was a coffee house where people get together and create rules to make sure people were trustworthy, to make sure people followed through with their trades. New York Stock Exchange, same thing, the precursor to that was called the Tontine Tavern and Coffee House, where they adopted a private constitution where you had to pledge to follow the rules. When you had the first listing requirements in the United States, it wasn't mandated by the Securities and Exchange Commission. It was private mandates by the New York Stock Exchange. So throughout history, you see people getting together, solving their problems, not turning to government. Turning to government is the worst, most pointless thing that somebody in the market can do. Instead of just dealing with the problem, not doing anything about it, you see markets over and over again, figuring out ways to reduce problems. In more recent times, I talk about PayPal as a way to reduce online fraud during the early days of electronic commerce. They basically would predict whether any given transaction was fraudulent or not and deny it or freeze an account if it was. You've got a computer determining whether something is good or not. The better the computer is, the less relevant it becomes, whether government knows whether they can enforce that contract or not. In more modern times, we've got credit card companies. They have all these types of technology as well. And we also have new technologies coming about all the time. And I think one very exciting potential is some technology which has taken out of Bitcoin. So I'm not super optimistic about Bitcoin itself, but I think there's a lot of cool things that people are taking out of Bitcoin, specifically the blockchain technology, which some people refer to as a distributed ledger. But you can use that and program in some other things to do all types of financial intermediation. This is currently being used by NASDAQ is using it for private issues. JP Morgan is using it to transfer shares between banks. And what it does is it helps them prereconcile trades. So you don't have to wait for the party to give you the goods three days later to settle the trade. Instead, it's done instantly. And this has a lot of potential there. In addition, there's another thing which people are doing called taking this technology and it's called algorithmically enforce smart contracts. And what it does is you program this distributed set of software to enforce a contract for you. And it's done by a computer. So a simple one we can think about could be maybe we bet on who's going to win the Super Bowl. So if the Patriots win, of course they're going to win. So the algorithmically enforce smart contract will go to nfl.com, figure out who the winner is. They also have access to both of our wallets, basically. And then they transfer the money into the winner's account. So you don't need to go to the government to have this contract enforced. You don't need to have anybody enforce it. It's done privately. All right. So I know I'm running out of time. Let me just, in the last couple of minutes, wrap up with how there should be room for optimism with all this stuff. So politics is bad. There's one takeaway from my talk. Politics is bad. Markets are good. Politics are bad. Markets are good. And we just need enough people to help spread this discussion. Markets should be viewed in a positive light. When I see people who are successful business people, rather than being like Occupy Wall Street, I go up to them like, thank you so much. Thank you so much for working for me. It's so great. Appreciate it. And Ross Bart said, as we get more and more people to advocate the ideas of markets, we can actually influence society in the long run. Thank you very much.