 Good morning, everyone. It's nice to see that Dr. Solarno has kept your energy level up. I understand he said a few controversial things, so we'll have some interesting discussions ongoing through the rest of the week, maybe, about this. But what we're going to talk about in the next session is, of course, the rate of interest. Yesterday we did a lot of coverage of material on the Austrian theory of price. So we talked about prices of consumer goods, price of producer goods. Dr. Sandy Klein talked about the price of money and the purchasing power of money. But we have yet to talk about prices that are inter-temporal, right, that have to do with the span of time. So far, we've only talked about what, in finance, we would call spot prices. What's the existing actual price of a consumer good right now, as opposed to, say, forward prices, right? Prices that people arrange to trade at some date in the future currently. And then the interest rate. So this is what we want to tackle this question in our session right now. We'll proceed in three steps. There are a few fundamental points that we want to make first about time and action. How do we incorporate the existence of time into our logic of action, our praxeological analysis. And then we'll talk about the two ways that human beings value action with respect to time. And as I did in the lecture on Monday, I'll follow the terminology here of Frank Federer. Terminology is always problematic, right? You may recall on Monday we talked about the personal economy and the social economy. So now we're going to talk about temporal valuation, which refers to the timing of an action. How do we choose when to take an action? And then we'll talk about the inter-temporal dimension of valuing in action, which refers to whether the satisfaction we receive from an action can be brought closer to us in time, whether we can get sooner satisfaction as opposed to later, which is a different issue from the timing question. So we'll separate those two out. And then the third thing, we'll just talk about the logistics, the details of the theory of interest. OK, so let's begin with these basic points. Action always involves a sequence of steps that occur then over time. So action is always in time. There's no such thing as a timeless act. The fulfillment of the end then comes later in time from the decision to act in a particular way. So we decide to act, and then only at a more remote future do we actually achieve the satisfaction from the end. Dr. Peter Klein, of course, talked about the implication of that in his talk on entrepreneurship yesterday. The implication of this, of course, is that for finite temporal beings like us, the future is uncertain. And so at the moment we decide to engage in an action, we can only anticipate the realization of the satisfaction of the end. We don't know it for certain. We're just involved in judgment of the realization of the end. We're involved in entrepreneurial foresight. So that we don't want to talk about today. That's been covered already, so we'll set that issue aside. And we'll turn instead to another dimension of action, which is its duration. So if action occurs in a sequence of steps over time, then it always is contained within a certain duration. The action starts at one moment and then stops at some later moment. The action is always in a duration. That is to say, the person acting always has a choice with respect to allocating moments of time that are either before the action or during the action or after the action. And again, if we want to think about this in an entrepreneurial way, we would of course have to include the fact that a person can start an action and then be engaged in the steps and then decide, oh, no, things have changed. And it's not going to work out and I quit. But remember, we're setting all those complications aside. So we're saying there is always a duration that the person intends. They start the action at one moment. They choose to stop the action at another moment. Then as indicated in the slide, we can subdivide the duration into two categories. There's the period of production. And the period of production itself can be further subdivided into stages of production, steps of production. This is what Dr. Patrick Newman was talking about yesterday. We want to build an automobile so we mine iron out of the ground, then we refine the iron, then another step of production, we make steel, and then so on and so forth. And none of those acts of production give us direct satisfaction. They're not consumer goods. They're just producer goods. We're moving through this period of production. And then sometimes as we move through steps of the period of production, there's also what Mises calls waiting time. So an example of this in the production of an automobile would be this. You're moving along the steps of producing, and you get to the step of painting the body of the automobile. And once you apply the paint, there's a period of curing. You just have to sit there and wait for the paint to cure, right? You're not actively doing anything. There's a waiting period sometimes in an action, in the production process of an action. And the point, again, of categorizing in this way is simply to highlight the fact that human persons choose periods of production. We can choose different periods of production. We can lengthen them out if we think that lengthening out the period of production will generate more value in the end product. And we can arrange factors of production in shorter periods of production. It's a choice variable what the period of production looks like for us. And then there's the duration of serviceableness of the good, the consumer good now we're saying that's produced. So it's a duration of serviceableness for the car that's produced through the period of production. Period of production takes whatever, eight months, then there's a car. Then the consumer buys the car, and now we can realize the satisfaction of all of that production. We realize the satisfaction of all of that productive activity that just generates the consumer good. Then the consumer good can be used over and over and over, at least in principle. They're perishable goods. They're used just once. But they're different durations of serviceableness for different goods. But the idea is that this is a category. We choose, people choose with respect to the duration of serviceableness in their action. They can produce cars that have less durability, and they would choose to do this because the cost of the production process is lower. Or they could choose to engage in a more extensive production process and get a more durable good. So this is the idea. This is all subject to our choice. And if it's subject to our choice, these elements of action, the time element of action, then of course we're going to choose, according to the way that we value the alternatives, longer periods of production, longer duration of serviceableness, shorter periods of production, shorter periods of duration of serviceableness, and so on. This is the way we would analyze these elements. So we're going to always economize with respect to these different elements. Okay, so now let's go, this is background, let's go to the two ways in which we value action with respect to time. So second step of our talk. And let's start with timing or this temporal element. So here we're concerned with this question. We have a given action that a person's going to take and the person can choose the moment in time, right? The moment ahead of the person in time to start the action, to place the action, right? To start the action. Could start today, could start tomorrow, could do the action next week. At least in principle, this is always the case for action. So we have this question of the timing of action. So it can start, like on the left side, right? It could start in an earlier moment in time. The action could be placed there by the person. The action could be placed at a later period of time by the person. So this is the basic question of timing. And the point is again that a person will choose with respect to these options, the person will choose to place an action at the moment in time which he or she perceives as being most advantageous to the satisfaction that's gained by the end that's anticipated by the action itself. So this is the idea of economizing. What I like the way Mises puts this in human action that he has a nice turn of phrase throughout the book, right? But he says time is an irreversible flux. By which he's trying to call our attention to the fact that the moments in time that are ahead of us that we anticipate are not homogeneous to us. Time is not like a units of money that are just equally usable across different things. The moment, as we move through our lives, the moments in time, we can see this by looking back, right? The moments in time present different possibilities for engaging in successful action. The circumstances change, right? For successful consumption and production at different moments in time. We in fact will change. Our subjective valuations will change later in life and so on and so forth. And so when we're thinking about when will we take an action, we take all of that into account, right? That can be part of the way that we economize with respect to time. So this is the idea. Now we can apply this. Let me give you an example of the timing of action. In this first part where I'm just talking about the value of a good itself, the subjective value of a good. We mentioned yesterday in talking about the laws of utility and the setup for the personal economy. So suppose we have a person who places value on growing a garden. And one of the consumer goods they want from the garden are tomatoes. So they plant some tomato plants, right? And then they do the proper fertilizing and weeding and so on and watering and in anticipation they take all these steps, the period of production. And then at the end they get this robust harvest of tomatoes. So now they've got whatever, 100 tomatoes. Now the marginal utility of a tomato at that point, to just sit and allocate immediately in the present the 100 tomatoes to various consumption acts, the marginal utility is very low. But the marginal utility of a tomato in the winter time when production can't be undertaken, at least not where this person lives, is very high relatively speaking, right? The person anticipates it, it would be higher. And so they can engage in this temporal movement of the consumption of the tomatoes from the present to the future. They can can the tomatoes or freeze the tomatoes or whatever and just bring them out and eat them in the winter when the marginal utility is higher. And you'll notice when people act in this way, when they economize across different moments of time, they bring the marginal utility of the good together. They exploit the fact that they can move it from where it's lower value to where it's higher value. And by doing that arbitraging activity, they bring the value at the margin together. And this of course is where we get to forward prices. Suppose we just moved to the market, okay, well. Then people who are trading oil, let's say refining companies, buying oil from producers of oil can anticipate that six months from now, the price of oil is going to be, the spot price of oil six months from now is going to be higher than the spot price is today. If they think that, then they can form a contract today to agree in advance to trade six months from today at a price they agree upon today. They can make a forward transaction. And suppose the forward transaction is at the price of oil that people are agreeing that they'll trade out in six months is $100 and the spot price is 60. Well, then we have the same issue, right? We have the same economizing opportunity where producers and holders of oil can simply hold the oil or delay production into the future and supply more of the oil where its price is higher by removing it from where its price is lower. And when they do that, the prices will come together and the benefit of reallocating the good in an economizing way are exploited, right, are undertaken. So this is the principle of forward transactions. Okay, that again is not our main topic, right? Our main topic is to talk about the second way in which we value action with respect to time. And this again, Federer calls the inter-temporal dimension where we're not concerned with the timing of action, when will we take an action. We're concerned with any action that is to be taken. So everyone or a person will just go ahead and place the action in the time that they think is economizing. They say, I'm going to do this tomorrow. But within the duration of the action, there's another element of time that a person must express value with respect to in order to act in an economizing way. So within the duration of time, once the action starts, remember, there's the period of production and then the consumer good is produced at the end of that, the middle bar, and then the duration of serviceableness, right? You have the consumer good and then you use it in production over time and it generates the satisfaction. So the other dimension of valuing with respect to time is this point here on the slide. It says that a person always prefers for the satisfaction to begin sooner. They always prefer for the line that divides the two to be moved to the left. They would always prefer if the period of production could be shrunk and you would get the same exact duration of serviceableness. Now maybe that's possible, maybe it's not. We're just saying a person's valuation is always to start a given satisfaction from an end sooner as opposed to later, which must mean then that the period of production is diminished, period of production is shrunk and that dividing line moves to the left. People always prefer that. Again, whether or not they can act in such a way to bring this about is an open question that we're just saying this is a preference that people have. Now this preference we call time preference. So just now that we have the strict technical definition, we can just use a kind of a little bit more amorphous definition, right? So instead of saying over and over this technical definition, we'll just say that time preferences, the preference a person has to get the satisfaction of an end sooner as opposed to that same satisfaction later. This is the idea of time preference. Now, just to emphasize that this is a praxeological notion. This is just bound up in the logic of action. There isn't any, it couldn't be otherwise. That this is just the way the logic of action is as we are as human beings. We're not here referring to other dimensions of human life like the psychology of action. In other words, time preference isn't the impatience that we have, that refers to the psychological aspect of action, not the logical. And it also is not a physiological claim. Now there's, we're not saying that people have time preference because well, when they eat, then they get hungry again and then they want the food again. And then, no, no, no, that's just a different altogether different dimension of human behavior, right? We're not saying that's nonsense or not relevant. It's just not part of economic theory. It's not part of the logic of action or the praxeological structure of action. Okay, so then I just wanna mention briefly this first implication of time preference. And I'm gonna mention this just briefly because Dr. Jonathan Newman will talk more about this in his talk on the business cycle this afternoon. And this is the inter-temporal production choices, how they depend upon time preference. So here all I'll mention is just this and then he can elaborate on this for your own knowledge later. The basic point is this. Suppose we have a person who's urgency for present satisfaction is very intense. Suppose a person is like that. Well, if a person is like that, they're going to want the shortest production processes they can get. This is like Robinson Caruso just washing up on the island and he's on the verge of starvation. He just wants to pick berries and eat them, right? He wants any immediately available production process or very short production process so that he can get the consumer goods and begin his satisfaction. But if a person has less intense preference for sooner satisfaction, then they're more willing to adopt longer production processes that are more productive in generating consumer goods that will give satisfaction, like Caruso going through the process of making a bow and arrow set and then hunting small game and so on and so forth. So that's the sense in which, the basic sense in which we're, Austrians are pointing out that time preference is what gives the dimension to the capital structure, right? It gives the dimension to the length of production processes. What we want to focus on though is the second implication which is what we'll call the pure rate of interest. And we define it this way. The pure rate of interest is the time preference premium of present money over future money. So the time preference premium of present money over future money. And the idea here is of course that, suppose, I'll just use an example to illustrate this. Suppose we have a family and they want a new car and there are various ways they can fund this. They could take a second job, one of them could take a second job. They could earn a little more income and then save or they could lower their consumption and increase their saving. And then they would go through this longer period, right, of production where they're going through this process of producing in the market and then saving. And then they could buy the car in three years or whatever it would take for them to save up sufficiently. So they have a longer period of production before the start of the satisfaction, the duration of servicefulness. But on the other hand, they could just find some other person with lower time preferences who's willing to lend them the money. And then they could borrow the money and they can move the duration of servicefulness, the satisfaction of their end, they can move it sooner to them, closer to them in time. Notice this is not the timing of the action, right? This is a different dimension. They borrow the money in order to move the start of the satisfaction closer to them in time. Entrepreneurs can do the same thing, right? Producers can do the same thing. They could save up and provide the funding to buy a capital good or they could borrow. If they borrow, they can move the satisfaction that they get subjectively, right, of having the producer good. They could move that closer to them in time and they could move the whole social structure of production, the period of production, they can shorten it and move it closer to the duration of servicefulness in time, right? So this is what we're speaking about when we say, when we talk about the interest rate, the pure interest rate, and how it efficiently allocates intertemporally. Okay, so now let's go through just the logistics of this or the details and the particulars of the argument. And what we'll argue, of course, is that the time preference theory of interest is simply the application of the general theory of pricing to this question of the intertemporal price of money, when people trade present money for future money, what is the price that's paid, right? The premium that's paid in this exchange. So we saw on Monday that when we applied the general theory of pricing to goods, that we just had the top line, right? The different people with different preferences, we have the iPhone SE buyers, right? And then the iPhone SE sellers and they just have different preferences for the iPhone relative to money. So some of them are demanding, some are supplying, and then the price emerges that clears the market and that's the argument, right? That the price of this consumer good is based just upon people's preferences. It generates from people's preferences as their preferences are guiding their demands and supplies. So it's the same argument for the rate of interest. We have some people with intense time preference, we say a higher time preference, we have people with less intense time preference, lower time preference, and the lower time preference people and the higher time preference people can make a mutually advantageous trade. The lower time preference people can lend to the higher time preference people. I hope I don't get canceled for categorizing people this way. But you know, and then the interest rate would emerge as the market clearing interest rate so that every borrower can find a lender, every lender can find a borrower. Right, the same argument that we made on Monday. Okay, so that's how it's going to work out. And I want to emphasize one other thing. This is a somewhat more sophisticated point, but I just want to insert this here in order to ward off any confusion or misunderstanding about what is exactly being argued here. And this has to do with this point that the inter-temporal trade that people engage in is always present money for future money. This isn't to say that people can't inter-temporally trade goods, they can do this. You could inter-temporally trade an apple or whatever. You could lend and borrow an apples or men's dress shoes or transmissions on a 2017 Honda Accord or whatever. You could do this, right? But we're not referring to that phenomena. That phenomenon, that sort of phenomena takes place in financial markets, more sophisticated financial markets. What we're talking about is just the rate of it. We're trying to isolate just the rate of interest to give you a better example than the ones I just did. People can buy and sell stock in companies, but the return on stock is a combination of interest and profit or loss, if you suffer loss. It's a combination, right? People are trading a complex good here that has different dimensions to it. And we don't wanna focus on that. We could do that, but that's a more advanced topic. Here, we just wanna look at the interest rate in isolation, so to speak. And there, what we find, of course, is in the real world, if we look out into the world, we see that lending and borrowing, people do it in money. When they just want to lend and borrow, they do it in money. And so this is why we say, well, the intertemporal trade of money is what we focus on theoretically, because this is what people are actually doing. We'll talk a little bit more about why they do this in a minute, but just to be clear. Okay, so this is what it would look like if we look at a specific case of this, just like we did again for the preference rank on Monday when we did goods. So suppose we have person A on the left who has less intense time preference than person B. So notice that person A and person B both prefer $1,000 today to $1,000 in a year. And we're assuming, again, because we wanna isolate time preference, we're assuming that the purchasing power of the $1,000 is the same, is anticipated to be the same in the present as the future. Maybe it isn't, but that's a complication we'll get to at the end. And then the rest of the preference rank, you can see for the person with lower time preference on the left, that person requires a $100 premium on $1,000 to prefer the future sum in one year to the present sum. So notice that person would be willing to lend $1,000 today in order to get a payment one year from today of $1,100 or more. $1,200 would be better, $13 would be better, right? The person on the right has higher time preference. Notice this person too prefers $1,000 today to $1,000 in a year, but this person's preference for future money requires a premium of $300. So this person would prefer $1,300 payment in a year to $1,000 today. In other words, they would lend $1,000 today if the interest rate were 30% or above, but not if it were 29% or below. If that were the case, then this person would be a borrower. Remember, I'll point out to you again, what we're doing with this kind of preference ranking, we're not establishing preference ranks in the abstract, we're saying we look into the world and we see that there's some people lending and some borrowing. If somebody lends, right, $1,000 in a contract to be paid back $1,100 in a year from today, then we can infer from that that they prefer the $1,100 in a year to the $1,000 today because that's what they did. And if we see somebody borrow, we can see that they had the reverse preference, right? They actually preferred the $1,000 today to the $1,100 in a year. They actually do, right? And then the rest of the preference rank, we can just build by logic. So what would make a person lend more, well, maybe a higher interest rate than the lower one, the law of supply and so on and so forth. Okay, so clearly you can see that these two individuals could make a mutually advantageous lending agreement. A could lend $1,000 to B at some interest rate between 10% and 29%. And they would negotiate this out and make their mutually advantageous loan. The only other thing, of course, we need to do in order to have an interest rate theory is expand this to the market. Again, just like we did on Monday with consumer goods, we just started with basic demand and supply and then we put in competing buyers and competing sellers. So I won't bother with charts to show this, but just go to a diagrammatic representation. So there's certain, in other words, we look out as economists into the world and we see that they're loan markets, they're markets where people are lending and supplying and then there's a certain interest rate at which this particular loan, let's say 15-year mortgage loans or whatever, is taking place and a particular amount of lending and borrowing that's going on. And then how do we explain this? And the Austrian answer to this is, well, we have people with lower time preferences and we have people with higher time preferences, people with more urgent desire to have their satisfaction sooner. And they can make mutually advantageous lending and borrowing agreements so that the people with more urgent desire for sooner satisfaction can attain that end by borrowing the money and the people with lower time preference could attain their end by getting the greater future payment that they value more, right? And then the market will clear when these people come into the market with all these different time preferences, then the market will, the interest rate will adjust to the point that clears the market. So this is the idea. We get the pure rate of interest, we get the total amount of indebtedness, lending and borrowing that goes on in the economy through this configuration. And just like, as we've been suggesting, just like with goods in the goods markets, the present money is reallocated to people who value it more in this process, right? Just like the good, the iPhone SE that we worked with on Monday through trade is reallocated to the people who value it the most, again, relative to money, right? So this is what's happening here also in the loanable funds market. Okay, so we want to take one more point along this line. And this is the final point on this slide. Just to note that once we have an interest rate in the market, then the interest rate itself equates the present market value of money with the future market value of money. And this is what allows the interest rate to integrate inter-temporal economizing into economic calculation. That's why it's important to stress this. So what I'm doing on the bottom two lines is just the standard straightforward compounding of interest and discounting. So we've got the future value that would accrue to someone who lends money on interest is the present value, the present sum, multiplied by one plus the rate of interest. They get the principal plus the interest payment, right? So a person who lends $1,000 today at an interest rate of 25% would get a payment of $1,250 in a year. That's the first line, right? That's compounding. But what we wanna focus on is since we're concerned about the inter-temporal periods of production is the entrepreneur. The entrepreneur is going to take present money and buy inputs and then produce a good and sell the good in the future. The entrepreneur needs to know how much is that future money that I'm going to get worth to me in present money given the market itself, given what exists, people's preference array in the market. And the answer is in discounting, right? So the entrepreneur just does the reverse calculation of compounding in order to find the present value of the future revenue that will be generated by some production activity. This would involve also investing in fixed capital as well as working capital, right? If that's the case, that's how the market works, then you can see immediately how the interest rate will integrate inter-temporal dimension of activity, of human activity, into the overall system of economic calculation because now future money and present money can be equated in the mind of the entrepreneur just like the present money, an entrepreneur who sells to one customer in the present relative to another is comparing equal monetary sums, right? So again, this is another reason why inter-temporal trade is done in money and not goods. Okay, then really the last step that we want to take in this is to talk about the two components of the time market, what Murray Rothbard calls the time market. So the time market is all exchange of present money for future money, and then again, we can look out into the world and we see that there are two categories that we can describe for the exchange of present money for future money. The first are credit markets, what we've been mainly discussing here, right? Lending and borrowing contracts. And the lending and borrowing contracts could be for consumer loans, you take out a mortgage, buy a house, you take out a car loan, general merchandise loans and credit cards and so on and so forth. With a lower time preference people lend to consumers who have higher time preference and then the sooner satisfaction of the consumer with higher time preference is satisfied. And then the producer loan markets, so they're bond markets, commercial paper markets and so on and so forth, where the entrepreneur is borrowing from again the capitalist lenders who have lower time preference and this moves the period of production, it moves it forward or closer to the end of it is move closer to the persons in time. So it shrunk, right? Because the entrepreneur doesn't have to wait to save in self fund, you can borrow the funds and start right now to get the inputs. And so notice the production structure, this second part of the credit market, all of that funding goes into the capital structure. So the production loans all wind up in the second part of the time market which is the capital structure. And there as I've been alluding to, the funding source could be either from the entrepreneur himself or herself, right? They can self fund in other words, they can save up their past profit, retain earnings and then fund their purchase of inputs that way or they can borrow from outside capitalists and then fund these purchases. So what the capitalist entrepreneur is doing, we sort of put these functions together, right? Dr. Klein likes to do in the entrepreneur. So the entrepreneur backed by the capitalist or if the entrepreneur is self funding he's a capitalist himself, right? These functions are together. So the capitalist entrepreneur is doing again is fronting money to the owners of the factors production. So the car company entrepreneurs at Honda or whatever, they're paying workers, they're paying suppliers of tires and steel and so on and so forth. Now to get these inputs in order to produce the car and then sell the car in four months or whatever, they're advancing money to the owners of the factors of production. And in doing this they earn the interest rate. They pay the discounted marginal revenue product of the factors and earn the full marginal revenue product of the factor, right? This is the point. Once we see that there are different components of the time market, different ways that loans can be made or present money can be traded for future money, then we also notice the arbitraging that can take place between the two subcomponents, right? So suppose like I've got sketched out here that the interest rate is real low on consumer loans, the R0 point A on the left panel and very high in the capital structure, that is if you pour lending funds into production processes, you can get a higher rate of return than if you lend to consumers. That sort of situation will not persist, right? That is not completely economizing because you have higher valued lending in one place and lower in another and so the capitalist lenders will simply shift their funding. So the supply will shift, right? Until the interest rates come roughly together in those two different endeavors. In fact, this isn't just the case for different components of the time market. It's also the case for every production process in the economy. So let's say we had a situation where the interest return in smartphone investments was 7.5% and the interest return in tablets was just 2.5%. Well, that too would not persist in the market, right? The capitalist investors in tablets would sell out their assets in tablets, lowering the prices of those assets and they'd buy assets in smartphone production, boosting the prices of those assets. And so the cost structure in tablets would fall because asset prices are lower and the cost structure in smartphone assets would rise and so the cost structure rises there and then the interest return would come together. And those of you again who are more sophisticated about all this recognize that this happens almost instantaneously, this kind of movement, this arbitrage in financial markets. We don't actually need movements of the physical objects themselves in order to get the movement of prices that's occurring in the market economy. And then the last point that I wanna make on the interest is this point at the bottom. Just to emphasize this because this distinguishes the Austrian view again for many other views of interest. Neither physical productivity nor value productivity of assets affects the pure rate of interest. Quite the contrary, so let me take an example to illustrate. Let's suppose we have a production process and it uses these inputs. There's capital, so on the left-hand side, suppose the entrepreneur anticipates that the marginal revenue product from using a capital good that he owns will generate $10,000 in the sale of the consumer good in a year's time. And the natural resources that he uses will generate $5,000 of marginal revenue product. And the labor he uses in this production process will generate $2,500 in the price of the product that he generates. So the left-hand side is the revenue that's generated from the sale of the product broken down as the entrepreneur sees it allocated to the different inputs that he's using. And the question is, if the entrepreneur, if the interest rate in the market is 25%, what would the entrepreneur pay today to buy those inputs? Will it depend on the productivity, the value productivity of the capital or the value productivity of the labor and so on and so forth? And the answer is clearly no. It doesn't matter if the marginal revenue product of capital in this example is 20,000 or 10,000. What the entrepreneur, the interest rate element of what the entrepreneur is willing to pay is the discount. The entrepreneur pays $8,000 for a $10,000 payoff in a year. If the capital good were worth more, say $16,000, the entrepreneur would pay that discounted by 25%, right? The greater productivity of capital doesn't affect the interest rate. They're independent elements of the price of the input. And so you could see in this example that the net income for the entrepreneur would be exactly 25%, right? Because he's discounting the advance payments and we're setting aside profit here, remember no entrepreneurial profit considered. So let me end on this then. This was mentioned in a talk also yesterday, I think by Dr. Patrick Newman. Oh, he's talking about the benefit of the capitalist. Maybe this is Dr. Sean Rittenauer. Actually, he was talking about the benefit of the capitalist. He's not a parasite, right? He's actually doing something valuable in the social order. And we can actually see now, we can break down the contribution that the capitalist entrepreneur makes to successful production. And so here's the way that economists categorize the what I've called the sources of net income that the entrepreneur earns. The first that we just mentioned, right, is the entrepreneur fronts money, lends money to workers. And so the entrepreneur will pay the workers a discounted wage, a wage from what the revenue that the output generates that the worker is producing. By the way, this is not exploitation. The worker could take the wage that's paid today and lend it out on interest and would have the exact same money sum that the entrepreneur would pay if the worker agreed to be paid upon the sale of the good, right? It's not exploitation. The entrepreneur is just satisfying the higher time preference of the worker. Entrepreneurs can provide labor in the production process, in their own production process, for which they would earn a wage since they don't pay someone to do this work that value of their labor would wind up in their net income. They'd earn the revenue from the output, the contribution that that labor makes to output, but there's no cost, right? No out-of-pocket cost. The entrepreneur can also supply leadership skills. This would be the ability to organize factors of production to make them more valuable than if they're organized less effectively. So here the entrepreneur isn't contributing a labor skill for which he's earning a wage, so to speak, but is simply making other, the marginal revenue product of other workers go up. And this too, then, since no payment is made for this by the entrepreneur, this would wind up in the entrepreneur's net income. And then finally, of course, there's profit from the superior foresight. And once again, this is not parasitical, obviously. It's that different people have different skill sets, different abilities were, thankfully, not ants in the anteep, right? Where this is the true diversity, the true actual diversity that's important in human life were different from each other in these ways. We're the same in certain respects and different in other respects. Thank the Lord, right? Isn't this a blessing to us? And because we can then interact in ways that we couldn't otherwise. And so yes, entrepreneurs self-select. If they're good at providing foresight in the market, they'll self-select into that area and they'll be successful earning profit in their operation and can have an ongoing operation. If they're unsuccessful, they'll drop out of the ranks of entrepreneurs back into the ranks of workers, which is again, the social economizing thing to do. Thank you for your kind attention.