 Aloha, and welcome to Hawaii Together on the Think Tech Hawaii Broadcast Network. I'm Kili Ikeena. Our program today goes out across the world, which is good news because our speaker today has been known to many people all over the world. He represents a brand of thinking that is cutting edge in many countries and is making a real difference. My guest today is Ken Stolland, a professor at Hawaii Pacific University, but he's been a dear friend of mine, one of my oldest and dearest friends in my professional life for the past 40 years. We've known each other in a variety of venues. And today he's a grassroots institute scholar as well, helping to provide guidance in terms of how society, government, and all of us should be in an ideal world and a world that's not ideal. We're going to talk about free market economics today, but I don't want anyone to feel that that's going to be very technical. We'll take a very human approach. In fact, I think that Ken Stolland is one of the finest teachers of free market thought, but he doesn't do so merely from an analytical or technical frame of reference. He does so by understanding what's at the heart of it. And I hope that you'll enjoy meeting Ken today. My guest, Ken Stolland. Aloha. Welcome to the program, Ken. Aloha, Kili. Thank you for having me. So glad to have you on board. Thank you. Indeed, yeah. Oftentimes we deal with issues, but today I thought we'd go a little bit broader than that and just deal with what's on our heart. What's on your heart as you teach and as you travel the world, not merely as an economist but an ambassador for a certain way of thinking, free market thinking? Well, thank you very much. Actually the thing that has occupied me a lot in recent years has been publication of my books. It's now in more than 80 editions and more than 50 languages. You're talking about the adventures of Jonathan Gullible, which I'll put up here so the camera can get a nice view of that. The adventures of Jonathan Gullible, you say, is in how many editions? It's in 80 editions in more than 50 languages and three plays. One play touring countries of Africa, one for the universities, one touring high schools in Slovakia and one touring elementary schools as a musical production in Kazakhstan. Well, I have to tell you, I slaved away as an undergraduate working on an economics major up at Northwestern University and had very thick textbooks. Some of them you and I have both gone through. But reading Jonathan Gullible is like a breath of fresh air. All these concepts I pretended to understand when I was in college I actually understood when I began to read Jonathan Gullible. It's sort of like a children's text, isn't it? Well, it was originally written as a radio commentary for an all-news radio station here in Hawaii. And there was such a response, a good positive response to the humor and satire as a story that Sam Slome decided to publish it as a book first for Small Business Hawaii. And since then it's taken off around the world as a way of making economics more fun. It's so true that many people have had a very bad, dry and miserable experience in economics classes, but there's no reason it should be miserable. It should be fun and interesting and humorous. So that's what I've tried to do, take economics ideas more than 100 different economic concepts and weave it into a story sort of like Gulliver's Travels. Well, the basic format of the book is that this traveler, Jonathan Gullible, finds himself amidst some islands or an island kingdom thinly veiled Hawaii, I think. I won't say that, but necessarily. And he encounters many situations that teach economic truth. For example, I mean, one of the first chapters that I read happened to deal with him coming up on people who were batting down coconuts from a tree. And they would hit and hit and hit, and they'd spend their whole day and night working and little result. But then somebody modifies his bat with something like a machete and is able to chop down coconuts at a much faster rate. And then in all amazement, the heads of the islands, the lunas, the bosses, decide that's a bad thing. They don't want anyone to get infected with this. What's going on in that story? Well, it's the resistance that people have to change. There was a technological innovation that was making their work much more efficient, but people feared that it was going to take away their traditional jobs. And so they outlawed it and arrested the person who brought the new innovation. And that happens a lot throughout history, where people who have brought on new ideas rather than see the potential of then finding new things to do with your time and energy and talents, they keep wanting to have things as they always were. Now, don't the bosses in your story say that this new practice will threaten job security of the other employees? That's right. That's right. It's true in real life. The first person who came up with the steamboat on the Elbe River, when he first landed ashore, he thought that people would be praising him about this ship that could go up and down the stream with the wind or against the wind. Instead, the sailors burned it to the waterline, and they didn't have another working model for 80 years after that. Because they felt our traditional form of sailing is threatened rather than seeing all the potential of trade and commerce that could be opened up by this new form of transportation. You know, it seems as if Jonathan Gullible exposes some of the sociology or the psychology of economic system. It helps us understand why ideal systems are not put in place, why it is that people continue to do things that aren't productive for the economy or for individuals. Yeah, very much so. People are constantly striving to improve their lives and improve the conditions of life. That's what the market is all about, people pursuing their efforts by trying to please and satisfy other people with various activities. But other people who feel threatened by it, either they don't like the competition or they don't like the new idea or they, various reasons to feel threatened, they go to authority and usually try to put some kind of barrier in the way. We have an example of that I'd say in Hawaii with the fact that the Jones Act, a very protective measure for some people in some industries, has made life much more difficult for people who would like to have commerce with the mainland U.S. by allowing much lower cost shipping, for example. Now, you're talking about how a certain measure that our government holds onto is actually counterproductive to economic well-being. It actually raises the cost of living. And some of our viewers may not be familiar with something you're very familiar with and you and I have talked about it a lot and that's the cabotage laws you refer to called the Jones Act wherein in order for ships to carry cargo between two American ports, there are four things needed. And what are they can? Well, it has to be, the ship has to be built in America, it has to carry the American flag, have an American crew and have an American owner for the most part. And this limits the number of ships that we can access to less than 1% of all the world's shipping and raises the price because we have to purchase ships that are five times more expensive than we could if we could buy them from our allies in Japan or South Korea. So you mentioned a 1% and you know, if I hadn't actually seen the data, it'd be hard to believe, but the impact of this Jones Act, in other words, the four requirements that must be met in order for a ship to be used in the United States in cargo transport has created a real scarcity of these ships. We produce now less than 1% of the deep bottom cargo ships in a year and you've used a term describing that, you've called this an artificial scarcity. Yes, that's right, it makes it, people have to redirect their, they can't do things they could otherwise do in the market. And one way this has impacted many people on the mainland is that now they have to shift to do their cargo transportation by trucks instead of by ships, whereas if it was a lot cheaper to send ships up and down the Mississippi River or along the coast from Seattle to Los Angeles, they could use shipping instead of truck transportation with all the problems of building highways and pollution and congestion, all that sort of thing. We'd have a much simpler life in a lot of ways, I think, if we allowed the free market really to work. And when you talk about the free market working, you're talking about a set of principles that work naturally, for example, supply and demand in a typical setting, you know, all other factors equal when supply goes up and demand stays the same, what happens to the price? Oh, well, if the supply goes up, then you have lower prices, the prices would come down. And you teach that as an economics professor. And when the supply goes down, but the demand remains, what happens there to the price? Then the prices go way up. And so that's the story of the Jones Act. Yeah, that's right. The supply of ships goes down because of all the rules needed to be met, that can't be met by any more than one percent of all ships, so the supply goes down. Demand is up, so the cost of shipping goods is expensive tremendously. Have you found that this kind of lesson helps you teach in your classroom? Very much so, very much so. And we see this phenomena of the concentrated benefits to certain special interest groups are weighed against the very diffuse interests of the higher cost to the taxpayers and consumers. So the taxpayers and consumers may not be so aware of the rise in the cost to their things because it seems like their prices go up a little bit. But the benefits to the concentrated benefits to special interest groups are so great that they find it in their interest to lobby and pursue the political route to exclude competition. And that's usually the problem. Sure. And I've heard you give marvelous examples to help your students understand the impact of the Jones Act. One has to do with a car that I think you want to ship from China or to China. And you compare the price. Oh, yeah. The price was much higher. Tell our viewers that story. Well, we wanted to send a car to China and investigated and found that, well, because there's so, the shipping structure was such that I had to send it first to, I mean that it would be shipped first to California and then to China because there's such a restriction on the number of ships that can come to Hawaii. It's rather complicated, but ultimately the point is that it's much more expensive than it would otherwise be if ships were freely allowed to pursue market opportunities. Like for example, sending sugar from Hawaii to the mainland is more expensive than sending it from the Philippines to California because the Philippines is allowed to use non-Jones Act ships with people in Hawaii had to use Jones Act ships to send their, the sugar. So that was a tremendous disadvantage to our sugar industry as it is for all of your industries in Hawaii. So free market economics is where we want to let the natural forces of the economy work such as supply and demand. When we don't interfere with them as we do with the Jones Act, supply and demand meet each other at a more reasonable place in terms of prices. Now, there's another interesting story that I recall before we go to the break. You tell the tale of how Jonathan discovers that there are people on an island who are walking around on their knees. And they are working on their knees. They're carrying out daily life on their knees. Wherever anybody from the government can see them, they're on their knees, which is terribly inefficient in the workplace, terribly inefficient in life, terribly cumbersome. But Jonathan discovers why it is they're on their knees. They're on their knees because the government has passed a tax on being tall, the tall tax. What does this tell us about human behavior in relationship to taxation? Well, it reveals how much people shape their lives to the tax code. So rather than pay that tax and walk around like tall people, they would rather go around on their knees. And they could really lower their tax by crawling, you know. Do taxes control behavior? Absolutely. You talk to any tax accountant or anybody who's filing their tax forms around April the 15th and you find that people have shaped their lives a lot, the tax code. And the tax code is as complicated as it is because so many people are trying to lobby their congressmen and senators to get special legislation to exempt them from doing something and that makes it more and more complicated. And then other people try to fit their lives to that tax code. And it's very cumbersome because then we're not pursuing market interests and incentives. We're pursuing whatever it satisfies the tax collector. What kind of reception has the adventures of Jonathan Gullible had in other countries? I know, for example, today some of our viewers, in fact, many of them are in multiple countries. I want to acknowledge in particular India. You've got a version of, you've got three versions in different Indian dialect. Yes. In India, we've got Bengali edition, a Hindi edition, an English edition, which is the Educator's Commentary Edition. And we have three new editions that are coming up in Pujab, a graphic novel in Malayalam and Tamil. What kind of reception is this? Well, it's a very well-received, there is actually more interest in the book in India than there has been in the United States, but we're working on that. Well, that might be when we come back from our break, that might be because of the thirst for liberty. We'll be right back after a short break with Ken Sculland, professor at Hawaii Pacific University, talking about free market economics, but when we come back, we again won't be technical. We'll talk about what's at the heart of free market economics, which is the concept of liberty. Don't go away. Hello, everyone. I'm DeSoto Brown, the co-host of Human Humane Architecture, which is seen on Think Tech Hawaii every other Tuesday at 4 p.m. with the show's host, Martin Desbang. We discuss architecture here in Hawaiian Islands and how it not only affects the way we live, but other aspects of our life, not only here in Hawaii, but internationally as well. So join us for Human Humane Architecture every other Tuesday at 4 p.m. on Think Tech Hawaii. Hi. My name is Bill Sharp, host of Asian Review, coming to you from Honolulu, Hawaii, right here in the center of the Pacific Ocean. Asian Review is the oldest of the 35 or so shows broadcast by Think Tech Hawaii. We've been in production since 2009. Our goal is to provide you, the viewer, with information, breaking information about events in Asia, Asia being anything from Hawaii west to Pakistan, from the Russian far east, south to Australia and New Zealand. We hope to see you every Monday afternoon at 5 p.m. Welcome back to our episode on Think Tech Hawaii called Hawaii Together, because one of the things that is most important is that we work together to solve our problems. Divided, there's nothing we can do, but United, nothing can stop us. And many people believe that, and I hope that you realize that Think Tech Hawaii, which produces about 30 shows a week that go out across the world, is working to bring people together. My guest today, Ken Sculland, is a professor of economics at Hawaii Pacific University. And more than that, he's a goodwill ambassador all across the world for the idea of free market economics. We've been talking with him about that, particularly his book, The Adventures of Jonathan Gullible. But I want to zoom in on something that's at the heart of free market economics. So, Ken, I got to say thank you to you. There's a young man who this year is going off to study economics and finance on the mainland. He's our fourth child. And he got very interested in this subject when, at home, we used as a daily devotional readings from the adventures of Jonathan Gullible. I know that may sound rather heretical, materialistic, and very worldly, but it was really a spiritual experience. And one of the things that he gave feedback about was that he could see in the situations that are described in The Adventures of Jonathan Gullible the real workings of how school and how government and how he perceived the economy working. And so if you could teach an eighth grader ideals of economics, congratulations. At the time, not eighth grader, I meant eight-year-old at the time. But one of the things that was most fascinating to him that set him on a little bit of a course of rebellion against his parents was an idea he fell in love with. And we are so glad he fell in love with this idea. It was liberty. Let me read to you a bit and ask you to comment. At the epilogue of your books, you've got guiding principles called the philosophy of liberty. Tell me what this means, as Jonathan says, my philosophy is based on the principle of self-ownership. You own your life. To deny this is to imply that another person has a higher claim on your life than you do. Now, my son learned that his parents don't have a higher claim on his life, but he's turned out well anyway. But what is this value here and why is it at the heart of the text on economics? It was something that the Founding Fathers thought was very important. So they wrote about this in the Declaration of Independence, that we hold these truths to be self-evident, that all men are created equal, that they are endowed by the Creator with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness. That we have the right to make decisions about our own destiny, our own direction, our own path in life, and that for other people to presume that they own us or that they can control us makes us their slave. And the Founding Fathers wanted to get away from that saying, we're not the slaves of King George III, we're the masters of our own destiny. When you say in this creed, you own yourself, self is a very big concept. It's not just personality, it includes property, it includes the product. Talk about that a bit. What is the self and what belongs to the individual? I assert that we exist in time, and that our future we think of as our life, because we can then have a future. Our liberty is our present of being able to control our actions. And the past is essentially the product of our life and liberty. And we often associate that with property, which is a part of it. And it's a physical manifestation of what we've produced in our life. And it's why John Locke and our Founding Fathers all talked about the importance of life, liberty and property, that they're the elements of ourselves in time. And that if we don't control those things, then we become the slaves of others. Now by being the slaves of others, that means someone external to us without our permission takes away from us our life, our liberty and our property. I would imagine it's perfectly alright if you decided to share your property with me or I decided to share it with you or our lives in any way. But to have that decision made by an external party, by the government, so that it's an involuntary removal of life, liberty or property, what is the affront to economic thinking in this? Well, we all recognize that it's wrong to steal. It's wrong to kill. And it's wrong to lie. It's wrong to covet. I mean, these are sort of fundamental actions that have been outlawed in most religious philosophies and so on. And yet it's ironic that even though it's wrong for me to take from you against your will, and people broadly accept that, somehow they find it acceptable if I ask somebody else to do it for me, if I ask a government official to take your life, your liberty or your property from you, then people accept it. I elect someone to do it for me. Yeah, large numbers of people. But the action is the same. Whether I do it myself or ask somebody else to do it for me, even if large numbers of people ask someone to do it for them, the action is the same. And I contend in this that the actions of what is really important, not just the numbers of people that sanction these actions. So let's talk a little bit about property. I'm going to zoom down another paragraph in the philosophy of liberty and read. A product of your life and liberty is your property. Property is the fruit of your labor, the product of your time, energy and talents. It is that part of nature that you turn to valuable use. And it is the property of others that is given to you by voluntary exchange and mutual consent. Two people who exchange property voluntarily are both better off or they wouldn't do it. Only they may rightfully make the decisions for themselves. I see a couple of things here. I see a value statement on your part that our property is our own and no one has a right to take it from us involuntarily. But I also see a system at play here where you talk about people voluntarily exchanging property. It's almost as if that's the very basis of economics right there. Absolutely. Tell us a little more about this. We aren't totally self-sufficient. We could choose to be, as Henry David Thoreau at the side of Walden Pond decided to make his own life and liberty and pursuit of happiness at the edge of Walden Pond. But we find that we improve our lives beyond much more basic primitive status by trading with each other. And this is where most of the world throughout history has improved their lives by improving their conditions with spending their time and energy and talents on the things that they do best with the resources that they have and then trading with other people for the things that they've produced from their better talents and resources. And this has been the driving force for the improvement of our condition and all too often there are efforts to try and intervene with this, to prevent us from doing these things because there are other people who feel jealous or envious of these kinds of actions. And we shouldn't allow the government that should be protecting us to turn against us and be the one that deprives us of our life, liberty and property. It should be protecting life, liberty and property rather than depriving us of these things. I'm sure you've received a lot of criticism for talking about the ideal of involuntary exchange as the basis of economy or as the basis of government. But what would you say if somebody said, look at all the good things we have through government taxation. We have roads. We have highways and highways. And we have the defense systems, the police department, the fire department and all of that. Without requiring people to give of their property for these purposes, we wouldn't have these good things that are needed to run a society. So what do you say? I think that's a good point and what they should also look at is how people, if they truly value these things, they can do it better with competition and with incentives that don't exist with the government monopoly and with the coercive powers. I mean, consider a government that has monopoly position and coercive powers can use its position in very harmful ways. It can be extremely aggressive against their own people. It can be extremely aggressive against other people in other countries. It can be extremely wasteful. And so you want to minimize the use of coercive power in order to maximize the better choices that we have. The roads, for example, first existed in this country by private voluntary action of farmers who wanted to get their crops to market. And they did so willingly and eagerly by building roads that they often put up a toll in order to pay for it later, or they contributed it because they had great gains from it. Just as fire departments existed throughout the country as volunteer fire departments or they were hired by insurance companies that had motives and incentives to put out fires. And mutual aid societies existed throughout the country because people were always eager to help each other and they had motives to come together and cooperate. But as the government then came in at the behest, let's say, of an insurance company that didn't want to pay for the protective service, wanted taxpayers to pay for it, then people's own voluntary action rested. They sat back and said, OK, well, let the government do it. But it's not as efficient at doing, providing things as people were driven by freedom and by incentives in the marketplace rather than just relying on politicians. You ask people, do you trust the campaign promises of politicians? And overwhelmingly, I get people to say, no, we don't trust them. Are they more honest or is the person who is running for office the more honest person or the least honest person who's likely to get elected? And people say, oh, the dishonest ones likely get elected. Are their moral standards higher than your own? And people say, no, they're not. And yet you put a lot of people who have a very low opinion of politicians, but you put a lot of them together into a legislative hall and suddenly they feel well that it must come up with something good that we really need. But in fact, there's a lot of things that we don't need that are wasteful, that are tyrannical, are abusive of their positions in power. It's a place that attracts the most corrupt in society to those things. Well, Ken, we've come to the end of our very short half hour together, but you've left some inspiring thoughts. And I want to encourage our viewers to take a look at Jonathan Gullible. Just Google it, because it's all over the place. And you can actually read it online, Jonathan Gullible, The Adventures of Jonathan Gullible by Kenneth Skulland. And I do want to say this, in talking with you, I'm hearing the heart of somebody who wants to bring a better thinking to the way we do government, to the way we do economy. Some of the ideas may seem very radical to others, but as long as we start thinking along free market principles, we can achieve at least a balance in this world and create a better economy and government for everyone. Ken, any closing thought? Well, the idea of liberty has always seemed radical to people who aren't familiar with liberty or who wanted to deny liberty to others. And so I'd say that it's our natural impulse to want to be free. And this freedom and competition in the marketplace is likely to bring us a lot more fruits than just a mandate by government. Well said, thanks for being with us today. Thank you very much, Gullible. My guest today, Kenneth Skulland, is the author of The Adventures of Jonathan Gullible, a free market odyssey. You can get that online anywhere. I'm Kili Akina with Hawaii Together on the Think Tech Hawaii Broadcast Network. Until next time, Allah.