 Professor Walter Williams, who is certainly one of the most well-known of all libertarian economists and author of numerous extremely interesting works, one of which is his brilliant book, The State Against Flags, which I have myself right now bought one of the 15 copies we have on sale and will try to pressure him into signing for me later on. I'll give you Walter Williams. Thank you very much. This is good enough like this. When I was invited to address you, the topic had yet to be decided, but I was hoping that I could talk about individual freedom and the effect that government intervention has on that. But what I've been asked to talk about is government minorities and discrimination, which will probably lend itself to that general philosophy or general issue anyway. What I would like to do to the extent that some of you are familiar with some of my arguments, I would like to present an outline of some of the things I want to say and leave most of the time or a good portion of the time allotted to me for questions and discussions, any kind of questions or comments that you would want to make. And you should feel free to raise any kind of question that you want. As suggested in the Praise See that's in your book, it is my opinion that when we talk about matters of race and or sex, there's very, very confusing language. And I think that the confusing language has a lot to do with our policy mistakes when we address the issues of sex and race or any other form of discrimination on the basis of attributes. So let me pose a question to you. You can think about as I talk. What are those things that we really care about when we talk about racial relations between people? I mean, should we be upset because one individual does not like another individual because of his race or ethnicity? Should we be upset when people make arbitrary choices based on skin color, sex, or sexual preference, if you will, or things like that? Now, let's delve into those things a little bit or let me just ask another question. Should we be concerned that people are prejudiced? And if so, why? My ideas suggest or at least some of my thinking on the subject suggest that when we talk about racial preferences, they're really no different from any other kind of preference. That is, at least an economist is not in position to say that it is somehow more righteous to prefer oranges to apples. I mean, how can we say that? Or we should like them equally. We just say, well, we just take the human preference as a given. Well, can we distinguish or is there anything about race or sex, for that matter, to say that people should not have preferences with regard to race and sex? Is it somehow different from a person having preferences for Bordeaux wine versus California wine? I assert that there's no difference. That is, there's no argument at all that one can present, in my opinion, that says that we should like each other equally by race or sex or nationality, et cetera, et cetera. That is, those are just preferences. Now, so we want to think about, if you accept my hypothesis or my argument, well, do we really care? Is that the thing that we should be concerned with when we look at racial or sexual relationships? Or what about prejudice? People say that you should not be prejudiced. Or if you read sociology books, you get the impression that prejudice represents some form of pathology that's needs curing by the sociological profession. Well, I think that prejudice is a very, very good word when we talk about racial or sexual relationships, but it's misused. Or we don't give it an operational definition. That is, I think that prejudice would be a very, very good word if we stuck with the, it's Latin derivative. And it's Latin derivative is just to prejudge. Now, maybe an economist can best understand this is when people make decisions on the basis of incomplete information, they prejudge or they form stereotypes. They might ask, well, what's wrong with prejudging? Or what's wrong with forming stereotypes? Or what are stereotypes, really? Well, when economists recognize that people must prejudge, that is, people must make decisions on the basis of incomplete information. And whenever you make decisions on the basis of incomplete information, you prejudge. And you try to find stereotypes to help you economize on information costs. To give you a flavor of this, suppose after our meeting here, you were to leave and go to the cafeteria. And as you're leaving the room, you step out of the door and you see a full grown tiger standing there. Well, what would you do? Well, the uninteresting prediction is that most people would endeavor to leave the area in great dispatch. But that's not a very interesting prediction. But if we ask, why do you do that? Why is your decision to run based on any detailed information that you have about that particular tiger? Or is your decision to run based on what you've seen of other tigers, about tiger folklore, or what your friends have told you about tigers? Probably your decision is based on that kind of information. That is, you are prejudging that tiger. You are using stereotypes. Okay, now, some people might say, well, I don't use stereotypes. Well, that person would go, before he would not prejudge the tiger, he would try to get more information. And he would go up to the tiger saying here, kitty, kitty, try to establish whether he's friendly or not. And then only, and only then, if he behaved in a menacing fashion, then the purse would run. But most people make a quick calculation. They make, they weigh the expected cost of an additional unit of information about that tiger versus the expected benefit. And you just find out that the expected cost exceeds the expected benefit. So they don't search for any more information. So now if you say you have to be kind of careful if you said that that person was behaving that way because he did not like tigers. But he's really behaving in a way to economize on information costs. Let me give you another example of it. Now suppose I had, suppose there were a group of people in the room, and there were five white males, I need this, okay, five white males, five black males, and five white females, and five black females, 20 people. And if I had 20 people standing up here, and you could not differentiate between those people except by race and sex, that's the only way you could differentiate among those 20 people. That is, you had zero information about any other characteristic. And I suggest to you pick a five-person basketball team among those people. And if you win the game, you get a million dollars. Now, how would you choose? Now, you have zero information about their basketball playing productivity, proficiency, and they all appear to you to be equal. And you can only distinguish between among them by race and sex. Well, a good Bayesian, he would probably confine a lot of his choices to the black males, knowing that there is an association between race and sex, not necessarily a causal one, but at least an association, at least in the United States. Now, even Jermaine Greer would not say, well, I'm not going to pick men. And so she did. So she chose to discriminate against men. Well, would we care? Or suppose you had a guy like Governor Wallace saying, well, look, I'm not going to give the blacks any chance to be picked. I would love to play against Governor Wallace's team. We clean them up all the time. So what I'm saying here is that a lot of behavior that is called discrimination or preferences may not in fact be that. That is, if I ask the woman in the audience, if she knows anything about basketball, to pick out a five person team, she would probably confine her choices to the men, and her choice would be dominated by the black males. But a man from Mars observing her behavior, would he be safe in concluding that she does not like females, neither does she like white males? No, he couldn't. That is, you want, we have to be very, very careful about inferring preferences from watching people's behavior. Now, similarly, if I were to ask anyone of you, let's play the following game. And I tell you, and I tell you, look, what we're going to do, we're going to walk to any university, let's pretend that Stockholm University, and let's pretend for a moment we can, it's completely integrated, and it reflects the ethnic composition of Stockholm, or maybe, maybe it's less like the United States, because I know that a little bit better. And the university that we're going to be at reflects the ethnic composition of, and the sexual composition of our country. And I tell you, let's play the following game, find the integral of x squared dx. And I tell you, for each person that you ask as you walk along the campus, can integrate this function correctly, I will give you $2,000. Each person that you ask to integrate this function, who does not know the answer, you give me $200. Now, if you find the payoff matrix of this game is officially rewarding to induce you to play the game, then the question is, how will you choose? You have, I'm also postulating, that you have zero information about the mathematical proficiency of any of the students. All you're allowed to do is walk up to the person and say, what is the integral of x squared dx? How will you choose? Well, you would choose randomly if you thought that these skills were randomly held by the people in society. But probably a good Bayesian would confine his choices. He would not pick women. He would not pick blacks. He would not pick Puerto Ricans. He would probably confine his choices to Japanese males, and not those wearing crew cut, not those wearing sandals and looking hippie-like. But he'd probably confine his choices to Japanese males. Now, again, the person is behaving on the basis of incomplete information. He is optimizing. The same thing with employment. That is, if you're a firm hiring people, then you're going to, and it's going to cost you, let's say, $1,500 per applicant that you interview for a job, and you're looking for an applicant who can perhaps get, let's say, $700 on an SAT test. Well, would you send your recruiters to places like Harlem and Philadelphia, where you, nonetheless, you have to pay $1,500 per prospective candidate. That's what it costs you to screen. But your return is going to be relatively small. So you will choose other schools or schools where there's a higher probability of success. And indeed, the schools with the higher probability of success may not be black schools. The point that I'm trying to make here is that by observing people's behavior, there's very little that you can infer about their racial preferences. Now, what about discrimination as another word that we use in discussion of race? People say that you shouldn't discriminate. Well, I think that we can come up with an operational, a better use of the term, or more operational use, more operational definition of the term discrimination, if we just look at the way an economist might do, that is, discrimination is solely the act of choice. Now, scarcity requires us to make choice. That is, when I came to Stockholm, I had to discriminate against other possible uses of my time. When I married my wife, I had to discriminate against other women, and she unfortunately requires for me to continue this discrimination. Now, you might say, well, that kind of discrimination doesn't harm anybody. I'd be insulted because for you to say something like that means for me, for my marrying my wife, not to harm other women, I would have to be the kind of man that only one woman want, and that's obviously not the case. So that kind of discrimination is indeed harmful. And matter of fact, we do it all the time, don't we? That is, any of you women, I know that they're roughly, when you're choosing to marry somebody or choosing a mate, they're roughly two and a half billion choices for you around the world. Now, how do you choose that one mate? Do you give each guy a chance? Or do you narrow it down on, based on some kind of criteria that the Equal Employment Opportunity Commission would not accept? And you probably do. You probably do. So do we care that people use stereotypes? Do we care that people have preferences? Do we care whether people discriminate? Now, it seems like all those things are necessary and common attributes of human behavior. So to tell somebody not to discriminate is foolish. To tell someone not to discriminate by race is foolish, as a general premise, because most people marry people of their own ethnic group. Matter of fact, it's even worse than that. They marry people of their own education and their own income standards. So all this does, you know, it makes the income distribution more skewed or makes inequalities more skewed than they otherwise might be. Let me just talk about another word before I talk about what we might care about. Oh, that was what we should care about. And that's segregation. Now, in the United States, if you ask the average American whether the airport, the Washington, the Washington, D.C., national airport, whether the soda, whether the water fountains are segregated or not, most Americans would say, well, of course, they're, they're desegregated, you know. And what would it be their tests? Their tests for the, whether water fountains at D.C., national airport are desegregated or not. The test would be, well, if a black is there, can he in fact just go up and get a drink of water if he wishes to. Now, on the other hand, if you ask Americans whether schools have been desegregated in the United States, well, there'd be a lot of controversy. Some Americans would say no, and some would say yes. Some would say that they're segregated and others would say that they're desegregated. Now, unfortunately, the tests in schools, people would ask, well, what percentage of the school population is black? And then if you don't come up with a magic number, then they would say that the school is still segregated and we need to have the Supreme Court order some more busing. Now, nobody uses that same definition or that same reasoning when they ask the question or when they answer the question whether the water fountains at the D.C., national airport have been desegregated or not. That is, no one says, well, blacks are 70% of the population of Washington D.C. And if 70% of the people at the water fountain at any one day are not blacks, then the water fountains are segregated. Nobody does that. Furthermore, because they don't use that sloppy definition, they don't go out and bus whites from the water fountains at the D.C., national airport and bring blacks from Anacostia to the D.C., national airport to drink water. You don't come up with foolish policy because they don't use the same definitions. Now, I think that the only thing that we should care about about in racial relations is whether their state support preference indulgence. That is, we should be very concerned when the state either explicitly or implicitly or directly or indirectly supports racial discrimination of one form or another. And I'll come back to that when I start talking about various forms of government intervention market. But let me say a few other things that in the vein of wetting your appetite to raise some questions. The most central premise of the civil rights vision all around the world, I believe, is that statistical disparities in incomes or occupations or education are moral injustices caused by society. That is, these statistical disparities show that in many people's opinion that women are discriminated against because while women are 50% of the population, they are x% of some job. Or while blacks are x% of the population, they're only x-1% of some jobs. Underlying this premise that statistical disparities are moral injustices caused by society, there's the assumption that discrimination leads to adverse effects on the achievement of those discriminated against. That's one of the minor assumptions behind the statistical disparity premise. Another minor assumption is that statistical disparities or statistical differences imply or measure discrimination by race or sex. And this assumption depends upon a third, and that is in a critical assumption to the civil rights vision, that statistical disparities would not arise and persist without moral injustices being imposed by the society. Now let's look at some of these assumptions or premises behind the civil rights vision. But first, before we look at some of them, we know, or at least we should know, that if A is known to cause Z, we cannot infer Z when B, C, and D are also known to cause Z. That is, we know that smoking, for example, is a cause of cancer, but would we say that everybody who has cancer smoked? I think that that would be somewhat fallacious to say that. So when we see disparities or differences between statistical differences, we know that discrimination may cause those differences, but we cannot say that when we find a difference that it was caused by discrimination. Let me look at some of the some things, or let me just throw out some observations of statistical disparities, and I would like for you to think whether they were caused by discrimination. First, 50% of Mexican Americans marry in their teens, while only 10% of Japanese do so. Now that is indeed a statistical disparity, but matter of fact Japanese, they wait until the median age for Japanese marrying is somewhere around 30, 31 years old. Now given that statistical disparity, and I don't know whether anybody can say that it's caused by discrimination, but it can lead to some other observed differences. That is, there are surely different income implications from one marrying when he's 30 than one marrying when he's a teenager. There are different income implications both for that individual and for his children. Let me throw out another one. In the United States, 75% of all professional basketball players are black, and the highest-paid ones are black. Now surely that is a statistical disparity, that is blacks are not 75% of the United States population, there are 12% of the United States population, but 75% of basketball players. Can one say that that's caused by discrimination, or can one say that black basketball players are involved in some kind of conspiracy against white basketball players? Not to mention Japanese basketball players and women basketball players. In baseball, three of the five highest home run hitters were black. The 10 highest slugging averages in a season, seven were German Americans. The five times that more than 100 bases were stolen in the season, all were by blacks. You could go on and on. You could look at other differences between people in the United States and perhaps around the world. To look at age differences in the United States, the median age of all Americans is 30 years old. The median age of Russian Orthodox Jews is 45 years old, Polish Americans 40 years old, Japanese Americans 34 years old, black Americans 22 years old, Mexican Americans 16 years old. The median age for those who have forgotten your statistics, median is half above and half below. Now can one trace those age differences, those rather fantastic age differences to racial discrimination? Their statistical differences would one expect that all ages should be the same. Now furthermore, there are also other socio-economic implications of these differences. That is, if you compare one group, most of whose members are teenagers, against another group, most of whose members are mid-career adults, would you be surprised to find significant differences in income at the median? You shouldn't be surprised at all because you're comparing teenagers with mid-career adults many times. So the fact that there are significant income differences at the median for many Americans, a lot of people say that this is racial discrimination. But a lot of it represents things other than race. It represents age, at least in that case. What about females? You hear in the United States there's this 59% cliché. That is, they say that as evidence of sex discrimination against women, we have this number that is women make 59 cents over male on the male dollar. And they say, and the assumption is that women are equally productive to men, but yet they only make 59 cents on the male dollar. Well, first of all, if you were to accept that, it would require that you believe something incredible. That is, here we have 59 cents. There's 59 cents, that's what a woman makes, an equally productive woman, and a man gets a dollar. Well, what they're saying that companies in the name of the brotherhood or out of just sheer stupidity are paying men 71% higher wages than they would have to pay if only they would hire this equally productive woman. Now, we know that companies have wound up on the industrial trash heap because they had costs that were 1% higher than their competition. But here you're talking about firms wanting to take on labor costs that are 71% higher than they otherwise would have to. That makes you suspicious about this 59% cliché. That is, it makes you wonder why companies are not just owned by women and just come in and drive the competition out of market with those kind of cost advantages. Now, but I don't believe, I don't believe that women on the whole are as equally productive as men. And there's some very good reasons for that. First of all, women have babies and men don't. And women nurture babies and men don't. So what it means is that women are, to a great degree, are tourists in the labor market, eating out of the labor market. So when you come up with a median statistic, it's going to reflect this. What gives support to this hypothesis is that if you take women, if you take women who have been continuously active in the labor force from high school graduation from 18 to age 37, their, the median income of this group of women is slightly higher than men of the same description. Furthermore, at colleges, on college universities, women who have never been married. Now, these are women who have never been married, by the way. And women who have never been married who are college professors and who have the same quality degree and the same number of publications and the same years of experience, their median income is slightly higher. It's not a very significant statistic, but it's slightly higher than men of the same description. Now, furthermore, a very interesting thing to put beside the 59% cliche, is that men who are never married, their income is 61% of married men. So if you believe in the conspiracy hypothesis of firms, not only do firms discriminate against women, but they also discriminate against men who have never been married. Now, there's some very good reasons. Well, at least some of the research I've seen suggests that the major problem for women is marriage. That is, when women get married, they put themselves at a serious disadvantage, because when a man marries, he gets a helper. And when a woman gets married, she becomes a healthy. And there are different human capital development implications of those roles, of different roles. That is, men come home from work and kick off their shoes and read their journals. A professional woman comes home, comes home from work, she kicks off her shoes and gets the kids washed and fixed dinner and et cetera, et cetera, which does not contribute that much to human capital accumulation. Furthermore, there's the mentality with the Valgoas. That is, when a man, when a couple moves, normally, when they couple moves physically, moves from one city to another, or one country to another, normally that move means an upward move for the man and a downward move for the woman. And I might just make one more thing before I go into just two or three issues about government. And that is, you would predict that females would tend to make lower income on the average, because of some rational choices that they make. That is, if you look at the distribution of women among professional occupations, you'll find they're disproportionately represented in things like elementary education, secondary education, librarians, and some other fields. Now, there's been some interesting studies. I think the one, it's in the 1979 September issue of the American Economic Review, and it attempts to measure skills obsolescence. And it shows that it measures the rate at which skills become obsolescent with people. Now, what it in a sense says, that if you are a computer technician, or a CPA, or a, or something like that, and you've been out of labor market five years to take care of a kid to give birth to a kid, or two or three years even, then you are not a very good certified public accountant when you come back, because you have not kept up with all the laws, legal changes, and the court interpretation of those laws. Your skills have become somewhat obsolete. The same thing with computer technology. If you are out for two or three years, then your skills become rapidly obsolete. But on the other hand, if you were a good elementary school teacher, or a good librarian, in five years later you're just as good an elementary teacher, or just as good a librarian. So there's not much obsolescence of those skills. Now, if one expected to be in and out of the labor market, what kinds of investment would you make in terms of human capital? It seems like it would be a rational decision to invest in those activities where the obsolescence rate of the skills was less. And so you find people rationally making choices that are consistent with their expected lifetime patterns, but it turns out that the wages in those fields are considerably lower than the wages in some other fields. So what I want to just make at this juncture is just to argue that statistical disparities are not necessarily indicative of some kind of racial discrimination or sexual discrimination. And furthermore, that even if they were, there's a question whether the remedy lies in government policy. Now, let me just say some of the things that I think we should worry about when we talk about racial relations. I think that we should be concerned with the various laws that we all have on the books in all of our countries that subsidize discrimination or subsidize preference indulgence. And one that I've done a lot of writing about that you all might be familiar with is the minimum wage law. And I'm finding increasing information, as I do research particularly in South Africa, that the minimum wage law has been and continues to be the major tools of racist everywhere. That is, racist unions in South Africa, they are major supporters of the minimum wage law or the rate for the job law, they call it there. Now, their stated intention behind their support for the law is to go something like this, and I'm quoting a fellow named Garrett Birkey, of the construction trade union. It's a racist union that would not allow blacks in as members. And he says that government apartheid laws are no longer protecting the black, the white worker from competition with the black worker. And in the face of government not doing its job and protecting the white worker, we should have equal pay for equal work laws or minimum wage laws. Now, as a matter of fact, in the United States, back at the turn of the century, there are many calls for minimum wage laws and equal pay for equal work laws to protect higher skilled white workers against competition with lower skilled black workers. Now, but however, most nations that I know of, most of the western nations, they have minimum wage laws, but minimum wage laws, but their state intention is to help the disadvantaged worker. So it's left up to us to decide whether it's stated intentions that determine the effects of minimum wage law or is there something else? Or is there downward sloping demand curve out there? And it appears to me that in South Africa, the minimum wage law has the same effects that it has in the United States. That is, it discriminates against the least preferred worker. And the racial character, why it subsidizes people, people's racial preferences, is seen just through kind of trivial analysis. That is, if you must pay, say $3 an hour to no matter who you hire and 10 people show up for a job and five are black and five are white or five are men and five are women, well, there's no basis for you make and let's, for simplification sake, let's say that they're all equal in their productivity. Well, there's no economic criteria for, from which there's no economic criteria for you to choose. So unnecessarily, you must choose your worker based on non economic criteria. You must choose on how you like that person, how that person appears, whether he's a member of your church, whether he's a member of your political party, or whether he's a member of your race. And so, and the reason why the minimum wage law gives inducement for racial discrimination is that it lowers the cost of racial discrimination. The cost is zero, whereby if the black worker, let's assume this is a white worker who's wanted $3 an hour and a black worker wanted $2 an hour, well, the cost of discriminating against an equally productive black would be a dollar an hour. And economic theory predicts that the higher the cost of something, the less you do of it. And so, you would find that the cost would indeed would be positive instead of a zero. Regulatory laws, laws, the licensing laws discriminate against people who might be classed as latecomers, people without much political clout, people who are not liked very much, et cetera, et cetera. Examples that I've done research on has to do with the taxicab industry. And in those areas where taxis are heavily regulated and command verbal high license prices, it turns out that blacks don't own many of the taxis. But in places like Washington DC, blacks own 70 to 80% of the taxis in Washington DC. And whereby in New York blacks might own 2 or 3% of the taxis. And you cannot explain that difference by saying that, well, in New York, it's the hotbed of racism in Washington DC is just heaven. You can't explain it that way. But it turns out that there's free entry in Washington. That is, the license price is $50 to get a taxi medallion license. In New York, the last one sold for, let's say, last May, that I'm aware of, is sold for $105,000. And that's just a little medallion, that little license that permits you to legally enter the field. And so we know that poor people don't tend to have $105,000 hanging around or either bank credit to make a loan for that amount. And in fact, if you look through the history of licensing in some trades in the United States, the explicit reason for the licensing was to eliminate blacks from the trade. Most notably, this was in the case of South Carolina and North Carolina in the plumbing and electricians union, and all over the south and the north with respect to firemen on railroads. So it appears to me that what we should be concerned about is not whether someone is discriminating, whether someone has the right numbers of women or the right numbers of blacks in a particular job or in a particular position. What we should worry about is, is there potential to rig the game through numerous collusive laws? That is, it seems like what we want to fight for is not the presence or the absence of discrimination. What we want to do, we want to make sure that there's free entry. And one of the most remarkable things I'm finding in my research on South Africa, and South Africa is an excellent laboratory to examine racial discrimination or racial problems because it has codified so much. And I think that what South Africa has is an excellent example that the free market just does not respect race, sex, nationality, religion, et cetera, et cetera. It just does not respect it. And if you want respect for those human characteristics, you need government. And the fact of apartheid, and you should read some of the laws, I mean they are explicit in their definition, the job determination laws and the group areas act and the Bantu act and et cetera, et cetera. The fact of apartheid is evidence that the free market just does not respect race and sex. That is, in order for, you know, these are white-owned companies in South Africa, the mining companies. And the history shows in late 1800s, early 1900s, that there was no great solidarity between white mine owners and white African workers, South African workers. It seemed like the white mine owners were only too anxious to hire blacks. Why? Not because they liked blacks, but because they liked the cheaper price. And one of the things that's rather remarkable on my visit to South Africa, I was asking the people there all the time, how come you don't have laws in South Africa prohibiting elephants from flying? And obviously, you don't need a law prohibiting elephants from flying, do you? Because they can't fly. So, you know, whenever you see a law in a book, your initial suspicion should be is that that law is there because some people would behave differently than the law specifies. Now what apartheid richly says, you know, law where it says mine owners cannot hire blacks as steam engine drivers, well if mine owners would not hire blacks as steam engine drivers, you would not need a law, mandating that. I mean, you find all kinds of laws, job reservation laws in South Africa, you find laws saying that whites can't sell their homes to blacks. Well, if whites would not sell their homes to blacks, why would you need a law? I mean, the laws in South Africa are staying this testimony to the fact that the free market just does not care very much about racial characteristics. Okay, so I'm finished. And unless there's some questions, I think my finishing conclusion is that we should not concern ourselves so much about racial discrimination, sexual discrimination. What we should worry about or whether those human acts, those racial or sexual indulgence, is subsidized by government or is mandated by government, then we should make sure that there's open entry and let people do whatever they want otherwise. Thank you very much. Yes, that lady there. Oh, you have to take a mic. Well, sometimes I think we do have to worry because a lot of problems are used as excuses. Pardon me? Sometimes I do think we have to worry about other problems because they're frequently used as excuses for government action. I was wondering if you could comment on, recently there was an article in Atlantic Monthly by a man named Lehman that was trying to explain in black ghettos the high proportion of illegitimacy and single parent household and so forth. And he was talking, offering a cultural explanation in terms of people who had immigrated to cities from rural tenant farmer backgrounds. And I was wondering if you were to read it and what you thought about it? I haven't read it, but there are a lot of exotic reasons to try to explain the high rate of black illegitimacy in the United States and the general decline of the black family. For those of you who are not aware, the illegitimacy rate in the United States among blacks is roughly around 55 percent. That is nationally 55 percent of all black babies are born out of wedlock. And in some cities like New York and Chicago, you might find 80 or 90 percent New York and Washington D.C. rather. Now the illegitimacy rate among blacks is a new phenomenon in black history in the United States. That is in 1940 the illegitimacy rate among blacks was about 12 percent. In 1918, the illegitimacy rate among black teenagers was less than that among white teenagers. So how do you explain the increase in illegitimacy and or wedlock marriages or slumberliness in general? Well, I mean, I think any economists would tell you that if you tax something, you're going to get less of it. And if you subsidize something, you're going to get more of it, whether it's wheat, cheese, or slumberly behavior. And indeed, in the United States, we have been subsidizing slumberly behavior. That is, we have been making the cost of illegitimacy or having kids out of wedlock relatively cheap. That is through welfare payments, through other kinds of in-kind payments. And then the fact that the modern times of the 60s, in the 70s, there was a loss of the ostracism associated with illegitimacy. When I was a young kid, and keep in mind for all of you, I just looked very young, but I'm much older than that. But when a black girl would get pregnant, she was a disgrace to her family, and she was sent down south to live with a relative because it was just a disgrace. Nowadays, I mean, girls have pregnant and their stomachs, and they're just kind of dancing in the streets, going to school, and all the social penalties have been withdrawn from it. And so what? To whites also. That's right, and illegitimacy rate among whites is higher than what it was. So I think that, I think one author put it, that the welfare state in the United States did more to destroy the black family than slavery could have ever done. That is, the slavery and reconstruction could ever done. That is, black families were far more stable during the reconstruction period. In New York, in 1920, in New York, 80% of all black children lived in two-parent families. And nationally, up until 1960, it was 75% of blacks live in two-parent families, and it was roughly equal, a little bit less than that of whites. Today, the number of blacks living in two-parent families is around 42%, and it's declining. And Reagan didn't do that. I mean, and there's no evil spirits that explain it. I believe that the welfare state explains it. Is that a question? Yeah. Yes. How do you feel about laws which force access, for instance, laws which prevent discrimination, and hotels, motels, public convenience names, that sort of thing? The question was, how do I feel about laws that prevent discrimination, motels, and hotels, and other conveniences? Now, if they're not state-owned, I believe that the proprietor has the right to admit whomever he wants on any condition that he wants to. Now, see, there are a lot of things that people can do that I find objectionable. And I would find objectionable. I would find distasteful that someone chooses to admit a guess on the basis of his race or sex. But I think that the true test of one's commitment to, Milton Friedman points out a lot of times, the true test of one's commitment to free speech doesn't come when he allows those people to be free to say those things he thinks that they should say. It comes when you allow people to be free to say those things that you find offensive. The same thing with freedom of human action. That is the true test of one's commitment to individual freedom comes when you permit people to be free to do those voluntary acts that you find offensive. That's when the true test comes. Now, I would also like to make the distinction that just because someone is free to discriminate in servicing to guess as a restaurant or hotel or amusement park doesn't mean that he will in fact do it. That is, we have to make the careful distinction between what people can do and what people will find it in their interest to do. And again, in the United States, the very fact that we had laws on the books mandating separate accommodations and separate hotels may suggest that hotel owners would have admitted blacks to their hotels. So I think that, see when in a free market, discrimination costs something and it's likely to impose heavy cost on the discriminator. And there's no, there's no object of desire that I know of that people will take at any price. There's somebody else back there. Yeah. I just want to question before, in Holland, you are not allowed to discriminate. And what happened was last year that the school teacher was telling a boy, a turkey boy, who immigrated a couple of years before, a secondary school boy, that his, how do you call that, his turkey stasis was the best of the classroom. So he was very good and that was even more because he was a turkey boy. So the school teacher was penalized. He was discriminated, discriminating the Turks. So he tried to do his best to do what he could for the boy, but he was brought to court and I think he got 14 days prison. I didn't follow. Did you say he was discriminating in favor of him or? I just told him he was the best of the classroom. Yeah. But because he was a just immigrated Turkish boy who had to learn the Dutch language within a couple of years, it was even a bigger thing to be the best one of the classroom. So because he was a Turkish boy, he was stupid and that was discrimination. You hardly can understand it, but it happened. Yeah. I can't understand it either. I mean, he shouldn't refer to the fact that the boy was Turkish. Oh, I see. That is discrimination in Holland. So you hardly can say anything. Okay. Thanks. I mean, that's they've progressed far beyond us in your country. Yes, a lady there and then that gentleman there and then you. Yes. I'm just curious about your background, where you grew up and if you had any serious discrimination events in your past that gave you the impetus to become the person that you are today and how old are you? Well, I'll start with last. I just had my 50th birthday a couple several months ago. I grew up in North Philadelphia. You all know a colleague that I grew up with and all the stories he tells are true. It was a and and I believe at times the mother said, don't be like the boy. He's silly and he's never going to get anywhere. And she was referring to Bill Cosby. We both grew up in the same neighborhood. And and you know, we, we faced, I mean, I've seen signs in Washington DC, you know, when you go to the movie, you know, when my mother was taking us down there, see relatives, you know, we do not desire colored patronage. This is in the early 40s. In the army, I was sent down to Georgia from Philadelphia, Georgia without a good orientation on the Southern way of life. And I had some problems adjusting to the Southern way of life down there, you know, court martial, the fights and all that kind of stuff. And what explains my position today is, and I have not always held my position all my life. I've probably been a radical all my life, but I haven't been able to intellectualize position. But I think it's looking at the evidence. That is, it's not a faith so much in free markets, but it's the evidence of free markets. That is, there are several things about free markets, that is, less preferred people tend to do better in free markets than in closed markets. Also, free markets tend to, has tendency to reduce conflict between people, among people, and government has the ability to enhance conflict among people. So I would guess that, you know, I would, I think if, you know, if you really press me, you know, I might, you know, I might really like communism. Because, you know, that's the way I run my household. There's no market in my household. You know, we don't exchange dollars and stuff like that. You know, you enter trash and it's two dollars and you, you know, because that's, that's, it's costly to set up markets. And so in my household, we have from each according to their ability and to each according to their needs. And communism is wonderful, I think, so long as you can keep track of the names and the responsibilities. Now, when you, when you begin to forget people's names and their responsibilities, then I think you better go to a market system for efficient accounting and enforcement of relationships. So, and then I'm also, I support communists, people's rights to be communists, but see the problem with most people who want to be communists, they want to make me communist too. And so if they would go over there and be a communist and leave me alone, let me get along great. So, well, there's a gentleman there. Yes, I'm from Norway and Norway's got this law that we should not discriminate against homosexuals and guest workers, but especially homosexuals, they got their own paragraph in the laws. And there was an example of a fundamental Christian priest. He was having a radio station and he was telling that from his point of view from the Bible that the homosexuals belonged in hell, because that's the view and they would say this was unnatural and was inspired by Satan. Because of that, he got the, they went to trial against him. I think that when he put in such a law, for example, that homosexuals should not be discriminated, it means that there's something they can't stand to hear. So if they hear someone's telling something about them, then they may get in pieces or something like that. And if you go on further that way, you may come to that. Marcus Lennist should not be discriminated or Libertarians should not be discriminated. There should be no one speaking against them from any sort of point of view. And I think, I feel that is the worry, I don't like that way of going against discriminations. That's the same thing as you talking about sexual racism, I think like that. Yeah, and I think, you know, if people want different lifestyles, that's their business. And I think we should not interfere with them. But at the same time, there should be no mechanism whereby they can impose their lifestyles on those of us who object to that. And I think that that's one of the great virtues of a market system is that it allows people with different tastes, with a diversity of tastes, to live in relative peace with one another. That is when I go to store to buy this tie, I mean, that was a totalitarian decision, that if I voted yes, I want to buy this tie, I don't have to consult with anybody else, I don't have to get agreement with my peers, and I buy the tie. Now imagine if we had a government tie factory, or government suit factory like we do schools, and we would be fighting all the time. Because if you look around the world, you'll see that most sources of conflict have something to do with government production of something, whereby nobody fights each other in the marketplace over taste. You never saw somebody petitioning a suit factory because it was making three-piece suits, or a jeans factory by these three-piece suit lovers. And I think that that's one of the... I think that we as libertarians, we don't make that point strong enough, I think, that we all are different, we have different tastes, different values, etc., etc., and it is the free market that allows us to live in relative harmony while maintaining this diversity. And I think that's one of the great understated values of virtues of the market system that we don't use in defense of our position. That lady, yes, right there, yes, she has another question. Economists are always telling us certain things like internalize the externalities, and... Yeah, I didn't tell you that. And, pardon me? No, I know you didn't. I don't use that kind of language. Okay, well, and the cost of information can be high and so forth. Now, in the initial examples you were talking about, the basketball team and the SAT scores and so forth, where people don't have much information, and given that it seems to be all over the world that people are very ethnocentric and always making, always categorizing people by race and cultural group and so forth. You know, there seems to be that in the Japanese case with the SAT scores, there are some Japanese people who are experiencing a positive externality due to the achievement of some other Japanese people. And likewise, there are many black people who are experiencing negative externalities due to behavior of other black people. And I'm wondering if there's a way of internalizing these externalities where you're suffering from what may be high cost of information? Well, I don't know. It cuts either way. You know, I'll let you continue your question, but I... No, go on. But, you know, in 1975, I went out to a Hoover Institution at Stanford University on Sevatical, and I spent a year out there and I had been, you know, really slovenly and I was out of shape and stuff like that. And I go down the basketball court, you know, determined to get back in the condition. And I was the only black guy down there, and all these guys fighting to have me on their team. And I just could barely get down the court, much less do anything when I got down there. I was so out of shape. And they were... I thought that they were quite angry with me. You know, how dare I be a black guy and couldn't play better basketball than that. So the, as you pointed out, the externalities can go either way. But, you know, I think that when people make erroneous choices, they pay for their costs. I mean, they, and I'm sure that unfortunately the people who might be incorrectly stereotyped, they pay for their costs. But if you had... Are you an American? Okay, you'll know this. And the reason I asked you is because you'd have some familiarity. If you had, I mean, given the fact that there's costly information and that people have stereotypes or maybe wrong estimations of black productivity, how could you reinforce this? Well, it seems like our government policy reinforces that. That is, consider this... Consider just a non-racial example. I mean, suppose you shop at a store. Everybody here in the country. Suppose you shop... You use the shop in an A and P. Okay? You use the shop in an A and P. Okay? Now, I... Here's Walter Williams' store. Anybody's store. Here's a XY store going to open up in your neighborhood. Now, how is XY going to get you to give them a chance to experiment, see how their food is? Well, typically what do they do? They have a sale, don't they? That is, they lower their price. Right? Now, you look at many aspects of the labor market. People are not allowed to lower their price, whether it's minimum wage law, whether it's government regulations, whether it's scales, or whether it's union agreements, or whatever. People who untry people are not allowed to do like XY store. Okay? Now, what's another thing? Well, affirmative action rules, you know, a guy says, you know, let's say I'm going to hire you. I'm going to hire you. And I say, you know, that woman, I think that she might turn out fairly well. I have a hunch. I mean, she has a resume. I don't know. I don't know anything about that call she went to. I don't know anything about her references. But I have a hunch that she might work out well. Now, but how are my lawyers come up to me and say, Williams, you better not give her a try, because if you try her out and she doesn't work out, and you have to fire her, you might have to spend $400,000 defending yourself in court against sexual discrimination suits. You could just accuse me of sexual or racial discrimination. And so I say, well, I'm not going to try. I don't stick with people I know. That's the same thing analogous to the store. Suppose here's your house here, and there's a law saying that once you try the store, you had to stick with the store. You could never fire the store. Well, that would reduce your incentive to experiment to try to get out more information. So I'm saying that in the United States and other places, we have laws that reduce people's willingness to experiment, to get more information, to try out people under circumstances that they haven't tried them out before. And that's one of the big, that's one of the big problems. It's just, it's, I mean, when you make it costly to fire somebody, you also make it costly to hire them. Joan? Charles Murray wrote an article once in which he pointed out that it's almost a mathematical certainty that affirmative action laws will lead to a perception of black inferiority, because there are not enough blacks to go around. And affirmative action requires that everybody have a certain number. And so there's enormous competition for the best top people in every field. And then certain companies will have to then take people who are not really as qualified in order to fill this quota. And so that what happens is that in terms of, you know, the general perception, everybody is fighting. The few best people can only go to a few firms. People are then promoted, again, in Peter Principle, because they become politically necessary. Yeah. Yeah. And, and, and matter of fact, from, and I might add something to this, which you might not have thought of, is that there's a bit of perniciousness with this process. That is, there are other people who benefit. That is, for, for me, like if I'm General Motors or US Steel, I will support affirmative action programs for racial quotas. And I'll get a lot of good public will. But at the same time, I know that, well, look, I have, I keep 100 lawyers on retainer anyway. And so there are some of these other competitor firms that I can drive them out of business or I can reduce the probability of their entering because of the system that's going to make it very, very costly for them to operate. And I already have a comparative advantage already. And so you find a lot of major companies supporting affirmative action, clean air and all this kind of stuff, because, so they use the government to get their competition out of the market. Yeah. Yeah. Okay, excuse me. My English is not so good, but I hope I will be able to, to make understand my question. It's, in fact, we as libertarians are against welfare because welfare is paid with money gathered by coercion. But what you said about the black families may give us a new argumentation. But I don't know if I did understand it totally well. If we take I am Belgian and in Belgium, we have every parent that has children has a right to get a grant, a grant every month, money for his child. And when we make a little comparison between income of welfare, someone on welfare can every time he has four children double or four children is enough to double your income of welfare. That's why for them it's a much better incentive than for people who are very wealthy. And maybe that's what explains that the wealthy people in Belgium usually don't have children or only have one or two children. But if we are in favor to aboli, that usually the opponents say, well, you are as social and you want to hit more low income people than higher income people that have less children. But if I could follow you, we could oppose to that, that in fact, those welfare grants are destroying family and that without welfare grants, maybe family should be favoritism more. But I cannot fix it totally how I could use that argumentation for the Belgian case. Maybe you can help. Well, there are several steps here. I'm using up all the libertarian paper. First of all, I think that as you point out that welfare, taking welfare in the short run is an intelligent economics decision. That is because at least in the United States, the after tax welfare package is for, let's say, a standard family of two or three. The value of the cash and in kind is maybe around $10,000. That's after tax. Now, because there's no tax on it. In order for a person to get a after tax income of $10,000, he has to go out and make $12,000 or $13,000 before tax. A lot of people who are on welfare, they do not have the ability to go out and make an income of $12,000 a year. Now, so poor people are poor, but they're not fools. That is, they will make the economic calculation and as you point out, it's a wise decision in the short run. But it's not a very wise decision in the long run because getting that first job and gaining on the job skills will, in the long run, get you an after tax package that's higher than the $10,000. Now, I think that's one of the arguments. Then furthermore, in the United States, the fact that the welfare system gives incentive for single female-headed households, it turns out that they could possibly be richer if there was, if there wasn't this disincentive to break up the family. That is, by having two parent families, that would get you out of poverty because in the United States, we're wonderful in the United States. I mean, our poverty level is $10,000 a year for a family of four. I mean, we're just wonderful people here and very rich to afford a poverty level like that. Our poor people have cars and televisions and things like that. But it turns out that on a minimum wage job in the United States, which is $335 an hour, each person on a minimum wage job, years wages, is close to $7,000. Close to $7,000. And if two people are working full time, you're really talking about $14,000, you're out of poverty. So if you had a two parent family, if there weren't systematic disincentives to break down the family, a whole lot of people would not be poor. They would not be on the poor roles. And that's one of the other things that the welfare family, the welfare system does, it breaks down the family. And female-headed families of any race, they tend to be poor. Poor on the average than two parent families. But then there's another issue. When we talk about welfare, when I talk about welfare in the United States, I don't talk about the poor getting welfare because welfare is an epidemic in the United States. Everybody is on the dole. I'm talking about farmers in the United States. We have aid to dependent farmer programs. We have aid to dependent motorcycle companies, aid to dependent banks. And matter of fact, I would guess that out of our budget, we have a $1 trillion federal budget that includes the above ground government. There's a lot of underground governments and we don't know quite what it is, the so-called off-budget expenditures, that only in my opinion, only $400 billion goes towards legitimate government functions. The rest of it is an activity which is illegitimate for government. That is the confiscation of one American's property and giving it to another American. And we have many, many programs. I mean, Social Security, we spend over $300 billion in welfare for the elderly. And the welfare for the poor, I doubt whether it's, I guess, one of the very interesting things we spend, it's estimated that we in the United States, if you add up all the spending at the federal, state and local levels, you would talk roughly around $360 billion in programs that have as a justification coping with some aspect of poverty. And it turns out that if you divide a number of poor people into this amount and just gave them the cash which I'm not proposing doing, each poor family of four would have $36,000 because they're roughly, how many more? How many? Ten million. Ten million poor people. Each poor would have $36,000 a year. Each poor family. And Gordon Pellock, according to his estimates, he would say $48,000 a year if you look at his book The Economics of Income Redistribution. And so what I'm suggesting is that poor people are being used as cannon fodder to conceal or stalking horses to conceal the income objectives of other people. That is the best way to get money from another American is to say that you're doing it for the poor. I know Tom Sowell, my colleague, he was telling me that, I don't know how true it is, but a friend of his was visiting, driving through Indian Reservation, and the Bureau of Indian Affairs officer was crying. He asked me, why are you crying? He said, my Indian died. And the, and his budget depended on the number of Indians that he had there. And I'm very sure that many poor people are seen in the same light by people who I call poverty pimps. Yeah, Johnson. Well, there, we have a lot of welfare programs, and those have to be adopted by government. So there presumably is a powerful political constituency that exists to get these programs going. And of course, you've just shown that the poor people, by and large, do not benefit this, certainly in the long run. Now, given that we all know that poor people do not make up a powerful political constituency, because if they were powerful, they wouldn't be poor. Who is it that benefits and makes up this powerful political constituency that produces welfare programs? Well, I think it's, it's varied. I think that civil servants are a beneficiary to the poverty programs, those people who get high incomes from administering them. Politicians who are able to buy votes. And then, but I would say maybe the primary beneficiary are middle class Americans. That is, who are able to, to redistribute income in their favor in the name of the poor. Let me give you just some examples. I have escaped the slums of North Latvia, and I live in a very high-income suburb of Latvia along the mainline suburbs. And, oh, several years ago, when my daughter started school, my wife said to ask me, could she have some change? Did I have some change for my daughter's lunch? And so I said, how much do you need? And she said, I believe with 75 cents or something like that. Now, it's been a long time since I've received lunch for 75 cents. And that is a subsidized lunch. Now, you wonder why are, you know, I don't need the subsidy. My neighbors don't need the subsidy. Why are we getting it? Well, you, we say, we have the school lunch program in the United States and so that kids won't go to school hungry. But there, but however, the school lunch program is given for every kid. Or you look at college, you know, a lot of the subsidies to higher education are to make college affordable and available to the poor. But according to all the statistical information I know that no more than five or six percent of the college population across the United States consists of people who come from poor families. The major beneficiaries of the income program are middle class and upper class kids. Or you look at the farm program, the justification for the massive subsidies to American farmers from the government is to help the poor family farmer. And according to Richard Ron at the Chamber of Commerce, he estimates that over 60 percent of all the farm subsidies go to farmers who have operating incomes over $200,000, which I mean operating profits over $200,000. And that hardly qualifies as poor. And matter of fact, the farm subsidy program probably works to the disadvantage of poor family farms. So you can go after program, matter of fact, Milton Friedman says, and I haven't found any exception to his rules, he says, other than cash transfers to poor people, that if you take any poor program, any poverty program and look at the intentions or the wishes or the objectives of well intended people and you turn them on your head, on those intentions on their head, you get the results of those poverty programs. And I can't think of too many exceptions of any government poverty programs. So there's a mass of people who benefit from this and they're not poor. The poor people will pay the cost of it. That is, for example, and many poor black people will, poor black people will, because I'm very sure that in the United States that if we run into some kind of economic collapse, then and people are looking for a scapegoat, a politician looking for a scapegoat, he might easily seize on the welfare program saying that those blacks cause the nation to go down on tubes with their welfare programs. And I think that if you look at the last election in the United States, not the last but 1980, when Ronald Reagan was about to come in and you found that many so-called black civil rights leaders were in a panic and they got a lot of black people in panic about Reagan being elected. I think it's point up a sad tragedy that the, that to make poor people, particularly poor black people, dependent on political, on government largesse, is to subject them to every political whim in the market, I mean the political arena. And one wonders whether there's a why strategy to make poor people, particularly poor black people, dependent on the political whims. And I just might make one point since I'm talking about poor black people, it is very, you're very well advised that to be advised that most black people in the United States are not poor. Most black people in the United States are in the low middle, low middle income or not. That is, there's this large percentage of black population in the United States, namely 33% who are poor and for whom there looks like it's not much hope. But most black people are not poor. Most black people pay taxes, go to work and try to get about a living like, like you and I. Yes. Yes, did I hear you say correctly that $400 billion is probably the maximum amount that the government should be justifiably spending and if you're going to answer- Legitimate activities. Legitimate activities. I'd like you to explain that member to me and then of course I'm going to have a follow-up question. Well, most of that number has to do with national defense. The court system adjudication of disputes, enforcing contracts, it's just a rough idea. It could easily be defense plus $5 billion. I think defense is a legitimate function of the state government. Maybe I'm maybe $400 billion a little bit too high, it could be more than that. But I was just kind of giving the the status the benefit of the doubt. Well, I know excluding the $6,000 coffee pots and all that sort of thing, you know, many of us don't believe that even if the state is a legitimate defense for, you know, externalities or whatever you call it, $400 billion is a bit much. But I'm wondering if you're familiar with the libertarian literature on non-status external defense and have you rejected the possibility of a free market and defense? Yeah, I think that's very naive. I rejected and I haven't argued with many of my libertarian friends over this. That is, I view the world as a hostile place. I view that we have some adversaries around the world that would like to be able to impose a will. And I think that United States, if United States cannot defend itself militarily, then you can forget about Western Europe ever having any semblance of freedom. You can forget about Sweden. You forget about all over having any kind of freedom. Now, you're nice. It is my opinion that... Yeah, right. And those countries wouldn't let us fly over them. But I think that we should have military power to make Russia or any other adversary glow a nice radioactive green in the dark with no question whatsoever. That is my opinion. That is my assessment because I see a good part of the rest of the world, the free world, not willing to defend itself. I see all of Europe not willing to defend itself. I see countries, I see in the name of welfare, and if you'll pardon my being an impolite guest in your country, I see Sweden's Swedes just allowing a foreign power just to walk in because they might worry to maintain the capacity to begin to defend themselves might mean that they might have to give up some food stamp program. That is, I think that as Adam Smith pointed out, he said that opulence without defense is not a very good program. Well, actually we didn't finish on the matter of whether the $400 billion number was as low as it could be because in view of the fact that the Pacific basin does not defend itself. For example, Japanese families only pay $400 a year for defense and American families pay for the defense of Japan to the tune of $4,000 a year per family. Do you believe that it is right for America to continue its role as international policemen? Or do you think it's time for us to pull back and only pay for the two defense of our borders? Yeah, that's a very emotional word international police, but I think that we should behave not according to America's obligation is not to behave according to the way the world should act. Its obligation is to behave according to the way the world is acting. And I think in the interest of the free world, we would surely like to encourage our allies to take a greater role in the defense of their own communities. And I'm sure the Reagan administration wants to work in that direction. But in the interim, I don't think that we should give the Soviet Union, if it so desires, an invitation to walk in and while we're trying to get them to take a greater role in defending themselves. Yes, gentlemen down here. I'm curious, do you support the proposed Star Wars program? I see. I don't look at Star Wars or the strategic defense initiative as being, I don't evaluate it as being 100% safe. So if it's 80%, if it has a 50% probability of working, I think that it gives an any adversary second pause. He has a reconsider. If we can knock four out of five of his missiles out, well, then he has a think again. But I think that if I might just not really answer your question, well, I've answered your question already, but if I might add to it, I think that the problems that we're having now show our weaknesses of the past. That is, in our poor policy formulation in the United States, I would have rather than our having the problems today of facing potential Armageddon, I would have rather United States in 1948 or 1946 told the rest of the world that if anybody produces nuclear weapons, we are going to bomb your facilities. And at that time, we did have that capability. They might say, well, as a good libertarian Williams, why would you offend the sovereignty of other nations? Well, it's one of those things of expediency. That is, if you want to avoid Armageddon, you have to keep the nuclear club size small. Because we all know that as the club size gets larger, the cost of making decisions gets greater. And to avoid Armageddon, there has to be a unanimous decision not to use these weapons. And as the club size gets larger, people have incentive to engage in strategic behavior. And if you think that today is bad, the Vietnam war is bad, and the prices and problems that we have now are bad, wait until they're 50 nations with nuclear capacity, then you will say wait until you find some of these nations. I mean, imagine, what do you think if Lebanon had nuclear weapons? Or many of these highly unstable places had nuclear weapons, and the costs of getting nuclear weapons getting cheaper and cheaper. So you'll be around mostly to be young. I say, I don't have to worry about a whole lot of things. Because I only have about 23 more years, live or 25, whatever. And these will be your problems. But you'll see the advantages of keeping the club size small as the club members get larger. I want to change the subject a bit. As an economist, as an Austrian economist, what do you think about current investments? What would you recommend? Or do you do that kind of thing at all? Well, first of all, I'm not an Austrian economist. I teach at George Mason University and we have a crowd of Austrian economists there. I'm kind of eclectic. As a matter of fact, I'm not really quite sure what an Austrian economist is, but the ones I've met, I like them. But so far as investment, I always tell people, you know, I speak worldwide in the United States and people ask me, well, what is the interest rate going to do? Or what should we invest in? And I tell them, if I knew what the interest rate was going to be, or I knew what to invest in, why would I be hitting the hustings trying to make money? I'd be sitting out on my yacht, you know, if I knew the answers, all these kind of things. So I don't know. Now, if I might just throw out an idea hoping that someone will capture the idea for what I think would make a good investment opportunity, and you should surely drop me a letter and let me know once you did this and give me my right commission for the idea, or my royalty, if you will, that I think people should go around and buy property in unstable countries, have a mutual fund of unstable countries. I got this idea when I was in South Africa last month where people are leaving South Africa, you know, going to New Zealand and they're selling their houses. They're selling $250,000 houses for $125,000 and they're just leaving the country. And I think you pick 10 places like this and kind of have a mutual fund buying these houses and let's have two of the places that get stable and the other places that value some go to zero. You can make a lot of money, couldn't you? So that would be my recommendation to you. Yes. Before that lady, that gentleman there. Okay. I would like you to comment on another kind of government regulation which, as I see it, has the same effects in a racial perspective and in other perspectives as minimum wage laws and tax regulation and so on. And that's immigration control. Do you favor the total abolishment of immigration controls? And could you might add a few comments on the economy of immigration? I mean, how do you see immigration as an economic factor? Well, I think that migration in general is one of the ways of investing human capital going to places where the wages are higher. I think that traditionally in the history of the United States at least, we have had fairly open borders. And immigration has always been good for United States. It has always been good. And as a matter of fact, it still is good for United States. But there's a problem in immigration today, at least in the United States. That is, before the welfare state presents problems. That is, before the welfare state, when people have come to the United States, we knew that they're coming there to work. Now, with the welfare state, people can easily come to live off of me. And I have too many people living off me. Matter of fact, I'm not only buying my share of the missiles, I support five American families through the IRS and tax code. And one of the most important things to me is I don't even get a thank you card on Father's Day from these families. But the problem is, is indeed the welfare state. In the United States, we have a lot of illegal immigration from Mexico. But all the statistical data on the illegal immigrant shows that there's very high employment rates. And that's one of the advantages of illegal immigration is because with illegal immigration, the people are more likely to work because they are not eligible for many of the programs, the welfare programs, because they're illegal aliens. So, matter of fact, I've testified in Congress in the United States that I support illegal aliens and I have some reservations about legal ones. Lady, yes. There seems to be a curious tendency to whenever people want to talk about the problems of black people in the United States, they use economic arguments. But when they want to talk about the successes, they don't use economic arguments. But it seems to me that, well, instead they use racist arguments. For example. Well, for example, all right, you see, you mentioned basketball and athletics and also the entertainment industry. There's burgeoning of black people at the very top of the entertainment industry. Now, it seems that these are industries where the barriers to entry are very low, where you're relying on your human capital. You don't need money to buy capital. It's easy to get people if you have, if you develop your own human capital to invest in you and so forth. Nobody goes around explaining, black success in this way, in these things. Instead, even black people go around saying, well, making racist explanations for it. I'm always hearing black people laughing at white people when they dance and so forth. But it seems to me that there are very simple economic explanations for success in these fields. Why doesn't one ever hear these explanations made? And instead, by not hearing them, it sort of reinforces the sort of racist explanations that one hears. And it reinforces the idea that blacks are going to be successful only in these sorts of areas. Instead of the view that if you took away the barriers to entry and all these other sorts of things, you'd see a great burgeoning of creative black success in those areas also. I think that, you're right. And I think that that's increasingly being heard. There's a raging debate among blacks. And there's an increasing number of blacks in America who are becoming adherents of the free market, much more than there was. I know my colleague Tom Sol, you know, we always say that the environmental, the EPA doesn't allow us to fly on the same airplane because we're a threatened species because we're, for a long time, we've been the only two black free market economists in the United States. And Tom says probably there's not enough, was enough of us at one time to have a good game of cards. But now there's an increasing number of blacks, young scholars who are questioning the status quo, producing arguments, looking at success, looking at the determinants of success, the compilation of private schools, that is independent schools that are doing good jobs in education, showing what's necessary. You find people like Bob Woodson is a senator for neighborhood enterprises. He's producing these arguments. So I think what you're saying is not so true today and it'll be less true tomorrow. And indeed, economists have talked about the fact that the, this is what I said a little bit earlier, that is less preferred people do better in markets where there's open entry, where there's free enterprise, where there's less regulation. And this has been identified among economists like Harold Demsets wrote this in the article in North Carolina Law Review several years ago, Armin Altscham, Becker, and any number of economists have pointed out the advantages of free markets. Now, the question is getting it popularized. But interestingly, it's not only free market, it's a mixture of things. People don't like to hear this, but I say it's genetics too. I mean, a lot of people say, like to say in this world we're all equal, but we're not really all equal. Like in basketball, one of the reasons why blacks excel in basketball, not only because it's open entry, but the reason is that blacks are built nicely and mechanical for basketball. That is, we have what they know known in the profession as hyper extensibility, which means in layman's term, double jointed. It's here, there's consistent relationship between the relationship, the length of the femur to the tibial fibia. And that's greater in blacks than in whites. And it means that it's in an ideal proportion, it means that you can change directions, hang in the air like most of them, things like that, far easier than Japanese or Chinese. And then in some sports, with basketball, you don't need much money to train. But tennis is, anybody pick up tennis rack, but you need a teacher. You're not going to be very good. So, other than open market, there are other arguments as well. If you look at the Olympics, you never see any Olympic class black swimmers. Why? Blacks can jump in the water, but we're natural sinkers in the water. That is, there are numerous studies that show the rate of which blacks sink. And they sink fast in whites because of greater bone density and perhaps lower lung capacity. It's the same thing with women. Women are far better, far efficient swimmers than men. You know, all the long-distance, the super long-distance titles are held by women. And I believe the first woman that swam the English Channel, the first person, wasn't there a woman? Yeah, they have a greater ability to convert fat to energy, and they have more fat, and they float nicer, and their bodies have a nice hydrodynamic design. And so genetics explains a role. You know, like another thing, you know, like when there's the Olympics on the 50-yard dash or the 100-yard dash, I go get my beer. I say, well, the brother's got this one. We don't, I don't have to worry about it. I don't have to sweat this one. So I can go get my beer. So there are many things to explain, but a free market is part of it, I think. Any other? That gentleman there. And then I'll get the lady, you've had a chance. Why don't you get the media attention that Jesse Jackson gets, or some others, of that strife? Well, I'm beginning to. I mean, let's see. I believe people like Jesse Jackson, I mean, they're saying what people want to hear anyway. The media, at least according to what I read and my impressions of it, they have a status interventionist, arrogant bias. And Jesse Jackson would supply that much more than I would. Furthermore, and I don't mean to insult anybody here by saying it, but a lot of white people in the media and a lot of white people in many positions, they love to be put on a guilt trip. Jesse Jackson will make people feel good. Well, he'll punish them. And where Walter Williams won't. Matter of fact, at one department meeting, I'll give this short little thing, but at one department meeting at Temple University, I had just been at school for about two months. And we had a department meeting, and they were talking about adding a new course called Black Economics. And so I was asking my colleagues which way demand curves, supply curves, a slope of blacks and things like that. And I couldn't get any unambiguous answers from them. And so anyway, they had department meeting deciding whether I had this course. And so I asked department chairman, could I break parliamentary procedure to make some comments? Because I had to go. And so they voted, being a democratic institution, they voted, they voted I could break parliamentary procedure. And I told the people that I wanted to declare full and general amnesty to all white people for both their own grievances against my people and those of their forebears. And the reason why I wanted to grant them this amnesty is so that they would stop feeling guilty and stop acting like fools. Because a lot of white people accept behavior from blacks that they would not accept from whites. And that is racism in and of itself. That is where you go to Dartmouth University and the Black Student Union has asked for a whole floor to be blacks only in the dormitory. This was several years ago. And the dean permitted it. And he would not put up with that from white students or teachers or colleges accept behavior by blacks that they just would not accept by whites. That's racist. I understand somebody was telling me at lunch that if I could somehow get rid of my wife, I could probably walk up to any Swedish girl and proposition her. And if she said, no, I call a racist. And she said, well, come on then. So which is, this is racism. So, yes. Well, Mr. Williams, it's really a great pleasure for me to be able to debate you on this issue, which I consider is of prime importance in free market economics. So I'm going to go back to the same thing. Now, let's exclude the present day realities. And it's now 20 years hence or 50 years hence, however long it takes us. And we have a free market in education and we have a free market in the purchase of postage and mail delivery and all that sort of thing. And all the free market ideas that we have have proven successful. And now we're left with just one thing, defense. And those belligerent Russians who want to take us over and make the world safe for Marxism or whatever it is. Okay. I can't believe that Americans are too stupid or too, you know, whatever, not in their, their own self defense, that sufficient number of Americans would not pay for armies on a voluntary basis, would not, would not pay for FDI voluntarily. No, I wouldn't. And that's, you know, it's really, it's really hard for me to believe you would not trust the American people to pay for their own defense. No, you're asking about me. Well, the point is, because people have come around, people have come around and asked me to contribute to public broadcasting. And I say, you can't deprive me of the benefits if I don't pay. Yes, but Oh, I've not noticed. No, no. But the historians, the problem is coercive taxation. The problem is the internal revenue service, which acts like a ladder to stop them to collect people, money from people coercively and do far worse damages in the here and now than the Russians could ever think of doing to us. And there must be a better way of funding legitimate social needs, including defense, when, if we would only trust people in the free market. Well, let me, you know, my, my, I can't do a better answer and ask your question. I can't give you a better answer than to, than to cite Thomas Payne. And he said that government, under the best of circumstances, is a necessary evil. Because government implies coercion, wasn't it for Thomas Payne? And he said that government of necessity implies coercion, but we have not become those wonderful angelic people whereby we have learned to not like that which is our neighbors. And so somehow government must restrain, restrain us from taking our neighbors or engaging in coercive behavior. And to point out that government under the, under the worst of circumstances is an, is an intolerable one because it is we ourselves who are the source of our, our, our displeasure. Now, so what I'm saying is that I think that I cannot conceive of a state where we don't need the course of power of government. That is the course of power to course individuals not into not coursing their neighbors. Okay. Now that's a relatively small part of, you know, that role, the legitimate role of government is a relatively small part of our national expenditures on government all over, is a relatively small part. Now the IRS has become oppressive as we take off into these grander ideas. That is there's a necessity that is, I don't, I don't believe IRS would have to be as oppressive if it had to raise only three or four hundred billion dollars as opposed to having to raise a trillion dollars. Now see, this, this is what, this is one of the problems that is as we try to force people to do things that are not in their interest, that they perceive not in their interest, we have to become more and more oppressive. And that indeed is one of the great problems with the growth of government. And I, and I could not agree with you more that the IRS is, is, is a Gestapo agency. Matter of fact, Hitler would have loved to have the IRS. I mean, he would have been fairly successful. And furthermore, the danger is that if some country were to defeat the United States, they would love to take the IRS in tact so that they have all the information about it. I mean, that is a dangerous agency. And that is one of the good reasons that we need to reduce the size. I agree with you, but I don't go as far to see a private support of a, of a national defense. Yeah. Oh, I'm sorry. It's now five o'clock. And I hope Walter will agree that he'll have some more questions and answers in discussion. But that we can't put him on at five because we have a request for an interview and we thought the, they would need to do this now. So if it's possible for you to take it at about five 30. So for this session in this main hall, we'll thank Professor Williams very much.