 Welcome to the Cato Institute. For those of you who don't know me, I'm David Bose, I'm the executive vice president of the Institute, and I'm delighted to have a chance to chair today's event. We're going to be talking about something that we don't talk about very often here at Cato, which is fiction. And obviously, one reason we don't talk about fiction much here is that a lot of intellectuals don't think it's important. It's not about public policy. It's not about anything real. It's fantasy. And therefore, it's not something that belongs at a serious think tank. But it is certainly the case that fiction on the whole sells much better than nonfiction in the United States. There are probably many more books of fiction that don't sell, but there are lots of books of fiction that do sell. And if you broaden this to include film, of course, creations of reality, representations of reality, can draw a lot more interest, more viewers, more readers, than straight depictions, at least in theory, straight depictions of reality that appear in what we call nonfiction. Certainly libertarians who are sometimes known to say fiction doesn't matter, fiction isn't real, only nonfiction, economics, politics, that's what counts. Many of them forget that they were first attracted to libertarian ideas by a work of fiction, often atlas shrugged or the fountain head. In perhaps fewer cases, although back when I was young, I think quite a few people also attracted to libertarianism by the novels of Robert Heinlein, particularly The Moon is a Harsh Mistress. So those who think fiction isn't serious as far as libertarians go sometimes forget their own backgrounds. And then when you broaden it beyond obviously the specifically libertarian world, there have been lots of important works of fiction that have changed people's ideas, Uncle Tom's Cabin, 1984 Animal Farm, things like that. There have been economists who have attempted to present their ideas in fiction. Henry Haslett wrote a book called Time Will Run Back, which has a great deal more economics than plot in it. Two economists collaborated on a couple of novels ostensibly written by Marshall Jevons that feature an economist thought to be much like Milton Friedman in the role of the amateur detective who solves mysteries, sort of the Miss Marple with a Harvard economics PhD. A lot of people who have read a lot of these things think that Russell Roberts novels do a better job of combining the teaching function and the fiction function. Some of you may know Russell Roberts from his commentaries on NPR or from his blogging at Cafe Hayek or from his econ talk podcast. Officially, Russell Roberts is professor of economics at George Mason University and the Jay Fish and Lilian F. Smith distinguished scholar at the Mercatus Center and a research fellow at the Hoover Institution at Stanford. He has previously written The Invisible Heart and Economic Romance, which came out from MIT Press. Before that, he wrote a novel called The Choice, which was named one of the top 10 books of the year by Business Week and one of the best books of the year by the Financial Times. His newest book is The Price of Everything, A Parable of Possibility and Prosperity, which has just come out from Princeton University Press. And if you saw the invitation we sent out, you know that it got a rave discussion by George Will in his Newsweek column. And commenting on Russ's remarks today will have Nick Gillespie, who as you know is the editor of Reason TV and Reason.com, which most recently has described itself as drawing two and a half million visits a month and is probably best known for the hit and run blog. Nick was Reason Magazine's editor from 2000 to 2008 and he had also been an assistant editor before that. During his editorship, he produced a book, Choice, The Best of Reason, which was an anthology of the magazine's best articles. For some reason that passive understanding, Nick took a PhD in English Literature from the State University of New York at Buffalo and an MA in English with a concentration in creative writing from Temple University. And Reason describes him as almost certainly the only journalist who have interviewed both Ozzy Osbourne and the 2002 Nobel Laureate in Economics, Vernon Smith. So please welcome to talk about The Price of Everything, Russell Roberts. Thank you, David. It's a pleasure to be here, especially I haven't been in this room in a few years, but when I was here last, it was called The Hayek Auditorium. Is it still called The Hayek Auditorium? A few. Well, that's a relief. It is a pleasure to be in The Hayek Auditorium talking about my book because the central economic idea in my book is the idea of emergent or spontaneous order, which was the central idea in much of what Hayek wrote about. The central idea in the book really is that there are things in this world that are orderly and yet are not the result of human design. And this concept of things that are orderly but not designed is a very alien concept to us. We know in our lives that things have to be orderly most of the time if we, only if we design them, only if we intend to do something about them, only if we take action to fix them. They don't fix themselves. So if we want the dishes done, we have to do them. The leaves don't rake themselves. The driveway doesn't shovel itself. We have to make a plan on when and how to execute those tasks and we do so. So most of our life is involved in making things happen and we're not, in fact we're usually judged very harshly if we stand back and let things take their own course. An exception from that in our daily experience would be our thermostat. We don't have to constantly monitor our heat or air conditioning. We're totally used to the idea that the thermostat is going to do it for us. We have to set it. We have to build it. We have to put it installed in the house, but we're totally comfortable with the idea that the thermostat is going to run our heating and cooling. And the reason that that works is because there's a feedback loop. So if it gets too cold in the house, the little wire in the thermostat expands or contracts. Anybody know? If it gets cold, what happens to the wire? It does something. It's like a thermos bottle. Somehow it knows whether to make it hot or cold. How does it know we don't know that it's beyond human understanding? But in the case of a thermostat, there are people who understand. I'm just not one of them, which is irrelevant. We all understand the idea of the thermostat, which is that there's a little wire in there and when it gets too hot or cold, it does something that sets the furnace on or off and similarly with the air conditioning. And that feedback loop of the external temperature and the expansion of the thing inside the thermostat is the thing that allows it to run itself. We're totally comfortable with that in our own house, but we often ignore the fact that there are feedback loops out in the real world that help our world be orderly without anyone designing it. We don't notice it. So for example, when a few hundred million Chinese go from the countryside into Chinese cities and start sending their kids to school and their kids start using pencils, somehow there's still enough pencils for you and me. And that is a remarkable thing that you probably didn't spend a lot of time worrying about. You're not worried about it over the next five years that you're going to have a pencil shortage. You're going to show up at Staples and say, I'm here to get pencils and they say, well, we don't have any. Well, why not? Well, the Chinese have all of them this year, of course, come back in a year. We'll have some for you. That kind of disorder, disharmony is totally alien to us. People figure out these two really cool things, one dramatically more important than the other. One is that by using a laser, you can improve your vision so that you don't need glasses or any kind of correction. The other is laser tag. Anybody here play laser tag? Okay, I don't. I've never played it. I hear it's fun, but people love it. But we also have laser eye surgery. No one says, oh, well, you know, we don't have enough laser stuff around for everybody to have both of these. We get both of them without any trouble. If you decide, as Americans have decided over the last 25 years in increasing in different times and in different levels of intensity that we want to be more fit and eat better, all of a sudden there are all these products waiting for us. There's special running shoes, special racquetball shoes, special diet, special books, special fitness machines, special trainers, special videos. All that stuff is out there for us if we want it and millions of Americans do. And it just gets created as a response to that opportunity when people want to get healthier and more fit. At the same time, we get many, many flavors of potato chips. We don't say, well, you know, we've got to spend our resources over here for fitness. Too bad you catch potatoes who want to have the jalapeno potato chips. I mean, there's innovation going on all around. A lot of it trivial like the potato chips or the laser tag, right? But a lot of extraordinary and sublime like being more fit and living longer or getting laser eye surgery. And as a result, we all get many of our choices fulfilled without the tension and conflict that should take place in adjudicating between who's going to get the resources to pursue their dreams because there's not enough resources to go around for all the dreams. So there should be tension and conflict as there was, of course, in many societies that were organized from the top down rather than most of our economy, which is from the bottom up. An example of the top down approach came vividly to me and I tell a version of this story in my second book, The Invisible Heart. When I was helping a Russian family from the Soviet Union at the time, this was in the early 90s, they had just come to the United States and they had very little experience with the market economy, obviously, and I got to take them to the grocery. And we spent about 10 minutes in the produce section, which was really extraordinary. And they were just wowed by it. It was touching actually to see how lovingly they looked at fruits and vegetables. It's not an experience most of us have. We totally take that for granted, that cornucopia of produce. And then we went into the rest of the store and the wife wanted to bake bread and she wanted to get some yeast. And yeast is a very small product. It doesn't take up a lot of shelf space. It takes up about this much. There's no wall of yeast. And it can be either in the dairy section if it's a live yeast or it can be the dry yeast, which is usually the flour we looked in both places. We couldn't find it. And I was kind of embarrassed because I'd been excited about this great American shopping experience. And I had to go to the manager. I said, is there any, oh yeah, let me get, go in the back. Let me make sure he went in the back. He found that they hadn't put out the latest bit. So they put it out and he gave me some. And the woman looked at me, the Russian woman, like this. So he's a big shot. They bring out the yeast for him. It's very nice. She didn't realize what she was dealing with. So in her world, you know, who got the yeast was sometimes special people. Certainly who got the meat, who got the apartment, who got the phone, who got the car. In America, of course, it doesn't work that way. And that bottom-up system is really rather extraordinary. Our prosperity comes from the feedback loops of profit and loss that reward, risk-taking, and punish bad ideas. And that really is what guides innovation in our society. And it's really an extraordinary thing. What I tried to do in the book, in the price of everything, is to show how not all order comes from the top down, rather much of it comes from the bottom up. It's the story of Ramon Fernandez, who grows up as a little boy in Cuba. His father is a legendary baseball player. When his father dies, his mother brings Ramon, who's five at the time, to Florida, risks her life, gets him out of Cuba. He becomes a tennis prodigy, gets a scholarship to Stanford, and is a student there when an earthquake hits the Bay Area, a really bad earthquake. He's having dinner with his girlfriend. When the lights go out, they realize they need batteries and milk and ice and a bunch of stuff, but they finish their dinner and by the time they get to Home Depot, they're sold out. But Big Box, a fictional story in the book, Big Box has plenty of everything at twice the price. They've doubled the prices for just that night. That's the first two pages. And what the book is about is how Ramon gets involved in the campus protest against price gouging by this vicious retailer that's taking advantage of people on the night of the earthquake. That retailer's a donor to Stanford. He gets tangled up with the provost. They have a bunch of conversations then about the source of our prosperity, of which prices play a central role as do profits and the profit and loss system. My fear is that we're in for a lot of top-downing and less bottom-upping over the next year, two years, four years, 25 years. It appears to be that we are at a watershed moment, something akin to what happened in the Great Depression that changed the way Americans and intellectuals looked at our market system. So I think it's a very good time to think about first principles and to think about what Hayek called the knowledge problem. The idea that knowledge is dispersed in our heads in the millions of people out in the world, the challenge of the economic system in many ways is to use that knowledge and coordinate it. There are different ways of coordinating. One way is with the coordinator. That's the Soviet system or some version of a mixed system. The second version is the bottom-up system, decentralized, using prices to coordinate resources and decisions. In our system, there is no weaver of dreams. In our dreams, somehow manage to coexist with each other without conflict, even though there isn't enough to go around and prices manage that conflict. As I said before, at the heart of that system is the profit and loss system. The profit is the incentive for risk-taking. The loss is the incentive for prudence. And over the last, I'd say, nine months, we have tried to avoid the lost part of it. We have consistently, with one exception, poor Lehman Brothers. See you later, too bad. But almost everyone else has been bailed out, Detroit's teetering, trying to get a large check from the rest of us. And without that prudence, we will lose the productivity of the profit and loss system. So I think we're doing tremendous damage to that system right now. There is tremendous pressure from intellectuals and the body politic to abandon the bottom-up market system to move toward a seemingly wiser top-down system controlled by experts and designed. And I think it's extremely important in these times that everyone, everyone, raise their voice in the name of liberty and freedom, because it is somewhat at risk. As if things get dramatically worse, we will see calls for dramatically more destructive things. And I think it's a very scary time. So those of you out there who care about these principles, don't just write your representatives. Talk to your neighbors. Make sure, help them understand the costs of the restrictions on the losses, the restrictions on liberty, and make sure that you help make the case for where our prosperity comes from, because it is, I think, a very dangerous time. That's the bad news. Let me close with some good news, and then I'll turn it over to Nick. The good news is that, unlike the 1930s, there is an intellectual base to draw on. The Cato Institute's an important part of that, and you're an important part of it. I think the understanding of how markets work has never been better. It's still abominably small in what it could be or should be, but I think the American people are much more skeptical of top-down government solutions than they have been in the past. But when things get bad, they will turn to power, and people's special interests will turn to manipulate that power, and that is my fear. So I hope we will all work to keep freedom alive. Thank you very much. Thank you, Russ. And now, a comment from Nick Gillespie. And if that's the good news, hopefully we'll keep freedom alive. I think the bad news is kind of winning out. Thank you very much, David, for inviting me, and Russ, thanks for writing your book. I was worried when I started reading the price of everything, because you're in one of these situations where you don't want it to be bad, and I have a real antipathy towards didactic fiction, fiction that's supposed to teach you something. And I think David mentioned a number of these books, things like Edward Bellamy's Looking Backwards, which is not only atrocious social policy, but it's also really got awful fiction. Things like B.F. Skinner's Walden 2, a similar double problem there. I struggle with Ayn Rand. I will admit that in the Hayek Auditorium, and Von Mises Men's Room down here. I struggle with Ayn Rand. David forgot to mention the great book by Robert Lefebvre. I believe it's Lift Her Gently, a parable where a suspiciously middle-aged man teaches a teenage girl about life, love, and Austrian economics, but not a great read. There are good didactic fictions. I think Uncle Tom's Cabin, which David mentioned, is one of those books, which however melodramatic it might be, it still is a great read and a powerful read that connects with people, more than a century after it was written. There are books like Mary Gaskell's North and South. I don't know if many of you have read this book. She was a contemporary of Dickens, and it's a fascinating story about the move from the countryside into the cities in Manchester during the English Industrial Revolution, and it plays out a number of scenarios by which one of the most fascinating scenes is where an aristocrat or the wife of a vicar or something like that is trying to get a girl to be their maid. She's like, you know what? I would rather go work in the factory because I can get better wages at more regular time, et cetera. It's a very good book. But in any case, I approach didactic fiction. It's usually like if you remember the old Highlights for Children magazine, where the subtitle of that magazine is one of the most terrifying phrases in the English language. It's fun with a purpose, and that's how I usually approach didactic fiction. I was really relieved to find Russ's book, not just intellectually stimulating, but totally readable on a dramatic level. It works really well as a novel, and particularly a novel of ideas, and particularly in the interstices that are layered between the chapters about Ramon's, the main character's, connection to Cuba, and eventually to the death of Castro, which becomes a turning point in the novel. And I think it's worth reading a short passage from this. This is from the chapter called The Weaver of Dreams, which is a motif that works throughout the book. And there are a series of short italicized sections before most chapters that where the main character, either events before him or outside in Cuba, are described as news of the death of the great leader spreads of Castro. Mines and tongues are in motion trying to figure out what has changed and what is the same. The man who collects and sells parts for the 1960s cars tries to imagine what he could possibly do instead. The woman peeling potatoes for the restaurant she runs in her living room imagines opening a real restaurant. The boy with the magic hands, the boy who has tamed a thousand basketballs over a thousand afternoons, dreams of going to college in America. The manager of the state run hotel catering to the Europeans wonders if he'll still have a job in a year and if he does whether the work will be harder or easier. The minister of the interior in charge of prisons has a sudden urge to do something quieter and less lucrative. It's a nice passage which gets at a series of human details and reactions that's characteristic of the book. I mean this as the highest possible compliment that I could pay. I look forward less to Russ's development as an economist and much more to his development as a novelist. I would actually have spent, this is a, I mean I guess it's a parable so it's going to be short, but I could have spent several hundred more pages with these characters for sure. Now the price of everything as Russ mentioned the price of everything comes into the marketplace of ideas at a time that couldn't be more crucial. Russ has said that this book is an attempt to instill awe at the market systems and the way they sustain our standard of living. In the most recent issue of Reason which is just coming out, the January issue we actually ran a short transcript of an interview with Russ that he had been kind enough to do for Reason TV a few weeks ago. And what he said in that is worth thinking about here because this is kind of the aim of the book and I think he's you know 100% successful in this. Unfortunately we do need 105% productivity now so it's, but he mentions he said, Hayek called our economic system a marvel. We don't have enough awe at the incredible stuff that our economy is able to achieve with no one being in charge. So what I try to do in the book is give people an idea of the forces that create order in our lives without deliberate design. The virtues of leaving things alone. Not just because freedom is good, which it is, but because of what freedom produces when we are able to choose our own path, choose our own dreams. This we desperately need now more than ever which I guess wasn't that Nixon's second campaign slogan, but now more than ever we desperately need to humanize economics and markets and to define them tooth and nail against traditional foes on the left and new found ones on the right. Especially over the next six weeks lasting in the Bush administration as well as the next four years and I hope that Russ is wrong when he suggests over the next 25 years. But there is, I mean something has happened. I mean clearly the policies that have been pursued just in the last six weeks are God awful and they're not going away. In fact, it seems likely that everything will be doubled down. Whatever happened in the past six weeks or over these two months will probably happen again. In just the past few weeks we've seen a disastrous attempts by the government, Democrat, Republican, perhaps mostly Republican if you think about it, by the government to take control of the economy to plan things out and a virtually wholesale rejection of markets. George Bush had a fantastic moment where he talked, in order to sell the bailout he said, I'm a big believer in markets except when they don't work which is right now so we have to get rid of them. That's a paraphrase but not much of one. It might be nicer than what he actually said. Hank Paulson told the LA Times last year that it's a market failure when housing prices go down which is a curious definition of anything having to do with free market economics. People like Sarkozy in France who was elected as a center right candidate has said, you know, the laissez-faire moment is over and I'm sure most of us here are wondering when it ever began and how did we blink so that we missed the laissez-faire moment but we do know that it's over. This is a tough time for free minds and free markets for the libertarianism of the Cato Institute of the economic principles at the heart of Russ's vision of society and the good life and it's important to recognize as we talk about humanizing economics and markets that it is in the end it's about human beings. It's not a system. It's not merely a system of resource allocation or increasing efficiency or innovation or actually facilitating cooperation across a wide variety of countries, of cities, of towns, of people, of ethnicities. It's about what Russ is talking about being able to choose what Yamiza's called us choosing animals. Man, what defines us is that we choose things meaningfully and I think that's right but the ability to choose our own path and to choose our own dreams. The book The Price of Everything starts with an incident of price gouging or so-called price gouging and returns again and again to Cuba and Castro and I want to close out my comments by kind of pushing on this and hopefully throwing the first question to Russ about this. One of the things that libertarians, people who are in favor of free markets, of minimal controls on people's ability to choose among various ways of living are often called heartless cold bastards. People like Mike Huckabee who is emerging as a potent element of a possible future for the Republican Party has singled out libertarians as cold, heartless, calculating, homo, kind of micai or I don't know what the plural of homo, kind of micus is but Mike Huckabee doesn't like it but we are often accused of being heartless, of being cold, of being calculating machines and yet people like Fidel Castro who really is the great villain of this book in a lot of ways and his death is what in many ways turns this book into a comedy almost or in a classical sense it's a book with a happy ending. But Castro, Castro, Che Guevara, any number of left-wing tyrants who sprinkle magic words of land restructuring and mass ownership, you know, vanguard of the proletariat or whatever, they sprinkle these words over their actions and somehow they're seen as the humanistic ones, the ones who take care of the little people. I have had by certainly people who hate capitalism but even people in the middle sometimes they have good intentions, right? And I've had a variation of this conversation many times in a wide variety of contexts where people tell me or it comes up that somebody has been lucky enough to travel to Cuba in the past, you know, 45 years now and everybody always says you have to get to Cuba before it is ruined and I play dumb which is a role that I am, you know, perfectly suited for and I always say what do you mean by it's ruined and they mean before Fidel Castro dies or before Raul Castro is strung up in a plaza somewhere. And I even know, I mean, I even know people from Venezuela who hate Hugo Chavez but say, you know, Castro, he's the real deal. I mean, and one of the questions that I want to ask Russ or because his book is about persuading people to take on a different world view. I mean, it will give you sustenance. It's like how many of you, you know, have been drinking non-fat milk for many years. It's like taking a long pull of whole milk. I mean, it's rich cream for those of us who already agree in the main with Russ's kind of perspective on things but the idea of it is to persuade people to take on a different point of view. And one of the questions that I want to ask is how do you or can you reach those people who tell us that we must get to Cuba before it is ruined, before it becomes, stops being what Jeff Flake called the congressman from Arizona, a museum of socialism. And you know, there are really only two or three left, although it seems that America right now is busy building a big addition to Cuba. And I'm not talking about Camp Gitmo either in terms of socialism. But then on the right, how do you reach the Mike Huckabees of the world? And to a certain degree, the Sarah Palins of the world, who again are emerging as anti-market foes on the right. They dislike, you know, they want energy independence because otherwise Americans, we can't really be free if we have to import oil and one assumes that we'll start going down the line, clothing, toys, baby formula from anywhere overseas because if we import with them, we're left open. We become, was it Napoleon who derided England as a nation of shopkeepers? You know, where's the virtue in that? Where's the military virtue? Where's the aristocratic virtue in that? And people like Huckabee also dislike this idea of capitalism as, you know, the agent of shampaterian creative destruction that one of the things that Marx and Engels got right in the Communist Manifesto about market societies, about bourgeois societies, that they are constantly making the sacred into the profane. They're changing the ways in which the social order is. They allow people on the bottom to get to the top, which is very frightening if you're anywhere near the top, right? And also suddenly, you know, everything solid dissolves into air and homosexual individuals who are gay want the same rights that individuals who are not gay have. And that creates social disruption. So I'm going to sit down and I'm going to ask you now two small questions. How do we reach the left and how do we reach the right with the message at the heart of your book? Thank you. I think this is going to be being broadcast on the web, right? Will it be preserved on the web after the fact? Eternally. Okay, well, whoever's editing this, just cut out my part because that was that was so much better than what I have to say about my own book. Thank you, Nick. That was really eloquent and very well done. I only wish that it had been exaggerated. On the issue of reaching the left and the right, I gave a talk here a long time ago that is, I think, still up on the web on speaking to the open-minded skeptic. It's a waste of time to speak to the dogmatic folks on the left or the right. But fortunately, they're small in number, at least for now. The people I'm talking about, the open-minded skeptic, are your neighbors, your friends, your buddies, your family, your cousins, your aunts, your uncles. And I think there's a lot to think about in how we talk about the ideas we care about to those folks. And the two most important things are empathy and compassion, which don't come easily to anybody, but especially to self-righteous intellectuals, of which many of us are, which I think is a disastrous strategy for getting people to be open-minded about our ideas. Empathy, being open-minded to what the other side thinks about and why they think what they do, as opposed to being self-righteously dismissive, and then compassion. Being a good person is probably the single best way to proselytize. Being happy isn't bad either. The worst thing can be as a grim, self-righteous, angry person of which, again, there are many people in our movement of freedom, I think, who have hampered our success. So I encourage us all to be empathetic and happy, because I think seriously it does make an enormous difference in getting people to be open-minded about our ideas. As for the rise of people like Mike Huckabee, Mike Huckabee and others, mostly politicians, are merely reflecting, I think, what they think sells. And to the extent that the rest of us are not interested in that product, they won't sell it. So again, I think I like the idea, maybe a pipe dream, but I like the idea of an American people who are willing to tolerate a little bit of creative destruction. It's not our strong suit. We really don't like risk-taking. We really don't like losses. We really like borrowing. Have you noticed? It's really an amazing moment in the last month was when Paulson panicked, changed gears for the second time, maybe the third time, depending on how you count, and decided he would use some of the tarp, the 700 billion of which he has access to 350, to get consumer credit markets going again. Isn't that part of the problem? Consumers borrowing too much money? Would that really be the thing you'd want to fix first? It's a strange and I think very surreal and informative moment of where the body politic is and how people in Washington respond to it. So having said that, by the way, I think we're in for some soul searching. Selling this book today is a little like selling ice in Alaska, right? Trying to sell people in the virtues of leaving things alone when it apparently was the case that by leaving things alone we destroyed the financial system has to be answered. One answer is that, well, every 70 years it falls apart, but of course I believe, and I think many of you believe as well, that government played a role in creating that catastrophe. But it didn't regulate itself as well as I thought in the face of that government disaster either. And we have to be honest about that and face that just as we have to be honest about the fact that it's creative destruction. It's not just creative. It's profit and loss. It's not just profit. I think economists do a terrible job in the name of free market policies when they only talk about the good side. And I think it's important to talk about the fact that some people have hard lives and some economic choices lead to difficult results. So I think honesty is an extremely important part of where we go from here. Having said that, a friend of mine was talking to me and he said, you know, self-regulation sure has a bad name these days. And I said, I'm so kind of fond of it. I said, you know, because you have to compare it to the alternative. It's very important to remind people of what the alternative is, right, which is government regulation. Paul Krugman had a great column a couple of days ago where he talked about how, you know, we got the first thing we have to do is just fix the financial system. You know, that's all we have to do. That's good. Well, that is, yeah, that would be first on my list. How we fix it, of course, is, you know, the devil is in the details. The challenge is to find a fix, a redesign that's going to make things better, not worse, not so easy. A bigger problem we have is the housing situation. There's no doubt in my mind that the housing situation was created by government attempts to increase homeownership beyond what it would normally be in a free market world. It's an inevitable political response to put more people in homes, as if it were the American dream, right? It's actually, it turns out, the dream of the National Home Builders Association. Until we confront that, we're not going to really fix that problem. And the ability of the body politic to say, yeah, leave that alone, let people put 20% down, not 10, not 5, not negative, right? There were lenders bragging that they would lend you 103 and 105% of the house, not just the equity of the house, but the closing cost too. And in a world of rising housing prices, that was an interesting business strategy. But we have to be honest about the role that free markets played in, not free markets, but private decisions played in that problem. But we also have to be vigilant and reminding people of the role that government played in creating that playing field that led to that destruction, because without that government intervention, we would not be where we are today. So, but to answer your, I'm just rambling, to answer your question. You have no idea. Yeah. Empathy and compassion, that's what I said. Yeah. No, and you know, two other things to follow up on that that I think are really useful. One is to take back the language of deregulation or to insist on a proper understanding of regulation, re-regulation and deregulation. It was almost a decade ago now that the California electricity deregulation happened, which was a law that deregulated supposedly the utility, power utilities in California. It passed unanimously in the California State Legislature, which means that it was by any indication a horrible bill, because it meant that every special interest had gotten what they wanted. They called it deregulation. It was a complete disaster, and it helped poison the idea of utility deregulation or markets in energy, unlike markets and other things, for really up through the current moment. It really did stall certain aspects. And it was not deregulation. It was re-regulation. And one of the things that has happened now, and this is particularly with the administrative change, it's very easy for Democrats to come in now and say, look, this is what you get with deregulation, which happened unbelievably under George W. Bush. Bush, Mercatus, has done a lot of really good work on this. Bush is the worst regulator essentially in post-war America. He was terrible. And even the financial markets were not deregulated. And to the extent that they were, and they were made healthy, most of it happened under Clinton and the end of Glass-Steagall and things like that. And it's worth insisting on that point always again and again. I also think that it's useful to point out that nobody is in favor of the bailouts. And this is actually a question of, I mean, by vast majorities, the American people are actually very uncomfortable with the way the bailouts have been positioned and structured. And it's a question of how do you tap into that in a way that they understand? I think one of the most remarkable things, the most cheerful news of the last month is that we didn't bail out Detroit. It seems like a political no-brainer. You have a very small concentrated group of people who are going to benefit from this. And I think there's so much discomfort on the part of the American people that they've said no to it. I love your point about the electricity story, though, because it reminds me of a second analogy with the current situation. And before I go on to mention that, I want to quote Hayek in the Hayek Auditorium, the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. So the California legislature tried to design a new market in electricity. They unfortunately froze wholesale prices. That's an unusual form of deregulation. It was called a market solution. They deregulated retail prices of wholesale prices. Of course, that led to a lot of shortages and an enormous part of the disaster. But the thing that that has in common with the current situation, besides the fact that the government was trying to somehow manage the housing market through Fannie and Freddie, through tax policy, through monetary policy, and hoping it didn't spill out of control through this complex system of interactions, nobody really understands either one. Try to understand what happened in California in the electricity debacle. It was extremely complicated. Similarly, the current situation is so complicated, the average person doesn't really know what's going on. The average well-read person doesn't know what's going on. The average smart well-read person has trouble figuring out what's going on. And when there's that level of ignorance, we get the creation of mythmaking. So the other thing I'm worried about, and why I think it's important to take Nick's advice to heart about language, we also have to try to take charge of the narrative. We're losing the narrative. The narrative now is greed ran amok. Government wasn't allowed to regulate, and we deregulate, and as a result, the whole system, a bunch of people got rich, and the rest of us got lost all our money. That's not what happened. Sure, greed played a role, but greed always plays a role. Greed's really old. It goes back to the Garden of Eden. Greed is a, it doesn't change. We don't get greedier. Suddenly, human nature, genetics, it's really not what's going on. It's not much of an explanation. So another theme I would push is to read a lot. Try to figure out what's going on. Try to stay informed, and try to help other people stay informed, because there is an immense amount of ignorance, because it's complicated. And as a result, people try to exploit that in the political process. Very important time to try to be informed. I think also following up on the idea of the narrative. Reason also is excerpted in the January issue of Robert Samuelson, the Washington Post, economics writers. A great new book called The Great Inflation and its Aftermath, which looks at the taming of inflation starting in the 60s through the late 70s and early 80s. As a major, I hate to use the term game changer, but a game-changing event in the American economy in that it set up the past decades of prosperity that we had. One of the things that's interesting is that it's something like a majority of people in America have been born after 1962 or 1964 now, which means that part of this narrative that is spinning out now, and Paul Krugman told Charlie Rose when I see when Obama is inaugurated, I want him to call for a new, new deal. And the whole idea that we are back in a depression era or that we need a new deal, which oftentimes overlooks the facts of how the old new deal worked and extended, according to recent research by UCLA economists as well as an understanding pushed by Anna Schwartz and Milton Friedman, it extended the depression, it extended economic downturn for all sorts of reasons. But even beyond that, we are talking about a point where housing prices are now what they were in about 2004, where unemployment is at 6.1%, as opposed to 25% in 1932, or 10, 11% in 1981, where inflation, which does seem likely to return in a big way, but is still relatively negligible, that most people today don't even remember the recessions of the early 80s, much less the depression. And as a result, reminding people of, I think, I mean, I don't know of, you know, everybody I know who is complaining about tough times, they're still waiting for it to happen to anybody they know. It's not even, we, I mean, the bailout happened before we even had an official quarter of negative growth, much less a recession. And there is something bizarre about the quickness with which we seek to strangle any sign, any feeling of kind of psychic duress from an economic perspective. And I think it's useful to try and recast things going back through, you know, what are the recessions of the post-war year? And how long did they last? How bad were they? And where do we fit in on that? And we're not even, technically, we can't be in a recession yet. We had a 3.3% growth in the second quarter of this past year, and people were disappointed. I mean, it's just, it's a very odd kind of discourse. Yeah, but I am worried that it's going to get, it could very well get dramatically worse, partly from what the government's doing to try to make it better, partly from natural causes. But it's a great point about expectations. And it is really the reason I'm particularly nervous, which is I think about my parents. My dad was born in 1930. My mom was born in 1932. They grew up as kids in that decade of the thirties when times were very unpleasant and very hard, and it changed their worldview forever about what life is about. My dad has probably never spent more than $40 on a pair of shoes, because why would you? They both cover your feet, the $40 pair. I said, Dad, your shoes are, how are they? Well, you know, they're, yeah, he's got blisters, they're uncomfortable. I said, why don't you spend a little money on your shoes? You could afford it. No, no, no, it's, it's, it's wasteful. So he has a whole different outlook. Whereas I, born in the 50s, you, many of you born later, some of you born maybe a little before, but we have never lived through hard economic times. Our idea of hard economic times is 1981. And as you say, unemployment was 10%, a little over 10%. We had inflation, which is unpleasant, but it was, it was nothing compared to the economic environment of the 1930s. And when people would say, this is the worst economy, which I've heard, you know, numerous times since then, there's the worst economy since the Great Depression. I would say, you know, what the unemployment was at the height of the Great Depression? 25%. This is not, it might be the worst economy since the Great Depression, but, which it wasn't at the time when it was said, but it doesn't matter. It's not analogous. It's a bad example. So what's going to happen to people who aren't used to hard times, who aren't used to neighbors who are out of work, who aren't used to being able to afford every, you know, Black Friday was a great day. See that came out today? We spent a lot of money. Sort, is that goodness or bad news? I can't figure it out. This idea that somehow it's patriarch to spend. I guess it depends if you're giving or getting Christmas gifts. No, but it's both. That's the beauty of it. We're just going to pull up the whole thing through our spending. This Keynesian idea that somehow if we all spend, we'll all save ourselves. It's a very strange idea in a system that really is many biases against saving and we don't save probably as much as we should in the United States. You know, you're sounding like your father now. Yes, I am. Let's bring some more people into this conversation. We'll bring a microphone around. Please wait for it to get here. Bring one right down here and take some questions. Is there anything that Barack Obama can pretend to do economically that will diminish fear without actually getting in the way of free markets? And who are the good guys and the bad guys or the less bad guys on its economics team? Well, the right thing is go back to the 30s, right? You had this very cheerful president, FDR, who really sold a message of hope and happy days are here again. And the myth, which Nick has referred to as the first myth was Hoover didn't do anything. Roosevelt saved the economy. The New Deal saved the economy. That myth is pretty much dead. Most people now argue, well, actually, Hoover did a lot, didn't work. Roosevelt did a lot more. It didn't work either, but it didn't matter because what mattered was he gave people hope. Now, I'd say what mattered was what the unemployment rate was in 1938, which had different measures, but it was in the high teens, which was horrible. And so here we had a very, very, very long depression, either because it was so severe to start with that it took a long time to recover or because FDR made it worse. I think it's very difficult to choose between those two hypotheses, but I don't see anything. I don't think if Obama was the greatest charmer in the world, which he's up there, he's in the top 50, right? I don't think if he was the greatest charmer in the world, we'd suddenly go, oh, it was nothing. We were just worrying for nothing. We're all okay. Let's go back to the way things were. So one thing I'm very worried about is this idea that somehow just the right person gets into the job, and he has a great economic team. I like his team a great deal. He could have picked many, many worse folks, and I don't know who could be better. I mean, the irony is Ben Bernanke is supposed to be, he is the world's greatest living authority in the Great Depression. So he knows exactly how to bring it about. I was going to say he knows exactly how to prevent another Great Depression. Unfortunately, this one's different. So he doesn't have a roadmap. So the thing that I'm most worried about is there is no roadmap. There's no manual. There's no economic science here. There's no obvious set of policies that are going to make things better. And what's being talked about with a straight face is a trillion dollar stimulus package. We have a 14 or so trillion dollar economy. We spend about three trillion now. So we're talking about the federal government. We, sorry, the federal government in our name spends three trillion now. We're going to make that four plus in the name of trying to get the system going again. I doubt it's going to work. Maybe I'll be wrong. It's a very interesting time to be alive. Because I am a PhD in English literature, unlike a PhD in economics. I have the economics answers. I know so little that I know what I know perfectly. But I would say there's two things that Obama could do. And one, you know, and it's true, this is a totally different situation for any number of reasons than the the Depression. But one is not to follow through on his parent promises to restrict trade and to kind of enact a 21st century answer to smooth holly to the tariff bill. And to actually hopefully Austin Goolsbee, who's one of his economic advisors who signaled to Canada that no, no, no, we didn't really just kidding thing about re re renegotiating NAFTA and keep keep barriers as low as possible. There is a huge nativist sentiment and Obama played on this about China about energy independence about interdependence in the world globalization. And it affects a lot of people. And this is a major source of anxiety, you know, that I somehow my job is going to disappear for, you know, because those millions of people move from the Chinese countryside to the city. I think that's one thing. And if he signals pretty clearly that he is not going to be a restrictionist or is not going to be worse or as bad as George W. Bush was who had a lot of bad tips early on in terms of trade. The other thing is also drawn from the Depression. Roosevelt promised bold persistent experimentation. And he delivered it throughout. And this is Amity Schley's really good revisionist history of the Great Depression talked about how one of the problems with Roosevelt is that he never stopped to let anything even work. He was constantly coming up with new plans on an almost daily basis or a weekly basis during the Depression. And as a result, you freeze out investors. We are already seeing that where Hank Paulson is, you know, isn't there a prescription drug we can give this guy to just settle down? I mean, he is manic beyond belief. And that is roiling markets as much as anything else. You know, when the first bailout was being proposed, Barney Frank and other people were saying, you know, we don't have the time to know whether or not this is the right thing to do. We just have to do something. And that's not a good answer. You know, and one of the most disturbing things about getting older besides your body giving out and your mind giving out. And, you know, is when you start to realize that you're the doctor as you go to, like you think they're smart because they went to medical school and I know I would never get into medical school. And then you realize these people are really not very smart, but at some point they were good at whatever tests they took, you know, filling in bubbles on a and this is happening with the with the U.S. government. And, you know, where it is Hank Paulson is really smart, right? He's an egghead and he was ahead of Goldman Sachs, who we just get $25 billion to. Isn't that a bizarre turn of events? So what a coincidence. Yeah. But, you know, end the bold persistent experimentation and say, you know what, whatever, whatever, you know, nag, you know, old glue factory horse I rode in on it stops with that and lets, we'll work around it, but not to keep coming up. And Obama has said we're going to try a lot of different things. And that's that's not good. I also want to mention the work of Bob Higgs, who's written very eloquently on the 30s as a time of uncertainty due to that experimentation. And I think we're getting a flavor of it now. Yes, right here. You'd both talked about the need to control the narrative and to make people use the language correctly about things like deregulation and such in both personal conversations and on blogs I participate in. One of the biggest problems I have convincing people that this isn't a failure of the free market is that real free market activity is so easy that it's almost invisible to them, you know, pointing out pencils or lasers or going to the grocery store. All of these things work buying a computer markets work. And they're like, yeah, but that doesn't count. I'm talking about the big things and it's always, you know, healthcare or housing, which are probably the two most distorted markets we have and education. Yeah. The third one they mentioned is education. These are things that are getting expensive because governments, two things are happening, governments either subsidizing them, which is pushing the price up artificially, or we're getting wealthier, demanding more of them, getting more of it and raising the price along the way, which is okay. So how do you, if the free market is invisible, when it's actually working, how do you get people to understand it and to trust it? Nick. You know, I'm thinking I'm thinking now, you know, for me, one of one of the cases of that is when you talk about education and healthcare, which are lagging fields when it comes to customer service, to individualization, to different methods of delivery. I mean, like nobody says, you know what, we have a restaurant problem in America where there are just not enough restaurants delivering food in all different types of ways. I love, you know, the produce section, one of the great things. And the shock and awe has kind of worn off now. But remember, it was really kind of in the 90s when this happened. But you would go into a produce section and there would be stickers on produce saying what it was and how to eat it. And like, what a great, wonderful delivery system where you're getting shit that you don't even know if it's food or not. And like, and it says, well, cut it here and wash it here and bake it, whatever. I mean, that's like tremendous in education, and not all education, but K through 12 education where over 90% of the people go to publicly funded schools. And in healthcare where what is it like 60 cents of every dollar is spent by some kind of public sector entity. Is it a surprise or is it simply a coincidence that those are two places where people are most unhappy with the overall systems? And, you know, and I think that that speaks to it. I do think with the financial stuff, and this is something where I try to keep up and I try to I and I think I have the beginning of an understanding of the financial sector. And it is clear that the, you know, one of it's not even a question. There are going to be rules imposed on people as well as rules that any industry or any any group generates. But it's, you know, one of the tougher order questions is how if we believe and as all public choice economists or people prone to that believe that whoever is regulating a field and inevitably gets captured by that field and then writes the regulations to the favored parties in that, how do we pull out of that to, you know, really this time get the regulations in the financial sector so that they're more transparent and visible. And I think one of the points that Russ has stressed in a lot of different venues, which is really important that one of the part problems with the bailout is that it makes it easier to invest and take losses and that that's a big problem because I know that I would be much more, if I knew I'm going to lose this money and it might be gone for good, I will be much more prudent in terms of what I do and I would have more knowledge. And, you know, that's also part of it is that we are cutting out the whole feedback loop of the economic system by doing the bailouts. Yeah, the only thing I would add is that I think it's extremely important to learn some economics. It's a weird field. There's not a lot of certainty in our field. This, what we've got is a way of thinking now that helps you make, keeps you from making really bad mistakes. So read those blogs, listen to those podcasts and try to get yourself and encourage people to do the same and formed about it because I think the feedback loop point, everybody understands that. There's nothing really subtle or profound, there's profound, but it's nothing subtle or deep about that that's complex or hard to understand. Everybody understands that when you don't pay a price, you don't act carefully. You know, Milton Friedman said it best, when you spend your own money on yourself, you spend it very carefully. When you spend other people's money on other people, you don't spend it carefully and that really sums up what's wrong with their education system. It's mostly run by people spending other people's money on other people. People spending their own money on themselves spend it much more carefully. So I think fundamental principles can help us a lot. Right here. Is, is there anything the government, the federal government should be doing? I think we all agree or share your concern about the implications of what's being done right now, but is there anything the federal government should or explicitly should not be doing? Well, I think there's some obvious things they could do to reduce the chance of a housing bubble happening again, which I think the government created. There's a general belief that this housing bubble just came out of nowhere. It was just the most eloquent and thoughtful person on this is Robert Schuller, who I interviewed a couple months ago, before I understood very much about the government's role in housing and his basic argument as well, just people started thinking it was going to go up and when you start to think that, then it's wise to even invest because even if you think it's not going to keep going up forever, even if you think it's just a bubble, you want to don't want to miss out. And I don't think it just came out of nowhere. I think it was a mistake to create government sponsored enterprises called Fannie Mae and Freddie Mac that were designed to serve two masters, investors and Congress and the American people, three masters start counting. That's fundamentally flawed. So the first thing I would hope, coming back to Terry's question, one thing that I wouldn't count on this, one thing would be nice to hear politicians say is that was a mistake. I haven't heard that very often. I heard some economists say it, but that was a mistake. They were structurally flawed in the future housing market, which by the way right now is, you know, as Nick said, housing price is going down some market failure. After you've pumped them up with this monetary policy, tax policy, capital gains change in 1997, ease of Fannie and Freddie guaranteeing mortgages where if they lose their money, they're going to be covered by the taxpayer. After we pumped that up, if the prices go down, we have to, you know, we got to pick, we can't let that happen. So the first thing would be to say, we made a mistake. We shouldn't have done that stuff. The second thing I would say the government could do again, not optimistic, this is not going to happen. But the second thing I would like government to do is to have a more simplified tax system that doesn't try to continually advantage home owning and home building. I own a house. I like owning a house. I've rented many years of my life. That was fine too. It's true. It's a little harder to paint the walls the color you want and nail in the pictures you want. Sometimes you can't play your stereo as loud maybe it's a bizarre argument that somehow home ownership is, I mean, it's a fundamental human thing that they exploit that we were prone to the security idea. It's mine. It's ours, which is a huge engine of prosperity. But subsidizing it to the point where 70% of the American people are in houses of a large number and put no money down, strangely enough, that's not the road to prosperity. So I think being honest about how to prevent the future problems would be a good step in the right direction. The real problem we're going to have though is financial regulation. The real issue is going to be what are the financial institutions that are going to emerge over the next two to three years? We don't have any investment banks in the United States right now. They've all defaulted into this being calling themselves banks that get access to that money because they're afraid they're going to go out of business, reasonable on their part. But what does that mean for the future of American innovation? It's scary. So that's going to start to reemerge. And the question is this government, what are we going to do? I mean, there's a lot of really bad ideas. Again, I think economics has a lot to contribute on what not to do. I don't want a special board created that's going to make sure there's no systemic risk. We're going to be so risk-averse for the next 50 years after living through this. I mean, these people destroyed their companies. People saw these companies destroyed. People are going to be a little more careful unless we keep bailing them out, in which case they won't be. So I think there's a huge amount of stuff to avoid. When you ask what there is to do, I think the answer is to confront the things that did contribute to the problem and not to do things that are going to be very hard to avoid, which is regulating the financial system. I would just add, you know, one of the most terrifying stats that's floating around there and something that Jeffrey Rogers Hummel wrote, there's been a 40% increase in the monetary base over the last year. And there seems to be no let-up in terms of just injecting more and more cash, printing more and more money, and putting it into the economy. That coupled with endless bailouts, these are really bad things. And if the government is going to spend, you know, $300 billion or something like that, it would be better not to spend it by giving it to companies that have already lost it. A recent online, a few weeks ago we ran a piece by Veronique du Régis and Philippe Leclu to economists. Granted, French trains. So, you know, take that with a grain of salt. But that's French. That's true. But they, you know, they argued that if you're going to spend money, give it to taxpayers in the form of a credit for a retirement investment that they can't access. And that way you put some money into a system where it really can't be access as opposed to just throwing bad money after worse money after worse money. And I think, I mean, we need to stop the bailouts. I mean, at some point where we just say, you know, Comrade, this is year zero. And like, you know, GM and Ford, you know, fits up. We were told in March we had to bail out Bear Stearns because we'd get a freeze up of financial markets. Well, we bailed them out and we got a freeze up in financial markets anyway. So let's take one here and then behind and then back there. Hi. I wanted to pick up on the question about what the administration could do, because I've been somewhat frustrated by the discussion over the last several months and you referred to the narrative. How do you describe what's going on? And clearly, a lot of it is the mortgage markets and the bubble and bursting and all of that. But since about mid-September, the stock markets have crashed. And I have a narrative on that and I'll run it by you. But if you just do a little bit of math on valuing securities, around mid-September when it was clear Obama was pulling ahead in the polls after both of the conventions, you look at his tax plans, his ideas about dramatically increasing the taxes on businesses, increasing individual taxes and capital gains taxes, which he talked about at various times. When you think that he's going to win and you think next year business taxes are going to go up, every corporation, its value goes down instantly. In addition, if you think that, gee, my stock holdings are going to go down next year when he raises taxes. And if I try selling them next year in order to beat the market, I'm going to pay higher capital gains, I'm in a big hurry right now to dump these stocks to actually right now force the reduction in the value. So you saw the market going down really dramatically from September until the election. And then in the days after the election, it fell off the cliff again. And so the narrative I have is that it's a more complex thing than just making people more confident and more willing to take risk. We have a revaluation based fundamentally on the expectation of what his tax policy will be. It's possible. I'm skeptical about that for two reasons. One, the market looks at what they think he's not what he says, but what they think he's likely to succeed in doing. And I think most people understood that that rhetoric was not reality, and it certainly hasn't proved to be reality. I think Nick's example is the best example. If the markets really thought he was a protectionist, I think that would have been a disaster for the stock market. But I think the markets understood, and I think people understood that that was talk, cheap talk, as his advisor communicated to the Canadians. John McCain's chances ended when he couldn't talk thoughtfully about the crisis, in my opinion. So it's coincident. Obama's likelihood of winning is coincident when the crisis in September appeared, not just post-convention when actually McCain did pretty well, but when it became clear that McCain was not able to reassure people that he was able to cope with this. So to me, there's a simultaneously there that can't be distinguished. Let me just say one other thing about the tax plan. There was talk about taxes on business. There always is. Businesses always fight those. They sometimes lose, sometimes win. At the personal level, the redistributive impact of what I think would be his tax plan, or what will be his tax plan, even if things get better, is relatively small. It's going to add some people to the list of people who don't pay any taxes, which I think is not a good thing. I think it's a bad thing that so many Americans pay zero for a federal income tax. It would have increased the burden on higher income folks. They would have gotten raises, most of them, because that's the way markets work that would have offset some of that. So in my mind, he's a big talk, not so much action campaigner who has picked fairly centrist economists as his economic team. They're left of center. They are more likely to be Keynesian. They're more likely to be redistributionist, but they're not radical. So I think the stock market signals come from many sources. It's one of them, but I don't think it's decisive. To go back to that larger question of narrative, I think it is true that McCain, and more broadly speaking, the Republicans who are supposed to be a party of free markets, which I think everybody in this room as well as anybody listening and the NSA, everybody knows that's not true, but they sputtered. I mean, McCain was, he was like a cartoon character where steam was coming out of his ears. He got on the plane to come back here to make sure there was a bailout. I mean, if he had, just from a basic retail politics, he should have created his unique selling proposition was that if Obama was in favor of the bailout, he should have been against it, and he should have had a couple of reasons for why. And that is where, I mean, this is where we might be entering a horrible era of kind of consensus politics. I mean, you know, where the Republicans go back to that mushy, useless alternative to, you know, an echo, not a choice. Okay, last question right here. The book, one of the things I was wondering about is what you hear often about a big box store is that they like to go into sort of a neighborhood and they sort of muscle their way to get special tax breaks and stuff that the smaller stores don't get. And so I wonder from that standpoint, is there still a good reason to dislike big store or big box, or is it that that's just all part of the market system and it works itself out and positive thing? It's not part of the market system. When people make that complaint against Walmart and others, I always say, well, those are bad ideas. They shouldn't get special tax breaks. They shouldn't get special infrastructure built form. That's, I think, a mistake. And they shouldn't be able to use eminent domain to justify stealing people's land. I think that's horrifying. But that is not why, to me, not the major reason they're so successful, the major reason they're so successful is they have figured out a way to use technology to lower the cost of bringing goods to the public. And so when people say they drove the moms and pops out of business, I always say, we drove the moms and pops out of business. We chose not to shop there. And we chose not to shop there because their selection was lousy and their prices were high. And they didn't offer a lot of healthcare insurance for their employees either. It was not a particularly pleasant environment. So the Walmarts and others who have thrived in the current world, yes, they get some special help from government. We ought to stop that. But the reason they're successful is they've figured out a way to keep their inventory costs low, the way to design their warehouses. They've made stuff cheaper. They've raised our standard of living, not out of the goodness of their heart because they wanted to make a lot of money and they shouldn't be entitled to stay in business. If they can't keep up with the competition, they should be left on the wayside, which they, of course, inevitably will, just as Sears and others who were the giants who were exploiting us in the past were. So their day will come. But as long as they play by the rules, and I wish some of the rules weren't the way they were, but that's the way the system's designed, and they were the better for it, in my opinion. And, you know, Walmart has suffered huge losses. I mean, they pulled out of Korea and Germany, partly because they didn't adapt to the local circumstances particularly well. I'd actually followed the kind of anti-spoil movement and the anti-big box movement. It's, in many ways, it's over. I mean, now they both can make certain deals. You know, 15 years ago, when Walmart would show up in a town, they would come and say, you know what? We're going to build this much extra infrastructure. We're going to give you money for a community center. They would buy their way into towns and now they can, you know, extort a rent or, you know, some kind of homage from local towns. And that is awful kinds of corporate welfare. And, you know, corporate welfare, one of the things that is appalling about the bailout and everything is that corporate welfare is being redefined as a social good now. It's such a good thing that will bail out the automakers because think of all of the, you know, the people who work in car washes or whatever. You know, it's this endless litany of how we can't let any job ever be destroyed because it'll destroy everything around us that's good and decent. Corporate welfare is awful. It is always awful and it always will be awful and it's worth bringing that up. By the same token, you know, this, I don't even think this is particularly controversial anymore. Big boxes, nobody talks about the end of downtown the way that they constantly used to starting in the 1920s through the 1980s when Walmart and a few larger chains, mostly that came out from outside of big cities, started coming into, you know, what used to be places near, you know, places like New England, places like California, New Jersey, the Mid-Atlantic region. Everybody knows that downtowns died because people moved to suburbs where they would rather be. And people also know, I think, and Walmart is a good example. You know, two of the big beneficiaries of Walmart and of Home Depot are Ace and True Value hardware stores where they've shifted their business model to be more service oriented and they've learned how to coexist and create a better kind of ecosystem for consumers because you can go to Walmart if you know what you're doing and buy some cheaper tools or whatever, or you can go to a place where you'll get actual help. And they're flourishing as chains. So it's, you know, I, and I think one of the things that is really interesting about The Price of Everything to bring it back to us's book is that it actually walks people through how that kind of system works. And in a way, I mean, you know, the asset test and, you know, I would love to do, you know, get some of your George Mason colleagues to do controlled experiments on people and have them read the book and see if it speaks to them. I mean, I'm sure that it will to the skeptic, not to the ideologue, but it actually walks through that in a very meaningful way.