 It's nice to see everybody here. Welcome to Old Parkland. A key principle of this amazing room is the philosophy of civil discourse. Old Parkland isn't only a center of business. It's a place where thought leaders from across the country and the world come to discuss topics of the moment. And in that vein, it is my honor and my privilege tonight to welcome to campus three incredibly talented and important thought leaders in our country. Eurone Brook is chairman of the Einrand Institute. James Galbraith holds the Lloyd Benson chair in government and business relations at the LBJ School of Public Affairs at UT Austin. And my friend, Tal Tsifani, is the president and CEO of the Einrand Institute. Tonight promises to be a great example of what debate is all about. Two people who may disagree, but do so in a respectful manner and provoke discussion and philosophical thought. It's a model which our universities, media outlets, businesses, and communities could use some schooling on these days. On a personal note, as a young and impressionable college student I happened to run across this book Einrand Atlas Shrugged and it forever changed my life. And last year, due to my friend Jim Dunn introducing me to the folks at Einrand I had a chance to re-acquaint myself with the organization. So it is a particular privilege and honor for me to welcome our friends here this evening. So with that, I'm going to turn it over to Tal and our friends are going to join us. Thank you. Good evening everyone. Again, my name is Tal Tsifani, CEO of the Einrand Institute. James. Here, a slight accent. I'm Israeli. Okay. Moved here in 2006 just to fall in love with the country. Now I'm a citizen of and it's an honor to be here. So when I was nine years old, my mother told me that we're moving from the city to a place called a Kibbutz in Israel where everyone is equal. At the reception that follows you can ask me about my experience living in that place from nine years old to 16 years old where everybody is equal. The issue of inequality is not one issue. It is an issue that shapes how we think about almost every other political issue. It shapes how we think about taxes. It shapes how we think about healthcare, social security, welfare, minimum wage, immigration, regulation, technology, and even free speech. If you believe that income inequality is a moral, political, and economical problem that needs fixing, then you will come to radically different conclusions about the kind of future we should be trying to create and the government's role in it. So the stakes are high. And whenever the stakes are high, it becomes crucial that we take the time to question our own views, to look at different positions and different arguments, to do the hard thinking needed to ensure that what we believe is right. Not that it's popular, not that it's a view that we've always held, not that it's the view of my political party, but that it is true. Use this debate as an opportunity to hear from two powerful advocates of different sides of this issue so that you can enhance your own thinking and help ensure that we as a country make the right decisions about the future. Before we get started, I'd like to thank Michael Levy, Julie Rattford, and the entire team at Old Parkland for making this happen. So a round of applause to making this happen. Thank you very much. I'd like to thank James Dunn for generously supporting this event and a special thank you for the Trammel & Margaret Crow Foundation for organizing all of this. So my organization, the Inran Institute, is sponsoring this event. We are an educational organization promoting Inran's philosophy of reason, individualism and capitalism. We distribute hundreds of thousands of books to schools and colleges. We run the largest essay contest in the world on Inran's books, Apple Shrug, The Fountainhead and Anthem. We also educate a new generation of thinkers about the power of ideas and the philosophical foundation for liberty and the moral case for the American way of life. If you'd like to see more events like this and help us put more books in young hands, please talk to me or Kirk there how you can support us. So let's start with today's debate. Income inequality continues to rise. Should the government act to reduce inequality? So for the pro side, this proposition, Dr. James Galbraith, Dr. Galbraith holds an L. Lloyd Brinston and chair of government business relationship in the Lyndon B. Johnson School of Public Affairs and a professorship in government at the University of Texas at Austin. He was the executive director of the Joint Committee, Economic Committee of the United States Congress in the early 80s and before that an economist for the House of Banking Committee. He chaired the board of economists for peace and security from 96 to 2016 and directs the University of Texas inequality project. He is a managing editor of the structural change in economic dynamics. On the con side is Dr. Yaron Brooke. Dr. Yaron Brooke is the chairman and the board of the Inran Institute. He wears many hats at the Institute and travels extensively promoting Iran's ideas and philosophy. Dr. Brooke can be heard on the Yaron Brooke Show which airs lives on YouTube or wherever you hear your podcasts. He's also a frequent guest on national radio and television programs. He's the co-author in pursuit of wealth, the moral case for finance, a national bestseller, free market revolution, how Iran's ideas can end big government and equal is unfair. America's misguided fight against income inequality. So first up we'll have Dr. James Galbraith who will have 10 minutes for opening remarks. Thank you very much. And let me first of all express my great pleasure at being here to have occasion to have this conversation with my old friend Yaron Brooke and to join you in this really remarkably beautiful facility which I'm dressing for the first time. It's very, very impressive and delightful. I am sometimes mistaken for, I don't know, pink, tinge progressive on matters relating to inequality. I have been studying the subject for, well, three decades. But my interest is mainly a matter of statistics, not politics of measurement rather than morals. I do obviously hold political views and I will defend them. But on this matter I would describe mine as comparatively, compared to Yaron of course, centrist. Even conservative, if it is to be conservative, is to defend things as they are. I should mention that it's been said that I hold the Lloyd Benson chair or maybe people here who remember Senator Benson you can understand that this has some reflection on my true standing. My ex-wife said when I was given the chair that it just goes to show you're not as dangerous as you would like to think. Is inequality always going up? I will quibble. I would say not always. Mostly it would be fair enough. But the details can wait for, if anybody is interested. Is inequality necessary? Absolutely. Without it, nothing works. This is Carnot's principle. It is the fundamental basis of thermodynamics. It applies to mechanics, to biology and it applies to society. Differentials are indispensable. I remind my students, especially the idealistic left-wingers, that they're in graduate school to get ahead. What else would they be there? All of us have that urge. We favor inequality and principle inequality comes to our special cases. Now, can inequality be too high? Yes, that too. If your car or your reactor runs too hot, it breaks down. For those of you who are in my generation or even a little bit below, I would say my advice is take your blood pressure medication. The system is running at too much pressure for what it's built to contain. It will not work well. It will be in trouble. There are safe and unsafe zones. There's good health and bad health. Do societies with reasonably low inequality, not excessively low, work better? Common sense says they do. A strong middle class is a good thing. It's a good thing. And a strong middle class means by definition this inequality, then, one which is characterized by having some people on one extreme and most on the other. And so does the evidence, and this is where I come into this because I've been working on the evidence, the measurement of inequality on a global scale. What you do, what you find when you begin to make sense of what are very messy numbers, is that by and large the wealthier societies of Northern Europe, Central Europe, Western Europe, and even North America have historically had lower inequality than the tropical regions, the less developed regions, the poorer regions, the less industrialized regions, the ones that lack a strong middle class that are divided between low-income peasants and very wealthy landlords, Latin America, Africa, and South Asia. Why is that? Why do they work better? Well, they have less dire poverty and less extreme wealth and concentrated power. They have a common wealth and a common purpose. They have less exploitation and abuse. They have less resentment, crime, violence, and less risk of revolutions. This is common sense. And the evidence, I think, supports it reasonably solidly all the way through. Now, inequality can be too low. That was the experience of one region in the world that we were familiar with, but that's not the point. The point is that, generally speaking, in the safe range, lower is healthier. Should government intervene? This is the question of the debate to reduce inequality. The answer is that it does. It does very systematically across a wide range of programs and policies. Social security has already been mentioned. Medicare, Medicaid, unemployment insurance. They earned income tax credit, which was greatly expanded, by the way, under President Reagan, which works reasonably well. They, I should say, slightly much less progressive than it used to be income tax. In all of these areas, and many, many others, the government acts to reduce, to moderate, inequalities that would otherwise occur. How much does this matter? That actually matters quite a lot. There is a standard unit for measuring inequality. We call it the Gini coefficient. And if one takes measurement across a range of countries that have effective policies of the kind I've just been describing, just looking at taxes alone, they tend to reduce inequality-facing households by about, up to about seven Gini points. How much is that? Well, it's enough to convert Angola into Azerbaijan. Almost enough to convert Argentina into Australia. Cyprus to Denmark. Greece to Iceland. I'm not sure I would want to convert Greece to Iceland, but Mexico to France or the United States. Poland to Sweden. These are substantial differences. Those of you who are familiar with these places I think can see it's not something which is obscure or hard to fathom or measure or observe. Should governments, in particular, should the government of the United States do more? That is not the question before us. Adam Smith, however, did write, wealth, as Mr. Hobbes says, is power. I love that, as Mr. Hobbes says. I mean, you really can't beat Adam Smith, but in this case, this is the most succinct and effective sentence I think of the entire wealth of nations. I do remember a time when the United States was a middle-class democracy, much more of a middle-class democracy than it is now, and not ruled by relatively small elites of tech tycoons, bankers, financial superstars. And I think that it's, generally speaking, a good idea. I am not against accumulations. I'm not against making money. I'm not against having rich people. But I do like what has been traditionally the American model in which people who do make very good incomes and accumulate capital for themselves are induced by government policy to contribute it back to their communities in a decentralized way, but with a nice nudge from the tax system. This is something that was introduced under Republican Theodore Roosevelt and has worked in the United States and is distinctive to the American case over more than a century. But it would have to be said, I would say that, wouldn't I? Because as the employee of a university which benefits from massive endowments and the generosity of the business leaders of Texas, I live and prosper very much on the fruits of the system. And I think it's a good system. Government has a role in keeping that system functioning. And it's a good idea for us to strengthen that role, not to see it weakened or eroded away if we want to keep the kind of society that I think many of us would like to have. Thank you very much. Thank you. Wow, what a fantastic venue to do these kind of debates. And thank you all for being here and thanks for inviting us and doing this. I think the disagreement today between myself and James probably covers many aspects of the inequality debate. But we're really focusing now on should government do something about it? I don't necessarily agree with James with regard to the systematic increase in inequality that's happened. And there's a new book out by a former senator here in Texas, Phil Graham, that makes the argument that inequality has not gone up at all over the last 50 to 60 years. But let's grant that it has. Should we care is the real question. Does inequality matter? Does the fact that some people make a lot of money and some people don't matter? And if it matters, then something should be done about it. And if it doesn't matter for politics, then nothing should be done about it. And I'm going to take the... I'm going to make the case that nothing should be done about it. And it's true, I agree with James completely that nothing is being done about it. A lot is being done about it. We have a massive welfare state. We have an entitlement state. We have controls and regulations and taxes. We are trying to reduce inequality. Whether that is leading us in a positive direction as a country, as a state, or a negative direction, I think is part of what we are debating. And I would argue that all those things that we have are leading us towards the crises we just had in Washington, the ridiculous drama that we just experienced in Washington. They're leading us to much worse in the future given the kind of deficits that we are projecting into the future given all this redistribution of wealth. And it's leading, I think, to a decrease in the level of economic growth, a decrease in the level of entrepreneurial activity, a decrease in social mobility in terms of the ability of poor people to rise up. The reality is that inequality is not a problem. High blood pressure is a problem. High inequality is not a problem. It's reflective of the fact that some people are more productive than other people. Where does inequality come from? It comes from the fact that some people earn more than others. What dictates whether you own more or less? Well, how much value you produce? So inequality is a reflection of justice. It's a reflection of economic justice. You produce a lot, you have a lot. You produce a little, you have a little. So there's nothing wrong with inequality. And there's no right level, right? I mean, how much do we have to... I always ask in these debates, what's the right tax rate or what's the right level of redistribution to get us to just the right point where we would all say inequality's fine. It's just perfect. Who gets it aside? We vote democratically. We appoint political leaders. We have expert panels that decide the right level of inequality. Just like we do in healthcare with blood pressure. It doesn't work that way. So there is no right level of inequality. Inequality, I think, is a non-topic. It's a non-issue. The fundamental issue when it comes to economics and when it comes to politics is the issue of freedom. It's the issue of freedom. And free societies are going to be unequal. Always and everywhere. Because we're different. We're just different. We have different talents, different skills, different motivations. Different moral characters. And as a consequence, we are all going to be different. And the outcomes are going to be different. Inequality is always going to be there. And the question is, is something wrong with it? And then what happens when we try to reduce inequality? How do we reduce inequality? What's the only way to reduce inequality? Well, the only way to reduce inequality is to take from some and give to others. Some people produce more and some people produce less. If we're going to make them more equal, we have to take from some and give to others. And by what right do we do that? By what right do we force ourselves on other people, decide what appropriate level is, and then steal from some to give to others, redistribute wealth? Where's the morality of that? If I produce, you get to take and you get to decide how much I keep. What's the right amount? What's the wrong amount? What's the right distribution of wealth? So the question of inequality ultimately boils down to the question of, does anybody have a right to redistribute our wealth, to decide who gets what? The beauty of an marketplace is we trade, we exchange value for value. If you create a lot of value for other people, guess what happens? You make a lot of money. It was, you know, like the question of, you know, billionaires are perceived as bad guys, right? If you're rich, you're bad, we live in a culture in which the accumulation of a lot of wealth is particularly nasty and bad. And the question is, how do you make a lot of money? How do people become billionaires? Very few billionaires inherit the wealth. And even if they inherit the wealth, somebody had to make it. How do you make those billions? How do you produce? Why is somebody worth 10 billion, 100 billion? How does that happen? Well, it happens by creating a product, creating something that lots of people want. Lots of people want. Not just the people in this room, but hundreds of millions of people want. And they don't just want it, they will need to pay for it. Why are they willing to pay for it? Because the thing that you've produced is worth to them more than what they're giving up. So, if you can get hundreds of millions of people to exchange their money for the thing that you have produced, and you can do that over and over and over again, you're going to become very, very wealthy. What happened to all the people who bought your stuff? Did they become worse off? When I buy an iPhone for an Apple for $1,000, am I worse off or better off? Did Apple, did I, did I, you know, lose something here? When I buy an iPhone for $1,000 from Apple, why did I give up the $1,000? Because I believe that I'm better off with the iPhone than $1,000. My life is better. Now, hundreds of millions of people have made that exchange. Hundreds of millions of people have decided that the iPhone is worth to them more than $1,000. That's why they're willing to give it up. So, if somebody becomes a billionaire, it means that he's made these transactions many, many times, and by doing so has made the people he's transacted with better off. Otherwise, they wouldn't have entered the transaction. It's the nature of a win-win transaction. Both parties are better off. The way you become rich is making the world a better place. The way you become wealthy in a marketplace is by enriching everybody you trade with. It's the nature of trade. Why cap that? Why limit that? Why say, no, no, no, 100 million is too much or X is too much? And James mentioned something about giving back. You know, once they become very rich, they should give back. You know, I really dislike that terminology for two reasons. One is they didn't take anything they created. Wealth is created. It's not taken. It's not redistributed in a marketplace. It's created. The pie gets bigger, in a sense. It's not a zero-sum game. It's a win-win. And the second thing is, what do you think rich people do with their money? They invest it, which means more jobs, more opportunities for people, more growth, more economic activity, and therefore people are improving their lives, creating their own wealth because the wealthy have invested that money. So the best way you can contribute to your community is by creating jobs in that community, by investing in that community, by creating businesses in that community, by investing in that community. Yes, you get richer in the process, but that's because you've created value. So inequality is just an outcome of free societies. Inequality is not good or bad. There is no right level of inequality. And indeed, many of the critics, not James, but many of the critics have too much inequality, ultimately their goal is some kind of utopian view of equality, which is really bad. I don't know what the right level of inequality is. What I know is I want to maximize freedom. I want to maximize liberty and let the chips fall where they may when it comes to the relative income and the relative wealth that people have. Thank you. So we'll go to some moderated questions, but we'll have an open Q&A, so I want you to start thinking about your own question. So I'll ask the first question of both of you. I'll start with you, James. The moral aspect of the debate, I want to go back to it, a lot of people think that the well-off have some moral obligation to take care of the less well-off in society. Are we morally obligated to take care of others that are worse off than we are and to do something about it? And if so, why do we have that moral obligation? I think we're not only morally but legally, constitutionally obligated to function together as a society. And this is where, I mean, I have a great deal of sympathy for a good deal of Garrett's positions here, but there is an opposing point of view, which holds that all of that value wasn't created by the entrepreneur, it was all created by the worker and the entrepreneur is dispensable. That's a position which held sway in a great part of the world for a good bit of time, right? It's not a position which you can refute any more than you can refute his. But neither of these positions is functional. The functional position is one that comes in the middle and makes a compromise and says, yes, there is a certain degree of difference. That's indispensable. But there's also a certain degree of, let's say, common purpose, common wealth, and that is manifested by having social insurance so that people whose income is not steady have a basis of support, so that old people have a basis of support. Health insurance, which has been provided for old people through Medicare for now 50 years or so, provides a stabilization of their incomes against what is inevitable at our age, which is that sooner or later we will get sick in a very expensive way. Unemployment insurance provides another aspect of this. The existence of the kind of university where I teach, the University of Texas at Austin, which is a public university, provides a common benefit to the citizens of the state. So I think that all of that is part and parcel of making possible the kind of individual initiative that you are and put so much emphasis on. And I'm not opposed to that. I just think it cannot be the sole basis of a well-functioning society and the reason you have a government is to come to some agreement over what the proper mix and balance. That's been the basis of success in our society. And societies which neglect achieving that balance one way or another. Societies which give everything to a tiny elite, often represented by a dictator. Societies which give nothing to any leadership class and simply try to redistribute everything to everybody. Those societies have rather short half-lives by and large and they're very unstable. And I like stable societies. It's because I'm a conservative. Aaron is the radical here. Absolutely. I feel very much at home because I see a good number of conservative faces. I should say I'm with you. Thank you. Yeah, I've never claimed to be a conservative. I am the radical here. We've agreed on something. There you go. So I do not think we either have a moral obligation or a legal obligation to care for others. We can certainly choose to care for others and such a choice can often be in our self-interest and within the scope of what constitutes a good life. But I think the moral obligation each one of us ultimately has is to our own life, is to make the most of our own life, to pursue our own happiness and to achieve the best life possible for each one of us. We only live once. Live it to the fullest. Make the most of it. That is, I think, your obligation. A wasted life. That is truly sad. And legally, from a political perspective, from a governmental perspective, I think the purpose of government is not to kind of balance it all out and figure out and make sure that everybody's happy and nobody's upset and everybody's working together. I think from a legal perspective, the perspective I think that made America and its origins the great country that it is with all the flaws that were right there in the beginning is a completely different perspective on government that I think is ultimately responsible for its success in spite of the fact that we have abandoned almost all those principles. And that is the principle that the role of government is not this balancing act that the role of government is the protection of individual rights. And with a clear Lockean from John Locke, perspective of individual rights and what they mean, the government is there to protect us. And other than that, to leave us free to make our own decisions about who to care for and who not to care for, who to support and who not to support, who to interact with and who not to interact with. I think it's once you bring the government into the process of trying to decide how much you owe your neighbor. Well, then the neighbor's going to start lobbying to try to get more of your stuff and you're going to start lobbying to try to get less of your stuff. And that's just two people imagine on 300, well, you know what it looks like in 350 million people? We've got it right now. We're all divided up into little lobbies and little groups and little pressure groups that are trying to manipulate the political system to get a little bit for ourselves. And some of it's in self-defense and it's clearly to try to grab as much of the pie as we can. So what happens when you allow, in a sense, democracy to decide who gets what is that you get the kind of doggie-dog political mentality we have today in the United States and really all over the world. The United States has moved a long way from the wall of government to protect individual rights, to protect our liberty, to protect our freedom otherwise leave us alone, leave us free. Let the chips form where they may and let us make decisions about who to support as individuals. It's the beauty of charity. It's the beauty of helping a neighbor. But then it's our decisions individual and it's voluntary. Government, as George Washington once said, is a gun. And the question is where do you want to use that gun? I believe guns should only be used and I know I might have said somebody here, guns should be only used in one context. And that is to defend yourself against an aggressor. Today we have guns in schools. It's called government education or guns in healthcare. It's called government provided healthcare. And we have guns in every business. It's called regulation. It's when force is dictating people's behavior instead of voluntary individual decisions made by free people. I just want to come back on one small point here which is Aaron's position of the primacy of individual rights in the Constitution of the United States. And I don't think that's quite historically correct. The Constitution of the United States makes a very strong reference to the common good, to the common welfare. The Commonwealth of Massachusetts, the Commonwealth of Virginia were constituent elements of the, that came together to frame the Constitution. The Bill of Rights were the first ten amendments to the Constitution. They were very important. They came very, they came early. But they didn't come first. They were added in. And they provided a balance in a system which had been on this continent for what, 200 years before the Constitution was framed which was a strongly collective assembly. So it's something that evolved. It's an important something. But the place as the foundation that we all came here as a group of anarchists essentially with no concern for each other is not to give an accurate picture of the actual history that brought this country into being. So if I may. I'm not an anarchist. So I believe in government. I believe government needs to protect it. I've got a confession out of him. I'm making progress here. I've never claimed to be an anarchist. I believe anarchy is anti-liberty. But I take the perspective that Lincoln took on the Constitution. That is that the Constitution cannot be understood without a deep understanding of the Declaration of Independence which I believe is the most important political document of the United States and really of all of human history. And the Declaration of Independence is quite clear about the primacy of rights. You know what they mean and what context and what role they play. And I don't think you can understand the Constitution in a historical context without understanding that that they are waiting in a sense the political manifestation of the Declaration of Independence, the political manifestation of the idea that we all have inalienable rights, the right to life, liberty and the pursuit of happiness. And the Bill of Rights is very contentious in that context because one of the things Madison really, really worried about was that if we list ten things in ten amendments then he didn't want that because he thought individual rights covers all rights. And now we're limited to these ten and that's why we have a Ninth Amendment that says enumerated rights which Supreme Court has chosen to ignore for the last hundred and something years. So, you cannot understand this country without understanding its inherent individualism. And now individualism, this is another point James made earlier. Individualism doesn't mean we all live in different islands and we never talk to each other or we exploit one another. The individualism means the opposite. It means that the capitalists, the entrepreneur and the worker trade. Yeah, they're both important. We can talk about who's more important. I think it's pretty clear the entrepreneur's more important. That's why he makes more money by the way. But they trade. The worker works. He gets paid. And the entrepreneur benefits from the profits. So there's a clear exchange there. Nobody is forced to work. We work. We live in communities. We work in communal corporations. But they're all done voluntarily. They're all done in the context of free exchange. In the context of protecting each other from exploitation. Which means protecting each other from the use of force against one another. Which is what? Protecting individual rights actually means. So Yaron, I want to push on that a little bit more. So let's say, from a moral perspective, how can you defend someone, the situation where someone works two jobs just to feed their kids. Where the CEOs, some of the CEOs just ruin companies and walk away with multi-million dollar severances. How do you think about it from a moral perspective? Well, again, I think about it in the context of what you produce. Life is what it is. Some people have greater ability than other people. Some people have the ability to run large businesses. That is very rare. There are very, very, very few people on planet Earth who could actually be CEO of a large corporation. And CEOs of large corporations don't typically last very long because it's a tough job. And they get kicked out pretty quickly if they don't do a good job at it. And it's those rare skills that produce large awards. Why does LeBron James get more money playing basketball than I do? Because he's better at it. For me, I'm never going to make as much money as LeBron James does, even if I do three jobs. But he's really, really good at what he does. We love watching him. And as a consequence, he has earned. He has produced. He has created entertainment value, you could call it. And CEOs produce other value that is not replicated by others. If it was, there would be lots of people competing for that job. Guess what would happen to wages? They would come down. Supply and demand. Not a lot of people qualify to be CEOs. So it's rough for somebody has to work two jobs to make a living. But what is the alternative? The alternative is to live off of someone else. And the question is, there are two ways in which you can live off of someone else. You can ask for their help, and they might choose to help you. Or you can take their stuff. And it doesn't, and taking their stuff we all acknowledge is wrong. But somehow, we have this mental trick where we go, but if we all vote on taking one person's stuff and giving each other, then it's not theft anymore, then it's okay. But it's still taking somebody's stuff and giving it to somebody else. How's that right? So work two jobs, a lot of us did when we were young, right? A lot of us worked two jobs. A lot of us had a hard time. I remember when the largest expense in my household was diapers. And it was hard to me. I was at University of Texas in Austin as a student and a graduate student. And it was tough and it was hard. And you work hard, and you rise up. You know, one of the things we need here is some regulation here on the question of time. No, it's fine. I'm watching the time. So, you're on. I'm done. Let's let James... You know, I watched that series between the Los Angeles Lakers and what's that other team? Oh, it doesn't... I'm a great fan of LeBron James. But, you know, so far as I could tell, he was playing as part of a team. And that team was part of an organization. And that organization was part of a league. All of which, oh, by the way, that game was smothered with referees who blew their whistles and called fouls. And everybody stopped and put up their hand if they committed a foul. And the other side got a little opportunity called a free throw. And that's what makes the game a great game. It is an organized activity. Corporations. Come back to corporations. Anybody here ever work for a corporation? I bet one of the things that you have noticed about that entity is that it's an organization. It's a large, complex organization. And it depends on people at every level. It can't be run without a good finance department. It can't be run without a good design team. It can't be run without some capacity if it's manufacturing to do the engineering and control the technology and have the specialist to do that. It needs a marketing department. It needs a whole range of things. Somebody's got to coordinate them. That person isn't Thomas Alva Edison or even Henry Ford. That person's skills are in the management of a corporation. I don't know. Some of you may have remember a book that was published in 1967 called The New Industrial State that wrote all about that. That was my father's book. So I grew up understanding that there were no great individuals, only great committees. There was a New Yorker cartoon to that effect. So a woman walks through a sculpture garden with these committees standing on the pedestals. But that's the world in which we live. And the question of how that is run is a question of rules, which are just deeply embedded so much so that we don't even notice. I made a mistake earlier this afternoon. I walked over from the Anatole Hotel. It was not a walk necessarily of the most pleasant and bucolic sort that I've ever seen. But I did notice that every time I crossed a road, there was a light and the traffic stopped. And I could rely on them to stop because there was a red light and there was a walk signal. And there were sidewalks. Why is that? Because even in that rather not first-tier walking area, there were rules and people respected them. And I assure you, if you were in Mexico City or New Delhi, you wouldn't do that. You just wouldn't do it. You wouldn't feel the same degree of assurance. If I may, the last question for you, James. And then again, start thinking about your own questions because we're going to have a little bit of time for that. If everyone were ten times richer but inequality remained the same, would you still regard that as a problem that the government should address? Is it about poverty or is it about inequality? I think there are two elements here. Poverty is something you could eradicate without eradicating inequality. That would be a good thing to do. Inequality has... That's like saying, I'm not opposed to it. What I think is a reasonable position on inequality is that when it is rising without control, your society is in trouble. Your society is heading for some crisis. What exactly the nature of that crisis is going to be? I'm not sure I can tell you. It might simply be a crash because often, if you just look at the statistics, what's driving inequality is a bubble. So it's simply a dysfunction in the financial markets and it comes to an end and there's a crash which may require the government to come in, bail out the banks, rescue the corporations, put entities through bankruptcy and so forth, the whole processes are doing that. But rising inequality is a sign that you're heading in that direction. So I'm in favor of maintaining a good balance, a degree of control. That is why I keep oil in my crankcase. That's why I keep water in my radiator. That's why I take the blood pressure medicine and I take it faithfully because it helps you live longer in a reasonably stable, successful way. Thank you. So I do think that inequality can reflect a problem but inequality is always a symptom of some other disease to the extent that it's a problem. And when inequality is combined with lack of freedom, when inequality is a consequence of authoritarianism, dictators stealing the wealth, or when inequality is a consequence of cronyism, where inequality on wealth creation, so-called wealth creation or inequality is a consequence of some people being at the trough of government and being able to grab more than others. When it becomes an issue of politics, then I think it's a problem. But it's not, again, the inequality that's a problem. I don't really care about inequality. The problem there is the cronyism. The problem there is authoritarianism. The problem there is the stealing, the redistributing. I think today we have a lot of problems in the America that may be reflected in some way in the state of inequality. Maybe it's too high, maybe it's too low. I don't know. But what I do know is there's too much cronyism. There's too much redistribution. There's too little freedom in American markets today. That's the issue, not the relative level of income that two individuals happen to have. So I want to open it up to leave more time for questions because our time is limited today. But I would just ask if you can raise your hand and wait till the microphone is close to your mouth because we're recording this. So anyone has questions for the panel? If you don't, I have like dozens of them here. So we have one here and one here. Okay. Go ahead. This question is for Dr. Brooke. Could you make the argument that there is real inequality, non-market inequality that's caused by regulatory capture and other artificial monopolies? And in that regard, if the government is sincere in wanting to lower inequality, shouldn't it be the government's role to figure out kind of where those artificial regulatory captures happen and look to, and those to kind of lower this perceived inequality? Yeah. I mean, it's what I was getting to a little bit. You can put it on. Yeah. In the final comment that I said, if there's regulatory capture and the things like that, then absolutely they should get rid of that but not in the name of inequality, in the name of regulatory capture. Regulatory capture is bad. Cronism is bad. Your wealth attaining political power is bad. Those things should be eliminated, not in the name of inequality because it might turn out that when you eliminate the regulatory capture, inequality might go up. It might turn out that there's some competitor that can do so well now that you've liberated this industry that they become so fabulously rich that inequality actually expands. So inequality is irrelevant. What's relevant is the lack of freedom that regulatory capture creates and it should be eliminated on that basis. Okay. I'll make a couple of comments about regulation. One I think I've already made, which is that all advanced functions in our society are to one degree or another regulated. We can't escape from that. We shouldn't want to. I have lived short periods of time in China and I can tell you, it's very hard to get fresh lettuce in China. Why? Because nobody will buy it. Why will nobody buy it? Because they don't believe it's clean. They don't believe it's grown in clean water. Except you can get fresh lettuce in China. You can get it at Sam's Club. It's flown in from California and it's stamped United States Department of Agriculture and that's a trustworthy regulator and that lettuce is used in China. So there's just an example. The second point I would make is that regulation is not something that the system, that private actors, that corporations, companies have imposed on them necessarily. It's also something in many cases that the strong players in an industry actually want. Why? Because it sets standards which improves their position compared to weaker players. Is this a bad thing? No. What it does, generally speaking, can be overdone. But generally speaking, it puts a discipline on the system so everybody ups their game. Productivity goes up, environmental performance improves, labor standards improve. Generally speaking, profitability is helped by that. The great example, by the way, of this process at work was over 70 years or so in Scandinavia from the 30s to the early part of the century. And what they did was they said we're going to have a very, very tight regulation of wages. 95% unionization, common contract. If you're depending on cheap labor, you're not going to be functional here. And Scandinavia, Sweden in particular, move from being heavily dependent on cheap labor and forestry to relatively low productivity industries into machinery, into aviation, into automobiles, sobscania. That's the basis. That was the basis of the upgrading of those countries to being the four... Things have gotten worse since, but among the wealthiest in the world. At first, it's a system that is part and parcel of the way we operate. At the end, it's right. It can go wrong. It's something which... That's why you have constant political process to decide what the best way of doing things is. And you can't avoid that. That's what a democratic system needs to do. But you also need to have those... You need to recognize they're integral. They're not imposed. They're part of how a complex society has to function. Well, let's try to keep the questions and the answers a little shorter, so we'll have... Thank you. So this is for Dr. Brook, which is your point that escalating inequality may be the result of an underlying cause. But having said that, I'd like to get your opinion on whether increased inequality acts to destabilize the political structure of a democracy. I think it does, yes. I think, generally speaking, it does, yes. I sense that that was your view, Professor. So for Dr. Brook, I'd like that perspective as well. No, I don't think so. I don't think it has anything to do with destabilizing political systems. I think what destabilizes political systems is the kind of mixed economy that we have adopted, the kind of system that we have, where everybody feels like because government is responsible for this allocation and for the distribution, partially through the regulatory system, partially through taxation, partially through the welfare state and partially through Coneyism, that they need to grab a piece of the pie because if they don't, somebody else will. And as a consequence of that, what we are setting ourselves up is that each pressure group is set up against somebody else and what we create, that creates the instability, for example, that we're seeing in the United States today. There are people, stories about life and about economics that I think are false, that create resentment and we keep repeating them and they don't know they're not economists, they're not political theorists, so they don't know. But when we tell people, yeah, the jobs can come back. Just hold on there and it's those evil businessmen who took those jobs to China and if we just have the right policy, if we just raise tariffs a little bit, maybe this reminds you of a certain president, we'll get all the jobs coming back and when the jobs don't come back, people get upset and now again, they didn't get their piece of the pie that they were promised and you get instability. It's not, certainly not, the only time inequality is associated with political instability is when you have a deep sense of the people that it's unfair and that happens in authoritarian regimes. So for example, in the French Revolution was caused by inequality, not really, it was caused by the fact that aristocracy was exploiting the peasants and stealing all their money, not because they were honestly creating wealth to create inequality. So it's how it's created that makes all the difference to politics. Let me just tell a small story because I'm reminded of it by the layout of this room. It's about a place a place where I grew up in some sense, I came of age as a professional. The Rayburn House Office Building where I was on the staff of the banking committee, the banking committee chambers, which when I worked there in the 1970s had two rows for members. There were about 35 members in the committee. They were all very long-serving members. They were politically independent. There were two memorable figures from Texas, whom I knew, Wright Patman and Henry B. Gonzalez. I think there were others as well. But these were people, you may not agree with them, but they knew their minds and they served their constituents in a way which was part and parcel of their relationship to those groups and to their own ideals. Go back there now. There are four rows of for members 60, some 65, 66 members on that committee. Why are they there? Because that committee is a cash cow for the House of Representatives for both parties. And they appoint members to that committee to take contributions from the banking lobbies. And they can do anything they want on any other issues, so long as they are in line on the banking issues. And that's the way it runs. That isn't the way it used to run. And I think that's a shame. I think you need a Congress which is independent, is not entirely basing its on crucial questions on the views of the lobby community and the fundraising. It's fundraising the pendants, not just of those members, but of the whole leadership in both parties on the funds brought in by those members. Okay, let's go. Any other questions? Hi, yes, it seems like the topic of income inequality is something that's become much more in vogue here in the last few decades. From a historical perspective, I wonder if that's because of the change in culture in our country. I'm just remembering one of my grandfathers and trying to imagine very, very dirt poor, grew up in a Grarian family in South Georgia. But I have a hard time imagining he or anybody of his type ever having anything to say about income inequality where they, of course, felt if that was to be an issue that they talked about and progress was made on. So I wonder if you could just talk about from a historical perspective when did this become a topic or were there in fact discussions about this in our country say 75 or more years ago? Well, the answer to that was a much more extreme topic in the 19th century than it is now. Slavery. Which divided the country into two castes, one of which had legal rights and property and the other of which had none. And then we fought a vast war, the biggest war. Only really serious war ever fought on North American territory after the revolution over that issue. So those questions, you can go to the Lincoln-Douglas debates. I highly recommend Sidney Blumenthal's biographies of Lincoln. They're really wonderful on this question. They give you a very, very clear sense. Now, I just think that the issue when I was younger in the 50s and 60s in the last century was very muted. Why? Because the New Deal and later the Great Society made, and the Civil Rights Movement made enormous progress. And so while certain aspects of it were continuing, they were very hot in the 60s obviously, particularly on Civil Rights, it was a much more overall middle class and stable society. For the last four decades things have been moving. I'm not one who says we're back in the 19th century. We clearly aren't. We're still in a society which is largely built by people like Frank and Roosevelt and Linda Johnson. And I think that's a good thing. That's what I defend as... There are differences between us on where we should stand. But so long as we're in a reasonable range, those differences can be resolved fairly within the political system and particularly non-violently. And that's what I think we should be trying to do. So I would take a different perspective. I think the issue of slavery is a different issue. It's a much more important issue. It's an issue of liberty. It's an issue of freedom. It's an issue of individual rights. The country was founded on principle of individual rights and then it wasn't granted to these people. They would deny it. The most basic right of liberty. So I think that was the big conflict of the time. I actually think it is a consequence of a cultural change. I think that in past eras there was this notion that you were responsible for yourself, for your own life, for the wealth that you created, for the kind of life you were going to live. There was... I don't think there was a lot of envy of looking up and resenting the people who'd made a lot. There was an appreciation for what they had gone through to make the wealth that they had gone through. I think our culture has changed. I think we've become a culture much more focused on envy, much more focused on what the neighbor has. I want what the neighbor has focused on my own achievement and what I can do to make my life better and achieve something for myself. So I think the culture has shifted from the 19th century and certainly in the last few years. And inequality, which I think is primarily an issue of of envy and morality. It's less of an issue of economics has risen as the culture has become more collectivist and collectivism is not about organization. Nobody is against organization. If it's voluntary collectivism, the placing of the collective above the individual is more important than the individual and expecting the individual to sacrifice for it. And I think also as we become less economically free as we become more regulated and more controlled and more taxed now we start questioning whether he got a lot of money because of his ability, because of his hard work or because he grabbed a little bit more of it in that banking committee from one of those congressmen, right? As we've expanded the world of governance, government intervenes in more and given politicians more power there's more opportunities to grab a piece for yourself not through production, not through work but through political manipulation. Okay, we have time for one more if anyone wants to ask. Or you'll take it. And this is to Dr. Galbraith. Let's just say over the past century in America we've had a massive change in both the level, the type the amount of redistribution that's taken place in this country. How does one define the optimal level? How do you look at that? And how do you define that? Where is the right level of redistribution to address the right level of inequality as you see it? What is the final right level? Is that your question? Yeah, and it's changed massively. I'll give you a short answer to that. I don't know. I don't know that it's a reasonable for me to be the person to tell you that that emerges from a political process. What I like in a society is the capacity to take up each problem as it emerges and deal with it. And that will get you as a result of a good process that will get you closer to where you want to be. But I don't consider I really am a process person rather than someone who's focused on a finer result. I look at my numbers, the inequality numbers they say, is there a perfect one? No. I think that's a question that's above my pay grade. I'm just a college professor. So what scares me is that it becomes anybody's pay grade, that anybody has the power to make that decision. I'm a process guy. I love process, but I want the process to be outside of the realm of the gun, outside of the realm of government. It reminds me of the point James made about regulation. Nobody's against regulation. Well, we're against this course of regulation. Well, against is a government imposing regulation. Industries regulate. You think farmers are not regulated because the FDA went away? I once heard an NPR story where they interviewed the farmers and the farmers were clearly more worried about the inspectors that came in from Safeway than they were worried about an FDA inspector. Partially because you can deal with an FDA inspector but a private sector inspector is much tougher because they have a lot more to lose. They have, as Nasim Taleb would say, skin in the game. I don't know. Private regulation, voluntary regulation, great. Post-regulation, through a political process, always going to be a disaster. My dad grew up on a farm in southern Ontario and the spirit of that time was that the government man was your ally. That was the person who helped you get tuberculosis out of your cows and get the right kind of pain on your barn and generally improve the productivity of your farm. I'm not saying all government is like that, but I am saying that that is the difference between a successful agricultural system and a run-down peasant economy which is going to end up with the Pitchforks coming at you. I guarantee you, if you go up to southern Ontario, they're not out with Pitchforks. They really aren't. I want to give you one minute for a closing summary, if you will. Very short. You're on. You want to start? Yeah. I mean, at the end of the day, what I am for is liberty and freedom. I want individuals, businesses, organizations, corporations to trade with one another, to set rules. Nobody's out there against our rules. Rules would be set. But how we set those rules, instead of to politicians in committees setting rules in all kinds of perverse ways. I believe in letting individuals and businesses negotiate them, trade with them, compete about rules, figure out what rules work and what rules don't through a market process. Economics should be left to individuals and trying to hold people back in the name of some ideal level of equality or some ideal of equality, which is even worse, I think it's both wrong and immoral. Well, it comes down to a difference between here and myself, really over the very existence of a government. And I do not believe we can function without one. I don't believe that an economic society can work and it has been tried, by the way, in which every party makes a private contract with every other party in whichever way they like because someone has got to enforce those contracts and you need courts for that. You need lawyers. And who sets up the courts and who appoints the judges? For that you need a government. And when you have laws and they're byproduct, which is regulations, that give you clarity and transparency over what the rules are. And you come to an agreement over what the rules are, that saves an enormous amount of time and trouble and inefficiency in the society. I'm not saying it necessarily works perfectly all the time, of course it doesn't. But the alternative is effectively it's warlordism. It's a state of a bella omnia, war of everyone against everyone else. And that tends to produce not a commonwealth, that tends to produce mass misery and severe reactions in the society, which you don't want to see. So I say work on improving your government. The government then can protect and advance the private sector and the economy. Generally speaking, keep that up, and probably come out all right in the end. Thank you very much. I want to thank all of you. As you can see, what shapes history are ideas. And this is a beautiful place to discuss those. So thanks again for everyone, and I'll let Michael. As long as we've had civilized society, we've had this debate, and long after we're all gone, we'll continue to have this debate. But I'm glad we this evening had a chance to have this debate with these three wonderful gentlemen. So I'd just like to give you all a round of applause.