 Today, we have the privilege of having in the room with us Dr. Jerembruk, author together with Dodden Watkins of the book Free Market Revolution. This book presents a compelling argument in favor of free market capitalism, emphasizing its role in promoting individual liberty and economic prosperity. The authors make a strong case about their perspective, highlighting the benefits of minimal government intervention and the power of individualism in driving economic progress. Although I don't personally share many of the views presented in the book as a member of PESS, I encourage you, my fellow students, to explore the economic ideas and perspectives presented in the book Free Market Revolution. As you all know at PESS, we foster deeper understanding of political and economic systems and the implications for society engaging in constructive and most importantly open discussions. So finally, I would like to express my gratitude to Jan and all of the members of the Fellow Student Association Master's of Liberty for students and of course to you that are here this evening and to Dr. Jerembruk for joining us. Thank you to both student organizations for putting this together and I know these events take a lot of work so I really appreciate it. So one of the great mysteries of the world in which you live and I hope to convince you that it is a mystery worth figuring out the solution to is this, capitalism is an amazing system that has brought people out of poverty, produced the wealth that Europe enjoys, the United States enjoys, Japan, South Korea, even China today to the extent that they have wealth it was produced by a little bit of capitalism. We live longer because of capitalism. We have fewer poor people because of capitalism. We have the highest standard of living in human history. It's not even close and yet we hate it. We hate capitalism. We despise it. We have a million arguments against it. We'll probably hear some of them in the Q&A today and all you have to do is I mean you live in this world. You know there's almost nobody out there in the world today advocating for the system that has brought this amazing world into being and it really is an amazing world. And the system has proven itself in contrast to pretty much every other system that exists out there. To the extent that you allow markets to work free of regulations, free of controls, free of authority, free of central planning, to that extent people become rich and to the extent you regulate, control, redistribute, people become poor. And we've seen it over and over and over again throughout the last 200 years. Some of my favorite examples of this, kind of obvious, you know, the extremes, you could look at East and West Berlin or, you know, the West versus communism in all its forms, everywhere it's tried, every time it's tried by every 10-part dictator that tries it, communism always leads to the same result. Fascism leads always to the same result. That destruction, poverty. So we experienced here in Europe, we saw the consequences, we saw the difference. If we go to other parts of the world, you've got North Korea, South Korea right now, great example. You know, there are these satellite pictures that show, that you see satellite pictures of the Korean peninsula at night and North Korea is pitch dark, there's no lights in North Korea. They don't have enough wealth to have electricity at night. South Korea completely lit up. The whole peninsula is bright light, they're rich, they're wealthy, they're free, or take somewhere like Hong Kong before the Chinese took it over. And in Hong Kong, you had a little fishing village, nobody lived there, maybe 10, 15,000 and a bunch of fishing villages around this peninsula. This is, it's a rock in the middle of nowhere, has no natural resources, and yet the British came there and what they basically said was on this rock, we're going to have the rule of law, we're going to have freedom of contract. That's it, rule of law, freedom of contract. You can't kill each other and you have to abide by contract, you say. You learn that, you can do what you want, pretty much. Today seven and a half million people live on that rock, GDP per capita, measure of wealth per capita, is higher than the United States of America, it's one of the richest places on planet earth. In spite of the fact that everybody who came there was not rich, the people who came there were Asians from all over Asia who had nothing. Got a little dinky boats and rode there. Some people literally swam from China to get to Hong Kong and they started with nothing and they made something of themselves and they didn't come to Hong Kong for the welfare or for the healthcare benefits because they were none or very little, they came there for the opportunities that capitalism creates. And you can see this over and over and over again in every single place around the planet earth. To the extent we adopt the elements of capitalism, to that extent we become rich, to the extent that we don't, to that extent we become poor. Now let me tell you what I think capitalism is, just so we're clear, because it's important. In my view, capitalism is a system, a property rights, it's a system, a political, economic system where property rights and other individual rights are protected by the government and indeed the only role of government is to protect those rights. And otherwise, and what rights, what do rights mean? Rights mean the freedom, the freedom to act based on your own judgment and pursue your own values in pursuit of your happiness, free from coercion, free of force, free of people imposing their will on you, free of authority. Capitalism is freedom, the freedom of the individual to pursue his values based on his judgment. As long as he doesn't violate other people's rights, punch them in the nose, steal from them, defraud them, then the government has no business with him, they're left alone. Now you might say, but wait a minute, Iran, there's really never been a capitalist country because there's never been such a place in the world where rights were protected exclusively, the government didn't do anything, governments have always intervened, they've always done stuff and that's true, there's never been a purely capitalist country. But here's my point, to the extent that we practice the protection of property rights, the protection of individual rights, to the extent we allow people to be free of coercion, to that extent we see all these benefits and again to the extent that we don't, we see the poverty, the, you know, dying, dying young and in every parameter, life is worse under socialism, under fascism, under all the other isms, under any kind of statism, life is significantly better in countries that adopt even a little bit of capitalism. So the real mystery again is why? Why, if I'm right, and I know some of you are going to challenge me and tell me I'm not right, but if I'm right, why is it that we hate the system? Maybe I'm wrong, maybe that's the best indication that I'm wrong is the fact that everybody hates capitalism. So I want to talk about why this is, why I think it is that capitalism so hated in spite of its success and indeed the whole world is moving away from capitalism, we become less and less and less economically free but we're also becoming less and less free in other ways, freedom is in decline and that freedom in decline is us moving away from the principles of capitalism. That's the consequence of hating something, if you hate something like capitalism, you're not going to have it for very long, it's going to go away and it's going away, it's disappearing and the future is not very bright given that that's going to happen. So why is it disappearing? Well, what is capitalism fundamentally about? What is the essence, what's the central nature of capitalism? What's the central activity in capitalism? Yell it out, you don't have to raise your hand. Accumulating capital, is that really, how do we accumulate capital? Let's do it that way, how do we accumulate capital? Trade, so trade is the way we accumulate capital. How do you accumulate capital through trade? Isn't trade just a zero sum game? I buy the iPhone for $1,000 and I lost $1,000. No, I gained the iPhone and I lost $1,000, isn't that kind of equal? How's capital created through trade? So there's profit, so Apple made money off of this when it's older to me, right? How much did I lose when I bought this for $1,000? How much did I lose? Nothing. Nothing? How did that happen? Well, because you know what you're getting, and you've accepted the deal. I've accepted the deal, so it's equal to $1,000, I'm kind of indifferent? How much do you think this is worth to me? $1,000, $500? I paid $1,000, let's see. How much is it worth to me? It's subjective. To me? So it's subjective, right? So how much is it worth to me? I'm asking you, how much? Give me a number. So your personal interest. We don't have $1,000. Don't have my balance sheet. That is true, and my balance sheet wouldn't tell you how much it's worth to me. You wouldn't have a clue for my balance sheet. All you have to say is more than $1,000, right? Economics 101, you don't buy something unless it's worth more to you than what you're giving up. Basic principle of economics, basic interest principle of trade, and it's why trade helps you accumulate capital. Because both parties benefit. Apple made a profit. Did I lose? No. I gained. I gained an iPhone, which I value. You might not, but I value it more than $1,000. I don't want to tell you how much I value this because it's a lot more than $1,000 because I don't want you to tell Apple and they'll raise my price and all that. But this is like with hundreds of thousands of dollars to me in a sense, because I can do with this stuff things that I couldn't even imagine to do. I remember life before the iPhone. So the fundamental thing about capitalism, I think, is this trade, this win-win trade, this exchange of values. Why do we engage in trade? Why did I go and buy an iPhone? Now, you could say I wanted it, but what's the bigger reason that I bought an iPhone? Because the first time I bought an iPhone was 2008. Now, you guys are too young to remember. But in 2008, we had this massive recession. It was the global financial crisis. Markets were crashing. People were losing their job. The world was going into a recession. And I went to buy my iPhone because I wanted to stimulate the economy because I care about people and I wanted to help them get jobs. So I bought an iPhone because I've read my canes and that's how you stimulate the economy by consumption, right? That's why you go shopping. You go shopping because you care about your fellow man. You go shopping because you want to make sure people have jobs. Why do you go shopping? To get things out of it. To get things out of it. For whom? Myself. For yourself. Yeah, we all go shopping because we want to get stuff for ourselves. Shopping is a very self-interested activity. We're not thinking about the common good and the public welfare when we go shopping. How about the people who make the stuff we buy? Why did Steve Jobs build this? For me? For himself. Yeah, he built it because he loves doing this and he built it to become a billionaire. He made a lot of money doing it, right? So really if you dig deep enough, capitalism is about trade and trade is about people pursuing their own self-interest. Everything in capitalism is about the pursuit of self-interest. We all do it because it's good for ourselves. Nobody engages in economic activity. Of course nobody. There's always one in the class. Nobody engages in economic activity for the good of his neighbor, for others. Nobody does economic activity to be selfless. We're self-interested. And capitalism is all about self-interest. The producer produces because he wants to because he loves it and because he's going to make money, God forbid, right? And the consumer consumes because he wants to because he wants to make his own life better by having nice shoes, you know, a nice jacket, a great iPhone. Capitalism fundamentally is the system of self-interest. It's all about self-interest. And what do we know about self-interest? What do we know about the pursuit of self-interest in terms of morality, ethics? What did your mother teach you about self-interest? I'm sure she told you, go out there and do what's good for you to help us in the world. No, I mean she taught you, at least if she was like my mother. Think of yourself last. Think of other people first. We live in a culture where professors and our preachers all tell us that to be virtuous, to be good, not just to have a, you know, OK life, but to be good, a good human being. You have to be selfless. You have to sacrifice. Sacrifice is noble. Sacrifice is good. And what does sacrifice mean? It means giving something up and expecting one in return. Nothing or something less important. It has to hurt. If it doesn't hurt, it's not a sacrifice. Jordan Peterson says sacrifices about delayed gratification. You put money in now and you get a higher interest rate later. You're sacrificing the money now. That's bizarre. It's called investment. Sacrifice means hurt. Sacrifice means giving something up and not expecting something in return. And that, a whole more code is built on this idea. We don't have saints who have fulfilled their life and lived a fantastic, wonderful, happy life. You don't get sainthood for that. What do you get sainthood for? Suffering, dying a horrible death in some greater cause. Living a miserable life for some greater cause. And I'm not just talking about religious saints. I'm talking about just who we view as, quote, good people. A whole more code, a whole more way of thinking is shaped by the idea that what's good is what's good for others. Now, none of us do it, right? I can look at you guys. I mean, you're not sacrificing a lot under day-to-day lives. You're not out there being Mother Teresa, shipping off to India and helping the poor. I don't see anybody in this room pretty eager to do that. But you all think, wow, that's good. I'm just not going to be that good. And as you get older, what happens when you do something that is not consistent with what you view as the good? What happens? What do you feel? What do you feel when you do something that's inconsistent with your moral ideal? Long, but you do it anyway, and that results in a feeling of regret. Another word I'm looking for. Shame, guilt. Guilt, guilt is the, you know, guilt. We all know guilt, right? Catholic mothers, Jewish mothers, and I'm sure other mothers are really, really good at guilt. Guilt, a very powerful emotion, very powerful. And you notice people, you'll see this, as people get older, they start feeling guilty because they live their life based on shopping for themselves and so on, but they know they should be doing something much more important. But they don't want to, so they feel guilt. And that guilt is used by politicians to get you to do things that you might not otherwise want to do, or is not in your self-interest to do. And you say, okay, I pay high taxes, I don't have to go to soup kitchen and feed the homeless or feed the poor because I'm giving it, you know, I'm giving it to my taxes. And that's how they get the raised taxes here. If you don't pay more taxes, more people are going to suffer. Oh, can't have that because that's my moral code, so I'll increase taxes. That's fine. That's good. So this whole notion, this whole moral notion of sacrifice and otherism, thinking about others first, otherism, meaning altruism, that's embedded in our culture. And it's not so much that we care to help other people. Indeed, if you buy my argument from earlier, which I don't know if some of you don't, but if you buy my argument from earlier, then if you really cared about other people, you'd be all for capitalism because capitalism is so good. I'll give you another example. Who do you think helped the poor more? Bill Gates or Mother Teresa? So we've got one for Bill Gates. Just yell it out. Don't raise your hands. Oh, you got two for Bill Gates. That was a two, okay. I mean, it's not even close. It really isn't even close. Mother Teresa helped a few thousand people come out of poverty, but not too much because she believed that being poor was the essence of virtue. That suffering was good. The meek shall inherit the earth after all. So she didn't really help them rise from poverty. She's prevented them from dying. A few thousand. Bill Gates changed the world, created jobs for probably tens of millions of people if you look at the entire supply chain, changed all of our lives for the better. How do I know that he changed it for the better? We keep buying his product. If we didn't want them, we wouldn't buy them. Why do we want them? Because they'll make our lives better. Again, the same reason I buy an iPhone for $1,000 to make my life better is worth much more than $1,000. We buy Microsoft products for $100 because we believe that it gives our lives more than $100. Indeed, the only way to become rich, really rich in our market is to make the world a better place. It's not the other way. Everybody buys your products and make themselves better. And sometimes they make mistakes. But most of the time, we figure out what we should buy and what we shouldn't buy. What hurts us and what's benefit for us. At that simple level, we're pretty good at that. So here you have Bill Gates, who's changed the world, made the world a much better place. And you have Mother Teresa. Yeah, she's helped some people. She's a saint. Everybody in our culture admires her. Everybody thinks she's amazing. And Bill Gates, we hate, hate. Every conspiracy theory in the world today, Bill Gates is responsible. Because we hate him. We love to hate him. We enjoy hating him. Why? What makes Bill Gates, even though he helped a lot of people, bad? Because how did he help other people? What happened to him while he helped other people? He got rich. In other words, he helped himself. The point of altruism, the point of this morality, is not about helping other people. It's about you not benefiting. It's about you being selfless. Mother Teresa clearly did not enjoy what she did. If you read her diaries, she was miserable. She suffered. Perfect, perfect moral exemplar. And therefore a saint. Bill Gates will never be a saint. He tried. He keeps trying, right? He left Microsoft. God forbid you make any money, employ people, create new products, build something. That's bad. He became a philanthropist. And he gave money away. He's not benefiting. He's just giving the money away. So he's a little bit better now. We still hate him. Why do we still hate him? He's what? He's still what? He's still rich. He hasn't given it all away. And you know what else really offends people? He seems to be having fun. He enjoys giving the money away and investing it and doing all these other things. I mean, if Bill Gates wants to be a saint, if he wants statues and boulevards named after him, I mean, he'd have to give all his money away, move into a tent, and maybe bleed a little bit for us so we can really see that he's suffering. Then maybe we'll consider the statue and we'll consider the boulevard. I mean, it's funny, but it's sad. Here are people who are changing the world, really changing the world. And we treat them horribly. Why? Because they took care of their own life. Because they made something for themselves. Because they engage in trade. We build statues and roads for politicians and generals who take what they want and who kill a bunch of people. That is worthy of a great gratitude. Saints who sacrifice themselves. But producers, creators, yeah, they are too self-interested. They're too concerned about their own interests. They benefit too much. They make too much money. Therefore, we dismiss them. And as a consequence, we dismiss the whole system. The system of capitalism is a system based on the idea of self-interest. People pursuing their own self-interest. People pursuing their own values. People pursuing, God forbid, their own happiness. It's not good. We don't buy that. That's morally offensive. Our entire moral code as human beings is grounded in the idea that that is bad. If you say to somebody, you're selfish, what do you mean by that? You're an evil, nasty, horrible, lying, steamy, cheating SOB. You can ask me later what SOB means. You're a bad person. That's what it means. In our dictionaries, if you look, people exploit other people, not traders. So we have an ethical system that is the opposite of what capitalism requires. We have an economic system that is immoral because it encourages self-interest. It's a system we all engage in, self-interest. And that's bad. That's wrong. That's immoral. It needs to be rejected. So we've got a battle between something that's economically efficient. Almost everybody acknowledges it's economically efficient. Even its enemies often acknowledge its economic efficiency. But is evil, or at least immoral, to one extent or another? And a battle between economics and morality, who's going to win? Morality always wins. People want to believe they do good. People want to believe they are good. And one way to do good is to get rid of this system. What animates people, excites people in the anti-capitalist movement is not this or that economic fact. Every single economic fact that they've come up with is being refuted. Those of us in a few markets had great economists that have challenged every one of the challenges to capitalism from an economic perspective. But the real challenge, the ethical challenge, the moral challenge, almost nobody has been willing to actually kick on. That's fine. Almost nobody is willing to take on, except for one thinker. And that was Ayn Rand. And Ayn Rand asks a very simple question. Now, we have this idea that we're supposed to live for other people. An idea that has never been challenged. It's in our religion. It's in our philosophy, in our secular philosophy. It's in our mother's. It's everywhere. And she asked one simple question. Why? Why is your life more important than my life to me? That's bizarre on its face. I'm living my life. I'm not living yours. Shouldn't my life be more important than your life for me? Isn't that true of you, too, that your life should be more important to you than my life? I mean, we live here. And if I'm not alive, I'm gone. All I have is my life. Shouldn't that be my highest value? My life can go as like that. If you are self-interested, if you do indeed care about your own life, does that mean you should be a lying, cheating, stealing SOB? Is that how you attain happiness? Is that what being a healthy human being means? Does that achieve flourishing and well-being? No. No. If you're not sure, then there's a way to test this. If you're not sure about lying, for example, a lot of people think that lying is good. You can get away with stuff. Why not? And just run the experiment. Take your best friend, lie to them for a day. See what happens. They won't be your friend for very long. Try it with your boyfriend or girlfriend. Won't be your boyfriend or girlfriend for very long. Lying is a really, really, really bad strategy if you want to have a good life. In business, if you lie, people won't do business with you. They'll figure it out. And even more fundamentally, you will always know you lie, which means you will always know you cheated reality. Same with cheating. The same with stealing. All these irrational, crazy behaviors are self-destructive. They're not helpful. See, they have set up this dichotomy. You can either live for other people, or you can be a lying, cheating, stealing, SOB. Those are two options. And when it says, wait a minute. There's actually a third. It's really taking care of yourself. It's really being self-interested. You should take all the coats from there and just put it outside the door. Yep, we figured that out. If you really cared about yourself, if human beings really cared about their own life, what do you think should be the most important thing to you? What is the thing that most makes it possible for you to live a good life? Or to live, not even a good life. Just to live. How do human beings survive? Never mind thrive. What makes it possible for human beings to survive? To eat, to clothe ourselves, to have any kind of material stuff, but also spiritual stuff. What does it take? Like, if you look around this room, what's that? Yeah, I was getting to that. If you look around this room, pretty pathetic. So it's a group of weak, slow animals. No claws, no fangs. I mean, you try going out there and running down an animal and biting into it. You're not going to be very successful. Tools? What's that? Yeah, we had to come up with tools. I mean, part of how we survived was through toolmaking and weapon making, right? But how do we do that? How do we come up? Because other animals don't do that. Only we do that. What makes human beings human? What makes it possible for us to have all the values that we need? Again, don't raise your hand. You're too polite. Just yell. What's that? Creativity, OK? But where does creativity come from? Yes, we're all conscious, but so is the lion. So is the deer. They're conscious too. Our consciousness is unique. We have a unique consciousness that has a feature that allows us to be creative, allows us to build tools, allows us to make weapons, maybe even plan and strategize and build traps and all kinds of things that allow us to survive. So what is the fundamental thing that allows human beings to survive? Reason. Yeah, our minds, thinking. It's ability to think, ability to observe reality, integrate those observations, integrate these concretes into abstract thoughts, understand what is going on in our world, create abstractions from abstractions, and invent as a consequence. There's new ideas. We see a stick. We see a rope. I wonder if I bend this. What would happen? I can imagine it because I can put different units together and I play around with it. I experiment scientific method. And I discover its properties, how it works, its nature. Oh, imagine the genius, the genius, Einstein level genius, who one day discovered that if you drop a seed on the ground and you water it, a plant would grow. Now that's Einstein level genius to discover that, what is it, 20,000 years ago? Because nobody understood where plants came from. There was probably a plant god that explained all plants. God made it happen. And then wait a minute, no, there's a causality here. Water, seed, maybe ultimately fertilizer. Some people still believe also God to be debated. And it grows. There's a causal relation. And he probably told the whole village, I understand where trees come from. My guess is they burnt them at the stake because that's usually what we do. But people come up with new ideas, challenge the authorities, challenge the status quo. And then some other genius probably said, oh, you can do that. Probably took 10,000 years before this happened. I wonder if we could take seeds and put them all in a row and grow them all at once. Agriculture, first real entrepreneurial activity, probably burnt him at a stake too. All of that requires what? Thinking, figuring stuff out, seeing causal relationships, investigating, testing, experimenting. The way we as human beings survive is by use of our mind, is by use of reason. So if you're going to be self-interested, if you're going to care about your own life, the thing you should most care about is your mind, is your ability to think. It's your ability to reason. To be self-interested, fine-read, is to be a thinker. It's to be a human being of reason, a man of reason. That's what it means to be self-interested. Not to lie, steal, cheat, indeed lying is just faking reality. But what does reason require more than anything else? Facts, commitment to reality, commitment to truth. So reason is our means of survival. It's the way in which we thrive. It leads to human flourishing. And to be self-interested, we must be reason-based. And you see, what she's doing here, she's building a morality from the nature of man. She's giving us, given what man is, she's giving us what man should do, ought to do. He ought to be rational. She's building a moral code, a moral system that embraces self-interest, that embraces your life, that embraces your need to exist, and embraces the idea that human happiness should be the ultimate goal, the ultimate purpose. One of the things you have to do in order to survive, other than think is do what? Once you've thought about stuff, what else do you need to do? Act. And what's the primary act you need to do just to survive? What's the primary thing you have to do just to survive? After you think. What's that? Produce. Yeah, you have to go hunt. You have to collect food. You have to make iPhones. You ought to produce. You ought to create the material things that are necessary, not just for human survival, but for human flourishing and human success and human growth in the kind of world that you want to create. So be productive. Be rational. Be productive. And I'm not going to go through our entire ethics here. My point is, there is a system of ethics consistent with self-interest. That system is developed by Anne Rand. I highly recommend you read her. We have, I think, flyers for free books. You can get free books, go to a website, and download whatever book you want. I highly recommend you read her. And indeed, if you care about capitalism, if you care about free markets, then you should definitely care about a new morality. A morality of freedom, a morality of individualism, a morality of self-interest. Because if you're a self-interested person who has reason and knows he can use that reason to pursue his own life, pursue his own goals, achieve things, make things, succeed in things, do you really want mother government sitting on your shoulder telling what you can and cannot do? What drinks you can and cannot drink? What you can and cannot consume? What kind of jobs you can and cannot have? How much are you OK for you to accept in wages and how much is not? You want somebody else making choices for you? Once you realize that your life is what matters, your happiness is what matters, and you have the capacity to make choices for yourself, why would you want anybody else making decisions for you? You would demand freedom. Individualists, egoists, people dedicated to their own self-interest don't expect other people to give them stuff. They expect to be able to produce the stuff that they live on. And therefore, they're definition capitalists. Capitalism is essential for their own survival. Capitalism is just a system that leaves them free to make the choices they want. There's no conflict between Ram's ethics and capitalism. And I would argue that as long as we don't embrace a new ethic like this, we can't win the battle for capitalism because it has this contradiction, sacrifice versus freedom. Sacrifice will always win, freedom will always lose. We have to challenge sacrifice. I don't want to sacrifice. Why should we sacrifice? What's the purpose of sacrifice? I want to live for me. Live the best life that I can. One life. You don't get do-overs. Every minute you waste, you never get again. Don't you want to live? Well, Iron Man provides us with a morality for living with a capital L. So in our book, Free Market Revolution, we're advocating for a revolution, changing the world, turning it into a capitalist world. But the fundamental revolution that needs to happen is not an economic one. It's not a political one. Those will not happen in the world in which we live today. They cannot happen. Yeah, we'll get prime minister's president to a little bit more friendly to markets and a little bit less friendly to markets, but generally we'll move more unfriendly towards markets. And it doesn't matter if you're left and it doesn't matter if you're right. Everybody is less free market today than they were 10 years ago, than they were 20 years ago. The revolution is not going to be political. It's not going to be economic because, for the reasons I said, it's too much of a contradiction in our culture. The real revolution, if it's going to happen, has to be a moral revolution, an ethical revolution. It has to be about the trashing of otherism, of altruism, of individual sacrifice, of human sacrifice, of self-sacrifice, and the embrace of a morality of self-interest. Thank you. Thank you very much. Once again, now we will move to the Q&A portion. First, we'll have two questions asked from our side, and then I will move with the mic and let you take your voice and ask any questions related to the topics. So my question is, how do you... There seems to be this paradox between the everyday life of people who do not believe in self-sacrifice. They are egoistic, they are individualistic, they are focused on their own good, and yet they seem to hold this belief that they will be... Yeah, they should live completely differently. What's the key to this paradox? Why? Well, the key to the paradox is that if you live, that nobody actually wants to be an altruist. That is that the idea of living for somebody else is bizarre. Again, we're alive. And that life energy is about sustaining life, our own life. So it's kind of a biological necessity to act, to feed ourselves, to eat, to do things that are necessary to sustain life. And that clashes with this philosophy, this ideology that says, no, no, no, you shouldn't do that. You should live for other people. And if you go to stay alive, you know how in airplanes, they tell you, if the mask drops, put on your mask first so that you can then help the person next to you put on his mask. And I'm like, no. I put on my mask first because I'm helping myself. Then I'll help somebody else, right? But it's not because I'm not putting the mask on so that I can help him. I'm putting my mask on so I can help myself. And then I'll help him because he's another human being and I value human beings. So the whole orientation, so we live in a culture where we do it, but we convince ourselves, oh, but now I'm gonna help this other person because that's what really makes me a good person, helping myself not a good person. And that results in guilt. And you see it all over our culture, this guilt. And politicians, again, use it constantly. They use the fact that you're not giving enough charity, that you're not helping enough people. We're gonna take the load off of you, they tell you. We're gonna make it easier for you. You don't have to worry about the poor over there. Give us your money, we'll take care of the poor. That's the bargain that welfare state has made with you. You go out, pursue your own self-interest, give us enough of your taxes, and we'll take care of the people you know you should take care of. It's your moral obligation to take care of them. So we'll just do it for you. I'll give you one other example of this, how politicians use it. Because I think this is the reason behind regulation as well, about the entire status regime. Think about, what do we regulate? What do we have regulations in business? Like I walk into an elevator in the U.S., walked into an elevator, and there's a little diploma, little piece of paper stuck to the wall of the elevator, and it says, a government inspector's inspected this elevator, don't worry, it won't fall. Basically, right, that's what it says. And I'm like, whew, I'm so glad the government is protecting me from evil elevator manufacturers. Because I know that without a government, all elevators would start falling and kill us all because the best way to make money in a capitalist society is to kill your customers. That's why McDonald's would poison you if not for food inspectors. And the cause that you bought would all break down if not for automobile inspectors. It's the government saving you every day from those evil businessmen. That kind of doesn't make sense because to be a good businessman, you have to have repeat customers, you don't want to poison them, you don't want to kill them. So what causes people to buy into this insanity? And almost everybody does. Because they know that businessmen are self-interested. They know that businesses are pursuing their own profit, their own self-interest. And what does self-interest mean? We said earlier, self-interest means lying, stealing, cheating, SOB. So all businessmen must be lying, cheating, stealing, SOBs. So of course they'll drop the elevator. Of course they'll poison the food because they're lying, cheating, stealing, SOBs. So we need the government to protect us from these lying, stealing, and I'm going, that doesn't make any sense, but it's in our culture. It's in the way in which we think about business. It's in the way in which we think about self-interest. But if we change the way in which we think about self-interest and realize, no, no, no. Self-interest means thinking long-term about your own well-being. And to do that, a businessman would think long-term about the consequence of his actions and therefore long-term profitability would necessitate that he build safe elevators, not to mention the insurance companies and the banks and the contractors, the people who use the elevators, the millions of different entities that have an incentive to have a functioning elevator that doesn't drop, that takes, somebody who is, if we understand itself, interest engages in that, then we don't, I trust a business, an inspector sent by an insurance company a thousand times more than an inspector sent by the government because I know the insurance guy said is doing it for himself. I don't know if I answered the question. I think I did. If anyone has any questions, please raise your hand. Oh, didn't we have a question here? Okay. How would you explain the economic success of Eastern Asia, especially as those are traditionally altruistic societies? Yeah, it's a good question. It turns out, so first of all, if you've been to Asia, there is a certain altruism in Asia, but I think it's a lot less, a lot less powerful than Western altruism. We have, we have made, I mean, Christianity basically is so altruistic in a way that Asians don't understand. I mean, a lot of you are waving crosses. What does a cross represent? What represents somebody dying for our sins? I mean, the worst kind of death possible. Not for his sins, I can understand that. You want to, you sin, you should die, or you should suffer, right? But somebody else dying for my sins, that's like the most unjust thing I've ever heard of. That's real altruism. And that's our symbol. East Asians don't have that. They tend to value family. They tend to value the people around them, but there is value to family. And there's value to people around them. Now sometimes they do that too much. We all do that too much. Valuing our family is too much. So I think they're less altruistic than we think. And I think there's a sense in which this kind of universal altruism is much more embedded in the West because of Christianity than it is in Asia. But look, they have exactly the same economy. They are living mostly for themselves on a day-to-day basis. And again, living for themselves at a certain level because they're not consistent. None of us are consistent, right? Unless we've adopted kind of a consistent set of ideas and very few of us have. So when Asians, like any other people in the world, allowed freedom, where their property rights are protected, where they can make money and keep it, they produce. And they thrive in each one of the South Asian countries, the Tigers, South Korea, Taiwan, Singapore and Hong Kong. While none of them are perfectly capitalist and when none of them are perfectly free, they've allowed a significant amount of freedom. They've basically protected property rights. They've basically protected contract rights and left people free to do it. And they've been unbelievably successful as a consequence. But even Japan, after World War II, Japan basically adopted a constitution that was written by General MacArthur. It was written by an American for them. It's a constitution that in many ways resembled the American constitution. It's not a constitution Japanese would have ever written for themselves because it doesn't align with their culture. But it's a constitution that's kind of defined how that culture has evolved over the last 70 years and it's evolved in a very freedom oriented direction and that led to the huge economic success. So when you adopt the ideas of individual liberty, when you allow people to go out there and live, then you do well, let's just do China quickly. China's always like this big mystery, right? Didn't the government do it? Didn't the government policy create Chinese wealth? You hear that a lot. And the answer is no. If you look at where the wealth creation in China has happened, it's happened always. It's happened in the private sector, in the areas of China, where the government has basically been hands off. So the first area where the government went hands off was in Guangzhou province. In the south, southeast, bordering Hong Kong. Shenzhen. Shenzhen is one of the cities that went from population basically of zero to a population of, I don't know, well over 10 million. Dongguan is a city that didn't exist and today it has, you know, eight plus million. And Guangzhou is this massive city that has done phenomenally well. And what happened is Deng Chaoping went there early when he took power and he looked across, he saw Hong Kong and he saw young Chinese risking their lives to escape to Hong Kong. And he said, his people wanted to build bigger walls. We always wanted to build walls to keep our people in or to keep other people out. And he said, you know what? Let's try something different. Let's try emulating Hong Kong. And he said, let's take this area, not the rest of China, just this area, very little regulation, no regulation basically, allow for on capital to come in and allow people to start businesses and be free and be entrepreneurial and do what they want. And the area went like that. Economic growth went like that. Millions of people started emigrating into the area because there was so many jobs, more jobs than they could fulfill for the people locally. So people came from the countryside. So then he said, okay, well let's try this in Shanghai. Same thing happened. Let's try this somewhere else, same thing happened. All the places where this was tried saw explosive economic growth. Other parts of China where this wasn't tried, stayed poor. So it was, now a lot of that is being reversed right now about Xi by the current leader of China. And you'll see economic growth decline. China really risks going into negative economic growth as a consequence. Where you have freedom, you get growth. You have economic success where you don't have freedom. You don't have economic success. Even in China. This is working, okay. So you practically with this free market, you aim for deregulation if I'm correct, right? So what about the crisis of 2008 where one of the main responsible like was told it was deregulation of the market. Banks were able to contract debt with the people that wanted to buy a house but they weren't responsible for that debt. And deregulation would ultimately lead to no responsibilities from these banks. So how would you tackle that? Okay, so I have an eight hour course online on YouTube about the causes of the financial crisis. So you're welcome to view it if you're that, if you're really interested and you wanna go really, really deep into it. But just briefly, a brief answer. What deregulation? I mean, everybody out there says there was deregulation but I wanna know, show me a deregulation and what it led to. Basically banks were able to trade with savings from clients. Oh, so the investment banking versus commercial banking. So the separation was done away with under Clinton. The first one and the second one was the fact that the bank could contract more debt itself with the Federal Reserve. And the ratio was increased. So the bank could actually be worth three, for example, 300 billions. Yeah, it could take a leverage 32 times the leverage. Okay, so those two, and then we can deal with some of the other myths out there. Maybe last one, missed regulation. So if missed, yeah, exactly. Okay, sure. All right, so let me do this. First one was investment in commercial banking. So in 1933, there was an act that separated commercial banking. Commercial banking is deposits in the bank and loans. And investment banking is investments, right? And the two were separated. So banks had to literally split and do it separately. By the way, no such separation ever happened in Europe. No such separation ever happened in Japan. So in Japan, in Europe, banks were always commercial and investment bank together. No, but for example, in Italy, they can't use investment. They can't use. In Germany, they can. In France, they can. In Great Britain, they can. There was never separation, right? They could use, and in the United States, they also couldn't use it directly. There was what's called the wall of separation. There was a firewall between the two. Even after the deregulation, there was a firewall between the two. But the fundamental part, just the empirical part because the fundamental part I'll get to in a minute. The empirical reality is not a single bank that did investment banking and commercial banking with one exception, I'll grant you the exception, failed. Those who went to banks are gonna trouble. So the only bank that actually didn't have, had both that failed was Citibank. But no other bank that had investment banking and commercial banking failed. They were all fine. Bank of America was fine. Wells Fargo was fine. State Street was fine. All these banks were fine. So the relationship between this particular regulation and the financial crisis is literally zero. There's no relationship between the two. Who failed? A lot of banks in America failed. Who failed? Countrywide Washington Mutual Action. This is an area I know pretty well. So these banks, all these like simple banks failed. Banks that were issuing mortgages. Banks that held mortgages on their balance sheet, they failed. So this regulation had no impact, zero, literally zero impact on the great financial crisis. What caused the financial crisis? Something caused it, right? What was the second one? So that was one. The second one was? Leverage. Leverage. 32 to one leverage. Yeah. So in 2002, I think it was. The investment banking model in the United States for a variety of reasons had broken after the dot-com bubble collapsed. And a lot of the investment banks were upset at this and there were new regulations. New regulations, not deregulation, new regulations. And by the way, the biggest new regulatory bill since 1930s was passed in 2002 called Sabadexley, which was massively changed the way business was done. And a lot of these investment bankers couldn't make money given the new regulations, not deregulation, new regulations. So they went to the Federal Reserve. They went to the government and they said, look, with this amount of debt, we can't make money. We need to increase the level of debt in order so we can make money. And the government said, yes, okay, do it. So that's an example of not markets. Markets had nothing to do with this. This is the government giving them permission to do crazy stuff. And the government giving them permission to do crazy stuff after the government had restricted them doing the honest stuff, the good stuff, the stuff that they used to make money out. And again, I could elaborate for hours. The third one was... The third one was... I'm old, I can't remember stuff. Okay, let me tell you what caused the great financial crisis. Quickly what caused the great financial crisis. In 2002, the Federal Reserve lowered interest rates at the fastest rate in the history. It lowered them to 1%, which was at the time a negative real rate of return. Now we're used to that because after the financial crisis, we kept getting very low interest rate. But at the time, it was super low. Negative real rate of return. Basically, I paid you to borrow money from me. That's nuts. That never happens in a free market. Nobody would ever do that in a free market. But the Federal Reserve is in a free market. They were a government institution. They could do whatever they want. So is the European Central Bank. So they lowered interest rates to very, very low. What happens if you lower interest rates really, really low? What do people do? What do you incentivize to do? Borrow lots of money. Absolutely. I love low interest rates. I'll borrow all day long. As long as you'll give me a loan, I'll take it. Because I can make more than 1%. If I can't make more than 1% in the market, then I shouldn't be in business. So everybody goes down to 1%. America stopped borrowing money like crazy. And what do they borrow the money to do? What do they do with that money? They buy homes. Why homes? My hairdresser, a woman who cut my hair in California, had three homes on a salary of somebody who cuts hair. So why were they buying homes? Because the government said, buy homes. They gave an incentive. Your interest on your mortgage. When you take a mortgage, your interest is tax deductible. You pay less taxes if you have a mortgage, which is a direct incentive to take on debt and to take on a mortgage, right? In addition, George Bush, when he came into office, said, I want home ownership in America to go from what is always being 63%. I want it to be above 70%. So he started increasing the incentives for people to borrow money to buy home so he could get to 70%. They got to 68% before the crash happened. So lots of people wanna buy, there's low interest rates. They borrow money, they wanna buy homes. Now all, by the way, government imposed. Not free market, none of this is free market so far. And then you say, well, why were banks lending the money? Like why did my hairdresser, who has a very low income, have three homes? Why were they letting her borrow so much? Because in a free market, the bank would take the loss and therefore it would say, oh, wait a minute, lady, you got one home, probably enough, three mortgages, way too much. Why didn't they do that? Ah, because these government agencies called Freddie Mac and Fannie Mae, government organizations that basically bought all the mortgages from the banks and then repackaged them and sold them off, right? But they were the ones who repackaged them. But not only Freddie Mae. Not only, but they had 80% of the market. Now they have 95% of the market. They were the dominant players in the market. They were set up by government in order to do exactly this. They were set up by government. One was set up in the 1940, the other one was set up in the 1960s to buy mortgages from banks. So the banks wouldn't have to hold the risk. Banks just get money for the servicing of the loan for the moving the money around. They would buy the mortgages, repackage them and sell them because they thought that would increase home ownership because more people take loans because interest rates would go down because the risk would go down because of the repackaging. So you get Freddie and Fannie lowering standards. Goldman Sachs then looks at Freddie and Fannie and says, huh, I can't compete with them unless I lower my standards as well. But there's no question who started this. Again, this was part of the government's policy to increase home ownership. So investment banks followed, but they were led by the government. And then they repackaged them and sold them. You know, they repackaged them. It's too complicated to get into, but they sell these things. And when the mortgages start going bad, all these repackaged loans collapse and the banks get in trouble. Now, some banks like Washington Mutual Countryside, these were created to originate mortgages. They were just on mortgage churning machines. And when all of this happened, they went bankrupt, as they should. They suffered the consequences of playing in this game. But a game created by government, not a game created by market, there was no market. Now, CC, I don't believe in deregulation. You said, I believe in deregulation. I don't believe in deregulation because there is no deregulation. They never deregulate. They re-regulate. What they do is they pretend to, they reduce some regulation and increase others. And all we remember is the ones that decrease. I'm for eliminating regulation. You can't change banking by taking just a few regulations here and there and eliminating them and getting rid of them. You either have to scrap all of it or don't touch it. What do we do though? Banks get into trouble. We don't want them to fail. God forbid they fail. In a free market, you let them fail. So we bail them out and then we place regulations on them so they can't do what they did before. But those regulations create perverse incentives to create the next crisis. And when that crisis happens, we bail them out again and we create new regulations on top of the old regulations. And maybe they even contradict the old regulations in ways that you grant create bad incentives that create the next crisis. The United States has had 12 banking crises and 13 banking crises in its history. It's insane. None of them caused by the markets. All of them caused by these stupid regulations. Banking is the only business that was regulated from the beginning of the United States from its birth of all the industries. It's the only one. So to say that the financial crisis was caused by markets when it's the most regulated industry in the US, even if we would use some regulation, still the most regulated industry in the United States, is just not to see what's actually going on. Massive amounts of regulations exist in the US. And we can get into why the rating agencies were so bad. And oh, European banks, why did European banks, let's just do this. Why did European banks buy these prepackaged mortgages from the United States? Why would Europeans want these CDSs, not CDSs, these CDOs, right? Collateralized debt obligations. So why did they want these prepackaged mortgages? Why would European banks, it's Americans, it's mortgages. What do you guys know about American mortgages? Well, it turns out that the regulatory agency that controls all banks in the world really, but primarily European banks, it's called Basel II. These were Basel II rules. These were regulatory rules that govern European banks. Basically Basel II rules stated in the 2000s that mortgage-backed security has zero risk. And if you bought them, you could treat them like government bonds and carry no capital against them. I mean, you'd be an idiot not to buy them. So the European banks, they had a higher yield than government bonds, and yet they were treated as zero risk, so we did it. But is that the mistake of markets? Provide bad incentives, markets won't function. Provide bad regulations, bad laws, markets won't function properly. And every crisis we've had. And my argument is gonna be that markets never fail. They don't. Governments fail all the time. Regulations fail all the time. And there's logical reasons for that. It has to do with the problem of knowledge that Hayek talked about. It has to do with the lack of pricing signals when you don't have a marketplace. It provokes incentives that drive bad decision-making and drive us into crisis. You wanna get out of crisis? Get rid of controls. You want more crisis, add controls. I was wondering, given that this free market capitalist system is superior to socialism and fascism in an enormous way, and I do believe it, what is your theory for why states and central authorities historically rose all over the world? Well, I think that two reasons. One is what my talk was about. That is the modality that we as a people have is anti-capitalist. And therefore, we demand that capitalism be eliminated because it's inconsistent with our deeply held moral belief, ethical beliefs. And I think morality always trumps economics. We'd rather feel like we're good by having the government control the self-interested motivation, the selfish desires we all have. Then, be rich. Europe basically made a deal. You know you're pretty poor as compared to America, right, America's pretty poor as compared to what it could be, but you're pretty poor as compared to America. By every measure possible, you've decided you'd rather have a welfare state and be less rich. I mean, so we desire to have less capitalism for social, ultimately, moral reasons. Our morality doesn't allow us to have the capitalism. So that's one side of it. That's why we all go along with it because we believe it's the good. The other side of it is, of course, the people in power want power. Free markets doesn't allow them to have power. If I like want to control you guys, I'm not gonna leave you free. I'm gonna tell you, indeed, that you can't be free. I'm gonna tell you that you're not capable of taking care of yourself. And I'm gonna tell you, it's a moral for you to take care of yourself. Indeed, you should be worried about your neighbor. And indeed, you should watch him and let me know if he does something bad. That's how I control you. I control you by not allowing you the freedom to live for yourself. And I need to convince you that it's wrong for you to live for yourself. And I need to convince you that you're incapable of living for yourself. Now, what's very, very famous philosopher taught us that we can't take care of ourselves because we never see reality. We never see the truth. We can't discover the truth. Yeah, Plato. Plato. Plato, you live in a cave. All you see are shadows. Vague representation of maybe reality. Who sees the truth? Philosophers. Yeah, philosophers. So we make them kings. Not because we care about the philosophers, but we care about ourselves. It's in our own self-interest. So let somebody else make decisions for ourselves because we can't know reality. We can't take care of ourselves. We can't discover truth. So we need an authority to tell us what's good for us and bad for us. And Plato's a republic. The philosopher king decides everything for you because you're not capable of doing it. And Plato's ideas are unbelievably powerful. And a lot of people out there, or even in here maybe, believe it like the poor can't take care of themselves. Somebody has to take care of them. This particular group, they can't take care of themselves. Somebody has to take care of them. Why can't they take care of themselves? Are they human? They're mind? So this is deeply philosophical in a sense of why all these things, and again, there's an incentive for a particular class of people, people in power. If they wanna keep that power, they don't want you to discover that you have a mind. They don't want you to discover that you can take care of yourself. They don't want you to discover that you should actually be living for yourselves and not for them. They want your sacrifices. They want you to sacrifice for them. Yeah. Yeah, thank you. I have a few points here, but I'm gonna, I suppose pick out one or two. Thank you for all of it so far. And I'm gonna come back to a few things that you said earlier. And I'm gonna, yeah, okay, I'm gonna choose two. So two things. Number one, I wanna come back to the point you made in the beginning about the morality of sainthood, martyrdom, that let's say, the Christian Western world has embraced. And we also compared it already with the Eastern, the East Asia, they're not as much as let's say, the Western Christian world, including the US, I suppose. Then if this is so, so that's the, okay, you confirm, good. Then why is it that capitalism itself, a deeply individual system, thrived in such a moral system of sainthood, of martyrdom, of self-sacrifice? That's the first thing. Can I take that one and then you can do the second one? Absolutely. And let's say related. All right. No, no, no, it's okay. So that's a great question. And it's interesting when it happens. So when do we start changing in the West? We start changing the West during the Enlightenment. That is the intellectual foundation of whatever freedom or whatever capitalism we have today. And what is characteristic of the Enlightenment? It's a rediscovery of reason as man's basic means of knowledge through the scientific revolution. It's we rediscover and we elevate reason during the Enlightenment. And what do we do with religion? What do we do with that whole notion of sacrifice and everything like that? We don't trash it. We're not quite ready to do that, I wish, but we don't. We relegate it though. Now it becomes something you do in your personal life. We say it shouldn't impact the public square. It shouldn't impact politics. It should be something in your personal life you do it over there. But in the public square, we should only debate and we should only let reason guide us. I think I gave the quote from Thomas Jefferson. I mean, that was very much the spirit. No, maybe I didn't, I did it, didn't. Bring before reason everything. I'm paraphrasing, including the existence of God that's on the Jefferson Monument in Washington, D.C. And that was the spirit of the Enlightenment. The spirit of the Enlightenment is, reason is how we know things. Yes, there's a wolf of religion, but it's primarily in your personal life and at home, not in your public life. And that's a revolution. Because before that, there's no separation between state and religion. There's no separation between the public square and the personal square. Everything is about religion. So the Enlightenment is about the relegation of religion to a particular place in our lives and the elevation of reason above all. And the consequence of that are profound in Western culture. One of those consequences is the fact that suddenly, if we embrace reason and we embrace every one of our reason that all of us have the capacity to reason, we suddenly recognize that every one of us has the capacity to discover the truth. Every one of us has the capacity to make choices for ourselves. Every one of us has the capacity to live for ourselves. And suddenly, you have a complete social breakdown. I mean, I don't think you know how people lived 300 years ago, right? Did you choose who to marry? No. Did you choose what profession to be in? No, and if you're a woman, certainly not, right? There were no professions available to you. Did you choose your political leaders? No. You had no choices back then. It's the discovery, discovery of reason that suddenly gives us the ability to make those choices. So, and the combination of that trend was the establishment of the United States, which even has a moral component in that the Declaration of Independence says you have a right to your own life to live it as you see fit based on your own judgment in pursuit of what? Happiness, that's pretty selfish, pretty self-interested. So the enlightenment created an environment in which we were free, in which reason was our guide, in which people pursued their happiness, and that's capitalism. You get immediately capitalism post enlightenment. Now at the same time, you get reactionary forces, forces that don't want the enlightenment, that don't want reason, that don't want capitalism, that don't want individual liberty, individualism, call it, fighting back. And they primarily in Germany, right? They primarily Kegel, Kant, Schopenhauer, Marx, the whole string of them, who are basically fighting the enlightenment. And we're still fighting it, right? Today we live in a world in which most of us on a day-to-day basis maybe still value enlightenment values. We pursue our happiness a little bit. We love technology, we love science, we love things like this. But at the same time, we are under the influence of a philosophy and religion that is anti all those things. And that is the struggle we observe right now in the West. The struggle we're seeing right now in the West is between enlightenment and anti-enlightment. And communism is anti-enlightment, fascism is anti-enlightment, religion is anti-enlightment, all these are anti-Western values. They're fighting against the ideas of the enlightenment and progress and freedom and capitalism. And the reason all of those things are declining and freedom is declining in the world today is because they're winning and the voices of the enlightenment are now. Thank you very much. Yeah, okay. I'm gonna skip because then- Second point. Yeah, this opened up like five other questions, but let's go to the first. I'm sure it did. Yeah, it's gonna take, okay, yeah, skipping forward, let's go for, yeah, specifically. Because you basically mentioned and you explained that the housing bubble that caused, let's say, the crash in 2008 and so on, the whole financial situation behind it was caused by regulation itself, basically. Then, you also mentioned the dot-com bubble just before. What about these other crashes in the history of, let's say, capitalist society, like the dot-com bubble, 1929, the crash on Wall Street, or I don't know, we can go, because even to the tulip bubble, it wasn't that strictly capitalist thing to have. How much time do you have? That's a problem, huh? Yeah, it is, isn't it? I'm gonna put the tulip bubble to the side, partially because I don't know that much about it and let's do stuff I actually know something about. 1929 bubble, it's pretty, within economics, there's really little dispute what caused the 29 bubble and that is bad Fed policy and then bad central government policy. The Federal Reserve had increased the money supply dramatically during the 1920s, increased it, it then started jacking interest rates up dramatically in 1929. As you increase interest rates, the value of assets declines, there's always a flip. Let me just be clear, Federal Reserve is not a free market. Federal Reserve is a government institution. So it's central planning. It's central planning of the most important thing in the economy, money and interest rates. They screwed up. I mean, there's history after history after history that's written about this and showed and then you could have had a smaller session in 1929 as a consequence of the readjustments to new interest rates, which is a little familiar because that's what's happening right now, the readjustment to new interest rates and instead we got a great depression and the question is why? And the primary reason for that is government policy. So J-ed is, so not J-ed, what's his name? President, no, before who's vote? No, no, no, Hoover and different Hoover, not the J-ed one, the other one. So President Hoover does two things. They turn a recession into a depression. And Hoover's a Republican, so this is not partisan, right? He doubles the income tax rate during a recession and he puts together one of the most disastrous laws in all of human history, smooth holly, which raises tariffs on all imported goods which basically causes a global trade war, right? Which everybody raises tariffs and which basically causes the depression to go from the United States and it expands to the entire world. Then FDR comes into power and does everything to extend the recession further by increasing government spending, by distorting allocation of investment and by increasing regulations. So the United States doesn't come out of the recession, the great depression, until 1945, until the war is over and there's a lot of deregulation at that point, right? So no, I mean, 29 clearly caused by government. There's no question about it. Most I think economists would agree. What else did you mention? Dotcom, all right, dotcom. Dotcom reminds me of Alan Greenspan in the middle of the dotcom bubble talking about irrational exuberance and what he's gonna do about it and how he's gonna manipulate it. Again, federal reserve and monetary policy have a huge impact on these things. And a lot of what the increase was was an increase in money supply that flowed into the markets. That's not a failure of markets. Again, it's a failure of the central bank. But I would add to that, look, the fact that I'm saying market failure has never occurred doesn't mean the stock market doesn't go down sometimes. Of course it goes down. And indeed when you have a new industry, any industry, this was true of the railroads, it was true of the automobile industry, it was true of the internet. When you have a new industry, a lot of capital flows into that industry and a lot of the capital that flows into that industry is invested in projects that suck. That's a technical term in finance, right? That are not good. And some of the money, usually a minority of the money, is invested in companies that are amazing. And at some point you need to be able to separate the sucky investments from the amazing investments and you get a drop in valuations. And it turns out that if you look at the dotcom bubble, as economists have, it turns out that the wealth created by the good investments far exceeds the wealth lost by the bad investments during the bubble. So the bubble isn't some failure of capitalism, it's part of what the creative destruction that capitalism goes through. It's part of that cleansing mechanism of bad investments, getting rid of bad investments and reinvesting in good investments. I could take every single one of those crisis and analyze them in the same way. It's just markets don't create systemic risk. There's no systemic risk in markets. The only thing that has systemic risk, systemic risk means risk across the entire economy. The only thing that has systemic risk is the central bank, which impacts every price in the economy and government regulations, which impact everybody in the economy. That's systemic. Government is systemic. Markets are not systemic. Yeah, you might have some area where people are buying too much real estate, real estate will go up and then it will crash, but other areas are not buying enough and the opposite happens and overall it balances up. That's how markets work. That's how markets function, particularly on an economy the size of the United States. So no, markets in that sense don't fail. These bubbles were not caused by market phenomena. They were caused. And what's interesting to me is when the crisis happens, the headlines are always, capitalism fails. And the academics always say, yes, this is proof, markets don't work. 10 years later, the consensus almost always is, 10, 15 years later, consensus almost always is, looking back, looking at the analysis. Yeah, Federal Reserve screwed up. Yes, regulations screwed up. Businessmen did what they were incentivized to do, but nobody knows that because all we remember are the headlines. So nobody follows the research, nobody follows the actual consensus even in economics, even in economics profession. I'm a finance professor, just so that's why PhDs in finance. So I like these questions, easy for me. Yes. Dr. Brook, I've got a question about morality. You were saying it's not okay to lie. I think we all can agree on that. It's not okay to deceive people if you are. I'm curious, why do you think it's not okay to lie? Because we can't have all agree on it, but we don't even have the same concept of lying. We don't agree on what lying actually is. That is true. Why do you not lie? Because there's a commandment, they shall not lie. Because you won't go to heaven if you lie. Why don't we lie? It's immoral. Says who? God. Something you have no reality to. I wouldn't say it's not okay to lie. There's just no longevity in lying. Okay, so that's kind of a utilitarian perspective. I can't get benefit from lying long-term, but yeah, but that's not his perspective. Here's he has a dogma that says I shall not lie because that's what religion says. I shall not do X, Y, Z, right? But that's a dogma. It's not morality. It's just somebody wrote it in an ancient book and we all believe it. But isn't the book all written to live happily? Is it? Is that what God wants us to do? Live happily? I don't remember that. I mean, that's how they said it. I read the Old Testament. I don't remember any section there, you know. What about the new one? He wants you to serve him. That's what he wants. Yeah, he wants you to serve him. Well, let's- And he believes that if you serve him, he tells you if you serve him, you will be rewarded. Mostly not in this life, particularly in the New Testament, mostly not in this life, in the next one. In Judaism, there is no next one. So we have a problem. Jews have a problem. Because everything has to happen here. It can happen in the next life. But look, it's a book. Somebody wrote it a long time ago. My question is, does not lying, what impact does it have? Well, it creates imbalance in your relations. I mean, if you are saying you are a libertarian or an ago-capitalist, then you need to make sure that your relations with other people are okay to thrive and to make sure that you don't, and you also said, well, don't be a fraud earlier on in your- What if I could get away with it? Yeah, that's sadly, that's very sadly. What if I could get away with it? See, I'm against lying. Let's be very clear. And I'm against more than lying. I'm against dishonesty, which I think is a broader concept than lying. I'm against all dishonesty. Even if you could get away with it, I'm against it. Not because somebody told me, not because I read it in the book, not because I believe in heaven, because I don't. So why am I against dishonesty? For yourself. Yeah, because it destroys me. So I have a really precious machine up here called Reason, my mind, my brain, right? There's a saying in computer science, garbage in, garbage out. I value this too much to embed lies in it. And you know what lies tend to happen? If you lie, you have to lie again. And again, and again to cover it up. Mostly you'll get caught, but even if you don't, now you have a whole section of your brain devoted to the stuff that's not true. And you have other section of your brain devoted to stuff that is true. And if you do it often enough, you won't be able to tell the difference anymore. The two will integrate, will pollute your operating system, right? Your brain. I don't want to pollute. The most valuable thing I have is this, is my mind. I don't want to pollute it with dishonesty. And it's stupid anyway, because the truth is amazing. Life, reality is amazing. And even when it's not, I'd rather face reality than evade it and suffer the consequence of that evasion, which are multiple and they always are. So I have an existential reason for not wanting to lie or for being honest. An existential one that relates to my existence, my happiness, my flourishing. I don't take it as dogma. It's the way to live a good life. Yeah, let him finish the question, that's fine. Okay, yeah. That's kind of you. So we are looking now in the last past three years of a worldwide outlaw of vaccines that are not causing health, but the opposite. You see rising in mortality rates, in excess mortality rates across the world, side effects, et cetera. And what is your take on big pharma companies that are actually deceiving the public through actually help of the regulatory bodies like the CDC FDA? So I get it. So I don't believe any of that is true. And I've actually looked at the data because I know a lot of people who believe in America, though a lot of people who believe that vaccines are killing people and the vaccines are responsible for the increase in excess mortality in all the countries. And none of it is true. It doesn't stand up to the very, very simple statistical analysis. It doesn't stand up to logic. It's just not true. It's a conspiracy theory. It's a lie. It's a lie being created by people who have a strong incentive to lie and to deceive you. The vaccines save millions of lives. I have no doubt about that and the data completely consistent with that. If you look at excess deaths, they're all caused by other things that have nothing to do with vaccines. Would you specify that? Sure. In America, if you look at excess deaths over the last two years, the causes are things like suicide, drug overdose, fentanyl. Fentanyl has increased excess deaths in the United States dramatically. Those are the primaries. When you look at heart disease, which is what the vaccines are supposed to cause you, they're supposed to cause you, those are flat. There's no excess deaths from heart disease in the United States, zero. All the excess deaths are in other categories and they're primarily, yes, young people because young people are doing fentanyl and they're doing other stupid things. They have nothing to do with the vaccines and I've looked country after country because I keep getting this on my Twitter feed. I don't know why I attract this question, but I do. And I've tried it, I say, here's a paper and I go to the paper and the paper often sites exactly opposite or they're taking the quotes out of context and they don't understand what's actually being said in the paper. There is literally zero, not a little bit, zero evidence that the vaccine are doing harm. I mean, they do some harm, they're side effects. We always use those side effects. They do cause, what do you call it, telefibrillation in young people. Not deadly, goes away within a few weeks. All right, and look, I'm not a huge fan of young people getting vaccinated. I don't think it's necessary. I don't think COVID is that bad. So I'm not a huge fan of young people getting vaccinated but the vaccines kills is just a lie. And it's a lie perpetuated by people making money off of that lie or people who have grievances against the system. And pharmaceutical companies, to me, are some of the most heroic companies in all of human history. They've extended life, they've improved life, they've cured diseases. They've made diseases liveable. That is, you can live with disease today because of certain drugs. I mean, I can't think of an industry, many industries that improved human life more than drug companies. So I'm a huge fan of pharmaceuticals. So now one last question of the night because we don't want university locus in here. I haven't answered the question afterwards but it's very late. Yeah, my question is about the free market because I feel like there's something going on and I wanna know whether you share this idea because I feel like we're moving away from two capitalism with free markets and free market access to some kind of like castrated capitalism where we have some capitalists which are extremely powerful and even have a power to take away this free market access from the regular people if you want. So I mean, look at big companies like Microsoft or Amazon. There is like no competition to their product and like our whole society is based on using their services, be it social media, be it Amazon as a marketplace for small entrepreneurs. So I feel like we're like, leaving capitalism behind us and proceeding to some kind of people call it techno feudalism. I don't know if you're familiar with that term but what is your take on that? I take on that is, again, I'm gonna disagree with you for two reasons. One, I agree with you that when moving away from capitalism we have been moving away from capitalism for 100 years or since in the case of Europe maybe since a decade or two after World War II and then everything gets more regulated, more controlled and we're starting losing more and more of that freedom that we had and certainly we're a lot less free today than we were in the 19th century. And I'm talking about economic freedom because social freedoms were much freer today than we were back then. So if you're gay, black, or woman you're much better off today than you were 150 years ago. So we need to be clear on what kind of freedoms we're talking about. But no, I mean, Amazon? Amazon sells 4% of all the goods, right? Yes, it dominates online buying but you can still go to a shop anywhere here and buy whatever you want. Amazon is one of the greatest, I mean, I benefit enormously from Amazon. So the idea that Amazon is somehow moving us away from capitalism, Amazon doesn't lobby that much. It lobbies some, shouldn't, but it lobbies some but it's not oppressing us, it's liberating us. Imagine if we had COVID and all those stupid shutdowns shutdowns, I do agree, there was a massive government failure and a massive power grab that we locked us down, right? But imagine having those lockdowns without Amazon. I couldn't have survived. So it liberated, I mean, literally I couldn't have survived. I mean, where would I live in a Caribbean island? And I couldn't have gotten anything. I had stuff shipped to me from Amazon constantly. I mean, it saved my life. But think about, I think about Microsoft. Microsoft provides, you know, I have teams. I can, in a sense, video conference with people all over the world, I can communicate, I can do that, save me. Makes my life much better. No, I don't think technology companies are the problem. And indeed, there's massive competition. You remember Zoom? Probably all use Zoom. During COVID, Zoom thought that they were gonna dominate the market. They were, they were 90% of all video conferencing. How much of the market they have today? Very little. Very little because they've got lots of competitors. Every day, somebody in Silicon Valley is coming up with an idea of how to undermine Amazon. I'll tell you how Amazon's gonna be undermined. I've got the idea. I know exactly how it's gonna happen. Anybody know how Amazon's gonna go out of business? Through competition. Artificial intelligence. I'm gonna have a little bot. I'm gonna have a little AI assistant, right? Who's gonna sit on my desk up and I'm gonna say, find me a pair of shoes that have this and this in this description. It's gonna go to all the online stores and pick one for me and bring it to my thing and I'm gonna press pay. Maybe I won't even press pay. Maybe it'll just buy it for me. And then you don't need Amazon. Amazon is an aggregator. At some point, artificial intelligence would make aggregation unnecessary because it'll go to each individual store like this. I can't do that. Don't have the time. I love Amazon because it aggregates it all and puts it in one place. But as soon as I can delegate the searching to an AI bot, Amazon's dead and they know it. So they're investing in AI to try to be the ones that provide you with that agent. But there are a million companies right now trying to compete with Amazon exactly on that. Same with Google. Google, we all search with Google. But if you've got chatGPT, why would you use Google? And chatGPT's still not that good. It's really good, but it still could be much better. And Google's finished. I don't need the government to break up Google and break up Amazon. The market will take care of it if they can't keep up. Why is Google investing heavily in artificial intelligence? To try to keep up, but there are lots of other companies investing in us. So no, I don't think the threat comes from companies. It does come from this sense. If you give government a lot of authority over business, what is business going to do? If I have a lot of authority over your life, what are you gonna try to do? Make me like you. You're gonna try to be chummy with me because I have a lot of control over your life. If you give politicians a lot of control over business, business is gonna lobby them. And here is the story I have to illustrate this, Microsoft. In the early 1990s, you know how much money, 1990s, Amazon was the biggest company in the world. You know how much money Amazon spent on lobbying? But you wanna take a guess? 10 million, 100 million, a billion, 10 billion. How much money did Microsoft spend on lobbying in the early 1990s? Zero, literally no money. Had no offices in Washington, DC, had no lawyers, had nobody. And one day, it was invited to Congress and Amazon executives in front of one of these committees in Congress and a Senator, a Republican Senator by the name of Armin Hatt stood up and yelled at them. You guys need to start having a presence in Washington, DC. You need to start lobbying. You need to have lawyers. You need to have a presence. In other words, you need to start giving me money, right? This is how corrupt politicians are. And Microsoft said, literally at this meeting, they said, we'll leave you alone. You leave us alone. We're not interested. We're the biggest company in the world. We're doing our thing. We're out there in Seattle. Why would we wanna come to Washington, DC? Six months later, knock on the door in Microsoft office. We're here from the Justice Department. And we think you're a monopoly. And we're gonna sue you. And you're gonna spend the next 10 years in court defending yourself against us. Guess what Microsoft started doing? Lobbying. Today, it probably spends $100 million a year on lobbying. Has a beautiful building. About equal distance from the White House and Congress in Washington, DC. Yeah, if the government's gonna use that power against us, we're gonna do it. So the only way to stop lobbying, to stop this mixture of business and government, which is bad, I agree, is to take away the power of government to regulate business. If you make politicians impotent with regard to the economy, I don't care about their sex lives, then business will stop lobbying them. So the problem is politics, not business. Last question, I guess. Yes, so practically, the economy touches upon all the aspects of our life. Like hospitals, schools, everything, even wars. It's always about money, always about the market, right? So if the government can regulate the market, what will it regulate? What will it be its role? What will the government's role be? Yes. Yeah, good question. So I think the only role of government should be the one that you mentioned, the one that's not a market where money doesn't play as big a role as people think, and that is war, right? The only role of government is violence. But it's also war, it's part of economy. Well, we can talk about that. Not really, it's a destructive economy. It's destroying the economy. No, it's destroying the economy. There's never been a war that anybody benefited from. You know, a few arms manufacturers make money in a war. But they're the only ones. Nobody makes money in a war. World War II, America blew up Germany. Anybody said, oh, after the war, America was the only player in town, so they made a lot of money. Not true. If Germany had never been blown up and not be Nazi, right, there not been a threat, the trade between Germany and America would have created a lot more wealth for America than spending gazillions of dollars blowing Germany up. War is lose, lose. Capitalism, freedom is win, win. War is lose, lose. Nobody wins in a war. Again, with the exception of a few arms manufacturers who are not that important in the big picture, and I know that's not what you're being told and it's not the story you read, but they're not that important. Just look at the percentage of GDP produced by the military industrial complex. It's tiny. War is a lose, lose. They're necessary sometimes, but they're lose, lose. You go into a war knowing you're gonna lose economically. It's just a reality. Capitalism is about building things. War is about destroying things. They didn't, didn't America gained its hegemony on the world thanks to the world, to the World War II? It gained, for example, America became the first economic power because it lent so much money to the British and to the French. That is, that is almost, that is such nonsense. Sorry, not personal, but it's such nonsense. America gained its hegemony on the world economically because America produced more than anybody else, even before World War II. Why is it that in World War I, you Europeans slaughtered each other on and on and on and on, and the only thing that ended the war was what? The most powerful country in the world at that time, entering the war, which is the United States, and then the war ended. The United States, by the beginning of World War I, was already replacing the British Empire as the mightiest economic force in the world, by far. And by World War II, the United States was much richer than the rest of the world, and heading in that direction of becoming richer and richer and richer. Now, even though it had a great depression, it was still miles, you know, moving ahead fast. So, World War II changed the balance of power primarily by destroying, finally destroying the British Empire, right? The last element of the British Empire. But Germany and France were not an economic, first of all, there are no such things as economic threats, because the success of any other country is gaboon to you. See, I don't view, so this whole view is a zero sum view, because if China gets stronger economically, put aside the politics, put aside the military, that's beautiful for America. I would argue, indeed, that America over the last 40 years has benefited enormously from China. Cheap goods that allowed America to invest in what it's good at, technology, software, iPhones, things like that. Massive amounts of labor that sees their productivity increase that benefits the United States. So, trading with other countries is beneficial to you, it's win-win. So, countries don't lose economically, because other people are successful. Countries lose economically when they self-destruct, when they do bad things to their own economies. And they lose economically at war time. So, a strong Germany, let's say Germany never goes to war. Let's say it comes out of 1933 and it flourishes and they boom and they build their BMWs and Mercedes and everything. The US is better for that. It doesn't have to build tanks instead of automobiles. It doesn't have to devote massive, and it doesn't have to see how many Americans died in World War II, I don't know, hundreds of thousands. How is that good economically? It's awful economically. You're taking your labor force and you're disrupting it. You're destroying it. So, no, war's a never good for an economy, for any economy. Winner, loser of the war, it doesn't matter. It's wars are zero-sum games. They lose, lose games, sorry, lose, lose games. They're not zero-sum. They lose, lose. They're negative-sum games. So, in Jero and Brooks' world, the governments are like Ministry of Defense. In your own books, there are three functions of government. Ministry of Defense, Police, Energy Diffury. That's it. You need laws. You need rules, property rights, defining property rights. And you need, so no regulations, but property rights still need to be defined. Where's my property, where's his property, is not always clear. It's not always obvious, particularly when you move into technology and intellectual property rights and things like that, which I know a lot of libertarians don't believe in, but I do intellectual property rights. These are complicated issues. Internet creates a huge amount of other issues around property rights. So, creating the boundaries around property rights is a rule for the government. But there are a lot of functions. Criminal law, it's not simple to define property, criminal law, proper police procedures, what's an objective evidence in a court of law and what isn't. That's the rule of government, to define all those things and to execute them. But it has no role in the actual economy. It has no role in guiding businesses and redistributing wealth and helping some businesses and subsidizing those, none of that. None of that exists in my world. It does, you know what government is? Government essentially is force. It's a gun. That's the nature of government. And the question is where do you want a gun? I don't want a gun in education. I don't want coercion, force, violence in education. I don't want a gun in healthcare. I don't want a gun in business. I don't want a gun in my life. Where do I want a gun? What's the one function of a gun that's legitimate? Self-defense. I want the government to defend me. That's all I want from the government. Thank you very much. Pleasure. Thank you.