 Equal is unfair, you know, over the last few years inequality has become this big enormous issue really globally. I don't remember hearing anything about inequality before the financial crisis and even in the few years after the financial crisis there was nothing and then it kind of exploded onto the scene over the last five years or so and really has become such a big issue that almost every problem in society is now blamed in one way or another on inequality, whether it's low economic growth in western economies or whether it's terrorism in the Middle East or whether it's poverty is now explained in terms of inequality. Really ill it seems that our societies suffer from seems to be now blamed on this phenomena of inequality and what is inequality? What do we mean when we say inequality? Well what's conventionally meant by it is basically the gap in income or wealth or both between poor people and wealthy people. So the idea is that this gap, this difference in income or in wealth has causal explanatory power over all these other problems that exist in society and if only we could shrink this gap. Economies would go faster, terrorism would be reduced, maybe even the globe would get a little cooler. That was a joke. Almost every problem it seems would go away if only we could. Now of course it's true that from the perspective of the global warming crowd it would get a little cooler because what's the only way to reduce the gap? What is really the only solution presented in reducing the gap? It's actually to eliminate the people at the top or to bring them down, to redistribute their wealth, to take from those who have and to give to those who don't. There was a very well known book and I assume it came out in Korea because it's out in every language in the world and the author is treated as if he's some kind of VIP. By a book called Capital in the 21st Century by Thomas Piketty, I don't know if you've heard of this book but it was a bestseller on Amazon. It was hailed as the most important book in economics in the last 20 years by almost every economist out there. He'll get a Nobel Prize in economics for the book, I'm pretty sure. The book documents or purports the document, the increasing inequality that is happening in countries like the United States and much of Western Europe. He has data for the last 200 years and this is considered one of the great feats of data collection ever in the book and he says, this is a real problem and it needs to be addressed and the solution to the problem of inequality is simple, 80% marginal income tax rates at the top, so top tax rate for anybody owning, I think it's over 150,000 euro over about $200,000, 80% of your income is taken, which is actually pretty good because I don't know if you, the presidential campaign in France, the election that happened a couple of weeks ago, there were all these 12 candidates and there were four leading candidates, right? And one of the leading candidates was a socialist or former communist, really a communist, and he got almost 20% of the vote. And his proposal was if you own anything over 150,000 euro, you get a marginal tax rate of 100%. So all your money gets taken away from you above 150,000 euro. And he was serious and he got almost 20% of the vote in France, right? I almost wished that the presidential election right now was between him and Le Pen because then the French would really get what they deserve. Either a fascist or a communist, it would be perfect. And the French deserve it. Now not only did he suggest an 80% marginal income tax rate at the top, but he also suggested a 10% wealth tax. So every year the government would assess your net worth and take 10%. So just to maintain your net worth from year to year, you would have to make on your capital investment more than 10%, or you'd have to make 10% exactly, to just to maintain yourself. And an environment of 0% interest rates, that would be really, really hard. So basically what Piketty is suggesting is that we take 10% of the wealth and we basically destroy the wealth of a whole group of people who have it. The argument is, according to Piketty, that unless we do these things, all the wealth over time will accumulate in the hands of a very, very few people and impoverish all the rest of us. All the rest of us will become poorer and the very, very wealthy will become richer to the extent that at some point they would literally own 100% of all the wealth in the world. And he has this little formula that says that if the return on capital R is greater than G, which is the growth in the economy, then all the wealth goes to those who have capital, which is true if R is greater than G forever. Now, there is no, just to be clear, there is no economic theory ever presented that suggests that R will be greater than G forever. It actually contradicts many laws of economics. It doesn't prevent Piketty from arguing that that's the case without presenting any evidence or any argument. Other than, there's one other thinker in history who suggested exactly the same thing and who said all the wealth would accumulate in the hands of a few and nobody else would have it. And that was the inevitable consequence of capitalism. Who is that? Karl Marx, who wrote capital, his book was called Capital in the 19th Century. This one's called Capital in the 21st Century. What I like to call Piketty's book, Das Kapital in the 21st Century, just to make it clear what he's writing. But he's basically updating Karl Marx. It didn't work under Karl Marx. And there's zero evidence, zero reason why it would actually happen under Piketty. So these are serious proposals. This is not, this is not marginal. And again, some people in at least French politics have picked up on it. And the serious people like Bernie Sanders in the United States, who probably came this close to winning the presidency in the US, who take this stuff seriously and are seriously talking about 80% marginal income tax rates and 10% wealth taxes as viable as real things that could happen. So people are taking this stuff seriously. Again, you cannot open a copy of the New York Times newspaper without stories in it every single day about the evil of inequality and the damage that it is doing. Now, I want to be clear, though, that I don't disagree that there are real economic problems in the West and every global, every economy in the world. There are poor people who remain poor and who find real barriers to advance. So there is a problem of what's called so mobility, economic mobility. That's real. That's not pretend. So the real problems are poverty. And there's real problems of the middle class, maybe not growing as fast as one could imagine because economic growth in many Western countries is basically between 0% and 2%, very, very low. And there's a problem at the top in almost every modern economy. And the problem at the top is cronyism. Is when businessmen basically get involved in politics and where they influence the political process for their own well-being. They influence the political process in order to gain unowned benefits to themselves. Use the legal system. Certainly you have that in Korea here. We have a lot of it in the United States. But every economy has this. So there are real problems in the economy. But this issue of inequality has nothing to do with any of those issues. Indeed, I argue in the book, and I'll argue a little bit here, that every one of the solutions presented for the so-called problem of inequality would make all of those issues worse, not better. All of those issues would be worse, not better. You'd have harder time for poor people. The economy would grow slower if it grows at all. And the people at the top, you would have more cronyism, not less cronyism. So in addition, there is no economic theory that connects this gap to any of these problems that exist in the economy. So there's no economic theory. There's no social theory. There's absolutely no justification for what they are doing out there, making this issue of inequality such a big issue. So why do people buy it? What is it about this inequality argument that's appealing? And I think it has to do with the number of fallacies that people hold. Let's talk a little bit about these fallacies. And so it's the first fallacy. Well, the idea is this, and people always use this image, right? We have a big pie. And the pie is the economy. The pie is the wealth in the economy. And now the issue is, how do we divide this pie up? And it's just like implicitly not fair, it seems. That some people get a big piece of the pie, and some people get a little piece of the pie. Because when dad brings a pizza home, and we put the pizza, then it's wrong for some of the kids to get a bigger piece and other. And there's a lot of fighting about that. Because implicitly, our assumption is that if dad brings a pizza home, we're going to get equal shares. We're all going to get an equal piece. So we have this image of an economy as a pie. And we're all going to get a piece of that pie, and it should be equal. And people, I think, relate to that, oh, yeah. Yeah, I want an equal piece of the pie. What's the problem with that? Yeah, so the first problem, the obvious problem, is the pie is finite. It's just the pie. But the fact is the economy grows. Wealth is created, so the pie is constantly growing. So it's not a limited amount that needs to be divvied up, but an potentially unlimited amount. And indeed, it is those often who get the bigger piece of the pie who are the ones responsible for making the pie grow. And if you took part of that pie from them, if you made them have a smaller piece, the pie would grow slower. Why is that? Why is it that the people who get the bigger pie? Why is it that the wealthy are more responsible for economic growth than the poor? What do the wealthy do with their money? They save it. They invest it. So they use their money to create economic activity. But most people would say, well, wait a minute. We have been taught that what really creates economic activity is what? Consumption. And who consumes more? Rich people or poor people as a percentage of their income? Poor people. Poor people consume 100% of their income. Rich people have money left over. They consume actually very little of their income. And they save and invest most of their income. So the Keynesians would say, we want to shift the pie towards the poor people because they'll consume more. And consumption is what drives the economy. So what's the problem with that? It's not true. Yes. That is usually a bad problem to have. It's just not true that consumption drives the economy. It's just not true that consumption drives the economy. And it's mathematical. So people say the US economy is 70% consumption. That mathematically is impossible. So think about it. How do you consume? Where do you get the money to consume? What's that? From the other 30% by taking from other people, right? No, but where do you really get the money to consume? I mean, yeah, from your work. So you have to produce. And you get paid for production. And then you can use that money to consume. If you don't produce, put aside redistribution of wealth, then you can't consume. So production has to come first. You have to actually have a job at something, whether you're self-employed, whether you work for somebody, to get the money to be able to consume. So at the very least, 50% of the economy has to be production, where you make the money, so that you consume where you consume the money. Otherwise, it doesn't work. But not only that, when you consume stuff, what are you consuming? Stuff that has already been produced. So what drives an economy is production, the creation of goods and services, the work that people do. Now, yes, you can't produce unless somebody is willing to consume it. And yes, once you produce stuff, you then go and consume. So they're not opposites. They're not in conflict with one another, but the primary in economics is production, not consumption. What drives an economy is saving and investment. And one of the reasons Asian economies have done so well over the last 40, 50 years is because Asian cultures are saving cultures. One of the reasons economic growth is so low in the United States, and one of the reasons we borrow so heavily from China and Japan and everywhere else is because we are consuming, we consume, which drives, actually, ultimately drives economic growth down. You need the saving. Now, we produce the saving from surplus from other countries. So the investment still happens. But you have to produce in order to consume. So production is primary. So it is the saving and investments of wealthy people that cause economic growth long term without saving an investment. There is no economic growth. And this is economics 101. This isn't difficult stuff, right? It's also easy to get people to consume. All you have to do is give them some money. Much more difficult to get them to actually save and invest and do it wisely. So yeah, so fallacy number one is this pious finite. And it's not because it's actually growing and that the growth is made possible because of the surplus that the wealthy have. But even that is a massive distortion of what's actually going on. What's the real fundamental problem with the pie? Yeah, there is no pie. I mean, you bake a pie and I bake a pie and you have a pie. We each bake our own pies through the work and production that we do. And some of us make little pies and some of us make big pies. But there is no collective pie. You can't take all our pies and mush them all together and pretend that there's a collective pie. It isn't that way. Actually, I did an episode of this TV show with Stu. I don't know if it's on the blaze. And he interviews you while driving a car and there are cameras all over the car on you. And he always takes you to fast food joints. We were in McDonald's and we bought a bunch of pies. And then we started mushing them on camera. So there is no collective pie. Each individual makes his own pie. Each individual works and produces and creates. And the fact is, some people create massive pies. That's their pie. It's not society's pie. It's not the government's pie. Nobody has a right to anybody else's pie. And that's the fundamental. It's this whole idea in economics about social wealth or we have a certain amount of wealth in Korea. No, you don't. There is no Korean wealth. There is no Korean economy in that sense. We like to aggregate in economics. And that's fine if we're just doing economic measurements. So we say the size of the economy is X. But that really is not meaningful. What's meaningful is what is the size of your bank account, wealth. And to the extent that you create your own wealth, it's yours. It's not society's. We have to get away from this collectivistic view of economics. So if each one of us makes our own pie and we understand that the pie I make is mine, then you don't get to redistribute my pie. It's mine. Now why do some people make big pies? How do you make a big pie? Or in other words, how do you become a billionaire? This is my secret for success. How do you become a billionaire? What does it take to make $1 billion in a free market? In a free market, what's that? Make a lot of people's lives better? Yeah, you have to make a lot of people's lives better. Why? Because when you sell something, famous iPhone, when I buy this iPhone for $300, how much is it worth to me? More than $300. That's why I'm willing to give it up. The $300 and get this. Indeed, much more in the case of an iPhone. Much, much more. So to make $1 billion is to sell a product like an iPhone to millions or billions of people at a price higher than what it costs you to produce. And if you can do that over and over again to lots of different people, you will make $1 billion. Now, have you made those people's lives better? Yes, because they got the money and got something with more in return. My life is better for having given up the $300 and gotten the iPhone. Now, notice what happened to inequality when I bought the iPhone. What happens to inequality when I buy the iPhone? It gets bigger because I gave up $300. So Piketty, an economist, looks at my bank account and sees my bank balance shrink. So I got poorer by $300. But he doesn't measure the value of the iPhone. He can't, because he's an economist. He can just do money. He can just do stuff with dollar signs behind it. So the iPhone is not there. If I buy arts, he doesn't measure the value of the art. Any asset I buy is not measured, unless it's a financial asset where there's a dollar sign next to it. So when you buy anything, you become poorer according to Piketty, and the other party becomes rich and inequality's grown. But that's ridiculous, because my life is much better for having bought the iPhone for $300 than it was before I bought the iPhone for $300. So my position in life has improved. So how can, in the book, we use the example of, you guys read Harry Potter? J.K. Rollins? Harry Potter? I mean, she's a billionaire. How awful is that? I mean, it's terrible, because she became a billionaire because of me, right? I have two boys. So every time a book, Harry Potter book came out, I had to buy two copies, right? Because they wanted to read them at the same time, right? And then I bought the audio tapes, because I wanted to listen to it. Every book, we did a road trip. So I could listen to it, and we all listened to it. Because they read it, they started reading it midnight when the book came out. And then I would do the road trip and listen to it. And then, of course, you had to go to the movies. So I was like, I figure I spent on Harry Potter, what, $1,000, $2,000, at least? So here I am, I became $2,000 poorer, and she became a billionaire. It's unfair, right? But did my life, was my life worse or better for having given up the $2,000 to get Harry Potter? Much better. I mean, Harry Potter's fun. It's spiritual fuel, it's entertaining, it's great, it's wonderful. So my life is better, her life is better, and life's not about money, life's about what? What's success and happiness and flourishing as a human being? It's not about money. So yeah, she got richer, I got poorer, but I got more fun. I don't know, I think I benefited more than she did. How do we even measure those things? We can't, and this is why the whole inequality's so silly. So people who make big pies can only make big pies, can only make a lot of money by making our lives better, by selling us a book that we enjoy reading, by selling us a computer that we find really productive, by selling us whatever it is that they sell us. We wouldn't buy it unless we believed that our life was going to improve as a consequence. So why would we wanna penalize people who make big pies? We wanna celebrate people who make big pies. We wanna celebrate when they make a lot of money. So the big fallacy here is collectivism, is this whole view of viewing everything as a social pies, everything is social, everything is collective, right? And you know, President Obama, it probably, you know, one of his most famous speeches, you know, articulated kind of the argument that they make to justify their collectivism. And it's a famous speech that he made, we call it, you didn't build that speech, right? And here again, the idea is that if you are baking this big pie, you don't get to be responsible for the benefits of that big pie. Because you had a great teacher when you were in great school that made you who you are. And you probably have good genes from your parents. And you probably had a good upbringing and a good education. This is called the argument from luck, which is very prevalent out there. It was really articulated by John Walls, famous American philosopher who died about 10 years ago. And the idea here is you're not responsible for the pie you bake because of all these other factors, external factors. But does that really make any sense, right? I mean, lots of kids have good teachers. I can't remember single one of my teachers, so I obviously didn't have any. But I'm sure some of you had some great teachers. Anybody have a great teacher that really influenced your life? Yeah, yeah. I mean, I think that if you ever make a lot of money, you should go find the teacher and thank him. And you know, if you want to write them a check, cool. But it's not like you owe them, right? They did their job and you benefited from that. That's great. But that was their job. They did it good. That's wonderful. And the fact is that a lot of kids were exposed to that teacher and she impacted the lives of only a few. And those of you who impacted should take personal responsibility for the fact that you were open to being impacted. Now, is it true the genes play a role in how successful we are? Sure. But that's reality. That's reality. Some of us are born with, I guess, good genes and some of us were born with what some would consider bad genes. And that's just nature. But I know lots of people born with good genes who screw it up. And I knew lots of people who were born with bad genes who somehow succeed anyway. Same with parents. Same with whether you're born rich or poor. I know a lot of rich kids who've screwed up their lives completely. And I know a lot of poor kids who've done amazingly well in life. So yes, we're all different. We're all born with different capabilities, with different environments, with different teachers. But it's what you do with what you have that matters. And yet, these other people want to give all the credit to other stuff. Why do they want to give it all the credit to the other? Because that's how they can justify taking it away from you. That's how they can justify socializing it and collectivizing it. If you didn't build it, it's not yours and I can take it. So they create a whole framework, psychological and philosophical framework, to justify taking stuff from you by saying you didn't build that. And that's becoming a very common approach. Even people like Bill Gates and Juan Buffett believe that they didn't build it. Juan Buffett, or at least they argue that. I don't know if they believe it or not. But Juan Buffett says all the time, I was born with the right genes, to the right parents, at the right time, it's all luck. But really, if you think about it, is it? Can it be? Don't we know that some people work harder than other people? Some people really engage their minds and other people don't. Some people really are involved in what they do and some people are not. Unless you're a pure determinist, it's our choices that make us. It's not, yeah, environment has an influence. Yes, our genes have an influence. But probably the number one influence in your life is the choices you are making every single day. That's what really determines your life. So, the argument about inequality is very much comes from a philosophical foundation of determinism and collectivism. And it's there basically, ultimately, to knock down those who are able and successful. And it posits. It posits as an ideal some world with equality, some world of equal outcome. Now, I've never met an inequality critic, somebody who is against inequality, who actually argues that the outcome should be equality because they know what that looks like. It's very, very ugly to get to pure equality. But almost all of them believe that equality is an ideal. Yeah, human beings are not good enough to attain it, but it's an ideal. It's like a platonic ideal. It's out there and what we need to do is strive as close to possible to get there. I always ask them, how high, you know, what level of inequality will be okay? So today there's too much inequality. So I tell you, we shrink it by 20%. Is that good enough? 30%, 50%, 80%, how much? And nobody will ever say a number. Nobody will ever say, this is how much we should shrink it. They refuse. They always say, well, you know, we'll know when we get there. But we don't because the fact is that, you know, some Bernie Sanders and people like that always say, look at Scandinavia, Scandinavia has a lot of equality. And you know what, if you go to Scandinavia, what people are complaining about in Scandinavia, there's too much inequality in Scandinavia. So Swedes want more equality and the Danish want more equality, right? So there's always you want more because if you set up equality as an ideal, even if you acknowledge that you can't actually attain it, you will keep pushing to get to that ideal. So let's think about what that ideal entails, right? So if you look around this room or any room or any group of human beings, one of the things you notice is how different we all are. Really, really different. As we said, different genes, different backgrounds, different environments, different thinking, different way of approaching the world. We're all different. It's one of the things that makes life so cool, so good. I mean, imagine if everybody was the same, even if everybody was the same as me, that would be really, really, really boring. Really boring. So we're all different. So why is it a surprise that if you take us all different and you leave us free, that we all produce different things? We'll all create different stuff. We all bake different pies, different flavor pies, different size pies. So in order to make us equal, given the fact that we're metaphysically unequal, what do you have to do? Well, you have to use violence on some in order to correct what nature has provided us, which is inequality. And there's no other way, there's no other way to get equality without violence. So 80% taxes, that's violence. 10% wealth tax, that's violence. Or communism, or any regime that has ever attempted to bring about equality has had a result of violence. I mean, maybe the best example of this ever was in the 1970s, a group of intellectuals who'd studied in France we talked about existentialists. They'd studied under the existentialists, under the egalitarians in Paris, at the Sorbonne, under Camus and Sartre and Foucault and all these guys. And they went to the country of origin and they managed to gain political control. They said, okay, we're gonna implement egalitarianism in our country. So we're gonna establish equality. So the people living in the city and people living in countryside. So what do you have to do in order to get people to be equal if some are living in the city and some are living in the countryside? That's not equal. Yeah, get everybody out of the cities. Say, literally, forced everybody out of the cities into the countryside. But then you have a problem of feeding them because all these people are in the countryside and there's no food. And it turns out that when you leave people out there in the countryside with nothing, some of them are good at finding food and some of them are bad at fighting food. So again, there's inequality and some of them are smart and some of them are educated and some of them wear glasses, which is a sign, I guess, of you can read and you're educated maybe, right? So what do you do? All these people are, they're unequal. How do you get them equal? Well, you kill them. You kill them. You kill anybody with glasses. You kill anybody with an education. You kill anybody who's a good forager of food. You basically kill them. This is the killing fields of Cambodia and where they killed almost 40% of the population. They killed 2 million people out of 5 or 6 million. And this criteria was, if you were special in any regard, if you were unequal in any sense, you were a little bit better at something or other, you were shot. That's what inequality, that's what the whole striving towards equality really means. The only way to level us is by chopping down anybody who sticks out and there's no end to that, right? If the Kamauja had been allowed to continue, they would have wiped out everybody pretty much. Of course, they were well educated and they wore glasses and they had plenty of food but it never applies to the ruling class who's implementing the strategy, right? So the ideal of equality is what needs to be crushed, what needs to be destroyed. It's a bad ideal. The only idea of equality that makes any sense is the idea of political equality. The idea that we're all equal in our freedoms, we're all equal in our liberties, we're all equal in our rights. We all have, as human beings, a right to life, liberty and the pursuit of happiness. We all have a right to be left free to pursue our own values, the rational values that we need in order to thrive as human beings. That's the kind of equality that is real, that is meaningful. And what happens when you give that equality to people? You get massive inequality of wealth and massive inequality of income. Who cares? It makes no difference. So there is a problem of inequality but it's inequality of rights and inequality of freedom. And there is an ideal of equality and that ideal is political equality, equality of rights and equality of liberty. And that's what we should be fighting for and we shouldn't take seriously this nonsense about equality of outcome in any regard. Thank you all.