 Why should you be interested in Lebanon? Firstly, I think it's crucial for understanding the historical and current developments in the Middle East. And secondly, I find that Lebanon offers some historical validations for political theories in the tradition of Mary Rothbard and Hans-Helman Hoppe. The Lebanon originally is a mountain range, the Mount Lebanon, which offers some nice slopes for skiing, but this superficial similarity to Switzerland runs a bit deeper because living in the mountains has interesting cultural and political effects. It was Professor Hoppe himself who observed once that a difficult environment and climate fosters the development of intelligence, of hard work, and low time preference. And this pattern we can observe in Lebanon in the 18th century, a French visitor, Const des Volnais, observed that those people that he found in the Mount Lebanon were among the most hardworking people that he has met in the Ottoman Empire. Because what impressed him is that in order to cultivate the mountains, they had constructed terraces. They had carved out terraces in the mountains. And on one hillside, he counted 120 steps from the valley bottom to the summit. And he was quite impressed by this amount of intergenerational work, which of course is an indicator of a very low time preference. But he thought that hard work alone can explain that. Living in the mountains must have another advantage. And by looking around, he found this advantage. It's a relative safety from state intervention. Mountains have always been a refuge and are much harder to control than the plains, which are in the open. So from early beginnings on, the people living in the regions were very independent minded, heavily armed, and protecting their little deep thorns in the mountains. Already the most ancient people there, one of the most interesting civilizations because it's one of the very few non-statist mergers civilizations, the Phoenicians, lived there. And later on, Maronite Christians among the first original Oriental Christians, still speaking the language of Jesus, moved to the mountains and established one of the earliest and most important monastic traditions. And a little bit later, the Druze, sect considered by most Muslims as heretic, found refuge in the mountains as well. A hundred years after Volnais, another Frenchman visited the area and he confirmed this observation in La Matine, his name was La Matine, that known French literate. And he found that the Maronite Christians that he visited were among the happiest people that he had ever met. And he was the first one to compare them to Switzerland. Already it was in the 19th century and he said, I quote him literally, even Switzerland does not afford more of an image of liveliness, happiness and peace than the Mount Lebanon. And he tried to find out the reasons for this relative happiness and peace. And the reasons he gives are quite interesting. At first he says they are self-governed to an extent that they are not afraid of the state but the state is afraid of them. Secondly, property is secure and inheritable. Thirdly, trade is very vivid, lively, the commercial activity is very strong. And all these factors and fourthly, sorry, the laws that they follow, the common laws that they follow are very simple and pure. So all those are institutional explanations that might not surprise you. But the question is, with Lebanon still being one of the freest economies in the region, how come it's not compared to Switzerland anymore? Why hasn't it become the utopia we would expect, or maybe he would expect it to become? And to retrace this history and how they deviated from the Swiss path gives us a lot of explanations about this intermix of geopolitics, local politics, and ethno-religious issues which are at the core of the upheaval that we see in the world nowadays. The Christians settling in the mountains were really discovered by Europeans in the Renaissance. They were quite surprised to find still vivid Christian tradition with monasteries and high cultural standards living in these secluded mountains. And since then, there has been a link between Europe in particular and the Maronite Christians which increased their cultural level and contributions they created very early on the college in Rome. This link to the West, of course, in a way was an advantage for the Christian population and puts the truth at a certain disadvantage which they compensated by becoming closer to the Ottoman rulers who had persecuted them before. And they could carve out their own independence by being full of lords. Through the link to Western culture, also some pernicious ideas slowly started mushrooming among the Christians in Lebanon. Among those ideas are in particular nationalism, democratism and egalitarianism. And all those three ideas have at the core a truth but are turned into falsehoods by ideological misunderstandings. And the comparison to the Swiss part explains a lot about the effect of those ideological misunderstandings. In nationalism, nationalism is quite different from cultural patriotism, but at first it was conceived as such. The Christians conceived a form of Arab nationalism as a way to protect our culture towards the Turkic overlords and are among the most important contributors to Arab literature. Very few Arab speakers nowadays have an idea how much they owe to those Maronite Christians and their impact on the language and literature was immense. Yet over time this nationalism was exaggerated politically. What happened is that we had a constellation of local politics and geopolitics intermingling. Among the truths a lord found out, something that has been found out by rulers throughout history, that he could protect his rule by getting rid of the nobility and enlarged population under his control. And how did he do it? He converted to Christianity and suddenly he had many more subjects so he could use to get rid of the local truth nobility. Of course the truth didn't take that lightly and the truth population took revenge with the massacres amongst the Christians, which further away in Damascus were interpreted as a war, a civil war between Muslims and Christians. The Christians joined this lord in a rebellion against the full good lords because it was part of the social revolt. It was part of an egalitarian approach to society, but the problem is in Damascus the social classes were quite the opposite. The wealthy were the Christians and the poor were the sunny majority population who took to Damascus before the Christians would butcher them. Lebanon since then has been a very important study field for the social dynamics of Damascus unfortunately, and it has never been as easy as Muslims butchering Christians. Muslims were butchering Christians, but the dynamics are much more complicated than that and usually it's an intermix of local politics and geopolitics which turned certain populations against each other and then the religious affiliation becomes a label which can easily attribute it to some foreign influence. The French protected the Maronites and at the same time the French took an interest in Arab nationalism because they wanted to carve out a sphere of influence in the Ottoman Empire. So they supported Muhammad Ali for his project of carving out an Arab nation state, the first Arab nation state in the Ottoman Empire. Of course that had little to do with Arabism, it's just politics. Muhammad Ali himself was not an Arab, he was an Albanian but he used this political force and he used the support he got by the French and at first the Christians end this former truce lord whose name was Bashir Shahab, allied himself with Muhammad Ali. And Muhammad Ali started the first project of modernizing and creating a modern nation state. And once the Christian population realized what it means, fortunately they rebelled and got rid of Muhammad Ali because what does modern nationalism mean in contrast to a kind of cultural patriotism? Modern nationalism means regular taxation, conscription, government intervention, education and most importantly disarming the local population. And that has always been the pattern of this kind of ideological misunderstanding of nationalism, creating a homogenous centralized state against the population by changing, re-educating, homogenizing the population. And fortunately this first project was put to a halt and the French carved out a smaller version which was still called Crater Lebanon. One of the pernicious effects of nationalism is this idea of greatness, a larger area, the more powerful the region, which in this case was very dangerous in combination with another pernicious idea coming from the West, this democratism, which has very little to do with the tradition of democracy as we see it in Switzerland and even in the ancients, among the ancients. In Switzerland, democracy means the self-government of small decentralized communities and the political activity is mainly an educational endeavor to bring out the best in the citizens, namely, jointly protect the commons without any professional politicians or rulers needed. Now the modern idea of democratism is quite the opposite. It means party lines, it means elections and it means numbers. And it should rather be called maturitarianism. And whenever we have a heterogeneous population and we introduce the idea of maturitarianism two new political winning strategies arise and their incentives are terrible. Those two winning strategies are outbreeding and genocide. And ever we have maturitarianism. And what happened in Greater Lebanon, which was not restricted to the Mount Lebanon but edit areas in the Southeast and North of Mount Lebanon while Mount Lebanon was dominated by the Maronite Christians, demographically those other regions have a majority, sunny and sheer Muslim population. And of course, once the idea of maturitarianism is mushrooming conflicts will arise sooner or later. And the major conflicts that should arise was nationalism turning against its original instigators, the Christians. The Arab Christians were among the first Arab nationalists but they should pay a heavy price for that because later on there was a short-lived union by Syria and Egypt which turned Muslims all around the world quite enthusiastic because they already got hold of the idea of nationalism and thought that's the chance to establish a maturitarian Islamic state with all its power and splendor and whatever efficient and strong state can create the land of plenty that they are promised by Western intellectuals usually. Now by the accident of geopolitics, this union was not part of the US led axis of power but fell to the other side in the Cold War. So joining in this union would have meant breaking any links with the Western powers that were protectors of the Maronite Christians. So the Maronite Christians felt a conflict of interest and would not be as happy as the Muslims joining this new union which led to slight protests by Muslims who didn't feel represented in government as it should be. And then a Christian politician, President Harmoon, asked for foreign intervention because he wanted to extend his term of power and he felt threatened by this upheaval in maturitarian democracy. And one power answered positively and that was a crucial turning point for history. In 1958, the United States invaded Lebanon and the Operation Blue Band. Already this very first intervention was based on a lie. It was based on a lie that according to the Eisenhower doctrine, it was an intervention to prevent a state from being taken over by communist army. But when the clueless Americans landed in Lebanon, there was no communist army anywhere. There wasn't even war but they were cheered by the local population. So America took some very wrong lessons out of this first adventure. First, the local population cheered when they arrived. Second, there was almost no death toll to Americans drowned while swimming. That was it more or less. Thirdly, they installed a new president, General Huat Shahab, who is a descendant of the Bashir that I had mentioned before. And he undertook the great project of making Lebanon safe for democracy without much help from the US needed. So for the United States, it seemed like intervention is easy and fun. It was like after a week that they seemed victorious. What they didn't know, of course, is that the people that cheered for them just thought that those are GIs taking a break from an exercise and coming as tourists. So good businessmen that they are, they sell all the dollars coming in and were quite happy and cheerful because they had no idea there was no war going on, no army there. So why are all those Americans coming on the beach? Certainly to have a nice time on the beach. And what they wouldn't figure out is that this project of making Lebanon safe for democracy would wreak havoc on the country. What happened, Shahab started the second project of modernizing, centralizing the Lebanese state, creating a Lebanese identity. It was a process of homogenization of the population, of centralization, of urbanization, of secularization, which for a while seemed to work. The conflict seemed to disappear into a new urban intelligentsia, students who didn't really belong to anything and it seemed safe for democracy. But what we discover again and again in history is that once a traditional society turns very quickly into a modernized, centralized one, issues of identity, crisis of identity arise. And it was a particular among these newly urbanized young intelligentsia that the last four war increased. The same thing happened before the First World War in Europe. It was particular among those homogenized, apparently safe voters for democracy that the last four war increased once the challenge was there. And the challenge arrived when a mass immigration of Palestinians started, which tilted the demographic balance even more towards Muslim majority and at the same time there was another foreign intervention. Israel tried to win over the Christians as their allies because they thought logically that's a Christian population engulfed by Muslim majority. They should be willing to be allies of Israel but they were surprised that most Christians were anti-Sionists. Why were they anti-Sionists? Because they thought that setting up a nation state with an exclusive minority would upset the whole region at the end the Christians would have to pay the price, which was quite far seeing the population back then but then all the vicious circle started that we have become used to in the Middle East. False flag operations, assassinations and massacres got started. And of course, once this vicious circle is going you have this intermix of ethno-religious issues, micro-political issues with just about local power bases and geopolitics where potential parts of the population is seen as enemies that are threatening your existence if you belong to the other religion, the other tribe. So there was even killings and massacres among Christians with different tribes, different affiliations. Some Christians in the end allied with Israel and of course confirmed all the worst expectations of Muslims that the Christian would turn against their neighbors in hand in hand with a foreign occupying power. That was the Lebanese civil war that waged starting 1975. So the conflict in 58 was just you pacified it a little bit but it just flared up much more intensely later on, a pattern we see in American intervention ever again repeating. What's the effect of war? Not only material destruction and this least important effort of war. Lebanon for not having a functional and efficient state has always been a rather less fair environment and it is quite amazing what businessmen can achieve in a short while. Already the first observer when he visited the region he said, I am deeply moved by how powerful the slightest breeze of freedom seems to be. The effect the slightest breeze of freedom has. So it's amazing how quickly the country has always been rebuilt after the destructions but the cultural destruction you can't upset and one of the most important impacts of war is that it raises time preference, raises time preference and also indirectly because due to the emigration because of war you have remittances and remittances have the same effect as development aid that's a kind of private development aid that's not for the good. Development aid leads in general if it's private or governmental to increase of time preference in the local population and this increase in time preference now cannot be upset anymore by the difficult environment. Why? Because due to technology and international trade this reasoning doesn't work anymore. Living in mountains doesn't mean you have to be a hardworking subsistence farmer. Any more you just get into the car and drive to the next department store to get your food stock. So this destructive effect of war is not upset by another cultural effect that would take a long time so what we could observe in Lebanon is an increase of time preference that means it has become a very materialist and consumerist society with very low saving rates. So even though we have a particularly free economic environment the capital formation is not as large as we would hope to see. So cultural factors are more important than most economists think. And this of course explains why it hasn't really become this utopia we should maybe expect. Taxation is very light and largely evaded. Regulation is attenuated by corruption. But most Lebanese intellectuals nowadays by going through Western sponsored universities have this idea and this explanation that Lebanon isn't Switzerland anymore because it lacks an efficient state and it has too much corruption and it's not safe for democracy. That's a very big misunderstanding which we can reveal by looking at the Swiss history and how it deviated from this history. Now efficient government we could see in Syria that was efficient control of the population and for a short while people even looked towards Syria in Lebanon as an example but that of course has disappeared completely. So it's quite foolish in this region to expect something out of an efficient state. And the interpretation of corruption is the same era. So what they see by looking at the Swiss population, the Swiss, Switzerland right now they see an orderly, clean, not corrupt society but they misunderstand two phenomena. The one is the private corruption which is just an expression of low trust and Switzerland is not a corrupt society in the sense that the trust is still relatively high among the population. You just don't drop your garbage because you know that no one else would do it. Whereas in a country where trust has been destroyed you drop your garbage because everyone is doing so it doesn't make a difference if you drop your garbage. So this type of corruption is totally different from the type of corruption which is just not playing along the formal rules of the state and corruption in this sense has a positive impact because it attenuates the effects of regulation and it attenuates the potential foreign intervention into the country. Into Lebanon a lot of money from Iran, from the US, from Saudi Arabia is flowing. If it wasn't for corruption the impact would be much worse. So corruption drowns resources that are also resources that are used for the ban. Corruption breaks rules that you can't really live by of course in a system that gives you little security you can't follow the same regulations as you do in a high trust, a high security environment as in Switzerland but all the productivity is of course a bit once the regulation is a bit offset by the productivity and stability that you might have. There is in Lebanon or other oriental countries if you just follow the example of the best here certainly won't go anywhere. So I think if you look at Lebanon nowadays after this pernicious wars in a very small area having nowadays the largest population of refugees per capita a quarter of the population almost which means multiply the millions that you have in Turkey by 12 that would be about amount of refugees at their house this immense destruction going on and still it is amazing and I'm always amazed what a success story it has been that you don't read much about. It hasn't been drawn fully into the civil war in Syria just at the borders because it's not because government was that efficient because it's not functional enough to have a non-neutral position and once you have a non-neutral position in geopolitics and potential mass immigration which might take a strong geopolitical stance of course you have all geopolitical conflicts within your country and it's the most difficult situation any region can have that Lebanon is experiencing I still think it's a success story in the end for where it's not deviated from the Swiss path of neutrality of self-government of small communities of resistance to homogenization and centralization and building up of a functional modern state at the price of traditional structures but it's not a shining success story but then I think in the distorted world of today if you have a shining example or a shining city on the hill it most certainly has a rotten and evil core. Thank you for your patience.