 Alright, well I'm going to go ahead and get started so that I can give Dr. Perugia as much time as he can take. We'll see if we can get that taken care of. I'm not going to talk very long because you guys can come and sit down. But, Dr. Perugia, one thing that I really appreciate about him is he's going to get you to think he's going to challenge somebody. So we are basic premises. This is a basic premises that you have, and I just invite you to come and listen. The greatest thing about him is he'll get you to the floor. So, let me see the floor. Thank you. There are chairs up here, and I promise I don't hit. So, there are three chairs up here, four chairs, and a third row here. Come on guys, don't be shy. So I'm going to make, since we've got a bit of a condensed time frame, I'm going to make some assumptions. And feel free to challenge me on those assumptions in the question period. The main assumption I'm going to make is that free models of capitalism works. If you care about standard of living, if you care about wealth, if you care about the fate of the poor, if you care about the quality of life, the standard of living of individuals, there has never been a better political economic system in the history of mankind than capitalism. Now, I think the evidence for that is unequivocal. I'll just give you a few quick highlights just so we don't make it completely random that I'm starting from that point of view. How many people 250 years ago, what percentage of the population was poor? What percentage of the population was poor? And intake poor, I don't know, a buck a day of income. One dollar a day of income, that's pretty poor. What percentage of the population do you think had that level of poverty 250 years ago? In other words, from four capitalism, 50, 90, 95, yeah, 99, closer than 99. When the United States of America was founded in the United States, by any standard that we have today was dirt poor. If you look at income during the history of mankind, income, and I'm going to draw a big graph, right, this is the graph, this is time, and this is wealth, all income doesn't really matter. Income is flat, minus 10,000 B.C. Income is flat, it goes up and down a little bit, open your pipe goes up a little bit, then it comes down, and it stays flat, and then it goes like that, like that, right, way up there. That is the industrial revolution, that is capitalism. And what's interesting is that that's in the West, it goes up like that, starting in about 1776, let's say, it's a great date in 1776. Two things happen that year, one is what? Declaration of Independence, this is Christian Valle, right? What's the second thing that happens in 1776, what book is published in 1776? And don't shut up. Students, wealth of nations, Adam Smith, first real kind of a capitalist free market economics, right? So wealth of nations, founding of this country, the industrial revolution all started around this time and it's no accident, they're all happening at the same time. So you get this increase. What's interesting is that the rest of the world, let's take Asia for example, the revolution, they didn't have what we had in 1776, so their income level stayed flat until about 1978, when it goes up in 1978. They start freeing up their economies, they start adopting capitalism, they adopt free markets, and they create wealth, and they become richer. And over the last 30 years, over the last 30 years, the statistic you won't hear anyway, but it's true, over 600 million people, 600 million people have come out of poverty into the middle class in places like China, Vietnam even, all over Asia. Why? Why? Because of Keynesianism, or socialism, or communism? No, those systems have all kept them poor, because of free markets, because of capitalism to the extent it's repraised. So to the extent countries adopt free market principles, to the extent that they adopt capitalism, wealth is created. Again, true everywhere. Even in terms of the welfare of the poor, poor people are far from so, capitalism works. However, in the West, in the United States, in Europe, we have been moving away from capitalism for at least 100 years. So there's this systematic erosion of the principles, the ideas of free markets and capitalism. More and more and more. I don't want to say free markets, what I mean, free of what? Students, but not a student. Free of what? Free of government, free of regulations, free of controls, free of government intervention. So just a little aside, when people say the financial crisis was caused by capitalism and by free markets, that is on its face false. You don't have to know any economics, you don't have to know why a financial crisis happened, to know that it couldn't have been because of free markets. Why is it? Because in 2007, did we have no, were we free of regulation, free of government control, free of government intervention? No. So what we had in 2007 wasn't free markets. So it couldn't be that free markets failed. Something failed. But it couldn't be free markets because we didn't have them. As it happens, the industries that fail finance, housing, mortgages are the most regulated industries in America. So it obviously can't be capitalism and free markets fail because it's the most regulated industries that fail. So it needs free of regulations, free of government control, free of government intervention. Free markets mean no regulation. That's what they mean. Slowly, but systematically. So this is the puzzle that I think, I think a lot of Americans kind of instinctually believe in capitalism, believe in free markets. And why are we, and this is not about politics because it's not true that Republicans are against free markets, Democrats are. As illustrated, by the way, talk is cheap. Man, this is what you do in life, but not what you say in life. And by their actions, Republicans, as much as Democrats, as I'm claiming they are, and I think they are, what is so, what is so negative about free markets that causes us to move away from the system that produces all this wealth, all these goodies that raises the standard of living, everybody. It's even good for the poor. And indeed, we adopt programs regularly. We adopt programs in this country that hold for me in the name of helping people. We hold them. We do that. What is it about capitalism that we find so accord? What is it about capitalism that when a financial crisis happens, before anybody knows the facts, before anybody's examined the evidence, before anybody's looked at the economic causes of it, we all know what happened in the financial crisis. What? Those are newspapers. Capitalism is negative. So what's capitalism about? What are free markets about? We want to almost participate in markets. Yet, students would ask a question. Why did Steve Jobs, those in the back, why didn't he make these things? Well, when the first iPhones came out, there was a little competition. About 60%. Steve Jobs still made a little bit of a profit. Steve Jobs wanted to make, what else made him build this? Wanted to change living standards. Was he again really concerned about living standards? Steve Jobs loved this stuff. He loved efficient things, effective things, things like that. This is passion. This is about Steve Jobs with his love of working, with his love of building. Most greed, most building. So Steve Jobs built, so Steve Jobs, who did he build this for? Steve Jobs. But Steve Jobs, Steve Jobs built this for Steve. How many people did he ask whether this would be a good product to make it out? Focus groups. Zero, none. Steve Jobs built what he thought was beautiful, and he assumed we would all like it. Now, when I, the US economy is probably rolling out of control, right? We're going into deep recession. Because I wanted to stimulate the US economy. People to be unemployed. Because I know that's where they have jobs. And you all believe in kinsiness and the consumption drives the economy. So you want to be good consumers so that other people, right? That's where you go tomorrow? Anybody go tomorrow for that reason? I didn't think so. Whose desires? Make yourself more productive by buying an iPhone, maybe cooler by buying an iPhone, maybe and consume because it's in whose self-interest, of self-interest. They're about consumers and producers coming into the marketplace. Each pursuing their own self-interest. Each trying to make their lives better by buying, selling the things that they're buying and selling. This is true of every market. And this is magnified in free markets where there's so many goods. There's so many producers, so many consumers. But that's what we engage in in a market. People tell me it was all about making money in 2006, 2007. And that's what caused the financing crisis. And my answer to that is, well, it's always about making money. It should be about making money. That's their job. That's what they're about. Always about self-interest. If you read, if you ever read, Adam Smith makes this point. He says in 1776, he says, the baker doesn't bake the bread. They didn't have life hounds in those days. So the bread is an example. He doesn't care about you. He doesn't even know who you are. He bakes the bed because he's trying to feed his family. He bakes his bed because this is an enjoyable profession for him. He bakes his bed because it's in his self-interest in the bakery. And you buy the bed not because you care about the baker and his family and him trying to make a living. You're buying the bed because it's in your self-interest in the bakery. So marketplaces are where people meet to pursue their self-interest. And it's an interesting phenomena, this pursuit of self-interest in the market place. Because the way we do it is through trade. We exchange good for good. I paid $300, I think $400 for this one. $400 for this item. This is this iPhone worth to me. I'm an economics student. How much is the iPhone worth to me if I pay $400 for it? You have to yell because it's acoustic. More than $400. It was just $400 for me. It turns out much, much more. We sold the energy to take the cash out. You know, write a check or use my credit card because this is worth more than $400 to me. How much is it worth to Apple? It's got something more valuable than iPhone. Something less valuable to them than iPhone and getting something they wanted, cash. So the beauty of a free market is when we do these voluntary exchanges, when we pursue our self-interest, then they'll win with transactions. It's not enough guarantee to be a mistake. You might overestimate the value of what you're buying, but your intention is always to make yourself better off giving up something and getting something of greater value in return. Call this the trade of principle. The idea that trade is but the motivation is self-interest. And this is the problem we have. What is our view of self-interest? Mauro, why do you be taught? I know there are a lot of parents here. What did your parents teach you about self-interest? I'll tell you what my parents taught me about my mother. I grew up in a good Jewish household. My mother taught me think of yourself last. Think about this first. She taught me that virtue was to be self-less, was to sacrifice, was to give, not to receive. Now all of that is counter to markets. In markets we're not about giving, we're about training. We're about making our lives better about self-interest, yet morally we are taught self-interest is a bad thing. Somebody like Bill Gates. Bill Gates, former CEO of Microsoft, everybody knows Bill Gates is richest man in America. $70 billion, some ridiculous amount like that, right? How did he make $70 billion? By selling us products, billions of people products. They paid $100 for a product they benefited much more than $100 for. Indeed, civilization as we know it today with the internet and phones and all this stuff would not exist if not for Microsoft having standardized everything, having done the magnificent job that Bill Gates did. And he made $70 billion while doing it almost every human being on the planet. He probably made, he changed the world in a deep, deep sense. Changed the economic landscape of the world, the technological landscape of the world. Microsoft, making all that money you guys are too young to remember this. But it was bad. It was pretty negative. How could he make $70 billion? I mean, let's stick the Justice Department on and we go after the Friday night trust or anything because he's a bad guy. You can't make that kind of money. I mean, you're hearing a lot of debates about inequality right now. Wow. I mean, was Bill Gates unequal? Did Bill Gates, now remember change the world? He made everybody's life better up because he benefited from it. Bill Gates became a good guy. But for a bit he should continue to make money. Left Microsoft and started giving his money away. Set up a foundation and started giving. Right? That's how he's a good guy. Now he's not a great guy yet. We haven't quite got into the level of Satan. Why? Because he's still loaded and he lives in a big house and he flies in a private jet he used to be enjoying giving the money away. That's a real sin. He's self-adjusted again. What would make it? How would we get him Satan? I mean, Maul Satan. I'm not talking about Catholic Satan. Maul. You know, statues in the streets. Bill Gates' dog gave it all up. He gave it all to a tent somewhere. And he could bleed a little bit for us. That would be good. Because that's what we associate morality with. We associate morality with sacrifice. Giving something and expecting one in return. Nothing. Something of lesser value. Trade is about giving something up and getting something in return of great value. That's not noble. That's not virtuous. That's not good. So in my view, and this is really controversial, in my view, the reason we reject capitalism, the reason we move away from capitalism systematically, steadily over time, is because morally we find it offensive. Capitalism about self-interest. Self-interest is a vice. Self-interest at best is a model. But morality is all about sacrifice. The opposite of capitalism. It's about giving. It's about sharing. It's about being selfless. Now that socialism is great. Socialism is good at sacrificing one group for the sake of another group. Sacrificing some individuals for the sake of other individuals. Who can be against that? Young guys are going to be all much more heavily than your parents and your grandparents have. Because you're going to have to subsidize their Medicare and their social security. But that's okay. Because your job is to sacrifice for your elders. So, morally, we accept that. So, an Obamacare needs sacrificing young, healthy people for the sake of sick older people. That's okay, right? There's nothing wrong with that. All the teachings is to sacrifice for others, and indeed, those in need are supposed to be the beneficiaries of our sacrifice. So, that's wonderful. This is all good. That's why there's no way Republicans can ever stand up and object to anything Democrats pass. Because they can't morally say no, we want to do away with this redistributive plan. But morally, how can we? What about these people? They need it. I mean, make one more point and try to wrap up. And when it comes to regulation, in my view, morality is much twice. Think of people that are too self-interested, too self-interested. What are they going to do? When we look at a kid in a schoolyard, right, in a schoolyard, one of you maybe, and we say, he's selfish. What do we mean by that? Do we just mean he really only thinks of himself, takes care of himself? Or do we mean something more negative? Something more negative, right? We need, he's a lying, stealing SOB. He'd do anything. He'd stab us in the back. He'd do anything to get his way, including exploiting us. He'd lie, steal, and cheat. We associate self-interest with lying, stealing, and cheating. So, when a businessman, we know he's self-interested, right? He's about making money. But he's also self-interested. He's about making money. But he's also self-interested, which means he's potentially a lying, stealing, and cheating. It's so big. We better watch him. Because if we don't, he's going to do, he's going to cut corners, he's going to exploit us, he's going to advantage us. And what's watching him eat? We better regulate him. We better put the tolls over him. We better make sure that he behaves himself because his tendency is going to be, because the tendency of the people is, might steal and cheat. So, if you walk into an elevator, you know, I don't know if the school has an elevator, but probably does. And you'll see a little diploma on the wall. And a little diploma on the wall says that a government regulator has inspected the elevator in a form far inferior. And you go, cool, that's good. Government's taking care of it. And if that's your response, we're never going to have cowards. Because what's the assumption there? The assumption is that if not for some government regulator, by the way, he has no self-interest, he's just looking for the public interest and the common good. He's a good guy. If not for him, those greedy capitalists would build elevators that would kill us. Because we know that the best way to make money is to kill your customers. But this is the assumption, right? If we didn't have the F&A, the Federal Drug Administration, McDonald's would poison us regularly. And we are stupid enough to keep buying their products. I mean, it's mind-boggling, but that's the assumption behind all regulations. All regulations are geared to the assumption that greedy businessmen will lie, steal, cheat, and kill us in the end to make money. They're bad guys because they're self-interest. So I want to quickly offer an alternative, all code. All code, it's not geared around sacrifice. It's not geared around self-lessness, but geared indeed around self-interest. I believe that your moral purpose in life is to make the most of your life. It's to live the best life you can live for you. That doesn't mean treating people badly. Quite the contrary. It turns out people have pretty important values to all of us. So you treat people well because trading, remember that trader thing? You give them stuff and you get stuff in return. Spiritual as well as material. But the best relationships in life are relationships in which they're win-win, in which there's a trade going on. We don't like to call it trade because it sounds materialistic and low, but that's what it is. Love is a trade. So I believe in a morality that says let's figure out how to live the best life that we can live. Let's use the tools that we have to make the most of our time on this planet to live a great life for us. And the goal, in my view, of a moral life is happiness. It's to be happy. It's to achieve happiness. And I'll just give you one tool because we can spend hours just on this topic. One tool. What do you think is the most important? And I got into a big argument with one of the founders of the school over there, so... What is the one tool we have that allows us as human beings to survive, to thrive, to achieve, to build, to create? Because if you look around the room, you can look. We're a pretty pathetic animal. We're weak. We're slow. We have no fangs. We have no claws. Put us out there to nature. It's freezing cold. We don't survive for very long. Try running down a bison and biting into it. For you versus the Sabre II Tiger, you lose. And yet, I had a bison booger last night. And last I saw a Sabre II Tiger was in a museum. And look at us. We're thriving. To be here, to be successful in spite of how pathetically weak we really are. It's this. It's our minds. It's our reason. So to be truly self-interested, to be truly self-interested, to want to live the best life one could live, the most important thing one could do, the prime virtue one could have is to use this tool. It's to be rational, to use one's reason, to apply it to your life, to think about what's good for you, rather than feel what's good for you. Use your reason to dictate your life. Use your reason to dictate what's truly your self-interest. If we had a morality that was focused on reason and self-interest, capitalism would be self-evident. Obviously, it wouldn't be a battle and we wouldn't be drifting towards socialism as we are today. Thank you all. 10 minutes. And I want students to ask you questions. Not parents because it tends to be where parents sometimes have questions or community members. So students, I know it only takes one of you and then you guys have to start going along with it. But feel free to ask Dr. Brogan. Any questions? We just have to really speak up because the acoustics are too much. Monopolies and trusses. No one's been dealt with that without one government interference. So how do we deal with monopolies and trusses without like anti-truss laws and government involvement? My view is that the way we understand monopolies is completely messed up. So what is the problem with monopolies? Prices go up and quality goes down. But the fact is that in a real free market there are no monopolies to the extent that they do that behavior. Why are there no monopolies? Because there's always potential competition. There are no legislated barriers to entry. And there's always alternative products. I'll give you a quick example. The closest we ever came to what we would consider that putting colds on monopoly in the United States was standard oil in the 19th century. This is Rockefeller. Where he controlled over 90% of all oil refining in the United States in the 1870s. Prices are quality while he controlled over 90%. You can go check this out. Prices went down every single year. Quality went up every single year. So why do we care? Now why did Rockefeller produce prices? Not because he cared about you. But because he knew that if he didn't do that competition would arise potentially domestically, potentially from overseas. There's always substitute products. What was oil used for in those days? What was the primary use of oil when Rockefeller had the 90 plus? What did they use it for? In the 1870s. Lighting, kerosene. If anybody ever asked you who saved the whales, it's Rockefeller. Absolutely true. Before Rockefeller's priming way in which we lit our homes and only the very rich could do this because you couldn't afford it otherwise because it was all oil. And that's why all the big whale industry was huge in the early part of the 19th century where people becoming rich and could afford whale oil to light their homes. Rockefeller came in and made kerosene so cheap the whaling industry went out of business basically. And everybody was using kerosene to light their homes. One drove Rockefeller out of the business of lighting homes. So there was no monopoly. The substitution product was Edison. Yet if we'd regulated Rockefeller if we'd broken his business up if we'd controlled it, prices would have gone up. Quality would have had economies of scale. But even more than that by driving prices down what Rockefeller did is it made other uses for the oil other than kerosene. So when the internal combustion engine comes along late in the 1960s there's gasoline to achieve because because of economies of scale Rockefeller's made it so cheap and they adopt gasoline for it. Now I know today that's considered evil because of CO2 but we'll put that aside. Great, great invention of internal combustion engine and a big part of that is Rockefeller keeping prices. So I don't believe any of you see time and time again when the Justice Department went after a coer for 80-70% of the aluminum business in the United States prices were going down while he was going up, nobody denied that and yet they still went after them. When IBM was, they went after them for having mainframes while there were other types of computers out there that were competing with mainframes. The whole conception of monopolies is distorted and it's perverted by the fact that when they teach economics no God not offending anybody they teach you this idea of perfect competition of monopoly pricing which are myths, science fiction there's no such thing as proper competition no mission teacher, it's nonsense it's completely detached from reality it's not what you want because if you had perfect competition if you lived in such a world there'd be no innovation, no creativity if you take a class in business strategy the whole purpose of starting a business is to create a monopoly so you can charge as high a prices as you can and you do feel a little bit you know, Apple had a monopoly of iPhone and it's sense on cable comes in right now but they still have a monopoly over the fact that it's an iPhone which means it's cool so in a sense that you pay a higher price than perfect competition would suggest for this because it's got the iPhone way more so the whole way in which the world works has nothing to do with those economic models of perfect competition and monopoly prices other questions is what? the gamut jar during the session depends on what kind of government it is so this kind of government the one we have today two simple things during the session this particular one which is short and over with and we will be going faster today than we can imagine two things, cut taxes, cut regulations so cut government spending cut taxes, cut regulations that's it what makes an economy boom is private enterprise what makes an economy boom is you guys participating in economy you want to leave more money in your pockets to participate more money in the pockets of business to make investments less regulation to entice them to make those investments but generally iPhone less government spending and less regulations less and less and less I'll give you an example there was a major session in the United States in the 1920s I think 1920 1929 stock market problem and the government did nothing and within less than a year the economy was growing in a full speed ahead during the Great Depression there was a big drop and the government did something it raised taxes, increased regulations increased controls what we got was the Great Depression so in the same year government did a bunch of stuff what did we get? a long recession the less government does in terms of more ideally what the government would do is cut, cut, cut there's another question let's say that again so how does the trickle down effect work in a sense that the wealthy get wealthy on the capitalism and how does that trickle down get wealthy on the capitalism get wealthier on the capitalism the innovators get wealthier on the capitalism the innovators and the really smart entrepreneurs could be poor one day I mean Steve Jobs was middle class, Bo Gates was middle class and became very rich if you're wealthy and lazy on the capitalism you lose all your money very quickly if you're not smart about how you use your money you'll lose it all in the 19th century the closest America ever came to capitalism they used to say short sleeves for short sleeves in three generations the second generation kind of doesn't do anything through it loses it there's a lot of mythology about wealth inequality and how wealth functions but what capitalism does is it rewards hard work it rewards innovation it rewards entrepreneurship it rewards creativity and that can come from any place on the income stream and you could be successful and the capitalism more poor people become rich then rich people become richer but it still trickles down so let's think about how it trickles down it trickles down primarily by the fact that rich people what do they do with their money they don't spend it indeed they spend the smallest percentage of anybody's income rich people spend they invest it they save it and what does investment mean in projects what do those businesses do they hire people they pay them wages so the capital that's invested by businessmen or by wealthy people who are active who are investing creates the jobs that everybody else, all of us are going to be employed without people making money without people creating wealth there are no jobs for the rest of us I mean jobs are not a workplace doesn't start with workers a workplace starts with somebody with an idea somebody with capital without that idea and without that capital there are no jobs and as workers become more and more productive what happens to their wages they go up because if they don't go up what will the worker do let's say I start out at a minimum wage it's really good at what I'm doing but my employer is not raising my wages what would you do leave the job and go somewhere else and say look I'm really really skilled and there's competition for skilled labor there's competition for productive people so your wages will rise so you cannot have jobs you cannot have economic activity you cannot benefit the poor unless somebody is making a lot of money but I don't like I don't like the idea of the wealthy and the middle class and the poor because in a truly capitalist economy that is very dynamic people are moving in and out of all those categories and what I care about is that productive people get rewarded for their productivity capitalism is a system that does that and unproductive people lazy people who don't want to work get penalized for that capitalism does that and they're wealthy for the middle class and for the poor no matter where you are capitalism treats you the same to the extent that you are productive use your reason apply it to your work you do well if you don't you do well time for a while first let's get to talking before you go please students please help the facilities guys people that are working also in the comments please help them out by folding up chairs stacking next to the racks on the stage around please do that other than that if you would like to come on up say hi and help Dr. Burns so again thank you all for coming up I'll take a picture