 Thank you all for coming. We live in pretty amazing times, and I think quite exciting times. We've got this Occupy Wall Street movement going on. We've got the Tea Parties, which I think are creating, for the first time in a very long time, a real debate in this country. I think there's a real interest today, again, for the first time in a very long time, in ideas, in what's going on with the country, what are the solutions? Are there solutions? Where do we go wrong? People are coming out to have a real conversation, and I find this exciting, a real opportunity that must not be missed, to engage in that debate. Because I think the side that I represent, that you all hear tonight, is often not being represented in this debate. We hear much from many of the other sides, many sides, not just two. But very little for what I will call the capitalist side. So, I view this as part of that exchange that's going on out there in the world. And I think the flyers labeled this, Washington or Wall Street. Who's to blame? Who should we occupy? And luckily we're closer to DC, so I'm all for occupying Pennsylvania Avenue and Capitol Hill. Why is it that the Occupy Wall Street is happening? Why is it generating so much energy and so much interest? What is it about this movement that has a sudden semblance of reality? What is it? I think within the American people and within the media and within the world we live in, it gives it any kind of credibility. Because it seems to have, I mean, a lot of respectable in some circles anyway. People have come out and endorsed this movement, supported it, or seem to be promoting it. And certainly the media seems to be quite favorably inclined unless you're at Oakland. But what are they tapping into? And we can talk about what the Tea Party taps into, because I think they tap into very similar things, different and yet similar. I think what they're tapping into is an immense frustration at the system we have today. It seems truly unfit. It seems wrong. We get an enormous financial crisis that to some extent or another, most of us suffer from. We get huge unemployment. On the other hand, we get bailouts. That seem random, right? They bail out, they get burst students and then six months later they don't bail out Lehman Brothers and then 24 hours they do bail out AIG and then Bush kind of bails out the auto industry and then Obama completes the process and bails them completely out. And it seems completely random. Some people get bailed out and little businesses don't get bailed out. Some homeowners, they have plans to bail them out and other homeowners, they have no plans to bail them out. And there's this sense of, it's random, it's frustrating, it's unintelligent, it's unintelligent. And to a large extent, it is unintelligent. It's a mess and a random mess. And yet most of us are suffering from what is going on. So why are we suffering when Wall Street seemingly is getting a bailout and people are getting rich? And then you've got this financial crisis, right? And I don't know, you know, financial crisis was only two, three years ago, but I don't know how much of you remember, you know, the headlines, the headlines were what? Capitalism is dead. Capitalism killed this market. It's all capitalism's fault. Wall Street is to blame for it. And really, there was no other side of the story in most of the media for months and months and months. It was one story, capitalism's failed, markets have failed, finances failed, these are the demons, these are the devils. And the solution is, the solution we always have in every financial or economic crisis, more regulation, more government, more info. And there's almost no other voicehood, you know, unless you're in the economics department, at George Mason, you have to be around here where you get lots of other voices, but this is pretty unique as a school. In most economic departments, there's no other voicehood anyway. So it's not surprised to me that the occupied Wall Street movement, extended to movement, views Wall Street as the problem. And that's what we've been talking about for the last three years, it's capitalism's fault, it's Wall Street's fault. And it's no surprise to me that so many people feel sympathetic because people are frustrated whether they blame Wall Street or not. They're not sure, they're confused. There's real, real angst out there and ignorance out there and a lack of understanding out there. And the fact is, the fact is, that American people in spite of their general benevolence and in spite of their general leaning towards capitalism and their general leaning towards free markets all have these really anti-free market kind of almost instincts, kind of emotional responses. It's easy to look for government for solutions. It's easy to blame the capitalists. And what I wanna talk about today to a large extent is why it's always, why is our almost immediate instinctual response to go, yes, that must be capitalism, yes, that must be democracy. Even before, we actually have the data to look at stuff and evaluate what actually happened. So I think there's a lot of frustration out there. And of course, I think the Tea Party kind of took a different spin on things and they were kind of the American people raising up, not after the financial crisis, more after Obama gets elected and really Obama came and stimulus and all the government spending and the growth of government. I feel the Tea Party is standing up and saying, we don't know exactly what's wrong, but we know this is bad. We know this is too much. Get off our shoulders, get off our backs. This is overreach. We don't know how to shrink government. We don't know exactly what to do about getting things right. But we know at an emotional level, this can't be good. And another question is, so why can't they articulate, because they can't. Where we should go? What we should do? They want smaller government, but what does that mean? What should we cut? How do we do it? When you start talking about specific programs with them, it's very difficult to find the cuts, the shrinkage of government that they actually want. It's easy to say, we're for small government and the Constitution. But what does that mean in terms of content? That is the real challenge that they face. And I think they too are held back from being able to give an articulate answer to that question. And the question is, what is it that is holding them back? I think they're deeper issues than purely economic or purely political issues that are holding them back. So let me first state, as if, let me assume you don't know this already, you don't know my position on this. And I encourage you, if you don't agree with me, or if you don't know, or if you want a fuller explanation, because I'm just gonna throw it out. My view of the financial crisis. So I believe financial crisis was caused by government. It was caused by government almost from A to Z. So over 90% of the causes of the financial crisis were government causes. And I'll give you two and I'd be happy to answer challenges or questions in the Q&A. By the way, you know, if you don't feel like being respectful, I can handle it. Two, I'm just gonna give two. And there are lots of subsidiary, there are lots of little things. But every time somebody points me in another direction, well, what about this? You peel it a little bit, you peel it on you in a little bit, and there's some government regulations, some government control, some government distortion of the market that created these bad incentives that caused the crisis. But I'll just give you two, and these are the two major ones. So these are the big ones. A, Federal Reserve Policy. And here I go back to the dot com bubble boosting, if you remember in 2000, March of 2000 starts. It continues through 2000, 2001. 2001, we get the added hits of 9-11. The economy is spiraling downwards. We're heading towards the recession. Now we have this view in this country. You know, really, it's mostly since the 1980s, but this view that we don't need to have recessions, that we can avoid recessions. That the Federal Reserve can finagle things so that we have soft landings. And that we will never have to suffer a recession. And there was the great, what's it called? The great, I forgot the term, but a Greenspan term that, you know, this period that we could go through where we have little dips, but then we'd rise up smoothly. And a Greenspan could manipulate interest rates to give us this perfection. This is central planning par excellence. And for some reason, while we understand that central planning almost works no way and in no field, in the one field of banking and interest rates, and Greenspan was such a genius, right? We believed that he could do it. A maestro, he was called, remember? He was a conductor. What was he conducting? The economy, right? And I thought when the Berlin Wall fell, we understood that that doesn't work. But anyway, I mean, then obviously we didn't learn the lesson. So in 2002, given a spiraling towards a recession, Allen Greenspan, lowest interest rates at the fastest rates in American history to 1%. Now, I won't spend a lot of time on this, but 1% was below the rate of inflation. Rate of inflation was about 3%. That creates what in finance we call a negative real rate of return. And that means, in terms of behavior, what? It means they're subsidizing borrowing. It means that paying you to borrow money. What do people do when there's a strong incentive to do something? They do it. So we borrowed, we borrowed like crazy. We borrowed on our college, we borrowed on our credit cards. And in particular, we borrowed on our homes. And that of course drove prices up and everything. But why our homes? I mean, why not everything else? And this is my second piece, right? So number one, when you lower the rate of interest, but lower the rate of inflation, bad stuff happens. Can't tell you exactly which bad stuff. Can't tell you where it exactly happened. Can't even tell you when it will happen exactly. We have no theory of that in economics. What we do know is bad stuff will happen. By the way, interest rates today is at zero. Inflation is depending on how you measure it, anyway between two to maybe even eight percent. Bad stuff is going to happen. Don't know when, don't know when, don't know when it manifests itself. Bad stuff will happen. Simple principle in economics. You can't run negative real rates of return and expect good stuff to happen. That's reason number one. I fear that some economics graduate students or undergraduates students here that might correct me afterwards. I'll stick to that story for now. Reason number two. Number two is housing policy. The United States doesn't believe in a free market in housing. We have a government that has housing policy. We've had this policy since the 1930s and it's already created major mayhem in markets. People don't think about this in these terms. But what are the crisis before this financial crisis was caused by government housing policy? Anybody have a clue? You whispered it so he would know what you're talking about. SNL crisis. SNL crisis, I know most of you are too young because you weren't born when it happened. Or born about when it happened. But the SNL crisis that happened in the 1980s, SNLs were created in the 1930s or formalized in the 1930s. They existed before, formalized in the 1930s. They can only do one thing. And that is lend 30 year fixed rate mortgages. All they could do is they had these 30 year assets, right? What happened to their liabilities? Liabilities were saving accounts so much shorter than 30 years. What happens when you have inflation, right? You economists and finance people, what happens? When you have high interest rates, what happens to the value of the assets? The value of the liabilities goes down as well but at a much slower rate. So SNL crisis actually happened in the 1970s with inflation destroyed the SNLs, brought them down. 1980s was just, we just saw the mess that that created when Congress then said, now that you're bankrupt, we're gonna deregulate you and you could take the, the insured deposits that we the government insured and gamble with them. Go buy a lot of your tickets. So they go went and bought a lot of your tickets and that's the SNL crisis. But this is a housing problem. This is because why did we form SNLs? So make it easy for Americans to own homes. How many of you rent? Well, you're students, most of you probably will. So let me ask the, well, anybody. How many have paid off your mortgage? You own your home, I'll try. A few of you, right? Thank you for all of you who rent. Well, you have to pay taxes for me to thank you but if you pay taxes, you rent or you were paid off your home, you guys are subsidizing my mortgage. I appreciate it because I have a pretty large mortgage because I get to deduct the interest that I pay on my mortgage. You don't get to deduct your rent and you don't get to deduct your paid off mortgage. So we have government policy that encourages people to take on debt in a very simple way for buying their home. And we encourage people to buy a home. There are lots of ways in which we do this. We encourage speculation and we encourage speculation at home by. You know that if you make money on your house, what's the capital gains rate? Zero. There's no capital gains up to the first half million a profit. That's a lot of profit on a home, right? First half a million a profit, there's no capital gains tax. The only asset class that that exists. Pretty cool stuff. They want you to buy a home. Government's not neutral about this question. And that's before I start talking about FETI and FANI and the FETI Home Loan Bank and half a dozen other government run institutions that all exist to get you into a home at all costs. In 1999, FETI and FANI, they're government creations and you know why they were created? You know, people talk about CDOs and securitized mortgages and all this stuff. Well, who created those? FETI and FANI were created in order to securitize mortgages. That was their purpose. That's why government created it. So before that, they were run pretty conservatively. They securitized mortgages, they created these CDOs, collateralized debt obligations. You don't know what they mean. I can tell you afterwards if you're really interested. And everything. So in 1999, Clinton told them, we want you to have up to half of your portfolio in alt-A and sub-prime, which are the lower quality mortgages. They'd only be doing a higher quality one. So they started doing lower quality mortgages. And it wasn't enough in the marketplace for them to have half the portfolio. So they encouraged more and more and more creation of really, really, really low quality mortgages. And they would buy them. So bankers didn't care. And FANI and FANI would just package them and sell them. And we could get, if you asked me about the rating agencies and all that stuff, I'd be happy to answer. But this kind of work. You see, they were government entities. They didn't care how much risk they were taking. By some estimates, they will leverage hundreds of dollars to $1 of equity. No private organization could ever carry that leverage. Nobody would lend it money. Why were people lending money to FANI and FANI? Because the government guaranteed their debt. So they could do whatever they wanted. They could lower wage as much as they wanted. And they were immune from any kind of market discipline. So just those two things. Government funneling money towards housing, encouraging us to funnel all money towards housing, making it so attractive, so cheap. And then creating interest rates where you'd be stupid not to do it. That, you know, we all did it. We all took on mortgages. And then they told us, and Alan Greenstein said, you know, the best type of mortgage you should take is a variable rate mortgage. Fixed rate mortgages, those are passé. If you look at the past, they never pay off. They don't pay off as well as variable rate mortgages. We all pay variable rate mortgages. It's really a bad, when bad times happen. And he said low wage states will stay forever. And for some reason, Americans believe that as well. So here's an accumulation of all coming from the top. Now, did people behave badly? Sure. Homeowners bought homes they couldn't afford. Banks issued loans they should have never issued. You know, investors bought securities they should have never bought because they didn't understand the cash flows. Lots of people made stupid mistakes. But if we're looking for underlying causes, the causes are all government related. And this stuff, I think, is not very hard. I think this stuff is pretty. The economics of it are not that complicated. Yeah, if you get into, you know, CDSs and CDOs and the derivatives part of it, it gets very complicated. That's why regulators can't regulate it because they don't understand it. They never, they don't, they just don't. They can't, they can't hire the talent to understand it because it costs too much money. But if you put that side of the market aside and it's not a big part of this crisis anyway, this is easy stuff. So why did nobody, almost nobody stand up and say, no, why did everybody buy the story that this is the market, this is Wall Street, this is bankers, this is capitalism? Now, let's do a little bit of kind of a loose definition. What do we mean by capitalism? I mean by capitalism. I mean free markets. Free of what? When we say free markets, free of what? If you have government, if you have control, if you have regulations, if you have manipulation, free of intervention. So removed from markets. So just a simple thought experiment. How could capitalism have failed? If capitalism means free markets, when there were no free markets in 2007. So the idea is in 2007 we had capitalism and it failed. What are the markets that failed? Banking, mortgage business, and housing, right? Free markets. Those are the main culprits in this crisis. I would challenge you to find three more regulated, controlled and manipulated markets in the United States. Banking is by far the most regulated business. Maybe electrical utilities are more regulated, but just barely more regulated. Regulators are involved in any aspect of the creation of a bank, of the running of a bank, of the expansion of a bank. You cannot do a bank module without regulatory approval. You cannot found a bank, just start a bank, just as a... You cannot start a bank in the United States of America, the land of the free, without getting permission from the regulators for your business plan, for your executive team, for your board of directors, and for your investors. You cannot start a bank in the United States without those four things. In other words, without permission, and without approval of everything, right? Because that's everything that you need to start a bank. That's not exactly capitalism, not exactly free markets. Regulators go into the offices of banks, particularly the big banks, at least every quarter, and examine their books, and penalize them, and tell them which loans to write down, which loans are okay, which loans are not. That's not capitalism. Every bank in the United States is regulated by at least five different regulatory agencies. See if I remember them all. Federal Reserve, FDIC, Federal Deposit Insurance, OCC. You didn't even know there was such a thing. Office of the Comptroller of the Coency. This is a leftover from the Civil War that never went away, and keeps finding new responsibilities. State regulators in which the bank functions, and if you're cross-state, you get multiple states regulating you, and if you're public, the SEC. And that's, and they're more, right? These are just the obvious ones. They're more literal. Freddie and Fannie, each had a regulatory agency dedicated just to them. They didn't regulate anybody else. Freddie had one, Fannie had one, and they were the biggest bankruptcies in the whole system. So just on its face, without any economic analysis, without looking at anything, this crisis is about regulations in government. It can't be about capitalism, because it was no capitalism. It can't be about free markets. They won't know free markets. If this crisis had happened in, I don't know, what's a relatively free market up there? What's that? Well, I was thinking within the United States, even what's a relatively free industry there? Yeah, computers, if this crisis had happened in computers, you know, maybe it had a case, markets have failed. But it didn't. It happened in housing, which is heavily regulated, mortgages with Freddie and Fannie dominating, and banking, which is controlled and regulated by government. So this is easy stuff. You know, it really is. I have not heard yet a semi-legitimate rational argument that would point this to government. And I've done plenty of debates on this topic. I've seen plenty of people try to explain the other side. There is no legitimate argument in my view. And you can try to make one later if you want. And how this is caused by the free market or caused by capitalism. Because those free markets and capitalism didn't exist in 2007, six, five, four. You need to have an existence in this country for a very, very long time, particularly in those three areas. So what's going on? Something's going on, right? There's some big conspiracy, right? To hide the free market. No, okay. What is it that prevents people from getting it and from understanding it? And what is it more importantly that creates this gut response, almost instinctual to blame markets and capitalism? By the way, this isn't new. The Great Depression was blamed on bankers and capitalism and most economists today, I think most economists, even ones on the left, would agree looking back at the data that government made a huge amount of mistakes that caused the Great Depression. Nobody can legitimate the argue that FDR got us out of the Great Depression because unemployment in 33 when he took office and 39 when the war started in Europe was the same, basically. And the economy had been flat, almost, listen up, send out, basically flat. We know this stuff yet. We still teach our kids in school that the Great Depression was caused by, not by the Federal Reserve, and not by the government, but by, why, what is this thing that prevents us from giving credit to markets, from blaming government for not allowing us to celebrate markets or to, you know, give them the credit they deserve. Unless, you know, we're very, very few exceptions. What are markets about? You're cheating, as you probably know. You've been there in the book, it's nothing. Hate students. Self-interest, how does that manifest itself? Well, I like to use my iPhone as a prop. When Steve Jobs makes one of these, why does he do it? Why did he do it? Unfortunately, it's not what he's anymore. But why did he do it? Profit. Profit is certainly one thing. These things have, if you, you know, as I like to say, he didn't get up every morning and think, what will maximize the benefits to Iran? Because I would have wanted to pay half of this. And the profit margins of these are about 60%. He didn't wake up every morning and say, I gotta answer my social utility, make my fellow man better off. He got up every morning and said, how can I make the coolest, prettiest, most efficient, whatever that I want? You know how many focus groups Apple went? Zero. You know how many consumer surveys they did? Zero. And then by the way, really hated for this, particularly by marketing professors. You teach that that's the way to do marketing. Steve Josh created these because he loved it, because he had fun doing it, because he believed in it, and because he made a lot of money doing it. All of those things, loving it, having a passion for it, believing in it, and wanting to make money at it, are all self-interested reasons. When you go buy something, you know, Anna Smith got this, right? When you go and buy bread from the baker, he's not selling it to you because he likes you. He's selling it to you because that's how he makes a living. He's trying to take care of himself, and his children, and his family, and his wife. So we know, we all know, even kids know, that people in business are in it for themselves. They're in it to make money, and they're in it to have fun, and they're in it to pursue their self-interest. Now there's another piece to the marketplace, and of course I went and bought one of these in the mall. And the first iPhone that I bought was in 2008, just as the economy was kind of spiraling out of control. So I went to the mall because I wanted to stimulate the economy. Right? That's why you guys go to the mall, right? You go buy stuff because you care about your fellow man, and you want to make sure they have jobs. Right? Consumption creates jobs, haven't you, Hood? That's Keynes and Coogman's theory of how the economy works. So you want to be good consumers because you want to create jobs, right? We go to the marketplace because we want to make our lives better. I bought this because I thought it was cool. I thought it would make me more productive, and I would have fun with it. And I was thinking only of me when I bought it. And you guys are kind of feeling uncomfortable a little bit right now because you know that's true of some of you, some of you are not. Because you know that's true. You all really, really suffer. And you act as well. That's how I used to ask my students when I taught. I used to ask, how many of you, when you decided what to study in college, what to major in college, how many of you sat down and made a list of all the possible professions, and then ranked them based on their social utility, and chose the one with the highest social utility and went for them? And there's always one poor bastard in there. And I said, how many of you chose your major because you thought you would enjoy it, you thought you would make money at it, you thought you would have fun doing it? And I'd say, you're a selfish bastard. Because they were awesome, right? So here we are, here's a marketplace in which the users are selling us stuff for their self-interest because they're motivated by profit, because they want to make their lives better, because they're trying to take care of themselves. And here's a marketplace where we go into, to try to make our lives better, to try to feed our families, to try to buy some good stuff that we can use that will make us, and some it's just for fun, and some it's for productivity, and whatever. Everybody in the marketplace is going to the marketplace with the intent of pursuing their own self-interest. They might be wrong. It might turn out that they don't. It might turn out that they buy something they didn't really want, or they might just be driven by emotion, but their intention is to pursue, to make their lives better. Marketplace is a place in which people are pursuing what they think of that moment is going to enhance their lives in some way or emotionally feel that it's going to, but it's about them. It's about being selfish, being self-interested. And what do we know? What do we know is why somebody's squirming a little bit when I say that, and if you don't, then other groups when I speak certainly do. What do we know about selfishness? What do we know about selfishness? Well, I know that when I was growing up, I grew up in a good Jewish family, and my mother told me, think of yourself last. Think of others first. Selflessness is the essence of virtue. She wasn't quite Christian, she didn't say sacrifice, right? But, right? But sacrifice is the model idea, right? That's just a fact. Not a slam on anybody except my mother. Now, my mother failed dramatically, as you can tell. But, she, like everybody else, their intention is to grow up a kid with morals, and morals means it means in the culture we live in today. It means being selfless. It means giving up stuff. It means sacrifice. What is a sacrifice? When we trade in the marketplace, when I buy the iPhone, who loses? No one. No one, win-win, right? I buy something for a certain amount of money that I think is worth more than that amount to me. The other party is selling it for profit, so it's worth less to them. Win-win. What's a sacrifice? Do both parties win? Then it's a trade, and it's not a sacrifice. What's a sacrifice? Net loss. Net loss, somebody has to lose. So if I'm sacrificing, I'm giving something up and expecting what in return. Less or nothing. That's what a sacrifice means. And our ethic today and our culture is all about sacrifice. That equals virtue. Self-sacrifice is virtue. So think of Bill Gates, right? He's the guy who created billions and billions and billions of dollars of wealth for himself and for many others. He sold his products, we all bought, we all used our lives a gazillion times better because we used them. Now this is from an Apple person, so. It's hard for me to say this, but it's true in spite of the fact that I am. I've been an Apple devotee since 89. Office. I still use office, there you go. So even we use office on Apple, right? And yet, when he made his money, what did we think of him from an ethical perspective? We might have thought it was a great businessman, but what did he think of him as an ethical person, as a mall person? Mostly nothing. What's an issue? Somewhat negative. He's greedy, he's making a lot of money for himself. He's not giving a lot away. A lot of people thought negative things about Bill Gates. You know, I don't know if you saw the articles that came out about a week after Steve Jobs died. They didn't do it the first week, because they had some respect, but about a week later, criticizing him. Why did they criticize him? He only cared about his own point of view. He wasn't a good boss because he yelled at people sometimes and he didn't really respect their point of view when they were gone. Because obviously he was right because the success Apple's had. And he wasn't for that thought. So obviously he was a bad guy. The fact that he created all this wealth, the fact that he created all these products, the fact that so many of us use them, all that is irrelevant. The guy was a bad guy because he wasn't. Sacrificing. He didn't do anything for his fellow man, right? He did huge amount for his fellow man. But what's the problem? Why don't we like him? Because he gained from it. Now take Bill Gates today. What do we think of him today? From an ethical perspective, I was Bill Gates. He's the same one. No, he's not quite the same. I'll tell you how he becomes the same in a minute. I'll take my lions away. He's good. You know, these are a tolical question, right? I'm kidding, I'm kidding. I like that, I like the concept. He's great right now because he's giving it away. And he's charitable, he's not only that, he's giving it away far away. So he can't even say he's trying to make his own city better because he doesn't give much to Seattle. He gives it to Africa, so he's really helping people he doesn't really know or doesn't really probably care about because he's giving it far away, right? Which proves how good he is. Now he's sacrificing, but not really. What would make him a saint, going to the same question? Here's what would make him a saint. I guarantee the Pope would do it, right? He had to give it all the way, move into a tent with his kids. They need to see blood, they need to see blood. I know tax breaks. Absolutely no tax breaks. Give it away and pay taxes on it. That's the mall code we live in. It's a mall code that the sainthood, virtue, morality is equal to sacrificing one's own value. It's the morality that says the moderation is a saint of all saints, the ideal person. And the Bill Gates and Steve Jobs who are creating their wealth at M. So, so. It's the morality that says that when you do, what do you call it, the micro loans in the third world countries, if you make a profit doing it, what some organizations do, you're bad. But if you do the exact same loans and don't make a profit, i.e. sacrifice, it's good. All hints of self-interest needs to be wiped out. So, a morality like that is gonna view capitalism how? Here's a system of self-interest. A system that everybody engages in self-interest. And if Smith got this, we get this. Every child gets this. We're not gonna view it positively. We might participate in it. We might still try to pursue our self-interest while condemning it. Oh, we're hypocrites, most people are hypocrites. Most people don't live the ideas that they believe in. Otherwise they'd go on, like, I mean, the one thing you can say about Mother Teresa is she lived her ideas, right? She wasn't just saying it, she lived it. Well, if everybody who believed in that morality went off to India, we could have capitalism here. The problem is they wouldn't be much of us left here. That's the problem. Because implicitly, most people accept our morality and most people don't live it. Almost all the people accept it, don't live it. And that results in when you have an ideal and you know you're never gonna live up to that ideal, what does it cause you to feel? Guilt, guilt, frustration, modernity. Guilt, so that most capitalists in this country feel guilty. Many people in this country feel guilty because they didn't live on Mother Teresa's elect. They don't really want to live on Mother Teresa's elect, but they've convinced themselves, they've been convinced that that is some kind of moral ideal and to get into heaven, that's what they should have done. And you know, now they've lost out something. J.P. Morgan, towards the end of his life, the great banker, tried to give his money away so fast because he was trying to buy himself into heaven. He wanted to pay back somehow, all the sins he had committed by making the money because making the money, he was self-interested and that was sinful. He didn't cheat anybody, he didn't like anybody. He made it in the market place. To me, this is the fundamental problem that we face. It's not a lack of economic understanding although there's plenty of that and there's a lot of economic education that has to go out there. It's not that people are stupid or ignorant so it's that people believe in a set of moral ideas that is inconsistent with cowardice, inconsistent with freedom, inconsistent with free market. Indeed, it is consistent with any form of statism you can imagine. It's consistent with socialism and fascism and all the mixtures in between. And until we actually present an alternative to that view of morality, until we're willing to challenge that view of morality and present an alternative and convince people of that alternative, we cannot succeed in convincing people that free markets are good, that capitalism is good, that freedom is a good thing. Now what is the alternative? The alternative is, I meant she's the only one since I have a start up, to present a morality of self-interest, to take the core of what is capitalism and give it a moral defense. Now it's not why she did it, she didn't start with capitalism and build up an ethics but it's the only ethical system consistent with capitalism. So what is Iron Man's kind of quick five minute, Iron Man's morality five minutes? It's basically the idea, and at some extent, to some extent, not a full extent, but at some extent this is the idea of the founding fathers. Because what is the American revolution about? What is the fundamental revolution that is American? The freedom for whom? And for what? It's sovereignty. It's all about sovereignty. Before the American revolution, who did you belong to? I mean, it's a funny question. Somebody, the king, the chieftain, the tribe, the pope, the witch doctor, you name it, depending on which culture you in, depending on which country you in, depending on who the ruler was, the emperor, you were owned by somebody else. You were just a puppet to be played with by whoever ruled over you. What did American founders say? No, and this comes straight out of the Enlightenment thinking. No, you own yourself. You are sovereign over your own life. Your life is yours to live. That's what the right to life means, your life, right? So Iron Man takes that concept, it takes it one level deeper, much deeper. And from an ethical perspective, as he says, ethics is about living your life, living, making your life a life worth living, making your life the best life that it can be. Your more responsibility, your entire code of morality should be those principles, all the virtues, all the values, all the principles, but those principles that you need to adopt in order to make your life the best life that you can be. It's about you. It's about self-interest. It's all about pursuit of happiness, again, a term from the Declaration of Independence, right? It's about maximizing your happiness, your ability to live in this world. And what is it? What is it that does it? What is it that makes possible for a human being, for the animal that we are, right? For the species that we are, what is it that makes possible everything we have, all the values, all the things that benefit us, come from where? Where do they come from? Computer, the desk, the carpet, the food, the clothing, the clock, the building, everything. Where does it all come from? It's in your mind. Your mind! We are not born with a gene that can feed us. We're not. Cheetahs know how to get their food. Their mothers can teach them a few simple tricks, but they know gazelle food, run, catch, white, eat. Look at your neighbor. We're pathetic, weak animals. We have no claws, we have no fangs, we're slow and we're weak. You put yourself against a saber-toothed tiger, who do you think wins? Well, it depends. Yeah, I saw that, my wife too. Who do you think wins? Well, it depends, right? Depends on what? If we're just like this, well, the saber-toothed tiger wins every time. But if we have what? If we can use our minds, now it's not clear, because I can build a weapon. But it's only my mind that can figure out how to build a weapon. We don't know how to build a hut. I don't know how to build a hut, even today. With all the knowledge that I have, all my PhD and everything, I can't build a hut. People figured it out, some genius of his time, Steve Jobs of his time, figured out how to build a hut. How to plant a seed, how to grow food. All these things people had to use their mind to figure out and then to act on them. So for when self-interest is about being wrapped, it's about using one's mind, it's about using one's reason. If you had a boyhood ethics to one statement, it's think, use reason, use your mind. Everything else is a detail. Be honest, why be honest? Because your mind needs facts, not falsehoods. To function properly, your mind has to be attached to the real reality that's out there. Not to the nonsense that you might feed it, to the nonsense that you might help you. You damage yourself when you lie. You damage the mechanism that's your mind. It depends on facts. You're sneaking into the front, you can compartmentalize it, you can keep apart the lies and apart the truth. But where are my integrating machines? They want to connect, and whether you do it consciously or not, you're gonna screw up. Those lies and those facts are gonna get messed up, particularly when you're my age, and you barely remember what actually happened. And this is a no-off, this is just... Now I have to remember, if I'm lying, I have to remember what happened and what I told people. And I need to remember which people I told that lie and which people I told actually what happened. Way too complicated for me. I don't have the brain power for that. I don't know, maybe some of you can pull it up, but may it off really try this on a grand scale and look what happened to him. He lived a miserable, horrible life and is in jail today. And he's actually claiming now that he's happier in jail than he was. And I believe him, because the efforts, the energy to lie like that and to sustain it, and to sustain it day in, day out with the people that you're most close and intimate with on a day-to-day basis is exhausting, it wipes you out, you cannot have fun while doing it. Liars don't have fun. They're not happy. They're not successful at the end of the day. They can fake it for a while, but only for a while and it's fake. So Iron Man's Ethics is pretty simple. You live for yourself and you do it by using your mind and by being rational. The Bernie Madoff's out, sacrifice is out. Now what kind of society and what kind of economy do individuals living for themselves want? Do they want somebody sitting in their shoulder telling them, don't do that, can't do that? Oh, you can't walk over there. Don't run, you might slip. I mean, it's like having your mother with you all your life. Worse. Worse than your mother, but, I should say he's bad about my mother. I just do it all the time, it's not fair. Right? It's much worse than having your mother there. That's why they call it paternalism, right? But it's the government. It's the government bureaucrat sitting on your shoulder and it's exactly what you feel like if you're in business. Particularly if you're in bank. A person of self-esteem, a person pursuing his own happiness, a person who wants to live his life and make the best of his life, live life to the fullest, wants to be left alone, to pursue his values, to trade with other people. He wants the camaraderie of being with other people, but as a trader, not as a sacrificial animal, not as somebody who's told what to do, but as an engaged trader, somebody gives values and gets values, gets something real in return. In other words, somebody who believes in racial self-interest, somebody who really internalizes that, is going to be, his gut response, his immediate reaction to anything would be give me more freedom, not give me more regulation. And if Iron Man's ethics of racial self-interest is necessitates, if you will, a political system that is free in his capitalist. It necessitates free market. And it's the only morality that doesn't. It's the only morality consistent with that behavior we experience when going to the marketplace. There's no other morality they can justify that in full. And in that sense, again, I think Iron Man completes the work that the Founding Fathers began. The Founding Fathers created a political system implicitly based on this principle. There's no other way, there's just no other way that the Founders could have articulated in what I think is the most important political document in human history, much more important than constitution, and that is a declaration of independence. They articulate the inalienable right, and the inalienable right means that it's something that cannot be taken away from you. Not by 10 people, not by 100 people, not by a million people, not by seven billion people, the entire population of it. Nobody can take a right away from you. That's what inalienable means. And what are these rights? These rights are the right to your own life, to be left alone to live your life as you choose fit. The right to your liberty to make choices and decisions and actions based on your evaluations, not somebody else's, nobody can force you to do things you don't wanna do. That's the right to liberty. And in the most selfish political statement in human history, each one of us has an inalienable right to pursue our own happiness. Now if we can capture the self-esteem and the passion and the ideas behind that simple sentence and the declaration of independence, we can have freedom, capitalism, free market, and a great American future. Thank you all. Thank you.