 Welcome once again to Mises' weekends. I'm your host, Jeff Deist, and this weekend we depart from our usual format of interviewing guests. I'm on the road, so we decided to play an abridged audio version of my talk from last weekend's Mises Circle event in Southern California. The title of the talk is The Case for Optimism. As libertarians, it's easy for us to become discouraged, but I argue that the state is losing its primary asset, namely its legitimacy in the eyes of those it would govern due to its own huge and increasingly apparent failures. I also argue that we do ourselves, our ancestors, and our kids and grandkids a disservice if we give in to despair. After all, the political class is something to be mocked, not feared. Give it a listen, let us know what you think via Mises.org, Facebook, or Twitter. Perhaps one of the most optimistic libertarian warriors who ever existed, of course, was Murray Rothbard, and he was a happy warrior if there ever was one, and he was enthusiastic about the revolution of libertarian ideas, because he understood fundamentally that liberty is the only manner of organizing society that's compatible with human nature and with human action. And it was this optimism that Murray had, this unshakable belief that we're right and the state is wrong, that drove him to produce what can only be called a staggering body of intellectual output in defense of personal liberty. Now, let me stress that Murray Rothbard, despite his reputation as an uncompromising intellectual, saw his efforts as quite pragmatic, not utopian. He understood quite clearly that utopianism was the hallmark of the state's intellectual defenders, not its detractors. He understood that utopianism and statism, not liberty, produced the great monsters and the great wars of the 20th century. And most of all, Murray understood that the true utopians are the central planners, those who believe we can overcome human nature and steer human actors like cattle. And to quote Murray, the man who puts all the guns and all the decision-making power in the hands of the central government and then says, limit yourself. It is he who is truly the impractical utopia. So in Rothbard's eyes, a libertarian world would be better, not perfect. So all our revolution is indeed intellectual. It is also optimistic and pragmatic. We should talk about liberty in terms of first principles and how those principles make for a better society precisely because they accord with the innate human desire for liberty. Let the statists explain their grand visions. Well, we offer a realistic vision of a world organized around civil society and markets. Now, all of us who are liberty-minded, we've all in our in our lifetimes gotten some version of this argument from people who are not so liberty minded, which is that you're unrealistic. This is overly impractical or too idealistic. Now, they say libertarianism would be great in theory, but that's really more for a late-night dorm room discussion or that's for a philosophy professor. And come on, states have existed for as long as there have been human beings and you'll never get rid of them. Might as well live with it. And some people would even go to so far as to say that there's a market of sorts for the state because states seem to keep popping up. But let's examine this for a moment, this argument of utopianism or impracticality. If you believe that the state is harmful rather than benevolent, if you believe that the state threatens individual rights and property rights rather than protects them, if you believe that the state decreases our chances for peace and prosperity rather than increases them, if you believe in some that the state is an overwhelming force for ill in our society, a force that makes us all far worse off, why in the world is it unrealistic to work towards its elimination? You know, I noticed that this charge of being too idealistic is never applied to medicine. It's never applied to crime, for instance. Nobody ever says to a researcher or an infectious disease researcher, you know, there's always been disease. There's always going to be cancer and it's really noble that you're having the race for the cure and everyone's going to run a 10K and then there's still cancer. And nobody ever says to the researcher or clinician, you know, that's great, but why don't you just spend your time trying to limit the duration of the common cold? Because we're never really going to get rid of cancer. Nobody ever says that. Nobody ever says to the police investigator, you know, gee whiz, if you look at society, criminality always crops up in some form or another. There's always a mafia. There's always organized crime. There's always murder and rape in societies. So, you know, it's impractical and it's unrealistic that you spend all this time trying to eliminate crime in Costa Mesa or wherever. Now, nobody ever says that. Everybody says, you know, what you're doing is great and what does a cancer researcher do? What does the criminal investigator do? They roll up their sleeves and they get to work and they say to themselves, you know, yeah, we may never eliminate cancer. We may never eliminate crime, but that's the goal. So, why should we be apologetic or timid or less than fully optimistic in our fight against the state? We should not. Like the cancer researcher or the crime fighter, we should be bold. We should be optimistic and we should be vigorous in our opposition to government. We should be every bit as certain as Murray Rothbard was in the eventual success of our mission because rest assured, we will win. The state, at least as it's currently constituted in the U.S. and most Western nations, is dying under the weight of its own sheer fiscal unsustainability. I'm curious as to anyone in the room of a certain vintage knows the name Herbert Stein. Well, Herbert Stein was Ben Stein's dad. I know some of you know who Ben Stein is, win Ben Stein's money, and of course, Ferris Bueller's Day Off, which is what Ben Stein really ought to be known for. Well, Herbert Stein was his dad and Herbert Stein was an economist and he was chairman of the Council of Economic Advisers for both President Nixon and Gerald Ford. The Council of Economic Advisers is kind of a cheerleading squad for economic news for presidents. So, not my kind of economist, apparently only faintly free market, but still an economist and also apparently quite an interesting man. In his later years, he briefly wrote an anonymous Dear Prudence column for some print papers. But when he was working for the Council of Economic Advisers, Herbert Stein came up with his own law. I don't know if he named it after himself, which seems a bit cheeky, but he's got his own law. It's called Herbert Stein's law. And it goes something like this, if something cannot go on forever, it will stop. All right. Sounds simple. Sounds simple. But he used it to describe economic trends at the time like balance of payments deficits. But he meant that no program was needed to stop something that would stop by itself, something that could not be sustained. And clearly the U.S. federal government, the largest, costliest and most powerful government that ever existed on the face of earth, cannot be sustained. Not in the fiscal sense. No way, no how. And we're not talking just about the $17 trillion in nominal treasury debt that the U.S. federal government owns to its creditors. We're talking about something, we're talking about unsustainability on a much larger level. There's another economist named Lawrence Kotlikoff who uses a concept called the fiscal gap. And the fiscal gap is actually much more accurate and frankly much more depressing measure of what the government really owes. And the fiscal gap basically measures the net present value of future entitlement obligations against the net present value of expected tax returns. So Kotlikoff has come up with a fiscal gap number of more than $200 trillion. I'm going to repeat that. $200 trillion between what the federal government is going to owe people in the future or have some very nasty consequences and what it's going to take in in taxes. Now we don't have time today to discuss all the details of federal government's fiscal situation and how this fiscal gap came to be. I think we're all pretty familiar with that. But rest assured the reality is wildly worse than virtually anyone in government or the mainstream media will talk about. Now you have to understand there is zero political will in Washington to cut the big ticket items like Social Security, Medicare, Medicaid, welfare entitlements and defense, zero. I mean if you recall during the sequestration debates the country was just in arms over just tiny proposed cuts. And if you consider the outrage that occurs when members of Congress merely consider cuts in the rate of growth of certain programs, the howls of outrage from our progressive friends in particular, there is zero political will in Washington for huge tax increases, which wouldn't help anyway. Kotlakov estimates we'd have to raise virtually all taxes by about 50% today and to be even making a dent in the fiscal gap. So politics will not solve this problem. The federal government's fiscal reality cannot be fixed politically or economically. We cannot grow our way out of it. The numbers behind Kotlakov's fiscal gaps cannot be overcome. They can only be put off and made far worse by endless rounds of monetary expansion. I think everyone in this room knows that the only thing keeping this whole charade going is the Federal Reserve, which is more than tripled the monetary base just since 2008. And we all know that the current dollar policy marked by endless rounds of quantitative easing is not sustainable. Even Janet Yellen acknowledges this on some level in her press conference a week or two back. But even without more quantitative easing, there is no reason to believe the Fed will ever sell the treasuries that began buying up rapidly in 2008. The Fed almost certainly will in fact simply keep these treasuries on its balance sheet indefinitely or at least until the never-ending undefined crisis ends. So in this sense, it really has just monetized a huge slice of the federal debt. And by the way, the St. Louis Fed is quite open about this. They produced a short paper. They acknowledged that a permanent acquisition of treasury debt by the Fed would indeed represent free borrowing and spending by the US government. They just claimed that there's a possibility that the Fed will at some magical future date, reverse these bond purchases, sell them back to banks, and reduce those banks reserves accordingly. But I don't think anyone in this room will ever live to see that day. So it may seem almost funny, but this reality should give all of us, at least in this room, cause for optimism. We know that the current arrangement cannot continue. So we as Liberty-minded people have a tremendous opportunity to recognize this and begin building the future. We don't have to labor under the delusion that everything will continue as usual. And the system will work if only we reform it or tinker with it or elect the right people. We can be honest and recognize that democracy doesn't work, it can't work, and the sooner it's exposed as a failure, the better. We should celebrate this. I really believe that. We should celebrate this. We should celebrate this understanding because no progress towards Liberty can occur until we understand reality and understand the problem at hand. But there's actually a deeper and more satisfying reason for us to be optimistic. The state is not only fiscally unsustainable, it's intellectually unsustainable as well. We should be optimistic because we're living what I believe is the beginning of what Hans-Herman Hoppe calls a bottom-up revolution. Bottom-up because it starts at the individual and hyper-local level. Bottom-up because it relies on radical decentralization and political secession. Bottom-up because it bypasses politics and traditional power structures. Bottom-up because it bypasses state schools, state intellectuals, and state media. Governments and the political classes who run them are facing a nonviolent revolution of ideas that was scarcely imaginable even just 20 years ago. And this revolution will strike at the heart of these state's only true asset, their legitimacy in the eyes of those whom they would govern. This bottom-up revolution is based on informed individuals like those in this room who increasingly don't need elites, political, academic, or scientific to run their lives. It is based on the recognition that national and global governance schemes have failed to solve or even address huge structural problems like hunger, medical care, energy, and economic development. It's based on radical decentralization, political and otherwise, because the vast diversity of individual interests demands an end to top-down government edicts and bullying by the 51% electorate. And I truly believe that this can happen and is happening without even necessarily a tacit acceptance or understanding of liberty among the majority of people. They simply see with their own eyes that the state doesn't work, so naturally they seek another way. I think this is especially true of millennials, many of whom are not necessarily particularly libertarian in outlook, but yet they're still deeply distrustful of the federal government. Technology, of course, plays a huge role in this bottom-up revolution. Technology has given us the ability to find fellow travelers, sort of compare notes with people anywhere in the world and talk about what our would-be rulers are doing. It's taken away the monopoly over the marketplace of ideas from traditional media outlets. It's enormously lowered the cost of learning and acquiring knowledge. I mean, it has literally brought the vast store of human knowledge to our fingertips. In governments, I think we'll have an awfully hard time keeping all this information, not to mention the ideas of liberty away from people who are increasingly connected and hungry for a better life. The toothpaste is out of the tube, so to speak. Now, to be absolutely clear, technology is not an ideology. And technology is used by the state just as it is used against the state. I mean, imagine someone with an appetite of J. Edgar Hoover with today's NSA or apparatus available to him. And technology can never change the fundamental choice before us, liberty or statism. There's no third way, right? Either humans deal with one another voluntarily through civil society and markets, or they deal with each other using compulsion through crime or government. But economic means or political means, the age-old question remains the same. But the free and virtually instantaneous flow of information has radically transformed the world. If you watch the Scottish independence vote at all, which I watched with great enthusiasm, governments like to talk about democracy. Well, they're about to get it good and hard. People are going to vote with their feet, their wallets, and their mobile devices. They're going to do so across borders. I'm optimistic, therefore, that this global interconnectedness will pose a huge threat to the viability of many nation-states into their political ruling classes as a result. People are now connected by ideas, by interests, by shared values, by commerce, not so much by geography and nationality. In fact, geography and nationality are shrinking in importance every day. And of course, perhaps the greatest legacy of the online revolution will be the demise of state education systems, which I think everyone in this room can applaud. I mean, teacher unions, lousy and compulsory schools, huge administrative bureaucracies, outlandish pensions, crushing student loan debt, it's all clearly unsustainable. Government schools cost too much and teach too little of importance like classical languages, rigorous math and science, skilled trades, personal finance, and the like. What they do teach is often harmful and statist, the whole panoply of victims' rights. So, liberty is just not possible in a society filled with ill-educated, state indoctrinated people. And I truly believe that market-based education will produce actual results, the antithesis of government education. But I think we should all be very happy and very optimistic to witness the state's education model crumbling before us. All of these happy developments are taking place at their own pace. None of us can time them. But I truly believe there's great cause for optimism that this bottom-up revolution is taking place inexorably before us. Now, in conclusion, I'd just like to say vis-a-vis our survey from earlier today. Personally, I don't care if you call yourself a libertarian or an anarchist or a constitutionalist or a Republican or a Democrat or a progressive or whatever you do. All that matters is that you recognize and agree that the state is out of control, even if it's just in one area, like drug policy or foreign policy. All that's required is that you understand and envision a free society. I think many of these labels and differences will seem petty to say the least. Murray Rothbard used to use an analogy that he borrowed from the late, great Gene Burns. I don't know if any of you remember Gene Burns. He was a long-time talk radio host in the San Francisco Bay Area, a very sweet guy, just a huge figure, a tremendous intellectual. And Gene Burns came up with this metaphor called the freedom train. He said, we're so far from where we want to be, from where anyone in this room would consider a free society, that we just need to get the train moving in the right direction. So just join us, whether you agree with 60% of our ideas or 80% or 90% of our ideas. Let's just get the train moving in the right direction. I think that's a very apt analogy for the time we live in. I like this metaphor. It sure beats putting ourselves into endlessly narrow boxes. And I'll leave you with just one last comment. The town where I now live, Auburn, Alabama, has a right-wing radio station. And during the day, they play the usual lineup. But one of the syndicated hosts is none other than Herman Cain, the presidential candidate from the 2012 election, who both Ron and I had an opportunity to be a very sweet guy. Politics aside. And for some reason, my kids love his voice. They love, they think it's funny. They like to listen to you as a very deep, gravelly radio voice. So they like to listen to you in the car. And we were listening the other day as we were driving. A lady called in and she was complaining that her friends and family were liberals and that she was arguing with them all the time. And she couldn't convince them of the correctness of the, you know, the Herman Cain view of the world, I suppose. And so Herman Cain said something that was very profound. I don't think he meant, he just said it as a flippant remark in passing. But Herman Cain said to this caller, he said, look, we can only save those who would be saved. And I think that applies to all of us as well. Far too often, we let the status frame the debate. Far too often, liberty-minded people are defined by what we oppose, the state, then by what we propose, which is liberty. So be optimistic and make the case for liberty. Thank you very much. There you have it, ladies and gentlemen. The case for optimism. I hope you enjoyed the talk. Have a great weekend.