 Well, the topic for this this lecture is has to do with political versus private entrepreneurship and the two distinct functions that exist between real entrepreneurship market entrepreneurship and political entrepreneurship and As a reading suggestion, there's a little book. It's very interesting. It has some good Economics in it, but it's written by a historian named Burton Folsom f-o-l-s-o-m It's called the myth of the robber barons and it was actually published under the same book under two different titles It was entrepreneurs versus the state at one time And then it was called the myth of the robber barons of Burton Folsom and it's based on American history but but every chapter makes a distinction between Real entrepreneurship and political entrepreneurship and some entrepreneurs in American history started out as as Real business entrepreneurs market free market entrepreneurs But then they got involved in politics more and more later on in their lives and became political entrepreneurs Or what today we would might call crony capitalists. And so you have this This phenomenon of there's no there's no set cut definition You know John D. Rockefeller Bill Gates, for example, Bill Gates was a market entrepreneur when he when he developed a lot of the Microsoft products But then after the government sued him for supposedly violating the antitrust laws He opened up a Washington DC lobby lobbying office and had his lawyers Start suing his competitors for for the same sort of bogus things that he had been sued over so he began playing the political game and he began giving millions of dollars to the Democrat and Republican parties in DC after they sort of sort of, you know Slapped him around a little bit in court with the the Microsoft antitrust suit about what ten years ago or so But let me define what I'm talking about here first, you know market entrepreneurship Of course, the consumers are treated like kings and queens in a real market with with market entrepreneurship and the whole purpose of market entrepreneurship is To make money by serving your fellow man my old friend Walter Williams when he lectures about this He he pulls money out of his pockets and Waves around like this. He likes to do that because he's a rich guy He likes to wade money around and he's a big capitalist also and and he'll say that these are Certificates of performance that I have in my pocket. That's what he calls them because you know in a market anyway The only way to get dollars to get money is to help help your fellow man a fellow woman out somehow Provide them with a better product A lot of you I know a lot of my students watch and like this television show shark tank Or they have billionaires like Mark Cuban and Others who you know ordinary people from all over the the world show up with some idea That can help their fellow man just a little bit better I think I think the biggest selling product that they invested in was some stupid looking Sponge that you can buy a bed and bath with the sponge daddy They've made millions and millions and millions of dollars and and whoever invented that I would argue has done more for humanity That all the politicians in the history of the world Over-invented sponge daddy, but here's what Macy said about the the the primacy of consumers He made the point in human action that that you know on the outside You see the bankers and the corporate executives or the farmers The capitalists they seem to be in charge of the economy they make all the big decisions What kind of cars they're going to make and who gets a loan who doesn't get a loan and so forth But it's really the consumer that's in charge and here's what How he put it the consumers make poor people rich and rich people poor They determine precisely what should be produced in what quality and what? Quality and what qualities they are merciless egoistic bosses full of whims and fancies Changeable and unpredictable. He's talking about you here They do not care a whip for past merit and vested interests in their in their capacities as buyers and consumers They are hard-hearted and callous without consideration for other people And I would argue that the internet has made all of you even more hard-hearted and callous because if you you know if you're wearing your favorites type of sneakers and you happen to hear that there's a Slightly better or cheaper brand you just go online on Amazon or something and and tomorrow they're delivered And so you know you don't you don't care a whit about past practices or anything like that That's the consumer and that's why these these would be entrepreneurs on Shark Tank You can tell these many of them spent years Struggling to figure out how to be just a little bit better than the next person who's been selling some product Or who hasn't thought of it who hasn't thought of a thing that that someone would would need yet as far as that goes Another thing about market entrepreneurs is the way they become really really rich is to serve large masses of people That's how to become really really rich as as Misi has put it Also in human action Every advance first comes into being as the luxury of a few rich people Only to become after a time the indispensable necessity Taken for granted by everyone the mass production Henry Ford, you know became very wealthy in his day by producing You know mass producing automobiles for the masses anybody who had a job could afford one Because his assembly line was so efficient it made the cars so cheap and his his slogan was you can have a model T Ford in any color you want as long as it's black And they're very standardized production and very low-cost production So so the consumer is king and queen With private entrepreneurship Political entrepreneurship is exactly the opposite political entrepreneurship is a is a system by which politicians and bureaucrats try to isolate themselves as much as possible from any pressures that would put on them To take commands from consumers or taxpayers or anybody else, you know after all there are no shareholders in government You know and we have the survivor principle in the economy in the private economy If you don't serve your customers well, you lose money or go out of business And you also have stock market discipline if you if you don't do well And serving your customers your stock price will decline and that will in that very often will incite a corporate takeover And you the CEO will lose your job in a corporate takeover So there's there's stock market discipline in that sense in the market that doesn't exist in politics as I'm going to talk in a minute There are such heavy barriers to entry in politics that in US Congress the average Re-election rate of a congressional incumbent is about 96% You can you can do everything Almost anything and and get re-elected in Congress unlike the business world where if you screw up and and produce a bad product That is you just marginally, you know less good than the competition you can go out of business Disappear and but not in Congress you can do almost anything it reminds me of When I when I still lived in the DC area of Baltimore DC The congressman Barney Frank was in the front page of the Washington Post for about a whole week Because it was discovered that his his partner was running a house of prostitution on the bottom floor of his Capitol Hill townhouse and you imagine that you're a member of Congress and for a whole week the front page of the Washington Post Is you're running a whorehouse from your house and he was elected ten times after that Re-elected ten times as that so as long as you can Pander to the special interest in your district. Who cares what you do you do anything and so as far as that Okay Anyway, so so politics is very different in this book that I mentioned by Burton Folsom the myth of Robert Barron's like I said I highly recommend it. I've quoted it in a lot of my writings An even better book is my book how capitalism saved America I write about the same thing there And of course no one will be permitted to leave here Auburn without buying a copy of my latest book the problem with socialism It looks looks like this over here I'm going to mention that in a second and so a good example of what happens when a society Transforms itself from market entrepreneurship to political entrepreneurship is Sweden I have a chapter in this my book the problem of socialism called the myth of successful Scandinavian socialism and I did a little research into Sweden because You know, we have a couple of politicians high high-profile politicians in America who have been touting this as well Maybe we should go this route and be like them Well, the truth about Sweden is in the late 19th and early 20th century They were a very limited government low-tax minimal government Capitalistic society they produced all these great inventors and entrepreneurs like Alfred Nobel who invented dynamite the people who created sob and Volvo automobiles and in that refrigeration technology and the per capita income growth in Sweden was the highest in the world from 1870 until about the 1940s the income growth and so it's very prosperous society and Sweden was not involved in any wars. I think 1809 was the last time they were involved in any kind of war So all all of the resources that other countries devoted toward war including the ultimate resource people Were not wasted and squandered and destroyed in Sweden all a decade after decade generation after generation and then they adopted a Political entrepreneurship or a form of political entrepreneurship in a form of nationalizing many industries a Big welfare state highly progressive income tax and the result was that's according to the Swedish Economic Association Which is their version of the American Economic Association There was not one single net new job created in Sweden from 1850 until 2005 55 years of zero job growth was a result So they basically ate up their capital the capital that was created by the earlier generation of entrepreneurs real entrepreneurs market entrepreneurs was taxed to death and They eventually ran out of that a lot of that capital and by way of the title of my book the problem with socialism comes from Something Margaret Thatcher once said that the problem with socialism is that you eventually run out of other people's money That's kind of a cute phrase And she was a big fan of Hayek by the way there's this famous scene where in her one of her first cabinet meetings She she slammed the Constitution of Liberty by Friedrich Hayek on a table and said this is what we believe in So all of her ministers cabinet ministers and so so so Sweden tried to bail itself out By doing a bad imitation of the Fed and they printed money and created 500 percent interest rates in Sweden and that that forced a sort of a Margaret Thatcher style reaction and that they privatized some industries deregulated banking and Communication telecommunications and a bunch of other industries and cut marginal income tax rates But they still have per capita income less than Mississippi which is our poorest state here in the US and so that that's a lesson to learn about what happens when a society goes from a a Capitalist culture a capitalist culture based on private entrepreneurship to a socialistic culture based on what I call political entrepreneurship and so What I want to go through maybe the maybe the most of the rest of my talk is what I call tricks of the trade of Political entrepreneurship and so you know as far as wealth destruction goes You know the reason why political entrepreneurship is Destructive and the reason why you see you know once a society develops that sort of mindset of that sort of policy is that Is that you know wealth is created by private entrepreneurs, but with political entrepreneurs? It's all about income redistribution. It's all about income transfers. It's all about the politicians providing Benefits to one small relatively or groups of small interest groups. They will they will in turn Pay them back in votes and money at the expense of the whole rest of society So it's it's at best a zero-sum game, but most likely a negative sum game you destroy Prosperity and then this is in the economics literature. This is called rent seeking I prefer that the word plunder seeking to rent because rents most most people just think rent is what you pay a landlord No matter how many times you define for them what economic rent is from the economics textbooks They most people still think it's what you pay a landlord and it's been my experience anyway And so plunder thinking that there is an economist named Mansar Olson who wrote several books about this and He used to he's the late Mansar Olson He was a public choice economist He and he gave a he had a little example of the effects of rent seeking or political entrepreneurship and They and there's kind of an interesting image of sticks in my mind anyway, imagine two sumo wrestlers You know these big big Japanese guys who wear diapers and they get it They get in a circle and they and they smash into each other You know and they wrestle or something I don't they grab hold of each other Whoever whoever gets out of the circle loses I guess sumo wrestler and so Imagine two sumo wrestlers wrestling inside a small China shop and Whoever wins gets the cheek keep whatever China is not destroyed And so these two guys just bounce around and knock everything over glass is shattering everywhere And there's one gob that left the game is over You know sumo wrestler a wins and there's like one wine glass left He walks out and the economic lesson is that is that plunder seeking or rent seeking can destroy a lot more wealth Than the winners of the game walk away with you know The the political winners the people who get rich through crony capitalism or political connections Yeah, they'll do very well, but the whole rest of society is impoverished another way of looking at it Is is a really a good thing that more and more young people are saying I'm not going to study business or engineering or Chemistry things like that I want to be a lawyer and work for a public relations firm in Washington DC. That's where the big money is Lobbying You know, what is the effect of that on the economy overall? Well, it depends on what you're lobbying for if you're lobbying against government intervention I guess that's a good thing, but that's only a tiny minority, isn't it? Who does that? I mean, where's the money in that and so and so you know in the longer run That's that's can be very destructive too because you know the things I mentioned chemistry engineering business and so forth those are all aimed toward Being a part of the market entrepreneurship segment of the economy Whereas lobbying and all that that's that's political entrepreneurship. Okay, so tricks of the trade what how has the state? gone about Isolating itself from any pressures by consumers taxpayers investors that anybody To do it at once so that basically the people who benefit from statism are the politicians the bureaucrats and their crow and Supporting groups in the society or whether it's the media who are bought off or the academics who are bought off with the bribes Our friend Larry white these the Austrian economists Larry white and monetary economists He published a study in a journal. I think it was journal of monetary economics, which is a pretty big journal and he took up took down a big long list of economists who have published in these high-level monetary economics journals and He got ahold of information on how many of them were paid in some way by the Fed Research grants summer job permanent job What if I think was over 70% were paid in some way by the Fed and he made me the case that Well, gee, maybe this might have something to do with why these journal articles are so favorable toward the Fed and Not not quite as critical of the Fed so so there are many groups that benefit Well one one way and one trick that is used Based on a book that I co-authored many years ago With my old friend James Bennett. It was called underground government underground government It's published about a hundred and twenty years ago And what this was was this in the late 70s in the US there was a tax revolt Proposition 13 in California was the most high-profile tax revolt they limited the property tax Rate in California, but about a couple of dozen states did the same thing. So there were all these states that did pass Property tax limitations debt limitations spending limitations and so forth even some counties did this in Maryland there's a county that that's passed a an ordinance that said that the You know the income tax rate at a local income tax rate can ever increase faster than personal income does It's it's something you know something that might benefit. But anyway My co-authent are wondering well, how is the government going to respond to this the people have spoken, you know over and over again? They've passed a referendum And saying we want to limit spending limit borrowing. Are they going to just behave behave themselves like the theory of democracy Says, you know the theory of democracy that people are taught in school is sort of a perfectly competitive theory of government The people speak and they want to do this or do that and the government and the politicians faithfully You know do what the people say that's democracy Well, we found that for over a hundred years Politicians be had become experts in thumbing their noses or giving a big middle finger to tax payers whenever they revolted You know revolt schmovo. They don't care about about these things And what and how they their vehicle was to create what we called off-budget enterprises for example Once one chapter we have featured Nelson Rockefeller the late governor of New York was sort of the king of this This thing that he had big spending plans. He was a Republican So naturally he was an out-of-control wild spender in New York and so and he wanted to he wanted to build, you know massive Public housing projects he went he wanted to cover the entire state Pave over the state with state universities and and all sorts of grandiose plans with other people's money, of course He's a Rockefeller, you know, what else did you expect and and a lot of these were turned down by referenda? Two three four five times they kept putting these referenda out and the people of New York voted no overwhelmingly So what did they do they created what are called off-budget enterprises and they funded them With bonds with borrowing, you know taxes are out of the question the people said no No, we're not going to be taxed for this and they called these moral obligation bonds Isn't that nice so so they were acting in an immoral manner by hiding everything from the people and they called them moral Obligation bonds and that that phrase and that type of bond was invented by Mitchell the bond bond council named Mitchell who worked for Nixon later He would work for Nixon it was caught up in the whole Watergate scandal and so but anyway So these don't require voter approval the government these are called revenue bonds in a general sense and they don't require Voter approval and so they just sell the bonds they tell the public well We're gonna we're gonna rent space in these dormitory rooms at the universities and the rent from the dormitories will pay Be more than enough to pay off the bonds the principal and interest never works out that way New York State went bankrupt Okay, same thing happened in Washington State They created something called the Washington public power supply system and the acronym was this How would you pronounce that? Whoops it was known as whoops They wanted to build five nuclear power plants with revenue bonds as non voter-approved revenue bonds And it ended up being the largest default in municipal government history a two two and a half billion dollar default After about 15 years of tinkering around and just a carnival like atmosphere with a construction of five nuclear power plants at the same time and so And so that was another catastrophe that was created and so and so in this book underground government we have you know Not even nine or ten chapters about this sort of thing is it still exists to this day whenever the people of any state in the United States demand tax cuts or spending restraint the politicians have a vehicle that they can use to say Okay, we'll do what you say You know you're the boss and then behind their backs they create off-budget enterprises and the people are ultimately on the hook They're not supposed to be but they're on the hook in Florida right now Sheldon Adelson the billionaire Republican Party financier neocon warmonger, you know generally bad person is building a big casino a gambling casino in Miami and He and others apparently got the state of Florida to agree to build a passenger train line You know they're no profitable passenger trains in America. They haven't been for what a hundred years or something like that They're going to build a passenger train from Miami to Orlando I Guess the business model is that mom and the kids will go to Disney World and dad will go and drink and gamble in Miami Get to get on the train, you know take it a high-speed train To Miami and of course it's being financed with off-budget revenue bonds It's a because you know you go you go to the people of Florida and say this is what we want to do We want to build a new train line that's going to whiz by your neighborhood 32 times a day Close off all the roads, you know with the bars that go down when the train's going by the trains Can be beeping that horn 32 times a day? Do you think how many votes do you think that would get and we're going to tax you? So your tax bill is going to go up by a couple thousand bucks a year for this so that Sheldon Adelson Can have gamblers at his casino and which is by the way is being built right next to the new train station They're building in Miami for this train And so that wouldn't that would never have passed that they took a referendum of the people which they didn't they just They just did it and it's revenue bond financing another another book that I wrote with Bennett that's about Political tricks of the political entrepreneurship is called destroying democracy These are all old books Really buy them for a dollar somewhere destroying democracy We gathered a huge amount of statistics on government grants to every kind of special interest Organization non-profits special interest organization imaginable and found that what what government does is it doesn't just sit back and Do what the people say in an election time? It gives money it gives millions of dollars to special interest groups Which they use to lobby the government for public relations campaign for bigger government more government programs Okay, so the government is paying special interest groups to twist the government's arms They please please give us more government and then and they do and it works And when it works the taxes go up and they give more money to the same groups and say do it again Do it again. And so and so this whole book it's about this fat big fat book in Destroying democracy is another example of political entrepreneurship and it still exists to this day In these data are online now Jim Bennett and I had to do we did freedom of information Requests back in the 80s and it took forever. I mean, you know it to do it, but we gathered it all But today you can go online. There's a database that was created by a group in DC As a result of our book because it this was sort of a hidden thing nobody knew about this much in the 70s and 80s and so that's another example a third book that I wrote with Bennett That's another book length example of political entrepreneurship Is is called official lies The subtitle is how Washington misleads us in chapter after chapter is the idea here was that you know There's a public choice concept called rational ignorance. It says that the average citizen Is rationally ignorant about most of what government does and in that you know The information that we acquire in our lives is mostly to get through school to do your job raising a family paying the bills Planning for the future and we pay some attention to public policy and all that but not much The government is so big that no human mind could possibly comprehend Even one 10,000th of 1% of what the government is up to just go online and Google list of federal government agencies and then just pick any one of them and Click on it and see all the divisions. How many people are all this stuff is and that's just federal That's not yes state of local So so the average person is rationally ignorant and government governments take a great advantage of this politicians take great advantage of this with by offering us a blizzard of lies about what they're up to and so a lot of the information that we do have about Government about what they's up to is Self-serving lies fed to us through the media mostly just over and over and over and with enough repetition The only need they don't need the whole population to believe the lies just enough Just enough to be able to get away with it to get a you know to get a majority in the next election You know, who knows anything about all you know, whenever we go to war It's usually in the famous essay war is the health of the state by Randolph Bourne He mentions that all wars are created by maybe a dozen or two people huddling in some room somewhere in Washington or Whatever the nation's capital is and plotting and scheming to to entice some enemy or Supposed enemy into getting into war and you know, what do we have to do with that? We have nothing to do with that and we don't know anything about it either and we never will this is all done in secret And so and so we that's another example of the tactic of Political entrepreneurship There's all designed to pretty much create monopoly government so that the politicians can do whatever they want Regardless of what the taxpayers the voters consumers whatever you want to call them have to say about it and then Tactic number four is called log rolling That's what the political scientist called log rolling. I'm gonna give you an example of log rolling Let's say this is a local government thing in my example Let's say we have three distinct groups in a in a community in Terms of their preferences for local spending on schools and hospitals These are things that state and local governments spend money on schools and hospitals And let's say these are there are equal numbers of voters at all three groups a b and c and group a is Older people who are concerned about adequate capacity for health care So there are four or more hospitals, but no more schools their kids are out of school that They don't they don't have grandchildren that they don't get they've they've done their thing They've paid property taxes for years for schools. They don't want to pay any more Okay, so so if there was a referendum saying will you pay a little more tax to build a new school? They would say no, they're not interested group B is parents with kids mostly. So they want more school spending They want build a new school or the extra wing on the school hire more teachers Whatever and so they're willing to pay a little more tax for more schools, but they're young relatively young and healthy They're not interested in hospital spending So they would vote no if there was a referendum to build a new hospital group C status quo They don't want more of an either thing no more schools. We've got enough schools with mf hospitals Okay, so if there's a referendum for hospital spending, you know, will you raise will you vote to raise your property tax rate a bit? In order to build a new hospital in the county It would need to get a majority and would it get a majority with this configuration of voters? No, it would get one it would get one third is one third for it and if you held a referendum on schools The same thing you'd get group B would want it but a and c would vote no so you don't get one third Well, what rock log rolling is would be if a representative from group a went to group b and said listen We don't give a crap about schools But we'll vote for schools when the vote comes up if in turn you vote for more hospitals Even though we know you don't give a crap about more hospitals at the same time And so they both hold their noses and vote for the other person's Advantage because they know the other person is going to trade votes and vote for their thing And so what you get in a democracy with log rolling is even though the true will of the majority Is a status quo no more of anything What you get is more of everything more spending on everything through through the technique of log rolling Okay a vote trading or log rolling is what it's called Another trick of the trade is called the washington monument syndrome And what this is is every time if the voters Vote down some proposition, you know sometimes if the politicians think They've done a pretty good job in lying to the public Good enough to get them to vote for some new program or some expansion of an existing program They'll take a vote because after all what do they what do they say the day after election day the people have spoken We have a mandate to to to bomb somebody or whatever. Whatever you want to do. We have a mandate now And so that's there's a benefit to the politicians of actually having a vote if you know you're going to win Yeah, okay And but you don't always know you're going to win sometimes you lose And so when they lose the vote they can take a new vote Well, I'll take a we'll vote over again until we get it right They say and so for what the washington monument syndrome is it's for example, if there's a vote On to raise school spending and the people vote no Well, then they can they can say well There's no money left for school buses. The kids are going to have to walk to school Or you're going to have to drive them no more school buses Or the police will say oh, we don't have enough time to pay all the police And so we're just not going to have any police in this part of town We're going to have to maybe stagger it, you know Mondays the police will be here and on tuesdays. They'll be over there And we'll do that. I lived in buffalo new york many years ago And so i'm a refugee from the frozen north I lasted one year in in by buffalo. It's uh That's all I'll say about buffalo but uh, but uh But I can remember they they did they voted three times for more school spending And it was voted down by the people in in buffalo and so what they did was What I exactly what I said We're sorry. There's no money for school buses and this was in the winter You know november is election time and it starts snowing in buffalo when I was there in october And it snowed all day and all night every day until about mid may In in buffalo and so and there are no sidewalks in the winter in buffalo new york at least the year I live there Everybody just walks on the streets To you know, the snow is plowed up this high on the sidewalks, you know all day all night and so I'm sorry the kids are going to have to walk the school in the dark on the road Or you're going to have to get up and drive through the snowstorm every every day every day And so it took another vote and guess what the voters voted In favor of raising the taxes and the reason this is called the washington monument syndrome is Sort of a famous example of it in 1965 the national park service wanted more money from congress and congress voted no Because there are other bureaucracies that were more successful in getting money for their allocation from congress So the head of the national park service closed down the washington monument And that was it's the most popular tourist attraction in washington dc And there are people from all 50 states who go to dc on a vacation And they want to go up into washington monument And so the members of congress from every state got complaints from their constituents You know, we are one week vacation of the year in washington And we couldn't go up into washington monument And so the congress was bombarded with complaints telephone calls and letters and everything like that They caved in they gave the park service their budget and they reopened the washington monument so that's that's another Trick of the trade of the washington monument syndrome that you know the next time in your community if you're if you're you live in us And you see something like this happening that Oh, we're gonna have to shut down the police or the ambulance services or the schools That's the washington monument in action is what is what that is You know never any talk about Cutting back anywhere to make sure the police are on the job or the ambulance services are still out there Okay The next thing next trick of the trade is creating Barriers to political entry. Yeah, and this is most prominent in congress Barriers to political entry and And here's an example of what the effects of barriers to entry barriers competition in congress what this is is uh reelection rates over the years reelection rates in the us house of representatives From 1964 to 2014 in the top graph There and it's a bar chart here and as you can see From all those years, you know, if you ran a line if you figure out the average, it's about 96 97 So for all practical purposes This there's a web. This is from a website called open secrets dot com If any of you when I get I get a look at this, you know on your own on the web And uh, or if you just type in reelection congressional incumbent reelection rates, you'll find this information and the senate is a little different but not that much And that just about everybody gets reelected all the time Okay, and so you've got a monopoly there and so You know any business that had a government sanctioned monopoly of which there have been many in history I've written about them over and over again in my books and articles and things Uh, well, yes, you don't have to be a phd. You cannot economists understand Then if they have a sort of an iron clad monopoly, they're not going to be quite as responsive To the customers as if they had competition out there And so then and this is certainly true And this is as close as you can get to an iron clad monopoly of power And in this in this sort of situation 96 reelection rate Like I said, barney frank, you could even run a house of prostitution out of your home and still be reelected Uh, you know, I grew up in pennsylvania western pennsylvania. There is this crooked congressman Sorry if that sounds redundant, but uh, but uh, his name was flood and he looked just like snidely whiplash in the bullwinkle cartoons He had a big handlebar mustache. He wore a black fedora hat and a cape Honest to god, you know congressman flood and and he was convicted of a felony for some kind of bribery thing But pennsylvania law at the time said and he appealed And so I guess the law at the time said if you appeal, you're not officially a convicted felon So you can still run for reelection and he did and he won And I remember reading the pittsburgh press interviewed people on the street. Well, what do you think of this? And they said, uh, well, they're all crooks in washington But he's our crook and he's really good at bringing the highway grants and the school grants and all that back to pittsburgh So we like them, you know, we'll vote for them as far as that goes. Okay. So, so why does this happen? Well, one of the reasons this happens is Jerry mandering is one of the tools that allows us to happen gerrymandering It's a combination about a uh, a new england politician called elbridge gerry in the 19th century And salamander, you know what a salamander is a lizard. It looks kind of like this. Here's my drawing of a salamander salamander That's also This is also a good rendition of the 12th congressional district of north carolina And uh, and so and so what gerrymandering is, of course, you know, if you lived I'll take this out And uh, if you lived where tom woods used to live tom just moved from kansas Which uh, no offense to any kansans out there, but tom calls it stinkville He didn't like it much, but here's here's my drawing of the state of kansas I guess By the time they got to kansas They just said, oh the hell with the hell with the rivers and that's just make them all square And you know, if you had four congressional districts, you could do this, you know, one two three Those are the four districts for congressmen but what gerrymandering is of course is that if the It's done by the party in power on census years every 10 years And if the democrats are in power, they'll draw it to their favor if the republicans are in power They'll draw it to their favor so if kansas here you have kansas and let's say there's a district that looks like this You know something like that 90 percent Democrat I'm just making the number up That'll be the district if the democrats get to withdraw the district and the same as republicans And so that means no matter who runs against them, they're going to win They've got overwhelmingly democrat votes there. And so it doesn't matter. It's a guarantees They're always going to be reelected. And so and so that's why you get districts like this a north carolina 12 district And I have more Some other ones this is uh This is in maryland right here. Look at that congressional district You could drive around maryland and be in and out of the same congressional district 15 times And that one's hard to see florida. This is a texas 35th district There ohio 9th district There This is north carolina again Kind of funky Let's see what else do we have here This is maryland 6th district So you get the idea And so gerrymandering is one of the one of the reasons for this plus, you know, they create dozens of uh Subcommittees so any any politician who wants to be on a a subcommittee if you're from a farm district You get on the agricultural subcommittee committee and you get to dispense benefits to farmers, you know farm welfare And if you're from an urban area you get on the urban affairs committee And you dispense goodies to people in the urban areas And and and challengers have a hard time competing if you can play santa claus Vote for me. I'm santa claus. Here's money. That's hard to compete with that with that sort of thing So so between that and then really congressional staff in reality are permanent tax taxpayer finance campaign workers That's every congressional staffer and each incumbent is given dozens of staff members, aren't they? And so if you're a challenger you have to pay people to raise money and pay people to work for you to promote your candidacy But the incumbents you know the taxpayers pay One I have maybe time for one more example a trick of the trade I call it The money for nothing syndrome. There's a whole book about this written called money for nothing my friend mcchezney what this is about is uh The phenomenon of a lot of regulations that are proposed and laws that are proposed Don't seem to have Identifiable special interests behind them usually when if you see a law that's being proposed There's some sort of lobbying group that wanted it maybe for years and then finally congress adopts this law But but there's a category of laws and regulations that doesn't seem to be any identifiable Interest group that one of them they come right out of congress Or the or the white house or the executive branch, you know per se And and so what is the motivation for that? Why you know what's behind this fred mcchezney asked now? He was a law professor for many years at northwestern and emory And this was a harvard university press book. So this is this is not published by some hack outfit in uh in uh somewhere but uh, but anyway the the gist of this is that The purpose of these laws is basically extortion. You know, I'll read you how fred explains this Legalized extortion because if it's done by congress, it's legal, you know If it's they can drop a bomb and kill a thousand people. No problem. It's legal congress did it President it okay Okay during the clinton administration, okay As con he writes as congress prepares to debate drastic changes in the health care system This was when they were debating hillary care. This is from the new york times Its members are receiving vast campaign contributions from the medical industry an amount apparently unprecedented for a non-election year They were the contributions were reportedly Third higher than the prior non-election year with some individual members of congress being given more than one million dollars And and what they were talking about was price controls They wanted to put price controls on the medical industry So the medical industry responded by showering politicians with millions of dollars and then The next line in this article is talk in congress of price controls soon ended So that's how it works proposed some heavy tax or heavy regulation There'll be economically ruinous to a business or an industry That business or the industry will send a lot of money to the politicians to finance their campaigns give their spouses You know six-figure jobs, you know all sorts of side payments And then the congress will say What was this about? This is all a mistake forget about it, you know, it's that's you know What what were we thinking and they'll give up on it and so mccesney wrote a whole book about this About this phenomenon with all sorts of theories and how it how it changes the theory of economic regulation That we already have in the field of economics, but it's it's basically legalized political extortion And so that's another trick of the trade of political entrepreneurship and it all fuels Rent seeking it all fuels rent seeking encourages rent seeking tells people this is how to make money Stealing it legally from somebody else rather than producing new goods and services like real entrepreneurs do and i'm about out of time Since gary north took up two minutes of my time. I guess we don't have time for questions So, uh on to the next one