 a real thirst to hear a robust moral defense of capitalism, which is what we're going to get tonight. I'll keep this short because you didn't come to listen to me. It's my great pleasure to introduce to you tonight Dr. Yann Brough, the President and Executive Director of the Iron Rand Institute in California. He's also the Founder, Managing Director and Chairman of BH Equity Research, a financial company. He's a contributor to the objective standard and a regular media commentator. I'm getting the signal which says we're all going to turn your mobile phones off by the way, so I've got to remind this. He's also a former finance professor and so I think he's perhaps even more qualified than we might imagine to tell us about the situation we're in and how we've played free markets at this juncture. So, Yann, over to you. Thank you, Tom. Appreciate it. Thank you all for coming. It's a real pleasure to be here and a real honor to be speaking. Really, my first speaking engagement in London, public speaking engagement in London, it's a real honor to be under the auspices of the Anna Smith Institute. So thank you for inviting me. There are still seats up front and I promise I don't bite, so feel free to... I think you'll be more comfortable seated. These are very difficult times to be defenders of capitalism, to be defenders of free markets. I get asked all the time, Yann, how can you continue to defend free markets? How can you continue to defend capitalism given everything that's happened? Hasn't what's happened over the last 18 months proved capitalism and free markets do not work? And I say, what are you talking about? What free markets? What capitalism? What do you see free markets and capitalism? Because if we understand free capitalism to mean a system of government where the government serves to protect and defend individual rights, to defend us against force and against fraud, it leaves us as individuals to contract and negotiate and transact voluntarily with one another. What is this capitalism? Capitalism means that I think one of those of us who defend 18 months ago, we didn't have free markets 18 months ago. We had elements of freedom, we had elements of capitalism, but we had lots of elements of state intervention in those markets. By our terms, capitalism has not failed. Something failed, mixture of the regulatory state, the mixture of socialism and capitalism, the mixed economy, and to those of us defending capitalism, that is not a surprise at all. So I think it's protect our tools, protect our definitions, protect what it is that we need in this financial crisis. Is it the element of capitalism, the element of freedom, the little bit of freedom that exists in the financial and generally in the markets that has destroyed our economy? Or is it the mixture of regulation and the mixture of state intervention that has caused this crisis? I think when one looks at the actual facts, the sequence of events that have led to the crisis that we face today, it becomes quite evident that what has led to the crisis we face today, central banks, in my view, take a radical position here, the very existence of the central bank that sets interest rates for all of us. Interest rates are a pretty complicated price to set. You know, in the Soviet Union, they try to set the price of bread to high, and what happens when it's too hot, you can't. You have those lines outside trying to get the bread because there was so little of it. So a bunch of bureaucrats in the Soviet Union sat around the table and figured, what should be the price of bread today? It's a relatively simple commodity, it's a relatively simple product. Interest rates have decided what should interest rates be today? It's twice the price. They get it wrong. And if you want the source of this common crisis, I would take you back to 2003, when in their wisdom, the Federal Reserve in the United States, and I know less about what the Bank of England was doing, but I suspect something very similar, the Federal Reserve in their wisdom lowered interest rates to 1%. When inflation funds rate, the rate at which banks go out and land from one another, inflation was at 3%, 4%. You're suiting. They're paying you to borrow money. They're begging you to borrow. In 2006, it goes through the roof. Because we're borrowing money, everybody was leveraging the hipster. What do you want to leverage? Why not when money is almost free? This is fundamentally about 3%, and then suddenly the Federal Reserve jacks interest rates up, right? They underpriced it. A quarter percent, in the steepest increase of interest rates, in I think U.S. history from 2000, starting 2005 to 2006, then suddenly something you could afford when interest rates were 1%, you can't afford any more when interest rates are 5%. Comics, Hayek and von Mises and economists like that would have predicted this. Case of bad monetary policy. Any such thing as good monetary policy, not a big believer in monetary policy, but this is clearly a case of awful monetary policy. Now, if you add on to that, this notion in the United States, the fact that it's part of the American dream to own a home, the American dream that's been encouraged by every president since FDR. Since the 1930s, whole institutions were created in the United States to help Americans achieve the American dream. At whatever cost was necessary, including subsidizing their mortgages, encouraging banks to lend money even to people who, the banks themselves knew couldn't pay the money back, but in order to gain political capital, if you will, to gain political favors, they did it anyway. That's too, in some cases, required to by legislation. Freddie and Fannie, which was subsidizing Freddie Mac and Fannie Mae, which was subsidizing mortgages. And it's just a bully pulpit. President Bush in 2003 was in Atlanta telling everybody that housing was the American dream and his administration would make sure that everybody who wanted a house would buy a house in America. And indeed, home ownership in the U.S. went from 65% to 70% in a very short period of time. Anybody could get a subsidized mortgage at very low rates. The banks weren't asking for anything in terms of documentation. Prices were going up because, you know, the classic asset bubble, the Fed was printing money, the money was going into home prices. Prices were going up. Everybody felt great until what he just did. So the cause of this crisis, not only do we not have a free market, not only it cannot be capitalism because there wasn't capitalism, but if you look at the elements within our mixed economy that caused this crisis, the elements clearly that caused the crisis are the governmental elements, the elements of the regulatory state, the elements of central banking and all the various regulations in the U.S. over the banking industry and over housing policies. I don't think that anybody looking at the data honestly can come to any other. So to me the more interesting question, rather than what caused this crisis, to me the more interesting question is why, as a culture in the U.S. and certainly in Europe, why are we so eager to blame capitalism? Why are we so eager to blame the bankers? I think every single financial or economic crisis in the last 1,000 years has been blamed on bankers. I think the only difference is in the old days they used to blame it on Jewish bankers, now they drop to Jewish because it's not politically correct anymore to blame it on Jews. But it's the bankers. The bankers have always been at fault somehow on these crisis. Why is it that we're so eager, so enthusiastical? You can see the commentators on TV, they're foaming, they're so excited about this wonderful opportunity to go after capitalism and people support it. In America if you follow the election, it's a recent election. Obama and McCain competed with none other. Who could be the most aggressive candidate to blame the financial crisis on Wall Street and capitalism on the banks? There was no free markets, pro-banking, pro-market candidates in the U.S. this last election. Obama went out because he was more effective in blaming the crisis than, you know, because, and I like them because he was not Bush and was associated with Bush in any way as McCain was. And, you know, one, and he's charismatic, he doesn't say much, but he says it with, what he doesn't say, he says with passports. Engage in kind of way. And the truth is that Americans truly did want change and to some extent they didn't care what change it was. So why is it, why was it so eager to blame capitalism? And I think this is really where Ein Rand, I'm just curious, short hands, how many of you have read something by Ein Rand? This is Ein Rand's real, I think, innovation. Is it, is it identifying the cultural, philosophical, moral roots of the antagonism towards capitalism? Why is it that people are so eager to blame business, to blame capitalism, to blame the bankers? And I think the reason is that capitalism is inherently selfish. People under capitalism are pursuing their own selfishness. A businessman can hide behind the mantra of what they do benefit society and everybody's better off if they make a lot of money, but bottom line is when they get up in the morning and go to work, they're going to work to make money. For whom? For themselves. For their share. Capitalists, everybody really under capitalism is in it for themselves. The workers are going to work because they enjoy the work, they enjoy the work because they get paid for the work because they get paid for it so that they can take care of themselves and their family. Very few people get up in the morning and say, oh Joy, I'm going to go to work so the world can be a better place. That's just not how capitalists function. They go to work because they love it, because it's fun, it's exciting. They go to work because they want to make a lot of money. They go to work because it's what they, it's the way they fulfill their lives. You know, steep jobs. I like my iPhone because I like to show it off. It's one of the coolest devices I think I've ever made. Steve Jobs didn't make this in order to make the world a better place. He made this to make Apple a more profitable, successful company. He made this because he had a passion for beautiful, effective, efficient products. He made this because he believed in it, he believed in it. He wanted to see the manifestation and reality of a product that his imagination was, engineer's imagination. It was all about him and Apple. And that's what motivates capitalists. But more than just the capitalists, i.e. providers of capital, that's what motivates most people within a capitalist economy. I think, bottom line, most people are pretty selfish most of the time. I used to have my students. When I taught, I used to ask my students, how many of you before you decided what to major at the university made a list for all the different professions you could do? And they ranked them based on their social, you know, what would maximize social utility. And then chose that profession that would maximize social utility. And usually they'd be one poor soul in the back. And then they'd ask them, who chose your profession based on what interested you? Based on what you wanted to do with your life. Based on what you thought would be the most fun, the most money, the most interesting, whatever. But about your values, and of course everybody raised their hands like that. Because most people, or successful people, function to try to benefit their own lives as much as they can. And yet, and yet, when I say capitalism is selfish, that people under capitalism behave in such an interesting way, even you guys are kind of squirming in your seats. That's kind of an uncomfortable thing to say. Because what have we been taught since we were little kids? About being selfish. I mean, I know what I was taught. I come from a good Jewish family, and I was always told to think of myself last, to think of others first, to take care of others. That's what morality means, morality means the well-being of other people. And if you think about yourself, it should be the last person you think of. And to the extent that you think about yourself, at best that's immoral, and at worst it's immoral. She is she is she. You know, that's what the kids are taught in the sandbox. No private property in the sandbox. I always, you know, when I talk to parents, and I tell them the sharing story in the sandbox, all parents tell their kids to share their toys. And I ask them, don't you think your kids get the hypocrisy? It's so strange when you're not at your door, and asked to use your automobile, your car for the day, to share your car. How many people would let them? There's always one. How many would? You're not going to let just a stranger drive off in your car. Yet you're going to ask your kid to share his toys with a stranger, every single time. Why? Because we still have an ideal life vision of kids, and our ideal is some kind of commune in which we invite everybody to share with all our stuff. Now we as adults, we're too cynical to actually do it. Because it doesn't work. So we won't do it ourselves, but we project idealism onto our kids, and ask them to be idealistic communists, even though we won't do that. Because that is the ethic that is in our culture. The ethic of our culture is around placing the world being of others first. Altruism, altruism doesn't mean being nice, doesn't mean being friendly and polite, and being willing to trade. It means being selfless. It means self-sacrifice. Sacrificing one's self for others. It means, the literal translation is, otherism. Altruism is otherism. It's an ism around, you know, it's a theory of others, not if you're self. Self is less. Now in my view, that morality, that idea of what is good and what is wrong is incompatible with capitalism. Capitalism is about self. Now, does that mean that the traditional idea of selfishness, that, you know, what have we taught the selfishness is? That it's, you know, it's lying, stealing, cheating, doing whatever it takes? Well, I mean, those of us who are, you know, who actually trade out there and we all know that lying, stealing, cheating, at the very minimum just doesn't work. You don't do well in business by lying, stealing and cheating. And indeed, I would argue, that in general in life, the most anti-selfish thing you could do is lie, steal and cheat. It hurts you more than it hurts anybody else. It's a disaster, I mean, I'm sure you've all told the lie at some point in your life. It's not a good idea. It messes up, you know, your relationships. It messes up your thinking. It messes up your ability to function in the real world. The real world is the truth. Now, I find, you know, as we get older, I find that it's hard enough for me to remember what actually happened. Never mind if I have to remember what actually happened in the lies I told you about. You know, one of the ways you make yourself more efficient thinker is to just focus on facts, just the truth, and leave all the rest aside. That's what being selfish and selfish really means. A culture that is driven by altruism, where altruism is the dominant ethic, I think is always looking for the flowing capital. Because those bankers are clearly selfish. We know that, and we can't deny it. And the bankers try to deny it, but nobody believes that. And yet, in our culture, selfishness equals lying, stealing, cheating. So when they do, when one of them lies, steals and cheats, what happens? We go, see? Told you so. If one of them does it, they all must be crooks. And let's regulate all of them. Which is one of the ways in which we get regulations. Time and time again, it's so being toxic in the United States. This is massive regulation of all business that was passed in 2002, I think it was. And it came as a result of NRA. You know, there were some bad guys in NRA who committed fraud. But the extrapolation was, see? Told you so. If you leave them alone, this is how selfish people behave. Therefore we need to control everybody. All businessmen, the innocent businessmen have to suffer for the sake of a few. But that comes out of this suspicion of anything self-interested. It comes out of this morality that we're all ingrained with. That is part of the fabric of the culture we live in. That is going to be time and time again suspicious of capitalism, suspicious of markets, suspicious of self-interested behavior. And therefore, I'd rather argue, if we are to defend free markets, if we are to defend capitalism, we need to acknowledge the nature of capitalism and be willing to defend the morality that underlies it. We need to be proud to be defenders of selfishness properly defined. We need to be proud to defend self-interested properly defined. And for that, we need to reject this notion of altruism and what altruism means. I don't think, no, we cannot win the case of capitalism. If we play into the hands of a morality, it is in principle opposed to capitalism. And too often defenders of capitalism have tried to do this. The conservatives, and I'm not talking about the British conservatives, the American conservatives, although I think many of the British conservatives suffer from the same problem. The conservatives in the U.S. think capitalism is a great economic system. They get it. They get how it creates wealth and how people are better off under it. But they find it distasteful because it's focused on self-interested. So for example, Owen Crystal, a famous American neo-conservative, wrote a book called Two Cheers for Capitalism. Now why only two cheers? Why not three? Because it's a system that promotes self-interest and selfishness. Not only that, it rewards it, right? If you make a lot of money for a film, you get big bonuses, you encourage to make more money to be more successful. I mean, co-pay, bonuses, all of that are rewards for selfish activity, for being selfish. So, Owen Crystal said, no, I cannot gear capitalism a third cheer. It's a good system, and what's economically well, but it's a little distasteful. Now, I don't think you can really defend capitalism. Based on that, a friend of Owen Crystal's, Michael Novak, gave a talk in Asia about the virtues of capitalism, and he goes through the whole talk about how wonderful capitalism, how good it is, and he gets on the last segment, and he says, look, even though it produces all this wealth and it's really good and everybody benefits, you know, Owen Crystal gives it two cheers. I don't really think it deserves that. One cheer is good enough. And this is in a big speech, defending capitalism. This is the conservative. They're altruists. They bought into altruism. They believe in altruism. They committed altruists. They cannot mesh that with the understanding of capitalism, and they try a balancing act. And the reason, and as a consequence, what happened to the conservative movement in the United States is it drifted leftward. It drifts towards the left. Because whose economic system fits perfectly with altruism? All the socialists. They're collectivists. They're oriented towards others, sharing all of that, far more consistent with socialism. The conservatives know this deep down, and they're willing to continue to see compromise on capitalism and continue to see it drift leftwards. That has been the history of American politics for the last hundred years, how the right has moved left. You know, there are a few blips in the other direction, but the systemic, the long-term projection is left. And I think the cause of that, is the fact that they never bought into the ethics associated with capitalism. The libertarians, on the other hand, tend to avoid all discussion of ethics altogether. That's not for them. That's philosophy. We start with liberty. We start with a non-initiation of force. We're not interested in morality. And I think, by doing that, many libertarians have given up on the real battle for capitalism. Because, again, I believe the real battle is not at the level of the non-initiation of force. I think you have to prove the non-initiation of force. I don't think the non-initiation of force, non-initiation of force is this idea that as long as we don't initiate force against one another, everything's fine and the government doesn't initiate force, that's fine. But how do you convince people that that's a good idea? Most altruists think that initiating force is fine. As long as you're making another person better. For example, tax is a good use way to initiate force, because you've got too much. He's got too little. What can be immoral about me taking some of your money and giving it to him? That seems like a completely reasonable thing to do if you're an altruist. Libertarians can't win the argument just on the basis of politics. In order to win this argument, we have to go to morality. We have to argue against altruism as an ethical system. Against the notion of selflessness. Against the notion of self-sacrifice. And for the notion of what Ayn Rand defined as rational egoism, rational self-interest, rational selflessness. And let me just spend a couple of minutes outlining what that actually means and I encourage you to read Ayn Rand read some of her nonfiction essays in which she deals with this in more detail. But this is not about her life-stealing and cheating. This is about figuring out. And this is hard work. In my view, being self-interested is very hard work. Because it's not about life-stealing and cheating. It's not about doing whatever you feel like doing because feelings are not tools of cognition. Just because I feel like doing something doesn't make it good for me. Being rationally self-interested means really thinking through. Figuring out what is really good for me. Over the long term. Over the scope of my life. What are the actions? What are the values and the virtues that I need to hold over the span of my life to make me the best person I can be. The happiest person I can be. The most successful person. That takes thinking. It takes hard work. It's not about being driven by your emotions. It's not about, you know, life-stealing and cheating, which are anti-productive, anti-selfish actions. It's about really figuring out what makes you happy. And how one goes about achieving that. It's about figuring out how to be productive. How to make a living. And going about figuring out how to do that as well as one can do. So in my view, if we're going to defend capitalism, if we're going to save capitalism for clearly, in the US at least, a clear leftist drift. It's, I think, slow, but it's a clear left-wing drift. We need to start advocating not just for the economics of capitalism, which I think, by the way, the economic arguments of capitalism were made as well 50 years ago as they are today. The Austrian economists, some of the Chicago economists have solved, I think, the puzzles from an economic perspective. There's nothing new in economics, I think, that needs to be done in order to save capitalism. We need to start together with those economic arguments that need to continue to be made. We need to stop making these moral arguments. We need to fight for something that people are still quite uncomfortable with, this notion of rational self-interest. This notion, and I think, at least in America, I think it's a little more difficult in Europe, America has this wonderful political heritage. It has its founding document, a document that has, I think, in the most profound political statement in human history. It has a statement that each one of us has an inalienable right to our own life, our own liberty, and in the most selfish political statement in the history of mankind. Each one of us has a right to pursue our own happiness, not the happiness of the community, not the state, not anybody else, but our own happiness. The right to pursue happiness is profound. And I think that that's what, you know, that's what the pro-capitalist movement, at least in the states, needs to latch onto that, because Americans still believe in that, to some extent. And if we can give that content, if we can give that a philosophical grounding, I think this is winnable, this battle that we're all fighting, or many of us are fighting, for more freedom, more capitalism, you know, freer markets. So, I hope you all join me. Rewind man. Educate yourself about these moral issues. I think they're really crucial. And let's bring the debate, let's make this debate deeper. Let's make this debate not just about the economics of the debate, I think we've won a long time ago. Let's make this debate about morality. And if we do, I think the future's ours. Thank you. I think that Adam Smith will be intrigued, but perhaps disturbed, by your arguments. Because, while we don't owe dinner to the altruism of the brewer or the baker, as he might have said, it's not in time for self-interest that we pull a drowning trial out of the river. Well, I do think it's in our self-interest that we pull a drowning trial out of the river, under certain circumstances, and I think there are certain circumstances where you wouldn't pull a child out of the drowning river. You know, in circumstances where you are sure to die and it's not your trial, it's not clear that that's the appropriate action, that's an action that most of us would take. But I think it is, Adam Smith presents the best, the best of the alternative case for capitalism. A case that I think has failed. I hate to say Smith, but I do think it is a problem. It's a problem that we need to face, because ultimately, the justification for capitalism that Adam Smith provides, that I think many defenders of liberty have provided, is the social well-being aspect. Ultimately, it's a form of utilitarianism. And I think that that is a, I think it's a case that is not winnable. It is a case that once you accept that there's some kind of social utility function out there that we're trying to maximize, now you can have lots of arguments and lots of debates on how to calculate the social utility. Who gets to say, who gets say in calculating it? There is no principal guidance in terms of what a political system should look like under the utilitarian system. And I think the fact that that argument has been around for several hundreds of years now and is, I don't think gaining traction, I think quite losing traction, is to me suggests that the utilitarian argument has been won by the left, not by the pro-capitalist elements and we need a better argument, which I think I'm going to provide. Why would you jump into the river and see a drowning child? Why is it in your self interest? Under certain circumstances. To do that. Because human life is a value to you. Every human being is a potential ally to you, as a potential productive person, as a potential wonderful thing. I mean we take care of plants in our homes because we love life. We like to see them blossom. We like to see them grow. Life is a value. If we're willing to water plants, a child is much more valuable than a plant. If we're willing to save a child now, under the right circumstances. I think it's a moral obligation. When they had the American election, I wondered if the Republicans moved to religious right, that absolutely put people off. So the Republicans have moved to the words of religious right to what extent that put people up. I think it did. I think there's no question that the Republicans have become a party that is, that owes its success, the extent it has success, to the religious right, and therefore has alienated much of the population. The evangelicals unfortunately dominate the internal process within the Republican Party where candidates are chosen. So even though those candidates are often not appealing to the general population, they get the nomination from the Republican Party to the internal mechanism. My personal view is that the religious right is the greatest threat to liberty in the United States today, much more so than Obama in the left. Partially because the religious right is fundamentally leftist, not the way it is when it comes to economic policy. I think you saw that, I don't know how many of you follow American politics, but you saw that with the candidacy of Mike Huckabee, who was the candidate of the religious right, the populist when he came to the economics, anti-free trade, anti-immigration, anti-Wall Street, and very much wanting to move the party left with when he came to the economics, and at the same time wanting to control our lives when it came to personal choices, and actually at some point said that he wanted to rewrite the American Constitution so that religion played a bigger role than it does today. And actually, Palin, who was McCain's choice for vice president, played the same kind of role, trying to get evangelicals by appealing to religion, that her economics were very popular. You know, McCain and Palin started every speech attacking the both companies and drug companies, big oil and big drugs. So the people who provide the life-flight of Western civilization who run everything and the people who make us better when we get sick and have the potential to prolong human life, you know, who knows by how many decades if they're left free. Those are the enemies that the Republicans need to be against. I think that way of the Republican Party is very dangerous. I think it's growing in influence. I think that the Republicans, if anything, are moving more towards the religious right and going to move more towards the religious right after the defeat in this election. What's the matter going on within the Republican Party right now between kind of the free market people and the religious conservatives? The religious conservatives clearly have that out by hand. It's going to be a real struggle over the next eight years of an Obama administration to see who wins that struggle. But if the religious right wins, then, you know, I'm not sure where the hope for America lies because it certainly doesn't lie with the Democrats, but there'll be nothing left of the Republicans. Can I just ask a question of which I'm sure would come as convenient drink to an objectivist? Is that one of the problems with people's understanding about what's happened in the financial market over the last 18 months or two years, is the fact that a month even amongst supposedly intelligent members of the Republican Party is the ability to make abstractions and to understand cause and effect. So your point about central banks pumping the world full of cheap money, not just for the Federal Reserve, the Bank of England, the Bank of Japan, which has virtually no interest at all for the last 10 years, and can't work out the connections, and it's not because they're stupid, it's because they're the narrative to use a terrible new labor expression is that we are seeing the demise of unregulated capitalism. And of course, anybody who works in financial markets will know that there's nothing unregulated about it at all. You've got salons up, you've got the European Union, you've got God knows how many regulations anyone's worked in banks will tell you how regulated it is. So how do you think more effects can be put across? Because if you open any mainstream newspaper or magazine or TV channel, the same old message is we're seeing the demise of unregulated capitalism. It's a bit rubbish, but unfortunately it's very difficult to, or very few people apart from yourselves and a few others seem to be trying to counteract it. Absolutely, and I think the way to counteract it is to speak up, and I think the first thing that we, you know, before we get to any of the more complex issues, before we get to the moral issues that the first thing we have to make, the first claim we have to make is there is no such thing as unregulated capitalism. There is no such thing as this cannot be a failure of capitalism because capitalism isn't healthy. The left has taken the word capitalism. It used to be that everybody was more capitalism. Why? Because it was this mixed economy. You have a little bit more socialism, a little bit less socialism. But if you accept that this mixed economy has capitalism, then nobody's against it. Everybody's for it, right? Because nobody's for pure socialism. And if the mixed economy says capitalism, Clinton was a capitalist, Obama would say he's pro-capitalism, what we need is to capture what capitalism really means. So, what I try to do when I go on television, when I write something, it's first, this is what capitalism is. Capitalism means unregulated free markets. Now, how many of you think our markets unregulated? Nobody even... Nobody really thinks that, but unless it's pointed out to them, their mind doesn't go there, because you're right. The narrative is, to use that horrible word, but the narrative is, that no, this society is supposed to think about these things. What we need to do is change the narrative. We need to start asking questions and you can do it by just asking questions. Where is this unregulated capitalism? Where are these unregulated banks? Do you realize how many lines of regulation they are in the U.S. bank regulation bills that every aspect of a bank's functioning is regularly? Everywhere deposit insurance. Now, of course, you in the U.K. have unlimited deposit insurance. So, because the government guarantees it all, so we don't have to think about who's safe and who's not. Make us all grade them right off the bat. Of course, that creates something on the part of the bankers. The bankers, as they get into more financial distress, have a greater incentive to take on more and more risks because it's not their capital, it's not their money anymore. It's the depositors, and the depositors don't care because they haven't guaranteed it. It's really in the U.S. that, you know, it's back in the 80s. In the 80s, the U.S. went through the S&L prices, the saving and loan prices were the existing saving and loans were going bankrupt and everything. And what's fascinating is that the Wall Street Journal used to publish a little chart which was which S&Ls in other countries were offering the highest rates on accounts, on checking accounts, saving accounts, cds, money models. And they would see, of course, people want high returns. People would send them huge quantities of money because they want a high return. Of course, that chart was predictive, almost 100% of which banks were going to go bankrupt. But then, six months, most of the ones on this chart were bankrupt. So why were people sending the money to a bankrupt institution on the verge of bankruptcy? Because we don't care because it's all guaranteed by the government. Now, what do you think those bankers were doing when they got this money that they, in those days, they were paying 10, 12% on some of the money? Well, they hadn't invested in ventures that they expected to get 50, 20, 25% on. Now, what kind of ventures get those kind of returns? Very, very risky. I call it, they were basically buying lottery tickets. And once in a while, one of these banks won the lottery and the other survivor lost the money. And that's why most of us went out of existence during the 1980s and 1980s. But the mechanism to make that happen is creative. And I said, just pointing out, in these little regulatory aspects, what kind of loans bank can make, the very fact that the Bank of England and the Fedors are set the interest rates, all of those, we just need to keep conveying this message what failed is not capital. What failed is not capital. Even if you don't make a positive point about what really caused the crisis is a central bank, just enough to get the narrow, and it's going to take a lot of work because we're outnumbered. We just are. And unfortunately, I've seen so many free-market economists crumble with this crisis, you know, something changed their stripes or turned that away. I happen to think that a big part of that is this small, uncomfortable-ness to it with the idea of capitalism that causes people to switch. Yes, over the years, having spoken about 599,000, and what would you regard as the rule of government, in a sense? So I think the rule of government is police to protect us against criminals and to protect against, against fraud. A judicial system, a judiciary that arbitrates disputes and of course prosecutes those who committed fraud and committed crimes. And a military that has protect us from fraud and invasion, from terrorist attacks, from violation of our property rights and, you know, I think there's an open debate at which point a violation of American, let's say we're talking about America, of America's property rights overseas would justify military intervention. I think that's a debatable issue at what point that happens, but I certainly think there is a point at which massive confiscation by a foreign government of American property is justification enough for the US to use a military force in order to protect the individual rights of its citizens. So the overarching idea is the rule of government is to protect the individual rights. The individual rights of its citizens, that's why we have nations, rather than the individual rights of all citizens all over the world. American government is set to protect the individual rights of Americans. UK government is set to protect the individual rights of the British. We all look the same, and there's not much difference between them. Unfortunately, we don't have that kind of circumstances. I'm not sure, you know, I get a sense that you're asking more in terms of the foreign policy, but I think the A government is set to protect the citizens. So if it's attacked, its job is to defeat the enemy as thoroughly, as quickly, with as few casualties to itself as possible, and then bring the troops home. My view is to crush the enemy and come back home. No nation building. No martial plans. No helping established democracy in the world as you know, Bush would have liked. No setting up puppet governments overseas. You go and penalize the people who've inflicted, you know, who've violated your rights and you get out of there as soon as feasibly possible. Again, the criteria for all those actions is what is the action necessary to protect the individual rights of your citizens while minimizing the risk to your office? How do you know that we don't have that? So I don't have to tell the objective of democracy. It's understood as majority rule. That is, I'm against the Athenian style of democracy where they don't like what Socrates has said. They all get together in the arena and they vote to execute. Socrates takes the poison because he believes in democracy too and the people have spoken and Plato's sophisticated escape plan goes to waste. I'm against majority rule and I think this is why defining the world of government is so crucial. If we define the world of government as protecting individual rights then no majority should ever be allowed to violate somebody's rights. The fact that 51% of people want me silenced gives them no way to actually do it. The fact that 51% of my neighbors want me to keep the trees and I want to chop them down gives them no way to do it. Of course in the US today and I'm sure in many other countries they can't. My neighbors can decide whether I go down to my house whether I chop down a tree or not. All of that is decided democratically in the United States. America has moved towards democracy. The whole idea of a right to property is an anti-democratic notion. It says that 51% of the people can't vote my property away from me. Ammon and Domain, which is democracy is a plight to property rights. Freedom of speech says 51% can't silence me. 99% of the people can't silence me. That's so, I'm a strong believer in constitutional republic in the context and in the framework like the founding fathers of the US established where they are individual rights. Nobody can take them away from you. No majority, no democracy. Things people can vote on are very limited. They can vote on their representatives and their representatives can do very few things. You know, things like a clear definition of what property rights actually mean. Property rights are an evolving concept that you challenges the property rights continuously. We need a legislature to continuously define and look at how you define property rights on the internet. How do you define property rights over minerals? You know, they went a long way in the 19th century for example, property rights and at some point in the late 19th century all new thinking about property rights basically stopped. And today we don't have property rights. Today it's just whatever the community wants. So, I think we need to get away from democracy and towards protection of individual rights and away from the majority world. And towards people voting on very narrow things. Only things that are not violations of other people's property rights. That's a good question. You said you were not vocal. And secondly, presumably, with the views you articulated you would be very much against legislating against Holocaust denial. Second one is easy. I'm definitely against legislating against Holocaust denial. Somebody wants to deny the Holocaust they should have complete freedom to do so. I think it's despicable, but that's just the legislation has no role yet. Freedom of speech is absolute. Ron Paul is a little bit more complicated. I really dislike Ron Paul quite strongly. Which will become a surprise to many of you. I think Ron Paul is the wrong kind of combination of libertarian which combines a strong religiosity and as a consequence an unwillingness for example to take a stand on abortion. Or you know, fudge your stand on abortion by saying it should be left up to states, i.e. democracy. I claim it's an individual right. It's an individual right question. It's either you're violating individual rights or you're not. And it should be an absolute yes or no. It shouldn't be up for a vote. It's fine. The mother has rights and the fetus does not. But whatever you follow, it's an individual right to take a stand. It's very accommodating on religion and Ron Paul is quite religious himself. I also dislike his wrong policy a lot. I think that Ron Paul and many in the American libertarian movement came up strongly with this idea that 9-11 was America's fault. Somehow our presence in the Middle East or something like that causes I disagree with that. I don't have the time here to go into it but I disagree with that strongly. I think the notion that America should apologize after 9-11 which is what many of these wanted, many of these libertarians wanted I think is horrific. I call it, there's a certain wing and I'll leave it at that. A certain wing in the libertarian movement and anti-American in a very, very deep sense. I mean Mario Apar comes out in sections for the Soviet Union over America. They hate government so much because they're anarchists. They hate government so much that they project that hatred on the American government more than they do on any other government in the world. And I think that's what led them to blame everything. Every crisis in the world was America Paul policies and Ron Paul unfortunately I think comes from that tradition and so I opposed him also. And now I love the fact that in a debate you could say this should be a bit of a that was fabulous. And there's certain things that he said that were just great but he also carries this other baggage that I don't agree with. One sentence, no punctuation and then we can take them all apart. That's a very simple question. Are you optimistic? I can't even remember. Socialism is not compatible with altruism because I'm forced to pay taxes. It's not altruistic at all. Secondly, I agree that the present crisis is a catastrophic failure of monetary policy but if we didn't have central banks would it have been avoided? The emotional book for your narrative you need an emotional book as well as a logical rational book otherwise you won't be able to land it. We spoke about rights and foreign policies wondering what the status would be of torture and then did the torturing Okay? Socialism and altruism How about we do this? Let's leave emotion and altruism to last because you want to end on a positive note. Let me do socialism, torture and then No, there's nothing in altruism that says that it has to be volunteered. Otherism does not acquire you to voluntarily sacrifice. It's fine to force people to sacrifice. There's nothing in the Christian ethic there's nothing in the Jewish ethic there's nothing in the Islamic ethic there's nothing in the Contian ethic that suggests volunteerism. If I think you're not giving enough to the poor it's completely fine for me to force you to give more and you'll still land up in heaven as a consequence. The fact that you were forced to do it doesn't change its moral status necessarily. But the other orientation is consistent with socialism. Socialism, you can sell socialism with altruism much easier than you can sell capitalism with altruism. Capitalism is unaltruistic even though it's voluntary even though it's charitable even though people give more under capitalism to charity than they would under any other system normal pro-life pro-charity pro-people than under any other system the motivation is not altruistic it's selfish fundamentally even when they do charity and there's a consequence if you're an altruist capitalism is up that's a quick answer torture. How many of you watch 24? It's a percentage of you watch 24. There's no question in my mind that in certain circumstances life or death circumstances torture is absolutely moral not only that I would argue that it's a moral necessity that not to torture somebody when you know the torturing will save lives when you know that that person is a bad guy I'm assuming that that the torture person is a bad guy you know the person is a bad guy and lives will be saved if you don't then it would be immoral not to torture him because then these people are dying and the torture is affected I have no opinion one way or the other about that that's a technical question you'd have to ask the experts I think it is but that's just a personal opinion a little bit based on the fact that I certainly use Israeli military intelligence a long time ago I didn't actually do any torture I promise to go I'll give you an example and actually this comes from a leftist Alan Dushowitz on torture and this example is you make a person your child has got a bomb strapped and a terrorist is right in front of him and only he can dismantle the bomb are you willing to do whatever it takes to get that terrorist to dismantle the bomb so my question is about terrorist suspects as opposed to known terrorists I think that's usually where the torturing is going there's no question there are great areas here you don't torture somebody you don't know but that's why I like 24 because it presents these kind of moral deliverance there's a nuke going off in Los Angeles right now you've got a person that you're convinced 80% is responsible he's the only one who can dismantle the nuke the nuke goes off and 50,000 people are going to die of it what do you do well there's a certain point where if he's innocent there's no torturing will be ineffective it would be stupid to waste of time you've got a bomb to dismantle at some point it becomes the only practical thing to do it's great and that's why it should only be an extraordinary circumstance and you know but I think it's left to the experts to make those kind of evaluations so I don't rule torture out is my point but it certainly don't suggest that every criminal should be tortured or every suspect of a crime should be tortured Emotion and optimism Emotion and optimism I am optimistic and I do believe that we need to make an emotional case for capitalism and as you can see I'm a pretty emotional guy and I think we can make an emotional case I think we have to make the rational case but we can do it with passion first of all secondly I go back to this notion of the pursuit of happiness at least in America we can hook people by the idea of here's a morality that completely justifies provides a basis in philosophy and morality for your pursuit of your happiness you don't have to feel guilty for being successful you don't have to feel guilty for working hard and taking care of your family and not worrying too much about starving kids in Africa you shouldn't feel guilty about this Americans at least and I think generally it would be respond positively to that message of self-fulfillment, self-actualization happiness individual happiness taking care of oneself and one family that is the message that needs to be conveyed and the capitalism is a system that allows them to do that it's the only system that leaves them free to pursue their own happiness that's something people can really grasp onto and relate to and the reason I'm happy is because of that, people still respond positively to that message and I believe that Iron Man is probably the best communicative of these ideas together and part of my optimism is the fact that through many of our programs we believe that about a million kids in the United States every year reading Iron Man Iron Man sales in the bookstores, unrelated to our own activities Iron Man sales at the bookstores she sells somewhere close to double what she sold when she was alive so I was sure I would sell double the number of copies today every day in the bookstores there was a best seller, New York Times best seller in 1957 of course came up the growth rate is clearly upward more and more people are talking about her ideas more and more people are taking her seriously today there is a chair in the philosophy of objectivism at the University of Texas in Austin a top 20 philosophy department in the world as a chair in the philosophy of objectivism there are regular seminars among philosophers to talk about her ideas you know there are at least somewhere between 50 to 100 universities in the United States where Iron Man is being taught on a regular basis so I am very optimistic because I think these are powerful ideas and if we can expose our people to them people respond positively to them our enemy is ignorance and if we are getting these ideas out there and we are reading the books so people are being engaged with these ideas then I cannot help but believe that we will and anyone who defends capitalism with such a bigger I think deserves a medal and so here is your one with Adam Smith thank you