 Good morning ladies and gentlemen. Welcome to Houston, for those of you from out of town. Welcome to the Mises Institute's high school seminar on prophets. Our prophets evil, we're going to be asking and answering today and having a lot of these, thank you. Okay, we have the answer already. We'll talk a little bit about what prophets are, what functions prophets serve, and the differences between prophets in a purely free society and prophets in an interventionist society like the one we have in the United States and around the world. I want to give a special welcome to our friends and supporters who are watching us online. This event is being streamed live on the Mises Institute's television channel on Mises TV. We're glad to have all of you with us as well. You should all have a program listing today's schedule. We have two outstanding speakers lined up for you, or at least one outstanding speaker, Dr. Robert Murphy, who many of you know through his writings and through his videos and other appearances. Dr. Murphy received his PhD from New York University, where he studied with some of the most eminent scholars in the Austrian economics tradition, such as Israel Kershner, Joseph Salerno, Mario Rizzo, and others. I'll also be speaking today. I'm Peter Klein, Executive Director and Carl Manger Fellow with the Mises Institute and also a professor at the University of Missouri. The high school seminar today, as well as our Mises Circle tomorrow, are made possible through the very generous support of the late Jeremy S. Davis and his wife Helen from here in Houston. Some of you had the pleasure of meeting the Davises and the world lost a great champion of liberty when Jerry Davis passed away last year. Jerry was a member of the Mises Institute's Rothbard Society. He was a graduate of Williams College in 1956, majoring in philosophy. He received an MBA in finance from Columbia University in 1960. He worked in the real estate, energy, investment, and other businesses. He was very interested in Wall Street, in the energy industry, not surprising for someone here in Houston, also in art and in higher education. He was particularly enthusiastic about the Mises Institute's student programs, high school events such as this one, and also our Mises University for college students. Mr. Davis was the first donor to sponsor a high school seminar, like the one that we're having here today back in 2009. He also brought another group of high school students here to Houston starting last year in 2011, and of course his generosity is allowing us to have this event and also our Mises Circle with Ron Paul and others tomorrow. So we very much appreciate the support of Mr. Davis and other generous benefactors of the Mises Institute. So, profits. What are profits? Why are profits important? Should we care about profits? Should we be concerned about profits? We gave the seminar the title, Our Profits Evil. Now, those of you who are attending this event today and those of you watching online are not a random sample of the general population and most of you probably are more sympathetic to the idea that individuals in a free market ought to be able to earn the profits that they can earn and that it might actually be a good thing in terms of channeling resources towards entrepreneurs and other individuals who are in a position to use them effectively. Folks like that should earn profits, that they strive to earn profits to avoid losses and that this is part of a healthy and functioning market system. However, as you know, if you watch television, if you ever go to the movies, if you've ever turned on CNN, you know that in our culture today, in popular culture among members of the mainstream media and politicians, profit is a dirty word. It's often a dirty word, right? If you look at the typical Hollywood blockbuster movie, the villain in a movie like that is most likely to be a businessman, right? Whose aim is not to, you know, take over the world or destroy it with nuclear weapons, but to earn a heck of a lot of money. We want profits and that's typically the way we depict someone in popular culture is being a bad guy, right? All he cares about is profit. Protesters tell us to put people before profits, or when the news media wishes to, you know, demonize or begin the process of demonizing a particular entrepreneur or a particular business, the lead will typically begin by reporting that company acts earned record profits last year, right? Huge profits are being earned by this company or that industry or this individual. That is, and we're conditioned to bristle at that. Oh, no, someone has earned huge profits. What have they done wrong? Right? What widows and orphans have they thrown out in the street? This kind of thing. Now, of course, those of you who have studied economics, particularly economics in the Austrian tradition, know that that's not the right way to think about profits. However, right, it's one thing to talk about what profits do and what function profits serve, where profits come from in a market society, in a free market economy. But the picture gets a little bit more complicated when you live in an interventionist society with a so-called mixed economy like we have today, right, with a healthy dose of market activity, but a large measure of government intervention in a society such as that, we might tend to be a little bit more skeptical even ourselves, right? In that kind of a setting, some entrepreneurs, some business people, some companies can in fact earn profits not by producing the good services that consumers will freely choose in a market setting, but because of government patronage, because of special protection that is provided by government officials, and a whole host of other means that we'll talk about today. So what we want to present to you this morning is what we consider to be a very balanced perspective, right? What are profits, what are losses, what function do they serve in a free society? How has that picture made more complicated in an interventionist society, and what can we do to make things work better? So that's what we want to cover in the three talks that we have scheduled for today, and please note that there's also a Q&A panel at the end of the event today. That's an unstructured panel where you in the audience can ask any questions that you like. We particularly welcome questions from our student attendees, and we may tolerate a question from a parent or two, but we certainly want to favor the students in that discussion. And we do have a coffee break, a bathroom break at 11 o'clock for 15 minutes. And again, if you need anything during the day, please see me or please see Christy Holmes in the back. So without further ado, let me turn it over to Dr. Bob Murphy. Thanks, Peter. Thanks, everybody. I hate following him because I have to adjust the mic down all the time. Thanks, everyone, for coming. Peter and I were discussing, right before we started here, the difference, because he's a college professor, and I was one for a few years before I had to get out, the difference between giving a talk to a bunch of high school students and their parents versus college kids, that for one thing, you are all here early. You all sat down quietly. People are actually sitting in the front rows. These are things that will never happen when you guys go to college just to warn you. Another difference I noticed when he first came in here and said, good morning, you guys actually said good morning back to him. That's just inconceivable that that would happen at college. They would just look at you like that. So we do appreciate you guys coming out. Just to echo some of the things that Peter said here, just keep in mind, there's a mixed group here. Some of you, this is the first time you may have come into an event like this. Perhaps your parents dragged you here and you're wondering why you're here. And so we can't just assume that we're all on the same page. And so in these sort of introductory remarks, these opening lectures, Peter and I are going to give you the foundation. And then in the Q&A, of course, that's the place where, I know some of you are much more advanced readers in this tradition. You can ask us the real hard questions. Before we started here, I was talking to a 16-year-old young man. And he was asking questions I'm not sure I would know how to answer. So for sure he's smarter than Peter Klein and he might even be smarter than me. We're not sure yet. We're going to see. But anyway, he'll stump us in the Q&A, I'm sure. So as Peter said, this is a hot button issue. And of course, popular culture teaches us, whether in the media or movies or press, that if somebody's earning a profit, that's prima facia, a signal that we should be suspicious about this person, that they're doing something underhanded. And that's the sort of knee-jerk reaction that we're going to try to diffuse today. So as Peter joked, one quick way is just to say, our profit's evil. Nope, let's go to the restaurant. We can be done. But we want to push it farther than that. We want to explain why is it that we don't think it's right to just say is a knee-jerk reaction profits aren't evil. But on the other hand, we don't want to commit the opposite mistake. We don't want to come off as saying that somebody who earns profits, you don't need to give me any more information, that person is morally praiseworthy, and we should all try to be more like this person. Or when you're raising your children, we're not saying you should teach them that the real important thing for how you should live your life is go be profitable in terms of dollars and cents. That's not what we're saying either. So I was trying to think of an analogy to get that across. The best one I could come up with would be a sports analogy where if we grew up in a culture where everybody thought that winning at sports was a bad thing, and that if newscasters said, so-and-so scored 40 points in last night's basketball game, and we're looking into that to see how that was possible, and they were really scolding them, that would be an odd thing. Because I think most people would say that in general, being successful at sports, being the high score, being the MVP, those are good things. Certainly you wouldn't say they're evil. Now by having said that, does that mean therefore that winning is everything? That if we catch somebody who wins because it turns out he was cheating, that that's still a good thing? No, of course not. Or even something less obvious, if somebody, a coach for example, is the winningest coach in his sport, and he's being lauded officially going to these meetings and so forth, but yet in his private life, he's a scoundrel, that he comes home and yells at his kids or whatever, and he doesn't care about them because all he cares about is that his team is successful on the court or on the field, well then most of us would probably think, well that's not a good thing either, that he's placing, being successful at sports above things that should be more important. So it's a similar thing, I think when it comes to profits, certainly Peter and I believe would be on the same page with this, that what we're saying today is there is a sense in which, without giving us more information, earning profit per se is actually prima facie a good thing, and if you have the sort of standard morality that most of us possess, then you would say it's a good thing, a morally praiseworthy thing, but that doesn't mean everybody who earns profits, therefore, is a good person and we should emulate them. There are ways you can earn profits that are not morally praiseworthy. The last little caveat is why would you possibly put two economists in front of a crowd to talk about what morality is? That's a very unwise strategy, because I believe me, I know a lot of economists and their views on what's right and wrong a lot of times are pretty horrifying. So why, of course, we're here is because the reason the public has this knee-jerk objection to profits and most people are suspicious when they hear about somebody's profitable, the reason isn't so much that we have a difference in terms of our morality really. It's not that really what the difference is for most people is that they don't understand what it is that profits actually do. And so we think if we educated people, which we are qualified to do as economists, to say what is the function of profits in a market economy, then we think everybody's shared moral framework would kick in and they would realize, oh, okay, I didn't realize that when you earn a profit, it's because of these considerations. And now that I understand just the neutral mechanics of it, not being judgmental one way or the other, just studying it as a scientist, as it were, and understanding what do these things do in reality, now our moral framework kicks in and we can say, okay, so now I'm not going to have this knee-jerk suspicion. So the first thing we should do really is explain what do we mean by profits. Now in today's talks, we're going to be at a sort of casual level, we're not going to get too technical. So I think one useful way to think about it is just to say, if you buy something at a certain price and then sell it later at a higher price, well then you've earned a profit on it. And that's really I think what most people have in mind when they talk about earning profits. And so it's that action as simple as that is that I just described that we're going to say there's a very real sense in which that someone who goes out and does that, that buys something at one price and is able to later sell it at a higher price, that per se is a socially useful thing. And in the absence of other information we should say, yeah, that's a good thing, go ahead and do more of that. Good job, well done. Now if you want to get a little bit more technical people distinguish between profit and interest, so let me just spend one moment talking about that difference. You see the distinction there, you could, if you lend someone $1,000 and then you write a formal contract and say, next year you're going to give me back $1,100. So the rate of interest would be 10% on that loan. Well technically, that fits the definition where you give somebody $1,000 and then time passes and they give you back more money than what you put into it originally. Some people, is that profit or not most economists would say, well no, that's interest. So what economists usually have in mind when they talk about profit is earning more on something than was generally expected. And that really isolates what it is that entrepreneurs do or speculators do when they seize profits, when they're able to buy something at one price and sell it later for a higher price, it's because they saw the future better than the average person did. And that's why that was possible. So let me just give you a silly example to see the distinction there. Imagine somebody says to you, oh my gosh, I had this foolproof way of making a bunch of money. What we should do is in early July, let's buy a bunch of stock in fireworks companies because I've studied the statistics and just without fail every year, right around July 3rd, the sales of fireworks just go through the roof. And so let's be smart and get in early, like we might even get in in mid-June just to be safe and we'll buy a bunch of stock of fireworks companies and then we'll wait until the stock price goes up and then we'll sell July 5th or July 6th. And that's my plan. All right, no, that would be silly. Let's think of why is that a silly plan because everybody knows that on July 4th there's a lot of fireworks that get purchased right around that time. And so that information has already been priced into the share price of any companies that have to do with manufacturing or selling fireworks. So you wouldn't be able to earn a profit based off of that insight because that's something everybody knows. The way you earn a profit in a market economy is you see the future correctly and it can't be something obvious. It's not that you're investing winter hats as we go into winter. People know there's going to be a surge in sales of those things. What you have to do is see the future correctly and in a way that's not obvious. And that's what gives you the opportunity to jump in because what happens is, and we'll talk more about this later on, what happens is the prices right now don't reflect that future bit of information that you have that other people don't have. So it's your superior ability to forecast the future that gives you that edge and allows you to earn profits. And of course if you're wrong, well then you will suffer losses and that's the flip side and I'll be talking about that more in my second lecture. But that is the essence of it and that's the sense in which, and we're just going to elaborate on that basic insight, that's the sense in which earning a profit is morally praiseworthy to the extent that we want to encourage people to go out and forecast the future better and we'll see that that adjusts our use of scarce resources so that we take into account the future more correctly. When people, let me just put it this way, we have to do something with resources and by we I just mean collectively of course in the real world it's specific individuals have to make decisions but we human beings when they go out they have to make decisions about how are we going to use our resources. There's only so much copper and tin and crude oil. There's only so many workers with various types of skills to go around. It's been decisions have to be made in some way as to how are we going to use those resources and what sorts of things are we going to start producing for the future. And so of course what's going to guide us in that well one of the things is we have to anticipate what are people going to want in the future what are the consumers going to want and so what it is that profit does it's a signal that somebody forecasted better about what the consumers were going to want down the road than his or her peers did and that's what made the profit opportunity possible because again it's not enough just to say something obvious that you know I think people are going to want apples next month I bet you some people somewhere in the country are going to want to buy at least one apple everybody knows that you can't earn a profit off of that what you could earn a profit off of is to think right now most people in the market in the apple industry the retailers and the farmers so I think that the demand for apples is going to be a certain level but I think it's going to be higher than that and I'm willing to put some money on that proposition and so I will invest my resources banking on the fact that I think there's going to be a demand for more apples than everybody else right now thinks and so if that person ends up being right then we'll see that that actually helps people that they're going to be glad the people who want to get more apples next month those people are going to be glad that there was somebody a month earlier who saw that coming and then did things that were perhaps in his narrow self-interest to do but yet yielded this beneficial outcome that helps them as well so there I've touched on what I'm sure many of you have heard of is what's called the invisible hand and that it's a metaphor that goes back to Adam Smith and it the idea is that in a market economy that the genius of a market economy is the incentives are such that people who are doing things that just directly benefit themselves and that and that could be why they're doing it nonetheless again assuming that it is a genuine market economy and we have property rights that are respected that will shower benefits on the public at large and so that's what Smith was saying that it's as if by an invisible hand people acting in their own immediate interest promote the general welfare I'm paraphrasing but that was the gist of what he was saying okay so that so that's a sort of a beautiful outcome that it takes you know people sort of innate selfishness and greed and channels it into something productive so that the person who's lying awake all night in a market economy trying to think I really want to be rich how do I do it well the way you do that a market economy is you have to sit there and think how do I best satisfy my customers or if you're a just a financial speculator you got to think what our price is going to be like in the future that other people aren't seeing right now and how can I be better than other people in anticipating those things all right and so that's that's pretty benign right that that's what a market economy does it takes these really ambitious people and it makes them lie awake at night thinking about how can I make other people happier how can I do that and that's what a market economy ends up doing when you understand economics especially in the in the Austrian tradition so how is this possible how could it be that when people go out and earn a profit that that showers benefits on everybody else well the what lies at the heart of that is that a voluntary trade is a win-win situation so what do I mean by that is there's this false idea I think I think a lot of people had when they say that if somebody earns a profit it must be at the expense of somebody else right that one person's profit must correspond to somebody else's loss in which case profits would be a zero sum game but to repeat that's not the way the world is right now right in a market economy if somebody goes out and earns a profit that doesn't imply oh there must be somebody else who lost the same amount and so it's just a big wash and so the only way you can win is if somebody else loses that's not the way genuine free market capitalism works so to see the essence of that we don't have to get real fancy with with complicated examples we can just think about something real simple like two kids go to school and they have their lunch the one kid has a peanut butter sandwich the other kid has a bologna sandwich and the kid who has peanut butter you know his his parents have sent him to that went to school with that thing for a week straight and the same thing with the kid with the bologna sandwich he's been getting that a week straight and they're sick of it and they would each prefer the sandwich that the other kid has and so they just they swap at lunch and you know something as simple as that just analyzing that as an economist you say okay what just happened there talk about that well they both walk away from that exchange thinking they're better off right because the kid who started out with the peanut butter sandwich we're saying just suppose he wanted he would prefer to have a bologna to a peter sandwich so he makes the swap so in his mind he got the better end of that exchange he gave up something less valuable and got something more valuable and on the flip side for the other kid it's the same thing he started out with the bologna sandwiches I would much prefer a peanut butter sandwich so in his mind I got rid of the thing that wasn't valuable or as valuable and walked away with the thing that was more valuable so that's sort of interesting if you think about it how can it be that they both walked away with the more valuable item and it's because value is in the eye of the beholder when we're talking about economic value in this context right it wouldn't be possible just make sure you understand what I'm saying here it wouldn't be possible for both kids to walk away from that trade with the heavier sandwich or the sandwich that had more calories or the sandwich that you know had more fat content right that wouldn't be possible because that's an objective property of the sandwiches one of them is heavier or they could be exactly the same and one of them has more calories and one of them has a higher fat content so it can't be that they both walk away with the heavier sandwich because that's a physical thing intrinsic to the sandwiches but since to say what's the better sandwich meaning in terms of how the student feels about it well that is in the mind of each student and so it is possible that they have different rankings because again economists would say value is subjective it's not an objective property of the sandwiches so that simple insight really sheds a lot of light on how it is in a market that profits serve people because the essence of what somebody does who earns a profit is he buys something that is valued in a certain amount by people and he transforms it in some way and then produces something that people value more highly and that doesn't it's not that by doing so he must be sucking that value from somewhere else right it's you can increase people's valuations and that's in that sense that sort of metaphorical sense or loose sense without it draining from somewhere else just like those two kids when they approached each other and made the swap of the sandwiches and walked away and if you ask the one kid hey did you get the better end of that deal and he says yep it doesn't follow that oh that other poor other kid must have gotten ripped off no they both could have walked away truthfully thinking that I got the better end of the deal and it's not that one of them was swindled they both really did benefit and so that's the essence of how it is in a market economy if somebody perceives something and realizes the crowd is missing this that you know we they're going to want more apples next month or these resources right now are being used to make these products over here but you know what that's that's not the best way to do it I could take those same resources and I could make something that the consumers would want even more and by doing that and then you earn a profit in the process you're not there for hurting somebody else necessarily okay so that's that's really the the essence of what we're talking about and that's how it's possible let me spend a few moments talking about a very important contribution so as you can see here we're from the Mises Institute I'm sure most of you know who this gentleman was but in case you don't Ludwig von Mises was one of my opinion one of the the most important economists certainly of the 20th century perhaps even of all time he made many contributions and one of his most important was his critique of socialism so for our purposes today I'm not going to get too technical with it but I do want to just give you the broad outlines of what it is that he pointed out and you'll see the relevance to our discussion about the social usefulness of profit so what Mises what he's going to say is is that socialism as a system doesn't work in terms of allocating resources all right that it's just it's just not efficient and to understand the importance of his contribution you should see he was taking part in this debate when certainly in the late 1800s and early 1900s when a lot of intellectuals thought that socialism was the wave of the future so they thought that rather than having prices and profit and loss and having individual business people be the ones in charge of directing resources in their limited spheres of influence surely we can have a much more rational sensible moral economic system if we take a bunch of experts and then take a bunch of people who we all agree are very wise and morally upstanding people and form a committee and then have them advise the government or maybe even the people in the government themselves the ones making these decisions but in some sense we'll be more rational and scientific about it and we'll just look at what society needs we'll look at what's physically possible in terms of our technology and supplies and so forth and we'll have the government centrally plan what things are produced and surely we can improve upon whatever the market does because at the very least the government could just mimic whatever the market's doing right now right and so that was one of they thought a trump card in their argument we can just do what the market does right now anyway so surely if we don't like if we can all agree certain outcomes in the market are morally objectionable like why should there be people starving when there's people over here who have you know a bunch of fancy horse-drawn carriages and so forth that doesn't we can most of us can agree that's a that's a silly outcome so if we can just tinker and improve on the outcomes of the market that way surely socialism is going to be better and we can eliminate all the waste from advertising and and silly things like that that that cutthroat competition forces us to endure if we had this more rational scientific approach to economic production all right so that was the scientific socialist agenda that was their blueprint for a better society so there were lots of objections that what the the classical liberals brought up the economists you know in the tradition of adam smith and so forth and then there's a french tradition as well of people who we would nowadays consider be free market or laissez faire economists there was a lot of objections that they brought up and one of them was to say just look you can't trust these people you know if you gave if you gave a handful of people that much power that they could literally control the economy they could do some really terrible things with it and just you know people can't be trusted with that much power and so that's the virtue of a market economy is it decentralizes it so no group of people can ruin everything for the rest of us so that that was one type of object and it's a it's a veil objections but it's pretty important to know that if you study history you can see what a veil objection that is another objection people brought up is they said wait a minute if if we're going to have the central group and we literally applied the the Marxist slogan of you know from each according to his ability to each according to his needs well then wouldn't that mess up the incentives for people to produce right if you if you as a worker know that i'm not going to get my share of the total output you know the amount of food that i get in the kind of house i get to live in the car i get to drive and so on and that's not directly tied to what somebody's willing to pay me for my production in the marketplace the way it is under capitalism well then what incentive do i have to really exert myself why wouldn't i just slack off all right and so a good analogy for that kind of argument is to say like in a class if the teacher didn't tailor everyone's grade to how each student did on the test but instead just gave everyone the same average score after there was an exam would student study as much going into the exam probably not right because they would just realize well my score is going to get diluted among what everybody else does and so the incentive to study so they the class average would itself drop and that sort of framework and so that's what a lot of these classical liberals brought up is a problem with socialism was to say that incentive is going to be totally sapped well you know why would people go and who's going to want to go work in the coal mines if they're not getting paid more because of that you know why wouldn't everyone want to do the real easy jobs all right so that was another big objection and so the socialists came back and they gave their responses and they said things like well it's true that in a market economy growing up in this dog eat dog world of cutthroat competition that we've all been conditioned to to be real stingy with our money and just be real you know it's all about me me me that's just that's not natural to people per se socialist that's just a conditioning because we grew up in this awful capitalist world if you were born into a socialist world then you wouldn't have those tendencies people would be happy to go and work for the general good they'd be happy to do whatever the you know central planning board told them we think in the interests of the country this is what you ought to be doing right now with your labor time all right so that was kind of you know so some people were real cynical and the socialists were real optimistic and that's kind of where the debate was that it was at a standstill basically arguing over you know the nature of man and that's kind of a hard question to resolve so it was in this context that mises came in then and he brought up a completely novel argument and he said look for the first for the purposes of argument sake of argument here let's stipulate that the central planners are all perfectly trustworthy right we don't need to worry about some hidden sociopaths seizing power some tyrant and then doing the various things let's assume that people in charge just want to act in the best interest of the nation and that they're going to do what they honestly believe is the right thing in order to use our resources effectively and promote the general welfare and let's further assume just for the sake of argument that all the workers dutifully do exactly what they're told and that there's no shirking that's not that somebody shows up to work and just you know screws around or whatever with his buddies because he knows you know I'm I can't get fired we're all socialist comrades here like what are they going to do to me that let's assume that people don't think like that they're all just happy they wake up in the morning what are my orders sir and they run and go do it knowing that what they get to consume isn't directly tied to their individual contributions he said let's just assume that still mises said there's this fundamental problem and the socialists do not understand what it is that profits do in a market economy mises said that the problem here is that the socialist planners would have no feedback mechanism they would have no way of knowing even after the fact if their plan made any rational sense so they couldn't have all the technical details they could know if you take resources and combine them in these certain combinations and amounts you can get this amount of output you know so given our resources given the skills of our workers and so on the central planners could know that oh we can we can produce this many cars or we could produce this many apples or we could produce this many diapers for newborns or we could produce this many houses of a certain size they could have all this these individual facts of engineering and technology but what they wouldn't have is they wouldn't know what should we produce with our resources they would know all the possibilities but they wouldn't be able to say this combination of output is better or worse than this other physically possible combination of output and that is the fundamental thing that the profits and losses do for us and at least gives us some type of feedback so I'll talk about this more in the second talk I give to you guys in a little bit but just to anticipate it what mises was saying is that in a market economy if somebody is doing the wrong thing the signal the way you get feedback about that is you start suffering losses because what's happening is what does it mean to suffer a loss it's that the resources you're using you had to pay a certain amount for them and now you're producing things that the consumers are only giving you less money for right so you're not able to cover your costs and so you're suffering a loss so mises this point is that's not just some arbitrary number that accountants come up with that corresponds to something real about the real world to say you're suffering a loss or the flip side if you're earning a profit that corresponds to something real about the world at large it's not just some arbitrary number the way that the socialists thought okay so the socialists believe that when you earned a profit that didn't mean anything that that was just this convention like it is if you're playing some kind of card game and then someone earned points and you could say in the grand scheme it doesn't really mean anything it's just a bunch of numbers you're writing on a piece of paper that's what a lot of the real naive socialists thought about profits in a market economy like to say this particular firm is more profitable than this one over here and that's why this firm now is going to gain more market share it's going to have more dominance and have more influence in the world to the socialists that was crazy that why should why should that be the criterion by which we determine who gets to tell us what to do or who gets to determine the use of resources and so mises pointed out that what it is in a market economy earning profits what that means is and again we'll come back to this as we go on today that those entrepreneurs were better able to forecast the future and that to earn a profit just prime a face you what that means is those entrepreneurs use those resources more effectively than other people were and the socialists because they're trying to abolish profit and loss and not have market prices would not have that feedback so it's they would it means it says they'd be groping in the dark not even after the fact they would have no objective way of evaluating what they did the way that a private business can you know after the plan is done they can look back over the last year the last 18 months and say were we profitable and that at least gives them some objective metric by which they can say are we doing the right thing here or are we wasting resources that should be doing something else okay why don't I stop there and I'll turn it back over to Peter thanks for your attention