 Thank you all for being here this afternoon. The book was written really to address what I think many of the people in the free world, in the free market kind of think tank world struggle with. And this is kind of the dilemma that we face, the conflict, the paradox, if you will, that we all face. On the one hand, all of history, all of economic theory, but really the last 200 years of history suggest that capitalism and free markets work. If what you care about is wealth creation, if what you care about is standard of living, if what you care about is raising the poor from poverty, they should all just embrace capitalism. Free markets work and they work everywhere. They work in America, they work in Europe. This city and this country now are testament to the fact that they work in Asia. So the mystery is, the paradox is, why aren't we embracing free markets, particularly in the West? Because in the West, for the last 80, 90 years, we've been slowly and systematically abandoning free markets, moving away from capitalism. And towards more and more and more of a failed system, the system of statism, where the state is the center, rather than the marketplace and the individual. So last 200 years, we've run a social experiment in the world. By the way, all you in the back, there's plenty of seats up here, so I'll wait if you want to come in and sit down. Seats in the front, they're all over the place. So for the last 250 years, we've been running a global experiment in what political, social, economic systems work, lead to prosperity, lead to human flourishing, and what political systems don't work, lead to human suffering, lead to death and starvation. 250 years, we'd be running an experiment. We've tried as close as we've ever come to pure capitalism, American in the 19th century, Hong Kong. And what do we get? Boom, explosions of wealth, high standard of living, tens of millions of people, why he's out of poverty, an achieved middle class. We tried the other side, pure statism, whether it's a Soviet Union or whether it's Nazi Germany, and what do we get? Death and starvation, destruction, everybody poor, nobody rises up. And then we've tried mixtures, we've tried some capitalism and some statism. The whole world today is this mixed economy, and some have a lot of capitalism and a little bit of statism, some have a lot of statism and a little bit of capitalism. And we find the direct correlation, we find that places that have more economic freedom, again, standard of living go up, standard of living a high, wealth creation goes up, the poor doing better, and places that have a lot of statism, a lot of government, a lot of central planning, people are poor, standard of living is lower. So the correlation is right there in front of us. You can take, there's a publication that does the economic freedom index, and you can plot economic freedom based on GDP per capita and there's another correlation. So the question is, why do we keep moving towards more and more statism? In the West, granted, China's different, Asia's different, generally. You might be, hopefully, have been moving in the right direction. But in the West, we're moving the opposite direction. We're giving up on capitalism. More and more controls, more and more regulations, more and more taxes, more and more redistribution of wealth, less and less economic freedom, less and less individual freedom in the economic realm. This is not, in my view, a question of economic theory. We know why capitalism works. We've had great economists who've explained why capitalism works. We have great economists who've advocated for free markets. So history is on the side of free markets. Economic theory is on the side of free markets, and yet we move away from it. In my view, the answer is much deeper. The answer has to do with the fact that deep down, at a very deep level, at an emotional level, we resent freedom. We resent capitalism. We resent free markets. There's an almost instinctual response that's against it. And you can see it. For example, after the financial crisis that just happened, 2008, big financial crisis, right? What were the headlines of the papers? Wait when the financial crisis happened before anybody had time to investigate, to do the research, to study what happened, who caused it, who's to blame. What were the headlines? Capitalism failed. Free markets failed. It's all the fault of the free markets. Before anybody had any time to even think about it, we already knew, deep down. We knew, it had to be capitalism. It had to be free markets. Something wrong with free markets that they caused enough. I believe that in five, ten years from now, when economists have looked at what happened and looked at the data and investigated and had time to reflect, there won't be an economist who thinks that the free market caused the financial crisis. Because the free market, because the financial crisis without a doubt was caused in the United States by government controls, government regulations, the central bank, all of it. The entire crisis is the fault of government. And if you're interested in the details, ask me afterwards. I'd be happy to explain in great detail exactly what caused the 2008 financial crisis. It wasn't, though. I can guarantee free markets. Now, how can I guarantee that it wasn't free markets? What do I mean when I say free markets? What do we mean free markets? Free of what? Free of what? Right? Yeah, we talk about free choice. So when we say free of markets, we're talking about free of controls, the control of choices, free of regulations, free of government intervention. Free markets are markets that are free of government controls, government regulations, government interventions. In 2007, before the financial crisis, was banking in the United States free of government controls, government regulations? No, banking was the most regulated industry in the entire country in America. In 2007, was the housing market in the United States free of government control, government regulations? No, if you know anything about it, there was Freddie and Fannie, and they heavily manipulated and controlled through government the housing market. So we can talk about what caused the financial crisis, but one thing is unquestionable. It wasn't free markets because we didn't have free markets. Couldn't be free markets that caused it. And yet, again, the get response was, that's what caused it. What caused the Great Depression in the 1930s? Well, if you read your textbooks, not just here in China, but in America as well, they'll all tell you what caused the Great Depression was. Wall Street, free markets. Capitalism caused the Great Depression. But no serious economist, no serious economist believes that anymore. Because they've had time, they've reflected, they studied the data, and now they know that the Great Depression was caused by government regulations. By the Federal Reserve, Reed Milton Friedman, other economists have written extensively about all the mistakes government made to cause the Great Depression in the 1930s, in America. But yet, we still learn there was markets because that makes us feel comfortable somehow. We don't trust markets. Markets are offensive to us. Why? What are markets about? Why do we participate in market? Why do people go into markets? You have to speak up, because, yeah, they're out there, they go into the marketplace to try to make their lives better, their lives. So Steve Jobs makes this, why? Why? You gave a big plug for Steve Jobs, good. Well, why did he make it? What was the purpose of making this? To make money, right? But it's not just about money. Money's important, but it's not just about money. Why else did he make it? What's that? Benefit to himself, because this is fun. Right, passion. He was excited about making this. He wanted to make beautiful things. But it was Steve Jobs who wanted to make beautiful things in the vision of Steve Jobs. He didn't ask me what I wanted. He didn't ask me how much I wanted to pay. This thing had profit margins of 50%. Very expensive. He made a lot of money. Because Steve Jobs produced this for Steve Jobs. And for Apple, and for Apple's employee, and for Apple's shareholders. But not for you, not for me. It was for Steve Jobs. Steve Jobs would be self-interested, his interests. And I like to joke that when I went and bought my first iPhone, it was 2008, the US economy was spiraling out of control. And I wanted to stimulate the US economy. I wanted to help my fellow man. So I went to the mall and went shopping and bought my iPhone. Because I know that's why you guys go to the mall, right? You go to the mall to buy your shoes and clothes because you want to make sure people have jobs. You care about the Chinese economy and you want to help it, right? No. Why do you go to the mall? To make your own life better. Because you want those nice shoes. Because you want a nice shirt. You want a nice iPhone. For your life. For your self-interest. So everybody goes into the marketplace with the intent of making their own life better. Through exchange, through trade. So the marketplace inherently is a place in which people are pursuing their self-interest. It's a place where we go and express our self-interest. And yet, what do we talk from when we're this big about self-interest? Now again, I don't know what they teach in China. I'm not an expert in China. But I can tell you what they teach in the West. Something I can tell you what my mother taught me. I grew up in a good Jewish household, right? And my mother taught me, think of yourself last. Think of others first. We are taught by our preachers, by our rabbis, by our philosophers, by all of our moral teachers. We are taught that nobility, goodness, virtue comes from sacrifice. It comes from living fathers. It comes from doing fathers. It's about putting yourself, your own interests, aside and pursuing the interests of other people. We taught this. We internalized this. This is how we raise our kids. And yet the marketplace is a place that's the opposite. It's a place where people pursue self-interest. And that's, there's a conflict there. Think about the lives of, let's take a different entrepreneur instead of Steve Jobs. Let's take Bill Gates. Think about Bill Gates. Bill Gates builds Microsoft. He makes for himself $70 billion. That's his wealth. How does he make the money? By selling us products that we value. He makes all of our lives better. Every one of us who owns Microsoft product, our life is better for owning it. And the whole culture is better. The whole world, if you all, is better. Not a single human being on the planet hasn't been touched by a product that comes from Microsoft. Hasn't been their lives, hasn't been made better. So he has changed the world, made the world a better place for almost everybody. How much moral, ethical credit does Bill Gates get for that? None. He's viewed it best morally, not as a businessman, but from a moral perspective, ethical perspective. He's using that neutral. But mostly negative because he's made $70 billion. He's a greedy businessman. When does Bill Gates become a good guy? He starts a charity. Now he's not making money anymore. He's not trading value for value. Now he's giving his money away. So he's not benefiting. Now he's a good guy. Because there's no personal interest in it. Now he's still not a saint. He's still not a great guy. Why? Well, because he looks like he's having fun giving the money away. So he's enjoying it. You can't enjoy being a saint. Sainthood requires suffering. So what does Bill Gates have to do if we want to make him a saint in western culture? He has to give it all away. He has to move into a tent. And if he could bleed a little bit, that would help. But that's the perversion of the moral view that is held by most people in the world today. This is the view that morality is about sacrifice. That virtue is about self-denial. Not about building things. Not about creating things. Not about trading things. Those are all self-interested. And therefore outside of morality. No, no. It's about giving. It's about sacrificing. And that's incompatible with capitalism. Bill Gates the capitalist is not a hero. Bill Gates the philanthropist. The socialist, the redistributionist of wealth. He's redistributing as well. That's okay. So an ethical system that we have is incompatible with this political system. And when ethics and politics clash, when ethics and politics contradict, ethics will always win. People want to be good. They want to be just. They want to be virtuous in their own mind. So they will need to give up some economic freedom. They will need to give up some wealth in order to be good. So when the politicians come to the people in America and say, look, there are poor people over there. We need to help them. I need to take some of your money and give it to them. People in America go, oh, okay, fine, take it. Oh, those people, the money. The fact that they are suffering is a moral obligation on me. My life doesn't mean that much. What matters is them. So, okay, I vote for increasing taxes. Rich people vote to increase their taxes all the time in America. All the time. Obama won the election in 2012, promising to raise taxes on the rich. How did the rich vote? If they only voted their economic interests, everybody rich in America would vote against Obama because he was going to raise their taxes. Eight out of ten of the richest counties in America voted for Obama. Now, why? Because they feel it's their moral obligation. They feel it's right that they might be taken and given elsewhere. And they feel guilty for the fact that they're rich. If you live a particular life, a self-interested life, a productive life where you're making money for yourself, but then you're taught that moral virtue is about sacrifice and giving and taking care of the poor and taking care of other people and you don't do it, what is the emotion that you get from that conflict? Live one life, think good is another life. It's called guilt. Now guilt is a great way to control people. Ask any Jewish or Catholic mother, and they will tell you that. That's an inside joke after no Jewish and Catholic mothers. So guilt is a powerful tool in the hands of the politician in the West. And the rich or the middle class, the people who built something, who created something, can't stand before it. So we redistribute wealth to appease guilt because we morally believe it is our moral obligation to help others, even if we have to sacrifice our freedom, even if we have to sacrifice the hard-earned wealth that we have. Why do we regulate businesses so much? What is it that causes us to regulate every aspect of business? Control it, tell them what they cancel, what they cancel, under what circumstances. What is it about business that forces us to want to regulate? Well, we already know that businessmen are self-interested, right? But what do we know about self-interest? Or what do we think we know about self-interest? What do we mean taught about self-interest? It's bad. And what kind of behaviors, what kind of behaviors are associated with self-interest? Well, when you, in a school year, when you pointed at a kid, another kid, and say, he's being selfish, do you mean he's taking care of himself? No, what do you mean? Yeah, he's hurting other people. He's lying, stealing, he's cheating, right? Cheaters are self-interested. So when we think businessmen's self-interest, automatically, inside our mind, because of the way we've been trained, because of the ideas that we've accepted, automatically we associated businessmen with thieves, businesses with crooks, businesses with cheats. You know who commits the most murders on American television? So like in the crying shows or TV, on the dramas or television, in the movies, who commits most of the murders? Businessmen. Over 50% of all murders on American television are committed by businessmen. In reality, one or two percent. On television, over 50%. Because we believe it. Deep down we believe it. We associate self-interest with murder and cheating and lying and stealing. So it fits. Now, if businessmen inherently, by their nature, are going to lie, steal and cheat, then we better be worried. We need to control them. We need to regulate them. We need some governed bureaucrat to look over their shoulder and make sure that they're not lying, stealing, and cheating right now. We believe as a culture that lying, stealing, and cheating is inherent in the activity of business. So we assign a bureaucrat who is not self-interested, right? What's the interest of the bureaucrat? He's a public servant. He's there to take care of all of us. He's not motivated by his own interests. He's motivated by utility of society. So we trust him. Because, again, it's consistent with our ethics. Our ethics causes us to trust the public servant and to be suspicious of the businessman. So we walk into an elevator in the United States. We walk into an elevator in the building. And on the wall of an elevator, there's a little plaque that says this elevator was inspected by a government bureaucrat and therefore it won't kill you. Because we know that if we lead businessmen to their own dealings, they will build elevators that fall down and kill their customers. Because the best way to make money under capitalism is to kill your customers. If we didn't have food inspectors, McDonald's would poison you. That's the assumption. That's the assumption. And markets cannot take care of this, we are told. Because they're greedy. Because they're self-interested. And self-interest is bad. So interest leads to vice. And bad behavior. So my view, my grand's view, was that as long as we hold this ethic of selflessness, as long as we place up as an ideal that public interest, social good, public good, other people's good, selflessness and sacrifice, capitalism will die. Capitalism will disappear. What she offers us instead is a different morality, a different ethical code. An ethical code, I think I heard Aristotle's name, an ethical code I think that has roots in Aristotle's ethics. An ethical code based on the idea that the purpose of morality, the purpose of ethics is not to teach you how to sacrifice, is not to tell you what group you should be selfless towards, but to teach you how to live, how to achieve your values. An ethical system that teaches you how to achieve happiness, that provides you with the virtues and values that lead to success in life, to happiness in life, to human flourishing. A system of ethics that is focused on you as an individual and in your life and in making your life the best life that it can be, making your life a success as a human being. Such an ethical system, she believed, is the only ethical system consistent with freedom, consistent with capitalism. And I think one of the challenges, for example, in China is that the ethical system many Chinese hold is not the selfless sacrificial ethical system that we so adore in the West, but it's a pragmatic pseudo-ethical system that capitalism is not ethical. It's what they teach in business schools in America that you do whatever you can get away with. Whatever works. Whatever works in the short run. Whatever works right now. However, I can make more money. But this is not what Ayn Rand is saying. This is not Ayn Rand's idea of self-interest. She's saying, no, self-interest constitutes a set of clear virtues, objective virtues, that lead to a happy life, that lead to success. The principles that work in the long run, not just in the short run. So what are these principles? What do we have to do if we want to achieve a good life, if we want to live a flourishing life? What is it that makes possible all human values? What is it that allows human beings to be successful, looking at history, looking at the world around us? What is it that allows us to be human and to flourish in this crazy world among nature? Because if you look around, if you look at your neighbor, if you look around at the people in the room, we're a pretty pathetic animal. We're weak We're slow We have no claws We have no fangs You know, if you run down a bison and bite into it, it's not gonna work. Sabre to tiger, human being, just on a physical level, who wins? Tiger every time. So what makes it possible for us to survive? What makes it possible for us to have survived the evolutionary pressures out there? It's our mind. Ability to reason. Ability to think. Every value that we as human beings have is a product of our minds. Think about agriculture. How did we invent that? Anybody here have the gene for agriculture? No, there's no gene. There's no automatic way in which we discovered agriculture? Somebody had to figure out that a seed dropping to the ground and water on it is what sauce of a plant growing. There was the scientist, the great Newton, Einstein of his day, discovered the relationship between a seed and a plant growing. I mean, we take it for granted, but somebody had to figure it out. And then the bogates of agriculture was the guy who said, oh, I can collect seeds, sow them, create agriculture, cut the thing and sell them on the open market. Right? So agriculture is a huge human achievement of the mind. As of clothes, as of everything we have, none of it is a product of just genes, of just instincts. We have very few instincts. None of them allow for the standard of living we have today. So fine range to be self-interested means to be rational. Means to think. Means to use your mind. Think, think, think. And thinking means thinking long term. Because while we're trying to achieve this happiness over a lifetime, you don't want to do something tomorrow after tomorrow that sacrifices your long term prosperity. You want to be able to live a whole life happy and successful and flourishing. So it's about being rational over the long term. That's what self-interest means. That's what taking care of self means. So you've got to be rational. You've got to take care of yourself, materially. You've got to be able to make the products that are necessary for human existence. So you've got to apply your rationality to the problem of your material survival. So you've got to be productive. You've got to be able to go out there and work and create and build. Think of Bill Gates working, creating and building. He was productive. He was using his mind, using his reason to the problem of survival, to the physical problem, of how to survive, how to thrive. And he did a phenomenal job at it. So if I had Bill Gates' model, Bill Gates is a good guy. Steve Jobs is a good guy. Not because they give money away, not because they help billions of people, which they did, but because they made something of their lives. They built something. They created something. They took care of themselves. They challenged themselves. They were giants. To be productive means. To create the physical material that you need in order to survive. And the knowledge that you can do that, the feeling that you get from knowing you can take care of yourself in this world, gives people self-esteem. Confidence. Pride in themselves. Self-esteem is unnecessary for happiness. You cannot be happy if you don't like yourself, if you don't believe that you can achieve things, that you can set goals and meet them. So self-esteem is necessary for human happiness. And I believe that therefore being productive is necessary for human happiness. You cannot be happy unless you're producing. You cannot be happy unless you have the confidence that you can produce for yourself, that you can take care of yourself, that you will not starve out there in nature. So when we hand people checks, when we provide people with welfare, we are not doing them a favor. We are destroying their lives. What we're telling them implicitly, I cannot take care of yourself. I need to take care of you. You're too incompetent, you're too stupid, you're too whatever, to take care of yourself. And what does that do to their self-esteem? They start believing this. They start thinking, you're right, I cannot take care of myself. I can only live with the help of other people. I'm completely dependent on other people. They can never be happy. They can never be successful in life. What they're doing by handing out the checks, is you're destroying their lives. This is what rich families often discover with their own children. If you have kids, and all you do is hand them the checks. Don't expect anything from them. Don't require them to work. Just hand them the checks. Then they turn out often to be rotten children. Unsuccessful, unhappy. That's why in a lot of rich places in the U.S. you find drugs and alcohol and suicide rates very high. Because there's nothing to live for. There's no sense of pride. There's no sense of self-esteem because they haven't achieved anything in their life. Everything they've achieved is because of their parents. So self-esteem is directly tied to productiveness. Directly tied to reason. Using our minds to solving the problem of production. And then how do we, if we're self-interested, how do we interact with other people? What's the relationship with other people? What's that based on? Well, that's based on what I'm going to call the trade principle. The way to relate to other people is to trade with them value for value. The way to relate to other people is not to exploit them, not to take advantage of them, and not to allow yourself to be taken advantage of by other people. Not to sacrifice for other people, but not to expect other people to sacrifice for you. The way to relate to other people is through trade. I offer you a value. You give me a value in return. This is what we do in the marketplace, right? I offered Steve Jobs $400, and he gave me an iPhone. How much is the iPhone worth to me? More than $400. Otherwise, I wouldn't have bothered giving up to $400. How much is it worth to Apple? Less than $400. They made a profit. So who lost when I bought an iPhone? Nobody, win-win. Trade principle is win-win. We both are better off at the end of the day. Rand says that should be the principle to get all human interaction, not just in the marketplace, the material marketplace, but also in our friendship relationships. If you have a friend, and you're emotionally and spiritually, all you can do is give, give, give, and you don't ever get anything in return, why are they your friend? It's not going to last. Friendship is a trade. You give, they give. It's not necessarily a material trade. It could be a spiritual trade, but it's a trade. Love is the same thing. Love can't be one-sided. It has to be two-sided. It's a trade. You're getting something out of the relationship. It's good. That's why it's love. So the way for people to interact is through win-win, value-added relationships. So Rand says, if self-interest is that, it's being rational, it's being productive, it's dealing with other people on the basis of the trade of principle, then is self-interest related to, is there any relationship between self-interest and lying, stealing and cheating? The self-interested people, are they crooks? Does it make sense to lie? Is it in your self-interest to lie? Now most people say yes, and I'm sure half of you, at least, are saying, yeah, I'm sure it's in my self-interest to lie. And I would say, it's never in your self-interest to lie. You're cheating yourself and you're cheating reality. You're corrupting what's up here. Reason, reason depends on what? Reason depends on facts, on truth, on reality. Lying is the distortion of facts, the distortion of truth, the distortion of reality. There's a saying in computers, garbage in, garbage out. If you put inside here garbage, you get outside there garbage. And you think, oh no, I only lie a little bit over here. Oh no, your mind is an integrating machine. It connects everything. You can't separate the lies and keep everything else fresh and clean. It doesn't work that way. Lying is corrupting to your own ability to think. Lying always requires more lying. And you always know that the values you've achieved when you lied, you didn't make. You didn't create, you cheated. You faked reality to get them. And that destroys self-esteem. And self-esteem is required for happiness. It destroys happiness. I don't know anybody who's lied in life. I mean lied a lot in life. And is happy. They might be rich. We all know people who've lied and become rich. But money is not life. Life is not about money. Money is just one aspect. Happiness is not about money. Lying, stealing, cheating do not lead to human happiness. I mean I am getting old. And I can barely remember what I did last week. I have a hard time remembering what I did last week. It's a fact. Imagine if I lied about what I did last week. Now I'd have to remember two things. What I really did and what I lied. But actually I'd have to remember a lot more than just two things. I'd have to remember what really happened. What the lie is. Who I lied to. Who I didn't lie to. Why I lied to some people. Why I didn't lie to other people. When I lied. When I didn't lie. Way too hard. It's way too complicated. It's a disaster. And I'm going to get caught. And when you get caught what happens to that relationship. That traitor principle. That value for value. What happens to your relationship with other people when they catch you lying. It's destroyed. In business. If you're lying. People won't do business with you. In friendship. If you like your friends. They won't be your friends anymore. It's a stupid strategy. It's an anti-life strategy. It's a self-destructive strategy. It suddenly is not self-interested. And it's suddenly not the way the market works. In a free market. So if we can uncouple. Self-interest from lying, stealing, cheating. And if we can reject this morality. Of selflessness. Of sacrifice. Of living fathers. Then what we're left for with. Is a moral code for living your own life for yourself. For your own happiness. For your own success. By being productive and by exchanging values with other people. And this is a morality. That leads inevitably to what kind of economic system. A capitalist economic system. A free market economic system. Somebody who has self-esteem. Somebody who is being productive. Is rational and pursuing his own ideas. Doesn't need mother government. Telling him what he can buy. What he can't buy. What he can't eat. What he shouldn't eat. What drugs he should take. What he shouldn't take. He wants to make those decisions for himself. He wants to make the evaluation of what makes sense. And what doesn't make sense. He wants to be independent. Not a dependent on government. Not a dependent on some bureaucratic authority. So he pursues a life. Of independence. And wants to be free. Of these government controls and regulations. So this morality leads inevitably to a free market. If people embrace it. If people accept it. So my view in the book. My view broadly is that if we care about free markets. We care about capitalism. We care about freedom. Then yes, we need to make economic arguments. We need to study economics. We need to know economics. And we need to explain economics to people. And that's all important. And we need to know history. And we need to be able to know and explain. And give examples about history. And the success of capitalism. But none of that will work. Unless we can also change the fundamental moral beliefs. Of the culture around us. In the West. Change it from the sacrificial altruism towards. Self-interest. Maybe China changed people's attitudes. From pragmatism, anything goes. Do whatever you can. To a principled view. Of morality of self-interest. If we can do that. If we can make this small shift. Then the economics and the history. And the politics and all that are easy. They're easy. So when we talk about a free market revolution. The revolution. The revolution I'm talking about. Is not a political revolution. It's certainly not an armed revolution. It's a moral revolution. It's a revolution in the morality that we hold. And the fundamental ideas that shape our lives. And if we can win that revolution. Then the rest is easy. Thank you all. You said Russia. When people live in the rational in long term. So this is really good. And make people living in a good condition. But we know people are not always rational. We have some stupid ideas. Just so I want to eat a lot of McDonald's or something. But yes. In this kind of reason. People believe in Aaron. Will force people to live in rational life. Will this kind of things happen? Because they think this is most important. No. Because see this is the point. If I believe that it's my moral responsibility to serve you. Then what my whole focus is how are you behaving. Uh oh. You're eating too much. Not to eat too much. But you are my responsibility. But if I'm a rational egoist. If I'm a rational self-interest. I don't care what you're doing. You want to eat too much? Your problem. Just don't come and ask for me to provide you with health care. Right? So the whole mental attitude shifts. When you're an altruist. Then you're always thinking why is he doing that? Why is he doing that? You want to have socialized medicine. In China you want to have socialized medicine. Right? Now it's my money taking care of you. So I'm worried. How much is he eating? Is he exercising? So I'm going to force you to exercise. I'm going to force you to eat well. Because I have to pay for your health care. But if you pay for your health care. And I pay for my health care. I don't care how much you eat. You want to be rational fine. Pay the price for your bad behavior. And you don't force that price on me. So if I want to pay this kind of responsibility. So I can do. So in my mind. This is rational. I just want to eat a lot. In this kind of life. My happiness is most. So I can't. Why don't we agree all over? This is a rational life. We're not always going to agree on what's rational. Certain behaviors are going to be rational. Whereas for others. They're not going to be rational. Because we have different values. We have different circumstances. We have different experiences. We're going to come to different conclusions. That's fine. As long as you can't impose your views on me. Then I don't care. So if somebody will donate all money. That's fine. What I can say is this. I can look at you and say. This is irrational. And therefore. In my view, immoral. But it's still your business. So if somebody feels guilty. Somebody in a free market feels guilty. And because he feels guilty. He wants to give all his money away. And live in a tent. And bleed a little bit. I can look at that person and say. That's irrational. That's stupid. That's immoral. But he has a right to do it. And he says. Do you have the right to force them to do what you think is right? And I say. No. You don't have a right. As long as they're not infringing on your rights. You don't have a right to force them. Thank you. Can I have a last question? He's the boss. You said. If you give some money. Or you give a check to other people. You destroy them right. So you need to trade with them. You give something them. And they give you something back. That's the lesson. The lecture to us. Free. Do you think you destroy us? So I'm giving you the lecture free. I think I'm destroying you by giving you something free. It's not free. I didn't manage to buy anything. But not all value is a material. Believe me. I'm getting a lot out of this. And what I get out of it. Is a few things. That is your immediate response. I can see eyes. Comprehension. I can see interest. That is very satisfying to me. But I expect things from you. I expect you to take these ideas seriously. And to go out there and tell your friends about it. I expect that by talking to a lot of people like this. The world that I live in will be a better world. If I thought I was talking. And all of you hated what I had to say. And you would never do anything about it. You would never do anything about it. And you would never do anything about it. And you would go and live your lives as if nothing had happened. That I wouldn't give the top. My reward. Is the fact. That I hope. That I've had any influence on you. So if I am a priest or a missionary. I give people talk about the question. And if it led them to believe it. I benefit myself. You don't benefit yourself. Because you're actually leading them to a worse world. And your world will be worse as a consequence. So the ideas that you're advocating are important. If I'm advocating self destruction. Then I'm not helping myself. The way I'm helping myself. Is by helping you be better people. Which I think leads to a better society. Which benefits me long term. Look there's also another aspect. I don't want this to be misunderstood. I'm not against giving somebody money. If they really need it. So let's say you have a friend. And they've lost a job. And they can't find a job. And they can't find a job by now. And they can't pay they rent. Or something horrible is happening to them. I'm not saying if you give them a check. You've destroyed their lives. What I'm saying is. If you make them dependent on that check. But if you. I'm not against charity. People sometimes need help. People sometimes need something in a short run. Now hopefully you get something out of it. But. It's okay to help people. It's not about helping people. She's not against charity. She's against turning people into. Dependents. Where they. And particularly she's against. Turning people into dependents. By forcing other people to support them. It's the force. That is wrong. My question is very simple. How do you see. The conflict between. Freedom and democracy. Democracy is a system. That the majority. Bullies minority. Thank you. So whenever somebody starts up a question. By saying it's simple. You know. So what do we mean. By democracy. You know it's really important. One of the things we're taught. All of us of her students. Is that to clearly define what you mean. What do we mean. Democracy. In its original intent means. Majority rule. It means. We vote on everything. Majority rule is a form of tyranny. Majority rule is a form of tyranny. It's tyranny of the majority. Over the minority. And. Everywhere that it's practiced. As pure majority rule. It's a disaster. And it leads to huge violations. Of individual's freedom. The minority always suffers. Under pure democracy. My favorite story about pure democracy. Is from Athens. Greece. The first democracy. And in Athens there was a great philosopher. And they named Socrates. And Socrates would go around. And he would engage in arguments. With young people. And the people of Athens were very worried. Because he would challenge the religion. Socrates is corrupting our youth. What are we going to do about it? Well, they realized. The only thing to do about it was to kill him. Because you couldn't silence Socrates. This is his passion. So they got together. And they voted. Democracy. What should we do with Socrates? Kill him. 51% said yes. Maybe it was 60. Maybe it was 70. Maybe it was 99%. So they give Socrates the cup of poison. To drink. To kill him. And Plato, his student says to Socrates, you know, I've got a tunnel. We can escape. And Socrates, no. I believe in democracy. And he drinks the chalice and dies. You see, in democracy there's no freedom of speech. There's only the freedom of the majority to determine what speech is. Socrates, they didn't like what he said. So they ruled him out. So they ruled him out. This is why, I saw 1776 in one of the slides, right? This is why the founders of America were against democracy. They established what they called a constitutional republic. They said minorities, by the way, what's the smallest minority? The individual. The individual. So they said individuals, minorities have rights, have freedoms that no majority can take away from. For example, they have a right to speak. Socrates, right? They studied history. And no matter how many people vote to silence them, that's wrong. You can't do it. Democracy doesn't work here. You have a right, I wish they'd said this, you have a right to use your property. Do with your property as you will, as long as you're not holding other people, physically, cursing other people. You have a right to do with your property whatever you want. Nobody can take that away from you, even majorities. So they had a bill of rights, they had a constitution that defined minority rights. They called it individual rights. And individual rights are freedoms. Freedoms of action. The freedom to act in reality to pursue your values. And no majority can take that away from you. So I am against democracy. As majority rule. I believe in constitutionalism where constitution protects clearly and equivocally the rights of individuals. And then yes we can vote for representatives. But the representatives can't do anything. Because we have this clear cut definition of our individual freedoms. So in my view, government should only do three things. I mean, put it differently. In my view, government should only do one thing. One thing. And that is protect our rights. Protect our rights as individuals. And to do that it only needs three functions. It needs a police force. It needs a military. So to protect us from crooks inside the country. To protect us from invaders who want to hurt us outside the country. And adjust the system to arbitrate disputes. But government has no way to take money from some people and give it to others. Because I am violating his rights. What about his rights? To his property. I have just violated his property rights. So I can't force him to fund somebody else. Governments have no right to tell you what kind of business you can or cannot open. They are violating your right to free action. As long as you are not cheating, lying or stealing from somebody else. In order to gain that business. None of government's business. So government protects us from crooks. From fraudsters. Protect us from terrorists and enemies. It has adjusted the judicial system. And that's it. So I am not an anarchist. I think anarchism is a disaster. It's the worst form of government if you will. Possible. Because there is no government. And what we turn into is a lot of force. And a lot of destruction. I believe in government. But a small one. Limited one. That only protects individual rights that have to be clearly defined and clearly articulated. So that's my mistake. And what happened in America today in my view is we've gone from a constitutional republic in 1776. When the constitution was written in the 1780s. All the way to today where we are democracy. Americans are democracy. So the majority votes to take money from the minority and give it to the majority. The majority votes that they want people to eat only this kind of food. The majority votes that people should only do that. The majority gets to decide and it sacrifices the minority. That's wrong. Anybody else have a simple question? She's eager. Oh, thanks. Thank you. I have a question. Actually I could follow his question. I think you mentioned a lot about the rational. You suggest people can be more rational. But I think you also have heard which would go against the traditional economy theory that people are making decisions based on rational. So I'm wondering there's a lot of suggestion or what you said. It should be applied only on certain context. I go back to what he said. And I agree with you. Sometimes like I don't care what you do as long as you don't push me to do the same thing like you do. But as a Polish perspective we are not animal. We are not animal. We need relationship with somebody. And let's move to the extreme context. Let's say you have this and you don't care about other people. So people are not willing to associate with you or actually you have a couple of friends. As a human being as a human being I would still go back to say do you feel it's kind of very it's kind of a new change for the more like push people want to push them to be more rational. Actually they change to the direction that people become that they're inhuman. Because we know that extreme rational would only apply on machines. Because they never made a... No, I disagree. Partially it's because you're economic students. And you're not. But economists have a false view of rationality. The idea that rationality means never being wrong. The idea that rationality means knowing everything is wrong. That's not what rationality means. It's not what's been meant in the social sciences by the concept of rationality. Rationality means taking in the evidence that is available to you and using logic to come to conclusions. It doesn't mean you'll always be right. You'll be wrong sometimes. It doesn't mean you have to get every single piece of evidence because you can't. You have to at some point say it's not worth my while to go and investigate over there. I'm going to make a decision based on what I have. It doesn't mean you're not going to have cognitive errors. Sometimes you do have cognitive errors like the behavioral economists. But what are the behavioral economists doing? They're teaching us the cognitive errors and if we're smart we'll learn from them. And we won't commit them again. This is the point and again rational automatically. I don't. In my view, rationality is an achievement. It's something we work at. It's something you have to work at every single day. To be rational, which to me means to be self-interested is hard work. And it doesn't turn you into a machine. It makes you passionate. It makes you excited because you know reality. You know the truth. There's no contradiction between emotion and rationality as long as you understand that rationality is the means by which you make decisions, by which you make choices. Emotion is the means by which you experience life. So you become more passionate. I consider myself pretty rational. I'm about the most passionate person you'll meet because it's clarifying it makes your emotions purer and you can a much freer to express them. So you live through your emotions. You experience life through your emotions but you make decisions based on facts, based on reason, based on logic. And it's not this omniscient, omnipotent view that some economists have about rationality. That's not what I mean. It's not what philosophers mean when they talk about reason and rationality. In terms of human relationships again, I'm not talking about being rational or being self-interest in means living on a desert island, on the contrary. Trade is good. I had the whole trade of principle. Value for value. And some of those values are emotional values. Love is an emotional trait. So it's about value for value but being rational about it because sometimes you fall in love with the wrong person and if you're not rational about it, you're going to screw up your life because you're going to be stuck with a really bad person. So you got to judge your emotions. You got to watch over your emotions. You can't just give in to them. You have to be integrated. You have to be conscious. Okay. I'm sorry, just one more. I really do add energy. It's difficult, but let's put your very into practice. If you talk about government we do this about the free concept so that a government should apply that police. But let's go back to China and you say actually when they reach people they are willing to pay more tax. Because it's the huge thing. In America, I don't know about China. Well, I mean in China there is a similar situation. But let's say if government do not do not involve in this there's like what really happening in the world is like a huge gap between the poor people and rich people and if we put it in the theory okay so the war is actually I mean the strongest suspicious we don't suspicious just naturally let them die. Okay, this is very applied to this and also we talk about rights. And let's say in China let's say the kids in Milan when they are born in different families like a rich family or poor family the poor families will not have the money to send their kids to the school. So let's say we have the same center we have a Gaokao college entrance elimination. Yes, every school I mean in the same cities they take in the school I mean students apply to the same scores. But let's say the kids from the poor family is not their part. I get it. So look first of all I don't believe you just let people die because that's not what capitalism does. Capitalism is the opposite. I mean this is the mythology. The mythology is that the capitalism the poor die off and the rich become richer and richer and richer. But that's ridiculous. How do the rich become rich? By employing poor people by selling poor people stuff by investing capital with poor people who can then produce more. Take America which is a proxy for one of the richer capitalist countries in the world. There are no poor people in America today. There are no in the capital law poor people in America today. If poverty is what you see in rural China or poverty is what you see in Cambodia nobody in America lives without electricity. Cambodia I've seen millions of people well thousands of people live without electricity. Nobody in America lives without running water. Why? Because we've created the capitalist system has created so much wealth that they can pay poor people so much more money that they can now live in homes which in China are probably considered middle class homes. You know poor people in America 80% of them have a conditioner. They have cell phones they have all no bills. Why? Because let me put it another way it's irrelevant the relative status of people. What's important is the absolute level in which you are. How good your life is. Capitalism allows the poor to rise up and become the equivalent of middle class. Every example in history suggests this in 19th century America there was no welfare there was no redistribution of wealth there was very little charity. All those and when the 19th century started in America everybody was poor. Nobody had running water nobody had electricity everybody was poor. By the end of the 19th century based on the standard living in the beginning of the 19th century everybody was rich. And in the meantime millions of poor people from all over the world came to America my ancestors, Jews from the middle of Poland who knew nothing who had no capital no education they were poor farmers in little villages in the middle of Russia and Poland and because America was capitalist with jobs they could get a job they could work, they could start a known business and within a generation there were middle class. Couldn't have happened in Poland couldn't have happened anywhere. If you take China today and you get rid of your state owned enterprises or you privatize them and you God forbid give people property rights over their lands real property rights right they own the land and you let the markets set prices and you let companies succeed or fail based on their profits and based on their merits the Chinese economy will grow much faster than it's growing right now and the poor in China will become much richer than they are becoming right now the more you distribute the more you take capital from the people who are going to invest and create all this and give it to people over there the more waste the more poor people you will have the slower the economic growth will happen the more wealth will be created that's what history teaches that's what economic theory teaches freedom works knowledge of free market is always embedded or weak to some better nature just like greed, vanity violence at the same time some smart people many smart people can manipulate very sophisticated systems to crown or steal wealth from others which seems to like the rules complied with the ideology of free market so my question is how can the ideology of free market deal with or play against with some so again I believe that the ideology of free market has to be based on a solid moral foundation and that solid moral foundation says that manipulating people stealing from people is not right is not moral is good and that stealing from people politically from a political perspective is wrong and therefore the state should ban it so if you're a crook the state should put you in jail if you're manipulating the market in a way that's stealing from other people the state should put you in jail that is the one, the only job of government is to actually do that and if we can put the crooks in jail then the rest of us are just free to produce and consume and live our lives and that's a free market that's the idea that's how you deal with it it's morally offensive and it's politically wrong it's both how do you comment on Obama yeah, of course for people to buy housing and how do you comment on super-cost rulings super what super-cost rulings oh it's a big croco Obamacare is a question about Obamacare Obamacare is terrible because it's a step towards socializing medicine in the United States we have in the United States today, if you have insurance we have the best health care system in the world there's no comparison if you're a you know Belosconians, the former prime minister of Italy, a rich guy according to the United Nations France has the best health care system in the world because they have a weird way of measuring these things but Belosconi gets sick does he go to Paris? no, he flies to the United States I come from, I was born and raised in Israel we have socialized medicine in Israel, my father was a doctor in the socialized system in Israel now Israel has really good health care why? because they have lots of doctors why does it have lots of doctors I don't know if you'll get the joke but because it's a Jewish state there's lots of Jews, Jews become doctors there's lots of doctors in Israel good doctors, smart doctors but if somebody gets really really sick in Israel and they have the money they fly them to the United States best health care system in the world and Obama and a big chunk of the American people are dedicated to destroying in the name of equality in the name of equality what they want is an equal system of health care where everybody gets the same bad health care I want an unequal health care system the rich get better health care in America no question about it the rich drive nicer cars the rich have nicer homes they eat better food that's part of the advantages of making money but the poor in America still have a better health care system than the middle class anywhere else in the world so the system is unequal but good whereas equal is worse for everybody so Obama cares a step towards socialized medicine it's a disaster the Supreme Court basically ruled the meaning of the Supreme Court ruling was this has to do with democracy the meaning of the Supreme Court whatever people want whatever congress votes on is constitutional they're basically saying the constitution doesn't mean anything it's democracy taxation power well if it doesn't work out of taxation power they use the commerce clause and it doesn't use them in the commerce clause use taxation power in other words anything else the constitution is meaningless and that's what the Supreme Court has done you're not okay I understand my question is not about the medical system my question is about the relationship between growth and inequality you don't seem to like to think about inequality very much but I'm writing a book about inequality so I actually like to think about inequality a lot I would like to have your thoughts on how to explain that when we have low growth which is not the case in China which is not so much the case in the US but which is the case in Europe when you don't have a lot of economic growth it's quite normal that the guys with a lot of capital will get more and the guys working waiting for growth are going to wait a long time you recognize there needs to work with these ideas there yes I recognize it's a little bit of Piketty's so how ideas is too strong of a term to describe what Piketty calls I think it's nonsense I don't think the relationship exists I don't think it's true look there's no whiteboard yet if you look at human existence and you know Piketty does a lot of empirics but this is simple empirics that everybody knows 10,000 years ago income per capita was about $3 a day average income per capita and it stayed $3 a day for 10,000 years and then something happened that is and during that period by the way the variation of income was almost non-existent so inequality was zero we had complete equality and everybody was poor everybody made $3 a day and then something happened and wealth per capita income per capita on average went like that like that and at the same time inequality went like that inequality is fantastic inequality is wonderful inequality is the sign that you are free the only societies where you don't have inequality are unfree societies the only societies where you don't have inequality are societies that use force because the only way to make people equal is by force my favorite example a simple example everybody know who Michael Jordan is famous basketball player best basketball player ever LeBron James Michael Jordan doesn't matter right how do you make me and Michael Jordan equal in basketball I want to be equal to Michael Jordan in basketball I think inequality is unfair in basketball I want to be equal to him how do you make us equal in basketball I could train every day all day and never come close to Michael Jordan so how do we make us equal you break his legs but that's not going to make us equal because I'm really bad at basketball you'd have to break his arms too but you laugh but this is serious I'm not kidding that's what equality means the only way to achieve equality is to break people's legs what do you think taxes are so I work hard and every dollar I make 50% is stolen from me 50% half of my life half of my working life is taken from me I'd rather you break my legs it's less painful it's less destructive to my happiness give me my 50% back and break my legs that's what equality requires it requires breaking people's legs now this myth about the relationship between growth and inequality countries that have high inequality put it this way there's no relationship inequality or growth is a function of economic freedom it's not a function of inequality now what happens when you have economic freedom is you have high growth and high growth leads to inequality but if you leave those countries free the growth will continue and yes inequality will continue but so what I mean I think inequality is beautiful we're different I've got a Ph.D. in finance I could have gone to Wall Street I'd rather do this I have more fun it's more enjoyable and I've accepted I'm going to be middle class I'm not going to be rich lots of us choose professions that don't involve making a lot of money life is not about making a lot of money and in a capitalist economy what is the difference between me and Bill Gates Bill Gates I think I calculated something 10,000 times richer than I am but what impact does that have on our lives Bill Gates drives a car I drive a car his car is nicer but not that much nicer if I have to get to point A to point B I can get there he lives in a house I live in a house this house is nicer but it's not that much nicer I get all the utility I need from my house Bill Gates flies everywhere in the world on a private plane I do too I share my private plane with 300 other people and he gets the fly alone but the fact is if I want to go to Paris I can afford to go to Paris I can afford to come here to China the difference between us is not very big in terms of how we live our lives how most Americans live their lives so he's richer than I am now part of the fallacy in Piketty what's capital and what capital means he gets it all wrong he's not even measuring capital he's measuring some pseudo wealth number but it's market wealth in places where there is no market I mean the whole book is one big era after era after era and at the end of the day what does Piketty care about he says this his solution to the problem of inequality is a 10% wealth tax globally so every year 10% of your wealth gets taxed away and he says look this isn't going to help the poor because it's not that much money but it's going to hurt the rich what Piketty hates are the rich what the people who talk a lot about inequality is they hate the rich they hate the successful because if you cared about the poor you would be an advocate of capitalism you'd be an advocate of free markets all history of mankind is there being a better system for the poor than capitalism is more people have been raised out of poverty through capitalism than through any other system and China right now is an incredible example of that right over the last 30 years hundreds of millions of people have been raised out of poverty in China by the elements of free market that you've instituted here not by socialism, by capitalism hello I have a question how do you look at anti monopolies anti monopolies good question so in my view in a free market in a truly free market there are no such things as monopolies if what we mean by monopoly is an entity that can charge any price at once and provide any kind of quality at once and I'll take take Rockefeller we've talked about Rockefeller Rockefeller was had at some point I think he had 92% of oil the oil production in the United States the refining capacity in the United States now you'd say that's a monopoly now what do monopolists do they raise prices and quality goes down that's what economics 101 we talked but if you go to the record you discover that Rockefeller reduced prices every year how many of his product kept increasing one there were few reasons one, he knew that if he raised prices there would be competitors one of those competitors was potentially Russian imports into the United States Russia discovered oil so there was competition overseas but there was also competition those 8% would have grown and he didn't want to take the risk he also knew that as he lowered the price of oil new uses for that oil would be discovered and he could make even more money and the classic one with Rockefeller is what did ultimately did we use what did we use oil when Rockefeller had 92% of the market for kerosene but he made it so cheap that when the internal combustion engine came around it was obvious to use oil inside engines and that was where he made his money later on who competed Rockefeller out of existence on the kerosene business there is another fallacy that the government can tell what a monopoly is so Rockefeller had a monopoly over lighting Americans homes who competed him out of business Thomas Edison electricity so there are what's the term in economics there are products that could replace your product that are not your products you might have 92% of your product but there are alternative products that can do what you do and if you don't watch it even here when Rockefeller did watch it there was a new product that replaced this Alcoa in the United States had at some point 80-70% of all the aluminum production in the world prices went down quality improved IBM was gone after for because it dominated mainframes but there were medium size computers called digital that competed with them and then ultimately there was the PC that competed with them Microsoft got into trouble for antitrust why because it dared to offer a product for free internet explorer so in my view there should be no antitrust the market takes care of these things if somebody abuses their power the economic power competitors will arise to deal with them in a dynamic economy in a dynamic model I don't believe that controlling a huge percentage of a market over the long term while raising prices can exist it's dynamic the new products, the new industries the new things that are happening constantly in a free model thank you professor you have a lot about free markets and I just want to know whether or not you have a pay attention to the Scandinavian countries and from my knowledge I see there's a very strong contrast between the management system and the Scandinavian system and the term of the wealth system so this is a standard question let me just say I find it fascinating this is true in America and in China everywhere I give a talk that even though my talk tried to emphasize that the issue is not economics that the issue is ethics all your questions about economics nobody's asking a question about ethics which is interesting, something you think about and I think because we were a little comfortable talking about ethics and we don't have the language, we don't know exactly how to do it but let me answer your Scandinavian question because I always get that question it's another one of the standard set of questions you get first of all, America's richer than Scandinavia standard living in America is much higher than in Scandinavia we live in bigger homes than average we drive nicer cars than average we have we have more in conditioning than them but they don't need air conditioning because they live in Scandinavia I always tell my friends let's run this experiment let's open the border let's lower all immigration controls between the United States and Sweden anybody want to guess which way the traffic will go all the Swedes will move to America not the other way around but then people tell me but Swedes live longer life expectancy in Sweden is higher Swedes also in surveys are happier than Americans in surveys interesting, right? because they're happy and they live longer but what's interesting is if you look at life expectancy of American Swedes they live the same length as Swedes so if you control for genes there's no difference and if you ask American Swedes how happy they are they're at least as happy as Swedes Swedes if not more happy surveys, all this happiness stuff it's got all to do with culture if you're a swede and somebody asks you are you happy? you feel guilty if you say no you're supposed to be happy if you're Jewish and somebody asks you if you're happy you feel bad if you say yes you're supposed to complain I live in a culture where all we do is complain we can't be happy it's wrong to be happy so let's take economics so Sweden is a great example during the 19th century and early part of the 20th century Sweden was one of the most capitalist countries in the world it had some of the most successful industries it created some of the greatest wealth ever seen and it accumulated huge amount of wealth and then in the late 1950s, early 1960s they turned to socialism and they started redistributing the wealth and they created a lot of wealth so there was a lot to redistribute they kept redistributing industrial production went down wealth creation went down productivity went down but there was so much wealth that they could still continue distributing it's all about 1994 and in 1994 Sweden was bankrupt so what did they do they started going away from the welfare state away from socialism and they started liberalizing the economy and for the last 20 years Sweden has been heading towards more capitalism just as America has been heading towards more socialism and it's becoming more and more capitalist and that's why Sweden is doing relatively well it's not doing great but it's doing relatively well because it's reversed the socialist policies of the 60s, 70s and 80s during the 1994 crisis that they had a huge debt crisis and today the economy is doing okay but given everything else in Europe it's relatively good so the welfare state doesn't work in Sweden it's still bankrupt the country it's just doing a little bit better than the rest of the world then it's just a matter of time it went bankrupt once it'll go bankrupt again and in terms of the quality of life there and the standard of living and everything else as I said it's lower than the United States and it's very much tied into culture Sweden is a very homogeneous country it's very simple it's very easy there's one language, it's very small I, you know, again if you lived in Sweden you want to go to the United States I don't know many people in America want to go to Sweden to live, visit maybe but not to live because life is better I want to mention about the asset system it's the economic system because with every part I mean with every part of the world they may have a different asset system for example like the Scandinavian area they have their own asset system they have their own PDs and when we put those free market things in a different part of the world we can see that the free market is going to become totally different things for example like the free market in China it's really become something not really that we suspect before no, I mean I don't think that's true I think if you look at the pockets where there are real free markets in China they look exactly like the pockets of free markets in 19th century America or Swedish free markets in Sweden in the early part of the 20th century it's, what you have to do is abstract away all the other stuff that's going on but in terms of the dynamics it's the same but there's an interesting question I think behind what you're trying to ask and that is maybe different people different things make happy I mean I'm claiming that I have all knowledge about what makes human beings happy and I think there is objectively truth about some things make people happy and others don't I mean Aristotle talks a lot about this in his ethical theories there's only one path towards real happiness towards real human flourishing towards real human success I don't know that Aristotle would agree with what I think but it's the path of reason, he'd agree with that of productiveness he wasn't big on productivity because in those days they didn't understand economics what it took to sustain life so being productive and being a trader that is the path to human happiness it's a path for Swedish happiness African happiness Chinese happiness, Jewish happiness it doesn't matter now there are other cultural factors when I said the Swedes have this attitude towards happiness and the Jews those are subjective things and they're wrong most of them are wrong I mean Jews shouldn't be apologizing all the time right Swedes shouldn't be overconfident we have to be rational rationality requires fitting to reality fitting to what's really true she's very patient capitalism in China actually a lot of scholars and academics have raised the idea that the Chinese economy is running an actual economy capital because if entrepreneurs if they want to make it big they need to strike all sorts of you know, sweetheart deals with so will this kind of crony capitalism eventually destroy the real assets yeah so there's a question about China being crony capitalist so let me first just in terms of terminology I hate the term crony capitalism there's only one capitalism it's about free market protecting individual rights then there's statism statism always involves government and business interacting so cronyism is a characteristic of statism not a characteristic of capitalism capitalism is the negation of cronyism it's when there's no government intervention in the economy so it's a negation so let's call it cronyism yes I think much of China's economy is crony and I think much of the achievements in China the ways in which businessmen have gotten around the need to be crony because you have to be you have to deal with government so the bribes the the finding ways around regulations and then there's the real crony then there's going to the government to give you monopoly power over something that's real monopolies when the government can come in and kill your competitors or destroy your competitors that's a real monopoly there's obviously a huge amount of that in China and yes that will destroy whatever elements of true capitalism there are unless it's rained in unless it's stopped a mixed economy when you have a mixture either moves towards capitalism which means getting rid of the cronyism or towards more statism which means destroying that part of capitalism China is at an interesting crossroad it could go in either direction and that's the big question you guys have to answer that's the big question you guys have to fight for is which direction should it go should it go towards more capitalism and therefore destroy the relationship between government and business destroy that cronyism or will it go towards a greater intensity of that relationship and towards in a sense backwards the United States is facing the same issue America is becoming more and more and more crony more and more and more status more and more businesses make money by getting favors from the government and it's a huge battle in America today it's a huge battle all over the west today and it's a question of will we move towards capitalism or away from capitalism that's the real challenge I'm reading a book about China right now which I'm finding fascinating and I would recommend I think it's in Chinese it's Ronald Coase's book on how China became capitalist not only China is capitalist so I think that's a wrong title but how did it get to where it is today it's fascinating because he's saying I'm just in the beginning so I don't know exactly what he said but he's implying that what he's saying is China really the real progress in China is that the government wasn't paying attention to it so those what he calls the margin of society, the margin of the economy that's what really grew fast where there was pseudo-private property where there was pseudo-free markets that's what grew fast and that the part of the economy that the Chinese government tried to manage where there's clearly cronyism and everything that is part of the economy that grew the slowest that is the least responsible huge growth in wealth and in production in China so it's really interesting I would recommend that book by Coase and I forget he has a Chinese co-author Wong Lee Wong Lee How are you? Do you want to ask again? Do you think that Rand Rand had came this kind of an aspect I am in peace with Christianity Another simple question That's ethical Yes it is, no it's a good question I love the question So do I think that Inuit philosophy can live in harmony with Christianity Ultimately no Christianity upholds a moral code which is exact opposite in my view of think of the symbol of Christianity the symbol of Christianity is a man bleeding while being tortured and dying on a cross for us for our sake What's that? Well Let's not deal with theology It's a man Every saint in mythology every saint in Christian history if you ever watched the paintings with the arrows all over him every one of them get torn by lions every saint has suffered horribly and that's what makes him a saint horrible for what? for whom? for him pain is objective if I stick a needle into your stomach you're going to be in pain even if you whatever you believe you're in pain pain is objective and pain is anti-life all of these saints are sacrificing for us their life gets meaning only from their sacrifice to us now yes there's being selfish in this sense there being self-interested in this sense there's an afterlife and they're going to be rewarded for it in the afterlife but when I say that to Christians they say oh my god no my saints are not self-interested God forbid the whole point is that they're sacrificing that's the essence of the Marl code the Marl code is the subjugation of self but look this is true of all religion objective as mine Rand is saying you're responsible for your own life the purpose of your life the purpose of your life is your life is you Christianity says your purpose of your life is not to serve you it's not to be happy it's not to be successful it's to serve God it's a silver being more important than you don't have pride say to Christians don't have pride because you're nothing as compared to God read the book my favorite book I've read the Old Testament we studied it in school read the book of Job my favorite book my favorite book in the Old Testament anybody know the story of Job that's some of you right Job is a successful prosperous happy guy he has a family, he has a wife he has a thriving business he's doing fantastically well God looks at him and says I'm going to test Job he kills his wife he kills his children he destroys his business Job now is no family everybody's dead no business he's suffering and he's angry at God and he yells at God and he screams at God and he's really upset and everything why are you doing this to me and God comes out to him and says none of your business none of your business who are you to ask me why I'm doing this to you you're nothing your job is to obey it's to live your life quietly without asking questions and towards the end of the book Job says you're right I have full faith in you I will never question again so God gives him a wife and new kids and a new business and everybody lives happily ever often but the essence of religion of all religion is to obey and that's why we invented religion the priests there are two reasons we invented religion one is to explain our arguments we didn't understand why the River Nile kept rising when the tides subsided so we said there's a God in the River Nile that does that we didn't understand why the sun goes around the earth oh it turns out it doesn't but we didn't understand that we had a new God we had a river God we had this God and that God to explain all the things we didn't understand and then Judas came about and said oh we can innovate we can have one concept that explains everything we can't explain we call it God and yes now we understand the tides but we don't understand molecular whatever so we'll call it God everything is God that we don't understand so that's one reason if I am the head of the tribe I invent a God and tell all you guys that I'm the only one who talks to him and truth comes from God morality comes from God all the stuff comes from God but guess who it's really coming from me but that's great I'm in now in a position nobody can hurt me I can establish the truth I can tell you what to do you all live for the sake of the tribe it's a great way to control people in my view those are the two purposes of religion free people don't want to worship some entity that never shows itself that there's no evidence that it exists free people want to serve themselves and want to deal with facts with reality with logic with rationality not with mystical stuff and they don't want to be controlled they don't want to have a pope or somebody who communicates with the other sphere and they don't want to live an afterlife which doesn't exist it doesn't exist they know how I know it doesn't exist because nobody can prove and nobody can provide one eye odor of evidence eye odor all I want is an eye odor of evidence that it does so my default it doesn't the burden of proof is always on those of certain deposits if you believe in an afterlife on you to prove it since you can't prove it there's no afterlife so I don't think they're too compatible for moral reasons and for epistemological reasons reason is the ultimate value of argument religion, Christianity all religion require faith require the negation of religion at some point or another I'll ask some moral questions good for example as I mentioned we can do whatever supposedly whatever we want just in case we didn't hurt anyone not morally, politically you can do whatever you want morally you can't and human beings use your hands a lot and a lot of animals extinct and I'm not sure oh okay so what is the morality about killing animals I might use there are two issues politically it's do politically first politically defensive animals belong to sign believe in property rights animals out there in the world should own property they belong to the property owner so you can't kill somebody else's animals unless they give you a license to do it permission to do it by the way the way they're saving elephants in Africa is giving private property rights over elephants in Africa so people have an incentive to grow elephants because then they use for hunting but they're more elephants because they're being hunted just count intuitive but completely true morally I believe that there's no reason to shoot an animal to kill an animal living being something that has value unless it's for a purpose for example to eat it unless you need to eat it so the purpose of the you know of so morally I think it's offensive to beat a dog up or to treat a mistreat an animal I think it's morally wrong even though politically I don't think they're going to treat it to me if it's your dog or if it's your animal now what about extinction of animals if you really like a certain animal and it's going to go extinct then buy some and protect it but if I don't like the animal and it's going to go extinct then I'm not going to don't you can't force me to buy it right so you like spotted owls in America buy a forest put some spotted owls on there and preserve them but don't force me to preserve spotted owls in my territory so I think that I don't think you have we have an obligation to preserve species we used to hunt for like fox for their fur I'm not sure it's that perfect I think it's fine to hunt for fox for the fur I mean every piece of clothing that human being used to have before we invented we had cotton and wool and so on was for an animal wool is for an animal right wool still is for an animal I mean it's for an animal so there's nothing wrong with hunting animals for the sake of clothing as long as it has to have a human purpose it's not just doing it for fun you're not torturing an animal for fun then I think it's mobile so but do we have to do that right now because we have that post right now some people are actually hunting for fun you know yes I yes because I think that I don't know fur is beautiful there's no reason to deprive yourself of something beautiful because of an animal animals don't have rights and in the end nature and animals are there to serve us not the other way around we're there to I mean the way human beings survive this is the way human beings survive is by exploiting their environment this is the argument against the environmentalism animals adapt to the environment or die humans adapt the environment to themselves so if it gets cold we go chop down trees and build a hut we burn wood in order to create a fire we kill animals to build to have furs to keep us warm we change the environment to fit us so anything that involves using animals or using land or using trees to fit our purposes when it's a legitimate purpose I think Molly is okay but is there an edge between there and I saw there should be a balance point you know the global warming global warming stuff like that okay so let's talk about global warming now we're moving away from ethics again so I'm not a scientist I don't know if there's global warming or not I'm suspicious I'm skeptical why am I skeptical? not because I understand the science I don't but because the same people who claim there's global warming going on right now used to say that there was global cooling going on and it never happened and before that they said that we were going to have too many people and everybody was going to die of starvation and that never happened and they've got a bad track record and I'm a finance guy if you come to me and ask for an investment and you have a bad track record I don't invest with you so that's why I don't trust them okay but put that aside let's assume there is global warming and the world is getting warmer right so so do we have a warm up you know Canada will become habitable think of all that part of eastern Russia nobody lives there we can all move there I mean we have to get rid of Putin but other than that people will migrate because of weather we've always migrated because of weather nothing new Florida floods we'll move out of Florida it's sad I'm not happy about it but so what stuff like this happens you know what worries me when it comes to climate what worries me is global cooling that is what worries me is the next ice age we know we know there's going to be an ice age there has been there will be these things going cycles but when you know when New York when the glaciers reach New York that is very hard to deal with much harder than warm I had a professor once who said global warming if you really believe in it buy air conditioning stocks again we adapt the environment to us if it gets warm outside we create more air conditioning for example here in this room the air conditioning has to be a lot stronger if it gets a little bit warmer because it's already pretty warm so we need we change we develop technologies the other thing we do let's say it's going to be catastrophic the solution can never be stop industrialization don't build fuel don't drive don't build stuff don't create stuff that can't be the solution so let's say could we put something in the atmosphere to help cool it could we develop a technology that mitigates the effect of CO2 a chemical I don't know I'm not a chemist I'm not a scientist but the orientation of the thinking should be how do we solve the problem without killing ourselves another way to think about it I once heard a presentation by an economist named Kevin Mofi Chicago economist brilliant guy one of my favorite living economists and Kevin did this analysis and he said let's assume let's take this book this book written about how horrible climate change is going to be over the next 100 years and he said let's price it out and let's do a discount of present value of the costs and see how much money should we invest today to prevent this catastrophe 100 years from now and it turns out that you should be investing exactly zero because if you take into account economic growth and you take into account that 100 years ago they're going to be much richer than we are today and if you use a proper discount rate because of the uncertainty that will actually happen you're much better off waiting and investing the money later on when we're much richer and the way he described it is what they want us to do today is to tax poor us who are poor for the sake of rich future generations another way to think about this just another example in 19th century Europe take London they were burning a lot of coal you guys burned a lot of coal right and there was a lot of soot in the air and it was hard to breathe it was very bad real pollution worse than Beijing and Shanghai imagine if environmentalists then had managed to ban coal for the sake of future generations no industrial pollution none of us would be here none of us would have been born if we would have been born life would have been miserable and horrible and awful the fact that they bore that pollution allowed us to become rich and get rid of it the same is true with global if it's happening I live on the edge of the desert in California so I'm going to be affected so you know I might have to move but I've also got a lot of air condition a professor hello professor so do you need a presentation that you mentioned about the inconsistency between the exorcist and the non-existence so you propose that probably the ethical revolution is the solution the what ethical revolution ethical revolution ethical revolution is the solution so how exactly do you think about it how do you get an ethical revolution education education education no shortcuts you have to explain it you have to get people to read about it you have to get people to think about it ethics doesn't change by fiat ethics doesn't change by osmosis ethics changes by people thinking by changing the value system it takes a long time it's not quick but it's education education education change happens slowly but don't do it I have to convince people I need a succeed or fail don't you see like the culture seems to be quite different in a different part of the world I mean culture seems so if you want to build up like new new kinds of ethical systems in the world in a different part of the world I don't think it matters what world I think let me just say I think China is actually a pretty good place to do this because from my perspective right now you guys don't have an ethical system because I mean in this sense in this sense in a sense that you're not Christian you're not due to a Christian tradition you don't have that Confucius has a certain element of ethics and it's kind of dated and I think capitalism has kind of superseded it and I think China's looking for something I think there's a void and I think in that sense there's a great opportunity in China to bring these new ideas to fill that void whereas in America I'm constantly fighting against the ingrained altruism of Christianity constantly up against that I think in China it's more why take that thing seriously it's about let me do whatever I want to do right and I think that's a need in some sense that's an easier battle to fight about moral issues ask a question do you support child labor? do I support child labor? it might sound like I'll raise this question but let me put you on no, no it's not that great of a question it's a good question yeah, go ahead the four families the four children they never got the chance to resist the education but somehow somebody brought them to the city and they worked in a factory and they got decent housing and stuff and somehow in the future the problem they would get a chance to be educated at least to get some trade some trade but at least time from whistleblower from quarter to the government saying that they're using child labor so at least the children will be sent back to be they are all those fatwaters so do you think this is good or bad? so I I support child labor in the sense that yes in the sense that I think child labor during certain phases of development is necessary because the alternative is starvation or at the very least stagnation and I think in the 19th century in Europe parents couldn't afford to send their kids to school kids had to work so that they could eat there was no wealth to redistribute even if you wanted to redistribute it so wealth had to be created and this is true of many very poor places in the world if you deny children the ability to work they will stop what do they do? what did children do by the way before capitalism? what did children do before capitalism? they worked from sun up to sun down all day in the farm on the land child labor has always been with us the thing that eradicated child labor the thing that got rid of child labor is capitalism because once you reach a certain level of wealth no parent wants his kid to work so they send him to school but how do you get that wealth from capitalism? so it's exact opposite people always tell me oh but capitalism creates child labor and I say no it's the opposite capitalism destroys child labor child labor I mean if you read the Bible if you read history if you read everything if you go and look at a 16th century farm if you look at a 20th century farm in China children worked in a farm they had to otherwise they couldn't eat so child labor is part of life that that capitalism had to get like slavery people say oh capitalism created slavery and they go really? that's the you know a lot of you read this all over the place capitalism created slavery have you ever read the Old Testament or read the Greeks? slavery's always been around and when did slavery disappear? when did slavery disappear? in the 19th century at the height of capitalism and who got rid of slavery? the socialist countries now who got rid of slavery? the British and then the Americans the two most capitalist countries in the world and they fought I mean in America 700,000 young men died in a war to end slavery so slavery went away because of capitalism capitalism is the anti-slavery anti-child labor system I tell people if you're wealthy enough how many of you want to manage a bunch of 12 year olds? nobody wants to manage 12 year olds in a factory that's why child labor disappeared because children are not productive do people join Tea Party because it's too libertarian? do people join Tea Party what? Tea Party is not libertarian Tea Party is traditional conservative in America it has an element of libertarianism but it's not libertarian it's much more conservative than libertarian yeah and then I think we'll wrap up yeah one last question we're talking about a lot of government and a lot of tax but what about public service and you know we are in a railway station and you can buy it yourself a car you can buy yourself a bike you cannot buy yourself a metro you know we're not from Dubai I don't know why not that is white cans private enterprise build a metro system but we can see in the British the United States the original subway system in the United States was built by private enterprise the original parks you know Central Park in New York the big park was private it was a bunch of businessmen bought the land turned it into a park handed it over to a non-for-profit to manage and it was a private park so in my view there are no public services other than police and military and a justice system that private sector cannot provide cheaper and more effectively than the government I don't think so because you know in Britain and I use it in Canada and the transportation system is based on public and by government and sometimes in a specific period some private company take over it and the price gets really ridiculous high yeah but because of the way it was privatized this is in England and the way they privatize the railroads and everything it's not real capitalism again now I can't show you but I have this parallel universe somewhere where England stayed capitalist that never reverted to socialism and all the public transportation in England was privatized and if I could show you that you'd see that they're much better than what they have today and of course they resist privatization even though they pretend to give an example all these countries in Europe are resisting Uber which is a form of privatizing public transportation and Uber would destroy the public transportation system the buses and the license-based taxis in London and it would be a lot more efficient and a lot cheaper that's why they oppose it and in China there's sort of stuff like Uber but you know in China there are two companies we call it BHB, Baridu, Alibaba and Tenzin and Tenzin they just in China there's Uber's you know Kabir we call it Da Hongfeng and they used to be the first one who got the apes on the phone and the public destroyed Baridu and Tenzin and they just threw up millions of dollars just to destroy them I don't know the China case but in the United States we have the equivalent of Baridu and Alibaba and all that stuff so Uber's thriving it has multiple competitors now not only is it applied now to taxis but if you want to go and stay in an apartment in New York you can use something called Airbnb which is where people are renting out their own apartments I mean it's amazing what this technology allows getting around the regulation the regulators want to shut this down and other companies can try but the main way in which it gets shut down is through regulators I think we're going to stop here thank you everybody