 Thank you. It's great to be back back in Hong Kong and thank you Lawrence and Lion Rock Institute for for hosting me. I will mention that Iron Man's books now even though they would be bestsellers in the United States sell more copies outside the United States in a variety of different languages than in the US. So for the first time she's kind of this international phenomena and of course all her books now are in Chinese so nobody has any excuse not to read Iron Man so please do so. And if you're interested in the topic of this talk and you find it stimulating my book Equal is Unfair about a week and a half ago was published in Mainland China in Chinese so we have a few copies up there but feel free to buy it in Chinese at some point. So inequality has become I think the biggest economic issue in the world in which we live. It's everybody talks about it and it's presented as inequality is the problem of our time. I mean there's only one issue bigger than global warming in terms of something to worry about and be afraid of and that is what's bigger than inequality. Now what is your generation really really worried about what's going to end the world in 12 years. I suppose you're all going to die in 12 years that's the story. Climate change. So climate change is probably the only issue bigger than inequality but when it comes to economics this is the thing that everybody talks about. Inequality is blamed it's used as a cause for pretty much every problem that exists out there economic problem that exists out there and even some not economic problems I've heard people blame terrorism on inequality but we blame low economic growth rates in western countries on inequality. We blame the fact that poor have a hard time rising up into the middle class on inequality and some countries the middle class is shrinking. We blame that on inequality. All the economic problems I mean Donald Trump's election supposedly was caused by inequality and therefore you could blame tariffs on inequality. So almost everything today in some way or another is being blamed on inequality. So what is inequality? How do we define inequality? Well it's the gap. It's the difference in income or sometimes we use wealth between the poor in a particular country and the wealthy. The wealthy may be being the top 10% or the top 1% depending on what exactly you want to measure. Sometimes people use as inequality the gap between the middle class and the rich with the idea that over the last 30 years the rich have been getting richer and the poor have stayed and the middle class have shrunk so the gap the difference between the very rich and everybody else pretty much everybody else has been expanding and this is supposed to be a major problem and the question is why is it a problem? And then you know you could cluster the arguments about why it's a problem into two. One economic issues this somehow causes some economic distortion and that causes economic problems and the other cluster is question of fairness, questions of morality. It's just not fair. It's just not right that some people you know go up in wealth so dramatically why everybody else at least seemingly either stays put or only getting better much more slowly. So economic issues and moral issues are the two arguments against inequality. So let's deal with the let's talk about the economic issues because I think they're easier to deal with quicker to deal with and then we'll get to the we'll get to the the moral issues which I think are more interesting. So as far as I can tell and I've read a lot about this topic you know there's this big book by Thomas Piketty who the French economist who is now a worldwide celebrity I mean if he was here speaking at the University of Hong Kong the president of university would have gone to the airport to greet him. Germany here and we've been an auditorium full of thousands of people because he is such a celebrity and everybody loves this guy but he wrote a book called Capital in the 12th 21st Century or as I like to call it Das Kapital in the 12th century which just gives a it just sounds better in German and links him to to to Karl Marx which is his his spiritual source where he basically makes the case that inequality has grown significantly okay you could argue about that with the data but let's say he's right but his argument is that it's going to continue to grow indefinitely into the future up to a point where all the world's wealth will be held by a few people and everybody all the rest of us will be destitute and he says the reason for that is that the return the investment return on capital investment is far exceeds and will continue to exceed forever the rate of growth of the economy more broadly which we supposedly benefit from so if you have capital you go it goes very fast if you're just part of the economy you grow very slow now what's fascinating about that is that that goes against every economic theory known to man as the the return on investment has to in the end correspond with the growth rate of the economy because what are you investing in the economy you can't make more money on investments than there is wealth or the growth of wealth in the economy more broadly there has to be convergence and as the return of investment as more and more capital is deployed the return will shrink and growth rates will accelerate so just an economics it doesn't make any sense by the way there was another person who made exactly the same prediction exactly the same prediction you know 150 170 years ago his name was Karl Marx and it never came true never came true and yet Piketty's making the prediction again nobody cares everybody's everybody's you know believes indeed there is absolutely there's absolutely no economic theory is this on no just went off right one two three this on no one two three two three oh and he there's no economic theory no economic theory that relates income inequality or wealth inequality with economic problems with slower growth rate with lack of mobility among the poor with shrinking middle class there's just no theory that would suggest a relationship between a gap just a difference and the rest of the economy there's one that people throw out and this is this is the way it goes we've learned since we were very little though it drives economic growth is what what is what is the thing that's most important for an economy to grow great housepiece of economics economic students here greed is it greed no can't be greed greed is bad we want economic growth consumption consumption exactly consumption right consumption is good production air savings air investment air consumption that's what makes economic economies grow this comes out of kind of the modern canyons i'm not even sure canes believed this consumption makes an economy grow if rich people have if the amount of wealth that rich people has grows what do rich people do with their money they consume it orders what's that order they hold it right they don't consume it because how many yachts can you buy how many airplanes can you buy how many big houses can you buy so what happens is rich people don't consume it's called propensity to consume the propensity to consume among rich people is low who spends all the money they have poor people because they they take all the money and they spend enough stuff that they need just to survive so if we redistribute wealth from rich people to poor people what will happen consumption will go up and we are told the economy will grow that's the theory it's not a very good theory it's not a theory almost any economist actually believes and by the way some people believe okay this is gone too right okay it's i don't know it turns itself off these things turn themselves off it's a really bad theory why why is it a bad thing what actually leads the economic growth yeah saving an investment think about it this just forget about this it's useless um think about it this way how do you consume how do you get the money to consume where does the money to consume come from paycheck from paycheck so what do you have to do to get a paycheck work so in order to consume you first have to oh this is still done uh in order to in order to consume you first have to produce you first have to have a job you first have to make something and get paid for having made something and then you can go and consume so before consumption there has to be production in your part but there's another production that has to happen before you can consume what production is that what other active production has to happen for you to be able to consume somebody has to make the thing that you want to buy so for every act of consumption there's actually two acts of production that have to happen you have to produce to get the money to be able to buy the thing and that person who is selling you this stuff has to have produced it somebody has to have produced it you don't have to sell it to you the primary activity in an economy the thing that drives economic growth the thing that drives an economy is production consumption is easy i give you a few you know hundred dollars and put you in a mall somehow you manage to consume very easily anybody production is hard production requires thinking effort capital organization management entrepreneurship production is really difficult the challenge in an economy is how to spoke production how to spoke business creation how to spoil entrepreneurship how to spoke job creation so that people have the money to be able to consume you need to first have a job so production is always primary and what creates production investment capital there is no production until you deploy capital to an idea entrepreneurship is what ultimately creates production which ultimately creates consumption so economic theory is upside down in terms of this argument about inequality it's not consumption that drives an economy and it's sad to see this repeated over and over and over again it is the challenge of producing stuff it is creating an environment which encourages production investment and saving americans are very good at consumption very bad at saving so how come how come america does so well who's saved who has been saving that is bailed out america chinese the japanese the chinese the asia generally your savers we're consumers and for now your saving have funded capital investment in the united states and that is that is that has created economic growth one of the one of the many reasons why a trade war with china is super dumb to be to be generous right because there's nothing gained by it and everything to lose america depends to a large extent on capital on saving investment and of course cheap goods which increase the quality of life in the united states so the whole economic argument around inequality is is just empty there he goes again there's just nothing there there's no there there there's no it's gone again oh it's backing all right there is no legitimate economic argument that says that the gap is problematic now it's true there are lots of economic problems you know the poor mobility among the poor the ability of the poor to rise up is much slower in in the west at least than it used to be it used to be much easier for a poor kid who's ambitious who wants to work to be successful much easier 50 100 200 years ago or 150 years ago than it is today so one has to ask the question why economic growth has slowed in the west significantly one has to ask the question why at the top there's a lot of cronyism you know people who haven't produced but are somehow rich and that's bad all these eight real economic problems but not a single one of those problems has anything to do with inequality indeed i would argue it's the opposite it's our attempts to reduce inequality by redistributing wealth by having a minimum wage by having all kinds of restrictions on entrepreneurs regulations controls that actually restrict production restrict the number of jobs that exist limit the growth in productivity and if you don't have growth in productivity what happens wages stagnate if you don't have growth in productivity it's very hard for somebody who's poor and ambitious to rise up how does the minimum wage keep people poor minimum wage is one of the most evil tools ever invented because it keeps people poor how does it do that can't find the first job can't find the first job so let's say the minimum wage in a lot of places in the u.s. now is $15 an hour most in a city poor kids have gotten a lousy horrible terrible education and they don't know anything so their productive ability is at around six dollars an hour so they can literally produce if you give them all the tools because they don't have a good education and because they don't have any skills they can produce six dollars an hour who is going to pay somebody fifteen dollars an hour if they can only produce six dollars an hour nobody so they'll never be employed because i'm not allowed to pay them six dollars an hour i could go to jail if i paid them six dollars an hour and at fifteen dollars an hour i'm not hiring them i'll find somebody else who can actually produce that if i pay somebody fifteen dollars an hour how much they have to produce that simple economic question how much at least 15 yeah more than 15 i'm gonna make a profit off of them right how am i gonna make a living if i pay them exactly what they produce so it has to be more than 15 and that will determine how much money i make off of my employees every employee in the world gets paid a little less than what they actually produce because the employer you know has to be paid somehow so a whole group of people in the united states are never going to have a job and there's no better way to keep people poor than never giving them a job because the only way to raise out of poverty is through work is through having a job so all these economic problems uh the low growth rate in the economies are consequences of regulation consequences of high taxes consequences of redistribution consequences of of of restraints on entrepreneurship instead of looking at solutions for those we're obsessing about something that doesn't matter one iota which is the gap so let's talk about how this gap happens right how does this gap happen how do how do we get people who are rich and people who are not so rich why do some people get rich how do some people get rich how do you become a billionaire this is school right this is the secret to success how do you become a billionaire you take risks but you know lots of people take risks right sometimes when i'm driving out there i'm probably taking a little bit too many risks doesn't make me money what kind of risks but what's what's unique about the risks that people become wealthy take in order to become wealthy that differentiates them for everybody else what do they have to do they invest it again people invest money all the time but only some people get rich really rich i'm a billionaire how does a billionaire become a billionaire they provide something they provide something that people want again a lot of people do that but what what is the difference with a billionaire they provide something that a lot of people want how many people like hundreds of millions of billions like if i can produce a product that hundreds of millions of people want and are willing to buy over and over and over again at a profit i'm going to be a billionaire that's the secrets being a billionaire now why do people want it and why are people are willing to pay for it enough to give you a profit why because they hate themselves and they want to make themselves poorer i'll give an example you know the same company quality has really made me really aware um and and as a consequence of any kind of quality i really really resent harry potter everybody read harry potter no never made damond red harry you gotta read harry potter so like harry potter is a series of books this is the magic series of books that jk wallens wrote and uh what you observe is the jk wallens is today a billionaire a billionaire she made over a billion bucks from these books now the thing that really upsets me is she became a billionaire and i got poorer because i've done the math and i spent at least i don't know three thousand dollars on harry potter i mean really right like every book came out right my kids i have two boys and they were about harry potter's age so every book that came out i had to buy two copies right one for each one of them because they wouldn't wait until one read it and then they would have to read it the night it came out i go in line and midnight and as they grew older they could stand at midnight but you know in the beginning i would go and we get the books and then they would read them but then i wanted also to to to read harry potter because i think the original one i read to them and then i got caught up so then we got the audio tape right and then we take a road trip and they would hear it for the second time and i would listen to it for the first time and you know we'd all as a family experience harry potter and then there were movies like nine of them there were only seven books but somehow it turned into nine movies and then there were rides in disney land and i don't know at least three thousand dollars so here's the thing about inequality right jk wrongs became a billionaire and i got poor by three thousand dollars that's just wrong right why is that why doesn't that really make sense did i get poor by three thousand dollars no but if you're thomas piccati if you're an economist not to be just a piccati and what does an economist do an economist looks at my bank account and he sees that my bank holdings went down by three thousand dollars and he sees that the three thousand dollars flowed into jk roland's bank account and she got richer by three thousand dollars all an economist sees is a one party got rich and one party got poor that's inequality inequality is expanded right by six thousand dollars her three thousand of mine inequality just got much worse what's missing the value i got for the three thousand dollars and the problem with it is that it's not material nobody captures that value now how much value do you think i got from harry potter if i paid three thousand dollars for the whole thing probably three thousand dollars well much more than three thousand dollars again three thousand dollars i can't be indifferent but i get much more than three thousand dollars worth of value from so i am richer spiritually granted piccati can't measure it those poor economists they can't measure it it's not in a balance sheet somewhere i just feel good three thousand dollars more than three thousand dollars worth of spiritual value and she got richer but i got richer more than she did because she only got three thousand bucks i got like six seven eight maybe you know just having happy kids how much is that worth like when you have priceless exactly right so i got super rich from harry potter she got just a little bit richer but again if you just look at the money if you just look at the income so billionaires become billionaires by making our lives better whether it's by writing a book and therefore making us spiritually better by producing an iphone how much is this worth i paid a thousand bucks for this how much is this worth to me if i paid a thousand bucks more than a thousand bucks i mean this is probably worth i don't know tens of thousands don't tell apple to me right not only is this a uh a super computer uh more powerful than the computer that sent man to mars more powerful than you remember those no well you guys don't remember because you weren't born yet but some of you remember those ibm mainframe computers that filled the room we used to do punch cards and go in and i was i i i still remember punch cards right and they filled the room and this is more powerful but it's not just a computer it's the most amazing communication device ever invented i mean i can call anywhere around the world at a marginal cost now of zero right it used to be again some of us remember long distance charges when you traveled overseas you like made really really short calls once a week because it was so expensive now and i can not mention i can video conference with my kids from anywhere in the world at a marginal cost of zero so unbelievable communication device from chatting to speaking to video conference not just that what else is this it's a camera it's a camera i mean i remember having to look around the camera and film anybody remember film remember what it took to get it developed and then you'd spool it into the camera and you remember what a mess that would create i mean oh my god you have no clue you young people have no clue how much how taking photographs has changed what else it's like an entertainment device i can watch movies i can access what's that you can read Harry Potter i can read Harry Potter absolutely and and i can listen to every piece of music ever composed by anybody with any performance i want pretty much in all of human history at a marginal cost of zero i have an apple music subscription or whatever right zero i mean just this is worth i mean if you just try to assemble this 20 years ago this would cost you millions of dollars so a thousand bucks is an unbelievable bargain so yeah apple gets rich off of making me richer so who wins i win yeah apple wins too so Steve jobs became a billionaire by making me better the only way to become a billionaire is by making the lives of billions of people better by making the world a better place to live for billions of people it's the only way to become a billionaire unless you're a crook granted or unless you're in bed with the government which is like a crook same thing but if you're actually a productive business person if you're actually producing and making stuff not only are you employing people not only are you making my life better by selling me the goods you're also making your life better you're actually using your mind using your abilities to make your life a good life so is it fair that billionaires are billionaires yeah i mean if i when i meet a billionaire once in a while i do i always say thank you because the money that they make is a fraction a fraction of the value they create now a lot of people use this kind of statistic they say like the 20 richest people in the world and i don't know what the exact number is but it's something like this the 20 richest people in the world have more wealth than half of mankind like three billion people you know why why the 20 people richest people in the world have more wealth than three billion people why is that because they produce more because the three billion people are mostly subsistence farmers how much wealth the subsistence farming produce zero nothing you eat everything you produce you consume everything you produce there's also class there's nothing to trade so how much wealth has been produced zero so if you add zero to zero to zero to zero a billion times what do you get zero i mean if this room was full of students in the united states i would say i one person a richer than the entire auditorium here why because all of you have student debt yeah so your net worth is negative which is what you should do with your student you can take on debt i paid off my debt and mine is positive see even if my bank account has one dollar in it i'm richer than the whole auditorium because your wealth is negative i mean when you do these statistics it's just demagogue it's not real it's just be a demagogue yes three billion people have less wealth than bill gates and another 20 billion is yeah because these guys made something it changed the world three billion people didn't i wish they did more billion is the better in this argument economic argument really make no sense the people who become very very very wealthy are wealthy because they produce the wealth they've created it did they redistribute the wealth did they take it from other people oh because the wealth keeps growing new wealth constantly is created there wasn't an iphone before there's an iphone that's something new that's something that exists before look at entrepreneurs out there if they do something that already they're not redistributing stuff they're creating something new they're making something that didn't exist before wealth is something that when you create it you add it the only the only entity that redistributes wealth is government it takes some sum and gives to others and indeed that's not zero sum because that's the negative sum because somebody in the middle takes a cut right it costs a lot of money to redistribute wealth it turns out there's a massive bureaucracy that has to be paid in order to facilitate so people who make a lot of money earn it now you'll be told that president obama had a famous speech my favorite obama speech it's a speech way said i call it that you didn't build that speech i don't know how many of you remember the speech but he went on this speech just said you businessman you didn't build it you didn't create the wealth you were born to the right parents you were born with the right genes you had a great teacher who taught you and inspired you you drove to work on government funded roads you have employees and suppliers and all the networks and that that helped you produce what you produced the venture capitalists the the whole ecosystem around you that made it possible for you to produce at the end of the day an iphone so you didn't build it society built it we all pitched in and helped out and that's a common view and it comes from a particular moral philosopher by the name of john walls who wrote a book in 1971 i think called the theory of justice and it's probably the most influential book in modern philosophy particularly political theory if you study political theory this is what you'll study your study john walls and wall said you don't deserve anything you make you don't deserve anything you get you're just a product of your genes and your environment and if you talk to psychologists if you go to study psychology what will they tell you your product of some of them will say your product of your genes right that's evolutionary psychology right jordan pierson and a lot of these guys steven pinker a lot of these guys evolutionary psychology you we've evolved in a particular way we have genes they express themselves that's who you are whatever your genes are that's what you are and then other psychologists say no no no you are you're actually a product of your environment it's what your teachers did it's what your parents did it's what all these other forces impacted you and then like the radical say no it's a mixture of both your little bit of product of your genes and a little bit of product of your environment and it's a mixture what's missing is anything missing because if that's true you don't deserve what you get it's just an accident it just happened now it's still maybe true that we want you to keep it because why nobody else deserves it but if you work hard you work hard because your genes dictated you work hard you just got lucky so it's luck it's like a lottery ticket and you know we don't feel too bad about redistributing wealth if it's a lottery ticket so what's missing yeah well what's another word for agency free will i know it's an unpopular unsexy word i think it's pretty sexy no free will you get to make choices yeah you're born in a particular environment yes you have particular genes yes they impact you but you know who actually decides who you are who you will become who what you do with those genes and what you do with the environment you do that's why you can have people born in the same environment producing completely different results you can have twins or siblings who have pretty much the same genes and produce completely different results because you get to shape yourself or not but or not is a choice as well because shaping yourself requires effort it requires thinking it requires introspection it requires making choices not making choices or making the wrong choices is also shaping yourself but then today you are product of the choices you made and it's nobody else's responsibility but yours i mean other than freak luck you know crazy stuff that happens but for the most part so you did build that you chose to make the effort you chose to work hard or you chose to work smart or you chose to go program instead of going to play soccer or something it's choices you make whether you study for the exam or don't study for the exam and we all know we make those choices and we all know we face points in our lives where it's really really tempting not to study for the exam because the party is really hot and it's really cold and i'd rather go to the party and sometimes we do go to the party and we don't study and it's a choice and the consequences always so that is what shapes who we are and therefore we do build it we are responsible for our lives we are responsible for our success and to a large extent we're responsible for our failures and failure is not a disaster most parts and there are some failures there are and failures are opportunities to learn and become better and figure out what went wrong and make better choices in the future so the whole inequality issue if people are agents if they have agency if they have responsibility if they are choosing if they are if they do build that then the people who make a lot deserve what they make people who make a little deserve the little because that's what they make so why is it an issue well because we have in our imagination the small ideal the equality is the right equality is good after all even in the united states declaration of independence the founding fathers of america said all men are created equal now they didn't quite mean it right because it was slavery and they when they talked about men in that context they didn't include women uh so there was some they had to make some fixes to that statement but the intent was all human beings are equal but what did they mean by equal did they mean that we all have the same stuff that we all have the same ability you all have the same productive capacity and therefore should get the same stuff no i mean they weren't they weren't stupid and they were naive what did they mean by quality yeah quality of rights equality before the law equality of freedoms every individual is free free to live his life based on his choices every individual is free to live free of coercion free of force free of authority to exercise his rationality in pursuit of his values without other people interfering without the state interfering so the idea of equality at least in the 18th century and i think to to a big part of the of the 19th century was the idea of equality of freedom we're all free the idea of equality of rights we all have the way to life liberty property and the pursuit of happiness not even the quality of outcome right just the quality of opportunity i want the opportunity to score basket and lebron won't give it to me he'll block every shot i make he'll take the wall ball away from me if i try to dribble and you haven't seen me play basketball but just imagine i just don't have it right so how do we how do we make me and lebron equal in basketball how do you give me a little bit of opportunity to score basket on the project yeah we're strict lebron james how do we restrict lebron james because you're not going to make me bad that would take years it's too late and even when i was young that you wouldn't make me bad not enough to score bad one basket on the budget not one right this is real this is just opportunity it's not even out how do you make how do you how do you give me equal opportunity with lebron james because we all have equal opportunity right how do you give me equal opportunity lebron james you restrict his ability how do you restrict it what's that tie him up we can tie him up tie his hands tie his legs you guys are gentle you guys are gentle usually within five seconds somebody said break his legs right and i usually say not enough you'd have to break one of his arms too because i'm that bad of a basketball player right that's what you'd have to do you have to tie him up break his legs you'd have to do in violence you'd have to do in violence and this is the point you cannot establish equality of opportunity or quality of outcome without doing violence on some for the quote sake of others in other words the only way to achieve equality of outcome to reduce inequality is by violating equality of rights by using force by using coercion by stealing and taking and doing violence against the person so either your for equality of rights or your for equality of outcome you can't be for both equality of outcome is about violence taxes of violence just try not paying them and you'll see the gun come out and the violence manifests redistribution of wealth is violence it's taking my property and giving it to somebody else i mean sometimes i think maybe breaking my legs wouldn't be that bad if i got to keep my wealth right because we all say breaking legs nobody could break legs that's bad but taking half my income every month it's okay yeah right i mean have my income is half my life half my effort half my ability half my i mean i work hard and you just take half of it just goes not anymore i've moved now to port of eco where i pay four percent taxes that's it almost as good i mean better than Hong Kong actually so some taxes but when i live in california it was 55 percent of my income out the door before i even got to it that's violence so to me every time people talk about equality i think violence and and maybe maybe the most striking story to me and this is i i'm i'm going to tell you the story because this is the image you should have this is a story you should remember when people talk about equality as if it's a beautiful thing so not that long ago you know probably about 40 years ago 30 40 years ago so in my world not that long ago there was a group of a group of young idealistic students actually lived in asia and they all went to school in paris they went to school in paris and they all studied with the great french egalitarian philosophers kammu and fukou and all these all these guys who taught them that equality was the ideal equality was beautiful if only we could establish a truly equal society life would be so much better this is marks on steroids it's the wheel thing and this group actually had the opportunity to go back to the country and actually gained political power and they had an opportunity to implement this idea of equality and but this is the problem they faced some people lived in a city and other people lived in the countryside and that's obviously unequal because there's a lot of convenience is they're living in a city their economies you can generate more wealth there are lots of advantages to living in a city and people in the rural areas are growing their food it's it's a completely different experience so how do you make them equal what do you do real problem that they faced they had to figure it out so what did they do they kicked everybody out of the city they literally marched them out of the city forced them to leave their homes and forced them into the countryside but now you've got another problem the whole population is in the countryside but it turns out some of them are good at farming and other people are not good at farming some people are good at foraging you know what foraging is foraging is picking berries and nuts just picking stuff off of nature because there wasn't enough farming going around right and some of them are not so for a while they banned foraging nobody could forage you obviously you create real problems a food production but you still had even deeper problems some of the people were educated some went out some could read some could not some were smart some not so smart how do you equate them how do you make them equal because it's wrong to think about equality just it's a money what about abilities like basketball how do you do it get rid of them what's that get rid of them so basically that's what they did from any kind of university if you'd finish high school they shot you if you wore glasses it was a sign for some reason that you were you know in in this world that you were could be maybe more intelligent whatever they shot you they killed 40 percent of their own population over two million people all in the name of in the name of equality in the name of a beautiful idea this is the killing fields of Cambodia they were the Khmer Rouge this is more pots and a gang of monsters and people love them in the west I mean for decades afterwards nomchomsky nomchomsky would praise the Khmer Rouge for the ideals for the beauty of their vision they killed two million people in the name of these the ideal of equality is an evil ideal is an ideal that leads to nothing but death and destruction when people are free if I take any group of people anywhere you just take this classroom as an example look around the room you're all different I mean it's a beautiful thing they were all different you take any group of people and you leave them free you just don't intervene you don't use coercion against them you don't tell them what to think and what to do and how to act you protect them from one another they don't steal and lie and cheat but not you know lying I guess they can do but they don't come in front right but on the next you just leave them free and you come back a few years later do you think they'll all be equal now they'll be massive inequalities why I don't know because some people are lazy and some people work hard that's a simple answer but another answer is some people choose professions that don't make a lot of money like I have a PhD in finance I could have gone to Wall Street I had job offers to go to work at Wall Street actually run a hedge fund I could have devoted myself full-time to running a hedge fund but I decided the money wasn't that important that to me what's important to me in life is this what we're doing right now I love this you can't tell I have a blast this is what I live for right I've literally given up millions of dollars millions I know because I know how rich my partner is and I hope which I am that gap I've given up in order to be able to do this we choose different professions some professions make a lot of money because they have a significant impact on large vast numbers of people people like me we can't reach millions of people and even if we charge a little bit right this is free and look how few people are here I'm just not you don't go gate to reach hundreds of millions of people I reach thousands of people I am proportionally poorer than Bill Gates right that's just a profession I chose and I wouldn't exchange it for anything in the world people choose to be artists people choose to be investment bankers people choose to be you know teachers see people choose to be entrepreneurs in high tech and even entrepreneurs in high tech not everybody becomes rich so if you leave people free they're unequal inequality is a feature of freedom it's not a bug to get rid of inequality means to get rid of freedom we should embrace inequality because it is a sign that we are free thank you all right we'll take questions I guess yeah we're in an organization which is funded by taxing people how do you look at also adding up not creating a problem because it does have some value there's obviously wouldn't be the society wouldn't be doing it well that that's a huge assumption I mean a society that's lots of things that have no value we've got a trade over China that has no value but we're doing it we go to war often for no with no value and we go to war and blow up ourselves and other people and destroy value not only don't we add value so the fact that people do something doesn't mean it creates value people people do stuff for lots of reasons value creating not being a main one and whether university creates enough value to justify its expense how do you know because it's funded by tax money how do you know let's say there are the universities in the united states I'd say universities in the top that are considered the top universities in the world in the united states that I think actually produce massive negative value because they train people to think poorly they they they inculcate ideas that are wrong stupid and destructive and many of the people leaving those universities can't find jobs so but because the whole process is funded by government and subsidized in student loans and all the rest of it rational market factors don't play so we don't know if value is created see that's a beauty of a market a market is not sustainable if value is not being created but government can sustain stuff along periods of time without any value being created now what do we do about universities how do we have universities that government won't fund them and I don't believe government should fund any of them well imagine if all the universities were privatized what would happen well your parents tax bill would go down so your parents would be richer right and maybe they could afford to send you to university what about the kids who don't have parents who could afford to do oh my guess is and this is not a wild guess what just happened in the past is universities would create charities they're basically would fund scholarships for poor kids but not just universities businesses would create charities to fund because you know I ask people this question how many of you would be willing to put a little bit of money aside to a charity in a world where government didn't fund any education in order for poor kids to go to school and oh every hand the room goes up right okay so what do I need government for I have a feeling you could do it more productively than the government did would do it more efficiently than the government would do right and that that's assuming it was needed I think as we got richer as a society and I think if you feed up an economy and you put governments in its place and he actually reduced government's appropriate size and function we would get richer so much faster than we are today that there would be so much wealth in society there would be easy easy to fund universities and education people say oh government didn't fund basic research there'd be no science really I mean think about all these billionaires what are they going to do with the money they don't want to leave it to their kids because that a spoiled the kids rotten they can't spend it so what are they going to do with the money well a lot of them love science because they're engineers or they or their or their geeks they they love science you think they wouldn't fund basic science if the government wasn't doing it but if the government does it it crowds out private funding or think about jet visas you know why jet visas jet visas is worth what a hundred billion dollars people say nobody needs a hundred billion dollars it's ridiculous is that true now I think jet visas absolutely needs a hundred billion dollars you know what what does he want to do with a hundred billion spend on stuff he wants to do you yeah but what is it that he wants to do that costs a hundred billion dollars go to mars so if we're going to go to mars it's probably going to be because there's people like you know jet visas putting his own capital investing his own money in building spaceships to go to mars that's going to require a lot more than a hundred billion dollars so i'm happy they are billionaires who have grand visions who are ambitious and maybe we'll take my kids and my grandkids to mars because i think that's exciting that's terrific you know finally leave this you know the bureaucrats and we'll go to mars so you know i don't see what the to me if the universities are based on a private real private model where people really have to pay to go to university the value added would be obvious and the value added would be much greater i think right now it's hidden we don't know what the value is in some cases it's negative do we really need another department of i don't know what would it be you look like you're going to say something you know i don't know gender studies or another feminist department that studies feminist literature or how non-pc can i get you know identity whatever identity study so we can discuss the differences between being yellow brown green blue and whites and the privilege that each one gives you and the i mean really we need you think that actually adds anything to humankind probably not it probably is destroying more value than it's creating and yet it's funded by the government so what the hell go study that i might have offended some people who actually studied some of these things but it's like no we need engineers we need people to think creatively we need we need we need people who can write beautiful books we need people who could create beautiful art and we need people who can create create products that we can all enjoy we don't need people who can tell us that we're victims and we're the products of our race and we're products of our genes and we're products of all this garbage we don't need people actually destroying us we need people who can build my question is yeah so i do believe that your argument is theoretically perfect but in the real world is there any and at least level that we can yeah or an optimal level of inequality or efforts to achieve equality that we can tolerate for example not in a free world with no government there must be some people that who are so dumb or whose productivity is so low who cannot provide for themselves or some countries whose environment has so like like so polluted so deteriorated so they cannot maintain a sustainable economy yeah so at the very end yet in a real world there must be some kind of redistribution although it can be inefficient it can lead to a lot of destruction of families but there has to be so so i don't see a test to measure what is the optimal level no because i don't buy your assumption that there has to be uh first i i'm not arguing against the existence of government i just think i because i think i was necessary i don't think you can have freedom without government government is necessary not a necessary evil the necessary good it is necessary for freedom to have government it's just the right kind of government limited by the right kind of right kind of principles um but no why right that is um let's say there are people in an economy who are not productive enough or or whatever born without hands or born with half a brain or whatever they just can't produce right what do we do with them well who is we right first of all they have a family again i believe that everybody's much richer in the circumstances like that most families take care of their sick children right but let's say they can't let's say take it one level more right the family's pretty bad off and they can't take care of of this child what happens there well again i'll ask the audience how many of you willy to put a little bit of money aside to put into a charity to help those people who really can't take it themselves so my point is that it has to be done voluntarily it cannot be done by coercion i don't allow for one iota of coercion in an ideal society but but a real ideal society not a mythological you know utopia once you allow for coercion it is truly a sloppy slope you know well this guy has a half a brain so we need a course to support him what about the guy with three quarters of a brain when he's well what about the guy with 99 percent of a brain or you know whatever the criteria is it's always a sloppy stuff when the welfare state was first instituted it was supposed to only help only help the truly destitute and only for a little bit of time and as soon as they got back in the feet there and today in the united states 47 percent of the population get money from the government in one way or another that's your slippery slope so no you cannot allow even a little bit of coercion into the system the issue of pollution is a completely different issue it's an issue that for the most part is sold by property rights if the rivers and the lakes and maybe even the oceans are privately owned then you don't get these kind of pollution because just like you can't throw your garbage in my backyard you can't dump your garbage in my river and the consequences if you do and we know what the consequences are we know how to deal with them and we know how to arbitrate them so most pollution issues are solved by uh by by private property the so the pollution problems that are not so by private property um for example some forms of air pollution that really hurt people then yeah the government has a role to play if you're clearly doing something that's hurting me by spewing this chemical into the air then the government has a right to tell you no you can't do that anymore but first it has to be proved that it's hurting me not hypothesized but proved um and and there has to be a process to objectively get to that solution which which is not the process we have today but i'm not saying government has no role but it has no role to curse unless harm is being done unless rights are being violated yeah so two main questions so uh firstly you have spoken of like equal qualities equal opportunities equal opportunities so what if the government for example enforces a national curriculum to all the students so and via new technologies such as like video lectures so that all the students can receive same quality and same lecture so would that be uh equal opportunity and would you support based on this type of sanction and the second question is that uh although uh based on your argument in equality does not create economic problems however it does create political problems so like if the society is too in equality that some of the poor people are pissed and especially America under uh democracy people are just kind of like somebody like like Sandra or Kotzeal Kotatz yeah and she's gonna uh advocate well they already have yeah um so let me take the first question first I don't believe in equality of opportunity I try to make that clear right because equality of opportunity still requires violence it still requires tying up LeBron James just to give me an opportunity not to give me an equal outcome you have to restrict him so I don't believe inequality opportunity is just another form of outcome it's just an earlier form of outcome but it's still an outcome and for example if you taught exactly the same curriculum with the same video and the same professor to every single student it's still not equal opportunity because some people have higher IQ's than others and they absorb it much faster some people respond to visual stimulation and some people respond to written stimulation and some people respond to other we all have different learning styles so you can't establish a curriculum this is one of the things I think is so evil about national curricula and government trying to dictate curriculum it's different kids respond differently you need to be able to experiment and you need to be able to customize curriculum to the particular students rather than have one standardized thing for everybody uh so no I don't believe in equal opportunity what I want to do is maximize opportunity create a world in which if you want to take advantage of the opportunities they're there for you to take advantage of them and if you don't you suffer the consequences I don't suffer the consequences for you you suffer them so I want to create a world of maximum freedom which means a world with maximum opportunities so I'd like to see competition in education I'd like to see different models of education I'd like to see people just like we sort each other out we sort out what kind of products we consume we consume different things we read different books we like different movies we drive different cars we should be able to experience different education systems based on our preferences based on our parents preferences so imagine education treating you like a consumer versus education today where the consumer is the teacher really the teacher is the one to be pleased who cares about the students nobody cares about the students nobody's ever done a survey or whether you're happy or not or whether your parents are happy with education you're getting you're not treated as a consumer you're treated as a nuisance the second question was give me one word this is a problem with two questions you're causing political problems see I don't think inequality causes political problems I think talk about inequality causes political problems I think Americans are being told that they have their lives they they're um that they are poorer today than they were 30 years ago Americans are we told that they're stagnating Americans are we told that the rich of God richer at their expense and if you tell that story over and over and over again people start believing it 15 years ago nobody talked about inequality it wasn't an issue nobody discussed it never came up it's only the last eight nine ten years really since the the financial crisis of people talking about inequality it's becoming talking point an ideological talking point people are motivated by ideas people are motivated by beliefs beliefs that they absorb from intellectuals inequality is an issue that intellectuals have created that intellectuals have preached and that people have bought into not because it's real but because that's what the smart people have told us people are upset people are alienated people are pissed off because they don't understand the world in which they live in because the intellectuals have deceived them in light to them for for decades and decades and decades in the system that actually allows people to succeed in life is capitalism any capitalism is the denounce over and over and over again by our intellectual classes and by your professors and by your teachers and by the people in the in the media and by pretty much everybody in the political class as well capitalism is not argued for so people are confused they have no idea what's going on and then they're told all your problems are caused by inequality and you should be really really angry at the rich guys americans never cared about inequality americans attitude towards the rich guy who lived in a big house on the hill was i want to be him i don't resent it i want to be that and you know what even if i never be it good for him cool he made it that's the american dream that's the american ideology it's only now it's only in modern times literally the last 10 15 years the people have started resenting people who have wealth they become european now it's true now europeans have a history that justifies this to some extent right because how did you become rich three four hundred years ago in europe how did you become an aristocrat what is the meaning of being an aristocrat be favored by royalty well but how do you become royalty how did how did anybody become anybody in in ancient times yes of an army yeah but how did you start by stealing it by having an army by using it by being good at the sword and by stealing it right so in in feudal society the world is a zero sum game and some people exploit other people some people get rich by exploiting other people that's feudalism that's the nature feudalism whether it's in china or that's in europe right so in europe all the wealth the historical wealth was accumulated by through feudalism in the hands of the people really good at stealing the crooks and europeans never shifted with the industrial revolution and and freedom and capitalism they never shifted to the idea of wealth being created in america we talk about making money because wealth is created in europe it's always about being about distributing money because they think it's a zero sum world because they lived for hundreds of years under zero sum world america's a new country founded with new ideas so you could make that switch easier it's now america's becoming more like europe with that mentality yeah i'll be moving a little bit from it's a one enough question and a comment um first to give maybe a case whereby you say this is this country or this society seems to be doing uh what you are advocating for which is very good and i support it pretty much to say okay maybe this country have tried to reach this particular way of dealing with this issue they are not following this inequality kind of syndrome and time to that that's my first part if you can you have that and then the other question is to bring your debate all to the international arena uh with nation states as you mentioned that capitalism is good and there are positive issues uh the capitalist countries who have succeeded if if they coerce in one way or the other to societies or nation states about that capitalism it becomes cohesion what would you advocate for um wouldn't it be better if non-capitalist society experiences itself that this is not working so let us change than somebody trying to make streams tight so that you choose the system they want uh if i am to name an example i can put societies like cuba i can put society like i don't know if it is well i end as it may but that cuba is an example and some answer against it to say can be so so is the question kind of should we invade cuba to force them to be capitalists yeah my answer is no not because i don't think that would be good for cuba i think we would be great for cuba um but because i wouldn't want my son to die in a war with cuba to make cuba better it's just too expensive and i don't want to spend my money on freeing cuba cuba cuba's problem not my problem but freedom is good freedom is good for cuba freedom is good for venetuelo freedom is good for every country that tries it and i don't believe in using force to do it but i do believe in using persuasion to do it i believe that we should exporting the ideas of capitalism the ideas of individual rights the ideas of freedom individual liberty and individual freedom to every country in the world and i travel to large parts of the world trying to do that trying to convince me i mean i have to do it in america and in europe as well because they don't believe in it anymore either i mean there is no capitalist country in the world today particularly is the last bastion of country of capitalism hong kong descends into uh descends into china um and away from capitalism so you know uh i believe that we have to advocate for these ideas i don't believe we should bring them on to people by force although there's no question in my mind if we did that they would be better off it's just that it's too expensive and it's not justifiable to do it um the ideas work and most societies don't learn it and we think about societies learning what about all the people who die in the meantime all the babies in venetuelo were dying because of starvation right now all the other people who who have to leave their homes and refugees in columbia or in brazil because they don't they can't make a living in venetuelo and they're starving what about all those people while the society learns the lesson learning the lesson is very very painful it's it's violent in and of itself right so you know if somebody went in there and and cleaned it up for them maybe they'd be better off particularly in a place like venetuelo where where i think it wouldn't be that hard to do but but and i'm not advocating for that i'm just saying you know you have to think about the whose incentive it is and and who has an interest in doing it but the venetuelo should welcome it because they've got a corrupt collectivist you know uh uh uh uh kleptocrat stealing all their money and and denying their inability to be free and to eat so people suffer when you don't have capitalism people in cuba are poor and and suffer in the political prisoners in jail and it's a horrible horrible place so don't you want i i want to liberate it i you know again i don't want to send troops in but i would like to see it liberated i'd like to see people free i'd like to see people pursuing happiness my point of condition would be like how how did you reach the point of saying capitalism is good it's because you experience it no i mean no because i because to some extent i haven't experienced it because i don't think capitalism really exists in the world um no i studied history and every history is available to everybody history is available to venetuelans history is available to cubans history is available to africa history is available to china you can look at history and you can evaluate and history is very clear the closer economy comes to capitalism the better it does the closer it comes to socialism the worse it does direct coalition and you can even look today at the economic freedom index and you can rank countries based on economic freedom and you can measure it relative to wealth and for the most part there's a high degree of coalition so this is not some mystery that you have to live it right because if you have to live it then nobody would ever become a capitalist because what happened to the first one right how did the first one become a capitalist how did how did the american founders ever make a no freedom was good they never experienced it they had a king but they knew theoretically they knew that it was the right thing and they fought for it and i'm saying i know that freedom is good for cuba cuba asked to fight for it people have to fight for it i mean the question is am i willing to fight for them no i'm willing to help them but i'm not willing they need to fight for themselves but it requires a fight and and everybody the knowledge that freedom and capitalism are good and work is available to every human being on the planet every is an exaggeration most human beings on the planet vast majority of them how do you bring china and singapore in the equation well china and singapore i think are still very different uh singapore significantly freer than china and significantly richer than china on a per capita basis uh china is still very poor on a per capita basis uh a gdp per capita in china is something like 6700 dollars uh you know that the poorest of the poorest of the poor americans don't live on more than 6700 dollars a year right so um people think in aggregate but yeah when you have 1.4 billion people you aggregate even a small number you get a big number so aggregate gdp is very large but per capita gdp is very small in china but uh china there's a wonderful book because i don't have time to explain the whole thing it's a wonderful book by a very famous economist by the name of Ronald Coase uh who uh who uh chicago very very famous anyway he wrote this book when he was 101 years old that's a way to remember 101 years old he wrote it with the chinese co-author whose name i don't remember unfortunately um and the book is called how china became capitalist now i don't think china ever became capitalist so put aside the title but the book is interesting and what the book shows uh illustrates quite clearly but also what is logical is that those areas of the chinese economy where the government kept its hands off boomed those areas of the economy where the chinese government pretended people had property rights because nobody has property rights in china but they where they pretended there was property rights where they created pseudo property rights they boomed those areas where the government tried to manage where they try to control the state run enterprises tanked the wealth in china is all being created in the private sector in those industries and those areas geographically where the central government has left has left them alone sent jen is a great example right right yeah right and it was the first area where the government said okay we're not going to intervene let's see what happens and they didn't know because dr peng was a complete pragmatist no ideology we'll just see what works i have no idea and it worked so he said okay let's replicate it it's sad that he didn't replicate it enough because he was afraid he was afraid if you gave people too much freedom they wouldn't want the communist party so he had to maintain some control and some freedom and and always play that balance and i think the balance right now shifting towards more control and less freedom which is hurting already hurting economic growth and will be economic growth even more in the future china has lost faith lost trust lost belief in the capitalist system since the financial crisis and as a consequence of that chinese economic growth is going to moderate and is going to slow and they're going to have big trouble because of the they've lost they have lost momentum towards capital and people enough to say that's the real the real story that i think people are missing in china yeah you think that is inevitable that society will move towards more the redistribution of wealth and away from capitalism uh given that all the example that we can see around the world and there was always going to be more poor people more talented people and more like lazy people um so that politicians can appeal to that side so no i don't think it's inevitable at all and and uh while right now that's the direction we're moving there being periods in history we're moved in the opposite direction so i don't think anything's inevitable like you know i'm not a uh i don't believe in a dialectic i don't believe in uh inevitable historical outcomes like mox or a lot of people today believe i think it's choices it's individual's choices and i think it's philosophy and i think in the case of the welfare state what is driving the welfare state is morality and you know i didn't have time today to talk about it but but if you read i ran or if you read my book free market revolution the key is morality we we unfortunately are raised with a morality that says that our more focus should be the well-being of other people and if that is the dominant morality then yes the welfare state is inevitable but i believe and i ran believed or i ran articulated a new morality a morality that changes and says that your primary more responsibility is your own life uh an egoistic morality and i think it is that kind of morality that if people adopt will lead us towards capitalism so to me i and i called my book my first book was called free market revolution and i in the book i said that the revolution is not in economics we know the economics capitalism work i mean the economics of capitalism we won that debate a long time hi it can be case um it's not a political revolution because you get the politicians you deserve you get the politicians at the end of the day we all get the politicians we deserve in a democracy or in a semi-democracy the real revolution is a moral revolution we need to change we need to change our rotation we change the way we think we need to change the whole focus in life and when we get enough people to change the way they think about life about their own life then they will demand freedom because if i'm living for myself if i want the best life that i can possibly have for me very rationally i want to be free i don't want anybody telling me how to live yeah back what if nobody donates at all then people will die so if people are fine with people dying people die all the time i mean how much of how much of your income how much of your income of your parents income you sent to africa to prevent people from dying of starvation right now today because right now you could write a check and save a person in africa right now i don't i don't send anyone and people die i mean i know ethicists and philosophers who tell me that people die because i don't send a check and i say okay i mean i live my life and i help the people close to me right so already people die now i know i believe strongly that free people incredibly benevolent people and then my guess is you'd have so pluses not deficits in terms of helping the poor i don't think people will die and the solution to africa those starting kids is freedom not my check right but i'm willing to volunteer to go speak in africa and try to convince them of freedom right so because so i want to use a tool that actually means something not a tool that's uh but i think that in a free society there will be enough money so nobody will die but if there isn't then people die that's the content there are always consequences to actions and i i don't think that because somebody dies is there's an excuse to pull out a gun and force me to do something it's not my fault yeah yeah i'll just uh have two questions the first one is like how your philosophy you know escape from the nature of like people who always want to steal you know whenever they get the opportunity to steal they try to take advantage of the because it's done by the government the welfare state to steal over and for myself is this like human nature right then how can we solve this problem once we have government we see that we cannot explain for this yeah and the second question is like uh what do i mention a lot of example is about the creative destruction like a lot of entrepreneurs they invent a lot of new things which are good for everybody sure but what we see right now is a lot of like you know a lot of public developer they just you know open the place and they do not do anything they just ran it out for those who can afford to pay the rent and then they are not inventing something new by the same of they can get well they developed something the building didn't exist before i mean like okay like i mean that if they didn't build the building but they just fired from somebody else and yeah but you know so the fact that they bought it from somebody else gave it incentive to somebody to build it and therefore it was built so it all it all is a productive activity but let me let me take the first part and the first part is there's a there's two parts to it really one is this idea of uh human propensity to steal which i don't think is part of human nature but but we'll talk about that and the second is cronyism the the idea of manipulating governments in your favor right which which we all think is bad i think everybody thinks is bad the the one about manipulating government in your favor is easy to solve in my view the more impotent you make the government the less reason there is to try to manipulate them and to if the less they have the less there is to steal so capitalism means this is why i said there's no capitalism in the world today capitalism means a separation of state from economics imagine a government that had no economic power didn't print money because money was private it was competition and currencies it didn't regulate markets regulated it didn't have you know complex tax systems it couldn't give you any favors even if i wanted to it basically had a police a a military and a judicial system arbitrary disputes but had no economic power then there's nothing to steal uh my favorite example of this is microsoft everybody you know microsoft think about today the largest company in the world based on market cap in 1990 i think it was 1996 microsoft at the time was spending zero dollars on lobbying no lobbying in washington dc no lawyers no office in washington no building in washington no lobbying nothing no involvement in politics they said you leave us alone we'll leave you alone we're not interested we're too busy changing the world but what's he making stuff you guys don't make anything we have no business with you so congress brought him in front of the senate and a famous senator i'll attach i'm just retired he was from utah a republican not even a democrat stood up and yelled at the microsoft executives you guys need to build a building in washington dc you need a higher lobbyist you need a higher you need a you need to bribe me he didn't say it that way because you're not allowed to say that in america but that's the equipment right you need to come and and manipulate the system you need to get involved microsoft said we're not interested we're going home go back to seattle we don't we don't want to be in washington dc less than six months later knock on the door we're from the antitrust division of the justice department and we're here to sue you for antitrust violations why what was the sin microsoft committed that it was going to be sued anybody know what the sin that microsoft committed what's that what it was giving away a product for free so you guys don't remember this because you weren't born yet but when internet first through in the web first became slightly popular we had to buy browsers it like to get netscape i think was got 60 70 80 bucks i used to yet you had to pay uh netscape download a browser and then browse the internet right and it was complicated and you had to pay for it and microsoft said you know what with the next version of windows we're giving you internet explorer for free that's why the justice department went after them now the funny thing is today all browsers are free that's the business model that actually worked in the end anybody use netscape no but the justice department still spent over 10 years destroying microsoft for for about 15 years microsoft did nothing new there was no innovation it went from the largest company in the world innovative productive growing to a very mediocre company and only about eight years ago the justice department they used to have a person at microsoft who used to prove all corporate decisions finally that person left and since then microsoft has returned to being productive innovative and is again the largest company in the world i mean government is incredibly destructive so what's the lesson microsoft learned we better lobby because we don't lobby they'll screw us how much money do you think they spent today on the lobby tens of millions of dollars a year they built this building in washington dc beautiful high rise but equal distance from the white house and congress right and it's it's you know and they have law firms and they have everything and then they played the game google when google was founded in the late 90s they looked around the venture capitalists who gave them money looked around and they saw what happened to microsoft and they told google from day one you spread the money you hand it out democrats republicans doesn't matter you give the politicians money google has lobbied from day one what percentage of the ad online advertising market does google have in the united states 90 percent or something it's technically a monopoly right has the justice one ever gone after google yeah no because they played the game obviously didn't play very well in europe because the europeans are going after them i mean you have no choice if the government has power over you what choice do you have now once you start playing the game it's very corrupting day and it's not just playing defense you start playing offense but that's the nature of the system the only way to stop it is to change the system businessmen real businessmen don't want to steal real businessmen want to produce they're very you know one of the things that again you guys might not in the late 90s there were a lot of there was a lot of fraud in american business you might you might have heard of enron and there was world calm and there was just like eight nine of these companies big companies and they all committed fraud at about the same time and you know there's a big uplaw in the united states capitalists it was broken the same usual stuff all businessmen are quirks bill o rally and fox said all seos in america should be fired because they're all quirks it was really interesting that every one of those companies was in a heavily regulated industry and there was almost zero fraud in silicon valley because it's not regulating if you if you manage a regulated company guess who rises to the top people who like to play politics because that's what you have to do to be seo of a regulated industry in a competitive industry who rises to the top unregulated competitive real business people real business people don't want to make make money it's not making money don't want to get money from fraud they don't want to cheat they want the self-esteem that comes with producing from creating from building and that's what you need to leverage so i don't think stealing is human nature i think stealing some people are quirks and they should go to jail and you should catch them and put them in jail but uh i think most people are not quirks i don't think it's in yourself interest to be a crook and uh and indeed i think that most productive people most creative people are not quirks so you've spoken about the just want to hear some of your observations on psychological implications in countries societies where there's a heavy focus on trying to equalize yeah i mean uh so i so the psychological issues come out of the attempts to equalize um so i'll give you an example i uh i i grew up in israel i don't know israel israel ran one of the great experiments in egalitarianism it's called the kibbutz i don't know if you've ever heard of kibbutz the kibbutz is a is a mainly agricultural community where everybody is equal and they took it so for example on a kibbutz in your apartment everybody had exactly the same apartment everybody had exactly the same apartment same layout same furniture if one person had a tv everybody had a tv and it was easy for everybody to have the same apartment because your kids did not grow up with you in the apartment the kids grew up in a kid's home all the kids were not your kids were not yours they were the communities they took this so all kids got the same education going back to the same teacher the same thing they got the same education in a kid's home and their parents could go visit them for a couple of hours a day but generally the you didn't have a kitchen in the house because the kitchen was communally and you worked in the kitchen you rotated between jobs so an ideal you know a marxist ideal and it was voluntary so you know i don't have anything against people who want i mean i do but i'm not gonna force them i'm not gonna stop them from doing it if they want to do stupid stuff what was interesting about two things i know one is it was a complete economic failure they were heavily subsidized by the government they couldn't sustain themselves without the subsidies but second relating to the psychological issues these were horrible places to live people hated each other they resented each other they stabbed each other in the back they slept with each other's wives or husbands or whoever you want to take it they they treated each other horribly why well think about it even in a place like this some people worked hard some people didn't people who worked hard made exactly the same money lived in exactly the same apartment ate exactly the same food as the lazy people so the people who worked hard resented the lazy people but the lazy people resented the people who worked hard because they thought the people who worked hard thought they were better than them right at 11 o'clock in the morning i used to i used to i worked on one of these people says i used to watch people sneaking back to their apartments because they've done enough work other people worked all day looked like dogs hated each other's guts and yeah if everybody's communal then what do you mean your wife communal is communal if we share our kids why can't we share our women right i mean nothing was yours and then destroyed their self-esteem it destroyed their capacity to be happy the capacity to enjoy life everything was about social resentment and so you know i don't know if you follow jordan peterson jordan peterson just talks about hierarchies and stuff and there's something to this hierarchy issue because what happens is if you equate everything materially then people try to be better than each other in other ways right and so they start competing on other things and it gets really ugly it can't get really ugly so i found that the social environment on the keyboard was the sickest most unhealthy i've ever seen anyone because everybody resented everybody for variety reasons the people who were lazy knew they were lazy and felt guilty for being lazy but could never admit to feeling guilty and had no incentive to change their behavior except that they felt guilty and resented the people who were tired made them look bad and you could go on and on with the psychological impact of those kind of relationships one of the priorities point and then let's say if i'm v kaching sun do i if i'm uh v kaching hong kong's wealthy as a person yeah and then i can start my thesis very easily yeah and then now that we have ai and then uh it gets easier for rich people to dominate the industry because it takes uh really lots of specialized investment to build the infrastructure needed and then in hong kong many people end up working for v kaching and do you still see this as a sort of freedom well look so i don't think you have complete freedom in hong kong but but um yes i absolutely see it as freedom i don't see any problem in it and i think it's a myth this idea of of the ease of inherited wealth so if you look at societies uh that really have competition and really have come up somewhat free like hong kong in the united states um kids of rich people often lose the money um if you're a rich spoiled undeserving child you're not going to be able to you know ai is hard to manage it's sophisticated it's complicated you better have some skill money is not the only tool you need in in order to manage a company you need many other skill sets and if you don't have them because you were raised you know kind of shielded from the real world then you're gonna fail and many rich kids fail and so if you look at the richest people in america first of all the list changes all the time interestingly enough how i thought once you become rich you're always going to be rich no it turns out that that people move up and down constantly particularly the freer you are the freer the society is the more movement there is the more up and down you go used to be said from short sleep to short sleep in three generations the first generation makes it the second generation loses it and the third generation is back in short sleep short sleep is a symbol of poverty but indeed sometimes it happens within one generation though lots of stories particularly from the early days of capitalism when there was real competition and freedom of people making money and losing it and making it again and losing it over one lifetime because the markets are so dynamic there are no guarantees so if you look at the list of the richest people in the united states it changes all the time second most of them are self-made most of them did not inherit their wealth now yes you'll see five of the walton children on the list because sam walton was so rich even when you divided it into five they'll all make the list of richest people and and they've all managed the money well but you don't find Rockefellers on the list anymore you don't find the children of conagy you don't find the children of a lot of billionaires from the past on that list because either was lost or was dissipated or a lot of rich people said and the same now i don't want my kids to have a lot of money like uh i'm i had the opportunity once to sit down and have lunch with uh michael delton right i don't know he's worth thirty billion dollars or whatever some ridiculous number that you could never spend in many lifetimes and he said to me i don't want to do my money he said i don't want to give it to my kids now he's working really hard and making even more money we can talk about why people work even when they're that rich more but it's not to leave the money to the kids because he said i do not want to leave the money to my kids i think it will corrupt them i think it will destroy their life because they won't get a sense of creativity they'll just it'll just be handed to them it'll be on a silver platter i want them to actually work for the money so i can build another hospital i can give it to another charity i can but it's hard to actually spend you know forty billion dollars or whatever the number is and and and i think most rich people feel that way i think i you know bill gates is already on record he's not leaving it to his kids one buffet said he's not leaving to its kids now it's not his kids won't get anything they'll still be richer than i am and maybe you are i don't know who your father is um maybe you are the son of a but you know i think i think people are becoming more aware of the danger of it and so i don't think it's a big problem and look at the end of the day i believe in property rights i believe if you make the money if i make ten million dollars and when i'm dead this ten when i about to die this ten million dollars it's mine i can decide to burn it i can make a big bonfire of all my money and burn it and it's none of your business i can decide to give it all away to charity and it's none of your business and i can give it all to my kids and it's still none of your business so society has no say in what i do with my money and all inherited says is people deciding what to do with their money and much of it goes to charity and much of it goes to all kinds of stuff and some of it goes to children and it's none of my business so i don't and i don't think it's a problem i really don't but even if it was it's a lot of my business i actually got the new green deal i actually got three jobs for everybody free but what does this do to america well we destroy it what do you think is the possibility of in the next 10 years zero zero i mean i mean these are all great ideas that are nice though right but no nobody takes them seriously even democrats don't take a green new deal seriously it's fantasy it's stupid it's ridiculous nobody can actually really believe that that's what's going to happen now the democrats will still do destructive stuff but it's over republican so it's just a matter of the speed of destruction it's not a matter of the direction the direction is very negative in america america don't expect america to save you guys i mean america's going in a very wrong direction but i i think some of the ideas will become reality i think we'll get medicare for all we'll get socialized medicine i think a republican president will probably sign it i think democrats and republicans will come together and give us socialized medicine and i think everybody in the whole world will suffer as a consequence right now there's a little bit of freedom in the united states and health care not a lot a little bit only about 40 percent of american health care is private 60 percent is public already and 75 percent of all medical innovations happen in the united states imagine if you socialize all of the health care in the united states medical innovation shrinks dramatically you guys lose because right now you're free riding off of us you're free riding off of american freedom you're free riding off of the fact that we're the only country in the world where we pay the actual cost of drugs you get you you force the drug companies to give them to i don't know about hong kong but other countries in the world force force drug companies to give the drugs for at cost so we subsidize all the r&d in the world so all most almost all medical innovation is a consequence of the american system if you crush if you destroy the american system innovation in health care basically goes away to a large extent so their massive consequences to even slower decline i think the big ideas of of suddenly a wage for everybody i mean one of the things that happens when you do that this mmt modern monetary theory uh is inflation it won't take long uh and and and then people give it up and and move to something different but the general decline of america is going to be very hard to reverse very very hard to reverse because it's psychological it's philosophical and and it's it's it's going to require real change people's ideas and changing people's ideas is very hard they mean so corrupted by by 50 years of bad ideas so uh and and by the way i think one of the reasons china has taken uh has taken a turn away from capitalist is because it looks to america and it it views america's capitalism has failed and and we shouldn't pursue that path of freedom and just to some extent it's america's fault america used to be a shiny city on a hill and it's no longer it no longer claims to me and no longer tries to be and it no longer is because the ideas are just the same as everywhere else it's the americas become europe all the bad ideas given that is that place that you would recommend that we move to you live in hong kong i keep recommending people move to hong kong um no i mean i wish there was what i recommend is to fight what i recommend is to speak up it's not to accept the path and and to move when the time comes because i think the time will come where you will have to move to move to a place where you can actually have a voice so when freedom of speech gets destroyed in hong kong as it's being destroyed in china right now um it never was huge in china but it's it's it's deteriorating in china if that reaches a point when china in hong kong you can't speak your mind then it's nice to move and you got to move to a place where you can't speak and the only way to change the world is to speak it's about speaking speaking speaking speaking that's all you can do and um but you gotta fight if you just if you just sit back and do your thing and ignore the world then the world will go worse because it's the momentum the the the static the momentum is with the status quo the status quo is against freedom it's against uh free markets it's against capitalism sadly i hate to be pessimistic because i'm an optimistic guy what's technology doing then for just to end on well i mean technology is making our lives like super cool right i mean technology is just great and life generally is great right i mean in spite of all the problems life is good uh we're at a high standard living that anybody could have ever imagined even 20 years ago part of this part of the angst that americans feel it's it's completely yeah in the best of times in many respects right so americans who think they've stagnated forget that 20 years ago they didn't have an iphone they forget that they had no internet 25 years ago people who long for the 1970s i remember the 1970s there's nothing worthwhile from the 1970s except some rock and roll i said there was good music in the 70s that's it you know at queen and pink floyd right that's what the 70s were good for that's about life sucked in the 70s crime rates were dramatically higher than they are today all over the world primarily in the united states i remember being in new york city in the 1970s not going to central park during the day because you're afraid to be mugged during the day today i have no qualms walking in central park at 2am that's the difference in new york city um technology i mean again punch cards rooms full of computers versus an iphone versus your pc versus flying flying was super expensive super expensive really really bad yes if you were in first class you got wonderful treatment but nobody was in first class i mean i mean really there was inequality almost nobody got to be in first class and you know nobody traveled think of that just a sheer number of human beings today who travel for leisure they're just a number of tourists today is exponentially greater than it was 30 years ago so those america americans in the rust bell to complain all day they go on trips to europe they go on vacations they couldn't afford that in 1970s so part of this inequality debate has convinced people their life sucks but it doesn't objectively by any real measure it doesn't because they got to be happy about it i mean the equivalents of them right they got a benefit from all these things that make some people rich they got a benefit from all the wealth that silicon valley created that they hold they created gazillion times more out there for us so every billionaire created trillions every billionaire created trillions of wealth where did that go we have it if we appreciated the lives we have now then there wouldn't be the angst but the angst is artificial it's psychological it's been not brainwashed but people are being convinced there i just want to say perhaps a little silly but sometimes we look to the animal kingdom for inspiration or guidance and i was listening to um um an animal behaviorist who had two little monkeys you probably know this experiment and was feeding them both cucumbers and at one point starts feeding one grapes i think and then the other one gets jealous maybe and just kind of retaliates it stops eating because he also wants grapes yes and the person interviewing the behaviorist said you see even animals know what's um egalitarian and i thought wow that's the wrong conclusion to draw from that exactly yeah right yes animals can't handle inequality human beings are different we have something that animals don't have what do we have it's the reason for the capacity to figure it out for the capacity to reason so we're a different type of animal and perhaps there's no effort involved they were just being given the food there's no effort involved and but again they were at the perceptual level they can't think abstractly we can't thank you i think would you pick the bottle okay so we got three equations yes um as you mentioned several times before uh maybe rich people don't know actually have what to do with their money right so why shouldn't middle class work harder and harder to always like earn more if at the end you don't actually know what to do with that i mean i was being somewhat facist when i said that right which people know what to do with their money um for example jeff bezos is going to go use it to go to mars um the reason to make money mostly is not for the purpose of making money the reason to make money is because money is a signal that you're producing value we need to know that what we're doing is value the way we know what we're doing is valuable is because the market is paying us for it other people see the value of what we're doing so the reason a billionaire who can't spend it all who doesn't have the vision of going to mars let's say literally won't be able keeps working keeps working hard not just the middle class but michael del works harder now than probably he did 20 every mean he's working mergers and he took his company private now he's getting here public i mean he works really hard why because it's fun and if he doesn't get money how does he know that the fun is value added the money is a symbol of the value he's adding for every dollar he gets he's created many dollars out there and that's the beauty of it the beauty of it is money is a symbol it's not a value in and of itself and about beyond a certain point it's not even a value in a sense that it allows you to consume it now becomes a value just as a keeping track of how much value you create so why don't you just give it away once you have it well they do i mean a lot of it they do give away they don't give it all away because they're trying to constantly think about how to do the best job of giving of using it whether it's through investment or through giving it away giving it away is not easy right so think about bill gates bill gates spends all his time today giving his money away that's his foundation all of these guys if you if you go and ask the texas you'll say building after building michael del hospital the michael del this the michael i mean he is giving it away but i mean it's hardly give the away that kind of money and do it in a way that you believe is creating value see when you produce stuff when you produce stuff you know that what you're doing is creating value because you're making money when you give it away you don't know it's creating value it's very tricky just giving it to somebody doesn't mean it's creating value maybe it's spoiling the bottom maybe they're gonna waste it you know maybe we don't need another hospital maybe we have enough hospitals how do you know when you don't have the profit motive when you don't have money as a as a signal then i've run a non-for-profit and it's very hard to run a non-for-profit because you don't and you know and my donors complain like how do we know you're having an impact because there's no profit the beauty we think profit is a negative i view profit as a positive when you make a profit it means you've created lots of value you've had a positive impact on the world you've made a world a better place so i would like to see these entrepreneurs not give them money away i'd like to see them invest it start venture capital firms put it to young entrepreneurs help people create more profit the world becomes better people become less poor because of profit because of jobs not because of charity china did not do that did not move i don't know 600 million people out of poverty because of charity but by creating jobs by making investments by allowing capitalism i just don't think that having more money makes you like more like happier so actually what wants to reach i i think it definitely does so first of all money does buy happiness up to a point absolutely buys after that that's not gonna see that you'll get happiness but being poor is not being happy right you need a certain amount of money to be happy and we just think about the ability to have medical treatments or to get your family to go to go to vacations to do things that are really enjoyable and fun you need that but more importantly the process of making money is what makes you happy it's not the money so the reason people keep working is because the process is fun but if the process didn't generate money it wouldn't make them happy because then they wouldn't know that the process was creating value you think of money is just the thing we have to buy stuff but no money is the signal that we created value in the world people are paying me people pay me not because they like me but because they think i've added something to their lives i've made their lives a little bit better so the more they pay me the more i've made their life better but i do it not to get the money i do it because i love doing what i do and that's what all entrepreneurs they love the process otherwise they don't retire i mean today some of these billionaires have become billionaires like what zucker book became a billionaire what 28 or something some ridiculous age like that right he should have retired right there because he's never spent at all but he didn't keeps working he works harder and harder and harder why because he loves it because it's fun yeah it will take a lot of time with the back there i mean before the industrial revolution we didn't know anything or we didn't knew very little now if i was like brilliant i'm not so if i was like a genius like Adam smith or something then i i i tell them hey we gotta get rid of this agrarian stuff and we gotta establish capitalism we gotta establish you know freedom and and when we do all these wonderful things would happen but i don't think i would have known that right and i think very few people knew that and it took it took the geniuses to teach us that us to experiment with it see that it worked and and and and take off like the fauney fathers and like people like adam smith and other great visionaries of the time but see these are universal like timeless they are timeless but but you can't fully understand them until you've done i mean so there's a sense in which we have to practice it great so to fully understand so we have more knowledge about capitalism today than i have smith did and we understand more what it entails that he did so i can i i'd give up you would give it and i ran actually says i ran said that you couldn't have developed her ethics without seeing the industrial revolution because what the industrial revolution taught i ran was the efficacy of reason i mean we always use your reason efficacious you can do science you can do theoretical stuff but what the industrial revolution taught us is that reason applied to reality raises the standard of living you know just creates this amazing and that you had to see to believe and nobody talked about yes what we really need is the liberate reason right adam smith doesn't talk that way nobody talks that way but that's how they should have talked if they really understood what they were talking about of course but i mean says no we had to see it before we could really explain it and now that we understand it that's what we advocate for so everything would be different i can't even imagine what kind of talk i would give and and and i'd have to do a lot of handway because i can prove a lot of this now i can just point just study a little bit history and you can see the truth yeah last question so the high debt levels all over the world yeah so we're going back to the pessimism yes i mean very much so particularly the idea that was in the united states i think those are the worst in many respects because while japan has higher debt levels most of its debt is to itself so yes chinese are suffering because of the high debt levels are ready the consequence of high debt levels is stagnation japan has seen its economy grow very very slowly i believe that low economic growth in the united states over the last decade two decades has been to a large extent a result of the high debt levels and the heavy regulations and it's only going to get worse so i don't know if the consequence is going to be a crash or just slow down and i'm not sure which is worse but yeah i'm very worried i think you i mean i used to say europe is the past america is the present and age is the future and now i worry that there is no future because age is going in the long direction but please china is age and china is going in the long direction so that really was so what about the concept of a sharing society concept of a what sharing society yeah trying to share all these there is no such thing as a sharing society i mean it's a bogus notion right i'm not sharing my uber i'm charging you money i'm not sharing my car i mean all the sharing society does is it's an improved utilization of assets which is great so i have i had a spare bedroom in my house i'm not sharing it with you i'm charging you for so uh all it is is you is is is is is using technology to better utilize existing assets and that's fabulous i think it's great it's it's one of those technological trends that are saving us and making us richer at the same time as politicians are trying to destroy well entrepreneurs are trying to create wealth and the question is what will happen faster they're well created by entrepreneurs and these businesses and the sharing economy and so on or the destruction of the politicians and right now more wealth has been created than has been destroyed so economies are still growing but how long is that sustainable i don't know i really don't know now technology is amazing so maybe technology will save us and and allow for economic growth in spite of the horrible stuff and once in a while i give a lecture on being rationally optimistic and that's the path that's the path i adopt but i'm not a hundred percent consistent