 Welcome to The FeeCast, your weekly dose of economic thinking from your friends at the Foundation for Economic Education. My name is Richard Lawrence and I'm here today with our great panel, as always, Brittany Hunter, Dan Sanchez and Mary Ann March. And you might have noticed, if you are a regular listener or a watcher of The FeeCast, that we actually missed last week's episode because we had this little thing called FeeCon here in Atlanta, and it was three days of really amazing content. Panels, presentations, speeches, musical performances, Brittany, you and I were the MCs for the event, which was pretty awesome. It's interesting because if you've never been on stage like that, you don't know that when you're on stage, you can't see everybody. I loved that part. The lights are shining right in our eyes, so it actually makes it feel like a cozier room, except for all the echoes. And all the applause, of course, because we can't help it. Right. So we did a couple of very special episodes at FeeCon with live studio audiences, one of which was with T.K. Coleman, the education director and co-founder of Praxis. We were talking about taking control of your own life and actually imagining what you can actually achieve and taking that and doing it. It was a great conversation. It was an amazing conversation. And we also spoke with Magat Wade, who is an amazing Senegalese American entrepreneur that we have profiled in a new video, a new documentary that we have coming out in the next few weeks here. Another very amazing story. So we'll have actually, those have come out now, and so you can see those on the FeeCast channel if you're interested. They are in a different set, but with the same amazing people that you've grown used to all the time. So I figured that we might actually talk a little bit about some of our other sort of highlights from FeeCon. What else, aside from the blinding lights of the amazing audience plenaries, did you love at FeeCon? There was one. And actually, Dan, you moderated this panel that was a primer on Austrian economics that I really enjoyed with Dan D'Amico and Donald Boudreau from Arcadis. It was amazing. I think it kind of gave an introductory kind of lesson on why we should even care about Austrian economics to begin with. So that was my favorite. I really liked another panel I moderated about the environment. So it kind of took an environmentalist ends as given, but some of the panelists especially really had free market means to those same ends. And so especially highlighting property rights as the best way to conserve our resources as opposed to government regulation. And of course, these ideas are not very often heard when we're talking about these concepts like environmentalism. So that's special. Marianne, how about you? Nobody had more fun at FeeCon than me. I was live tweeting the whole event. I was running around everywhere. I went to a significant amount of the breakout sessions, all of the keynote speakers, and it was fun. I saw the panel that Dan mentioned. One of my favorite parts was screenings by Free the People and Reason. Austin and Meredith Bragg from Reason spoke a little bit about their videos and they had one really great comment which I'll share with you, which was when it comes to YouTube comments, you smell them. You don't eat them. Oh, that's good. That's true. And actually, Meredith and Austin were filmmakers in a Thursday night presentation we had of a series of films, Battelius and Nexus, our friends there. They presented their film Demand Curve, which was also very, very fun. We had four other films in that presentation that I hope we'll be able to share with our viewers very shortly here. That being said, we welcome YouTube comments. Oh, of course. You smell great. I wonder really briefly, because you mentioned it, Brittany, if I could ask for a very brief definition of Austrian economics, because we're not talking about the economics of Austria. What's Austrian economics? It's not the unemployment rate in Vienna. I would call it. In a lot of ways, the study of human behavior, of human action, why do we do what we do? It doesn't matter if X amount of people buy this certain brand of something. Why? Why do we make that choice? It's almost like sociology. That's why it's appealing to me. It's practical economics. It's really scientific in the sense that it's exact because it's logical. It's logical deduction. What can you say about action that is always true? Historically, things will vary. You won't be able to say exactly why someone did something. But given these constraints, you can, for example, know that minimum wages cause unemployment. And that's not a historical contingency. That's something that you can know scientifically, actually. And this, of course, is named the Austrian School of Economics because it comes from Austria, from a number of thinkers there in the late 19th century. Carl Manger, I believe, is kind of the godfather, so to speak, of Austrian economics. Yeah, the founder is Carl Manger, who in 1871 wrote Principles of Economics. And he was part of what's called the Marginal Revolution where it really re-founded economics as opposed to the labor theory of value. It established the subjective theory of value, which really put human valuation and human choice, especially consumer choice, at the helm of the economy. And then his student, Eugen Bumbavark, did a lot of on the business cycle and time preference theory of interest. And Ludwig von Mises was his student. We talked about him before on the feedcast. He said one, I mean, it was him. Do you think that it's fair? I like to think of Austrian economics as being a little bit more molecular where we're starting from the individual and building on from there as opposed to starting with the aggregate. Do you think that's fair? That's exactly right. It's very much what Mises called methodological individualism. And so instead of, for example, Keynes deals with huge aggregates, the Keynesian economics. But what the Austrian economics does is it starts with individual choice and then builds up from there. It doesn't skip any steps. It's almost the most microeconomics, right? It's as small as you can possibly get. Right, right. Nanoeconomics. Nanoeconomics. And it has macroeconomics because like the business cycle theory, that's basically macroeconomics, but it's built up from the microeconomics. Our axiom is the individual. Right. Whereas other schools, it's just like kind of two separate realms like macro and micro and they don't really interrelate. Yeah. I think that's more respectful of the individual instead of just lumping people together. And reality, it's more respectful of, like you said, what actually happens. Yes. And speaking of what actually happens, we had a bunch of other things at FICON, right? So we had a track called Uncreativity, right? Yes. We had a track about challenging statism, which is basically looking at how the government is actually interfering in our daily lives and how we might be able to hack that or challenge that. We had a track on market urbanism, which is all about using market forces, individual to actually solve environmental problems that exist in the world. Speaking of the keynotes, just thinking about the creative kind of keynotes we had, and of course we'll have all sorts of keynote videos up online very shortly, if we don't already, we had Tina Goh, who was an amazing cellist. Yes. And she performed at the beginning of Friday's sessions. Wait till you see this video. She's so passionate. And she actually plays through the entire Wonder Woman theme, which she actually was the cellist for and the composer on Wonder Woman and then gives a talk and then comes back and does a parting Game of Thrones theme on her cello, which was amazing. Amazing. We got a different angle than most people since we were backstage, but it was magnificent. Yeah, most people think that that theme from Wonder Woman is an electric guitar, but it's really an electric cello that she sounds like a virtuoso and a heavy metal band. But her story about being an entrepreneur was so, so inspiring about it. She was just a college student shopping at the dollar store, kind of how do I make money with my art? And that's what I think a lot of people were there to kind of learn is, you know, specialization, we believe in that you have this one skill. Okay, what do you do then? How do you make money from this? And so she was really inspirational. Her story was amazing. And of course, you know, in these plenary sessions with everyone in the room, we wanted to add a little bit of entertainment so they could take a break from really thinking as hard as they are during the panels and the presentations downstairs in this case and actually be entertained. So that was the whole idea behind FICON was to give them an awesome experience. One of my favorite parts about FICON in particular and FEE seminars in general is that you don't always know, even right after it happens, how it's going to impact you. There's going to be things weeks, months from now that we think back to and can draw inspiration from and I think that's amazing. Yeah, James Walpole has, one of our writers has a great post where he talks about the emotional high point for him in the conference was when a violinist and could you help me with the pronunciation of his name? Willie. Oh, Willie. Willie Ortega. That's right. And he is famous for protesting in Venezuela against the regime there and being persecuted for that and so you could just really see the emotion that built up from that experience in his live performance and so it was just such a great confluence of the emotional, the political, the principal, the ideological, the artistic, all in one performance and he was moved to tears. And we'll have that video up online as well. It started with him kneeling on the stage with his violin and he's wearing a shirt with the Venezuelan flag on it and then he is on the background. You've got all this video of him being arrested, beaten up and he was later imprisoned for... So emotional. They broke his violin. They broke his violin. So he came to FECON and it was probably one of the most moving moments of the entire conference. So we were extremely happy to have him there. So we are going to take a quick break and we'll be right back with the rest of the FECAST. Hi, I'm Sean Malone, Director of Media for the Foundation for Economic Education and I want to talk to you today about FEC's podcasts. You're currently listening to our wonderful FECAST but did you know we also have two other amazing podcasts for you to listen to each and every week. There's Words and Numbers featuring Anthony Davies and James Harrigan where they talk about economics, political theory, and current events every Wednesday. We also have a brand new offering called the FEE Audio Experience where we bring you content from our seminars and events held all across the country. You'll get to hear fascinating talks from speakers and panelists which we'll make available to you right after each event. So be sure to check out the FECAST, Words and Numbers and the FEE Audio Experience right here on our homepage at fee.org slash shows and also subscribe on iTunes, Spotify, and Google Play. Thanks for listening. Welcome back to the FECAST. We were talking as we went into the break about FECON. Now we want to kind of switch gears a little bit and answer the question that always comes up which is when you're talking about with people, your political philosophy and you might suggest well maybe government should do less, maybe government should be maybe in the role of providing the services of a night watchman state only providing for policing and maybe courts, people inevitably ask us but if the government's not doing all the things it does now who will build the roads? And this question always presents a challenge to people who believe in a very limited government and this week there's news out of wherever Domino's Pizza is based that perhaps they have an answer to that. They do have the answer to it. Domino's will build your roads and in fact they've already I think prepared 50 potholes so Domino's unleashing this new plan, Paving for Pizzas. Which sounds delicious. Sounds delicious and exactly as it sounds so they are actually coming to your town if you nominate your town and they're going to fix the potholes that are causing your pizza to be delivered I guess not in perfect form. So the rhetoric goes that the pizza men are your pizza's on the front seat, your passenger seat, they get to your house, they go over a pothole, that pizza goes flying, pizza's ruined, Domino's has to make a new one. Pizza Armageddon. Pizza Armageddon, chaos ensues no longer. So are they doing this out of the goodness of their own heart or is there some self-interest involved? There's always self-interest involved Dan. Even the democratic socialists have self-interest. Exactly. So how could their bottom line benefit from this venture? Yeah well so if all these pizzas are getting destroyed which apparently they are because this is enough of a problem where it's causing disruption in their business model, people aren't getting their pizzas in the quality that they are promised to them because of these potholes. So it's in Domino's best interest so they won't have to remake those pizzas and then use their employees who should be working on a different order but are now forced to remake the pizzas. Or if people just stop ordering from them because they keep getting their orders messed up. Exactly but now you have fixed roads which means literally everyone benefits. The driver gets there safely, your pizza gets there safely, consumers can get to the store and back safely if they choose to pick it up and the entire community gets a better road. Yeah even people who have nothing to do with Domino's are benefiting. Nothing to do with it. Yeah. And in economics that would maybe be called a free rider problem. Yes. Right? And no pun intended with the roads comment. But this is an interesting thing right? I mean Domino's has been doing a couple of gimmicks along these lines. They have this pizza insurance. They have for instance if you end up bringing your pizza through carry out back home and as the commercial has it a tree hits the car and destroys the pizza or you slip on ice after the tree hits your car and flips the pizza over. You go right back to the Domino's shop and they remake your pizza. And so they're very interested in making sure that their customers actually get a quality pizza. And this I think we could use in Atlanta. I think with some of the potholes that we have here in the roads I would like to nominate Atlanta perhaps. I have a second. Actually we probably have four votes for Atlanta. So we'll upvote that request on there. And there's a good reason for that because we are not really their customers. So we're kind of captive. Speak for yourself. The government's customers in terms of paving Atlanta's roads and maintaining them. And so they don't really need to keep us happy. The money they're getting from us is not money that we could spend somewhere else. Like we just have to pay taxes and no matter how badly a job they do we have to continue. Whereas if we were their customers they would have every incentive to keep us happy. And you mean by their customers you mean the government because of course I am a Domino's customer so I am definitely vested in interest over there. So paving for pizza and everything else that's the name of this thing. Everyone else benefits from it. What about the people who would say well of course when the government builds the roads it's done through taxpayer dollars and everyone benefits so that's the only just way to do it. How would you counter that? I would say that that might be how we've seen it done for some number of decades but they don't do it well. They spend a lot of money to do it and from a lot of the reports I've been reading the building of the roads isn't even the problem. The initial expansion and laying down of the foundations that's all well and good within parameters. The real problem is maintenance and that's what I think is the most interesting thing about paving for pizzas is that they're tackling the bigger issue which is maintaining the roads and I've got a statistic for you Richard. Always with the data. Yes. Between 2004 and 2008 states dedicated 55% of their budgets a total of 20.4 billion dollars on expanding roads which only accounts for 1.3% of all roads and the other 98.7% only received 43% of the budgets and as we can see in our city and other cities there are big problems. The roads aren't being well maintained by the government. It's great to see a private organization stepping in and doing something about it. And so we have all these roads in the U.S. most of which I believe are funded by some level of government. Was that always the case? Actually no. There was one of the first highways in U.S. history was called the Lincoln Highway and it was a private initiative. So there was entrepreneurs in the automotive industry in the tire industry and they realized that if there was a road that made it easier for people to get from place to place and travel long distance across the country then that would be a big boost to the automotive industry. And so they created a private foundation to make this happen and it really helped. It really worked and it was only later that the federal government stepped in and crowded that out. Let's talk about crowding out real quick. What does that mean? Crowding out is when government expenditures make it harder for private competitors to operate in that area. So for example with public schools that it may be substandard public schools but they're free. At least no charge. Right, no charge. Free to the consumer not free to society. We have to fund it with taxes and so that makes it harder for private schools to emerge and compete. Because those private school parents are essentially paying double. They're paying for public schools and their taxes and then they're paying privately for their schools for their children. That's right. And so why wouldn't private schools be crowded out because of such great investment in public schools by government? Well they would be. They would be crowded out by public investment. But they still exist. Oh you mean completely crowded out. Yeah I mean so they're crowded out in the sense that there aren't as many as would have been otherwise. Right. And I think that when we're talking economics we're always talking about things on the margin. Right. Are there going to be some percentage of people who are willing to pay both pay for public schools and for private? Yes. But the people on the margin who are choosing between sending their kids to school in clean clothes versus paying for their education. So this 1912 highway organization is crowded out by the federal government when it ends up building an enormous amount of roads. And later of course we have the Eisenhower Interstate System that most people might not even recognize was intended specifically to be a military program so that the military could easily mobilize and in fact there's a certain rule in the interstate highway system manual that says every certain number of miles must be flat or straight enough rather so that a plane can land on it. And these are all notions that I think are hidden by sort of our usual rhetoric that only an organization as large and as well resourced as well funded as the government has the ability to do things such as roads. But we see from these examples in the past that that wasn't always the case. Yeah. Yeah. Oftentimes what happens is that government jumps in and sort of hijacks the progress that private sector made and repurposes it towards its own uses. So whereas you know this was the original freeways were about commerce and about trade that the government especially with the Eisenhower highways that repurposed it for military purposes which to some extent is for destruction and not creation. And you saw that with ancient Rome that a lot of the Roman roads were for military purposes. And a lot of people think of that oh well that's good because it's about defending the empire but it was also about subjecting the subjects of the empire so that they say all roads lead to Rome well all roads lead out of Rome too so that the army from Rome could march out and suppress any kind of uprising of someone who wanted to break out of a community that wanted to break out of the empire. Right. Well just as all roads lead to Rome all roads at this point in our fee cast lead to the break so we're going to take a quick break and we'll be right back. Hi. I'm Sean Malone director of media for the foundation for economic education and I want to talk to you today about fees podcasts. You're currently listening to our wonderful fee cast but did you know we also have two other amazing podcasts for you to listen to each and every week. There's words and numbers featuring Anthony Davies and James Harrigan where they talk about economics political theory and current events every Wednesday. We also have a brand new offering called the fee audio experience where we bring you content from our seminars and events held all across the country. You'll get to hear fascinating talks from speakers and panelists which will make available to you right after each event. So be sure to check out the fee cast words and numbers and the fee audio experience right here on our homepage at fee.org slash shows and also subscribe on iTunes, Spotify and Google Play. Thanks for listening. Welcome back to the fee cast we were talking in the break about certain fictional renditions of the world in which we inhabit and one of them of course comes to mind which is where we're going we don't need roads and of course that reference from Back to the Future comes into your article as well which we have a link to in the underneath the video so that you can read what Brittany wrote about all this paving for pizza nonsense which actually sounds pretty good if we can get it here in Atlanta which I'm extremely stoked about I would love to see that and I'm a big as any Domino's fan so the question is if I'm a Domino's fan and I'm constantly ordering from this company that's patching the roads in order to get me my pizza what kind of problems does that make a parent? I mean economically, socially if I'm paying for roads to be paved through my direct expenditure on pizza is there an issue with that? Well it brings up the issues of public goods which is a term that economists use for goods that are non-excludable so it's hard to exclude any particular individual from it and non-rival risk where someone using the good doesn't deprive someone else from getting the benefit of the good so an example of a public good that is often raised is a dam so you have a dam and it benefits the whole community and you can't really say okay well you in this community you don't get the benefit of the dam you can't exclude people from it and you also if someone moves into the community it's not like oh okay well he's benefiting from the dam and that makes me benefit from the dam less so the argument that a lot of economists use is that for public goods you have to have the government provide the dam or the government to build the roads otherwise people wouldn't be incentivized to pay for enough of a supply of the good So for example a dam is a public good in the economic sense where it's non-excludable you can't say Bob because you didn't pay for this thing you won't have the benefit of the dam and it's non-rival risk meaning if all four of us consume the benefit of the dam a fifth person coming in cannot not be benefited from it Exactly A pizza on the other hand would definitely be a non-public good it would be a private good because it's rival risk Because then everyone's getting a piece of the pie Apparently We're just full of dominoes references all day because of course that's their rewards program that I have way too many points in So it's interesting that you mention public goods, Dan because there are a couple different definitions of course when most people are talking in the public sphere they're talking about it in a non-economic sense which basically means for the good of the public the greater good but this economic sense of a public good is a very specific definition and I want to read a couple things to you right here because I think it's important it's interesting because I usually go to Merriam-Webster and in this case Merriam-Webster does not have a definition for public good so I'm not able to tell you how popular of a term this is to look up I'm sure it's not very popular but here we go On Google it basically means a commodity or service provided without profit to all members in a society either by the government or by a private individual or organization and the second definition is what we said which is the benefit or well-being of the general public so they even say in economics this is something that is not done for profit See the problem I would have with that definition is that it's according to what the government does it's not according to like the nature of the good so for example the government could provide free mugs to everyone and not charge them and then call that a public good but it doesn't mean that it's non-rival risk and there are public goods that don't have to be provided by the government I like to think of radio as one example where it would be really costly to try to exclude people from tuning their radios to your station but that doesn't necessarily have to be provided by any kind of government or state and I think it's also worth noting that the government owns no road company so when we're talking about that like no profit actually a road company is profiting and they're profiting from your tax dollars because again, the government does not have the government road company that goes and paves your way they take your funding that we all fund and they use it somewhere else in the private sector so there is someone profiting and they're profiting off your dollars but you have no say in what happens to that and hence the problem that we come up with all the time of contracts that are done without bidding and so our politicians are actually giving their friends the contracts at a really good rate maybe not in the best interest of the public good, the greater good so I guess the thing that I'm wondering about paving for pizzas and dominoes is that's really cute thanks for filling some potholes and bellies and bellies not to miss out on that one but what good does that do us if we want to build a new highway how do we scale this out we can't depend on dominoes to fix all the roads they've got pizzas to bake well for one thing that lots of businesses have an incentive to get people to them every business unless you're an online solely business and even then you have delivery trucks so literally every business needs the road right and so making it easy to come to and so when you think about malls that they're kind of providing public goods too because there are like thoroughfares and walkways through there that people aren't paying for but it's in their incentive they want to make it easy to walk to their store so let me ask you this then if it's in all of these people's interest to pave the roads why don't we just hit them with a good old tax let's just let the government tax these organizations get that needed money for the roads why is that not a great idea they already have the money and look what's happening so it looks like making giving the government the power to say okay I'm going to do this with the money again you're taking away the demand right the consumer can't directly say no I don't like this they'd have to go through not only bureaucracy but also some middleman you know that's also being paid to do this work it would be exactly what we have going on now right and so this kind of always brings up the question talking about public goods there's also a very interesting difference in the way that we talk in economics about the public in the way that the colloquial usage of that word it happens right so when most people talk about the public we talk about something that is government run or operator or funded right public schools for example are given that name public but truly public has a very different meaning and I wonder if maybe we could sort of weigh in on that a little bit yeah public generally refers to just people and so like public businesses are businesses that are open to the public and even in I think in the UK public schools actually means private schools because it's schools that are open to the public it's for the people and I think that there's something insidious about lumping the notion of public with the notion of government because basically they're saying that the government is us, is the people or at least represents the will of the people in some profound way when really they often don't I know someone who insisted upon public schools being referred to as government schools simply because it is an insidious sort of conflating of ideas sort of the government side along with the interests of the public a lot of the time those don't line up most of the time perhaps what that leads to is this great quote that Bostia this economist, French economist Frederick Bostia talked about that he said that whenever I say that I don't want I mean this is a paraphrase whenever I say I don't want the government providing education people take that to mean that I'm anti-education when I say I don't want the government providing food that I'm anti-food and that kind of linguistic merging leads to that kind of fallacy well it's similar also to what we were talking about in a previous episode where we were defining socialism and one of the ways in which we found out it was that it equals generosity right and so if people think socialism equals generosity public equals government you can see very easily how people would support things that are funded to be public or funded by the public and think that that is serving in general that greater good that we all seek to achieve when really it is businesses that are more public in a sense because they are driven by consumer demand and there's no middle man in the way of the government claiming to represent their wills they are actually expressing their will with every dollar they spend like Mises said that the market is like a democracy in which every dollar is a vote and very rapidly responding to the wishes and needs and wants of all of us individuals in that sense that we were talking about earlier well I think all the wishes and needs and wants of this group of people probably have a pizza right now so I think we're going to end the fee cast and we look forward to seeing you next week have a great weekend