 Thank you. So, Mike on? Thank you. Okay. Thank you all. I really appreciate you all coming this afternoon. So, we live in a pretty amazing world. We all have these simple computers in our pockets. You know, more powerful than the computers that send man to the moon. More powerful than those IBM mainframe computers. They used to fill up a whole room. Now we carry them around in our pockets. But the amazing thing is this is not just a computer. This is just also a communications tool. We can communicate with one another across oceans, across the entire world. These days, from 30,000 feet, by video, at a marginal cost of, what's the marginal cost of another Skype call? Zero. It doesn't cost anything. When was the last time you paid to communicate? Now, some of us are old enough to remember, long-distance phone calls, where just to call from Arkansas to New York, could get to be hundreds of dollars of long-distance charges today. We can call each other for nothing on one of these. You can access every piece of music ever written on this. It's an entertainment center as well. I mean, one of the things that I think is true of young people, of any generation, but maybe more so of this generation, is how much one takes for granted. You know, this is brand new, 10 years old, this technology. And yet, it's ubiquitous. It's everywhere. I travel all over the world and everybody has, not everybody, but almost everybody has one of these. Life's pretty amazing. We live, your generation, will live probably into their hundreds, right? Over a hundred. We don't just live long, we live healthier lives. We know more about health. We have better medical treatments. We have in every aspect, almost, of physical, material, human life. Life is the best that it's ever been by far. By far. And this good life is a pretty recent phenomena. From an historical perspective, having such a long lifespan, having so much wealth, having the kind of computing power, the entertainment power, the communication power that we have today is really, really unusual from a historical perspective. 300 years ago, what was life like? For 95, 99% of the population. What was life like on planet Earth? For human beings, they meant, you got up in the morning, you went out into the fields, you found all day, you came home, when the sun was about to set, you ate dinner, you went to sleep, repeat and repeat and repeat and repeat. You were born with the same stuff you died with over and over and over again. Every generation was exactly the same as the previous generation. It wasn't this idea, my children will be wealthier better off than I am. That's a modern concept. Never existed in human history. 300,000 years. From an average economic perspective, nothing changed in human life. If you look at average income, or average wealth during this period, 300 years ago, it was about somewhere under $3 an hour. Sorry, $3 a day, $3 an hour, it would make you unbelievably wealthy. $3 a day. And it basically stayed that way for 300,000 years. It went up a little bit in ancient Greece, came down, it went up a little bit in ancient Rome, came down in the Dark Ages. But on average, in the world, it basically stayed flat. Until suddenly, kind of out of nowhere, completely unexpectedly, it went like that. And I have to jump because it goes where. Because from a better perspective, we are now 300 times richer than we were 250 years ago. But from a better perspective, it doesn't capture the real value of how much life is better today. Because it doesn't capture life expectancy. It doesn't capture quality of life. It doesn't capture the fact that we have the really clean hands despite of our complaints, really clean water. It doesn't capture the intangibles. It doesn't capture the actual value of this as an economist. If I'm adding up the value of the iPhones out there in the world, how do I do that? If you're just doing economics, I know you're a law student, so you're not supposed to know economics. But, you know, just the simplest way, how do I capture the value of all the iPhones in the world today? I take their price, and I multiply it by the number of people who bought them. So this costs $1,000. Let's say there's a billion people out there who bought them. Let's say the total market of iPhones, the value of iPhones, is $100 billion. But how much is this iPhone worth to me? How much is this iPhone worth to me if I pay $1,000 for it? Anybody take any comment? Can I wish for it? How much is this iPhone worth to me? How much are the clothes you're wearing worth to you if you pay $100 for them? How much are they worth to you? Did you pay $100? You should know what's worth. What? At least $100. I mean, generally, you would say more than $100 because if it were worth exactly $100, you wouldn't bother, right? You'd be indifferent between $100 and the stuff you buy. The iPhone I paid $1,000 for is worth to me much more than $1,000. Much more. I just described the amazing thing this thing can do. To me, to my life, this is worth tens of thousands of dollars. Don't tell Apple. I don't want them to raise the price on me. But this is worth tens of thousands of dollars. Now, that gap between what I paid for it, $1,000, let's say $10,000 that I think it's worth to me, that $9,000. We don't measure. There's no measure of that. That's the amount that it's improved my life by $9,000. There's no economic measure of that. There's no way to capture that in economics. No way to do it. It's one of the problems with all the inequality measures that we have. All we measure in inequality are dollars. But the values we get are not measured in dollars. They're measured in increased quality of life, which we can't measure. And the inequality in quality of life, I would argue, has gone down, not up over time. Think about the fact that both the difference in life quality between me and Bill Gates, in terms of dollars, the difference between me and Bill Gates is astronomical. These were $70 billion. I'm worth a lot less than that, believe me. But in terms of quality of life, I have an iPhone. He has an iPhone. I don't think his iPhone is much better than mine. Maybe he has a little bit more memory of stuff, but no big deal. He has access to the same information I do, the same art that I do. He has a bigger house, but we both have a house. Pretty decent house. We both fly in a private jet anytime we want to go, let's say, to Europe. The only difference is I shame my private jet with 300 other people, and he gets to fly by himself. But again, the difference is not that big. If you think about travel, what it was 100 years ago, suddenly what it was 200 years ago, when that trip was three months or years, and today we can do that trip, so what's the difference between me and Bill Gates in terms of quality of life is very small. Any quality in terms of quality of life is very small today, because we can't measure quality, or we can measure physical things. So today, we are so much better off than 250 years ago that the 300x number underestimates that by probably a fact of 100, with thousands of times better off than we were 250 years ago. And the question, I think, that's important for us to understand is why. What happened 250 years ago to make us so rich, so successful? What is the difference between life 250 years ago? What made it go through the roof? Because it was flat, and then suddenly it went like that. And what would you put the dates where it kind of flips like that? What would be a good date globally for that, or at least in the West? 1800 is not a bad date, right? Somewhere around there. I like to think it's anywhere in those decades. I have a particular date in mind, which I like in particular. It's 1776. You know, it's a night date, easy to remember. But three things happened in 1776. Most Americans know of one, but there were actually three things, important things that happened in 1776. One was it was the first time that year that the steam engine was commercialized. So steam engines had always existed. But the commercialization, actual use of a steam engine for production, first time was 1776. In that sense you could say the beginning of the Industrial Revolution. A famous book was published in 1776 that has to do with capitalism, the title of our talk. What was that? What's the first book? The Wealth of Nations by Adam Smith was published in 1776. And of course the most important event in 1776 is the publication of the Declaration of Independence in the United States. To me, in my mind, the most important political statement in human history. Because what does it say? Because I think it's the sentiment, it's the ideas in that document that make that, make that progress possible. It makes wealth possible. Because what does it say? You have to be careful here, there's a room full of lawyers. What does it say? It says that all of us, as individuals, are equal. Equal in what respect? Because we're not equal. Look around the room. We're not equally not equal. So what do we call in what respect does the Declaration apply equality to us? And granted, the founders didn't exactly do this consistently, right? They didn't apply it fully. But the idea behind it, what is that idea? We're equal in what? In what respect? What's that? A human value? And how does that manifest itself in the political document, in political application? In the application of that equality? What's the idea there? It comes in the sentence, the sentences that follow it. We're equal in the fact that every single one of us are born with rights, with inalienable rights. Inalienable means cannot be taken away from you. Rights, not in the modern sense that we understand them today, unfortunately, but rights in the sense that we're all born free. We're all born free of coercion. We're all born with a right to live free from being cursed, free from having force applied to us, free from authority that dictates what we must think, what we must do, how we must act. Rights are a concept that relates to freedom of action. Rights say you are free to act on behalf of your own life. You're free to act in pursuit of your own values. Unless you're infringing on somebody else's rights, unless you're using force on somebody else, you're free. So the document is basically a document saying we should be free as individuals to live our lives as we see fit. Free from coercion, free from force, free from authority. And while it was applied inconsistently throughout the world, that idea, the idea, there comes from the enlightenment, there come some thinkers like John Locke and the Scottish and English and French enlightenment of that 18th century. That idea that all individuals are inherently free should be left alone, should be protected from coercion, applied on them, but otherwise left alone to pursue their values. That idea unleashes something. What does it unleash? What unleashes human ingenuity? It unleashes human entrepreneurship. It unleashes people to think for the first time to be creative, to think outside of the box, to innovate, to think new thoughts without the fear of persecution. Think about Galileo. Radical idea that the earth goes around the sun, not the sound around the earth. And what happens to it? What's in house arrest? Forces used against him because of an idea that he has. Because the authority doesn't accept the idea, objects to the idea, and it can apply force against it. Within 200 years, thinkers in the West reject that notion that there's dogma, that some authority is going to apply to all of us. And they free up the human mind for the first time really in human history, in the exception of Greece. What happens in the early part of the 18th century is there's a rediscovery of the idea that what makes us human? What makes us human? And don't say thumbs. What makes us human? What makes the human animal unique and different from any other animal out there? What's that? Other animals are conscious. Right? They're conscious of the world around them. There's something about human consciousness that is different than other consciousnesses. I think that's a word. What is it? What makes it different? Our capacity to do what? To reason, to think. To be rational. To abstract. To think in terms of abstract concept. To integrate the facts of reality into greater and greater abstractions. No animal can do that. People talk about human beings as being able to communicate. But communication is a is a derivative from the fact that we can think that we can use our reason. And in the beginning of the 18th century suddenly people discover, rediscover this idea that, yeah, what makes us unique as a species is our ability to think, our ability to use our mind. And it's not an accident that at the same time you get a scientific revolution. Suddenly people are saying, look, we can use our mind to explain the physical world. Newton comes out and he explains the laws of physics. And we can actually understand why things move the way they move. And everybody can understand it. You know, if you don't, if you didn't get the laws of physics of Newton it's your teacher's fault. They're not that hard. This is not difficult stuff. And people go, whoa! Because where did knowledge come before this? Where did knowledge come from before that? Where did the truth come from before Newton and before this idea that reason was our tool for discovering things? How do we know stuff? Yeah, from ancient books. From some authority. Telling us, this is the truth. You must abide by the truth. Why? Because it just is. It's revealed. In the 18th century people said, no. We don't accept that it's revealed. We want evidence. We want proof. And suddenly people are saying, wait a minute if I can understand the laws of physics how things move if I can, if I have a mind if I have a capacity to reason as an individual then why can't I make other decisions for myself in this world? Why can't I decide what profession I go into? Before the 1800s your profession was dictated by what your profession your parents had. You didn't get a choose. Why can't I make that decision for myself? I have the capacity to reason. I can know the truth for myself. I don't need an expert to tell me what the truth is. Why can't I choose who to marry? The whole idea of romantic love the whole idea of choosing somebody was new. And it's a product of the fact that we suddenly discover that we can think for ourselves. Each one of us every individual has the capacity to reason. And then why can't I choose my political leaders? So it's not an accident that you get the Declaration of Independence. It's a consequence of this idea that every human being has the capacity to reason and that reasoning capacity leads to making decisions for oneself in every realm of one's life. And then why can't I invent this machine I don't need somebody's permission. Why can't I start up a factory without asking for permission? Why can't I do? And you can see how this leads to an explosion of innovation, creativity, building, creating, making. It leads to capitalism. Because what is capitalism? Capitalism is a nice word people throw out just like socialism. They don't bother to define them. What does capitalism mean? You're lawyers, you're supposed to define stuff. It means what? What first comes into your mind when you say capitalism? Yeah, free market. Capitalism is a free market. Free of what? Free of what? Free market is another one of those terms you need to define. What a free of what? Yeah, overwhelming regulations, right? Who defines overwhelming? Free of regulations! Free of controls! Free of coercion! Free of force! Free of intervention! Free markets mean free markets. Free means no coercion, no force, no regulations, no controls. You might not like free markets. You might say, oh, we need some regulations. I don't say that, but some people might say that. Right? But free markets actually mean no regulations. Leaving it up to choices of you as individuals assuming you all have the capacity to reason for yourself to make decisions that are in your self-interest rationally and to act in the marketplace. Free from that authority. Free of that coercive nature of the state. Orc crooks and criminals. So free of coercion. So capitalism is free markets. Capitalism is the system. Capitalism is the system. It's a social system, economic system, political system. That basically where the government's whole job is to protect rights and otherwise leave us free. It's a system where our property rights, all property is owned by individuals. All property is private property in which the state's job is to protect that property and nothing else. So no coercion by the state. It's there to protect you from the crooks, the criminals, the fraudsters, but nothing else. That's what capitalism is an ideal means. And as an ideal, it's never been practiced. We've never had complete capitalism. But you have to know what it means to know how close you are to it or whether you want to go all the way or not. You have to first know what it is. What happens in 1776 and in 100 years that follow is that that spirit of freedom gets unleashed. Governments shrink to only deal with protection for the most part. And leave markets free to innovate, to produce, to create, to build. And what you get is an explosion, explosion of economic growth for the first time in human history and sustained economic growth. And today we know if you look around the world you can measure this to the extent that we practice those free markets. Nobody's perfect, but to the extent that we practice them we're rich to the extent that we don't, we're poor. You go country after country after country. You can take the economic freedom index and the countries at the top are dramatically richer than the countries at the bottom or even the countries in the middle. Economic freedom makes all the difference. So the greatest virtue of capitalism is that it's a system that sets us free. It's a system that leaves us free to think whatever thoughts we want to have and to act on those thoughts. It's a system that rewards productiveness, rewards being rational, rewards being honest, going to business and try being dishonest for a while. It doesn't last for very long. You can try in your personal life too. Take your best friend, like them for a date, see what happens. Really bad strategy for living. Particularly bad strategy. It's the same in business. Lying is just a bad strategy. So it's a system that rewards honesty, certainly rewards hard work and productiveness, rewards innovation and thought. It rewards individuals striving to make their lives better. It rewards virtue. Virtue properly understood. And it makes us all richer. It extends human life. It gives us all the benefits. All the stuff that I talked about before is a product at the end of the day of whatever capitalism we still have in the world. It's no accident. What's the most innovative area in our economy today? What's the one area where you get innovations constantly? Yeah, we collect tech generally, right? So technology. Why is that the most innovative area? Like take airplanes. Airplanes are an area where there's massive innovation going on. What's that? There's award in the one, but you could argue there's award in airplanes. You can still, you know, if you came up with a completely new way of doing aircraft, you can make a lot of money. But why is there almost no innovation in airplanes? It's highly regulated. What was it before? Last innovation in airplanes was what? Last big innovation. Anybody know? The Concorde. Concorde, supersonic. It took New York to London, I think it was three hours. It's pretty amazing, maybe four. But pretty amazing, the lake plane. When was the last time that Concorde flew? A long time ago. And why doesn't nobody invest? There's a beginning right now in supersonic technology. But why has there been no investment in that over the last 20, 30, 40 years? It's too regulated. It's too controlled. Regulations hamper innovation. Why? What is the essence of regulation? What is the essence of regulation? All regulation. What's that? Protecting your business from the bad guys? Is that the essence of regulation? What's the essence of regulation? What's that? What's the essence of the regulation? What's the essence of regulation? What's the regulation trying to do? Yeah, it's to restrict you. It's to try to tell you how to run your business. It might have good excuses. We're doing this in order to protect consumers. We're doing this in order to, you know, I don't know, help you protect you from competition, which often is the case, right? We're doing this because it's good for society. We're doing this because it's good for something. But the essence of regulation is authority. The essence of regulation is the Catholic Church telling Galileo, no, that's wrong. You can't say that. Because we, the experts, know better. We in government have figured out that you can't do that. Supersonic jets, no good. The essence of regulation is force, coercion, authority. And what's the excuse given for regulations always? It's good. Because we're the experts and we know. You're too stupid. The marketplace is too stupid to figure it out. You don't have reason. You don't have the capacity to think for yourself. You don't have the autonomy to make those kind of decisions for yourself because so-called the social cost, whatever that is, is too high. But the essence of regulation is authority. Is somebody telling you what's right and what's wrong? Whatever it is to innovate in, whatever it is not to innovate in, whatever it is you can explore, whatever it is you're not allowed to explore. In the universe, it limits your thinking. It limits your capacity. Every industry that's regulated. There's very little innovation. And ultimately what you discover is there's a lot of fraud. It's no accident that when you look at fraud cases in the past, again, you guys are probably too young, but the last big explosion of corporate fraud was Enron, WorldCom, Taiko. There was a whole series of them in the late 1990s. Every single one of them. In a highly regulated industry. There was almost no fraud in Silicon Valley. Because what's Silicon Valley about? Production, creation, building, making stuff. What are regulated industries about? If you're running a company that's highly, highly regulated, what do you spend half your time doing? Getting around regulations? Also lobbying Congress, lobbying the president, lobbying the state regulators, lobbying people. And that's a different mentality. I call it the schmoozing mentality. CEOs of regulated companies are really good at schmoozing. CEOs of unregulated companies are really good at producing. Schmoozers are much more likely to be corrupt than producers. It's the way politics is about power. It's about exchanges. Power. Production is about what? What's the essence of free markets? How do we relate to one another in a free market? Trade. What's trade based on? Win-win. It's about making stuff better. So the essential characteristic of capitalism is that freedom to think and to do based on your judgment. And again, as long as you're not holding other people, you're free to innovate, to produce, to trade, to act as you see fit without asking for permission. The essence of a regulatory state is that you need permission to act, permission to produce, permission to innovate, permission to do everything else. And there's no accident that those industries where you don't need permission, technology for the most part, you don't need it, innovate, advance, produce, move us forward, and those where you do need permission, we stagnate. What was the last innovation in the internal combustion engine that really hasn't been? Again, because it's heavily, heavily regulated. Heavily regulated. So the virtue of capitalism, the virtue of freedom, is that it frees up the human mind. It frees up human thinking. And it makes it possible for this innovation of progress and success to increase standard of living to occur. I mean, one could only imagine if we eliminate the regulation or loosened up the regulations and healthcare, what kind of life expectancy we could actually attain and what kind of progress we could actually attain in those fields. Today, again, those fields are hampered, restricted, constrained by asking for permission in almost every single dimension that they occur. So capitalism has produced the greatest wealth ever. So only systems produced any wealth. No other political economic system has produced any wealth in human history. Socialism, everywhere it's tried, in any way it's tried, any place it's tried is a complete and utter disaster. All you have to do is look at Venezuela today. If anybody doubts that Venezuela is socialist, ask me about it. Because it qualifies. You can go down the book. America's 100% capitalist. But it's tilted in that direction without any question. And any country that's tilted in that direction is a massive failure. And what I find interesting, and I'm not going to give a complete answer to this, what I find interesting and intriguing is how attractive socialism is and how unattractive in our culture capitalism is. How cool for young people socialism is and how uncool capitalism is. And I think part of the answer is capitalism basically says that your life is yours which means the responsibility for your life is yours. It means that you you get to act any way you want and you are going to make mistakes and you're going to fail and it's up to you to deal with that failure. It basically demands it basically expects to take full responsibility over our own lives. It also implicitly assumes that we have the capacity to do it. That is, we all have the capacity to reason, to think, to be rational. Think about our modern culture. So much of our modern culture tells us that we're not capable of taking care of our own lives. That reason is not efficacious. That reality is not objective. It's not. I mean some philosophers tell us it's not even there. Never mind, we all see it differently so reality is not one thing. There's no one logic we're told today. Women have one logic, men have one logic. Logic depends on the color of your skin, logic depends on your genes, logic depends on all kinds of things. No, there's only one logic. But if you think there are a million types of logic then there's no reason. There's no reality. There's no capacity to actually discover truth. There's no capacity to actually take care of oneself. So we live in a world that undercuts reason at every opportunity. Undercuts the relationship between our consciousness and reality at every opportunity. And if you doubt it, again ask me in the Q&A. I'll list you to all the philosophers that don't believe in human reason. And then capitalism again, to take personal responsibility over yourself, it also says implicitly that your life is worth taking care of and that it's your moral responsibility to take care of you, that your primary moral responsibility is to take care of yourself. But again, we live in a world in which we are taught and expected that your primary moral responsibility is to take care of others. Don't think of yourself too much. Don't be selfish, don't be selfish. It's all about other people. It's all about the group. It's all about the collective. It's not about you. So in the world in which we live in today, ideologically is opposed to the prerequisites of freedom and prerequisites of capitalism. Not in capitalism is important because I think the quality and the standard of our life depend on it. But I think in order to preserve it in order to grow it, in order to move where I would like us to move, which is more in a direction of more consistently capitalist, we have to resurrect, we have to rediscover those foundational ideas which they had at least implicitly in the 18th century. We have to rediscover the efficacy of reason. We have to have a renewed respect for human reason, everybody's reason. Every elite who can guide us all down there. But the reason of every day, every human being, at least their capacity to do it, we need to expect them to do it. And then we need a politics and a morality of individualism. An idea that individual life is sacred. Every individual life is sacred. And your life is sacred and your life is your responsibility to live as you see fit using your reason as your guide. And if we do that, the world is significantly better off. But the focus on the individual versus the focus on the group, again we live in a world right now where the focus is tilted dramatically towards the group, towards the tribe even these days, towards collectivism rather than individualism. So capitalism to be defended, we must defend reason and we must defend individualism. We must defend the philosophical things. And in my view, the best author, the best philosopher to ever defend them, and therefore the best author, the best philosopher to ever defend capitalism is Ayn Rand. So I'd encourage all of you to read Atlas Shrugged, The Fountainhead, and maybe more importantly, the virtue of selfishness, capitalism not known ideal, or non-fiction writing on anything. Give me an example of a common pooled resource. Yeah, so in economics we call this the commons, right? So the tragedy of the commons. And the tragedy of the commons is, of course, that because nobody owns it, it usually is depleted. It's overused, or it's filthy, or it's polluted, because nobody owns it, therefore nobody cares. And indeed, if you look around the world, the most filthy places in the world are the ones that have the most commons. That is the ones that have everything commons. So the most dirty place in the world was Eastern Europe when the Berlin Wall came down. Communism is filthy. Right? And my solution to the commons is pretty simple. Not have any. That is my solution to the commons is to privatize it. I'd go all the way. I mean, I don't know yet how to privatize the air. I'd love to figure that out. I don't think that can be done. There are two places where I think there's a real challenge, like oceans and fisheries, which is a challenge, but places like Iceland and places like Norway have come up with very, very creative ways to create private property with regard to fish and the ability to fish. Now, whether they're the right ones, whether that's the right... I'm not an expert on that, so I don't know. So oceans are definitely a challenge, but I think you can do things with the property of what matters in the ocean, which is the fish, the ability to fish. But streams? Absolutely. Rivers? Absolutely. Lakes? Absolutely. Beachfronts? Absolutely. All of it should be privatized. So to me, capitalism is the system where all property is privately owned. All property is privately owned. And so anything that has a human use is going to be privately owned by somebody. And I think what happens then is you solve a lot of these problems, because we know from common law going back hundreds of years, right, that you can't dump your garbage in my backyard. That's been settled way back. If I have this property, you can't bring your garbage in here. Well, if I own this piece of the lake or this piece of the river, you can't pollute upstream and damage my river. And there's 19th century law that has to do with water rights and things like that goes back to when the West was actually privately owned and when rivers were deemed to be private and where the cows pooping over here affected. And there's how do we deal with that, right? And you can deal with that through legal mechanisms that we know. I think the problem is when it's common because what happens when it's not privately owned? How do we settle any dispute on any issue where it's not privately owned? It's a collective action problem, but at the end of the day, the only way to settle it is through a democratic process. And what a democratic process always leads to? Well, it's either the majority dictating to the minority what they have to do, in other words, violating the minority's rights of action. Or it's often not even a majority. It's often the loudest minority that gets the dictated. It's the one we're willing to pound on the table the largest. It's a pressure group that has the most political levers. And we see that. The more government has grown in terms of its intervention in the economy, the more regulations we have, the more controls we have, the more we become a society in which much of the decision-making is done by pressure group politics. By which pressure groups has the most levers in Washington? By who lobbies the most? There was very little lobbying in Washington a hundred years ago as compared to today. But the more power you give, the more in a sense everything becomes public property. Because if you think about it, there's a sense in which there are no private corporations in America today because they're all so heavily regulated. There's a sense in which you don't really own your land. Try not paying taxes on it. See what happens. You're actually renting it from the government. It's called property taxes. There's a sense in which we've turned everything into the commons. And in that sense now, everybody lobbies. Everybody's a pressure group. Everybody tries to manipulate the political process. And politicians are more and more and more powerful. Whereas in American history, politicians were relatively little power. Today, they're all powerful. That's why politics has become such an important part of our lives. When maybe a hundred, 200 years ago, you know, it wasn't that big of a deal. Because politicians didn't have a lot of power over life. So what you get is this pressure group politics to determine use of the commons. And everything's a common because of regulation. Yeah. Excellent. Yeah, I gave a talk in Norway a couple of years ago. It's online about the evils of the Scandinavian welfare state. So, yes. It was... They'd never heard anything like it. The poor students at Bogan University were quite shocked and apoplectic about it. So let's start by the fact. The simple fact that Norway, Sweden, Denmark are not socialist. I mean, you can argue about what they are, but they're certainly not socialist. The government does not own the means of production. In socialism, the government owns the means of production. They do not own the means of production. And indeed, in many respects, a country like Denmark is less regulated than in the United States. So, for example, it is easy to fire an employee in Denmark than it is in California. I don't know about Arkansas, but in California Denmark has incredibly flexible labor models. Very little regulation with labor models. Easier to open a bank in Denmark than it is to open a bank in the United States. Less regulations of financial institutions. I know a bank in Denmark, a good friend of mine, built a very successful private bank. The only place in the world where he would not open a branch is the United States. Because we so heavily regulate our financial institutions. So on an economic freedom index, you know, people rank economies based on economic freedom. There are a couple of different rankings, one by Heritage and one by Cato. Denmark and Sweden and the United States are both in the same place. Scandinavian countries regulate less. They redistribute more. We regulate more and redistribute less. When Bernie Sanders called Denmark socialist, the prime minister of Denmark went in front of the press to object because Denmark is not a socialist country. So that's point one. Two. The Scandinavians are just not that successful. They're not that rich. We're richer than they are. If Denmark was one of the states in the US, they would rank somewhere around 20 people cap. Just ahead of Mississippi. But I mean, people think of them as these successful places because you go to Denmark, it's clean, it's nice. I love Copenhagen. It's one of my favorite cities in the world. It's a fantastic city. But if you go to people's homes, they're small. And the stuff they have, they're just not as wealthy as Americans. That's just the reality. Now, the poor in Denmark are slightly better off than the poor in America, but the middle class is actually far behind the middle class in America in terms of wealth. A lot of Danes moved to America. A lot of Swedes moved to America. A lot of Norwegians moved to America. In the late 19th century, early 20th century, there was a massive migration from Scandinavia into America. What you can do, and people have done this, is they've done studies comparing Danes in America with Danes in Denmark. Danes in America are richer. Danes in America are just as happy as Danes in Denmark. Because, you know, if you ask people if they're happy, if you ask a Scandinavian if they're happy, they say yes. Because that's what you're supposed to say. They're happy people. Like, if you ask, you know, my origin is Jewish, if you had Jews if they're happy, they never say yes. Like, it would be an insult. You're happy? How can you be happy? Nobody's happy. Right? You know, you're happy, right? So much of this is cultural, and yet we take these happiness studies as if there's some. And if you look at the actual studies, they're very poor science. So they're just as happy if you look at life expectancy. Life expectancy in the U.S. is relatively low as compared to some of these countries. But if you adjust for genes, Danes in America live just as long. It's not longer than Danes in Denmark. So, you know, what are the advantages? Do we dwarf more? So, yes, as a consequence of that, there's less risk-taking in Denmark. It's less entrepreneurial than the United States. You know, because you've taken away some of the risk elements. You've inculcated low risk behavior into the culture through the redistribution mechanisms. And in some respects, they're less free. In other respects, they're more free. But to compare the U.S. to Denmark, it's similar to actually come to any conclusions. Again, they're not socials. And I'll just give you my quick story in Sweden because, you know, I get the Sweden question. I usually don't get it at Denmark. I usually get Sweden and I get it so often that I've got my shtick down, right? See, here's the short version of the economic history of Sweden, right? This is true but very condensed and short. Before 1870, Sweden was the poorest country in Europe. It was dirt poor. It's the period in which many Swedes left in Minnesota, Wisconsin, in that part of the U.S. But really all over the U.S. Pre-1870, dirt poor, poorest in Europe. 1870, they do massive reforms. They basically establish the rule of law, property rights. Basically, they become the most capitalist country in all of Europe. Sweden, the most capitalist country in all of Europe. Indeed, they stay from 1870 until about 1955-56. The most capitalist country in all of Europe in terms of respect for property rights, no regulations and freedom. They become, very quickly, the richest country in Europe. By the dawn of World War II, Sweden is the richest country in Europe for capital GDP. Many of the great big industrial companies in Europe are based in Sweden. And then in about late 50s, early 60s, they decide to experiment with socialism. So they start redistributing wealth on a massive scale and in some of their industries. What happens is GDP per capita, basically it was growing slow dramatically in its growth. Sweden becomes, you know, middle of the road. Not the poorest country in Europe, but middle of the road. It loses its place as the richest country in Europe. Those big industries disappear. By 1979, what is the biggest industry in Sweden? The biggest money maker in Sweden. Anybody know? The money maker in Sweden in 1979. I have to know a little bit about pop culture to know this answer to this. ABBA. You remember ABBA? Yeah, ABBA, the rock group, the pop group. Number one, all the industries were gone. ABBA became the number one money maker. Number two money maker in Sweden was Johan Borg, the tennis player who left the Monaco in order to avoid the big tax. I think ABBA also, some of the ABBA members left Sweden because of the high tax rate. By 1994, Sweden was basically bankrupt. It couldn't pay its debts. In 1994, Sweden was the grease, what grease is today. Not quite as bad but close. Since 1994, again, Bernie Sanders never tells this story, since 1994 Sweden has been reducing regulations dramatically. It has privatized all the nationalized industries and now in private hands. It actually has school vouchers which even we in the United States don't have. It has lower taxes, lower welfare benefits. It has cut dramatically the size of government. Not, as Republicans always do, cut the growth rate. They've actually cut government spending. Government spending from year to year is lower in absolute terms. By the way, almost the exact same thing happened in Canada. Canada was almost bankrupt in 1994, and actually if you look at government spending, government spending started declining from 1994. But Sweden, it's dramatic. So Sweden has actually proof that socialism doesn't work and capitalism does, even in a well advanced western country. So, nothing about Scandinavia today is socialism. I mean other than redistribution of wealth, more than they should. Yeah. What do people groups mean? Yeah. No, it's a good question, but let me put it this way. I'll flip it on you, right? Things like slavery. Things like massive discrimination. Features of human history from day zero, pretty much. The treatment of women, women of second-class citizens. Features of human history from day zero. They're in the Bible. God tells you how to treat your slaves. Slavery was legit in the Bible. There's no prohibition against slavery in the Bible. Women of second-hand citizens is in the Bible. It goes way back. You know, really, really, really just used the first thing they pray, the first prayer they make every single morning. I'm not making this up. The real religious, ultra-orthodox. Thank you, God, for not making me a woman. This is ingrained in these religions. So that's human history. That's the way it was. And then comes capitalism. And suddenly you get the elimination of slavery. I mean, not completely but almost, and suddenly illegitimized it. That's capitalism. Suddenly women, we expect to treat women as equals. Rightly so. That's capitalism. We can talk about American Indians. I think Indians are a particularly egregious situation, but we can talk about them. I think to this day it's just a horrific what we do with American Indians. We'll talk about that in a minute. Capitalism is the first system, economic, political system to actually liberate everybody. Because what does it say? It says every individual, not a member of a group, but individual has the capacity to reason and we're leaving them alone to live their life as they see fit. And suddenly the focus is on an individual. On your virtues as an individual, not as your membership in a group. I think one of the problems in the world we live in right now is we're reverting back to group politics. Identity politics is what they call it now, right? So the way to resolve those issues is to really treat people as individuals, at the very least from the legal framework. And one of the great tragedies of how we dealt with African-Americans is okay, we fought a war to end slavery, right? Good. We got rid of slavery. But then then we institutionalized into the discrimination. Jim Crow laws which existed until the 1960s. So we didn't allow for real capitalism. And in my view the only solution to that is capitalism. You don't solve anything by reverse discrimination. You don't solve anything by reverse racism. Because all you're doing if you reverse racist, if you reverse it, if you do things like affirmative action in my view is you create racism of a different form. And I think there's no accident that we're seeing identity politics today. I think it's a consequence of the affirmative action and our legalization of looking at people as members of group rather than as looking at people as individuals.