 We are a wonderful lecture. I thought it was very accessible and the standard very easy for us to understand and somewhat thought-provoking and I have to say that I've been a listener of your lecture since 1990s and I mean that it to you for my financial security and prosperity as well as intellectually and Of course, I am but I've been I'm profoundly indebted to Ayn Rand for high dears the ideas that that that took me in into a journey that I would not otherwise Have taken So let me start by asking you how you discovered Ayn Rand and how her ideas are writing so work I've influenced you in your life. Sure. So I was a Know if you know, but I was I was born and raised in Israel In the 60s and 70s and Israel at the time was a very socialist economy and very collectivistic Tribal you could say right the Jewish people the state of Israel was the top value That we were educated around everything in our culture the songs the stories Was focused on making you part of the tribe making you part of the collective and I I was I bought in completely. I was a socialist. I was a collectivist I believed in it all and I was talking to a friend one day and We were discussing economy economics and politics and he was For the first time said I know him he was making these arguments for a free market kind of capitalist perspective And I looked at him and I said, what are you getting this nonsense from? Because I thought it was complete nonsense And he said you got to read this book and he handed me a copy of Atlas shrugged Which I Spent the next few months reading and it took me a long time next few months Yes, it took me a long time because I argued with Ayn Rand on every page of the book every page of the book I disagreed I Didn't accept it. I threw the book on the wall You mean literally? Yeah Both I think and By the end of the book she won and I won right win-win She'd convinced me Not that I understood everything not that I got it right, but I understood enough to know That everything I believed to that point was wrong Didn't make sense. There was no reason for it Why should I live for the collective? Why was the tribe more important than me? You have one life one? One opportunity of this why not make the most of it? Why not live the best life that you can live? Wherever that happens to be with whatever people happen to be wise family more important than friends Why shouldn't you choose your culture or choose the country you live in? So this of course had profound impact on everything that I did from that point on First of all I went on to try to read everything she wrote and try to really understand and it took many years to fully Understand I'm still learning. I still don't understand everything But it it led me to kind of the choices in in the friends that I made it led me to Decisions about rather than following the path that the family wanted to choosing my own path And it led me to leave Israel because one of the things that I decided was instead of living for the tribe for them for the group I said I've got one life where would be the best place in the world to live this one life Where could I make the most of this one life and to me that was America at least in 1987 that was the obvious choice I'm not not a sure today, but certainly in 1987 America still this beacon of freedom this beacon of opportunity and I left Israel and and and removed to the United States have never never regretted it Never regretted it since what would you call the state of the United States in state of America right now? It's depressing partially because it's election season so all these people are talking and it's better to They all shut up The United States is losing What makes it special? And what is it that makes it special in a sense what makes America special what makes the United States special is what makes The West and I and I talk about the West not in terms of geography, but the set of ideas that make the West special So in my view America is the greatest achievement political achievement of a particular Ideological tradition and that ideological tradition is the Enlightenment and the Enlightenment is Two ideas I believe two ideas define the Enlightenment and therefore in my view Define what it means to say there's a West and Define what it means to be America And the two ideas are one the primacy of reason Reason is the means of knowing the world That is a discovery made if you will by Aristotle in the Greeks rediscovered in the Renaissance and flowered during the 18th century during the Enlightenment What's the other name for the Enlightenment anybody know what the other name for the Enlightenment is the age of Reason and there's a reason for that, right? It's the age of reason because reason is placed above all else religion and faith are challenged During that period for the first time really since the Greeks Religion and faith are challenged and of course reason manifests itself in the 18th century in The scientific revolution the greatest advocate may be for the Enlightenment is Newton Right the great scientist and the second concept that is always the twin of reason Because who reasons we talked about this a little bit in my talk who reasons The individual reasons only the individual reasons groups don't reason so when reason rises to the top so does individualism and This is the era of John Locke the era of individual rights the era of individual liberty and the crowning achievement of the era is the establishment of the United States of America Because it is the culmination of all of that the founding fathers of America all men of reason and individualism and Thomas Jefferson Memorial There's a quote from Thomas Jefferson which says something like I don't remember it exactly bring everything before reason Even the existence of God must be brought before reason reason is the Supreme and Of course in the Declaration of Independence government is established in order to protect the individual the rights of the individual Now that concept of reason and individualism Have slowly been diminishing in the West and at the same time in the United States Okay, so it's still diminishing. Yes on the decline Yes It started the decline started really right after the establishment of America with the German philosophies of Kant and Hegel and and the rest of the German romantic tradition which destroys reason They undercut reason the whole idea of the romantic philosophies was to elevate emotion above reason And you get the culmination of that in Nietzsche which will which is so you're saying that Entrepreneurial heroes are flourishing despite the decline of reason. Well Are they flourishing any more than they flourished a hundred years ago? I don't think so. Oh We just know the guy with the entrepreneurs today But think about what it meant what kind of innovation we had a hundred years ago and compare it as As much as I love Silicon Valley Think about a hundred a hundred and twenty years ago the kind of innovations we made in the West right again The West is an idea not the West is a geography We went from Hossen buggy To train automobile airplane Huge We went from kerosene lamps to electricity Huge Now with all due respect to the internet with all due respect to the iPhone and to every little to Facebook and Twitter That's not going from the horse to the automobile. That's not going flying That's not going to electricity so if you think about the amount of innovation and the quality innovation and the Extent of innovation. It was much greater a hundred a hundred and twenty years ago and the other thing was back then Everything was on the table. You could innovate in everything Today the scope of innovation is very narrow we can innovate in Technology a little bit in telecommunications, but what was the last really big innovation in air travel In airplanes. We basically the Boeing 787 which is the latest Boeing is not that different than the Boeing 727 I mean, it's a little bit more comfortable. It's a little bigger, but it's the same technology Right the last technological innovation in air travel was the concord I don't know how many of you remember the concord Right and we grounded it. I mean if you read science fiction books in the 1950s They thought that by 2000 we will be colonizing Mars our our Cars would be floating on air We still have four wheels and we have the same internal combustion engine that was invent that invented 120 years ago So a lot of industries today are not innovating the train system and you guys have great trains But those huge leaps of innovation are God and I would argue I think I'm ran would argue is that all those industries where you have government regulations government controls Those are the places you don't get innovation and government has so far left technology alone So all the innovative energy has gone into there But it's limited The scope is limited So I don't think there's any more innovation today than there was 50 years ago I think there's less and it's limited to a bigger scope, but because It's limited. We know all the names because it's the only you guys we have A hundred years ago, there was innovation everywhere there was innovation in Michigan and in New York and in California and in Ohio I mean if you look at the map of the United States and all the different places Every one of those big cities was a center of innovation today. It's a center We call that that center of the United States the rust belt. Why is it the rust belt because it's rusted. It's falling apart Yeah, that's an interesting point of view. I never thought of that It's it used to be more ubiquitous more common now. It's Silicon Valley one place, right? America used to be the land of innovation the land of entrepreneurs today 2014 and I hate to be negative but 2014 in America more companies went bankrupt Then we started for the first time since the 1970s and that's a very very unusual It's only happened a few times in American history that more companies go out of business that are created That's not a good sign It's not a good sign. I realize that there are people in the audience who are familiar with or even knowledgeable about business innovation and The the recent economy and why don't we open ourselves to a few questions? Yeah Questions don't be shy So the question is what made ayn Rand unique in the history of philosophy? So I think the first thing That is unique about ayn Rand at least in modern philosophy is That ayn Rand was what we called a system builder She had a comprehensive philosophy. She had something to say about metaphysics epistemology ethics politics and even aesthetics even the arts Very few philosophers in all of human history have had that Plato Aristotle Emanuel Kant and That's pretty much it in terms of having a comprehensive philosophy about everything She also Innovated in every single one of these she had something new to say about metaphysics about epistemology about ethics about politics about aesthetics she I think is the first philosopher to have this system integrated Integrated around the idea of reality as Existing independent of consciousness The reality is what it is the things out there are there and the idea that we can comprehend that reality using our reason and That really is the theme that goes throughout her philosophy because you think about her ethics her ethics is about Using our reason to enhance our own life And she's the first philosopher since Aristotle to say that the purpose of ethics is not to sacrifice to others but to lead a flourishing successful life for ourselves All philosophy almost all philosophy with maybe the acceptance of Spinoza all philosophers since Aristotle again with the exception of Spinoza all focused on morality as Living for others in one way or another sacrificing virtue was about How you would sacrifice to other people who to sacrifice to Rand is the first one since Aristotle To really bring back the focus on self on how to Make yourself virtues and values for the purpose of Living the best life one can live human flourishing human success and that's really the core of her ethics reality of her philosophy reality reason egoism or self-interest Everything else is derivative from that. Does that capture what you were looking for? Oh? We've got a microphone. We want we want you to speak into the mic And by the way feel free to ask the question in Japanese and you will translate if you're more comfortable doing that I'm from a financial sector investment firm and before asking a question. I really appreciate your speech and maybe Productivity and the appendices must be the virtues Which I personally have to pursue but now the question is when we think about the issue from a society level Don't we really need to adjust the and we have fairness or we whether we don't need a re-distribution because That's the way we have to get the Certain size of a universe of a potential customers or we will get the Potential innovators in the future. That's why for example Steve no Steve jobs and Bill Gates set up the his new initiative of philosophy and Giving a distributing big money to Africa was solving the healthcare issue. So I just wonder What is your thought? What's the? Irons thoughts on that so As I understand the question don't it's don't we need to redistribute some wealth in order to create consumers Create demand for our products to create future innovators and just because it's fair So the question is what is let me start with the last one Let me start with fairness because that's a moral issue and then we'll get to the creating consumers Which is more in economic issues What is fair so? People produce at different levels Some people change the world and some people make enough to be able to feed themselves and some people don't work at all And don't produce anything Why is it fair to take from those who've created so much and give to those who've created less? So to me fairness Which today is defined as equality? Why is it defined as equality? Shouldn't fairness mean? Getting what you deserve And when it comes to production when it comes to material values, isn't what you deserve what you produce? What you contribute in a sense to production So to me It's not fair to take from people by force because that's what we do in redistribute to give to other people Now if Bill Gates wants to help people he has a right at his money But that's not the same as the state redistributing wealth Taking from some it's but you know by force and giving to others to me. That's not fair Force corrosion is not fair So if individuals voluntarily out of their own will Distribute their wealth or the betterment of society. That's a good thing. It could be a good thing But it depends on why they're doing it Unfortunately, I think many do it today out of a sense of guilt You know in in America people talking about giving back giving back Now giving back makes an assumption that you take something But what did Bill Gates take? It's the world is not a zero sum, right? We have an assumption built into this thinking that there's a pie and Bill Gates took a big piece of the pie so we get a small piece of the pie But no Bill Gates built a pie He created a pie and by making that pie We got some pieces that we wouldn't have got it Bill Gates hadn't made the pie. We've already benefited from Bill Gates So he it's not that he took anything. He's already given us a huge amount So giving back to me suggests that people feel guilty somehow As if they by making money have made you poor But no Bill Gates has made us richer even the poorest person on the planet is richer because of Bill Gates Because of Microsoft and the networking effect and what computers have done in the world So to me Fainters demands that we leave people alone and if people want to give and help They should do it because they believe in it because it's somehow Consistent with their self-interest with their flourishing with their life that it's in pursuit of values They believe in and then they should give and I suspect Bill Gates is Not doing it because of that and why do I suspect it Bill Gates lives in Seattle? In Seattle Seattle has a lot of problems I don't know if you've ever said there's a lot of homeless people in Seattle There are a lot of poor people in Seattle not poor like Africa, but still relatively and yet Bill Gates Doesn't invest in Seattle. He doesn't use his philanthropy to help people in Seattle He chooses the place Furthest away in the world that he can think of Africa to help people over there. Why? Because he doesn't want anybody to suspect he might doing it for self-interest If he didn't it's Seattle people say ah, you're trying to make your life better by by changing the place You live in so you're going far far away as far away as you can imagine Tell people you don't know it all So I suspect he's motivated by guilt indeed if you listen to him. It's clear that he is So I you know, I'm not I'm not too happy about it, but he's considered a hero because of it I consider him a hero because of Microsoft because what he built and what he created and he changed more lives at Microsoft Than he ever will through his philanthropy So that's that's the fairness question although we can talk a lot about the fairness question I want to say something about the economic question because there's a massive fallacy That we need to spur consumption We need to get people to consume Your prime minister here in Japan Abe and all his economic advisors believe in this idea in economics We need to create consumption the Chinese are now trying to shift their economy from an investment economy to consumption America is driven by consumption I don't know if there any economists in the in the room here. This is complete and utter Nonsense economically and this is why Japan in my view is Stagnating economically because you you believe in this and you're trying to do the wrong things Think about it this way In order to consume. What do you have to do first? You have to produce so that somebody pays you for that production so you have money so you can go and consume Even if you're receiving a check from the government Where does the government get the money to give you so you can go and consume it has to take it from somebody who's produced something so at best Consumption can only be 50% of the economy because every dollar that is consumed has to be first produced a dollar represents production Or yen represents production But it's not even true Because production is multiple layered and everything that's consumed has to be produced by somebody And there are many more steps in production than on consumption consumption is one step by the ice cream eat ice cream ice cream gone But making the ice cream is a multiple step. There's a cow somewhere. It has to be milked The milk has to be transported somewhere the milk has to be converted into ice cream think of all the jobs Think of all the steps all the production that has to happen to make one piece of ice cream So you can make it disappear like that consumption is destruction consumption is destruction So if you if you want to spur economic growth if you want economic success, you don't want I mean consumption happens anyway, right? You know, it's not hard. Just put any person in a mall. They're gonna consume consumption is not hard If I know that I have the money to consume What's important is jobs? What's important is production? What's important is entrepreneurship? What's important is innovation? If you want a thriving economy, what you need is to spur investment to spur saving That but saving not that sits in the in in like in Japan in government bonds, right? You have 220 percent Debt to GDP right the highest in in in the world or at least in the in the in the in the productive world if you will It's sitting in government debt Right when government only consumes government doesn't produce what you want is those savings going into production Going into investment going into job creation what you want is to shrink government and spur the private sector to invest and produce and then People will consume because they'll know they've got a job. They know there's a future. They'll know they've got income and consumption is easy I mean who doesn't know how to consume? You don't have to think too hard about consumption, but production that's hard, but that's all You know economic policy, and I don't believe government should have any economic policy because I think government should be separated from economics But to the extent we have a government that's involved in the economy today It should be geared towards production not about consumption So you should be reducing business taxes and eliminating regulations and allowing for flexible labor markets And for allowing for flexible financial markets That's what would drive what you need is is is hostile takeovers And you need the breaking up of your conglomerates. You need freedom so that the markets will reshape Towards production towards greater profit-making towards greater wealth creation and consumption will take care of itself But when you consume production doesn't take care of himself So the whole economic policy is based on a mistaken assumption. Yes, it's it's basically Everybody in the world today is a Keynesian and Keynes was wrong from beginning to end and and Completely wrong and it's interesting because and it's interesting why we're all Keynesians in 1972 I think it was 72 72 73 something around it Richard Nixon said we're all Keynesians now and He went on to destroy much of the US economy as a consequence of everybody being Keynesian And we got stagflation inflation with stagnation which contradicts Keynes according to Keynes You couldn't have both inflation and stagnation at the same time. So in the 1980s Nobody was a Keynesian. Everybody was thatcher and Reagan supply side You know supply side means production side and everything went away and now we Reaganomics Reagan Oh, well Reaganomics, you know, isn't an army isn't really there isn't really such a thing as Reaganomics But you know, there was basically the idea of Keynes is dead and in 1980s. We declared Keynes is dead and now He's back in a life and why is that? This is my theory So I you know, who knows if it's mine if it's iron rand. It's pretty good But if it's mine, it's it's a little dubious, but my theory is this Keynes is the only economist to justify a big state So whenever The state wants to grow and take on more power They adopt Keynes You know, they could adopt marks But marks is dangerous right marks is associated with communism and that has failed So Keynes is like yeah, he's okay, right? He's an Englishman You know, he wasn't a commie didn't believe in the state owning the means of production But he still believes in a big state So whenever the status get into power They use Keynes to justify taking over big chunks of the economy This is what happened in 2008 in the United States when the United States got into financial trouble Bush and Paulson and the those they immediately went they they wanted more power and They use Keynes in order to gain that power And this is true over and over and over again. You see these cycles so yes, it's it All of Japanese economic policy much of American policy much of European Economic policy is based on a wrong Economy, I mean Hayek proved Keynes wrong two to three years after Keynes wrote his book Nobody cares Nobody cares We are doomed to making the same mistakes over and oh, you know Einstein He said, you know what the definition of insanity is According to Einstein doing the same thing over and over again and expecting different results. Well in Japan For the last since 1991, right? So the last 24 years Your governments have done the same thing over and over and over again, and they keep expecting it to work It's never worked. So they stimulate the economy Again, they do big infrastructure projects again and again and again, and it ever works and They do it again, and they think this time it'll work in other words the economic policy of Japan and the United States is Insane according to Einstein now that we know where we are because of all these reasons any prediction into the future Given the women's saying how can you predict the future? Insane people do insane things. I mean it I believe Then unless some very fundamental ideas change We are doomed to keep repeating the same mistakes over and over again, and the fundamental ideas are a Change a moral change in the culture Moral moral change in the culture. So economics won't change We will not adopt different economics until we adopt a different ethical code Something fundamental has to something very fundamental. So as long as We regard self-interest as suspicious as long as we think the profit motive is shady The profit and wealth Yeah, we don't like them because their reflections of self-interest and we associate self-interest with these negative Activities of lying cheating stealing and so on as long as that happens We will not free up economy because what is freeing up the economy mean it means Placing more Economic power if you will in the hands of entrepreneurs in the hands of businessmen in the hands of the profit seekers But if we're suspicious of them we want to control it we want to you know So we have to stop being collectivists and we have to start being individualists The reason capitalism thrived in the 19th century is not because they had great economists They didn't the economists were you know Adam Smith is good But you know what Hayek and von Mises are even better It's not because of great economists. It's because of those two ideas I mentioned earlier because of respect for reason and individualism. That's why we had capitalism freedom and capitalism are consequences of Fundamental ideas not of economic ideas. That's why in my belief is that it's not about teaching economics it's about changing our view of very fundamental ideas in in in the world about How individuals should act in the world and that's why it's hard. That's why it's so difficult Thank you. Let's hear another question from them I'm a little bit of a virtual making money I'm not sure I'm not sure I'm not sure I'm not sure I'm not sure I'm not sure Everybody wants to make the best of their life So You're making an assumption that everybody wants to make the best of their life And I don't think that's necessarily true Or at least I don't think that a lot of people think About what will make the best of their lives because we're not taught to do that We're not taught to think about ourselves So my mother when I was growing up Told me think of yourself last think of other people first. That's what Most of us here in Japan are taught to everywhere. Yeah, everywhere think of others first think of yourself last I Told my children think big emphasis on think about yourself Think about what kind of human being you want to be think about what career you want to pursue Think about what life you want to live? But if we don't teach that to people they don't know how to do it So They have all these obligations to family and to society and to the community That they think of the most that they've been taught of the most important things for them and they're busy doing that and Very few people stop and say I Want to live a great life. How do I do that? Now what happens at some point in America? I don't know about about here is that you know that they feel unhappy So they go to the bookstore and they find self-help books, right? And they're huge section of self-help books But none of the self-help books Actually teach you to think about your life. They're very superficial, you know do this do that They don't go to the core of it They don't challenge the fundamental moral question of what is the purpose of your life? And I'm saying the purpose of your life is to flourish is to live a great life is to be happy But nobody, you know, we take happiness. Yeah, we all want to be happy But nobody takes it seriously the science of happiness. How do we become happy? What are the steps to being happy? And and and nobody challenges the idea that morality so we live in this conflict We want to be happy. We have all these self-help books that teach us supposedly how to be happy But morally we're supposed to sacrifice and all our moral heroes are people who sacrifice for other people They weren't happy. Have you ever seen a painting of a saint with a smile on their face? They've ever seen a happy saint No, the definition of a saint is Somebody who suffered they usually have arrows sticking in all over the place or they're crucified or something, right? At least again in the West, right? So how do you combine that view of life of sacrifice is good with I want to be happy Then you get guilt and you get conflict and you get you get, you know, this ripping apart, right? What I know and I think provides Is really a science to how to be successful. She says no, you shouldn't sacrifice pain Suffering that's not what life is about It's not about the arrows. It's not about being crucified. It's about living It's about enjoying life. It's about finding the things that that that really enhance your life And then people say well, you know, what about lying and stealing and cheating? Doesn't that make my you know, doesn't don't people become rich by lying stealing and cheating And she says no Just look at liars people who lie all the time people who cheat all the time They don't have happy lives. They might have a lot of money, but they don't have happy lives. They can't live with themselves Some of them go to jail. That's not very happy So when you teach your children to think about this themselves first It's not the same as putting your interest Self-interest ahead of others in a sense it's putting yourself interest ahead of others I care about myself more than I care about you guys That's reality. I care about me more than I care about you and you care about you more than you care about me And I get this is the test I always give and this is this is a test that works even for the most Outruistic collectivistic people I say Two kids are drowning one of them is yours one of them is the neighbors. Who do you say first? Your own Everybody saves their own child first and I'm proud of that most people feel guilty about it Because according according to the morality out there you should sacrifice you should save the neighbor's kid and let your own kid drown But no we save our own kid first because the fact is we do at some deep level care about ourselves more But then we feel guilty about it. I say why the guilt But that's different than saying in order to pursue my self-interest. I'm gonna destroy you. I'm gonna sacrifice you I don't care about you. No Ainran said You shouldn't sacrifice to other people and you shouldn't ask other people to sacrifice for you The way to deal with other people is what you call the trader principle What do you want in life a win-win? Relationships, did you say trader principle trader trader from trading? Win-win, so think about a trade When I buy an iPhone I pay I know three hundred dollars for this How much is it worth to me? More than 300 otherwise I wouldn't have bothered So I'm benefiting from I give up three hundred dollars. I get something that's worth more than three hundred dollars How much is it worth to Apple? Less than three hundred dollars. They're making a profit So they won and I won Win-win relationship trade is win-win at least we enter trades with the intention of win-win sometimes we make a mistake Right, but we enter the trade with a win-win intention all human relationships should be like that Your love relationship, right? Friendship love You want it to be win-win if one party is sacrificing to the other not gonna last very long and Love think about love love is the most self-interested of all emotions. Why do you love somebody? Because they make you feel good Because they were projection of your values and Yet we're taught that love is self-less really so imagine The day before your wedding You go up to your spouse to be and you say I'm not getting anything out of this. This is completely selfless This is a massive act of sacrifice. I'm marrying you as a sacrifice I mean she'd slap you in the face and walk away The whole point of getting married is because I love you you make me feel great Right, so the very concept of selfless love is a misguided one Yes, love there is no such thing as selfless love You can be selfless and you can love you can't combine the two and being selfless is hard We we need to be trained to be selfless, but that's what our educational system does It tries to train us System the whole society is teaching us to be more selfless Why who has an interest in us being selfless? Who has an interest in us sacrificing? Who has an interest in us caring more about other people in ourselves? Yeah, but but those who don't want to produce don't have power What's that? Whoever demands a sacrifice and who demands a sacrifice the guys who have the power The the chief of the tribe the witch doctor of the tribe and this is the this is the gimmick right You should live for the tribe for the public good for the common interest and I say, but I don't know what the public good is. What what what do you mean by the common? Don't worry. I as head of the tribe I am No, I channel I commune with the spirits To get to tell you what the common good is. I know what's good for the tribe. So follow my orders Our tourism the idea of living for the sake of other people the idea of the Primacy of the group over the individuals are the way in which we are controlled by the people who Want to control us by the power lusters By the dictators by the witch doctors the witch doctor being the religious leaders Because they are the only ones who know what to it what writers and Then we need to follow and God forbid you be an individual because you might challenge them This is why they always burn at the stake the innovators They always they always destroy the independent thinkers Because they are a challenge to their authority Individualism this is why individualism comes out of reason because the idea is that it's not the Platonic philosopher king who reasons right according to Plato only some people the philosophers know the truth We all live in a cave We only see shadows. We don't see reality as it really is So we need the guidance of the experts the guidance of the witch doctors to tell us how to live and That serves the interest of the witch doctors. It serves the interest of the philosopher kings or the kings Right what reason does what Aristotle does is he shatters that he says we all have reason We all see reality as it is. We don't live in the cave. We don't see shadows We're seeing the light every one of us can reason. So we don't need the witch doctor We don't need the king. We can live our lives. We can choose our own values. Suddenly we're individualists So Aristotle shatters the collectivism of Plato There's a there's a wonderful book called the cave and the light the cave and the light published a couple of years ago which shows a Points that I ran made a long time ago But this is the first book to really illustrate it if you will It shows that all of the history of Europe and the West is Really a battle between the ideas of Plato and the ideas of Aristotle the ideas of collectivism and And and and the idea of the philosopher king The idea of the abstract ideas that only some people commune it with and the ideas of reason Individualism that is the struggle that has always been the struggle who is the author of the book You know, I don't do you remember this name? author-herman author-herman Very good book highly recommended because it shows this contrast and it actually has a whole section on Ein Rande in the book We place as Ein Rande on the Aristotle side on the side of reason and individualism where she belongs But that's the battle. That's the battle. We're still living. That's the battle in a sense We will always live what we hope is that Aristotle wins When he does you get a renaissance and enlightenment Thank you. He's got a big voice Yeah, but we're taping it. So yes This question is related to the gentleman's question over there, which I think what he was getting at was the point of this of a social safety net and And I I would argue that That your point about the leaders having that power to control us That they are allowed and granted that power because there are a tremendous amount of people Who are looking to people who are going to help them in many case give them things? And they're looking for a social safety net Which in eons past was provided by charity their government wasn't giving people things but the the concept of the social safety net Controlled by a central government is I believe so entrenched in our modern society and our modern thinking that it is Virtually impossible to think of it going away However, there is a constant struggle How much of a safety net is necessary versus? How much should we take away and force the independence that you talk about people being independent? Supporting themselves or their family helping those in or friends or church Charities helping those that need help rather than the government provides you What do you think is the way the best way for? Those of us that believe the social safety net has become too strong and too dominant and has Reduced basically all of our standard of living. What's the best way for us to? To explain and and get the word out that that yes The safety net is necessary. We would prefer the church does it But if the government does it it should be smaller How can we help convince people and help them understand sure that they don't need the government to provide everything? So let me before I answer that question Let me challenge an assumption you've made because I actually don't agree with it The assumption is that the powers to be get their power from The people who want well distributed in their direction and this is kind of their Mitt Romney I don't know if you follow American politics. Mitt Romney made this 40 49% comment 49% of Americans get stuff from the government. So they're gonna vote for for the left, right? They're gonna vote for more. Well, that's not reality reality is that rich people vote for the left as much as poor people vote for the left that Educated people vote for the left in America more than uneducated people. It's actually people who successful actually It used to be the opposite It used to be that educated people voted for more freedom if you will for Republicans if Today over 50% of people with a college education vote Democratic So I you know, I don't think that's true. I think they're motivated You know people are motivated by guilt as much as they motivated by I want stuff and a lot of people who Are in the who are getting stuff from the government would rather not get stuff from the government Want to vote for freedom and this is I think the key So I'm against the safety net a government sponsored safety net. I believe that any safety net should be voluntary and I think you have to fight for that you have to fight against the idea of a course of safety net Because if you're just fighting to shrink the safety net, you're not fighting on principle. What's the principle? Giving somebody a thousand bucks is too much, but 400 is okay. Why? Why not? It's like the minimum wage, right? In America today, it's $7. They want to make it $15. I would say why not make it $100. I Mean if the minimum wage works, why not make it $100 everybody can be rich Of course, then they realize that that can't be right. You have to fight for no minimum wage Because otherwise it's a slippery slope. There's no reason not to make it high There's no way if you want to accept the safety net you lose control over how big it's going to be She have to make the case that a safety net is Bad for two reasons one It's cursive and We have to make a case that corrosion is evil Corrosion is bad taking a gun Sticking at somebody's back and saying give me your money is wrong It's wrong when an individual does it in a back alley in the street and it's wrong when the government does it by Pulling the money out of your paycheck without you even having a chance to get it You're in the middle of your answering the question, but I have to interrupt Some people believe that corrosion is a necessary evil to provide the sufficiency. Yes Yeah, I say there is no such thing as necessary evils evil is evil is evil Just because you want it just because they need it Doesn't make it necessary Evil is evil. Just the fact that we use necessary evil Suggest that something's wrong here, right evil should never be necessary Only good should be necessary So corrosion is wrong. I give you an easy example a simple concrete to remember it Let's say my neighbor Is sick or his child is sick make it more emotional His child is sick and he doesn't have enough money for the treatment Dying the child is dying doesn't have enough money for the treatment He only has two Options I have money. Let's say he can come to me and ask me to help And I might help But I might you might not but I might not Maybe my children need the money right now. Maybe I don't have any money to spare Maybe this Neighbor is a really really bad guy There are many many reasons why I would not help there are so many many reasons why I would but it's my choice He can ask for my help the second alternative is he can pull a gun out and Force me to help nice. He literally did that. We would say he's a crook He's a thief even though the cars might be good. We would say that's wrong You can't pull out a gun and take my money and we would put him in jail. Ah But this is now he pulls a trick It's a mind trick, right? He goes to all the neighbors And he says I want his money. Let's vote on it and we vote and 51% of the neighbors say yes, we should take his money and now when he pulls the gun at me and takes my money away Now it's okay We took something that's clearly immoral clearly wrong Clearly identifiable as theft and by voting turned it into something. That's okay So democracy is actually abused or abused for illegitimate legitimate reasons democracy has always been abused To violate the rights of an individual in the name of the majority think back again to Greece Think of Socrates. Everybody know Socrates the great Greek philosopher everyone Walked around town and used to ask young people questions right the dialogues if you've studied Plato You know the dialogues and he was corrupting the youth He was challenging the ideas of the elders. He was challenging religion So the people in Athens said who this is bad. We don't want Socrates challenging Conventional wisdom. We don't want Socrates challenging religion. We need a silent Socrates So they got together and they voted to silence Socrates now. What's the only way you could silence a philosopher like Socrates? By killing him So they voted to kill him right, so that's democracy full democracy is when the majority is Controlling the individual your majority impose herself in the minority now. Let me give the second reason I still owe you another reason right to argue against so one is the coercion is evil and And that you know, I haven't really justified the quotient is evil fully, you know, there's there's a lot of literature on that by Iron Man It's it's the fact the quotient is the enemy of reason But but we don't have time to get it to the whole argument. The second argument is that when you give people money Particularly when it's unconditional like the welfare state you're destroying their lives It goes back to my point earlier about where we get self-esteem so by offering help you're not helping them You're not helping them unless you're helping them as a one-time thing in an emergency, which is what the old safety net used to do When the safety net is voluntary, it's not perpetual You don't live off of charity anymore charity is there for emergencies Charity is there for for a while something bad has happened and to get you back on your feet It's not to be perpetual support when you give somebody perpetual support. What happens? You disincentivize them from work And if they don't work, they never have the sense of taking care of themselves They never make something for themselves. They're dependent They're not independent. They never get to use their mind to solve a problem They're just sitting in couch potatoes watching television getting checks on the government So you deny them pride. You deny them self-esteem. You're destroying them The recipient of welfare is the victim of welfare Welfare is a way to institutionalize people into unhappiness. It institutionalizes them into poverty Opportunities are taken away from them. It's bad for the recipient if you care about people I care about people I care about any person who's ambitious who wants to make a better life for themselves Giving them a check doesn't help them It makes them worse Giving them opportunities giving them a job that helps them that gives them that gives them real Opportunity so you're just a given example that a friend of ours John Allison uses Which is actually out of his own personal experience his grandfather John Allison John Allison is a CEO of one of the largest financial institutions in the United States or was he's retired now 10th largest bank in the United States financial He was a CEO for many many years he built the bank up to become this big so very successful individual And he tells the story about his grandfather His grandfather was a bricklayer very poor Worked with his hands laid bricks made very little money But he made money He fed his family He whatever he came back to a little home and the food was simple, but it was food. He was providing So he had an immense sense of pride That whatever it is that he was providing he was providing He was capable of taking care of his family in this world and whatever level he could Providing his children with an education and maybe one of his children or one of his grandchildren would be the CEO of a great company one day But that sense of pride that you to care of yourself and your family you deny that when you give people welfare And that's the way you destroy their lives So if you care about the poor the poor or at least those among the poor or ambitious you should hate welfare You should hate the safety net. It doesn't help them. It destroys them So you're totally against the idea the very idea of coercive social safety net or welfare Because it destroys productiveness and Perpetuate dependency. Yes, and I would say that even if it was voluntary Even if it was the same thing it was perpetual. Okay, I would be against it I would be for charity that helps people in emergencies or that helps people who really can't take it themselves They're sick, or they were born with some You know some Lack of capacity that makes it impossible to take care of themselves But that's a fraction of a percent most people can take care of themselves And then they need help to get back on their feet when something bad happens to them. That's the kind of charity That is helpful to human beings. Thank you and the back Thank you for your time and coming today and I have a few questions actually one is I think I don't know if you've touched the topic but The one is the concept of equality of opportunity. I think even is of opportunity, you know every had it everyone has The right to you know to actually develop themselves but some people like you know Africa people they didn't have maybe the Capital or whatever to actually develop or flourish themselves. So how does I think this is kind of part of the safety network to but How does in rain? Things and how do you think about this topic and let me let me take the questions one at the time? Because I can't remember. Okay. I'm getting old It's true. I I think equality of opportunity is a is a real misconception There's no such thing we can't equate opportunities Right, some of us have go to good schools and have what connected parents and you know and others don't and the only way to try to make it a little bit more equal is By denying some people opportunity for the sake of other people and then again, you're back to coercion So what I'm for Is a different type of equality? I think the only type of equality that means anything that is real any time You think we want equality of X and you know that equality of X is impossible metaphysically impossible because we're all different some things wrong with the statement equality of X What equality is possible? The quality that the founding fathers talk about in the in the declaration of independence You know where all men are created equal That equality means equality of freedom equality of rights Equality before the law, but where the law is a law that protects rights We're all we're all born free We're all born with the right to pursue our lives free of coercion No matter what color skin we have no matter what ethnic background we have no matter what Man woman We're all born free That's the only equality that exists Now that a political system that respects that that preserves that equality of freedom that equality of rights is Also, I believe a political system that maximizes opportunities Rather than equate opportunities Maximizes opportunities for everybody. So if you're a poor kid Born in a free society you have more opportunities Than a poor kid born in a socialist equal opportunity society Trying to equate opportunities. So I want a political system that maximizes opportunity doesn't equate it So when I think of Africa, I want to maximize opportunities for people in Africa. How do you do that by making them free? How do you provide capital to Africans? There's a wonderful book by hinanda de soto hinanda de soto a great Peruvian economist an economist from Peru called capital ideas And this is what he says he says the problem in Latin America and the problem in Africa of poverty Partially is because people lack capital But they don't really lack capital what they lack is legal recognition of the capital that they have So they don't have title over their home They don't have title over the land that they have but that is just government creating laws that protect rights Government doing away with a feudal system that still exists in part of Latin America and part of Africa But if we recognize a farmer's right to the land that he's farmed for generations Suddenly they have capital and when they have capital They have opportunities So the way to solve the problem is to establish the rule of law and when I mean by the rule of law is a rule of law That protects individual rights all the other problems go away Thank you. So I think this is I have another question. Sorry is okay Go ahead is is about like when you talk about, you know, I'm free to do whatever I do what I what I want and Then for example, there's some common social kind of problems like for example unemployment and education and and these It's a will I think will like economically creates an increase the crime rates, for example so if Socially you want to decrease the crime rates because you want your child to be safe I think like just thinking alone on yourself and if you want to pay, you know, whatever It's a safe network. It's linked. It's kind of linked But it's I just wanted to know about how in rent think about this need and how people should Take about like take care and and the last question is how did she think so you think about Japan how the this kind of social economy actually growth such as The level that is right now and it was it's not capital means we're like socialism From from my view, I think it's a mixed economy. It's a mixed economy like everything. Okay, let's so let's so See you asked two questions I can't remember the first one one word about the first one was it Yeah, social problems. You mentioned education and employment crime so The government's job in my view its only job is to protect me from criminals So the government should do its job There's also no evidence in the literature of a correlation between crime rates and and unemployment for example, so We live today suddenly in Japan, but I would say really globally We live today in the safest least crime-ridden Period in human history They've never been fewer homicides Mooders, they've never been fewer rapes. They've never been fewer deaths by war Then in all of human history, this is the safest time ever and Nobody know, you know, there's not it's a clear why I mean I have a theory, but it's not clear why it's certainly not related to an employment or employment So I ran would say there are no such things as social problems Individuals unemployed and They're much more likely to be unemployed the bigger the status. It's fascinating, but capitalism when industry is left alone It always everywhere. It's tried creates more jobs than there are people Think United States during the 19th century In order to keep the economy going add to import millions and millions and millions of people in order to keep it going Indeed, even the United States today in spite of all the mixed economy. We still need millions of immigrants. I Mean partially because some Americans won't do certain jobs. They'd rather collect their welfare checks than actually go to work But you know Silicon Valley we talked about Silicon Valley during the talk I lived there in the 1990s and dabbled Very badly in some venture capital and stuff like that half the startups in Silicon Valley are started by immigrants Indians Chinese Israeli Swedes half so You know itself generating capitalism generates more jobs than there are people and there's actually an economic reason for that people are scarce And therefore you innovate in order to reduce your dependency on people So all these problems are really eliminated by freedom and Those that are not like crime. That's the job of the government the one job of the government The only job of the government is to rid ourselves of that is there is the police It's to create that so there is this notion that I hear sometimes some people is We should vote for statism Because if we don't the poor will rise up and there'll be a revolution against the rich and And I hear a lot of that rich people always say this to me Oh, I I I want a big safety net because otherwise if we just leave poor people alone that there'll be a revolution But if you look at human history, it's never happened in a free country True in in France in the 18th century, but that's because there was a king and what did what did Marie Antoinette say? You know, let them eat cake You know, she was so detached From from from the reality, right because we also actually but but in a free economy where people rise up and they go down and There's never been a revolution of the peasants, right? There was a religion in Russia because there was a saw But not because there was freedom. Okay, so that's that's the first question the second question very quickly about Japan. I mean the fact is that Countries do well economically to the extent that you allow them to be free post-World War two You had a constitution That allowed for quite a bit of individual freedom the Japanese Constitution is the only constitution in the entire world that has the statement that Individuals have a right to life liberty in the pursuit of happiness which MacArthur put into that which doesn't even exist in the American Constitution but exist in your Constitution So you have a strong element of freedom and a and have individual rights even if it's not Completely absorbed by the culture. It's there in the legal code to some extent so that you've had a lot of freedom And therefore you've done well economically To the extent that you reduce that freedom You stagnate and that's what happened to some extent over the last 20 something years And the same is true everywhere when you allow the Chinese a little bit of freedom boom They exploded with economic growth when you like Thailand a little bit of freedom They create economic growth when you reject it they shrink so it's all connected to how much Imagine how rich you would be here in Japan if You really were free economically if the government really stepped back and allowed you to produce and allowed you to creative Creative destruction if that were allowed in Japan Wow Wow, you would be so rich. It's hard at first to imagine how rich We're so rich today in spite of the mixed economy not because of it I Realize we have only have a few minutes left. I think the last last question Yeah, I know that the time is almost up So let me ask you a quick question my question is about the speculation in the financial market Or what do you think of people who are playing money game? I mean because I know that the investors like Midas Milligan in Atras Shagged are very important because they help create values by investing money on the promising project and well productive Entrepreneur or great innovation ideas, but some people invest money for just for money So what do you think of that kind of people? So I mean the fact is that people who invest money Without contribute anything. So so dumb money Just to try to speculate lose it So they don't survive in the financial markets the financial markets are very Survival of the fittest focused and what does it mean to be the fittest? It means that you're adding value now. How do you add value? Let's say in the stock market. You're not doing like Midas Mulligan giving money to entrepreneurs You're just exchanging in the stock market But somebody like Juan Buffett Adds value. What is the value he adds? It's the knowledge of What the real value of the company is and when he buys it? He's affecting the price and by affecting the price. He's making the price signal more efficient Which affects the allocation of capital throughout the economy? So financial markets in my view are The most important markets in an economy Because they signal not just whether entrepreneur X get money or entrepreneur Y gets money They signal which industry should get money or capital which shouldn't Which industries are on the rise and which industries on the decline? They signal and therefore Determined the allocation of capital throughout an entire economy So if you're a hedge fund people say oh hedge funds are not productive No hedge funds incredibly productive because they're trying to evaluate and determine whether the price signal is accurate And they're trying to make it more accurate by including the information that they have that nobody else has into the price They're long some stocks and they're short other stocks and shorting Shorting is terrific. I love shorts Because the shorts are saying this stock is overvalued People think it's more valuable than is and if they're wrong, they're gonna lose a lot of money I mean you can lose. I don't know how much you you guys know about finance But when you short a stock you borrow it and sell it you can lose an infinite amount You can only make that you can only double your money, but you can lose an infinite amount I can speak from experience. I've lost an infinite amount shorting or close to an infinite amount a lot of money So I give you I once shorted it a stock with it was somebody else's money $250,000 and I lost a million dollars on that investment That's pretty crazy an investment of 250 and you lose a million. That's what happens with the short So what these people are doing is they're confident that something's overvalued by doing that they're pushing it down say imagine imagine you running Let's say it's 1910 and you run the best buggy company You know what a buggy is it's what the horses pulled right you run the best buggy company in the world And your stock is way up there and I'm a small I run a hedge fund and I noticed Ford And all these other guys building automobiles and I'm saying You're not gonna survive, but you don't know it because you haven't noticed those guys And I short your stock and by shorting your stock. I'm starting to drive it down And maybe it causes you as the CEO of the company say what's going on? Why is my stock going down and you look around? Oh, there's an automobile company. I Bet a retool. I bet I look for a different job Right and other and the bankers are looking at it and saying why is the stock going down? Oh, there's an automobile business there. Maybe I shouldn't lend these guys any more money Maybe I should shift my resources. So the stock price Signals to the world. This is a dying industry. This is an industry on the rise So it's a it's it's an incredibly productive activity incredibly important activity And and I admire I mean my view is In a capitalist economy the most productive and the most important people are the financiers Because they make possible everything else Steve Jobs Can't start Apple without Midas Mulligan Giving him that first check and there was a Midas Mulligan, right? Giving him that first capital you can't imagine a biotech company That for ten years doesn't have a product Yeah, it's a classical biotech company ten years Somebody is willing to risk their capital for ten years might never get a return might go to zero and yet all these workers The lab workers the scientists all get paid in the meantime They're not willing to take the risk they get paid So without the capitalist the scientists don't get paid the janitors don't get paid the workers don't get paid The capitalist makes it all happen. This is why it's called capitalism Because it's the core. It's what it means the financier is Is the engine of capitalism or I like to call it the heart of capitalism and The circulatory system of capitalism it circulates the blood the capital. That's the financial system So it's incredibly productive, but people who are not productive, but are just playing finance They lose their money very quickly. It's just like playing roulette You might win once you might win twice, but if you keep playing you'll be wiped out Thank you. Yeah, wrong. Thank you all. Thanks for staying up so late Come again to Tokyo be happy to thank you