 We right now we have a period of time for questions and answers from the audience so I hope we puzzled you enough or peaked your interest enough that We couldn't possibly have answered all of your economic questions here, but we're gonna try now. So does anybody have any questions? Yes Yeah referring to the numbers from Robert Higgs that I mentioned and presented The question is are we in a real recovery? Well, I think what this indicates is that we're not in a real recovery that You know given all the stimulus that's out there all the deficit spending and the Quantitative easing all of that stuff that the government is using to prop up gross domestic product That further suggests that we haven't reached a return to normality now I would suggest that Real net domestic private investment the 100 index in 2007 was probably too high They stimulated the economy too much and as a result we got the business cycle which took us down But I you know at a number 40 percent below that more than 40 percent below that indicates that Entrepreneurs are still not willing to invest if you look outside of the aggregate number And that's the first thing Austrians do you you see an aggregate and the first thing we do want to do is take it apart When Peter showed that cake, I thought I want to get inside that cake So if you look outside of that what you see is Record amounts of cash on corporate balance sheets So if you look at the major businesses other small business medium-sized business Local and regional business, but if you look at corporate America What you see is a record amount of cash on their balance sheets either held domestically or by their foreign subsidiaries outside of the US and That's a great indicator that entrepreneurs are very uncertain About in making investments because they're holding that cash rather than putting it to work with New outlets new businesses new products and things of that nature Remember that from our point of view What's what matters is not simply the level of investment, but that the specific goods and services that that investment is embodied in It's not just how much is invested It's what you invest in and the reason that we have our intercession in the first place is The the hangover effect of a previous artificial boom that was created by government stimulation of the economy interest rates near zero Entrepreneurs are investing in projects that are not consistent with the pattern of goods and services that consumers ultimately want There was too much investment in consumer durables and long-run investment projects recovery from for you know from from an Austrian perspective Consists of liquidating the bad investments and getting money redirected into good investments You know mark talked about the Chinese of you know phantom cities or the cake that was made by the central planners The government can certainly do that it can do a lot of investment, but it's not investment That's valuable. It's not investment that is in the right things So recovery means a painful period of liquidation and readjustment The Fed and the Treasury and Congress have done everything in their power to prevent any adjustments any Reallocation and thus any true recovery since 2008. I hope that was misleading when I I probably should have kept the the net part off of there So it's not to confuse anybody questions Yes okay, so the question is Imagine I'm just repeating just for people online Imagine that someone builds a supernet and manages to catch all the fish and doesn't leave anything for The other people is that still a good thing? But well the thing is that remember like I said in that one slide There's only so much fish that he can consume himself There's only so much good that he can get out of consumption from a Stock of fish as the stock gets bigger and bigger So again, the only way that he can benefit from the fish is to make exchanges with other people in the community And like I said is that every exchange is mutually beneficial. It's a win-win situation So eventually people will benefit not just him I would like to add to that add to that the because it's sort of a looming problem What if everybody or what if one person got in there and took all the resources and destroyed it and so on? those types of things do happen but They typically only happen in an environment where there's no private property So in the Old West The Buffalo were hunted to near extinction Because they were nobody's property and there was no private property allocation out west and so hunters Faced a near zero marginal cost of shooting another Buffalo and And you know killing the Buffalo off like that, but things like that only happen Where there's no private property? assignments where people have not been able to Take possession of property and so you sometimes do see problems like this in Public waterways and things of that nature where there's no there's no private property assignments But That It's a very poor method of tracking Economic growth if you have a market economy Where there is very little government intervention? It's somewhat reasonable. I mean it's a government accounting system You know if you so if you had a market economy, it's a reasonable Account of the production of final goods and services But there's a lot of problems with it In general Which the people who put these things together originally they laid out a whole list of why you can't use this to do x y and z And so from the very beginning it had a lot of problems And the fact that you have a lot of government intervention rigging the numbers on a regular basis Makes it even more problematic, but it's what is the standard of debate in the profession as it exists There have been some attempts by Austrians and other scholars to come up with better aggregate measures Looking at gross private product only Excluding government expenditures and so forth and these have some advantages relative to GDP But I think the premise of your question is is right that ultimately No measure like this is exactly a measure of well-being in an economy right because well-being is subjective and personal The amount of value or satisfaction I get from consuming goods or services is not something that's reflected in any number That could be summed up across individuals. So all of these measures I mean they do provide some information as crude proxies for things that are going on at a macroeconomic level But we should always take them with a grain of skepticism Dose of skepticism. Yeah, one thing that you might Google is Murray Rothbard and PPR it's a measurement that Murray Rothbard developed called private product remaining Question for individuals Okay, yeah, I did talk about the cash on corporate balance sheets and the question is about private savings and according to the statistics What happened over this business this past business cycle is that the private savings rate Which is one measure of the amount of savings that individuals do Outside of corporate balance sheets that private the private savings savings rate went down to zero during the boom and That's exactly what Austrians would predict is Because you know you think in a boom conditions people would be saving more But what's happening is the lower interest rate is encouraging investment at the same time. It's discouraging savings and the difference between basically real savings and real real amount of investment is you're going to get a lot of male investments or bad investments Now what happened since the crisis emerged in 2008 is that the savings rate has gone up To about 5% I think But that's still only half of what the traditional savings rate of Americans has been so it's You know we view savings as a good thing adding to the productive side of the economy And that's recovered according to the statistics about halfway back. I Would imagine so Yeah, I mean I think people are D-leveraging their own personal balance sheets as well Which is something that Keynesian economists are very unhappy about Right, but it's funny if you just start start paying attention as you read the newspaper You see something online or you listen to a news report about the economy how often the dominant The main focus is on total consumer expenditures Consumer spending went up. Yay. Everything's going great. Consumer spending went down G And you hear them say well consumer spending does make up a large Share of GDP therefore more consumer spending means higher GDP. We're all better off But if you think about this systematically starting with Danny's Presentation and going through marks you realize that that has everything exactly backwards and that what we're interested in is the free market allocating resources according to people's wishes absent Artificial intervention and stimulation from the state, but I mean what what the economy needs right now in practical terms is less Consumer spending and more savings and that's exactly the opposite of sort of the conventional wisdom you get from New York or Washington, DC or whatever Yeah, it's basically saying like the people on the island saying we ate so much fish today. We're gonna be so rich That's a great question because it does draw another one of those distinctions where Austrians and mainstream economists basically have a completely different point of view and a different form of analysis And ours is better of course. Yes We're right Any other questions? Yes, no savings is not the same thing as Decreases in the velocity of money which is a statistic designed to measure the number of times the average dollar Is in circulation? So those are somewhat distinct Concepts savings is taking away Consumption and making it available for investment. Yes Is Okay, the question is if savings is a good thing would it be better to tax spending rather than income So Murray Rothbard what the point that he would always stress is that people pay too much attention to the kind of tax and What's more important is the height of the tax? and so And in man economy and state he explains how all taxes Eventually get borne by land and labor and so really Again, that's what's more important Related to the brigands someone posted a question on on YouTube Saying that well the government protects us from Brigands, so it doesn't make sense to think of them as brigands Now if you go back to the story and and you think about it So say the brigands come in and they become kings and nobles and they plunder through taxation Are they gonna like it if other brigands come in and start looting their subjects? No, why not? Yeah, if if if if other brigands Loot the people and makes them poorer then it's less for the Government brigands to plunder so it makes them poor. So of course, they're going to want to To protect them from other brigands because they're saying hey, these are our victims Get to stay out of this With with the mob with a mafia is what you call a protection racket But with the government we call it the social contract Just again a small comment on consumption tax a lot of people have proposed Replacing the income tax with some kind of maybe a value-added tax or some other kind of consumption task It's an interesting point But to echo what Danny said in addition to the level of the tax being more important than the specific collection procedure There are also a number of interesting Practical and sort of political difficulties. I think with most of those proposals So that their proponents have in mind that we will Institute of VAT or some other kind of consumption tax and then after that start, you know reducing income taxes and Other kinds of business taxes on business and so forth, you know kind of politically speaking It's that doesn't seem like a very wise strategy Because a new tax almost always historically has simply been added on to the set of existing taxes I think it would be very difficult to strike that kind of political bargain where you could actually get a Substitution rather than the addition of yet another tax. I Think that also points out how the Austrians are different from mainstream economists mainstream economists sort of reinvent, you know invent these ways of making Alterations in government that supposedly will make us better off if all the equations work out correctly and all the estimates come out Correctly Austrians are very realistic about their economic theory but we're also realists when it comes to economic policy and You know a tax government almost never gives up on a tax gives up on a regulation Gives up on a bureaucracy. They're sitting on like 29,000 empty buildings that they refuse to sell off They never give things up. They only are interested in taking more. Remember that Richard Nixon August 15th 1971 took us off the gold standard Temporarily to what extent our taxes constitutional that's it's that's a Political question and a good question. I mean the Constitution does explicitly provide for certain kinds of government fees You know, it depends what you mean by Constitutional does that mean what was in the original document or what most people think what? Constitutional means today is whatever is the latest decision of the US Supreme Court So by that standard everything that the government is currently doing is constitutional if you mean, you know Did the founders have in mind anything like the kind of system that we have today? I think you know the answer is obviously not just to give you one illustration when the income tax was first introduced during the progressive era or you Know in the 19 teens the top the top marginal rate was wasn't 2% So the most that you could be taxed even on your you know Your extra income at the very top was 2% and a lot of people thought that was outrageous But that was the only way they could get it passed by promising that Most Americans would never pay any income tax only a few You know millionaires and the amount they pay, you know would be teeny tiny So that's one way of you know, what would the the voters and people in Congress who approved the income tax in 1913 what would they think of the current tax structure or the tax structure in the US in the 1970s and 80s I Suspect they would be somewhat surprised Now one thing is that the income tax For certain periods was considered Unconstitutional and but they actually amended the Constitution with the 16th amendment which allowed for an income tax Even though before the 16th amendment Abraham Lincoln actually imposed an income tax anyway So yeah just As we learned just a couple of years ago, you know, the Supreme Court has now decided that a Law requiring people to purchase goods and services from private vendors namely health insurance contracts is Constitutional because that's a form of tax So to answer your question, we'd have to say what does the Supreme Court think that taxation is and apparently any Expenditure that the government compels either to the government or to a private company could be considered a tax and according to the Supreme Court It's constitutional Oh, you've heard of the Articles of Confederation That's the document the agreement between the states that Americans used to defeat Great Britain and become independent of Great Britain There was no power to tax under the Articles of Confederation The only thing that they could do is make requisitions from the states and so they didn't have a taxing power and Everything worked out pretty well except a small number of states within the Articles of Confederation could block anything so a minority of states You needed more than a majority in order to pass something and so the delegates would go there and meet in Philadelphia and They couldn't tax and It was really hard to pass anything and that little small states could block the big states from doing certain things and the big States could block the little states for doing certain things and So it wasn't fun as far as politicians go So they decided to rip up the document start over again with the US Constitution, which does have some taxing powers in it Okay, thank you very much. It's been a great day and again, I really Especially like to thank the donor that made this event possible. I think it was all worthwhile. Thank you