Hello, everyone. Over the weekend, we've seen Ontario, Saskatchewan, New Brunswick and Alberta all report new single-day highs of COVID-19. Just yesterday, PEI and Newfoundland and Labrador left the Atlantic bubble as cases increase on the West Coast. And a few days ago, our government approved a request for assistance to deploy in a long-term care home in the Opus Quayak Cree Nation in Manitoba. As they always do, our brave women and men in uniform are stepping up again to support Canadians and help provinces get the situation under control. The cases we are seeing are extremely concerning, and the federal government will continue to be there for people and small businesses every step of the way. As of yesterday, applications opened for the newly launched Canada Emergency Rent Subsidy.  If your community is in lockdown, we're adding an extra 25% help for commercial rent through the new lockdown support. Combined with the rent subsidy, you could have up to 90% of your rent covered. To help with another big expense for business, payroll, the wage subsidy has also been extended until June of next year. These programs are just some of the many measures we've introduced to have the backs of business owners and workers alike through this second wave. Go to canada.ca slash coronavirus to find out what supports are there for you. We know that this second wave had the potential to get really serious really fast, and we also knew that we had to be ready to do whatever it takes to get it under control, because at the end of the day, lives are at stake. I know you get that. I know you're worried about the people around you. Last Tuesday, I got an email from Jackie in Edmonton. Jackie's worried about her husband who works in the school system. She's worried about her grandparents and parents-in-law who are in long-term care homes. She's worried about her kids. Jackie, I hear you. You're right. This is a tough time, and I want you to know that you're not in this alone. Our government's top priority is to keep Canadians safe. That's why every step of the way, we've been supporting the provinces so that they can make the right decisions for you. Our supports for businesses and for people mean that local officials don't have to choose between people's health or the economy, and we've been supporting with supplies as well. As of last week, we've sent over 300,000 rapid tests to Alberta and 444,000 face masks. The federal government has also provided $1.3 billion to the province for everything from PPE to contact tracers through the Safe Restart Agreement with another $260 million for schools in Alberta through the Safe Return to Class Fund. And that's just some of the support we've made available for people and businesses in Alberta, just like for everyone across the country. No matter where you live, we will continue to be there for you, through this second wave and beyond. Our main priority is to ensure Canadians' safety, whether it's to buy more equipment or individual protection, to increase the spread or to invest in research. That's what we're working on. Since last week, we've provided more than 2.9 million face masks to the provinces and territories, and others are coming. We've also sent 4.6 million rapid spread tests, and millions more are coming. People need this essential help on the field. We will continue to do our part and provide the equipment they need during the weeks and months to come. It's essential to buy and distribute equipment and rapid spread tests, but it's also important to find a vaccine that's safe and effective if you want to win COVID-19. Not too late. We've had promising news regarding AstraZeneca's vaccine candidate and Oxford University. Canada has already negotiated an attempt to receive up to 20 million doses. This vaccine is part of our entire range of potential vaccines for Canadians. And when we have a vaccine, the good material to administer it will be essential. Until now, we have received more than 24 million doses of syringes and needles, and other deliveries will be coming every week. It's part of the strategy we've set up to be ready when the vaccine is ready. We know that everyone will not be vaccinated at the same time. We will have to establish priorities. But everything we do now will help us vaccinate Canadians as quickly as possible. To keep Canadians safe, we need access to as many potential vaccines and treatments as possible. Today, I can announce that we've signed a deal to secure up to 26,000 doses of a therapeutic drug from Eli Lilly with options for thousands more. This treatment was developed in partnership with Vancouver's Abcelera Biologics and is part of our support for researchers right here at home who are working around the clock to find a treatment for COVID-19. So to the scientists and researchers across the country, thank you for everything you do. Just like always, your dedication and expertise is making Canadians healthier and safer and is building a better tomorrow. Canada is lucky to have thousands of world-class scientists and researchers as a government. We will continue to be there every step of the way to support you in the work you do. Today, I can announce that we've signed a deal to secure up to 26,000 doses of a therapeutic drug from Eli Lilly with options for thousands more. This treatment was developed in partnership with Vancouver's Abcelera Biologics especially thanks to the support we've provided to researchers who work hard to find a treatment here in the country. We will continue to support our scientists and researchers who have nothing to do to find a safe and effective treatment against this virus. And I want to thank them for everything they do for their country and for the world. The news about promising vaccine candidates that we've heard in the past few days is reason to be hopeful. Our government has worked hard to secure tens of millions of doses so we're prepared once a safe, effective vaccine is ready for Canadians. But we cannot be complacent now. Remember, if you catch COVID-19 this week, a vaccine in the coming months won't help you. We've seen restrictions increase across the country over the past few days and Canadians are taking extra care to stay home. But I want to remind you, nothing that we do today will bring the numbers down this week. This week's numbers were already determined by behaviors last week and the week before. What we can affect today is what our country looks like a week, two weeks from now. So continue doing your part to keep yourself, your family, and your loved ones safe. Stay at home, wear a mask, avoid social gatherings, especially indoors, and don't forget to download the COVID-19 app. It's easy, free, and quick, and it's incredibly powerful. Just ask Sasha from Toronto. Sasha downloaded the app and two weeks ago it notified him that he'd been exposed to someone who'd tested positive for COVID-19. Sasha always wears his mask, sanitizes everything, and felt just fine. But he did the right thing and went in to get tested. Well, the test came back positive. He'd been asymptomatic the whole time. If Sasha hadn't had COVID alert, he would never have known. But because of the app, he found out and then was able to self-isolate and keep other people safe. He and his family are almost done their self-isolation, and they've said that they want everyone to know about their story so that as many people as possible use the COVID Alert app. To Sasha and his wife Kate, thank you for doing the right thing in getting the app, getting tested, and then staying home. And thank you for sharing your story to encourage even more people to make the smart, responsible choice that you did. The more people download this app, the stronger it becomes. So join the over 5.4 million Canadians who, like Sasha, have downloaded the COVID Alert app. Yesterday, I had the opportunity to talk to students and teachers from the Catholic School of St. Martha, Kingston, Ontario, with our local deputy, Mark Gerritson. So I would like to conclude today by addressing directly the teachers and the staff who are in charge of this app. And I would like to say thank you to all of you for being here today. Thank you for being here today. So I would like to conclude today by addressing directly the teachers and the staff who are in charge of educating our children during this test. I know that this year has been difficult. I know that you will continue to do everything you can to help our children, to raise our children, to teach our children. But it's really not easy. You put yourself at risk, but you will do everything you can to support our children and their parents. Thank you. I know the kind of commitment it takes to be a teacher. I know what you do as a teacher, and I can assure you that all Canadians are deeply grateful to you. Continue your excellent work. Continue to be here for us, as we will be for you.


I tried to open with a joke, but I was listening to Dr. Woods's lecture yesterday. And I thought I'd better open my lecture tomorrow with something that I'm grateful for, because otherwise I get on the naughty list, and he was pretty convincing that you don't want to be on that list. So I thought, I am pretty grateful for this week, because even though this is what I do for a living, whenever I come here, I get really anxious and apprehensive. You might have seen me pacing around there.  Last year, when I gave this lecture, I think I used the word yes, a punctuation mark. So I'm very kind. YouTube commentators pointed that out to me. But the reason for that is not only that I have most of my mentors sitting in that corner of the room that I'm going to avoid throughout the lecture today, but that we have students in the room that really want to learn. And that really makes us step up and really be at the top of our game. So this is why I'm grateful for Dr. Woods. All right. So this is particularly the case when one is tasked to do one of the fundamental, one of the core lectures on Monday, because we're dealing with fundamental concepts, and it's absolutely crucial for you to get these concepts right. If you are to understand what are the foundations of economic science and where particularly lie the differences of how Austrian economics explains to you the market and the real world. And this is the case with the concept of division of labor and the relationship between the concept of the division of labor and that of social development. So what I thought I would explain to you today is how these two concepts are related. In fact, they underpin each other. How they are, in fact, division of labor and society two sides of the same coin. So in order to do this, I thought we would first go through how the theory of the division of labor has developed in history, just point out like the salient historical moments when the political economy, if you want to division of labor and how it evolved. And then we're going to talk a little bit about a few fundamental concepts in terms, laying obviously emphasis on how Austrian economics understands these concepts in terms. And then the core of the lecture are points three and four, which is Ricardian's comparative advantage over the law of comparative cost. And I'll give you numerical examples both in terms of physical productivity and the more realistic version in terms of in monetary terms. And then point out some of the characteristics that the Misesian law of association has that add richness to Ricardo's original insight on comparative advantage. And finally, as our time permits, we're going to talk a bit about implications of Mises's law of association on trade society and social order. So the concept of division of labor began to be studied fairly properly in about the 13th and 14th century. Now the seeds of this had already been planted by some ancient Greek philosophers like Plato and Aristotle and some Chinese philosophers as well. But it was in the Latin Scholastic thought that this began to be treated like a proper question, though it was related primarily to moral and philosophical issues rather than economic issues. The question of the division of labor became one more economic in tone with the Scottish Enlightenment and the development of what we now call the classical economics, where the question became, why does the separation of employment between persons bear important economic consequences? The most famous formulation and the most famous description of the division of labor was obviously in Adam Smith's Wealth of Nations. But I would like to point out here just as we go along that there's a crucial element to the way Smith described the evolution of the division of labor. And he ascribed the evolution of this phenomenon to an instinctual propensity to exchange in individuals. Individuals have this instinctual desire to trade without the people and as a result of that they're economic bonds that are created and as a result of that we have exchange in the market being formed. I think Adam Ferguson put it in even better terms exactly what Smith meant when he talked about nations stumbling upon establishments like the market, like the division of labor, which are the result of human action but not of human design. So they took away any kind of idea of rationality and purposefulness from this evolution of the division of labor. And this was further taken by Marx and other writers to mean that the world in a way is being propelled through subsequent stages by some type of material forces. So that's why you have the world going through stages of capitalism and then bringing about the advent of socialism and so on. About the same time this was happening in Britain in the 18th and 19th century, the French liberal school in France was also treating this topic of division of labor. However, for them and particularly one of the French liberals, Antoine de Stoudietracy, the focus fell primarily on the idea of rationality and purposefulness. On the fact that the individuals are able to see the benefits of the division of labor and they act in accordance to reap those benefits and this is what creates the social bonds. It's not an instinctual propensity to exchange but it's a rational and purposeful recognition of the benefits that the division of labor brings to individuals. Now, Smith's analysis and obviously after him that of Ricardo and John Stuart Mill was adopted into neoclassical Ricardian models but these models because of the mathematical apparatus that was used to construct them are very narrow. They only focus on particular aspects of international trade. They're working on polishing the mathematical aspects of it and they're working on fine-tuning them so that they can predict international trade patterns. So in a way, even the initial aspects that were in Smith and Ricardo's analysis are now lost in what we could call the neoclassical trade, the Ricardian models and in modern economics. However, in Austrian economics I believe that not only the original richness of Ricardo's theory of comparative advantage but also the added elements of Mises' law of association have been kept and it's in on this area that we will focus in the remainder of the lecture and explain the importance of the concept of division of labor not just in economics but in explaining the evolution of society as well. So just as I talked about this last year I'd like to start with definitions.  So generally if you ask like the general definition of division of labor people will tell you that it can be defined something like a division of a process of employment into parts each of which would be carried out by a separate person. I think this is pretty much what every one at first glance will understand that division of labor is about. However, if you we are to treat this problem in economic terms I think the definition that Professor Herbner used to use in his lectures when he used to give this lecture is much better and I'll explain in a minute exactly why. So Professor Herbner defined division of labor as purposeful specialization in production according to efficiency and this purposeful specialization applies to land and capital goods as well as labor. Now what this definition does is first of all it explains the ubiquitousness if you want the all pervasive element of the division of labor. So it's not just about individuals taking up different tasks. It's also about the specialization of the factors of production. So you can think now of the structure of production of the factors being used in different stages. That's what we would call the vertical division of labor and that's the entrepreneurs allocating those resources to those different stages. And so there's a vertical division of labor as well as a horizontal division of labor. And it also contains the the element of purposefulness which I was mentioning that's absolutely crucial. So the idea that I'm trying to get across here is that people are aware of the benefits of this specialization. They are aware that if they specialize themselves and their employment and the factors of production according to the relative efficiency that this will be to their mutual benefit. So that specialization takes place with a purpose, takes place with people's explicit desire to reap those benefits. And if you use the idea of purposefulness then you cannot talk about the division of labor and furthermore about international trade in terms of the what I call the incorrect unit of analysis which is that of nations. We know from Mises that nations do not act, nations are not purposeful, nations are not standalone entities endowed with rationality. So if specialization in order to take place and be beneficial needs to be purposeful then specialization can only be done by individuals. Specialization can only be done be accomplished by entrepreneurs who find the best process of production and build their firms in that particular area. So this is the kind of definition that gets that particular distinctiveness of the way Austrian economics understands division of labor. It gets that across very clearly. Now as to the where do the benefits of the division of labor come from? Now we're going to talk about this again as I'll explain. I'll give examples of Ricardo's comparative advantage, but just to mention it briefly the benefits of division of labor come from the fact that human beings and nature are unequally endowed with various qualities. So human beings differ from each other. Some of us are more athletic, some of us are more analytical, some of us tell better jokes than others and so on. Yeah, I'm in the second category and the factors of production are unequally distributed across the globe as well. In Romania where I come from we have great like land for pastures and so on here in the United States I mean it's so big that's a very high diversity. In the UK you know it rains a lot but that's where the industrial revolution was created and so on. So there was a lot of capital developed there as compared to like labor and land in other areas. So these factors of production are unequally distributed across the globe and that's where the benefits come from. Some areas would focus on producing other some goods, some individuals in some areas based on their qualities and the factors of production they have available will focus on producing some goods and others will focus on producing other goods and then they will trade each other and that increases productivity. Again, bear with me I'll explain exactly how in a minute. What I want to stress again and I told you I'm like a broken record in this regard individuals are able to grasp this. Yeah, individuals are able to understand that this is a beneficial thing to do. They don't just do it because they feel a need to do it. They don't just accidentally stumble upon it exchange and say hey that's interesting. Maybe I'll do that again. Maybe not. Yeah, they're able to grasp the fact and they are purposefully using it to improve their own welfare. Yeah, another thing that I'd like to get across at this stage is that division of labor is also not teamwork. Yeah, so it's just not yeah we love teamwork don't we? It's the best. My students love it too. I teach business and management so we have to we give them this oh this is how you're going to work in your workplace working teams and they hate it. So what division of labor is is not simply collaboration of individuals. Yeah, it's not simply two or three people doing the same task at the same time. Yeah, it's the division of tasks and the specific division making sure that each task fits an individual's abilities best. Yeah, and that brings about the maximum efficiency and the maximum productivity. Yeah, which brings me to my next point yeah just specializing just dividing tasks randomly if you want is not a guarantee that we will actually increase our productivity. So first things first we must be able to exchange the fruits of our labor afterwards in order to benefit from that. Otherwise we've just specialized and we don't actually have the goods that we want and this is where the argument from free trade comes from yeah because if division of labor is more productive than human labor in isolation you can reap those benefits by being allowed to exchange and that exchange needs to be free in order to fit with this pattern of division of labor that is given to you in any one it's indicated to you by the differences in individuals and factors of production. Yeah, and also specialization needs to be accomplished according to what I call market signals. Now we'll talk in a minute about money and money prices and what entrepreneurs see as money signals and what as market signals and what individuals perceive as money signals but the idea is the market I meant not money. The idea is that the market the market gives these signals to individuals and to entrepreneurs alike suggesting to know what areas of specialization they're best fitted to yeah. To give you an example because so you imagine imagine you're a young blues guitarist yeah this is Eric Clapton. Do you know Eric Clapton? Okay good see not that many. So imagine Eric Clapton instead of trying to work when he was young to be a blues guitarist and becoming one of the most successful blues guitarists would have said I would rather be an economics professor yeah that's that's a specialization decision and an economics professor this is what I spent most of my time when doing this lecture trying to find the pictures to fit would have said I want to be a blues a blues guitarist yeah now that would have been a specialization decision would have that been accomplished according to market signals no the market unfortunately for Dr. Salerno wanted Eric Clapton to be a blues guitarist and wanted Dr. Salerno yeah the best the maximum productivity the maximum efficiency from specialization was this in these two lines yeah um Eric Clapton was the blues guitarist and Professor Salerno was a notable modern Austrian as he himself calls um um now do you want to do you want to see how they look like now yes you do so this is Eric Clapton now good well that was that was that was worth five hours of my time trying to find the good yeah so now I was just to wrap up on the idea of concepts and and and terms and definitions so I'm gonna also try to get across to you the fact that we do talk about recording comparative advantage and division of labor in a very simple sort of analytical way but if we are to really discuss it have how this actually happens in the market we need to take into account that the real world in the real world we have a monetary market economy yeah so real productivity schedules like real prices already don't no longer exist yeah we have money prices so the money prices are the the tools that entrepreneurs are the signals that the entrepreneurs use in order to be able to calculate special lines of specialization yeah the monetary income is what matters for individuals when they choose their line of specialization yeah again I don't think professor Solano would have been paid as much as he is now as a blues guitarist and equally Eric Clapton would not have made the money he's making now economics professor duh um yeah and also kind of to to bear in mind that we are talking in this particular lecture about a perfectly free market yeah and the results of of what happens the benefits of division of labor in a perfectly free market but do bear in mind that somewhere behind there are looms this idea of government intervention yeah and um government intervention what it does what I'm going to try to explain to you is that not only that it hampers the development of the division of labor not only that it hampers um the way um the pattern of specialization but it affects the very fiber of society as well yeah I keep announcing it but we're getting into the meat of things right now so here's the first numerical example of of the law of comparative cost yeah so imagine you have a bakery um again traditionally this is done in terms of nations is portugal in england and wine and cloth and so on but I think this is actually you know to stick true to what I was saying that that's an incorrect unit of analysis I think this is a better way of explaining it so imagine that you have a bakery where the owner is Catherine and she's thinking of hiring James to help her around um now Catherine has been doing this for a while she has enough experience she knows the recipes for the coffees by heart and she's baked enough pies to not have to check them every single minute so she's fairly productive yeah she can in an hour she can make 40 coffees or two baked two pies you know now James is only starting this up he's 18 he's just finished high school he's trying to think about what to do with his so this is a temporary job for him so obviously he doesn't have the experience nor perhaps even the dedication that Catherine has at this moment so it takes him a long time to figure out how to do the coffees yeah it takes him a long time to figure out the the recipes so he can only produce 10 coffees in an hour or one pie now you would think looking at this that Catherine has absolutely no reason to hire James she can obviously produce in an hour both more coffees and more pies than he can yeah so you can say that Catherine has an absolute advantage in both coffees and pies and James doesn't have an absolute advantage in anything so you would think there's no need for these people to specialize to to exchange there's no need for these people to enter in an economic relationship whatsoever but remember as I was saying Catherine has a lot of experience she's been doing this for a while so hard time is a lot more expensive when you think about it in relative to James's and the way you can figure that out that's a very plain way of saying that their opportunity costs are different yeah so if you look here for in order for Catherine to make one coffee she has to give up for the time that she's dedicating to making that coffee 0.05 pies alternatively to bake one pie she has to do 40 by two yeah she has to give up 20 coffees for James in order for him to make to make one coffee he has to give up 0.1 pies but only 10 coffees yeah so it's more expensive if you want for Catherine to spend her time baking pies than making coffee and it's less expensive yeah for James to spend his time baking pies so another way of saying this is that Catherine has a comparative advantage in making coffee and James has a comparative advantage in baking pies and now that they know this they can actually specialize according to their comparative advantage and increase the productivity of the bakery and increase their welfare so let's see how they do this so before specialization yeah if Catherine and James were working side by side together and they were working 10 hours a day and just splitting their time equally yeah five hours on making coffee five hours on baking pies they were able to make 250 coffees and 15 pies yeah as I said this is a physical productivity schedule that's why I have to say pies and coffees so many times I'm getting very hungry too yeah but now that they know their comparative advantage lies now they are able to split their time differently so what Catherine tells James is the best for you if you just stick to baking pies this time you don't have to switch between the two tasks you don't have to in your much more productive in relative terms um you're at your less least disadvantage in baking pies than you are in making coffee yeah so James will dedicate his entire time in baking pies and Catherine is now able to split her time differently she'll spend the majority of her time making coffee and only a part of it helping James with the pies yeah and at the end you can see compared to before specialization they are now producing 280 coffees and 16 pies at the end of a 10 hour work day yeah so specialization increases their physical productivity yeah and they both benefit from it now as I said this is in this is a good way of explaining of getting across the analytical principle behind the theory of comparative cost but we are trying to get a touch of realism into our analysis so I'll just go through these it's easier this way so what we want to do now is introduce money a little bit so let's think about it in terms of in monetary terms yeah so if you think of coffee is about three dollars and a pie is about five dollars then before specialization Catherine was making about 825 dollars a day in the bakery now after hiring James and after specializing she's actually able to make 920 dollars yeah 20 dollars after tax but this is how this is how Catherine this is how Catherine is going to look to see if it's actually worthwhile hiring James yeah there is an increase in the income of the of her bakery yeah after hiring James and after specializing and obviously now we've talked about the reasons why specialization is productive and we've talked about number two three and four here yeah so obviously Catherine and James have different natural aptitudes they also have primarily differently acquired aptitudes yeah Catherine has more experiences James has less and so on if you specialize you spend less time switching tasks who economize on time as well but the primary reason why division of labor as it grows becomes even more productive is because the division of employment into tasks the specialization of the factors of production and of labor allows for the use of capital goods and automation yeah I'll come back to this but in our example imagine that once they do this Catherine decides to acquire a new coffee machine and a new oven in the bakery yeah that will increase the productivity of both Catherine and James and obviously increased their monetary income this cannot be done yeah if there is no specialization and no specialization of factors of production right so just to sum up what we've been talking about so far so we can define comparative advantages the relative superiority in a particular task when taking all other tasks into account and now I've taken you through a lot of numerical examples but it is a very simple analytical statement and yet I do think that this is probably the best thing that Paul Samuelson ever said yeah and it's very true yeah so that the fact that this idea of the comparative advantage is logically true need not be argued before a mathematician yeah you don't need to be a mathematician to understand the simple calculations we've just made but the fact that it's not trivial he was tasked Samuelson to give an example of an economic law that is both logically true and not trivial and he said comparative advantage because comparative advantage is not trivial and Samuelson says is attested by the thousand of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them yeah and it is the it is a doctrine it is it is a phenomenon of the market that underlines our understanding of the market yeah so it is essential for it to to be to for for us to grasp it correctly yeah so um again summing up the idea is that money prices provide the signals in the monetary incentives it is money prices not productivity schedules yeah we're not in the market calculating productivity schedules in terms of coffees and pies and whatever at all 20 products we're selling in a bakery yeah so we're calculating in terms of money prices money prices provide the signals and the monetary incentives for individuals to choose their more efficient yeah the more productive specialization available and as well for entrepreneurs to choose the most efficient processes of production that are available to them yeah and they do that looking at potential profit and loss now now that we've seen sort of the original formulation of the law of comparative advantage with a few twists um before we go on to talk about the implications i would like to um just touch very briefly on the elements that make Mises's law of association much richer than Ricardo's original theory of comparative cost so now first of all if you read human actually you'll see that Mises actually calls it the Ricardian law of association but again if you read human action you'll see that Mises was actually very humble um i don't think he ever uses the word i i need to ask David Gordon i don't think he ever uses the word i or we in his writing it's always economic science or economists and he only seems to be referring to someone else not himself yeah even when it's his own contributions so you will never hear Mises saying it's the Misesian law of association but it is the Misesian law of association because it goes much further beyond than Ricardo's original law what Mises saw in Ricardo's explanation of why definitive labor is more productive than um human effort in isolation he saw in it the reason for social cooperation he saw in it a law that explains why social cooperation exists why it gets to encompass the entire world and why it becomes permanent yeah why it doesn't just disappear the next day yeah so Mises understood that the market economy through its prices and incentives guides on individuals and entrepreneurs not just to specialize yeah but through that specialization to actually purposefully integrate themselves in the division of labor and in society by doing that to the greatest advantage to themselves and to their fellow men yeah so um again if you look in human action Mises discusses Ricardo's law of comparative cost in the law of association in the chapter of human society you know he does not have a chapter on international trade where he talks about this um he does not have a chapter on the wealth of nations or whatever where he talks about this he talks about the law of comparative advantage in the chapter of human society another thing that he talks about there although it is before the chapter where he discusses money is monetary calculation because there were a lot of critics at the time who were saying well Ricardo's law is no longer valid because it's formulated in terms of the labor theory of value we need to make sure that we introduce subjective value theory and so on and what Mises says is the analytical statement remains true regardless of what value theory underpins it as far as the theoretical explanation of it is concerned but if you want to see how people discover their comparative advantage in the market if you want to see how that is actually accomplished in the market you must realize that in the market it cannot be done without monetary calculation so what Mises indicates here is that comparative advantage is not something that can be discovered yeah from outside the market in an office by some trade policy maker yeah it's something that it's not something that's given it's not something that's inherent in the market it's something that it's calculated it's discovered by the entrepreneurs yeah and the individuals and once you begin to understand the importance that the monetary market economy has for the development of the division of labor you begin to understand that division of labor actually only is able to grow past a very initial primitive stage in the presence of the monetary unit yeah when we are we are actually in a monetary economy when we are actually using money that's when we can actually develop the vertical division of labor yeah that's when we can actually work on extending the structure of production when we are able to calculate professor Solano will explain this in more detail in the lecture tomorrow on calculation and socialism yeah but i'm just trying to get across the fact that division of labor can grow extensively and intensively only in a monetary market economy otherwise it is left to the very primitive stage yeah so now a few implications um of this understanding of the mesesian law of association we can call it that now rather than Ricardo's comparative advantage yeah some implication of the mesesian law of association on i think i have trade theory trade policy society and social order and i think we have time to go through all of them now a criticism that is often laid at the feet of comparative advantage is that it's very static in nature yeah because again the idea is that comparative advantage because it's formulated in terms of labor theory of value and we're just looking at the factors of production at the endowments at some particular point it's a very static view however if you understand that comparative advantage is actually discovered in the market yeah it becomes clear that comparative advantage actually changes as the market changes yeah the division of labor based on comparative advantage changes as the data in the market change so in that sense the concept of comparative advantage is a very dynamic one it can change very quickly just as consumers preferences change now usually here i give my students an example of a job that disappeared i used to give them an example of phone switch operators yeah there was a time when people had a comparative advantage in yeah switching the phone lines from one and that disappeared that disappeared with technological development i thought this time however i would give you an example of a couple of jobs that will exist in the future because of the division of labor yeah because what division of labor does by allowing us to be more productive is on the one hand allowing for automation and therefore technological development and two because we are more productive we can afford more leisure yeah so here's a couple of examples you know maybe you'll yeah you're guessing what i'm talking about yeah drone managers well today we have things like fleet managers and so on but they you know we can become people are rumoring getting actually just a few years becoming uh well unless the government gets in the way but um yeah becoming an actual job in the market and again 10 15 years ago this was something this was not even thought of this is only possible because we've been able to specialize and separate yeah the the process of production into different stages that we're were able to automate some of them like the delivery or maybe the assembly or whatever it is yeah and another one this is not going to be as clear i'll explain it um that of a nostalgist yeah so can you imagine in five ten years from now people paying maybe booking through an app or something to have people design particular parties or their weddings or even you know design the decor of their house to mimic a particular era in history you've seen this you've seen this nostalgia coming back in hollywood movies because they're rebooting now every single movie that was came out 20 years ago yeah so there's there's a tendency for people to look back at past years and to try to live in a similar way as before now you could very easily imagine that imagine that there would be people making a living out of this you know there are people that make a living out of vlogging again something that 10 years ago was not even possible the reason this is possible is not only technological development but the fact that the division of labor has made us so productive that we have enough monetary income and leisure time to be able to afford this yeah imagine this a hundred years ago 200 years ago someone in the victorian era saying well i'd like to live you know a hundred years in the past i wonder if someone can help me with that yeah now i've stressed repeatedly that comparative advantage is located at an individual level you are at the level of the firms that the entrepreneurs bring together so i won't insist on that i would also like to point out that that's what what i like to call it a market level of detail again if you look at the treatment standard treatment in economics textbooks you may hear things like america has a comparative advantage in steel production or or in automobiles or france has a comparative advantage in producing wines or whatever but that's not what the consumer understands as a product yeah that's not what the market level of detail is and the best example that i have here are these um foodie shops that only make like milkshakes or they're only make burgers yeah that's or avocado toast yeah that's a big one that's all they that's all they sell yeah they don't sell breakfast or fast food yeah these big broad categories but avocado toast so as a result you may have a comparative advantage in producing avocado toast and not one in actually being a good like breakfast restaurant yeah now again a couple of other things that um we can deduce from understanding mises's law of association is what limits the division of labor yeah to what extent can the division of labor grow what helps it grow and how far can it grow so on the one hand division of labor in terms of extent yeah is limited by how broad how big the market is and obviously the utmost limit is the whole world that we know of yeah but the other more important which you can deduce from understanding the importance of money prices and monetary calculation in calculating comparative advantage and the development of the division of labor is that the division of labor will actually be limited by the extent of savings and investments yeah um by the extent of capital accumulation in society now professor angle hard i think and professor garrison will touch on these aspects in the the course of the afternoon what i'd like to point out here is that you cannot expand the division of labor without previous savings yeah because the expansion of the division of labor i was saying requires capital goods and automation that requires capital accumulation in order for that investment to be able to take place yeah and obviously that requires real sound savings so you can understand you can try to understand you can try to see here the connection between a very sound the connection between monetary policy and the soundness of the division of labor yeah if you have an unsound monetary policy um if you um if you have credit expansion division of labor will be affected as well much reduced to the level that compared to the level that it would otherwise have been now there are very there are quite a few barriers to specialization trade uh in cooperation as well yeah so no just not just limits but like barriers to it expanding some of them can be natural barriers yeah so we do talk about the extent of the market like the whole world being the outmost limit but that's not necessarily true to happen for instance Romania has never i i don't think i've seen a lot of Chinese places in Romania i don't think the Romanian taste for Chinese food has ever developed yeah so that's a very like natural barrier in the development of you know division global division of labor or globalization if you want to call it at this point yeah it's just people's preferences yeah and that's a very like natural barrier in Chinese food becoming a staple you know in every single country around the world but the more important barriers are the artificial barriers yeah and this is where government intervention comes in so as i said starting from monetary policy which affects the entrepreneur's ability to calculate and obviously affects the the way the entrepreneurs allocate factors of production to actual interventions that target things like international trade and international trade flows and so on these reduce the level of specialization and obviously reduce the benefits that we can get from the division of labor now i have an entire lecture that i'm tomorrow at two same same place um if you want to come um judge Napolitano was at the same time but never mind uh yeah where we will talk in detail about the type of um government interventions how they look like what's the rhetoric um of trade policy and so on so i won't insist um on it particularly today uh but the idea is that all these barriers are artificial all these barriers actually hamper division of labor to an extent that would not and and make it um bring about fewer benefits than it would otherwise and i think this in a way explains people's reluctance or in a way very ambiguous lukewarm feelings towards globalization is that they i don't we have never experienced unhampered global division of labor we've all experienced it hampered somehow by government intervention and it doesn't have to be just directly on it if you reap benefits from trading yeah with um global partners those benefits may be very well um counterbalanced or just like taken away by other policies other domestic policies yeah that might reduce your welfare so you never get to feel them fully yeah so i'm hoping that i got across to you what misa's meant when he called the division of labor the essence of society and the fundamental social phenomenon now there's a great article here if you want to go into this into more details is professor sonorino's article misa's a social rationalist which not only explained the differences between misa's view on social development compared to other social theorists but also explains the um the the connection yeah the indelible connection that means a saw between division of labor and society yeah if you if you want to think about it division of labor the structure of money prices in the market their size of the same coin yeah you do not reach a complex structure of prices without a division of labor and you cannot grow division of labor without money prices yeah and then this division of labor because it creates economic bonds and because we need each other and we need the products that we produce after specializing and we need to interact with as many people as possible to be able to benefit as much as possible and get as many products as possible this is what strengthens yeah and it's in many cases even creates our social bonds yeah outside the realm of the very small family if you want so misa's would have defined society as the complex network yeah of interhuman relationships that result from this fact that people can recognize the benefits of the division of labor and purposefully use it um to improve their welfare so how do we strengthen how do we extend these bonds yeah the surest way to do it is again savings capital accumulation developing division of labor and that will ensure that our economic as well as our social bonds are strengthened but we have a great enemy in doing that and that is government intervention and control over market prices as I said starting from monetary policy to trade policy to other domestic policies that reduce the benefits we would get from the international division of labor so the point that would I would like you to remember here is not that is the connection between division of labor and and the fiber of society and the fact that whenever government interferes in the market it interferes with the division of labor and it not only reduces the welfare part of social welfare but it also reduces weakens the social aspect of social welfare so I think that's my time up thank you very much


Let me tell you what it means to be a good brother, okay? What it means is that I am doing these massive long flights, one second. I am doing these massive, massive long flights and I am going in a little helicopter like that, squeezed up and my sister is doing short flights and she is going in a big helicopter. They are trying to do it. Okay, but I love her. They are trying to do it. They are trying to do it. They are trying to do it. What's happening?


Welcome to Digital Asset News to get top stories and cryptocurrency digital assets, and a big amount of bite-sized pieces. So today, we've got some interesting stuff. First up, the SEC chair, Gensler, says a lot of crypto tokens are securities and calls Bitcoin a store of value. So we're going to dig down deep into what he is actually talking about, and just to see if this is actually cause for concern. On top of that, we'll take a look how PayPal is having a fantastic quarter and really a fantastic year, as the CEO said, this is the strongest quarter we have ever had. And really, you can just trace that back to what's going on with their involvement of Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. So we'll take a look at those two big stories, but first let's take a look at what's going on into the market. And hey, not too bad, 2.39 trillion. Looks like it's not too big of a deal of what was just said by the SEC chair, which I think it actually is a big deal. And the average selling segment is bearish. So we take a look at the coins of what's going on. And just to mind you that this story just broke a couple of hours ago about what he said. So let's see how the market has reacted. And in all honesty, everything's bearish as far as like an hourly sentiment for trade the chain. And just for the one hour change, I mean, Bitcoin still at 37, almost 58,000. That's slowly decreasing, Ethereum slowly decreasing. And over the last hour, just a little bit down over 24 hours, everything's looking pretty good. But we can see there's a little bit of a changing of the tide. Do I think that this will be a major deal and news outlets will pick it up and people will talk about it and actually get scared? Who knows? It's cryptocurrency and digital assets. But it is a concerning thought if the SEC chair comes on and says, you know what, they're all securities. So let's just jump in and see exactly what is going on with Gensler and the SEC. So let's take a look. This just broke today is May 7th. Yeah, 2pm, 16.05. Sure. There was a time discrepancy, whatever else. So this actually came about during Gensler's today's appearance on CNBC's Squawk Box. Now, familiar with that, it's a great little show on CNBC and they talk about all things financial and great, whatever. But Gensler, the lead point and chairman of the US Securities and Exchange Commission say to this, he says as far as cryptocurrency to the extent that something is a security, the SEC has a lot of authority because that's the title of their name, Securities and Exchange Commissions. And a lot of crypto tokens, I won't call them cryptocurrencies for this moment, are indeed securities. Back in 2018, Gensler had an opinion that both Ethereum and Ripple affiliated XRP could fall under the definition of an unregistered security, which is what they are battling in right now. And I have to tell you, this lawsuit just became a heck of a lot bigger for the SEC versus Brad Garlinghouse and Ripple, Inc. So the things that are going on right here, I think, could have Ripple repercussions of what is going on in the market. So when we take a look at what's happening, these are the big deals. So moving forward, Gensler also say that Bitcoin was deemed to be a non-security. And what was interesting to me is that in this article, that he states that Ethereum and XRP could fall under the definition of a security, which is weird because his predecessor had said, Clayton had said, no, Ethereum is mostly decentralized, so we can't classify that as a security. So here's the thing. Usually when you hear these types of stories, the market usually drops because it is a negative opinion as far as digital assets and cryptocurrencies. And this today could be a major effect. It could actually have no effect because people are just pretty much waiting for the outcome for the XRP lawsuit versus the SEC. But if you take a look at it, what would happen if all cryptocurrencies were deemed a security? Well, first of all, it's not just the opinion of one person. It has to go through a legal process just like what is going on right now. And so if this actually comes to pass, then what would happen? Well, you would have just what's going on right now with XRP, you'd have a lot of different exchanges that were selling unregistered securities. Would it be retroactive? I'm not sure per se, but I can just tell you it would probably not be very positive for the crypto market in general. There is one shining light here and that is at least for Bitcoin, as Bitcoin is concerned, they're saying that no, it's not a security, so that's pretty great for crypto holders as far as Bitcoin. But what about all the other ones out there? What about all the Cardano's and the V chains and the Theta's and the tomato coins and everything else out there? Well, it would probably be a little bit of a hit. Exchanges would have to register all these securities, but then it would just be a huge, just enormous mess for that to actually happen.  And back when it was being created, there was it was a law passed, a rule I forgot to escape from right now, but they said, you know what? We're just going to let it just be persona non grata and just let things just happen and not have the individual websites be subjective to everything that is being that's going on. So would this actually happen as far as securities? Not too sure, but I can tell you that side. It is an interesting opinion by Gensler who is no slouch in the crypto department because he taught blockchain and cryptocurrencies and talked specifically about Ripple and XRP in his lectures at MIT. So these are some pretty smart people he talked to and he's pretty much one of the experts as it comes and pertains to that. So we'll see exactly what happens, but as so far hasn't really affected the market too much. Let me know what you think in the comment section about what could potentially happen, but it is interesting about what he said and how things will actually move forward. So moving on, this is why I think it's going to be tough for the SEC to really come down and say, you know what?  And here's a prime example. Not that it's greedy, but it just shows how much money is influxing. So PayPal crypto shows the strongest quarter ever CEO says. So PayPal's best quarter ever and the strongest year in the history of the company. So says the CEO. So Dan Schulman said his company generated $6 billion of revenue just in Q1, growing a record 31% spot and 29% respectively. He said this is the strongest year in PayPal's history and Q1 was the strongest quarter ever with record financial and operating results. So what's changed? What changed with PayPal for Q1? Well, just at the top of my head, they offered a nice little cryptocurrency package of Bitcoin, Bitcoin, cash, Ethereum and Litecoin. So that's not a bad decision on their part. And it's just them being coming one step closer to becoming a true bank of what they're really going to be. And I think that's what their overall purpose and goals are is just to become a digital online bank and just have a banking license and just be able to have people just transact in that way. It's very little difference right now. The only difference is with PayPal is that you can't transfer for you. You can't transfer money in from a bank into your PayPal account, but everything else can go out. And of course, you can get paid into your PayPal account through vendors and different people. So there's very slight differences in what you can do. And of course, on top of that, PayPal also owns Venmo. And you say that Venmo continues a strong performance in Q1 with 51 billion of total payments value up 63% year over year. And you also confirm that PayPal closed its acquisition of Curve last month. Curve, if you're not aware, is a custodial service. It's the same one that I trust capital for crypto IRAs are used. It's the one that I recommend. It's in my, it's linked in the description. And they acquired them for quite a bit of money. So because they're going to play the long game, and they're going to want to make sure that all the cryptocurrency that they actually hold is secure. And that's what Curve exactly does. And then to finish up, he says, we've got a tremendous amount of really great results going on tactically with our crypto efforts right now. And we're excited about those. And he states that's about half of our crypto users open the app every single day. So if you think about like just things that are being used in general, how many apps do you have on your phone that you open up every single day? Probably not many, but you probably got a boatload of ones that just are just sitting there idle. Well, on this one, half of the people open up every single day, what are they doing? Probably checking the price or probably buying. And then to finish up, to look into the future about what they're going to do, I thought this was the most telling and interesting. They said their company is going to roll out with a new digital wallet. And it's an all in one personalized app that will allow users to make the most of their money, swing in their financial lives every day, whatever that means, that could be savings, that could be different transformations of whatever they have cryptocurrency into something else, buying other products, probably access to merchants online and making the seamless process. Who knows? We expect to roll out our next gen digital wallet in Q3. So right around the corner, amazing. Over the coming year, we'll accelerate our customer's digital engagement to the rapid innovation of our digital wallet and merchant commerce platform. So this is it.  And if you look at the both things to just come back and say, okay, everything is now going to be a security. So now everything gets put on the brakes. We get pushed to the back as far as USA and America. And then guess who gets to take control of everything else globally? Well, guess what? China is really a way ahead. Different countries are way ahead. So if they want to do that, that would be the biggest mistake that America could potentially make just to allow other countries just to go, you know what, let them have securities and let them just, you know, fall by the wayside because crypto moves pretty fast. Let that happen. That's fine. And then we'll just pick up the mantle and just pass you by. I got to tell you, in my personal opinion, this is the fourth industrial revolution. You know, you had the first one in the 1800s with small steam powered engines. Then the 1900s came about larger types of machinery, different forging for metals and things like that. The third one in the early 1950s, 1940s, when he had just more of an explosive for like combustible engines and farther and farther different things that were being created as far as like moving on 60s, 70s, 80s, computers, machinery and things like that. And now we're in this state where it's like everybody's kind of stable. The ones who control the next big technology advances, which is artificial intelligence and blockchain, are going to pretty much dominate and be the next world power. So if America wants to take their foot off the gas and do that, sure they can do that. But again, huge mistake. Hopefully they make the right decision, but only time will tell. And that's it for my rant for today. Lastly, I will just say this. I just had a great interview with Mickey Watkins. He is the CEO at World Mobile. Why is that so important? It's because World Mobile was the partnership that got picked up by Gardano to give digital ID and internet access to different parts, countries in Africa. And I sat down with him for, it was a good 20 minute interview, and I'm going to be putting that over at the Dan Clips YouTube channel. Again, Digital Asset News, this primary channel you're watching right now is just for basic news and basic things. Dan Clips is more for advanced cryptocurrency digital assets, what's going on and the new emerging tokens and projects. And this one, after I sat down with him and listened to what he's doing, it's huge. And if you've been on the channel for a while, you know I invest in people. And this is probably the next solid team I've seen next to Gardano and Ask. And that's it. So I will let everybody know when that is up. And that's it for today. So look, thanks for sticking with me. I appreciate it. If you like the video, found value, give it a thumbs up and a like. Consider subscribing. I think we talk about on this channel are very time sensitive. And that's it for today. So enjoy your weekend. I appreciate it. And I'll see you on the next one.