So let's jump in and talk about this issue of inequality. You know, inequality has been a big issue for I'd say the last five to eight years or so. Certainly today, right now in the United States with demonstrators in the streets, rioters, demonstrators, many of them are talking about inequality and making the claim that much of what they are demonstrating about regards inequality. So I want right off the start to differentiate between two ways in which we talk about equality. There are two different meanings, if you will, or two different contexts in which we talk about the ideas of any of equality. One is the traditional idea, going back to the Enlightenment, going back to the founding of America, going back to the Declaration of Independence in America, the idea that all men are created equal. That equality is what we'll call political equality. It is the idea that there are no aristocrats. It is the idea that there's nobody who gets special favors. It's the idea that nobody is different before the law. The law treats everybody the same. And that we're equal in our freedoms. We're all free to live our lives as we see fit pursuing the values that are important to us as individuals, and nobody has a right to interfere in our pursuit. That is the idea of equality that animated the founding fathers of America. It's the idea of equality that animated the Enlightenment. And to a large extent, it is the quality that people are demonstrating for in American streets today. The argument is that the law does not treat everybody equal. That the law is treating some people, some people, let's say blacks differently than whites. To the extent that that is the issue, I am clearly on the side of equality. Equality is a fundamental principle of Western governance. It's a fundamental principle of civilization. It's a fundamental principle of good government. So political equality is necessary. It is moral. It is just, it is good. And to the extent that it we deviate from it, we shouldn't. And we'll talk about the fact that we deviate it from it in many, many ways. People should all be equal before the law equal to all be people should all be equal in rights should all be equal in their ability to pursue their own happiness. And that's what kind of the US government in its original intent was structured to do. It is deviated from that quite a bit. But the inequality that people complain about and have been complaining about for the last 10 or so years is not that kind of inequality. It's not the issue of inequality before the law. It's not inequality of rights. It's economic inequality. It's the idea that some people have more than others. It's the idea that some people are rich and some people are poor. And the idea is that the gap between rich and poor is growing. And that they say is bad. It's economically bad. It's politically bad. And it's morally ethically bad. So the argument about inequality that when I say equal is unfair, I'm talking about economic equality. Now, over the last 10 years, almost every problem that we have in the world has been blamed on economic inequality. Whether it's poverty, economic mobility, the ability to rise from poverty to middle class, from middle class to wealth. The idea of cronyism, the idea of some people using government to gain wealth. But even ideas as widespread as global warming terrorism, and almost every problem out there in the world, coronavirus now, has been blamed on this idea of economic inequality. And that's what I want to talk to you about today is, is this a problem? Is economic inequality a problem? And the first question to ask is, you know, what's the problem? Because remember what economic inequality is economic inequality is a gap. It's the gap between those who are wealthy, and those are middle class or some interpretations of those are wealthy, and those were poor. There are a variety of measures of this there's something called the genie coefficient that measures the gap between the poor and the rich and very rich and measures how that changes over time. And it's not a very good measure and economists debate this all the time. And the argument that exists out there is that inequality is growing, it's grown in Israel. It's growing in the United States, it's growing in Western countries. And this is really, really bad. And the question I think one should ask first is, why is it bad? Why is it bad? What is it about inequality? It's bad. Does inequality cause poverty? Is the fact that somebody is rich cause somebody to be poor? Is the fact that somebody rich make it impossible for other people to be rich? Did they stop mobility? Is the fact that this gap is spreading cause any kind of economic damage? Does it cause the economy to grow slower? Does it cause incomes of the middle class to stagnate? And the answer for purely economic perspective. There is no economic theory that I am aware of other than really, you know, Marxist economic theory. The really the most extreme that makes any link between inequality between the gap and between economic activity. There's no theory that says that the big gap causes less economic activity or small gap causes more economic activity. And there's no empirical evidence to suggest that that is the case. There's just nothing in economics that suggests that inequality in and of itself is a bad thing. Now you probably heard of this big book. It was translated to Hebrews. I'm sure it's at every bookstore in Israel because it's one of the best selling books of the last decade by Thomas Piketty, the French economist that documents. He has reams of data all how inequality is getting worse, i.e. bigger and how bad that is. So if you actually read the book and one of the one of the better signs in the world in which we live is that while everybody bought the book because you have to have it on your bookshelf to be cool to be accepted into society. It has to be in the bookshelf. Amazon data shows that almost nobody reads it. That is they let download it to the Kindle, and then they don't read it, which is good, because it's not worth reading. It's at best a good paperweight because it's big and thick, but Piketty offers no economic argument for why inequality is bad. He randomly asserts that if the return on capital return you get on investment is higher than the growth rate of the economy, all the wealth accumulates in the hands of the rich, but it's a random assertion. There is no, every economic theory out there would suggest that that cannot happen. Indeed, Marx, Karl Marx made the same prediction, which turned out to be wrong, and it doesn't prevent Piketty 150 years later from making exactly the same prediction, which will also turn out to be wrong. So what's the problem with inequality? Why do people make a big deal out of this? Why is it growing causing such a long? I mean, I think there are many reasons, but let's think about how people think about wealth, how people think about wealth in society. People use a metaphor for wealth. I mean, you've probably heard this, you've heard of the pie, right? There's a pie, there's a social pie, all the wealth is like a pizza, right?  And they say that's just not fair that some people have a big piece and other people have a little piece. So almost all the arguments about inequality are not arguments about economics. They're arguments about fairness. They're arguments about morality. They're arguments about what's right, what's just, what's fair. So think about it. We've got a big pie, this is the analogy, and some people have a big slice of the pie, some people have a little slice of the pie. First, is it a good analogy? Is the pie a good analogy for wealth in society? What does the pie assume that maybe is not so reflected in society, and I know you're all muted. So my questions are going to be, have to be rhetorical because otherwise it would be great if you could yell them, yell the answers back. They can write it today on the chart. No, that's okay, because otherwise it'll, if I have to wait for them to type. But what's the problem with this pie analogy? Well, there are many problems. Let me start with that. But the first problem, the first problem is that the pie is finite. There's one fixed pie. And what happens to wealth in the real world? Is it finite? Do we have the same amount of wealth in the world today as we did 50 years ago, 100 years ago, 1,000 years ago? We don't. Well, today is far greater than we had in the past. Far greater. It's not even close. So the pie is constantly growing. It's not a pie that is static and that we now are dividing. It's a pie that grows constantly. And how does it grow? What causes the pie to grow? What makes wealth creation possible? Well, it's things like investment, innovation, ideas, entrepreneurship, production. It's a variety of different inputs. It's a sophisticated process that causes this pie to keep growing. And ultimately, it's about trade. It's about people engaging in economic activity. So the pie is constantly growing. And part of the way it grows is because some people are really good at what? What are people really good at that causes this pie to grow? Well, they're good at making pies. And some people are not so good at making pies. Because the biggest fallacy about the pie analogy is that there is no pie. There's no such thing as social wealth. Israel doesn't have wealth. America doesn't have wealth. Noni has some wealth. Alon has some wealth.  I might have some wealth. Each one of us has our own pie.  But you know what? Keep your hands off my pie. It's my pie. Don't take my pie and mush it up with Panina's pie. I spent a lot of time making my pie. She spent a lot of time making her pie. You don't get to mush them up and make one pie together. Pies are individually baked. Wealth is individually created. We each create our own wealth. The fact that you can talk about national wealth, national income, is just an economic abstraction. There is no pie to be divided up. There's my pie and your pie, which we create and we get to eat. So wealth is not a characteristic of society. It's a characteristic of individuals. And it's only by abstraction and economists who need to deal with aggregates added all up in order to create something called GDP or something called the wealth of society. But it's not real. The real is the wealth we each have as individuals. And how do we make this wealth? How do we bake our pies? He has a question. How do you become a billionaire? So this is probably the most important part of the lecture because you're going to learn the secret for becoming a billionaire and expect you all to do it. How do you become a billionaire?  To make huge amounts of money like that? Is the way to become a billionaire in a free market, in a free world, we're not talking about how Putin became a billionaire. That's a completely different way. Because the way Putin became a billionaire, the way politicians become billionaires, is by stealing everybody else's pie, by using a gun and taking other people's pies and stuffing them in Switzerland. That's how Putin becomes a billionaire. That's how the Saudis become billionaires. They steal. But how do businessmen become billionaires? Do they steal? Is it a zero-sum world? Is every dollar they make at your expense? So let me ask you a question. And I can't see, most of you are not on a video and I can't see you all on the same screen. But let me ask you a question. If this is true of you, that's an older population here on the Zoom I've known. So I'm not sure what the answer to the question is going to be. But how many of you have read or whose children have read Harry Potter? How many people read Harry Potter? Like two. Usually in my audience everybody's read Harry Potter, right? I read Harry Potter. All, what was it? Seven, eight books or whatever? All the books. So you read Harry Potter. And this is the amazing thing about Harry Potter.  Harry Potter single-handedly increased inequality in the world because I don't know if you know, but J.K. Wallins, the author of Harry Potter for those who don't know, is a billionaire. Now I have calculated how much money Harry Potter cost me. Now both my sons are Harry Potter's age. So both my sons, when they were growing up, I had to buy two copies of the book every time it came out. Then I wanted to read Harry Potter because in the early years I would read them the book and then later they wanted to read it themselves and, you know, they'd get it at midnight and they would not sleep the whole night and read this book. And then I wanted to read the book. So I got it on tape. So I heard it. I used to hear it when I drove, right? Usually I did a road trip with my kids. So that's three Harry Potter's. Then we watched every movie and there were like 26 movies, right? They split the books and gazillions of movies. And then there rides at Disneyland. And then there's all kinds of stuff. I figured I've spent, I don't know, $4,000 on Harry Potter. I got poorer by $4,000 and J.K. Rowland's got richer by $4,000 because I am worse off according to Thomas Piketty, the great French economist and according to most economists, I'm worse off for having bought Harry Potter and J.K. Rowland's became a billionaire at my expense. Now is that true? Am I worse off for having spent $4,000 on Harry Potter? Is my life worse? Why did I buy the books? Because I enjoyed them. Because I had fun with them. Because they added to my life more than $4,000. Think about how much it adds to your life when your kids read a book from beginning to end and love it and enjoy it and want to talk to you about it and want you to read it too and have a conversation. Is that worth a few hundred bucks? And then they do it seven times because they read all the books and then you go to a movie with them and you're having a shared experience with them. How much spiritual pleasure, spiritual value do you gain when that happens? So I am much richer for having read Harry Potter than for not having read Harry Potter. I am happy I spent those $4,000 on the books. It was an amazing investment in my spiritual well-being. And yes, J.K. Wallins became a billionaire. But you know what? If I met J.K. Wallins in the street I would say thank you because she gave me more pleasure than $4,000 can buy. So yes, I gave her $4,000 but I got much more than that and the difference is worth a thank you. Now this is true of every single billionaire who's made it honestly. When I buy my iPhone when I buy this spend $100 on it. Sorry, not $100. $1,000 on this iPhone. Why did I spend $1,000 on it? Because my life would be poor if I did because I would suffer? No, because I thought that this would make my life better by how much? By more than $1,000. Otherwise I wouldn't have bothered to give Apple $1,000. I would have been indifferent. So my life is better for having bought the iPhone and being poorer by $1,000 even though this makes it possible for me to make millions of dollars because it allows me to do my work. And Apple made a profit. Steve Jobs became a billionaire and I got poorer by $1,000 and yet I got more than $1,000 worth. So who lost? Nobody. My life is better. Steve Jobs' life is better. Same thing with Bill Gates. Same thing with almost any honest billionaire you could find out there. The only way you can be a billionaire is to create a value that hundreds of millions of people want and are willing to pay for more than it costs you to produce. And if you can do that over and over and over again every single year you will be a billionaire. Create a value. Hundreds of millions of people want it and they're willing to pay more than it costs you to produce to make it. And you can do it over and over and over again. You'll become a billionaire. See, it's easy. So every one of those billionaires has made my life better. Every one of those billionaires has made a world a better place to live. Indeed, anybody who creates wealth can only make wealth by trading with somebody value for value. They've all made the world a better place. So to me, rich people are the people who drive this economy forward. They're the people who bake these pies if you want to imagine a pie and they make them bigger. They make our life interesting like J.K. Rollins did, like Steve Jobs did. And if you think about this idea of inequality I mean, if you look around this virtual room we've got 141 people here. How many of the 141 people are the same? How many of the 141 people are the same? The same inability. The same in intelligence. The same in character. The same in motivation. The same in interests. The same in any dimension. Good looks, tight. Nobody is the same. We're all different. We're all unique. And it's what makes life so much fun and so interesting.  Well, of course not. Some of us will be better fishers and some of us will be less good fishers. Fishing, right? Some of us will just want to lay on the beach and do the minimum amount of work in order to just get by. Some of us will build will become builders for everybody else and build them all shacks and get compensated. Some of us will become farmers. Some of us will become teachers. We'll all do different things based on our ability and based on our interests and based on our character and motivation. And as a consequence we'll have different amounts of wealth because the fact is that those different things are valued by other people in different ways and we'll accumulate different amounts of whatever however we want to measure wealth in this desert island. Maybe in fish, maybe in home, maybe in little rocks. I don't know. I can assure you we won't have a Federal Reserve for all of dollars. So we're all going to be different. That's life. But more than that that's life under freedom. When you're free you're different and you have different outcomes and you get inequality. Inequality is a feature of freedom, not a bug. It's a feature of freedom, not a bug. How do you get equality? I'll give you a quick example. I see somebody with a cap of the San Antonio Spurs. It's a basketball team. Now one of the great basketball players who played for the Spurs was this guy called Duncan. He was one of the great basketball players of all time. But I'm not going to use this as an example because nobody knows him. I'm going to use LeBron James as an example because I assume everybody knows LeBron James and if you don't, think Michael Jordan. This generation maybe knows Michael Jordan. I am really upset. I'm really unhappy that there's no basketball equality. I want to be able to get on a basketball court with LeBron James and score one basket. And you've never seen me play basketball. But even for an Israeli I'm pretty bad. And relative to LeBron James I'm never scoring a basket. How do we make me and LeBron James equal in basketball? I can train my whole life and I'm not going to beat LeBron James as equal in basketball. How do you make a sequel? Well, if you weren't muted somebody would yell out after a little bit of prodding you'd have to break his legs. And that's true because the only way to make me and LeBron James equal in basketball is to cripple LeBron James because I can't rise to his level. The only way to do it is to bring him down to my level. I am never going to be Steve Jobs. I'm never going to be J.K. Rowland's. My books don't sell as much. I'm never going to be Bill Gates. The only way to make me and Steve Jobs equal is to steal his money and give it to me. Or in other words, break his legs. And if you think there's a difference between stealing people's money and breaking their legs give it a little bit of thought if that's really that big of a difference. What is money? How do we get the money?  That's where money comes from. It's our life you're taking when you take money from us. So the only way to reduce inequality is by using violence. Using violence to take somebody's money to break somebody's legs to hurt somebody. There's no other way to do it because we're naturally unequal. And why just money? Why are we concerned only with income inequality or wealth inequality? Why not inequality in basketball or inequality in IQ or inequality in good looks or inequality of height or inequality of any other things? I don't know how long you want me to go but I'm going to end with this We want you to go. Continue. I'm going to give you this story. It's a real story. It's a true story about what inequality looks like. So not that long ago in the 20th century there was a group of young men who went to Paris to study and they were intellectuals and they went to Paris to study and they studied with the best professors at the Sorbonne and at the best universities. People that we all grew up with and people like that. They studied these ideas of equality and the virtue of equality and the importance of equality. And they hung out in Paris together and they swore that one day they would go back to their country achieve political power and bring about real equality. They wanted real equality and they did.  Establish a society of absolute equality. First problem they encountered was that some people in their country lived in the city and other people lived in the countryside and now it's unequal. Clearly there's great advantages to living in a city. It's there's division of labor, you become wealthier there's more access to food there's a lot of things and it's a different kind of life work and everything. So how do you make the people in the city equal to the people in the countryside? How do you do that? Well they came to the only logical conclusion they basically kicked everybody out of the city I mean literally they marched them out into the countryside the cities were empty ghost towns nobody was in the city they marched them into the countryside but then they discovered something interesting too that in the countryside people were not equal. Some people worked hard some people did not foraging is picking berries and getting nuts and stuff and some people were not. Generally people were starting to starve because there wasn't enough food not everybody was a farmer people started so they noticed this that people are not equal but beyond that some people had an education others did not some people were smart some people were not how do you get them to be equal? Because they're all different and they're not equal. So what do you do? Well as I said the only way to make Le Bon James the same as me is to knock him down.  Well the answer is you kill them because you can't make them the same so if you wore glasses it was a sign maybe you could read maybe you were intelligent, you were shot if you had a high school degree you were shot if you had a white collar profession in your past you were shot these people killed 40% 40% of their own entire population this is not a made up story it's not some novel you read in a book this is the what's that the coffins were different well they didn't use coffins they just stuck them in in collective graves this is the killing fields of Cambodia this is exactly what they did and this is exactly what motivated them what motivated them was equality absolute equality uncompromising equality now I believe that any quest for equality of outcome equality of economics leads to some form of violence there's no other way about it and in that sense it leads to the violation of the principle we talked about in the beginning it leads to the violation of equality before the law equality of rights equality of freedom so I have no real opinion about what the right level of inequality is I don't care I don't think anybody should care I have a very strong opinion about freedom I think the value should be freedom equality before the law equality of freedom equality of rights the right to live your life as you see fit in pursuit of the values that you believe will lead to your happiness and as long as you don't hurt other people it's none of anybody else's business what you do that is real freedom but that will lead to economic inequality there's no question about that nothing wrong with that it's actually good and you could argue and you can ask me when we get to the Q&A portion of this you can ask me about how inequality actually promotes greater wealth greater mobility reduction in poverty I'll just give you this example and I don't know if I can draw this so you can see on the screen so how many people just ask you how many people were poor 300 years ago in the world what percentage of the population lived on what the United Nations calls extreme poverty I think it's $2 a day or less what do you think the percentage of the world population that lived somebody says 98% it's somewhere between 90 and 98% we don't know exactly but it's well above 90% lived on $2 a day or less now that is inflation adjusted dollars so imagine you today living on $2 a day or less you can't because it would be impossible you can't even comprehend it how poor life was life expectancy by the way during that period was about 39 so you most of us would be dead looking at the screens a few of you would be alive like in your 20s that's middle age Jacob and me will be around what's that? Jacob and me will be around Jacob and you so life expectancy 39 we're living on $2 a day or less but you know what everybody's equal everybody's equal almost there's some aristocrats who have all the stuff but everybody else and even the aristocrats just think of what it meant to be an aristocrat back then no running water no toilets no electricity no iPhone maybe if an aristocrat knew how to read maybe that's not even given to you so life as an aristocrat sucked was really really bad and for poor people it's unimaginable how bad it was now think about the world today what percentage of the world population lives on $2 a day or less we'll see what comes up what percentage of the world population today lives at what the UN calls extreme poverty no responses usually I get okay we got 20% I figured around 25% he's either heard my lecture before or he's googling every question I ask here and he's getting the right answer 20% 15% I used to get 40 20% 15% yeah that's reasonable for people to think the number is what Asaf said the number is 8% 8% of the world population today lives on $2 a day or less what was it 30 years ago it was 30% so poverty in the world over the last 30 years has come down dramatically not a little bit dramatically from 30% to 8% but more than a billion people more than a billion people close to 2 billion coming out of poverty extreme poverty over the last 30 years nobody knows about this nobody cares nobody's dancing in the streets but we all have Thomas Piketty's book in our bookshelf and we all moan and complain about inequality who cares why is that what's that when poor people are coming out why did they come out of poverty why is that it attracts so much attention because nobody is aware of the real numbers because our whole culture is focused on hating success and hating the rich hating prosperity and hating ourselves self-hatred is a big deal it's focused about hating success and complaining and bitchy and complaining constantly about how good life is and admiring and believing the worst of the world so we constantly all of our news programs are focused on what poverty and death and destruction and illness and bad stuff that's what we focused on and it comes from a particular view of morality a morality that says if you quote the New Testament and inherit the earth there's an ability to being poor success happiness, prosperity, achievement those are all suspect because they all imply that you've been self-interested that you've been thinking about yourself that you've been too egoistic that if you really a virtuous person you give all your money away so we have a general orientation towards bad news with negative information towards elevating or admiring the meek and resenting and hating the successful and that's being in our world for a long time and it's very hard to undo it but let's get back to the question of how did they stop being poor they stopped being poor because they got a little bit more freedom they stopped being poor because other people got rich they stopped being poor because the multinational corporations went into their countries and set up those evil sweatshops and provided them with jobs so the way they got out of poverty is because of our ability to provide them with jobs in a global economy the way they got less poor if you will the way they got out of extreme poverty it's because of capitalism it's because of the system that creates inequality it's just the system of freedom it's just a system that leaves people free and some create big pies and some create little pies why is it anybody's business how big of a pie I create alright so at the end of the day I think we should all be for freedom I think we should all be for capitalism we should all be for the only system that has brought human beings out of poverty the way we got from 300 years ago to today from economic freedom the way we got from 300 years ago of equality to the inequality and rich that we are today is because of freedom and capitalism we should celebrate those and stop, we should really stop talking about inequality it's meaningless thank you I would like to raise the question after we show the video raise the question for the group and we can discuss about it and then we move to some question answering questions alright you will see what happens so she gives a rock to us that's the task and we give her a piece of cucumber and she eats it the other one needs to give a rock to us and that's what she does and she gets a grape and she eats it the other one sees that the rock to us now gets again cucumber she tests the rock now against the wall she needs to give it to us and she gets cucumber again what can we learn from monkeys about human beings and is what is the fundamental difference if there is any between monkeys and human beings monkeys are not human beings we evolved from monkeys but monkeys are not human beings we evolved from species we functioned by different laws some may argue about this nobody could argue with it we have the capacity some may choose to live like monkeys but this is the big difference monkeys cannot choose to live like human beings but we can choose to live like monkeys we have free will monkeys do not we have a conceptual ability we can invent rockets to take us to the moon we can zoom we have lost space monkeys cannot you cannot learn anything about human behavior from monkeys human beings are so removed evolutionarily from monkeys that it is meaningless to study monkeys in order to understand human beings we are complete I mean we talk we have complicated conversations we do experiments on monkeys they don't do experiments on us what about jealousy? does not exist? jealousy I mean it depends what you mean by jealousy jealousy I know that you are right but I'm jealous it's painful in my stomach jealousy is something we learn it's not something that's ingrained in you you're not born jealous it's something you learn and some of us are not jealous of Bill Gates's billions not at all I live a good life I wouldn't swap my life for anybody's life I don't want Bill Gates's life I like my life I might be ambitious to be wealthier and to have a bigger house but it's not because my neighbor has it people who always want what the neighbor has are miserable people they're unhappy if you live your life based on jealousy you're always looking at other people you're going to be miserable but not everybody's like that and that suggests that it's not wired into us it's not how we are as human beings it's learned and it can be unlearned and to unlearn a lot of that bad stuff I recommend reading Iron Man look it's not that I support jealousy as a virtue but I think it's human maybe I think it's bad ideas I think it's bad ideas that make us focus on the other instead of focusing on our own on ourselves I'm not jealous of LeBron James's ability in basketball you know it's you see with young kids jealousy is not competition I'm competitive if I got on a basketball court with LeBron James I would play against him knowing I would lose losing to him but we're competitive competition is different than jealous young children are competitive and their parents teach them to be jealous often because the parents are jealous and we teach our children to be jealous we also teach our children to share we teach our children to be good socialists right but we don't share as adults your young kid is playing in the sandbox with his little cars and what if the parent says you got to share why? why should the kid share? I mean he could trade I'll give you my truck if you have a sports car or something and you won't share as an adult if some stranger came up to you and says I want to borrow your car right now would you give him the keys? of course not and you think your kid doesn't know that and doesn't know you're a hypocrite there's little subtle things about about the big world and about what we expect from them that we don't even know we're teaching them alright let's see I would like to hear Amos where's Amos? Natalie's got a hand up we'll get to Natalie Amos good evening there's Amos thank you Yaron fascinating discussion I think that it's very easy to agree with your assertion that everybody is getting better off by everybody being free and doing everything they can for the best ability the question is if return on capital and that relate to what you said before capital is much higher than the growth of the economy you claimed that the wealth would not be concentrated in the hands of few no I claimed that the return on capital cannot be over the long run higher than the return on the growth of the economy it just cannot be there's the marginal return for capital I mean it's a basic law of economics that Piketty chooses to ignore the more capital you have it's just going to be on that capital but if you look at the return on the S&P 500 over the last 50 years and you compare it to the growth of the economy you get on one hand over 10% return on the other hand you get maybe real return of 2% yeah but that is a massively biased sample right because you've got a survival bias there you're capturing only the firms in the S&P 500 that have survived the entire period you're not taking into account all the firms in the S&P that have been dropped by the S&P or born bankrupt or gotten smaller it is a tiny little segment of the entire economy, entire allocation of capital it's just one little piece of it you can't do that kind of math it's just wrong math you can't compare apples to oranges and by comparing the S&P to the economy you're comparing two different things there are periods of time where the return of capital is higher than growth in the economy and you want that because that is what spurs ultimately the growth in the economy is more capital flowing in because the return is high what that does is suppresses the return on capital and increases the return on what's been invested in which is the economy but it never happened when Karl Marx claimed it would happen and it just cannot happen it's not good economics it's not how economics works yeah it might be what you're saying might be correct in the law grant I think that regardless of the fact that few companies came out of the S&P 500 a lot of companies came out of the S&P 500 the S&P 500 today looks nothing like the S&P 550 years ago nothing like it there may be three companies that are the same yes think about the wealth that Apple created and is now in the S&P 500 and think about all the wealth that was destroyed because some company went the other direction right and you net those out and the net is the growth in the economy okay but still so if we look at the last 10 years you have to agree that the S&P had much better return the day before me absolutely okay now according to your assertion we all should be happy if all the wealth let's say 99.99% of the wealth is created in the hands of you the rest of us are still better off because we get 0.01% of the wealth created so everybody is better off but all of us should be happy in this situation but if that were the case then we won't be better off because if 99.99% of the wealth was created by people we wouldn't have the money to buy the stuff that they're creating we would have nothing this is part of this problem but you can't create science fiction unrealistic examples and then judge a theory based on those examples the fact is that it's impossible for and I can show it economically if I had a blackboard for 99% of the wealth to be created by a few people it just doesn't work that way partially because they have to employ people to help them create the wealth and because of what I do that's what we just do with the salaries that we get and how we deploy it it's just not it's not logically possible but in the US in the US now the three richest people I think have more wealth than the bottom 50% well okay let me you know the you I don't know you almost I don't know how much wealth you have but I'm willing to bet that you almost alone 10 million Americans combine we combine all the wealth of actually more than 10 million probably 50 or 100 million why? because every student in the United States has a negative net worth so if you add up all the students in the United States they actually have a negative net worth so you could have one dollar in the bank and you would be wealthier than the millions of students in the United States these kind of statistics are meaningless the fact that three people are wealthier than so many people so what I'm wealthier than half the population of the earth may be combined because they're so poor the point is this the three people in the United States are very very wealthy the three people all made it honestly they all made it by creating something they all made it by making the lives of people better off there's no other way not just in the United States but all over the world and there's no question that the world is better off of having Bill Gates there's no question that the world is better off and not Bill Gates worth let's say a hundred billion dollars how much wealth is he created in the world well if you calculated people have done this it's trillions of dollars say he created trillions of dollars and he has a hundred billion dollars I think that's quite a bargain for us we are all much better off of that so I mean Microsoft by itself worth one point six trillion dollars yes and think about how many how many million is Microsoft created among its employees and among its suppliers and among other software companies that built for its platform and among computer manufacturers that built for its platform the amount of wealth created by Microsoft is unimaginable so what if Bill Gates has why does anybody care how much wealth Bill Gates has so fair enough do you believe in progressive Texas no absolutely not so you don't believe that people at Bill Gates should pay higher percentage I'm talking percentage I think they should pay a lower percentage because they contributed more but I don't think that's right I think everybody should pay the same percent across the board flat tax simple tax flat I actually believe they should be knowing income tax because the last thing you should want to do is tax production tax building, tax creation tax work you should tax consumption there should be a flat consumption tax and that's it I agree with you about that income taxes income taxes discourage work right if you tax something you discourage it if you subsidize something you encourage it but if you tax consumption you discourage consumption what's the difference what is consumption consumption from an economics perspective is destruction it's the elimination of stuff production is the creation is what grows in economy production is what wealth is consumption is just when we eat ice cream it's gone consumption is destruction so I'm all for production now the purpose of production is to consume but consumption is not an economic drive I'm talking about from purely economic perspective you want to tax the consumption you do not want to tax the production from an ethical perspective there's a whole other story tax production in your type of a world are you worried about a democratic process in which people will rebel and will eliminate we'll get to the opposite direction where you want to go not rebel because if I look at history you've never seen a rebellion in a free country you've never seen a rebellion because of inequality in France against the kings because it was a kingdom it was political inequality but for example, Hong Kong has massive inequality there's no rebellion about the inequalities there's no rebellion about inequality even in the United States there's no rebellion now if you give people the right to vote about everything which is absolute democracy which I'm very opposed to that's a system that killed Socrates let's remember they didn't like what he spoke then yes, they'll vote what do they say, two wolves and a sheep vote on what's for dinner how does that turn out? I don't believe you should allow people to vote to take my money so if I were rewriting the constitution I would make it impossible for people to vote to take my money or your money because it's clear that the majority is always going to want to take the money for the minority exactly, that's why you have to get into a system which you don't maximize necessarily the total wealth in the economy by smart taxation but you prevent a situation in which the masses are voting in a party that takes 80% taxes see, I don't think the masses are that stupid I think you want a system in which the masses are happy, are productive and a system that has institutional guarantees that protect the minority and that's what America was a long time ago for a long time it's not anymore but you probably know that if Joe Biden is going to be elected taxation tax rate is going to go up drastically but on the other hand I get rid of Donald Trump so it might be worth it I might be willing to pay a little bit more taxes just to get rid of Donald Trump so now you came to my side you said that you are willing to give up a lot of wealth in order to get benefit of not seeing somebody a president that's right but America today is not the standard America is not the standard that I want to see I want a much freer country a much better country a country that has a lot less taxes and doesn't have buffoons as presidents okay, Nony, I'll let somebody else I can, I can do it forever yeah, thank you it's relevant but really we want to let other to ask questions staff Ben good evening in English or in Hebrew either, whatever okay I grew up in Canada okay, okay I love the Canadian mafia go ahead actually, I don't really have a question, I want to thank you for the lecture and for the words and Ayn Rand Nony reminded me I did have a question in the beginning, if you could briefly give some background or have you already, because I haven't been here all of the lecture about the institute the Ayn Rand Institute and the vision of the institute sure, I mean the vision of the institute is really to introduce the war to Ayn Rand and to make her an important player in the intellectual world in which we live that is to make Ayn Rand a voice in the culture, I mean the fact that I think many of you probably heard the ideas that I expressed today for the first time I don't want that to happen I want the ideas that I expressed today to be part of the debate ongoing debate in the world around us and that's the mission of the institute it's to take Ayn Rand's ideas and bring them into the debate and ultimately change the culture so that I get the world I want those of us who like this get the world we want which is a world of actual freedom of people who are free to live their lives based on their own thinking in pursuit of their own happiness and not a world in which some groups decide how other people should live some groups decide how much money you can keep some groups decide what products you can invest in I want a world where people are truly free free to make mistakes by the way and we're going to so the institute is really focused on that we do it by trying to get people to read Ayn Rand's books whether it's by running the world's largest essay contest we get about 20,000 essays every year from high school students we distribute books for free to teachers who are willing to teach the books we try to make sure that Ayn Rand's translated into pretty much every language in the world certainly her books are many of her books are in Hebrew and much of that is because of Boaz I'm hoping equal is unfair my book that I just gave a talk on will be in Hebrew one of these days you know we try to write about her ideas get the word out there and then we teach your philosophy so what you're seeing is like an iceberg and a little tip that's sticking out underneath there's a whole philosophy I think Boaz talked a little about it when he was here to give a talk a whole world of real philosophy metaphysics epistemology, ethics politics and we teach that and we educate future intellectuals to be able to go out there and advocate for these ideas thank you hello hi hi do you want to ask something yeah, yeah I have a serious question here no one, one, one I have one serious question a serious, not serious not a serious series I have one serious question so after reading Ayn Rand let's say The Fountainhead or Atlas Shroud yeah after reading these books and after knowing about you since like 15 years I know about you I was following you not that close because obviously I'm not libertarian anymore since my late 20s I just skipped that part of my life it was fun but after all these things you are talking about equally equal income inequalities not income inequalities here so okay everyone knows about this but after this let me ask you a question how is that, that we are not tackling the problem, the real problem what's going on in the world today so I'm Hungarian in Hungary we have less income than in the US right, there are let me tell you one thing there are zero riots in Hungary zero riots in Hungary why is that, why is that why did you not talk about the serious and important things why do we have to I'm sorry you didn't talk about two things you didn't talk about not just the solution was the solution because it's okay it's okay you didn't talk about the solution you didn't even talk about the problem itself what's causing these problems in the USA because it's obviously not income inequalities come on, come on let's not play this game please I'm gonna play the game in spite of that it's not it's not income inequality has nothing to do with inequality most of the demonstrators and the rioters that throw rocks and windows a middle class they're white no they are not watch the videos no they are not and the problem is not income inequality the problem is ideological the problem is white people the problem is white people the reason you don't have demonstrations in Hungary you have no freedom in Hungary if there were demonstrations in Hungary they would shut down we have we don't have freedom in Hungary give me a break the fact is I'm sorry who did you talk about Bernie Sanders happy to talk about Bernie Sanders Bernie Sanders the problem in the United States and there are problems in the United States I'm not denying them the big the massive problems in the United States have nothing to do with income inequality they have everything to do with an ideology an ideology that believes that equality Bernie Sanders is successful because he has sold the idea he has sold the idea to people that inequality is a problem and who voted for Bernie Sanders and this is not up for debate this is factual he did not win in poor states he won in rich states he wins because Upper East Side in New York and Upper West Side rich Americans intellectual Americans vote for him and young college students vote for him poor people voted for Biden poor people across America voted for Biden and if you look at the 2016 election working class Americans voted for Trump Trump is not a product of wealthy Americans wealthy Americans voted for Clinton for Hillary, Wall Street voted for Hillary Silicon Valley voted for Hillary this is none of this is about income inequality all of this is about in America we have a corrupt ideology an ideology that dominates both the left and the right in the United States is corrupt and corrupting and what people are voting for is ideas Trump is bad and white people are bad I see, I see so Trump is bad and white people are bad fine Trump is awful and white people I think race is irrelevant to anything I don't think color of skin should matter race is quite important race the idea that race is important is discussed it's truly disgusting why do Ashkenazi why do Ashkenazi Jews have the highest IQ why do Ashkenazi Jews have the highest IQ why do Ashkenazi Jews have the highest IQ it's not, it's it's genetic can we move on I don't like the line of questions I see, yes sure you want me to come and give a talk on IQ but I really do find this we have to respect our speaker it's not insulting to me it's insulting to the world and this comes out of hungry and it's not an accident comes out of hungry there is a rising white nationalism there's a rising white racism and we Jews are going to be the first victim of it and beware of this kind of talk of IQs and Ashkenazi Jews and the reason by the way we have high IQs is so we can manipulate the world and control it because I'd love to be able to do that you know it's so offensive to think in terms of blacks have low IQ these people have that IQ those people have that IQ it's focus science and it's disgusting social theory and the history of it is something we should all be very familiar we might be scoping to reality but reality is I will take you on on the statistic behind IQ you can't just say stupid Hungarian how should I know that I have a question on what Thomas said to Yaron but in a different way Yaron do you believe in equality of education that's a good question I don't believe there is such a thing and I don't think there can be such a thing I don't believe in what some people call equality of opportunity I don't think there is such a thing you can't get equality of education and I don't believe in things that you cannot get I believe in reality I believe in things that are possible I believe in maximizing opportunity for education and the way to maximize opportunity of education is is to get rid of government control of education it's to bring innovation it's to bring entrepreneurship to bring competition into educational field and some of the best schools that serve poor people are private schools and it's not surprising that they are comparable at serving poor people they actually make poor people they actually oppress them because education poor people get is much worse than education rich people get in public education in government schools so I believe that the only way I don't believe in equal anything when it comes to economics or opportunities I believe in maximizing opportunities and the best way to do that is through freedom who should pay for the private schools whoever wants to that is so I always ask my audiences how many of you are willing to help poor kids get an education by putting some money aside and contributing and every single hand in the room goes up and I say great then all of us will start a foundation and we'll pay for poor kids to get an education and we'll pay for them to go to school and why do we need the government to step in and tax us and create massive inefficient bureaucracies and start their own schools with one set of curriculum with one set of priorities with teacher unions and completely corrupt the process we as individuals will do it now I have no doubt in my mind that in a true free market every child will get an education and a thousand times better than it is today the government should give a coupon for education to every kid I think that is between the world we live in today and my ideal world somewhere a hundred years from now that is the best transition so the best transition is something in the United States we called education saving accounts where the government basically takes the money they spend on your government on public education puts it in your account and you can spend it on any form of education you like you can choose and then competitors compete for your money okay do you believe that more investment should be put into poor kids than wealthy kids because they don't have the same opportunities at home to get support and to study again the question is who is going to make that investment not from the government no I think when the government does that it makes things worse there is no empirical evidence there is no empirical evidence there is no empirical evidence putting more money into the problem solves anything if you give poor parents enough money to give their kids a private education that is good enough the private schools will take care of the rest that is what I am saying but it might be that poor kid comes home at 1pm and there is nobody at home and there is only one mother and I know rich kids that that happens to them I know rich kids that get abused by their parents the fact that you have money doesn't make you a good parent you can't evaluate that on a case by case basis everybody should get the same because that is the only way to allocate fairly tax money but I would claim that on average a poor kid needs to be in school for 8-10 hours a day and a rich kid can be 5 hours and get the same level of education I don't know I tell you what I am saying I don't want to take the planet deciding these things for me I want the mother I want to give some other it is fascinating but because it comes to what I am saying not really going to kill me tomorrow that is the story we still have time to take exactly thank you so much for this fascinating talk and the mother I am new and I like the story I like it very much I want to ask I have a question about more of a psychological point of view if what is your view about let's go another way if the poor want more money or some people want more money some people want less money what is your view about the individual's relationship with money I think money is a relationship that the person has with it I think if you change the relationship towards money a lot of people will have an easy time with it maybe it will what is your view about that I think it is up to the individual I agree with that I think we should all have different attitudes towards money some people are more competitive than others and part of that competition is money is how much money they make some of us don't care that much about money I will give myself as an example not that I don't care much about money I really do care about money but not that much I could have gone and worked on Wall Street I run a hedge fund I could have dedicated the last 25 years to my hedge fund I didn't, I left my partners and I went to run a non-profit why? because the fact is I enjoy what we are doing right now but will the Institute is it dealing with it it's dealing with inequality is it dealing with the solution to the actual relationship with the money if you read what I highly recommend there is a speech in Atlas Shrug that's just about money what money represents what money means and what is its significance and at the end of the day money is a symbol of the value you create the economic value you create in a culture but that's it that's all it is it's a representation of the economic value you have created a little bit of money means you've created little economic value that's okay if that's what you choose but it's a lot of money you've created a lot of economic value in the society the reason teachers get paid less is because they have less impact on the world because they only teach 30 kids at the time but Zoom the guys who created Zoom have changed the lives of hundreds of millions of people and it made possible education at a scale unimaginable even 10 years ago and that's why they're going to make billions and teachers only going to make tens of thousands yes but we're talking about inequality and people think that this is unequal and I say no it's not unequal this is how it's supposed to be but these people that want it to be equal I think in my opinion they have a bad relationship because money is supposed to be earned money is a result of value creation it's not supposed to be given when you give somebody money when you give somebody money you destroy their self-esteem you actually make them worse off I agree so the important relationship with money is to view money as something that you earn that you create that you produce as a reward for something not as just manner from heaven not as just something money is a reward system it is a way to compensate you for values you've created and if you take your kids and you give them money throughout their life and you've got enough money in their 20s you keep giving them money then they never learn to appreciate what money is they never learn to appreciate what it takes to gain money they never learn to appreciate and the same with the welfare state if you take a group of people and you say, you don't have to work for a living we'll just write you a check we'll send you a check every month then you're institutionalizing them into misery they will never be happy you cannot achieve happiness with other people's money So Yaron, what do you think about this idea of universal based or given what I just said what do you think I think what I think of universal basic income I think it's a terrible idea it institutionalizes the idea that people are owed something and that they should get a salary whether they produce or whether they build or whether they make or whether they contribute or whether they do anything with their lives somebody could sit in their parent's basement and play video games their whole life and they keep getting a check from the government why? somebody had to work for that money somebody had to produce that wealth and this kid is doing nothing he's contributing nothing he's adding nothing why should I pay for him so I think it's an immoral idea now is it better than the welfare state we have today? yes because it gets rid of the bureaucracy that is involved today in the welfare state today in the United States you have 500 different welfare programs the bureaucracy of welfare nobody has an incentive to get anybody out of poverty because they're making money off of keeping people in poverty UBI universal basic income gets rid of the bureaucrats it's just a check if you do away with all welfare all the programs food stamps all of it and you just send somebody a check then I think it's better than what we have today I still don't think it's right I still don't think it's moral or good one of the claim is that if people will have it and have the security then they will become productive through this kind of claim no I mean I think people who want to be productive can be productive today yes they're barriers yes it's harder for some people than others but we live in a kind of society I know a lot of people who will raise poor, grew up poor bootstrap themselves were successful I think those arguments are insults to people who have actually been successful in life in spite of growing up poor it's what you make of what you have it's really what you make of what you have and some people make a lot of it some people don't why should we reward those who don't