I'll start with talking about the issue of accessibility. So I know that you, most of you all know this, that there are still many, many people in the world without access to electricity. Estimates are around one billion people out of our seven and a half billion people on the planet who don't have access. And if we look at places like Sub-Saharan Africa, basically there's been really almost no improvement over a 20 year period that population is growing faster than electricity accesses. In some parts of the world, like India and Bangladesh, there has been a significant improvement in the availability of electricity, at least at the village level. But in those cases, just because it's available, the village doesn't even really mean it's available to individuals. It just means if you could afford it and if you have the proper hookup, you can have access. So lots of people and it just goes without saying that it's pretty unimaginable for us sitting where we sit, living without access to electricity. And I think the situation is even more daunting when you look at cooking fuels. There are about 2.8 billion people or about more than a third of all people use solid fuels for cooking. So this is biomass cold charcoal, also used for heating. And there's really been no improvement whatsoever over the past 20 years. It's been really hard to displace for a whole set of very complicated regions. And challenges are, of course, the air quality implications of burning solid fuels, particularly burning them in households, but it's also very time consuming to go get the solid fuels and collect them and have them available when you need them. So a real challenge in the area of cooking and warmth. So what I'd like to spend a moment doing is just talking about the benefits of energy consumption. And I'd like to talk about this in the context of sort of the average amount of energy consumed by a person for per year. Okay, and we can look around the world at different countries and they all have a different average availability of energy. And this sort of characterizes what one could expect in terms of the energy services available at different levels of consumption. So if we look at countries where people are in the range of, or portions of countries where people are in the range of 20 gigajoules per person per year, you've got basic cooking, some warmth, water availability, household lighting, and maybe a cell phone. But that's sort of this very basic package of energy services. If you can move up to say double that, what we start to see is people begin to use irrigation, there's the potential for things like food preservation, cooling, cooking, and sort of industrial scale cooking, transportation, you can move beyond a purely subsistence kind of agricultural and start generating markets. If we get up to say 60 gigajoules per person, we start seeing really enhanced communications, entertainments, TVs, school lighting, computer access, basic healthcare, much more widespread transport, sanitation, and so forth. Once we get up to 80 gigajoules per person, we start supporting industrial and commercial development. So machinery, automation, industrial processing, and so forth. And once we get it up to 100 gigajoules per person, the energy services are really advancing quality of life. So we start getting to comfort, heating, and cooling, advanced healthcare, advanced technological development, and so forth. So there's this hierarchy, but the availability of energy is very important in the context of, is it available on demand? So if you're up at the 100 gigajoules per person, you could expect when you flip the switch, it comes on. But at the very low levels, the energy services are very sporadic and unreliable. And there's a similar issue with regard to energy quality. You cannot run advanced equipment and machinery unless you have a grid that provides very high quality power, meaning it stays on, but also with good frequency regulation and so forth. So this brings us then to this chart where we can see the correlation between availability of energy and at least one measure of human wellbeing. So this is in this graph, we've got the energy per capita on the x-axis and on the y-axis, we have the human development index, which is a composite indicator of human health, level of education, as well as gross national income per capita. And the higher this value, the more wellbeing is reflected by this number. And what you can see here is that countries at less than 100 gigajoules per person typically have very low human development indexes. You can see it goes up. And by the time you get to 100 gigajoules per capita, very interestingly, what we see is there's almost no benefit in terms of this index of wellbeing. And so if you look at countries like the United States, they're way over here at nearly 300 gigajoules per capita. But if you look at countries like India, much closer to about 0.6, China has been advancing steadily and it's now close to 100 gigajoules per person and close to 0.8, human development index. So in light of this, and in light of the fact that we need to provide equitable, affordable energy to everyone, the question is, well, how much might we need? And from my perspective, that if we set a global target of about 100 gigajoules per capita, that would put us in the right ballpark of how much energy we need to provide. I used to say, imagine a world where everyone lived like an Italian, which is the Italians are a little bit more than 100 gigajoules per capita. And everyone goes, yeah, I can imagine that sounds like a pretty good life. So as a target, that's, I think, a good start. So when we think about energy access though, this is not a static situation. As we know, the world's population is growing. Incredibly quickly, it's always a shock to me to see every time I turn around, there's another half a billion people. Today, we're at about 7.6 billion people. And if we look at the United Nations forecast out to around 2100, we're in the ballpark of about 11 billion people. And it's also interesting to take a look at these projections of increased population in terms of where will population be growing? So if we look at upper income countries, what we anticipate is that the growth rate, and basically we are not increasing populations in upper income countries. In middle income countries, interestingly, populations are anticipated to go down, but we see enormous growth in the population of the least developed countries, which further exacerbates this energy access challenge because we're going to have more people in the places where people already need more energy the most. So we can say we need 100 gigajoules per person, we've got 11 billion people, we'll have 11 billion people estimated by 2100. So we need to imagine designing an energy system of about 1100 exajoules. That's a big number to put into context. That's about two times today's global energy use. So from my perspective, as we grapple with the Climate and Energy Challenge, I've always got this number in mind is what collection of energy resources and technologies can provide 1100 exajoules. But of course the story doesn't end here. There we've talked about the challenge of accessibility, but there's also the challenge of having an energy system that's protective of the environment. And of course there are very significant air quality issues, but that's really not the focus of today's conversation. Here we are really talking about climate change and how do we design an energy system that's both accessible and helps us solve the climate problem. So we can take another look back at the energy system. And as I said, we had about 600 exajoules of primary energy. About 82% of that is from fossil fuels. Of course the challenge is that when we combust fossil fuels, we make carbon dioxide, which leads to the accumulation of heat-trapping gases in the atmosphere and global warming. And here's a record from August 21st, just 10 days ago of the latest data from the Montaloa Observatory with carbon dioxide concentrations in the range of 415 parts per million. And again, this is daunting to me because when I started really paying attention to this issue, the CO2 concentrations were about 360 parts per million. So it's not a surprise that there's been significant warming over the past 200 years or so. So this is a data set made available by NASA looking at the global average temperature. And we can see steady warming to today where, as I mentioned, about 1.5 degrees C of warming. And we already see very significant consequences of this. Here are two really striking photographs from space, one of California in 2018, and one of Australia in 2019. Both of these regions with massive wildfires, unprecedented wildfires, and having lived in California since the 1960s. We've always had wildfires, but they didn't start in June, they didn't last till November, and they didn't do the massive amount of devastation that we see with today's fires. And likewise in Australia, this was really unprecedented. And here is some photographs just from a week ago. Again, California on fire as we're having this meeting, very significant fires, particularly in Northern California, very close to where I am. And on the right hand side, again, an amazing photo. This was from the International Space Station, looking at the cloud of smoke over California. So everyone has their own version of experiencing climate change. It depends on where you live. It's highly local. But I think almost everyone now has some experience in their own life that an accumulation of experiences really, which say climate change is here today. Of course, there are in addition to these immediate and extreme events, there's also sort of slow moving catastrophes as a way I would think about them. If the Greenland ice sheet melts, we'd anticipate about six meters of sea level rise. This would be an enormous problem for coastal cities. And I took this photo myself and I was next to a glacier that was capping at a rate of four times. And now caps at a rate of four times the average from the 1960s or so. And this is the largest glacier in the Northern hemisphere. So that brings us to, well, what are we going to do about it? Well, the IQCC in the fifth assessment report, and more recently in the 1.5 degree C report, have made it clear that we have a carbon budget. And the idea is that if we want to limit warming to, for example, two degrees C, there's going to be some maximum amount of carbon dioxide that we can emit. And if we want to, for example, have a 66% probability that warming will remain within two degrees C, we have a remaining budget, because we've already spent a lot of our budget of about 1,100 gigatons of CO2. And I think the equally important conclusion from this perspective is that if we go over our budget, we're going to continue to have warming. So if we really want to stabilize climate at one and a half degree or two degrees C or wherever, at some point we have to achieve carbon neutrality, which is where carbon dioxide removal, which is the focus of this work, becomes so important. And this is said on a backdrop of the fact that there are many CO2 emissions that are very difficult to eliminate with today's technologies, either from an affordability point of view or we simply just don't have another option. These are things like shipping, aviation, long distance road transport, ironman steel manufacturing, cement. And also, even though renewables have gotten to be in many parts of the world, the lowest cost option for providing electricity. There are still very significant challenges associated with integrating renewable generation to provide the reliability and the quantity and quality of electricity that we need. So that at least for the time being, having some kind of particular natural gas generation available to provide what we call load following electricity is going to be important. So if you add up all of these difficult to eliminate emissions, we're about 9.2 billion tons a year. And this was based on 2014 data, quite similar today. And by 2100, who knows what that number will be, but it will be significant, most likely. And if we're going to deal with these emissions, we need some form of carbon management. It could be capturing storage on point sources or alternatively, we can look to other solutions that directly capture carbon dioxide from the atmosphere. This has put into a sharper focus by integrated assessment studies, which show that if we want to achieve limiting warming to two degrees C or less, that we're going to need to be on trajectories such as shown by the blue and green curves here, suggesting that we need to be very close to peak emissions. We need to rapidly decrease emissions. And that sometime in the latter half of this century, we're actually going to need to be actively removing carbon dioxide from the atmosphere, which brings us to the urgency of beginning to develop the technologies and approaches that allowed us to do this. And at a really enormous scale. I mean, if you look at these numbers there, 15, 10 to 15 gigatons a year, you know, that's on the scale of a third of the global energy system today. And we know what an enormous that endeavor is. So there are many, many pathways to carbon dioxide management and carbon dioxide removal. This was a chart that was prepared on 2016 at the request of the secretary of energy to, to try to lay out the broad landscape of what are the options for carbon dioxide removal. And we won't go through this in any detail, but it does set the stage really for, for the agenda items that we're thinking about today. We have a source of our emissions today, about 36 billion tons. We can choose to capture from concentrated sources or we can capture from the air. There are a whole set of capturing conversion processes that are possible. The result of that capture process, it could be either you have a gaseous, a gaseous CO2, you could have organic carbon, you can have inorganic carbon. And then once you have those, then there's of course the question of, well, what is the ultimate fate of that? And you can either chose to utilize that carbon, or you can sequester it. And you could sequester it in geological formations, grasslands, forests, wetlands, oceans. So today's conversation is really going to be to explore the right hand side of this chart, looking at the potential of, of nature-based climate solutions to help us address this challenge.  We need twice the amount of energy that we're using today, and we need to do it in a way that's carbon neutral. And with that, I am done and thank you very much. And I will stop sharing my screen. Great. I'd like, I would like to remind everyone to please use the Q and A function to submit some questions. I know that we've got a couple queued up. So I'll hand it over to Jennifer Nome. Good morning, everybody. Thank you. Wonderful presentation, Sally. So we have a couple of questions. I'd like to start with Shafiq, Jeffer. Shafiq, would you like to go ahead and ask your question? Sure.  I'll ask my last one first, perhaps, since you were covering that, the 10 to 15 gigatons per year for kind of negative emission technologies to even reach the two C. Scenarios is quite daunting. Does the general community really believe there are sufficient routes currently that we understand from either director, capture, natural climate solutions, et cetera, really, really to get there? Are we believing this is really kind of a route today? Or is it still very much pie in the sky? What's your take on it? I think it's a question of money. I mean, we know, we can capture CO2 directly from the air today. You know, it's quite expensive.  So as a backstop technology, would we do this at 10 to 15 billion tons a year? I think so. Now, if you're looking at others, you know, more nature-based solutions, you know, I think then there are lots of questions and there are people who are more expert than I are, you know, what are going to be the consequences of the massive land use changes that would be required, for example, in the area of terrestrial solutions. Or if you look at oceans, you know, what would be the consequence of, you know, ocean fertilization or direct injection, you know, at that scale or alkalinity modification. So I think in the nature-based solutions, there are many questions about, you know, is the cure going to be worse than the disease? But I think that if it were purely a technological play, could we, you know, capture it from here and put it underground, I think we could do it. But it would come at a very significant cost. Thank you. Thank you. Thanks to Shafiq for the question. And it looks like folks, you're taking a little while to wake up this morning. So Shafiq, if you want to go ahead and ask another one of your questions, because you have, I know you have many, so. So Sally, the other question I had was when we look at this 100 gigajoules per person, I think you kind of answered it with the current energy mix, this translates into, to emissions, if I see that correctly, probably about double where we are today. Right. If we have the exact same energy mix, yeah. Okay. So that was kind of the number you put at the end there of the doubling of the energy. And from a standpoint of decoupling, cooking versus heating for biomass and solid, you mentioned for the last 20, 30 years, we've really not been able to make a dent on this use in the developing economies primarily. How do you see that? Is that something we can really decouple and kind of address the needs from a heating versus cooking in different ways? Or is this really kind of a coupled problem that we can't address? Yeah, you know, it's probably not a couple problem. I think for very, very low income people, I think it's a couple problem. I think for, and particularly rural, very low income people for, for urban or, you know, peri-urban populations, I think that they probably can be decoupled to a certain extent. You know, we still, though, see a massive amount of use of biomass in, you know, major, you know, cities of 10 million people still using biomass in, in South Asia in particular. Yeah, we have a question from Jessica. Jessica, would you like to unmute yourself once you're able to and ask your question? Sure. Can you hear me? Yes. Thank you. Okay, great. Yeah. So I was really curious on that, you know, continuing on this perspective of 100 gigajoules per person for the countries that really are using excessive amounts relative to that, you know, what are the, what are the main levers that we can use to reduce people from, you know, 500 gigajoules per person down to 100. And, you know, are these things really feasible, or is this kind of just a hypothetical? Mm-hmm. Yeah. I mean, there are huge efficiency improvements you can do. I mean, just looking at cars, right? If you are driving a car that gets 25 miles a gallon, there's a perfectly decent car today that gets double, double the mileage. You know, if you look at places like the U.S., which are very, very large energy users, there's a huge difference between, for example, U.S. and Europe is in transportation. There's also a tremendous amount that can be done in terms of building energy efficiency. So there are lots of low-hanging fruit, you know, and then there are some more expensive things that need to be done, more structural, you know, vehicle electrification being one example where you can get significant efficiency improvements as well. And once you do that at scale, it will require fairly massive infrastructure changes to make sure that the electricity system and charging infrastructure is up to the task.


Hello, welcome back to The Happy Huts. How can I find my Zoom call recordings? Where on my computer or PC or Mac can I find the recording file for my Zoom meeting? We're getting through this as quickly as possible and I'm going to show you two other things you can change in your Zoom call settings to make your Zoom recordings even better. To find where on your computer your Zoom call recording is, go up to your avatar in the top right hand corner and click on that to open up this menu. And then we want to go to the first choice on the menu which is settings. This opens up a whole menu window with lots of tabs down the left hand side where you can change different settings. But the first one we're going to go to is recording. And there, as if by magic, is the very first piece of information in this menu. Local recording, store my recording at, and this is the location where your Zoom call recordings are currently being stored. You can click on open to open the folder right now. Or you can click change to set where you want your Zoom calls to be recorded. But before you go, there's two other things you can do to make your Zoom recordings even better. Down here, see this checkbox here, optimised for third party video editor. I would really recommend that you tick this box because the way that Zoom records isn't very friendly if you want to edit those recordings later. The second bonus change you can make is by clicking on the video tab on the left hand side and that opens up these options. Make sure you've got this box here, HD ticked, because then the Zoom recording will be in high definition and it will be a much better recording to use. I hope this video is helping. If you hit the thumbs up button, that will help others to find this video. And right here are some other things that I do with my video recordings. Can you please help my daddy get 1000 subscribers? Just click on the space. Thanks. Bye. How was that?


If you're stuck on defining your niche, I have a strange suggestion for you. Just let it go for now. Yeah, let go of trying to figure out your offerings for now, figure out your ideal audience, okay? Instead, build an audience based on your authentic personality and your authentic content first. So let me explain. When you try to figure out your niche from the beginning, you end up investing a lot of your time and energy in building a product or service, or in figuring out this ideal audience that you want to reach, and you become so invested in it that you lose the flexibility of what reality will give you. And also, you define everything, and you don't have an audience yet. And now that you've created your product service, okay, you figure out this is the people that I want to give it to, now you're trying to persuade this group of people to buy it, and it all becomes very unauthentic. You do copywriting, you do funnel creation, you do all these things that is not pleasing to the audience, it's not uplifting, it doesn't feel good, it just feels like, ah, someone's trying to market to me. Instead, try this, okay?  And your passions. And yes, you want to, you probably have a sense of where you might want to build a business in the future, but even if you don't, you could just show up as you. You're building an audience based on your personal brand. Have you heard that before? I think it's the most, I think going forward it's going to be the most sustainable type of business in terms of most viable for an ongoing long period of time. Building an audience based on your personal brand, okay?  Showing up either through video or through writing or through images and you build an audience who just love you for who you are. Imagine that. Yes, they're out there.  Last I checked, it was something like four billion people on the internet, okay? How many people will resonate with you? One percent of the internet, one out of a hundred people? One out of a thousand people? Let's say one out of a thousand people might resonate with you. Four billion people and then let's see, four hundred million, 40 million, four million people is one out of a thousand people on the internet might resonate with you. Now, let's take it down even more. Let's say one out of one tenth of those people you could reach, that's 400,000 people you could reach who might resonate with your stuff and maybe let's say out of the 400,000 people, one tenth of those really do resonate with you, really, really like who you are and your ideas and your personality. That's 40,000 people. That could be your true and raving fans, you know, for the life of your business. It's worth finding them, okay? The simplest way of building an audience is through paid ads. There's two ways, really. There's paid ads and then there's collaborations with other influencers. There are other people who have an audience that's growing an audience. Paid ads is easiest. You could run Instagram ads, you could run Facebook ads. My recommendation always to start with Facebook ads because you're able to tailor the targeting and you're able to post either writings or video or images to kind of, you have more flexibility with Facebook ads. It's right now that the cheapest, actually Instagram ads are cheaper, but I think Facebook ads in my experience has been more effective.  And then you get to know your audience members either through one-to-one conversations, private messaging, through phone calls, through video chats or through commenting. You get to know them and then you survey them based on what you want to offer. Hey, here are my three ideas for online courses. Here are my three ideas for one-on-one services. Which one of these is most interesting to you? Oh, interest. Oh, that one is most okay. Based on their opinions, you then offer the thing that they say they want. You see, so now instead of spending so much time and energy defining your niche, creating this product service that you're so invested in that you don't want to fail, which basically locks you in to an offering that may or may not be good in the market. You don't know. A marketing expert can't tell you. If you're just working with yourself and a marketing expert, you have two opinions, okay? You can't have just two opinions. You have to have opinions of hundreds of people or thousands of people. And how do you do that? You do that by building an audience first and then getting to know them, surveying them and then offering them what they want. This is the way that makes money and not only does it make money, it makes money authentically because now you're no longer trying to push people, push something down people's throats. You're not trying to make people buy something. You're simply talking to people who already love you, asking them what they want and then selling it to them. It's quite simple, but it's not how most people do it. Most people do it by trying to figure everything out in the beginning and they do it with too little information. They're not in touch with the market and I don't want that to happen to you. So build an audience first, whether you're doing it through Instagram or through Facebook or through YouTube, those are some of the best places to build an authentic personal brand and then you can sell whatever. And what you sell might surprise you. You might be totally surprised by what you can sell. I mean, maybe it ends up being, who knows, maybe it ends up being like they support you through Patreon. Maybe they're just, maybe they're sending you $10 a month because they really like your content and they want to support you in creating more stuff or maybe it's creating an online course that they want or maybe it's creating a group of, you know, a sort of more premier group of people that you facilitate out of that audience. Who knows? But let it be open for now until you build an audience and get to know them and what they are buying. What they are buying, what they're interested in buying and from there you can take a survey and then sell them what they want. I hope this is helpful. I look forward to your comments or your questions. Have a great day.


The assessment centre is very similar, no matter which of our offices that you attend it at and it has three main parts to it, so first of all you will be involved in a group exercise involving some sort of case study working with the other students at the assessment centre, then you'll have your one hour interview normally with one of our partners in the area of the business that you're applying to and then finally you will have a tour of the office and a networking session to really get to know our people. Generally you'll be placed in a team working towards a solution for a particular challenge. At the end of the day generally you'll present your solution with your team and at some stage during the day you'll also sit a closing interview. I'd say first and foremost make sure you get a lot of sleep. I think sleep is pretty important. For the next day we get a lot of people that are quite tired because they've been up stressing. So the second thing would be try not to be too nervous. Nobody really knows what's going to happen next. Nobody actually knows what's going to happen at all and everyone's in the same boat but it's a lot better and it's more fun for everyone if you can kind of relax and just enjoy things as they happen and unravel. Beyond that you could probably research the company. You need to know exactly what the company does and who they are when you turn up. It's all about interviewing for that company. When we have technical interviews if you could prepare for those just make sure you know and you're ready to kind of code and ask some technical questions but other than that get some sleep, eat well, relax, turn up, smile and just try and have a really good time. The best way to prepare for an assessment centre is research. Research the company, be confident talking about why you want to join the company and what makes you the best fit. Review your CV, make sure you're confident talking about your strengths and the skills that you've listed in your CV and also create your elevator pitch. Be able to introduce yourself in a couple of sentences because obviously you're going to be interacting with a lot of new people throughout the day. We actually say there's nothing to prepare fully. We try and say get a good night's sleep the night before but it's always good to think about case studies to read any practice case studies that you can online. Familiarise yourself with the terminology, the language. Just try and be the best version of yourself. Try and not be late, all those kinds of things and I think it's a good time to prepare some questions for the one on one partner interview as well. So when you speak to the partner bring some questions along to try and get a feel for KPMG. I guess be authentic is one of the big things for us so we want you to be the best version of yourself across the whole application process so when you do come to the assessment day we want you to be the same version of yourself that you have been throughout the whole process. So be genuine, be honest. If you're unsure in doubt about anything be a little bit more reserved but also if you're feeling confident feel free to speak up and ask questions, things like that. Standing out I'd say would be be yourself and ask as many questions as you can. So the dress attire for assessment days should be provided by the recruiter. If it's not it's fairly safe to assume that you should dress professionally. The first impressions count so you want to look presentable and professional. In terms of dress for the assessment centre we just recommend that you come in business attire but something comfortable. We don't want you to be fidgeting or too hot or too cold so just take the lead from the career service if you're not sure go and talk to them about what's appropriate. When it comes to wardrobe general advice is dress for the job that you're going for. If you're going for a company that has a pretty corporate culture make sure that you dress appropriately for that. At zero wear whatever you want. We are a t-shirt and jeans company we issue t-shirts every year. You can wear exactly what makes you feel comfortable. If that's a suit then wear a suit but if it's tidy t-shirt and jeans wear a tidy t-shirt and jeans it doesn't matter. Oh and a smile make sure you wear a smile. Again it depends so at Fish and Public Health Care we don't wear suit or tie so I would definitely ask the person that's organised the assessment centre as to what's appropriate. You also want to be comfortable so with these activities you might be moving around a lot so you do want to be in comfortable clothing. I think my top three tips would be first of all come prepared. I'm definitely be as calm and relaxed as you can because we want you to as I said before be as authentic as possible and as genuine as possible so we can see the best of you and your strengths. Secondly I would really recommend that you be as collaborative as possible on the day either in the team exercise or going outside of your comfort zone to talk to different people in the networking section. That way we can really see all of your skills and abilities to network and it gives you the opportunity to show off I suppose to lots of different people who will be involved in the decision making process. Thirdly I would say again to know yourself, know why you're applying to EY, know why you're applying to that part of the business, why you want that role and maybe even why in that certain location because often the partners are very passionate about the clients that they work with in the city. So know yourself and know what you're applying for. Communicate, so try and have fun, try and make friends. It's really good to see when a group of people who haven't met before meeting at assessment day and then become fast friends and we've had examples where they've gone out for dinner afterwards together, they've followed up with each other afterwards. It's really nice to see that cohesion and to see them communicate and make friends. Important things to remember with assessment days, you don't have to be the loudest person on the team. Utilise the breaks, make sure you're introducing yourself to people, networking, it's really important and as well the challenge on the day isn't necessarily the most important aspect of the day. So rather than spending your time preparing for the case study that you may do, spending your time reviewing your CV and being confident talking about yourself, think about how you're interacting with your teammates and obviously ask lots of questions. I think it's really important at assessment centre to listen really carefully to the instructions that way if you're not unsure with the activities that you can ask specific questions relating to them and be more comfortable. I suppose if there was anything else that you should probably remember when it comes to an assessment centre, the first one would have to be assume you're being assessed at all times, treat the entire day like an assessment. Sometimes the things that don't actually seem like a challenge actually are so that would be tip number one. I think tip number two is not. I said earlier that you should be yourself and it's okay to not be right for our company. But I would say it's not just okay to be yourself, it's just the best. The best people are always themselves and that's a lot easier to hire for. We can see that quite quickly. And then I would say probably the third thing to really nailing an assessment day is just to have an open mind and a positive attitude to pretty much everything you come across. If you can smile through something that you're nervous at or if you can smile at something you're not necessarily strong at, we're going to notice that as well and that's equally as important.


All right, well, welcome, everyone. 11 o'clock in the morning is about the perfect time to talk about Austrian capital theory. So here we are. I don't have a quote on, unfortunately, up on the slide. I don't know what happened. I was a little entrepreneurial heir, I guess. But I do want to read this from Ludwig von Mises' essay, Planning for Freedom. He says, quote, there are no means by which the general standard of living can be raised other than by accelerating the increase of capital as compared with population. And his main point there is, if we want to increase our standard of living, if we want to contribute materially to human flourishing, we need to stop thinking of capital as a dirty word and, in some sense, put the capital back in capitalism. And so that's kind of what we want to do a little bit today.  But some important works is Karl Manger's Principles of Economics, Eugen von Bumbauwerk's Positive Theory of Capital, Ludwig von Mises' Human Action, of course. F.A. Hayek's Prices and Production, Marie Rothbard's Manneconomy and State, Roger Garrison's Time and Money, and Hayes' Quarter to Soto's Money, Bank, Credit and Economic Cycles. The last three there are sort of, in some sense, periodic culminations of received wisdom about Austrian capital theory. I know that there is other literature out there, but this is a good starting point that will give you hours of reading pleasure if you start here. Now, if we're going to talk about capital theory, it is helpful and I think really important to understand what we mean by capital. What is capital? Is capital a stock of capital goods? Is it a pot of money available for investment? Is it a set of homogenous, non-human factors of production we represent with K as in das Kapital? The short answer to those is no, actually. Mises provides the answer to what is capital in human action. He refers to it as the sum of the whole complex of goods destined for acquisition evaluated in money terms. So it is sort of a stock of capital goods, but it is also not just a stock of capital goods because it's the set of capital goods, the goods destined for acquisition evaluated in monetary terms. So that phrase destined for acquisition means production goods, goods that are used for production and sale of products, goods that are factors of production, produced means of production. The phrase evaluated in money terms indicates that it is a capital, as we understand it, is a monetary accounting fund. A monetary accounting fund embodied in capital goods. And so as Mises says, as such, capital, this sum, is the starting point of economic calculation. If an entrepreneur wants to know, have they done good? This past year, can they be like Little Jack Corner? He says, oh, what a good boy am I at the end of the year. You compare the capital value of the firm. Has the firm's capital value increased or decreased? And if they've made profits and they've invested wisely, the capital value is going to increase. And if they either make foolish decisions and blow all their well, maybe not foolish, but they make the decision to blow all of their income on bubblegum, cotton candy, and ticky talk, or they just make unwise investments, their capital is going to shrink. And so capital is a key tool of economic calculation. Now, as I mentioned already before, it is not merely an amount of money. Mises later on in human action says this, quote, there is no such thing as an abstract or ideal, quote, unquote, capital that exists apart from concrete capital goods. Capital is always embodied in definite capital goods and is affected by everything that happens with regard to them. The value of an amount of capital is a derivative of the value of capital goods in which it is embodied. So as the value of capital goods go, so goes an entrepreneur's capital. And so we don't want to fall, if we don't understand this, we will fall into two perhaps different areas. We could see that capital is just a bunch of physical goods, apart from economic calculation. Or we see that capital is just a pot of money, apart from the actual capital goods. And so we need to remember that it is essentially the sum of complex of capital goods evaluated in monetary terms, according to appraisment by the entrepreneur. So what I want to do with this lecture, I want to start by looking at capital value. I'm just going to talk through it. I'm not going to get very numbers heavy here. But the capital value of an enterprise, if we want to talk about Dr. Herbner mentioned yesterday in his lecture on subjective value and price, he's talked about how prices of goods for both consumer goods or the prices of products, shall we say, the prices of products compared to the sum of the prices of the factors of production both contribute to allowing producers to calculate the capital value of the firm and hence help investors know, capital should I invest in buying shares or buying the assets of this firm or that firm. To understand the capital value of the enterprise, we have to recognize that the capital value of the enterprise is the sum of the monetary value of the assets minus its liabilities. And so the basis for capital, the capital value of an enterprise, is the capital value of the assets owned by the enterprise. That's like the business, not the Starship Enterprise. It's not related to Star Trek. And so the current value of the asset is the sum of an asset's discounted marginal revenue product over the course of the duration of serviceability of the capital good. Now, the discounted marginal revenue product, as you may know, is the marginal revenue product generated by an asset discounted by the interest rate. Because this was discussed earlier today, when somebody invests in the present, they invest in, say, buying a machine that they're going to use to produce a product they're going to sell for revenue. That revenue is going to be reaped in the future, but they have to invest now. But because that revenue is going to be reaped in the future, because of time preference, the present value of that future revenue is not going to be equal to the amount of the revenue brought in in the future. So it's going to be discounted. And so that's why what matters is the discounted marginal revenue product, not merely the marginal revenue product. So the discounted marginal revenue product is the marginal revenue product of the factor, the amount of additional revenue attributed to using this unit of a factor of production, in this case, a capital good, discounted by the interest rate. And so in some sense, you can say, well, then the route of the discounted marginal revenue product is the marginal revenue product in the interest rate. The marginal revenue product is determined by the productivity of that factor, the marginal physical product of the factor. How many units, more units can be produced by using this factor than not, times the price of the product. And so for instance, let's suppose that we are thinking about buying a computer, a computer that we're going to use for five years before it either wears out or it becomes obsolete. It gives up the ghost of the machine. So we try to figure out how much should we, are we willing to pay for this computer? Well, it's going to be dependent partly upon how many extra units of sales can we get, how much more spam can we sell for a particular period of time, for say a year from now, by using this computer for one year. And then we multiply the number of additional sales by the price of the spam, if you will, which runs right around $3.98 at Walmart if you're concerned about these things. And so you calculate these things and you find out, let's suppose that the marginal revenue product is $990. Well, if the interest rate, let's say, is 10%, so the social time preference is approximately 10%, then you will discount that $999 according to the interest rate. And so the present value of the $990 you'll get a year from now, the present value is going to be $900. But that's just for one year. Now, this computer has five years of service. You would get five different discounted marginal revenue products, but the discounted marginal revenue product is not going to be identical for every year because the second and the third and the fourth and the fifth year of this revenue is going to be two and three and four and five years farther down the road. And so the discounted marginal revenue product will be discounted by the interest rate over a longer period of time. But each year's worth of revenue will be discounted. And so if we sum up, then, the sum of the five discounted marginal revenue products over the five-year time, it turns out that maybe this computer, then, if we assume sales and prices to be constant, would be close to $3,753, which would tell the entrepreneur, that's what this computer will generate for us in terms of present value. So we don't want to pay, say, $4,000 for a computer that's going to generate a present value of $3,753. If we did that, we would be a loser. And that's not the goal of a producer. We want to be a winner, a profiteer, one might say. So the moral of the story is capital value is affected by many things. It's affected by the productivity of the capital good. The more productive, physically productive, the capital good is, the more output you're going to get by using this, and so the more revenue you're going to get by using this, so the greater the discounted marginal value product that you're going to get from this, and therefore, the more this factor will contribute to the capital value of the firm. Secondly, the price of the product being produced. If you're producing a good and the price of the good that you're producing increases, that increases the value of all the capital goods used to produce that good. Because all of these capital goods are going to be bringing in more revenue, not because they're more productive, but simply because the demand for the product is increased, which has increased the price of the product. Capital value will also be affected by the interest rate. If people's time preferences increase and become more present oriented, the social rate of time preferences will increase, the interest rate will increase, and therefore, these future marginal revenue products will be discounted at a higher rate, so the discounted marginal revenue products will be lower, so the capital value of the firm will be lower. That's why it's one reason why when the monetary authority, our friends at the Federal Reserve, work to increase the money supply and lower interest rates, that's one reason why stock prices increase, because the perception of capital values increase because these future streams of income are discounted at a lower interest rate. That's also why producers can be led astray by our friends at the Federal Reserve. Fourthly, the capital value is affected by the duration of serviceability of the capital good. The longer period of time that the capital good is useful, the more marginal revenue products will be generated by this capital good. So if instead of the computer being able to be used five years is actually able to use eight years, that will make the capital good even more valuable, assuming the demand for the product stays constant and the productivity of the capital good itself doesn't decline noticeably. And so the capital value of a good, I forgot to move along, the capital value of a good and hence the capital value of the firm is affected by the productivity of the capital goods that are owned by the entrepreneur, the price of the product being produced and sold by the enterprise, the rate of time preference, and the duration of serviceability. So all these things impact the capital value of an individual capital good and hence the capital value of a enterprise, a firm. Now note that the top factor there that affects the capital value is the productivity of the capital good. The productivity of the capital good is determined by at least two things. One is the complementary factors with which they are used. Like if I want to make spam and I don't have any, and I have lots of pork, but I don't have any machinery that I can use to process the pork and making the spam, that the pork itself is not going to be very productive. It's not going to help me make spam because I need these other complementary factors. I need other factors to work together with my pork to make spam. And so the complementary factors with which they are used impacts the productivity of any given factor production, any given capital good. Secondly, technology. Technology is important. Every capital good embodies a particular technology. I mentioned a machinery. I love watching. I don't watch it a lot, but every time I do watch it, I am fascinated this program, How's It Made? Have you ever seen How's It Made? I find that fascinating. And I sometimes show a video of How's It Made to my students showing the process of a potato chip being made and how automated the potato chip manufacturing process is.  It's an amazing process. I think that they call that machine the Nimbus 3000. I think it's the machine that they use to do all of this. It's fantastic. They even have a machine with sensors on them. So when the potato chips go down the chute, they can identify if there's a bad chip, like this chip is excessively dark, except it may be a little burnt or something. And then the laser will sense it and immediately trigger an air blast to blow the chip off of the main drag. And on the one hand, what this does is it supposedly increases the uniformity, uniform quality of the chips. It also makes it less likely that you're going to get a little door prize. When I was a little kid, it's like a little door prize. Oh, I got the dark chip this time. I got the super burnt chip. And it was a little bit different. It was kind of a fun little thing. Those days are gone because we've reached uniformity in our chip production. And so it was a pretty amazing thing. So all capital goods embody certain technology. It's way different. Making those potato chips that way is way different than the capital goods used by, say, Julia Childe when she made potato chips in her own kitchen. It's a whole different production process using a whole different set of capital goods. Technology also is embodied in what we call the production function. In other words, the process or recipe regarding how the different goods, the capital goods, the labor, the land is organized and put together to produce a product. All of these things, the production structure, how the process, the recipe for how goods are produced, and the technology embodied in the capital goods themselves, all of these things affect the productivity of the capital good. So in other words, in order to understand and to get Austrian capital theory right, we must see that Austrian capital theory incorporates both the production structure and how the physical capital goods work together in an economic order, as well as the entrepreneurial appraisement process. The entrepreneurial appraisement process that imputes monetary values to all of these things. If we fail to recognize either of these, the importance of the physical capital goods and the production structure, or the entrepreneurial appraisement process, if we fail to recognize either of these two things, it'll lead us to error. Some errors worse than others, but in any event we'll be left wanting. So let's talk about the production structure. The production structure is rooted in Manger's exposition of the interrelationship of economic goods. Manger and Principles of Economics sets out an excellent discussion of what makes something in economic good, and then talks about how economic goods aren't just a hodgepodge. Economic goods that are used in the economic order are not just sort of autonomous atomistic goods just thrown together in a pot, and you do the hokey pokey and that's what it's all about. No, they are related to one another. There are consumer goods, for instance. Consumer goods are the goods that are directly serviceable. They are goods that give us direct utility, but just by using them we don't have to produce them anymore. We don't have to mix anything with them. We just consume them, and we get direct satisfaction. And these goods are goods that Manger calls goods of the first order. The goods that are used to produce these consumer goods are called higher order goods. They're also called producer goods. Goods that producers use to produce other goods, eventually culminating in the production of consumer goods. And these producer goods are indirectly serviceable. They're serviceable, or they wouldn't be economic goods, but they don't satisfy our utility directly. The pork used to make spam is not utilized directly. The pork is a capital good that's used to make spam. So the pork is transformed into directly serviceable goods only at one point in the future. And so from that, we get this sort of standard categorization of different economic goods. Producer goods, we have land, large tracts of land. And we have labor, which is human effort. And we have capital goods. The produce means of production. So the capital structure is about how different produce means of production, different tools, different machines, different intermediate products fit together and work together in this process culminating in a consumer good. Now each consumer good is made possible by its structure of production. And if you've seen me before, you know that one of my favorite consumer goods of all time is a flowerless chocolate cake. It is the greatest dessert in the history of the world. It's one of the culminating consumer goods of civilization. I would suspect, I would suspect that as our culture declines, less flowerless chocolate cake will be consumed. They do not, I have this on fairly good authority, I think, they don't serve a lot of flowerless chocolate cake in the White House, for instance, or in the halls of Congress. That's just an expectation. I don't know anything about that. I would be shocked if they did. In fact, I would find it almost not right if they serve flowerless chocolate cake in the White House. But anyway, that's neither here nor there. So each consumer good is made possible because of its structure of production. To make a consumer good, a producer must obtain the services of the necessary land labor capital goods. So what is necessary for making a flowerless chocolate cake? We need chocolate, semi-sweet chocolate. We need butter. We need a pound of semi-sweet chocolate. We need a half pound of butter, two sticks. And we need eight eggs. And that is it. That is all the ingredients you need. I told you it's the greatest dessert in the history of the world. I am not kidding. Dr. Rittenauer does not lie to his students. Now, of course, if you just throw these things into this bowl here, they're not just going to spontaneously generate.  There's no place like flowerless chocolate cake. You've got to do so. There has to be other complementary factors, such as the spring form pan. That's the pan that the thing gets baked in. And it gets baked in an oven. There's a stand-up mixer, which is it's important that you have to be able to mix the eggs at a fairly high rate to get the kind of flowerless chocolate cake that you want. And there's even more factors than this. There is, of course, labor there, which is clear on the left-hand side of the screen, as a photo from an excellent photojournalistic book by August Sander. I can't remember the name of the book, but he was a German photographer that went through, in the 1920s into Germany, just photograph different people in their work outfit, in their place of business. And this is a pastry chef. And I always sort of liked him. But any event, he's engaged in labor, probably getting ready to whip up a flowerless chocolate cake. And so before we can eat the flowerless chocolate cake, the chocolate, the butter, the eggs, the mixer, the spring form pan, the oven, the spatulas, the mixing bowl, the microwave oven, if you're going to use it, they all need to be produced first. So we need those factors of production first. So the producer obtained services of factors of production by purchasing them in exchange for money. Now, this, unfortunately, can't probably see this a lot. This is, on the one hand, a fairly extensive production structure, the structure of production for a flowerless chocolate cake. The flowerless chocolate cake is clear at the bottom. That's why it's called the first order. And everything is above the other factors of production or above the flowerless chocolate cake. That's what they call their higher goods of higher order, or higher order goods. But this is fairly extensive. For instance, if you're going to make a flowerless chocolate cake, you now have to have semi-sweet chocolate, of course. You have to have semi-sweet chocolate. But the semi-sweet chocolate doesn't come out of nowhere. The semi-sweet chocolate must be produced. The semi-sweet chocolate must be produced using cocoa solids, and cocoa butter, and sugar, and a factory, and transportation, as well as land and labor. Those are factors that are necessary to produce the flowerless chocolate cake, because you have to have them to produce the chocolate. What about the butter? You need raw milk, salt, a separator, tanks, a churner, packaging, a dairy plant, land and labor, transportation to get the butter from the plant to wherever the kitchen is. What about eggs? What do we need to produce eggs, right? Well, I'm just going to tell you. I'm going to solve that age-old question. The chicken comes first. You need a chicken to give birth to the eggs, or to let the eggs fly, so to speak.  I don't want to get into that. I was going to say, I've heard this said that you know why all chicken coops only have two doors, right? Because if they had four doors, they'd be chicken sedans. Sorry. I'm doing that for my daughter's sake. She doesn't get at least one groan per hour. She thinks something's wrong with me. But you need a chicken, chicken coop. You need water, automated equipment if you want to produce eggs on a pretty large scale. Electricity, you need a chicken egg processing factory or plant, you need transportation, land and labor. So you need all of these things to produce the eggs that are necessary to produce the flowerless chocolate cake. So the producer obtains the services of all of these factors by purchasing them in exchange for money, which has already been discussed earlier today and the day before. And when the production of the lower goods is completed, the producer sells them for money, right? So the egg producer buys the chickens, the feed, the electricity for the chicken coop, the chicken coop material, et cetera, et cetera. They buy that all for money. And they produce the eggs. And then they sell the eggs for money to either the grocery store or maybe if you want to buy them direct to the dessert maker. And then the dessert maker spends money on semi-sweet chocolate eggs and butter and springform pans and spatulas and everything else. And then they use that to make flowerless chocolate cake and then sell the cake for money in their dessert shop. Desserts are us. So this process then, this process is a process, the production process is a process by which producer goods at different stages, at each subsequent stage, is used to produce a product that is then used for other products to produce another product, which is then used by products at another stage to produce another product, ultimately culminating in the production of the consumer goods at the lowest stage of production. Now this understanding of the production structure is helpful for a number of reasons. One, it helps us to understand how complex the economic order is. I mean, this is just, one, a rudimentary. This isn't even exhaustive. An exhaustive production structure for flowerless chocolate cake, you couldn't fit on one slide. This barely fits. You can hardly read it. So this is just, but it's simple. It's simplistic. So ask yourself, how easy is it for what it be for a central planning board to centrally plan the production of all of these goods that are necessary to produce just a flowerless chocolate cake? And a flowerless chocolate cake is just one little consumer good for people with refined tastes. So think of all the different consumer goods that are available. And then multiply all of this by the number of consumer goods that are available. It's very quickly would understand that trying to centrally plan effectively and efficiently an economic order is impossible. It's impossible. And I think every person in the social sciences that are drawn to this idea sentimentally or otherwise to the idea of central planning should at the very least first pick your favorite consumer good and try to trace out as detailed as possible the production structure that is required to produce that thing. That is not just an academic exercise. The more you do it, the more you will be amazed at the beauty of the free market price system, the beauty, dare I say, of capitalism. Now, if we look at another helpful thing about the production structure is that it teaches a couple of important principles. For instance, it tells us that production effort moves down the structure of production. Production effort moves down the structure of production. Let me see that on the right-hand side. Now, when I say production effort moves down, I'm not talking about the magnitude of effort. It's not like, oh, we have to work really hard at the higher stages and the lower stages. We don't have to do anything. We just kick back and drink our little lemonade and say, give me the flourless chocolate cake. No, that's not what we're talking about. We're talking about simply the direction of movement. The point is, before we can produce the flourless chocolate cake, we have to have the milk. So we have to produce the milk first before we produce the butter before we produce the flourless chocolate cake. Well, before we produce the butter, we have to produce the Holstein. We have to produce the cow. And so we begin with production at the top highest stages of production, and then production successfully moves down different stages to the consumer good. And so it turns out that the economic order does not depend on stimulating consumption enough. The economic order depends upon investment in production. So we have to have producer goods first before we can, including capital goods, before we can enjoy consumer goods. So production effort must start at the higher stages and moves down successfully to the lower stages. On the other hand, the other important principle is that income moves up the structure of production. Producers use money that they own to purchase the services of the factories of production and then use them to produce lower order goods. And so, for instance, what we mean by there is that desserts are us, wants to make a flourless chocolate cake. They must purchase somewhat sweet chocolate, eggs and butter in the springform pan, et cetera, et cetera, from the producers of these goods at the higher stages. And so their investment is income for the higher stage capital goods owners and the owners of the higher stage factor owners. The producer of the eggs, in hopes of attaining this revenue, must first invest and spend money on chickens and chicken feed. And so the income flows directionally, flows from the consumer to the producer of the flourless chocolate cake, to the producer of the egg, to the producer of the chicken feed. It flows up the structure of production. And value is also imputed up the structure of production. And what do we mean by this? We mean that we don't value flourless chocolate cake because we value somewhat sweet chocolate and butter and eggs, right? We can, you know, have a certain affection for somebody sweet chocolate and butter and eggs. I think they're great pals to have around. And not really care about flourless chocolate cake. But we value them more intensely because they can be used to produce flourless chocolate cake. We value the eggs because we value the product that they are used to produce. We value the semi-sweet chocolate because they're used to produce flourless chocolate cake. And so value is imputed from the consumer good up to the next stage factors of production. The semi-sweet chocolate, the eggs and the butter. But then the butter manufacturer because he can get revenue from producing butter, he then imputes value to the raw milk, to the separator, to the machinery used to make the butter, et cetera, et cetera. And so the butter is valuable because the flourless chocolate cake is valuable. The eggs are valuable because the flourless chocolate cake is valuable. And then, of course, obviously other things that you can use to make or valuable too. And then eggs, of course, it makes it a little bit dicey or shall we say scrambled. Things that complicates matters, of course, eggs can be eaten just as consumer goods as well. Ask people or friends at the Waffle House. So value and income directionally move up the structure of production. Now those producers who use their money to invest in the purchase of factors of production, we call the capitalists. Those producers who use their money, their savings, and they invest in the purchase of capital goods, they're called the capitalists. So the capitalists are the ones that own various stages of capital goods. Now, as was pointed out earlier today, any act of production takes time. You may have heard this. And hence, any action is based on a speculation about the future state of the market. And so the fact that someone produces a flowerless chocolate cake is no guarantee it's a profitable venture. We don't live in the field of dreams, right? If you build it, they will come. If you produce it, they will buy it, right? It is not supplied, it does not create its own demand. People supply to satisfy the demand that they think will be there. That's what the entrepreneur does. Now, it's also important to understand, as Suda Shanoi liked to point out in her work, the structure of production is basically the other side of the division of labor coin. We talked about the fact that the division of labor must be coordinated by entrepreneurs. Just building a, producing a good doesn't mean that it's a wise activity. It's only a wise activity if the value of the consumer good is valued more than the sum of the value of the factors of production. So that means that the entire structure of production must be coordinated by somebody, and that somebody of course is the entrepreneurs, the ones who undertake production. Each producer must produce an anticipation of the sale of his product or her product. And any investment in the production is made in anticipation of a later sale to lower order producers and finally to consumers. And so entrepreneurs are important at every step of production, every stage in the production process. So we don't, we can't, again, we can't analytically, analytically it makes sense to talk about the production structure and how the higher order goods and lower goods are related to one another, but we do not want to forget that all of this activity in the actual real economy must be coordinated by entrepreneurs. Now, this entire complex structure of production is only made possible by the use of capital goods. If we did not use capital goods in the, in any production process, the production process would be very, very simple. It used to be land and labor and that's it. There would be no complex structure production. And so, and hence no flourless chocolate cake, which would be a very sad thing. And so the complex structures only made possible by the use of capital goods. Using capital goods, therefore, is very good. It's very productive. It's very helpful, but using capital goods require longer what Bombaver calls more roundabout production processes, right? In other words, if we're gonna make a flourless chocolate cake, we don't just set out and start doing it. We first have to produce the somebody sweet chocolate, the butter and the eggs. So we have to do these things first. For instance, if I want to make a flourless chocolate cake, if Groucho wants to make a flourless chocolate cake, he has to buy a mixer of some sort. He probably will deem it wise to have a mixer. And he can think, well, maybe I want to buy the standing mixer. Well, standing mixer's gonna cost approximately $500. And if he spends $500 on a mixer, he cannot spend that same $500 on something else, like a ping pong table, right? And so, if he wants to buy the standup mixer, the capital good that's gonna be useful in producing flourless chocolate cake, he has to forego the spending of $500 on the ping pong table. So we can use the mixer to aid in this future production of flourless chocolate cake only by being willing to forego consumption now, right? The fund from playing ping pong. So you have to make the age old choice, flourless chocolate cake or ping pong. And then Groucho says flourless chocolate cake. Now, you probably know by now that there's restriction of present consumption is called saving, right? So the restriction of consumption is saving. And then we take those savings and we direct saved resources to the formation and accumulation of capital good, that act is called investment, right? So saving and investment go together, right? They go together. People save, not just to not spend, they save to direct those savings to investment, to the accumulation of capital goods. And thereby increasing the capital value of their enterprise. Now, why do they do this? If accumulating capital goods requires saving, requires restriction of present consumption, that means, I mean, we're gonna put it off. I can't have it all now. Really, why would I wanna do this? Well, I do this because capital goods increase the productivity of land and labor. And it does so in two ways. The first way is that capital goods increase the productivity of goods we can produce without capital goods, right? We could, if we wanted to, try to whip all eight eggs with just our fingers, right? And we can move them really, really fast and we can even not just move our hands fast, but move our fingers as we're doing it to try to mimic and we could even do this, right? Now, this looks very silly and it is. But the point is, you could try to do it. Now, you can't, I've tried it. You can mix eggs up this way a little bit. But it's a lot better to use a stand mixer. A KitchenAid stand mixer is much more productive. One, you put the eight eggs in there and you hit the button and it just goes by itself. Think, well, that's, and it whips it a lot faster and you get it to the, sort of the mild frothyness that you need to have a really good fly with chocolate cake a lot quicker than if you used your hands. But on top of this, on top of this, since it's standing there and it's doing its thing, that frees you up to melt the semi-sweet chocolate and the butter together. And it's like, it basically increases, like doubles your productivity. So instead of having to whip the eggs first and then melt the chocolate and the butter together, you can start whipping the eggs and while you're whipping the eggs, you can at the same time melt the butter and the chocolate together. Doubling your productivity. So that's, this shows us that capital goods increases our productivity beyond what it would be without capital goods. There are certain goods we can produce without capital goods, but by having capital goods we're more productive. But secondly, and more importantly, capital goods allow people to produce goods that they otherwise would not be obtainable at all. Some goods can simply not be produced without capital goods. This is one of my favorite cartoons, right? Talking about the golden age, the age that the fish called the golden age before the hook, the pole, and the worm were even thought of. So before any fishing capital goods, all they could do was try to catch fish with their hands and people were relatively slow and they couldn't do that. And so the fish called it the golden age, right? Before capital goods existed for the fishermen. So Groucho could not catch fish or game at all by himself with just his labor in the land. He needs a pole, a hook, a bow, and an arrow, even just maybe like a lean-to that would allow him somehow to, and a trap to catch a little rabbit that he could take care of later. A little Haasenfeffer. And so capital goods increased the productivity by significantly allowing us to produce a veritable plethora of goods we simply could not produce at all without capital goods. Now, so the role of the capital good is to advance people in time towards their objective. If we want to make a fly with chocolate cake, utilizing capital goods allows us to do this more quickly. What keeps then people from investing more and more resources in capital goods, time preference. The fact that we prefer present ends to future ends. At some point people will value present good more than some amount of fly with chocolate cake in the future. We do have to consume something in order to survive after all. So time preference determines how willing people are to put off present consumption to save and invest. And the lower a person's time preference, the more saving and investment in capital they're willing to engage in. As a society, the lower the social rate of time preferences, the more willing people in that society will be to restrict consumption, save and invest. Now within the structure of production, there are a lot of choices that have to be made about capital goods. We can arrange capital goods and production in a more or less capital intensive process. Different combinations of factors can occur. We can make a fly with chocolate cake. For instance, using a fork, a whisk, a hand mixer, a stand mixer or this industrial strength mixer if you wanna make a lot of fly with chocolate cake. I've never really, I've used one of those once but not to make a fly with chocolate cake. What capital that the producer decides to use depends upon his preferences, depends upon his subjective understanding of the production process and what he's trying to engage in. And hence this becomes a choice variable. The producer makes a choice. Do I want to rely on a whisk or do I wanna use a stand mixer? Additionally, each factor, each capital good has a different degree of specificity. Springform pans I would say are more specific than eggs. There's a whole lot more uses for eggs versus a springform pan. And so those are decisions that the producer has to think about when he decides am I gonna commit money to investing in particular factors of production. Milk chocolate versus dark chocolate, right? There's a variety of chocolates. Which chocolate is the best to use for a fly with chocolate cake? The short answer is special dark. But milk chocolate has its own uses as well. That becomes a choice variable by the producer. The durability of the capital good also needs to be taken into account. So the durability of the capital good also has to be chosen. All capital goods are perishable, right? No capital goods last forever. And you know that the rate at which capital goods are used up, you probably know that we call that depreciation. And each particular capital good has a different rate of depreciation. The eggs used to make the fly with chocolate cake are used up just like that. The minute they go into the bowl, they get mixed up. You can't extract them, right? You can't make the fly with chocolate cake Oh, let's extract the eggs and use them again. No, they're used up, right? The oven, however, in which the fly with chocolate cake is baked can last maybe for 15, 20, 25 years. Who knows? Here we have two choices of spatula. A flimsy spatula on the left and more sturdy silicone spatula on the right. Which capital good we use depends upon the choices and the desires of the producer. It's also a choice variable. Now after a capital good is wears out, we'd be back where we started if we did not save and invest further in maintaining our stock of capital goods over time. So each producer in the production process that has the option of either adding to his capital, maintaining his capital or just consuming his capital and maintaining his capital, keeping his capital available at the same level or accumulating capital requires a certain threshold of saving. If we want to consume capital, we have to save it all. Once we accumulate a certain amount of capital we start using to make fly with chocolate cake but if we don't save anymore after that fact, little by little our capital goods start to wear out and we don't replace them and then we'll be back to perdition. Now the entire economic order consists of one integrated production structure and this understanding has implications for macroeconomics and this is where I'm gonna have to leave with this slide. The understanding of capital and capital structure is what allows us to see major differences between an Austrian understanding of macroeconomics and the approach of so-called modern macroeconomics. Both the Keynesian macroeconomics and neoclassical and monetarist macroeconomics involves massive aggregation which obscures all of the insights of the structure production about the specificity and the heterogeneous nature of the capital goods. The capital goods are heterogeneous with different uses, specificity and durability and they must be used in the right place at the right time in the right combination of other complementary factors to be productive. All of that is abstracted if we take the Keynesian approach where all investment is just the big eye or the neoclassical approach where capital is just the K. All of the insights of Austrian capital theory are lost in these type of homogenous aggregates and the homogenous aggregate approach fools people into thinking well if this is the case you just need to stimulate spending on these things. If we just stimulate spending if we just increase the amount of money that we call investment or capital then we're all better off. We're all better off and so we can do that. We can do that but if we do that by simply inflating the money supply so we can stimulate more investment without actually voluntary saving let's say bad things will happen and you will hear about that in the lecture on the business cycle.


I'm not sure if you ever use the modules before. I mean, when I say module, we're talking about JavaScript modules. Okay. So I'm going to go here and create a unit five, and we'll do a module demo version. We'll go to node. So here, say I'm going to have a protocol modules, and I'm going to also have a file, just my usual index HTML. It is at a module, I have my main JavaScript. Okay. And then maybe I have another script here. Maybe this is for like your functions script. Okay. So let's build the index first. I'm using two JS files, and this is quite common when you have, let's say you're in your main script, it grows so huge, right? It's go really big. And so what you do is you break it into multiple files. You don't want to have a really big file to run. So you can break it into multiple files. So let's say that I like to separate all my functions and put functions into another file. Okay. So instead of putting my functions here, I'm going to put in the functions file. So a JS file in this case is, usually it's called a module, even though we just call it script. So let's take here the functions. I have a function called getName. And the inside here, I have a, you know, a name variable for my name here. Okay. And then this is going to be turned a name back. So now let me collapse this side. And let me split in two, you can see better. Okay. So one functions over here. And then over here is to my main JS file. And I can use that function here. But before we do that, let's go to the HTML. So if you want to use both of those scripts, you have to import them in here, right? Script and what is important, I want to get the functions first, so I can call it, like I use the functions and then also need my other one. So let's duplicate that, okay? Oh, shift down. And this is the main script. So my main script, right? Depends on the function script and then and so on. So now, because when I load these two scripts into this environment, this name space, all of these functions in encode are available, right? Lost my other file, sorry. Okay. So they're all available in the same space as if I just, you know, write them right in here if I had this correct order. So that means when I load it, I'm able to access the functions in the main module here. So I can, you know, let's do this first. Let's do H1, so you can see here, module or demo. And let's say you have a button here, just to show your name. And then we'll output the name writing here in H2, okay? Yeah, we'll give it an ID, so it's just easier. Fun would be, okay? And let me style my body just to make it center. Really simple script to, almost there. Okay, let's see. All right, let's run first. Okay, so here is the result of that. Okay, just really simple page. When I click the show name, I'm gonna, you know, load the function and then display the name right below this button here. So back to the main script. So you wanna wrap this with the unload, right? Because you wanna wait until the load, the script is loaded, using the arrow function again. And then now, once I run the page in the browser, the functions module would have been loaded. And then by that time, when the main is loaded, I would have access to this function already, right? Okay, so somewhere down here, I wanna call that function. But first, let's target the button and the output first. Let's be TN is document yet, use query selector, shorter query selector. The ID is, I think it's the show, okay? And the other one is output, document query selector. The ID is output, okay? So those are my two targets, okay? So now let's attach the event to the button, at the end, add again listener, right? Event is click event. And then here, we just use the anonymous function, okay? Again, the arrow function goes right in here. When we click the button, I wanna get the name function. Okay, so you can put here, say, the name is equal to get name. You see that it's available here, right? I just call that function, I got the name, and then now I just wanna display that to the output. So output, we can just put the inner HTML equals the name. All right, so very simple like that. So let's give it a try and see if this works. Back to my browser. Okay, so here it is, I'm gonna refresh it just in case, and I load, so here's my name, right? So that's how you usually do, right? We have a lot of scripts and you want to load them. You wanna load them in the order that they come in. If this one is depending on the other one, so make sure that it loads first. Again, depends how you create your data. If it's a function like the way I have here, it doesn't really matter. Well, yeah, but usually you put in that order, right? So imagine if you have like 10 scripts, you need them. So you're gonna, it's gonna grow, right? A lot, okay? So instead of doing this way, you can use what's called modules. So with module, you have a single entry into all your JS files. What module does is it allows you to export this function or at least code to another module. So by the way, every script here you see here is self-contained only in this file. They are not available to this file. The way it's available here is because I expose it here. Okay, so the HTML, you know, expose all the function or the code inside its function so that this can access it if I did not have that in here, like that, okay? And if I go back and rerun my script again and you're gonna see that it doesn't work. And if you try the F12, it will tell you that getName is not defined, okay? So it's not available in this case, it's hidden. So how do you make it work? Well, one way is you put it here, right? And this will grow I showed you earlier. The second way is to make this into a module and you export this out. So whatever I have in here in this functions file, if I want to expose anything to the outside world, I use the export directive, okay? Export here takes an object and whatever I pass to this export will be accessible to the other module in where I can import them in. So here I'm gonna export the getName function and any other things I want. So here I'm exporting the function called getName due to export. And then on the main function, if I want to use it, I will just import it through the import directive. And then where is it coming from? So it would import something, something from and then here is a string that goes to that directory. So it would go to the functions directory and then the name would be just the functions of I think they're in the same file, same directory. If it's in a different directory, you would call, dot slash directory name, directory name slash function JS, whatever it is. Okay, so my script is called function JS. This dot slash, if you are not aware, it just means the current directory. If you don't do this dot slash, it treats it very differently. Okay, so the current directory, the file because they are in the same directory. Okay, so now I import what I need to import. Well, you have to know what you need. I need the get name. So whatever is placed in study export here, only those names will be accessible in here. Otherwise, you can't access them. So I have to want it as a get name. I use the same name. Now this name here has to be exactly the same name as this one here. If you call a name, if you call it X, it could be X, whatever it is, okay? And if you want to change it to something else, you can change it here too. Instead of just get name, you can just say use that as just get, right? If you do that, then this is the alias for this. So it's a shortcut. So instead of get name, I just say, you know, yeah. Okay, so let's see if this thing works. And it should not work because one step is missing. And I need to tell you why, but I just want to show you anyway. As you can see, it says, can I use import statement outside a module and the main JS one? What this means is that when you use a module in your script, it is the main module and you want to export this or use this in your HTML, then this script here, you have to change to the type call module. That's the requirement. If your main JS imports other scripts into your main JS file and you must change it to a module, otherwise it won't work. Okay. So now I don't need this anymore, right? Because I imported here. And let's see if this still works. As you can see, the error goes away. Let me refresh this and there it is. Okay. You see that it worked just like before. So now you see how powerful modules can be. I can have one single entry file and I can have tons of other files and I can import them in. I can import exactly name as is or I can rename it to something else. Okay. And if you have like two of them, say you have a constant pi 3414. I want to explore that too, which is put right in here, call it pi. Okay. So your main library, if I need pi two, you put here pi. Okay. And then now I can use pi as well. And just for fun, we could just say get name with a name plus space and then plus pi. And I should be able to show them both here. Okay. So export, export all you need. You can use some private. If pi is only used only inside this module, you don't need to expose that. It don't export it. What do we export it out? We'll be accessible from in other modules. You can also put the export directly here like that too. Especially different ways how to export your objects. If I do that, I don't need to do the here again. Okay. So this is useful for if you export multiple, this is for only individual ones like inline export. Here you export a list of all these objects. So either way you do it, it's fine.


Biden economics, Bidenomics is a new term. I talked about it a little bit last time. We talked about a manufacturing dramatic increase in the building of manufacturing plants in the United States over the last year and a half since the CHIP Act was passed and the Inflation Reduction Act, which is both investing heavily in infrastructure, primarily manufacturing infrastructure in the United States, and this is viewed by everybody as well. Look, Biden is succeeding. This is amazing. This is what we always should have had, more central planning, industrial planning. The Republicans are actually trying to out-compete the Democrats by saying, yes, we need more of this. We'll give it to you as well. It's not just the Democrats. In other words, the Republicans are completely embracing Biden economics. There was a big conference put on by Compass, USA, the big kind of new right organization in DC by Cass. Cass is the guy in charge of this. Anyway, the government is gonna spend, we're gonna figure this out. This is great. Well, the latest of this piece is that as part of the infrastructure law that was passed, which was bipartisan, I'll continue to remind him, there are gonna be billions and billions and billions of dollars distributed and starting now to build a high speed internet all over the United States. The government is gonna deploy billions of dollars. They're gonna decide which states get them and how much they get, primarily for areas that don't yet have high speed internet, primarily for areas that have been neglected by the market. But the idea here is for the government to roll out massive spending on internet. 40 billion dollars for high speed internet. This will create, of course, many jobs. This will, of course, connect people to the internet so they can be more productive. This will increase the, what do you call it, the feasibility of people to move to rural America and work from home, because I'll have high speed internet now. I mean, the delusion of power, the delusion of central planning, the delusion of all this, I mean, as I said the other day about manufacturing, this is the classic broken window fallacy.  What you ignore is what could have been done with that money. What you ignore is what the market, how the market would have allocated that money to actually desirable uses, not to the uses desired by a central planner, by government authoritarian, but by the actual people by the marketplace. Part of this massive investment in America that is part of this Inflation Reduction Act is in addition a massive investment in nuclear power. Now, I happen to like the idea of nuclear power. I want more nuclear power. I want more high speed internet. I think both are good things. I just want the government to stay out of it, but the government is going to be spending huge amounts of money. Again, billions of dollars, the Biden administration is, to advance nuclear power because it's green. And, you know, so right now, a majority of Americans want more nuclear power. And the federal government has opened up the coffers and they are getting ready to spend massive amounts on nuclear power. The government is now just giving a $1.1 billion grant to fund this fund to California to keep the Diablo Canyon. Diablo Canyon nuclear power plant open in spite of the fact that California wanted to close it because it's getting old. In addition, there are plans now to build new nuclear power plants all over the United States. Of course, these are only plans. They're not reality yet. The real challenges here, challenges which I don't think are being dealt with, the government is much better throwing money at problems than actually dealing with the challenges. Three challenges. The first is cost because of regulations, because of controls, because of all the environmental and safety and the millions of regulations that have to go through everything. Nuclear power reactors to build a still, even the mini nuclear power plants, super expensive, somewhere double probably the cost of what would make them economic on a per kilowatt scale. And whether any of these projects will actually be built, given these costs, who knows? Second question, and this relates to Russia, is where do they get the fuel? How do you get refined uranium? How do we get the uranium needed for the fuel? It turns out that Russia dominates uranium processes, processing. And indeed, the nuclear power plants in the United States that they are still buying the uranium from Russia, a billion dollars a year, unbelievable. This is low enriched uranium, high, sorry, a high assay low enriched uranium. Russia is the only commercial supply of it. Now, they're trying to figure out other places to buy it. They're trying to figure out how to do it in other places, but right now Russia is it, right? We're not talking about nuclear bomb grade uranium. We're talking about, I guess, this high assay low enriched uranium, which is used for nuclear power plants. For example, the power plant that was likely to be built in Wyoming, in a coal town in Wyoming by Terra Power, I think this is the company Bill Gates supports, is now delayed opening for two years into the future because it can't get uranium. Can't get uranium. Department of Energy in the United States is scrambling to figure out how to get uranium. Now, the raw uranium is in other places. The question is, how do you get it enriched and that enriched uranium? And then what do you do with the spent fuel? Of course, the Terra Power, I think, uses spent fuel in order to, or one of these nuclear power plants actually uses spent fuel. So, I mean, that would be the solution is to open a bunch of spent fuel facilities. And then finally, I think this is funny. Finally, the problem with building a lot of nuclear power plants because the plan is to triple nuclear power plant, nuclear energy production in the United States by 2050. Triple it. Today, it produced about 19% of all the electricity in the U.S. The idea is to triple the amount of electricity, not necessarily the percentage, but the amount. For that, the United States reckons they will need 375,000 workers. In the near term, they're going to require skill trades, electricians, metal workers, fabricators, construction workers. These people don't exist. We don't have 375,000 workers who can do these works. Right now, there's a massive shortage of exactly these kind of workers, skilled blue collar labor. By the way, they make a good living because they're in short supply. So the biggest problem, one of the big problem beyond regulations, costs, controls, the government might say we want nuclear power plants, but the regulatory agency doesn't approve them on all that stuff, beyond nuclear waste, beyond all those. No people to build the plants. Not enough construction workers. The Santas has a solution for this, don't worry. So, and this is one of the big problems in this idea of reviving through bi-denomics, reviving US manufacturing. Who's going to work at these manufacturing plants? Where are the workers? There's a massive shortage of workers right now. I mean, unemployment is still like 40, 50 year lows. Who's going to work there? Anyway, I'm not a fan of any central planning. I'm not a fan of money flowing to these things. I do hope though, that what will result from this is trimming down regulations, lowering the cost of producing a nuclear energy, and maybe significant freeing up of that market to allow private enterprise to go and build nuclear power plants, rather than the government deciding who the winners and losers are and deciding how much money to spend and pouring money into white elephant projects all over the country. Let's leave it to the private sector. That's not the plan though. Again, both Democrats and Republicans are committed now, committed whether it's the Santas or Trump or any of the Republicans or Biden or RFK or any of the Democrat, they're all committed to managing economy and determining how to use, how to allocate resources, picking winners and losers and focused on increasing manufacturing jobs in areas and fields and things that the government as a central planner will decide. Basically, even though China is in decline, China has won because what the United States is doing is embracing the Chinese model. Of, you know, was it public private partnerships? In quotes I put that. Thank you for listening or watching the Iran Book Show. If you'd like to support the show, we make it as easy as possible for you to trade with me. You get value from listening, you get value from watching, show your appreciation. You can do that by going to iranbrookshow.com slash support by going to Patreon, subscribe star locals and just making a appropriate contribution on any one of those, any one of those channels. Also, if you'd like to see the Iran Book Show grow, please consider sharing our content and of course, subscribe. Press that little bell button right down there on YouTube so that you get an announcement when we go live. And for those of you who are already subscribers and those of you who are already supporters of the show, thank you. I very much appreciate it.


Study Macbeth for William Shakespeare? Let's do some word-level analysis on the relationship between Macbeth and Banquo. In Act 2 Scene 1 Banquo says, all's well and this declarative sentence shows nothing has changed about him, his heart is still open to his friend Macbeth. The verb dreamed shows he's haunted by the witch's prophecies.  Thur and three is alliteration, it shows his deep mistrust of the witches but also importantly it shows that Banquo is still really honest with Macbeth. Yet Macbeth lies and says, I think not of them and this ties into the theme of reality and appearances, he is now beginning to lie to Banquo and misguide him. The alliteration of wee words shows that Macbeth is basically telling Banquo we should talk about the witches but actually he's lying to him, he's acting as if he's not that bothered about what they've said. When Banquo says he'll still keep my buzz and franchise and allegiance clear, this declarative sentence basically is him stating his loyalty to both Macbeth and Duncan. So whilst Macbeth is disloyal to his friend, Banquo stays loyal.