Now it's my very great honor to introduce the Honourable Michael Kirby. Michael was the inaugural Chairman of the Australian Law Reform Commission, which influenced the privacy legislation of Australia. He was elected Chairman of the OECD Expert Group on Transborder Data Flows and Privacy, which prepared the highly influential OECD guidelines on privacy. In 1991 he was awarded the Australian Human Rights Medal and in 2009 he was awarded the inaugural Australian Privacy Medal. In 2010 he was named Global Privacy Champion by EPIC in Washington DC and in 2010 he was appointed Laureate of the Gruber Prize. He has served as a Justice of the High Court of Australia from 1996 to 2009 and more recently he has served the United Nations as Chair of the Human Rights Committee's Commission of Inquiry on North Korea from 2013 to 2014 and more recently as a member of the Secretary General's High Level Panel on Access to Essential Medicines from 2015. Michael Kirby. Thank you very much Alan and thank you all for having me here. We have a lovely night last night, those of us who were lucky enough to go to the Northern Club. I've been there many times, but usually I have to speak and therefore it was lovely to be there. Excellent food, beautiful environment and a reminder of the determination of the early settlers in this country to establish a civilized nation, which they certainly did. Tenakoto, Tenakoto, Tenakoto, Katoa. I am going to divide my remarks today into three parts like Caesar's Gaul. First I'm going to speak about how I became involved in the issues of privacy because my only real value to this conference is as a kind of historical relic of those who were there in the very early days of international privacy protection. Secondly I'm going to talk about some of the problems which we have had in Australia in providing effective privacy protections and in many respects I think we are behind New Zealand and most other countries of the Western world. And thirdly I'm going to tell you something about the two appointments that were last mentioned by Alan Toy because I think they have lessons for the whole process of building international law and international protections for human rights and they certainly provide some reflections for me as I think about privacy in the context of my current activities. I go to Washington D.C. tomorrow for a meeting on North Korea and it is going to be related to providing opportunities for information to the new administration in Washington because it's going to be quite a different ball game and therefore that will be preoccupying me when I go there. I knew no more about privacy or such law as existed than most people when I was appointed the chair of the Australian Law Reform Commission in 1975. I suppose I had a developed sense of privacy because of my sexual orientation and the expectations at that time that if you were gay you had to keep it very very private and it was expected that you would not tell and others would not ask that was the way of those days. But I wasn't obsessed about it and I was surprised but pleased when following the dismissal of the Whitlam government by the Governor General of Australia, Sir John Kerr the election which was held appearing to imperil the continuance of the Australian Law Reform Commission led to a promise by the acting Prime Minister Malcolm Fraser that if returned to government the coalition would give a reference to the Australian Law Reform Commission to prepare a comprehensive report on privacy. That was good news because first of all that was a very relevant issue as we were then approaching 1984 and secondly it was an indication that despite the change of government that the Australian Law Reform Commission was going to survive something which hadn't at all been certain at the time. The election was won by Mr Fraser, the new Attorney General was Robert Ellicott a very talented lawyer and a strong supporter of law reform and so it was that in April of 1976 he gave the Law Reform Commission the reference to prepare comprehensive laws on the better protection of privacy. It wasn't a surprise really that a coalition government, a conservative government should hit on the issue of privacy because it is a value that is of concern to people who are not necessarily terribly radical about law reform. It's a value that is of concern to most human beings certainly it was in 1976 and so we set about working on our reference and getting our things in order to produce a report and at that time the Secretary and Director of Research of the ALRC was George Brough a very experienced federal public servant and he went to a conference in Vienna on privacy protection as it was developing in Europe and soon after that an invitation came to us to send somebody to Paris for the OECD because the OECD had decided to establish an expert group for the purpose of preparing a response by the OECD to the developing concerns about privacy. The OECD was and is essentially the rich countries club and it is intercontinental in its character but its fundamental core membership was Western Europe and North America onto which was attacked Australia, New Zealand and Japan in those days it's expanded significantly since then but that was basically what it was democratic parliamentary or electoral democracies and the concern that had arisen in under the OECD was on the part of the Europeans that something should be done to ensure that as they prepared their laws on trans-border data flows that the Anglophone countries beyond Europe should have in place laws that would protect privacy so that the growing body of digitized personal information could be safely exchanged and the concern of the Americans was that nothing should be done by these pesky Europeans to reduce detailed laws on privacy that would interfere in the growth of the American technology and the sale of American technology to the world so the American concern was mainly economic, the European concern was mainly human rights that I think is probably just a reflection of the experience of those two areas of the world for the Americans it was protecting their patch for the Europeans it was the vivid recollections which were still then in everybody's mind usually of personal experience of the war of the Manila folders of the occupying power and of the misuse of information for the Europeans this was not theoretical this was something which was practical and urgent and necessary so when the group met in Paris, we met in the facilities of the OECD those facilities are just across the river from the Tour de Fel in a château, château de la Mouette and in a large and rather ugly building that adjoins the château on the days where we were being rewarded for working hard on our expert group we were allowed into the château and we sat in a chandeliered room and on the days where we were not regarded as having worked hard enough we were just put into the ugly bastion that adjoined at the first meeting a dispute of which there were many during the course of the deliberations broke out as to who should be the chair and it was I think assumed that in the normal way a Nordic would become the chair and there were some very impressive Nordic candidates John Bing who was one of the early toilers in this field at the University of Oslo a friend of Professor Beifield who's here and Jan Freyser the privacy commissioner I think the first privacy commissioner of the world from Sweden and in the end however I think largely as a result of the American insistence I was elected the chair and so I then had my first experience in chairing an international body I've chaired many international bodies since but I look back on the task at the OECD with great pleasure because it was a wonderful opportunity I was 38 at the time most of those who were there were older and my job was to try to get some concurrence in the outlook of the Americans and the Europeans and this I did by adopting a very strict rule for the meetings of the expert group always beginning on time I told them that in Australia Her Majesty's judges may be wrong but they're always punctual they soon got used to that and where necessary running overtime something the French did not really approve of at all and eventually they adopted a principle of just walking out at the time that or shortly after time was called and so I had to stop the meetings and not go overtime but we got everything we could out of the meetings we didn't have laptops tops and other devices at that time and therefore I had to go back to the my little hotel room at the end of the day and print in my very neatest printing the minutes of the meeting and the decisions that had been made they had never seen a chairperson who did that most chairpersons for the United Nations and for the OECD simply sat silently and left it to the secretariat to run the show that wasn't my style at all and the every day we worked hard and the decisions of the day before were on the table and that helped to move the thing along in the end the fundamental dispute came down to the belief that the Europeans had that this had to be really hard law and clear and enforceable and the Americans view was this had to be soft law guidelines and every country could do its own thing in enforcement because there was no way the Americans were going down the track of a data commissioner no way at all and that was the way the Europeans had basically approached the matter and therefore that had to be reconciled as well as that the Americans had a big constitutional problem which they carried around and forever referred to and that was the free speech provisions of the First Amendment of the United States Constitution and that was just a sine qua non that had to be accommodated in whatever the OECD group came up with we had a very good grounding before us because the Nordics had started talking about this from before 1973 was the year the Swedes enacted the first privacy data protection law and Jan Frazer was appointed the Privacy Commissioner of Sweden but the Nordic Council had gathered together the Nordic countries and they had worked on the first set of principles and it was a bit like Eleanor Roosevelt's committee drafting the Universal Declaration of Human Rights one of the great pleasures of my life was meeting John Humphrey John Humphrey was a professor of law at McGill University in Canada who was the man or the person who put first down in writing the words of the Universal Declaration of Human Rights and a stamp was issued in his honour by Canada with the opening words they were in the language of that time all men are free and equal in dignity and rights it's a very wonderful expression it's now expressed as all persons are free and equal in dignity and rights and some people have to be constantly reminded that all persons means all persons and what problem do they have with that application anyway after about 10 meetings we had we started basically with the Nordic Council's guidelines and that had led on to the Council of Europe guidelines and directives and that had led on to a lot of academic material and we nutted out the OECD guidelines of 1980 they're called sometimes the guidelines of 80 which is when we finish with them or 81 which is when the Council adopted them the Council of the OECD but the methodology was one of intense work and eventually sufficient consensus was obtained to lead to the guidelines being adopted and recommended to the Council and adopted by the Council and recommended to the members now the OECD does do treaties the OECD you know has the treaty on against corruption it's a treaty to which Australia is a part in I think New Zealand forbidding nationals to corrupting other non-nationals and non-members so that would have been one option but it wasn't acceptable to the Americans and that therefore was what we did the Chief of the Secretariat was a man named Hans Peter Gassmann he was a German and he was extremely intense very hardworking, spoke perfect German English and French and ran a very tight shop there was an excellent woman who worked with him Alice Frank she is I think she was Jewish from Germany but she spoke perfect English and she lives in England she's still alive she's in her mid 90s and I keep in touch with her Hans Peter Gassmann has died but Alice Frank is still alive and in Brighton in England so the two stars of the committee were well there were many the two protagonists were Louis Joannet he was a French magistrate he was a sort of judge but an official in the French administration and he worked in the cabinet of President Mitterrand later on, Giscard d'Estaing was the president at the time Louis Joannet is very well respected he went on to become Special Rapporteur of the United Nations for many things and he came out to Australia to take us off on the way we treated refugees so I've kept in touch with him because of those activities the top American representative was William Fishman and Lucy Hummer from the State Department they were very sharp, very intelligent and they were well matching each other and the job of the chair was to try to get some way of getting consensus between them which eventually we did Gassmann had employed a professor from Sweden named Peter Saipel and he did the drafts of the guidelines as we went along but in the end we got to the final point they were soft law but at least they were conceptual the conceptual nature of it was what the French insisted on that we should try to get the fundamental principles of information out, information in and information proceeding out it was a sort of temporal analysis and superimposed on it the right of access for individual control of personal information in the last resort as you know and as is explained and illustrated in this wonderful book of Graham Greenleaf Asian Data Privacy Laws which is an excellent short analysis of what happened to the guidelines the criticisms including by one of you present of the guidelines when they were produced and the 2011 to 2013 revision of the guidelines but the guidelines once produced were profoundly influential throughout the OECD countries virtually all of the OECD countries in one way or the other except the United States adopted legislation and adopted the OECD principles and that was itself a contribution to a commonality of approach they might have a data commissioner or they might have courts or they might have a privacy commissioner or they may do enforcement different ways but the fundamental principles being conceptual were very useful and their commonality was of considerable use the revision in 2011 and 2013 with which I had no connection ultimately decided to leave the actual OECD principles untouched as Graham Greenleaf explains in his book that was not because they thought that they needed updating because virtually every country that had privacy laws had gone beyond the principles of the OECD guidelines of 1980 it was because they couldn't agree on the direction that they should change but at least they didn't undo the guidelines they kept them they're not up to date but they're a sort of basic core and they give a conceptual framework the area that was changed was the international principles and for accountability and an attempt was made to enhance those principles and to allow non-member states to accede to or agree to be bound by their guidelines and so that was an outreach by the OECD I've now worked for many, many UN agencies if you're a good chair and being a judge is a very good experience for being a chair because you've got to be you're in charge, you've got to run it and there's no messing around and our tradition is very good for that but if you're a good chair the word gets around and that then leads one appointment leads to another and it leads to another and that's how it tends to happen so I'm just mentioning that if you're interested in international chairmanship you've got to get your ore in and then once you do that you've got to work your guts out and then you will get other appointments Now although the OECD principles were adopted for Australia and although they became an important part in the privacy principles of the 1988 Australian Privacy Act the follow-up has not been satisfactory and in fact it shows the untruth of the statement that is constantly and repeatedly said when suggestions are made in Australia that we need a Bill of Rights or a Charter of Rights or an Act for Human Rights or something or you don't need that we have Parliament Parliament will can fix everything up well the plain fact of the matter is unless it's sexy or vote catching or interesting Parliament just will not do these things especially if there's a bit of controversy and as in the issues of privacy very powerful opinionated opponents and so the net result is we haven't done at all well in Australia and we needed to do a lot because in 1936 there was a decision of the High Court of Australia in the Victoria Park Racing Course case in which a majority of the High Court of Australia led by Chief Justice Latham said perhaps there should be protection a common law protection for the defence of privacy but they don't exist in our law and he wasn't inclined to develop it there was a powerful dissent in that case by Justice Everett Justice H.V. Everett who later went on to resign his seat in Parliament became Australian Foreign Minister during the war and later the President of the General Assembly he was actually the President at that moment in December 1948 when Eleanor Roosevelt and John Humphrey's Universal Declaration of Human Rights was adopted by the General Assembly of the United Nations and he contributed to that course and it contains as you know a provision for the protection of privacy which began the course of the development of the international instruments defending privacy as a fundamental human right but although the State of New South Wales in 1975 established a Privacy Commissioner and although the person appointed to be Privacy Commissioner Bill Orn was very gifted in using the media and capturing attention and making a lot of noise about privacy and putting privacy on the agenda and awareness and consciousness he didn't have many powers it was basically a complaints mechanism and he could make recommendations but he didn't have really powers of sanction and so we had the common law decision in Victoria Park and we had nothing much in the statutory realm the ALRC had produced a report in 1979 recommending a defence or a cause of action in privacy to be worked with a reform of defamation law but that was not followed up and the Privacy Act of 1988 didn't contain a residual general protection for privacy so that that was the situation we found ourselves in after the OECD guidelines four times the Australian Law Reform Commission in different references by different attorneys general over 30 years recommended that a general remedy in privacy should be provided that it should be circumscribed so that it only happened where it could be demonstrated on an objective standard that a person had reasonable expectations of privacy it was to apply both in respect of protection of the solitude of an individual but also protection of the private information of the individual so it wasn't only data protection and four times the ALRC recommended it in 2009 the New South Wales Law Reform Commission made a similar recommendation in 2010 the Victorian Law Reform Commission made a similar recommendation when Mr Rudd was briefly the Prime Minister of Australia he started inquiry and one of his ministers, Brendan O'Connor did what is very common in Australia we had the committee on the committee and he had a committee on the committee and that led to the committee on the committee investigating whether they could do anything on protection of privacy but the net result of it was that nothing was done 2010 for the fourth time the ALRC recommended privacy protection and other states came along to the party the South Australian Law Reform Institute made the same recommendation so the law reform bodies were speaking with one voice but the politicians were undecided and fundamentally that was because big media opposed it big media opposed it and I received an email yesterday in Australia which was a so-called fact check because a member of the opposition a member of the Labour Party opposition had said Australia has one of the most concentrated medias in the world in terms of ownership and the question was, was that accurate and then they go through analyzing all the countries China you will not be surprised comes out at the top with 100% of media controlled by the central government Egypt isn't far down and then there are one or two others and then Australia is I think about the seventh most concentrated media they are very powerful and they are very opposed to anything that interferes with their capacity to invade, to defame and to do what they like and judge whether they have done wrong 2016 the New South Wales Parliamentary Committee came forward and said well let's do it alone in New South Wales but the government of New South Wales decided that that would not be a good idea that it has to be done nationally although they did indicate that they would introduce laws on so-called revenge sexting and that particular matter appears to have been hived off for the bits and pieces approach to reform of the law of privacy so that is where we are in Australia delay by the federal government and parliament, timidity by the state legislators rabid opposition by the media and other interests timidity on the part of the courts and a general feeling that it is very difficult to do anything in this area because of the rapid development of the technology and the concurrence of people particularly young people particularly in social networks and particularly in sexting texting sexual images apparently a survey by the Burnett Institute in Melbourne found that 80% of young males in Australia had engaged in sexting and didn't see anything wrong with it and therefore get over it this is not something important only becomes important if somebody breaches the principle and sends the sexual image to somebody else or if the parties fall out and then revenge texting is used in the relationships between the parties but that is essentially where we are in Australia and it's not a good place to be and it's not a good place to be if you are looking for long term protections and institutional protections for privacy in an age of so much technological change now the third point relates to international activities as I mentioned I've been involved in a number of international activities and there are four of them at the moment that I just mentioned because I think they have a certain general lesson for whether we are going to get anywhere in anything more than soft guidelines will the United Nations for example ever get involved in this area that's a question Graham Greenleaf asks in his book and the revelations by Edward Snowden I think did really shock a lot of countries in the United Nations shocked a lot of people in Australia and did appear to require that something should be done at an international level to lay down fundamental rules and at least everybody should know where their information is going and what if anything they can do about it but the four areas in which I am involved are first the clash between human rights and intellectual property law I was in Geneva last week for a meeting of the PCB the program coordinating board of UNAIDS in relation to the report of the high level panel of the Secretary General of the United Nations Ban Ki-moon Ban Ki-moon had set up a panel earlier this at the beginning of this year to investigate the policy incoherence between universal human rights and the human right to access to essential health care on one hand and the global intellectual property protection and how do you reconcile the universal access to health with an intellectual property system that just puts drugs out at the price of most ordinary people especially in developing countries and at the end of the day of our deliberations I had to speak to the PCB and urge the merits of the high level panel report because we made a number of suggestions for doing what has never really been done reconciling the entitlement of authors to just rewards for sharing their invention with society and ensuring that ordinary people can get life-saving drugs like the HIV drugs or like the hepatitis C drug which costs in Egypt $800 for a 12-week course that saves lives but in the United States costs $87,000 and in Australia it's just been approved for the pharmaceutical benefit scheme and the price hasn't been revealed but it's thought to be something like $54,000 for a 12-week course most countries can't afford a $54,000 I don't know what you've done in New Zealand about this I imagine you'll do much the same as we did but these drugs are now being sold at such enormous prices that the ambassador for the Netherlands came before the high level panel and said please don't think this is just a problem this is a problem for the Kingdom of the Netherlands we cannot afford the costs of these drugs well at the end of the session last Friday in Geneva the PCB after an 8-hour work over the the statement, the resolution reached a consensus of all but one country the United States of America it did not consent and it lodged when they adopted it by a majority they lodged a dissent the United States defends its intellectual property which is surprising given that I read in Graham Greenleaf's book the fact that they were originally the intellectual property pirates they had their own regime and they didn't care about the rest of the world but now they've seen where the Mueller is and they are very defensive of their intellectual property so that's illustration 1 illustration 2 is North Korea that's what I'm going to Washington for and that's another illustration of the growth of the endeavors of the international community to get human rights made more powerful and more effective including against tyrannical states like the Democratic People's Republic of Korea and one of our recommendations in the Commission of Inquiry on North Korea was that the the leaders of North Korea should be brought before the International Criminal Court under the Rome Statute you can do that but only if the country concerned is a member of the Rome Statute which North Korea is not or if the Security Council refers to the matter which is done on three occasions but which it couldn't get the Chinese and Russian consensus to do in the case of North Korea and therefore the irony is the United States Rome has not itself ratified the International Criminal Court President Clinton in his last days in office signed it but President George W. Bush withdrew that signature and it hasn't been ratified but there was Samantha Power the Ambassador for the United States making very strong demands that North Korea's leaders should go to the International Criminal Court but that is something the United States does not itself submit to New Zealand has a connection with my North Korean report in the course of writing it I came to the conclusion North Korea of course did not attend, did not play any part denounced the inquiry, denounced the members of the inquiry and especially the Chairman and I then said to my colleagues one of whom had been the Attorney General of Indonesia and one of whom was an expert in genocide from Serbia I said we've got to send our draft report to the people whom we are criticising and they said oh I don't think so this is confidential until it's delivered but there's a case in the Privy Council Air New Zealand against Maan and that was the case of the Erebus Crash where Justice Maan a very gifted judge with a great capacity of writing you remember said the evidence of Air New Zealand was an orchestrated litany of lies and he hadn't given due notice to Air New Zealand of the way he was thinking and given them a chance to answer and I said this is human rights this is fundamental human rights he may be the Supreme Leader of North Korea but he's entitled to human rights and due process so we've got to do it Air New Zealand and Maan and they agreed with me the United Nations official said this has never been done never been done but anyway we did it and I think it had a very big impact in North Korea after that North Korea turned on a big charm offensive trying to avoid the actions which we had suggested the charm offensive was soon dropped when it was clear that they were going to be referred to the Security Council and to have these issues considered but the interesting point for present purposes is if you pursue these things you've got to do them in a just and fair way and you've also got to be consistent basically in your own approach as otherwise it's going to be hard to move things along the third exercise is LGBT rights because this is something which is before the General Assembly of the United Nations at this moment the Human Rights Council this year established the office of the independent expert on LGBT rights that was a very important step I have to say before he submits office Ban Ki-moon, a cautious bureaucratic official from has been wonderful on this it's he who says what is your problem with all persons are free and equal and dignity and rights all persons means all persons anyway to the African group who represent almost all of the countries of Africa all persons doesn't include LGBT people so they moved the motion that there should be a stop order on the work of the independent experts on LGBT rights that went to a vote in the General Assembly two weeks ago and the General Assembly voted by 84 to 79 with 15 abstentions to continue the mandate but I heard when I was in Geneva last week that they are mustering for a second attempt to stop it so moving things along where there are sensitive issues and particularly cultural issues and matters of difference in different cultures and different countries is difficult and there would be strong support in many African Caribbean developing countries for action on privacy in the United Nations there would also be a lot of opposition as I saw last week in Geneva from wealthy countries who like to have it decided by those who are accused and the final thing is in privacy OECD guidelines have been reviewed there's been some improvement but whether there will be an international initiative and in particular one organized by the United Nations is not clear there is as you know a mandate holder a special rapporteur on privacy concerns of the Human Rights Council it's hard for that council to take up the issue of privacy because it's there in black and white in the Universal Declaration and in the ICPR but whether that will be done and what would be its outcome remains to be seen so here I am all of you are experts for that has moved on the caravan has kept moving and it's kept finding new issues I think it's absolutely wonderful that this group brings together people from our region and that Graham has done this book and that we are not just talking to ourselves but talking to countries in the region including issues including issues in those countries which are a concern to their citizens too privacy is a fundamental human right it's there in the great instruments and it's therefore appropriate that this should be a global regional and national concern we in Australia have really not made much headway and there is work to be done thank you for having me and now we have about 10 minutes for questions but first there will be a big round of applause for an old ancient historical character who has been brought out of Mothballs to say a few words to those who are in the field working in the here and now ok any questions or comments any criticism objections in retrospect do you still think that the guidelines were the way to go looking back I think that's all that would have worked then the Americans would not have they would have walked away they would have said we won't and can't and therefore that was and that was the value of the 2013 revision that it didn't undo it because that it was at least a start and so I think it was as much as we could get in 1980 and it's probably as much as could be got today if you wanted countries like the United States and possibly post Brexit United Kingdom and maybe even Australia and so I think but it has a value it has a value in having the concepts I mean they were very clever people who had starting with the Nordics and Professor Bing and Professor Cyple and another member of the expert group was Hans Karel Hans Karel was a Swedish diplomat who later became the chief legal advisor to the Secretary General of the United Nations and I've stayed in touch with him because we both serve on a body of the International Bar Association they were very clever people and the difficult thing in law is often crunching your brain to look at what is the very essence of this and I think that is what was useful in the OECD guidelines and that had this chronological set of steps of the limits that you put on the amount of the type of information you collect and then the limits you will put on the use of the information where it's been provided for one purpose and then is wanted to be used for another purpose and then the provision of the information to others and generally the data subject had a say or control in the steps. The fundamental problem was that the technology moved along and so certainly in the use of the data the search engines came along and the idea that with the tremendous advantages of the search engines you would say well you just can't use data for other purposes even though it's there and is available and the marginal utility of using the data is so much greater than the marginal cost of the occasional breach of an individual's privacy this is the problem that with the advances of the technology the language really became out of date. Yes Commissioner I remember an earlier inspirational speech that you gave very precently in which you predicted the need for a right not to be indexed and we've seen that translated now in some parts of Europe as you're aware to a right to be forgotten and we see great resistance to that up from the US I wonder if you had any observations on where that conversation might go from your earliest conception of the idea Well I've only read generally this development and naturally as a person who believes in privacy I believe that individual should have a right to be forgotten. I saw in Graham's book it's called the digital eternity that we have at the moment and eternities all very well but you think of young people if 80% of them are sexting and if that's around somewhere maybe it won't matter so much in the future maybe people will say well it's just another body part don't worry about it and there's no doubt things change. I mentioned in Lena game meets because I sat in that case which was the attempt to get the High Court of Australia to expand the law of tort to provide privacy protection but it was an attempt by a corporation and although it was before Citizens United which was the big case in the United States which has been a very bad decision for democracy in the United States I intuitively felt that you should be very careful about expanding privacy rights to corporations or to government authorities or government institutions so I said it's not this is not the suitable case to consider it but generally speaking I think there ought to be a right to have things forgotten and that the individual should have a say over that though of course it has to be balanced against any public interest in keeping it because for example in the courts you see so-called cold cases cases which new evidence comes in and they're dusted up and then getting access to very ancient material perhaps under judicial or other warrant would be the way to strike the balance but fundamentally and in most cases the individual should have that power and in the world of sexting and other huge mega data of emails there will be needs for this Graham do you have your hands up Graham? Michael you mentioned quite a lot of interesting stuff about links the OECD guidelines development one of the things that's true to me is there were half a dozen pieces of legislation data privacy legislation in existence around the world by the time you're completing this working I wonder from this distance if any of those pieces of legislation stand out to you as having influenced the content of the guidelines and if I could also ask what influence did the committee working on the Council of Europe have a convention at the same time how am I going to work with you? Well there's no doubt that the Swedish Act was influential we had sitting at the table a young Fraser and he was the commissioner of the Swedish Act and he would say well how we would deal with this and he would give instances and give the text and we had the English translation of the text but the Americans couldn't stand the idea of a data commissioner and they said that's just not the way we do things we go to courts which are independent and that's very expensive and that didn't seem to trouble them because they'd have a different cost rule in the United States generally each party has to pay its own costs and they regard our rule that the winner gets their costs we regard that as an indemnity principle if you've been put to the trouble of having to assert your rights and you win you shouldn't have to be out of pocket so it was just a very fundamental difference the Council of Europe was a great help I went to a number of meetings at the Council of Europe in Strasbourg there was a fantastic official Fritz Hondius who was their guru on privacy and he would come to our meeting so it was Sweden Nordic Council the Council of Europe I think there had been early moves in the European Commission and then there was us in the OECD but it was all known and all used but the Americans and I had some sympathy for the American view because the idea of a data controller and it's a very a personnel intensive system and I didn't see that as likely to be very popular in Australia but in fact we've developed our privacy commissioners and you can go to an ombudsman or a privacy commissioner when you never go to a court which is just too expensive I want to pick up on your previous question of it and follow up on some of your speech a lot of human rights is aimed at restricting the power of government which of course historically particularly governments are the most powerful actors in many societies and you mentioned Citizens United and this tendency in America to grant human rights almost to corporations it seems to me and I wonder if you could expand on your thoughts on this that we are missing the application of human rights obligations on corporations and in particular in the area of privacy things like making it much more explicit that human rights obligations on privacy must apply to Google must apply to Facebook in general not just where there is a specific court case but in general that these major corporations have enormous power, bigger than many countries their total turnover is bigger than the GDP of half the world's countries Well we're not missing it because as you would know Professor John Rugge has undertaken for the Human Rights Council a study on the back of an earlier attempt which had failed to express human rights obligations of corporations to respect the human rights of employees officers, customers the community and this requires a big leap of the mind especially for us in the Anglo world because the fundamental principle of the corporation was that the corporation exists to advance the interests of the shareholder and so we've got to rethink what the whole corporation is about but of course statutes have frequently put duties on corporations but Rugge has said that they have fundamental obligations to protect human rights and this is being increasingly put into various forms of practice I had to launch a meeting in Sydney of the Gay Games Federation and I said that they should study Professor Rugge's follow-up report which is on FIFA because following the terrible revelations not all that surprising of the corruption in FIFA and also the abuse of companies that build the stadiums and so on he's put out a whole series of principles which FIFA have agreed to and I've said we should be looking at those for the Gay Games so things are moving in that area and Rugge is a very skillful proponent of his work and he turns up at meetings of the International Bar Association and he's the advocate for his work and he's just not one of these UN people who writes the report and then leaves it he's sort of in there a bit like me with my North Korea report you've got to not be content just with a report gathering dust you've got to make sure that something happens so I think you'll see much more in that field One more question and I think we should perhaps draw it to a close back in the 1970s when I first got involved in privacy there was still a lot of attraction for the idea that a talk would emerge not 1936 case notwithstanding as an old lawyer I was skeptical about it but 40 or 50 years later whatever it is now with inaction by legislatures throughout Australia I turned my mind back to the question of talk what has been some development in some of the countries or at least country in the United Kingdom and New Zealand particularly reflecting on your period on the High Court would you see any prospect of the emergence in the Commonwealth in Australia in particular? Well Australia is going through a bit of a renewal of the High Court at the moment and effectively the only justice who is left from my service in the court which was nine years back was just been made the Chief Justice so it's a whole new ball game but if I look at the decisions that have been made on the refugees cases I don't think this is shall we say a hugely creative period in the High Court of Australia as for example the period when Chief Justice Mason was the Chief Justice of the court so it's difficult for a court in the face of so many reports and so many rejections performing the judicial function to say well we won't worry about that we'll just go ahead and do it ourselves but I would have done that if it had been a case involving an individual if leaner game makes have been a case about the individual after all that is the way we ultimately overcame the wrong turning of the law in Australia on native title to Aboriginal and Torres Strait Islander peoples it was done by the courts and the reason why it was done was the courts made this law the courts can make a new law and if parliament doesn't like it then they can move in and they can adjust it or adapt or abolish it but they have their job, we have our job they haven't been doing their job I just get mad with the idea that parliament fixes everything up if you've been a chairman of the law reform commission for 10 years and if you've been in the pellet judge for 25 years you know that is just not correct and in fact the genius of the modern parliamentary democracy is to respect and uphold the parliament but to supplement it sometimes it's like a symphony you have the you have the violins and the trumpets and all the thunder and lightning but you also have those old double basses that are at the back of the orchestra going away and reminding people of the deep underlying principles which can sometimes be forgotten and you know I go to the Attorney General's department in Canberra from time to time and in my day the Attorney General's department in Canberra was a very small, tight department it had a team of absolutely top federal lawyers they were the best constitutional lawyers in the country because they did it all the time they slept on their pillow thinking about it much of that work has been outsourced to the private sector and Attorney General's is about seven or ten times bigger than it was when I went there and they're all there for security national security hundreds and hundreds of people and it's a one area that never has a problem getting a lot of money spent on it is national security and of course I'm not saying it isn't an issue but you've got to keep it in proportion what will our democracy be if we protect our national security but don't keep our laws bright and shining and up to date protecting the fundamental human rights of the citizens and that really is as important a challenge for democracy as is the importance of defending ourselves against the problems for national security anyway, thank you all for having me tenacoto, tenacoto, tenacoto, katoa


Hey everybody and welcome to episode 19 of Patterson in Pursuit. I am your host, Steve Patterson, and today we're talking about one of my favorite topics, economics. My wife and I just got back from a great trip to Canada, but this interview is coming to you from the great state of Virginia. I'm talking today with Professor Donald Boudreau, who is a professor of economics at George Mason University, and he's the former president of the Foundation for Economic Education, which is an organization I used to work at a few years ago. In the economics world, there's kind of a sad reality that it seems like more and more professional economists and economic commentators are mistaken about the very basic concepts in economics. And if you've been following my work for a little while, you know I am all about the basics. If you get the basics wrong, it really doesn't matter how advanced your analysis is, you're going to be foundationally mistaken. Which is why I'm excited to talk with Dr. Boudreau because he also focuses on the basics. Dr. Boudreau is one of the clearest writers and thinkers on economic topics. And if you follow his work, you'll notice that he engages with the mainstream political and economic commentators that influence the general public, and he's excellent in correcting their errors. He's written a book called Globalization and has a blog with fellow economist Russ Roberts entitled Café Hayek. If you guys haven't checked it out, go to CaféHayek.com. It's a fantastic website. There was a lot of very clear economic writing from Dr. Boudreau. In this interview, we talk about several things, but probably most importantly, the three basic starting concepts in economics. There are many basic concepts, but he has chosen three which I think are very foundational. And if you don't understand them, there is no possible way to understand how the world works, in my opinion. So if you're interested in what we're talking about, check out the show notes page today. It's steve-patterson.com slash 19. And I'll have a link to some more economics resources if you guys are interested in mastering the basics. Enjoy. So first of all, thank you very much for sitting down and speaking with me, Professor Boudreau. My pleasure. I'm a big fan of your work because you focus a lot on the basics, basic foundational concepts in economics, which it seems like a lot of people, both in academia and in like the media and the general public, they seem to overlook the basics. Can you explain just a little bit maybe the importance of understanding the foundational concepts in economics and perhaps just what those basic concepts are, like you have comparative advantage, you have to understand that concept and so on?  I might miss some, but basically, the basics of economics are, we live in a world of scarcity, which means that if you want more of something, you or someone else has to give up something else to get that greater amount. There are unintended consequences to nearly all acts. They can be beneficial unintended consequences or ill unintended consequences and supply and demand. I mean, these are, we could go into more detail about other basics that are I think maybe a little bit less basic. But scarcity, supply and demand and unintended consequences, these are pretty foundational. A lot of what I regard to be the mistakes in public policy and errors in public policy discussion stem from errors no more complex than a failure to recognize these basics, failure to understand that we live in a world of scarcity. You can't create prosperity out of nothing, a failure to understand that there are consequences beyond those that are initially seen. This is Bastiat's what is seen and what is not seen, and a failure to understand the basic principles of supply and demand as those principles are taught in any decent economics course. Unfortunately, I fear that supply and demand is taught less and less decently in basic economics courses today. I make this rather sourd assessment from some correspondents that I have with some of my fellow economists, the younger economists, not all by any means, but increasingly large numbers of them seem not to understand supply and demand and some of them actually seem to disdain the notion that supply and demand is an important concept. Focusing on the basics is vital not only to help people better understand economics, but it's vital to help people clarify their understanding of the way the economy works and of the likely consequences of various public policy proposals. Let's talk about some specifics of the basics applied to the public policy proposal. Let's take something that always comes up, the minimum wage. Can you explain how understanding supply and demand, understanding scarcity and unintended consequences, those basics, can you explain how you would analyze something like the minimum wage? There's no better real world example than the minimum wage for showing the importance of these three notions. I should say these three notions are all intertwined with each other, they're not hermetically sealed off from each other, connected. So the supply and demand is the understanding that when the price of some good or service changes, the quantities that buyers of that good or service want to buy change. The quantities that suppliers of that good or service will just sell change, and they change in the opposite direction. If the price of something goes up, then buyers want to buy less of it, and suppliers are willing to supply more of it. Seems pretty commonsensical. This is a foundational principle of economics, but you don't need to be a PhD economist. You don't even need to have had a principles of economics course to understand this reality. Supermarket managers understand this reality. When they can't sell all of the paper towels that they thought they could sell, they put them on sale, because they understand that if you lower the price, that's a really reliable way of getting people to buy more of them. And so when the price of unskilled labor rises, and the minimum wage applies only to unskilled workers, only about 4% of US workers today make the federal minimum wage or less because they're low skilled workers, so they don't get paid very much, when the price of unskilled labor is artificially raised by legislation, that means buyers of unskilled labor, employers, want to buy less of it, they want to hire fewer hours of it, but the willingness of people to work at those higher wages goes up. Well, when the quantity supply goes up, and when the quantity demanded of that thing goes down, you get a surplus of that labor. A surplus of labor is called unemployment. That's the unintended consequence. Well, presumably it's unintended. The people, I think most of the supporters today probably are well intentioned in the sense that they think that the minimum wage will in fact raise the incomes of low skilled workers either at no cost to anyone or at the exclusive cost of employers. So here's what we get to the concept of scarcity. Employers do not have, contrary to what Bernie Sanders' supporters may suppose, do not have an unlimited quantity of wealth in which they can dig into to pay higher wages. So employers, especially because they are in fact self-interested, we might even say greedy as enemies of capitalism like to call them, precisely because they are like that. When the price that they have to pay for labor rises, they understand that that means greater cost for them, so they undertake efforts to economize further on labor. They say, well, how can I continue to have these tasks performed in a way that's less costly than it would be if I just pay the higher wages and not react at all so they can substitute into machinery, fire workers. They can alter the kinds of workers they hire. Relatedly, most of the industries in which low-skilled workers work, they use disproportionately high amounts of low-skilled workers, these are industries that are very competitive, the restaurant industry, the maid service industry, the lawn care industry, the manual labor, all these industries use manual labor. These are highly competitive industries. We can debate, well, should they be more competitive? I'm all in favor of reducing occupational licensing and reducing further barriers to business startups. I'm not saying the world is perfect, but I think it's just completely implausible to suppose that the industries that use unskilled workers are by and large monopolized, that these employers are making consistently year after year unusually large profits. They're not, restaurants come and go and they go out of business, maid services come and go, lawn care services come and go, it's fairly easy to enter these industries.  So they cannot afford to simply raise the prices as some minimum wage advocate will say, well, I'll just raise their prices and then pass along the cost to consumers. They can't afford to do that because they're operating within profit margins and when they're operating within profit margins, they understand that when the cost of labor goes up, the best way to minimize the effect of that higher cost is to reduce the amounts of workers they use. Let me say finally, even if all the prices, even some bizarre scenario, which is barely imaginable, occurs where the prices of all those goods produced in industries that use disproportionately large amounts of low-skilled workers, minimum wage workers, even if those prices all rose completely by enough to compensate employers for the higher cost, well, that means the prices of these goods and services are going up. That means consumers are going to buy less of them. And so even if employers don't change the way they supply outputs, they'll be supplying fewer of those outputs to the market. And so those employers will need fewer workers per unit of output, excuse me, fewer workers because they're producing less output. So just reflecting on the principles of economics, I don't see that there is any way that you can conclude that raising the minimum wage doesn't reduce the job prospects of some low-skilled workers. Now, I say reduce the job prospects because formally or more clearly what the proposition is is not strictly that it will eliminate jobs. I think that's the practical consequence. But it reduces the number of people who are working. It could just, their hours might be reduced. So you get the same number of people working, but each is working fewer hours. Either way, they have less income. And there's no reason to suppose that these people feel better off sacrificing those hours if that sacrifice means less income. This is an example of a trade-off that is implied by the concept of scarcity. The employers can also change the nature of each job. They can demand that workers work harder. And employers can be more strict in their intolerance of employees doing personal things on the job, like texting, making personal phone calls, they can be more strict in demanding that employees show up on time for work and not leave early for work. So there are any number of specific, different, specific kinds of adjustments employers can make to a higher minimum wage. But they all are attempts to economize further on labor because labor becomes artificially costly for them. I don't see how an understanding of basic economics allows you to escape that conclusion. There's one exception, and that is the claim that the labor market is monopsonized. Well, that's just a ridiculous claim. That requires that there be one buyer, at least in any one market, of low-skilled workers, just one. And you can show on a blackboard that there's only one buyer of low-skilled workers, that might lead to a minimum wage not reducing employment. Even then, the theory is not quite as clear as some people think. But apart from that one unrealistic exception, reflection of basic economics says, no, minimum wage is going to hurt some low-skilled workers. OK, so let's take this framework and apply it to something like rent control. So let's say, number one, we're talking about the fundamentals is the concept of scarcity and rent control that not everybody can have a place to live wherever they want. There is a finite amount of apartments in different locations. That's just kind of a brute fact that we have to deal with. So people have to make trade-offs. Two, supply and demand is people pending on the price of these properties are going to change their decisions, both the people who want to be in an apartment. The renters are going to make their decisions based on the price. If the price goes up, that will be dissuaded. The price goes down, they will be enticed. And the counter is the people who are renting out their apartments have the reverse. The higher they can get, the more they're willing to rent, the lower the price, the less the rent. So that kind of falls into the third one, which is unintended consequences. So correct me if I'm wrong, that if you were to have something like rent control that said, for the sake of poorer people in society, rents can't be above a certain point. What the unintended consequence of that is that you're going to have a shortage of available properties. Can you kind of explain specifically why that's the case? Give me the economics of that. So let me change the example just a little bit and I'll get back to rent control. The reason economics appeal to me so deeply. I remember the day I became an economist. It was January 17, 1977. I was a freshman in college. I wasn't interested in anything. I had no academic. All I cared about was football and girls and beer. And I sat in economics class and my late teacher, Michel François, drew supply to man curves on the board. And I was barely paying attention. And she said, look what happens when government puts price controls on, pushes the price below market clearing. Well, you get a shortage. When the price falls, buyers want to buy more than sellers who are willing to sell. And I realized suddenly why, I grew up in the 1970s, why I spent so much time waiting in gasoline lines. And all the other explanations that I'd heard, they kind of made sense to someone who was in economics. Well, Exxon is keeping its tankers out in the Gulf of Mexico to drive up the price. If you're 15 years old, okay, well, this is a popular one. We're just running out of oil. I mean, we've been using it now for a hundred years and it's up, running out, right? And that seemed plausible if you don't know any economics. And when I saw supply and demand, I thought, I don't think I articulated it to myself at that moment in these words, but I thought, this explanation makes far more sense than any other explanation. I was amazed at the power of these four little lines on a chalkboard, back then it was a chalkboard, to explain reality. And so with rent control, it's the same issue. If the rents fall, if the rents are artificially pushed down by the state below market clearing, the willingness of people to rent rises, right? As we economists say, the quantity demanded of rental units goes up. The willingness of landlords and potential landlords to rent goes down. You get a lower return on your rental units. So you create a housing, you create a shortage of rental housing and that's manifested in long waiting lines. Now, unlike with gasoline, people don't literally stand in line to wait.  So the waiting lines are in the form of you get your name on a list and you hope that this list opens up at some point. And so rent control is much studied like minimum wage. New York, especially New York City, San Francisco also. These are two places in the United States that have rent control and where rent control is seriously enforced. So a lot of jurisdictions that have rent control but it's really kind of a dead letter or it's not enforced that much or the rent controls are so high, they're not effective, they don't take effect. But we know a lot from looking at the experience of New York and San Francisco and that record is pretty darn clear that the predictions of basic economics play out there. There's a shortage of rental housing in New York. We know that in the 1960s, when the New York City Rent Control Board, a lot of this depends upon the actual details of how they implement, which is an interesting story in and of itself. But in the 1960s, when the New York City Rent Control Board was especially radical in really being stripped and denying requested rental increases to landlords, that was corresponding with a spike in building abandonments, a spike in condo conversions in New York. Rent controls control only the price of rental properties, not of owner-occupied properties. It's been a while since I've done it, but when I was at fee in the late 90s and very early, I was there from 1997 to 2001. And I would often, at least once a week, usually more take the Metro North train down from Irvington to Grand Central Station and then back up again. And that train path, when the train comes through the Bronx and then enters Manhattan, you can look out of the windows, you can look over at the Bronx and you can look over it up or the northeastern part of Manhattan. And you see these abandoned buildings or these buildings with squatters living in them. They've been like this for years. I don't know if they're still like that. I think they still are, but I can't speak with absolute certainty because I've been a long time since I've taken that train ride. But I saw it a lot. Just 15, 18 years ago. And you have to wonder, well, what are these abandoned, why in New York City, which has to be one of the most, probably the most prime 22 square miles Manhattan, a real estate in the world? Why does it, and right across this little river in the Bronx, why are these horrible buildings? And the best answer is rent control. Rent control made it impossible for the owners to maintain the building so they abandoned them. And these buildings were in a part of town where condo conversions were impractical. People weren't gonna buy condos in that part of town. So the owners walked away from them. In some cases, in some cases, there's, it may have been documented, but there's certainly a valid suspicion that a lot of these buildings were victims of arsonists hired by the owners. Is that rent control actually prompted the owners to torch their own buildings for to get the insurance money, right? And so here you have a policy that makes a modern city like New York, parts of it look like Dresden after a firebombing. And if there were no rent control, I have no doubt. I mean, there were other problems in New York.  It's not just rent control, but certainly without rent control, it would be a lot more profitable and attractive to some landlords to create low-cost rental units there. And without, but now with the fear hanging over them due to the New York City Rent Control Board that they won't be able to adjust the rents in order to cover their costs, they don't create as many rental units as is necessary. You know, that reminds me, there's a story that Bert Folsom tells that when the railroads were being connected from East Coast to the West Coast, Bert's great, yeah. Yeah, that it got so absurd in the way that the government was financing this that one of the parties started blowing up, taking dynamite sticks dynamite and blowing up the railroad because of those unintended consequences. So we have people who are incentivized to burn down their own property as a function. That's incredible. So how do you respond to somebody that says, well, yes, you have these basic arguments, but they're elementary. When you get the more education you get, the more you realize that you've oversimplified and really the intelligentsia knows as seems to be evidenced by the amount of people that support government intervention in intelligentsia and academia that really we do need these kind of policies because they're more complex than you may not be. Well, look, obviously the world is more complex than any theory, even graduate level theory makes out to be the whole point of theory is to simplify parts of realities you can focus on. And I am in no way, I in no way think it is a mistake or lament the fact that there are higher level courses in economics. I myself do some higher level stuff. But yes, the world's more complex than basic economic theory shows it out to be, but if that theory is valid, then it still has explanatory power. To say it's basic doesn't mean it's incorrect. It still is the starting point for our analysis. And more often than not, that starting point takes, you can get from that starting point to an adequately full assessment of a policy without much more complexity. The problems with policy today, it's not that the problems do not stem from the fact that politicians and bureaucrats are taking basic economics too seriously. And therefore we economists have to say, oh no, no, look, the world's a lot more complex. The problem is the policy makers are ignoring the important features of reality that are highlighted by basic economics. And when you ignore those basic features of reality, all the curly cues and nuances and advances that you make on basic economic theory are irrelevant because these policies are ignoring basic facts. And so yes, this is a dodge that a lot of people use.  And the proper response is yes, that's because most of the errors that are being made in public policy are errors that stem from policy makers ignorance of the basic truths taught by these models. Now you say this is ignorance on the part of the policy makers. And I think that- I'm a public choice guy, it's not just ignorance, a lot of it is. I think that would be a relatively uncontroversial statement to say that public policy makers maybe aren't the most educated about economics and maybe don't face the incentives to care really about economics. It's more of the latter, yeah. Why is it the case that so many economists seem to be mistaken about basic economics is that they genuinely don't grasp these basics or is it that they've reached, as I've heard some people have told me, you know, in graduate school, you reach an ability to grasp higher levels of abstraction. And that's why they seem to be mistaken on the basics. I don't know that there's one simple answer. I'll throw out some hypotheses that I have. One is related to what you just said. By the time you master PhD-level economics, particularly the way it's taught today with very high-level mathematics, you're proud of that. And that's what you think of as economics. And so there's perhaps a kind of psychological aversion to just using simple supply and demand and simple word-based arguments when you can use these higher-level math stuff, which does, I think, blind, because it's so complex, relatively complex, complex compared to basic theory, not complex compared to the world. The real world is always much more complex than the most complex economic theory you can name. So there's reluctance to rely upon basic economics. And so I think for a lot of these economists, they have to prove, either to themselves, their friends, their colleagues, their students, they're somehow smarter than ordinary people. And one of the lovely things that I, one of the things I love about economics is that it's just consistently applied common sense. I can take someone who, an adult, or even a high school student who's never had an economics course. And I fancy that I can explain to that person in just a few minutes some really important economic concepts. Without ever talking about math, or ever using any jargon. But that seems to be, I think, to a lot of economists, professional economists, oh, that can't be real science. I mean, if you can explain it in 10 minutes to a high school junior, that can't be real science. So you're doing something else other than economics. So you're simplifying it too much. I don't think it is simplifying it too much, in most cases. Another hypothesis is the screening hypothesis. So because math, well, because economics now has become so formalized, both mathematical and mathematically and statistically, the two are different, although they're related. There's a selection bias. It selects for people who can master mathematical logic and statistical techniques. And those are not, mastering those techniques, however impressive it is. And I do not, I admire people who can master those. It is a genuinely impressive form of intelligence. But that is not the same thing as mastering economics.  That doesn't mean you're doing economics. You're doing math using these things. It doesn't necessarily mean you're doing economics. And so there's a selection bias that people who now excel at the higher levels of economics are selected in, not because they have displayed any facility with basic economic reasoning and the ability to grasp basic economic concepts is because they're just good mathematicians with good statisticians. Is this also the case? Are we talking about high levels of economists that really don't grasp the basic concepts? Or is this? Increasingly, I'm sorry to report. I see high level, I see what strike me as more and more high level economists who seem not to understand basic economics. Now, I do believe that the typical economist, you go to the American Economic Association meeting, you just grab a random economist from the crowd.  Certainly, then the typical, then it's revealed by the typical politicians' claims. But it's not good enough. I think the typical economist is becoming less good as an economist. What I see happening, particularly over, I'm not sure when it started, it's not so much the mathematician of economics, but I think a kind of naive positivism is returning to economics. Can you explain a little bit more? Yes, the level of statistical analysis has risen so greatly. The statistical tools that are available now are really impressive that allow economists to crunch data. And I meet a lot of particularly young economists now. I think economists, 40 years old and younger, who they think what economics is, is crunching data on, crunching data that most people regard as economically related. And so, they don't bother thinking about the theories that hold these data together. In their view, what economics is just looking at the data sort of in an a-theoretical way. This is why so many economists, young economists will say, you know, there's a lot of evidence that raising the minimum wage doesn't cause unemployment because when we crunch the data, it's hard to find statistically significant effects of higher unemployment when the wage rate rises. Well, that may be, but the real world is complex. There are all these things, all kinds of things going on. And they say, well, of course, we control for all of those things. And the sound, the good economists understand that you can't control for all of those things. There's so many unseen variables that you just can't control for all of those things. And there are, by the way, to return to minimum wage for a minute, there are many, many other empirical studies, also high level, that do find the predicted negative employment effects. But in my view, I mean, conduct all these studies. That's fine, do it. I'm happy to do it. I'm happy to look at all those studies. Yes, look at the real world with data. It's important, do it, do it all. But to conclude that because a handful, and it's all it is, really a relatively small handful of studies, can't find statistically significant evidence that raising the minimum wage increases the rate of unemployment or increases the rate of unemployment among teenagers or unskilled workers, that that somehow suggests that the law of demand, this idea that as the price of something rises, we buy less of it, doesn't apply to labor or to low school workers. I think it's foolish. But I believe that a lot of economists now have that view. If you can't see it in the data, it doesn't exist. Well, they would respond, well, you're just being unscientific. Well, they do respond that I'm being unscientific. Yeah, and not just me, by the way, people who take my position. And I say, my response is, no, you're being unscientific, right? You're being unscientific. Part of science, science is not just, it's not just looking at data. The naive person thinks it's just looking at data. Part of science, science is complex play. It involves human judgment. It involves always broader knowledge of the subject matter about which you're studying. It involves understanding of history, understanding of the philosophy of science, basic theory in your discipline, of mathematics. And so this judgment gets better when you have this larger and wider collection of knowledge and wisdom. And so if you think it's just, not you personally, but if someone, or these people, and they say, oh, you're being unscientific by saying that the minimum wage causes unemployment because we have some data that show that it doesn't. Well, then the cheap response is, well, I have some data that show that it does. So who's being unscientific? We have to figure out some way to decide which of these two different conclusions from the data are correct. The way a lot of these economists conduct the discussion is they just want to sophisticate up their econometric techniques. And my argument is, to get back to something I started to say a moment ago, part of being a good scientist, a scientist with a small s, not lab coded, but a good, in a way that economists are, in fact, I believe, scientists. Part of being a good scientist is understanding, being able to identify certain laws of economic behavior and understand when and how they apply. And to also make inferences from what you learn. If we're all agreed that if the price of paper towels goes up, people want to buy fewer paper towels.  As taxes go up, people are less likely to engage in the taxed activity. As the price of haircuts go up, people are less likely to get haircuts. If we understand all this, well, it's scientific to say, okay, we've identified a law here. That law should also apply to low skilled workers. And if you say it doesn't, you need to give me a really good reason for why it doesn't apply. So let me challenge you on that. Is, you say we've identified these laws. Is that identification something that you arrive at through an analysis of data, or is this just pure theorizing? So is there any, this is two questions, I suppose. Is there any data that would convince you otherwise? And two, is there any lack of data that would convince you otherwise? Well, you're asking a lot of questions there. And they're good questions.  Because I know from a lot of experience that you dive down that hole, you never come out. And this is, I'm sure your listeners don't want to. I've already talked to a few people about it. So we don't have to go into great detail.  We can deduce them just through reasoning. Although even Mises wasn't so naive as to say, we don't learn anything from observing the real world. That's an unjust characterization of his view. I'm not quite the a prioris that Mises was. But so I think we understand the laws of economics through what we know from our human experience. From observing the, in a theoretically constrained way, like using supply demand analysis, for example, observing the world using that, and we ask ourselves, does this analysis help us better understand the world over here? Oh, yes it does. How about over here? Yes it does. Well, that says that this analysis has a lot of explanatory power. And the more explanatory power it has, then when you use it to understand different parts of reality, then there becomes an increasingly strong reason to believe that it continues to have that explanatory power when you apply it to this other part of reality, particularly if there's no obvious reason why it shouldn't. So when you ask, is there any data that would convince me otherwise? This is what I meant when I said it depends on the question. Obviously, yes. I mean, if study after study after study show that raising the minimum wage, no matter how high, or forget about the minimum wage, in some, you know, in some meaningful amount, and study over the effects over the long periods, and done really, really well by the best econometricians and economists, and they never find any unemployment effects. Then at some point I would have to say there's something about the market for low skilled workers that makes the law of demand there non-operative. What is that something? Is it monopsony power of employers? Is it some unseen change in the nature of the job? By the way, if that were the case, and the theory would still hold a loop just right now. Yeah, yeah. But even then, I wouldn't use that, I wouldn't generalize from that to, okay, well the law of demand must not be a general enough principle that we can use it to theorize about the real world. But practically speaking, in the case of the minimum wage, again, the majority of studies still find a negative employment effect. And so if you're going to use purely statistical or data-based empirical arguments to suggest that a foundational principle of a science doesn't apply, you need overwhelming evidence. You don't need just a few studies. And that evidence has to be almost unanimous to convince me. Startling propositions require startling amounts of evidence to back them up. I was talking to my friend George Selgen yesterday on another topic. We were talking on the phone. And we were joking. And George said, well, you know, someone might claim that water runs uphill. And if someone had a study that said water runs uphill, no one would start thinking, well, maybe the law of gravity doesn't apply to water. And I remember thinking, when my son, who's now 18, almost 19, when my son was a young boy, I remember going to some of these water parks. And I actually did see water running uphill at one of them. But I didn't look at that and say, oh, my gosh. Maybe gravity doesn't apply to water. Maybe gravity doesn't apply to water at this water park. So doing good economics, it's not satisfying to a lot of people. Because there's no formula for it. But being a good economist ultimately is a matter of judgment and wisdom. And I just know it when I see it. And I think other good economists know it when they see it. And I know bad economics when I see it. I can't prove it. If I think this Professor X's economics is lousy, there's no formula, I can say, to prove it. I just give arguments to other people and let other people judge whether or not they think my arguments are better than Professor X's arguments. But there's no escape. Science is a human endeavor. I'm very much influenced by Deodor McCloskey, particularly in this matter. Science is a human endeavor. And human beings, we have certain ways of thinking that are just part of being human. We don't have access to capital T truth. It's just given to us whole and pure without any intervention of our own distortions of thought and prejudices and biases. And we just don't have it. And so we have to do our best to use our judgment and our wisdom. And I believe that supply and demand analysis, basic economics, is a huge benefit. It's a huge, usually valuable tool for improving our wisdom and our judgment and usually a valuable tool for someone with good wisdom and judgment to make statements about reality to help themselves and to help others better understand reality. I like high-existing between making specific predictions and making pattern predictions. I don't think it's the case in social sciences that we can make many specific predictions.  We can make if-then predictions. I predict that if the minimum wage goes up, then there will be fewer job opportunities or worse job opportunities for low-skill workers. That's different than saying if the minimum wage rises, there will be tomorrow or will be next year fewer jobs. A lot of other things can happen that overwhelm that particular effect. That doesn't mean that the science, that doesn't mean that the basic economics is wrong. That doesn't mean other things happen. I believe that unfortunately an increasingly large number of economists, particularly young economists, have poor judgment. They just have poor judgment about what matters. They have poor judgment about what data mean. They naively don't ask, well, where did these data come from? Why do we classify things in this way rather than that way? Why should we believe that a study that doesn't statistically conclude that higher wages cause unemployment? Why should we let that study or a handful of similar studies lead us to believe that the law of demand doesn't apply to the market for low-skilled workers? It's just poor judgment. But it's poor judgment that gets to mask itself in a sort of dime-store costume of science. Well, and that's kind of the last thing I wanted to ask you about, because this phenomena of perhaps young students or increasingly popular, not only economists, but popular intellectuals, from my perspective, outside of academia, seem to lack this common sense. They seem to lack this sensible judgment, and especially in the soft sciences when you're not just talking about economics, but or like in the humanities, good heavens. I wonder if you have a kind of explanation for that, because I think we're starting to see a group of people of which I am part that are really interested in ideas and very turned off by academia, largely because people seem a bit too full of themselves and not actually interested in the accuracy, critical conceptual accuracy of their ideas. Oh, so much of it goes on in academia, particularly in the social sciences and the humanities. It's just pure peacockery. That's exactly the word. Or peahenery, and I want to be sexist. There's a lot to show off in economics, I know, with the jargon economists use, the way their papers are structured, and I can speak for economics mostly, obviously that's my discipline. A lot of the math that occurs, it appears in top level journals, or any journal for that matter in economics, a lot of it is just window dressing. It's designed to say, look what I can do.  And then you read the paper and it often makes a point if it's valid at all, or relevant at all, it's a point that could've been made with either no or much less math. Do you think that this would be a presumptuous conclusion? It's something that I believe, but I wonder what you think about it. That it is entirely not only plausible, but realistic to think that somebody with access to the internet in a matter of a month, if they know where to research and they're good skeptical people that can listen to both sides of the argument, can come to more sound and accurate conclusions about economics than even people who are pursuing their PhDs. Certainly possible, they have to know where to look. The risk is they can also come to some bizarre conclusions. But I think the internet here actually makes things better because the risk of coming to a bad conclusion in economics is sort of natural. I think if you don't, again, economics isn't hard, it isn't difficult. But if you don't learn supply and demand unintended consequences, that scarcity is unavoidable. It's not an artifact of reality that we can get rid of. A lot of people just don't naturally become bad economists. They just don't have the, they're not triggered to think, to ask the basic simple questions that economists ask. And once you trigger to think, to ask those questions, then you really, I think it's hard to imagine not asking those questions. So, okay, you're gonna raise that wage. Where's it gonna come from? Where's the pay gonna come from? And once you start down that road, well, then it's natural. Oh yeah, we gotta figure out where the pay's gonna come from. Well, it's gonna come from higher prices. Well, one with a high price is discouraged consumption. Yeah, well, won't then the less production mean the demand for fewer workers? Oh, I hadn't thought of that. So, while it's easy to, I think, quickly become a competent at thinking like a good economist, it's not natural. The internet probably increases the chances of it becoming natural. So, while the internet also expands the opportunity to stumble upon a lot of real nonsense, I think because the natural state of the human mind is economically nonsensical anyway. The bad things in the internet don't really have that much of an effect. They just have to reinforce what people naturally think. But by allowing people to find explanations, videos, short blog posts or op-eds or chapters of textbooks, enhances the ability to people who are in economics. I don't have any evidence that that's happening. I'd like to think it is. I can say that the public discussion today about public policy seems to me a lot worse than it was when I first got into economics. Really? Yeah. I mean, there's some exceptions. I mean, the big, and I think this is important, the big exception is price controls. When I got into economics price controls was still accepted in the United States. Today, except for minimum wage and rent control in some cities, price controls are pretty much off the board and that's a good thing. But, and maybe it's a selection bias, maybe it's just my memory failing. But the overall understanding today that's evinced by public discussions that I see seems to be just worse but economics. Remember, the New York Times famously in 1987, that's not long ago, at least not to me, argued for zero minimum wage. I basically argued for eliminating minimum wage. The New York Times. Now the New York Times is calling for more than doubling the national minimum wage. Trade, while ordinary men and people in the street have always been protectionists mostly. Elites were almost all in favor of free trade back in the 80s and we see almost daily that seems to be going away. Yeah, you had a handful of people who were bemoaning globalization and bemoaning the rise of Japan. But, you know, even Paul Krugman now is giving aid and comfort to protectionists. So, last thing on this, in my own experience and given that I, as we were talking about before, I had a job at FI where I got to go around and talk to a lot of students and professors who were specifically interested in what you might call sound economics. They're familiar with the works of Ludwig von Mises and Frederick Hayek where if you read those, you kind of, you grasp the economic way of thinking.  That is central and once you get it, you can't not get it. You can't not get it, yeah. So, this is perhaps a more challenging question. Would you say that if somebody sincerely grasps those basic concepts, the scene and the unseen, for example, that they are going to have a clearer footing to understand the world around them in an economic way than, I can't possibly say the majority of professional economists, but it sure seems like the conversation in the general public quotes economists, they have all this evidence of all these economists that believe these things that get the basics wrong. I think that if an intelligent person who's never had an economics class reads, Bastiat's essay, what is seen and what is unseen, reads his petition of the candle makers, reads Leonard Reed's eye pencil, maybe reads Milton Friedman's Free to Choose or Capitalism and Freedom, maybe reads an essay or two about Julian Simon, you know, a handful of small things, but reads just a handful of things that are accessible to an intelligent person without ever having taken an economics course. Then that intelligent person, if he or she has any kind of wisdom at all and any kind of good judgment at all, I believe will know what I regard as sound economics, will know more sound economics than is, than seems to be known by a large number of, I'm not saying a majority, but a large number, distressingly large number of professional economists. Relatedly, that same person, the same lay person, a non-economist who reads these things, will by doing so have enough understanding of economics to assess public policy proposals and to participate intelligently in public policy debates about economic matters that make that person as expert in these matters as even the best, as all but the very best economists. Because again, the public policy proposal, the public policy debates, these issues do not involve nuances in economic theory. These all turn on misunderstandings of very, very basic facts. The typical public policy debate is between someone who thinks that scarcity doesn't exist or forgets the scarcity exists and someone who insists that it does exist. The typical public policy debate on trade is between someone who simply doesn't know the definition of a trade deficit and someone who does. And so not knowing the definition of a trade deficit, you can imagine being whatever you want, sounds bad, so therefore it must be bad. And so what public policy debate needs much more of is an understanding of basic economics. Economists should be leading the way in that. I don't see them doing so. I don't see them doing so as much as I'd like them to do so. I say them because I'm almost speaking about them as if they're a different field than me. I increasingly feel that way. Well, on that note, I wanna thank you for sitting down talking with me. This has been great. My pleasure. All right, so that was my interview with Professor Donald Boudreau of George Mason University. I hope you guys enjoyed it. Check out the show notes page this week, stevedashpatterson.com slash 19, and I'll have some more resources for you guys to learn about basic economics if that's something that you're interested in. And make sure to tune in next week where I'm doing a interview breakdown of my conversation with a Stanford professor about democracy. I have lots and lots to say on that topic and I think you guys are gonna enjoy it. All right, have a great week.