Welcome to Free Thoughts from Libertarianism.org and the Cato Institute. I'm Aaron Ross Powell, editor of Libertarianism.org and a research fellow here at the Cato Institute. And I'm Trevor Burrus, a research fellow at the Cato Institute Center for Constitutional Studies. Joining us today is our colleague Dan Mitchell, senior fellow at the Cato Institute. America got its start in anger about taxes. So what would that founding generation think of our tax regime today? I would like to think that they would be very upset. It's not just that government is so much bigger in doing so many things that are so contrary to the animating spirit of the American Revolution. But the income tax, the way we collect money, the intrusiveness, the nosiness, the way you have to lay your life bare to the IRS, I assume for a generation that had very, very small government and what little government that did exist back then was financed by a few excise taxes and trade taxes. I would think they would go ballistic over the income tax. What they actually did to the tax collectors, I find this to be fascinating, when the stamp tax and the Townsend Act, they tore these people's houses down. The mob got up, went to their houses, tore them apart by their hands, tarred and feathered people, not condoting that. But how against taxes they actually were? But then the income tax comes along. What year did the income tax come along? Well, we had an income tax during the Civil War. I think it lasted from 1862 to 1872. But that was always said to be temporary and it turned out to be temporary. We then had another income tax come in in 1894, but that was ruled unconstitutional in 1895.  The income tax began, at least the modern version of the income tax began, with a top tax rate of 7%, one two-page tax form, 14 pages of instructions, and that has morphed into the monstrosity that we have today. Yeah, what is that? Let's get about the monstrosity today. What is the top tax rate? How many tax rates are there? How bad is it? Well, probably the simplest thing to look at is that 75,000 change pages long. If you go to the IRS website, last time I checked, you could download about 1,000 different forms. And the number of tax rates, which actually is almost a trivial issue in terms of the complexity of the tax code, the actual number of tax rates I think right now is 7%, but that's nothing compared to all the exclusions, deductions, credits, exemptions, preferences. Those are the things that make the tax code the nightmare that it is today. What's motivating all that nightmare? I mean, taxes could be very high, but they could be radically simpler than what we have now. I mean, if you want to collect a lot of money, you just write a one-page law that says we're going to take x% of whatever you earn. So all of those exemptions and loopholes, they're often called, are those there to raise more money or hide taxes or what's the motivation behind all of this? I think the simple way to think about it is in 1913 we had this relatively simple introductory income tax and it was like a ship going out to sea. Well, 102 years later, there are layers upon layers of barnacles on that ship. And in theory, episodes like the 1986 Tax Reform Act were designed to scrape the barnacles off the ship. Of course, they only scraped off about maybe one-fourth of the barnacles and in some cases they were the wrong barnacles because one thing to understand about all these different provisions of the tax code is sometimes the complicating provisions are designed to mitigate a penalty that shouldn't exist. For instance, you shouldn't be double-taxed on income that is saved and invested. Well, I don't know how many thousands of pages of the tax code are designed to things such as IRAs and 401ks, but I'm glad those pages are there. Now, what I would prefer to have is no pages because we wouldn't have any double taxation of income that's saved and invested, but some of these provisions are better than nothing, but of course many of the provisions are there to put in penalties, to put in loopholes that don't have any justification, and those exist because over decades the different lobbyists that go to the Ways and Means Committee in the House and the Finance Committee in the Senate, they've succeeded in having provisions that benefit their clients. And maybe these are provisions that lower taxes but only for one very narrow group of people. Well, as a libertarian, I like it when government gets less money, but I don't really like it if government gets less money just because someone hires a good lobbyist and gets the playing field tilted in their direction. Is there also an attempt to social engineer via the tax code? Well, there's certainly an attempt to social engineer in the sense of trying to control or steer behavior or bribe people into doing things that politicians like. So the charitable contributions deduction and the tax code, well, don't we all care about churches? Don't we care about symphonies and ballets and art museums and the Salvation Army? Well, yeah, okay, we all care about those things. Well, do we need something in the tax code to bribe us? Well, only one-third of people roughly itemize on their tax return. On their tax return, so obviously two-thirds of people who are giving to charity in this country are doing it even though they're not getting a charitable deduction. So I think that a lot of the mess that's there, people rationalize and decide after the fact, well, oh, if we didn't have this provision, nobody would buy a house or nobody would give to their local church. I think that's nonsensical, but it's in some sense been absorbed into the collective consciousness of tax people in Washington. Now, you mentioned the phrase double taxation, which can you clarify exactly what that means? Yeah, it's very important economically, but it's a term that requires some explanation. In theory, what we should have is a tax system that doesn't have any bias between income that you consume today and income you consume in the future. Now, what's income you consume in the future? It's just a tax geek way of saying saving and investing. But right now, in our tax code, if you consume your after-tax income today, because think about it this way. You earn income, you pay tax on your income, and you have some after-tax income. What are you going to do with it? Well, there's really only two things you can do with it. Consuming in the future, as I said, is saving and investing. If you consume now, the federal government by and large leaves you alone.  But other than a few little penny-any things like that, the federal government doesn't tax you for consuming income right away. But if you consume your income in the future, we have all these examples of what are called double taxation between the corporate income tax, the capital gains tax, the double tax on dividends and the death tax. If you save and invest, you can be subject to as many as four different layers of tax that you don't get hit with if you consume your income right away. So obviously, there's a huge bias against savings and investment in the tax code, a huge bias in favor of consumption. Why does this matter? Because every single economic theory, even the Marxists and the Socialists would agree that you have to have capital formation for economic growth. You have to set aside some of today's income to finance tomorrow's prosperity. And yet our tax system treats people who do that almost like they were criminals. You mentioned earlier, though, that we often tax things that we want less of and we give tax breaks on things we want to encourage. But it seems like saving and investing are things that unquestionably we want to encourage. So why are we taxing them more? Ah, that's because who does the saving and investing, those evil, bad, awful, rich people. And when you have a tax system that is so driven politically at least by a lot of the class warfare discussions, well, we can't get rid of the death tax because only rich people pay that. We can't get rid of the capital gains tax because that's for the rich. And if you go through all the different debates and the discussions we've had about the various forms of double taxation in our country, it largely is driven by class warfare. The politicians want to collect a certain amount of money and who's the easiest target? Those evil, awful, bad, rich people. But that – I mean, one of the common things we hear especially from people on the left is that the rich, because they can get accountants who know all of the loopholes or because they're politically connected, are paying much less tax than they ought to and they're certainly not paying their fair share. So aren't all those things – I mean, we want the rich to pay their fair share, right? Well, from a libertarian perspective, the fair share is that the law should treat everyone equally. That's etched above the Supreme Court equal justice under law. To me, that's a just a flat tax. Now, of course, as a libertarian, ultimately, I'd like to shrink the federal government so we didn't need any broad-based tax whatsoever. We got along just fine before 1913 without an income tax. But if we're going to have an income tax, I do think it should treat everybody equally. When you look at the treatment of rich people, it's a bizarre combination. I mean, the rich, as defined by, you know, say, the top 20%, top 10%, however you want to classify it, they do pay a disproportionate share of the tax burden. Now, it depends. Are you measuring just the income tax? Are you measuring all taxes? But no matter how you slice it, the top 10% are paying way more than their share of income and they're certainly paying a disproportionate share of the overall tax take and a huge share of just the income tax take. Now, that being said, the definition of taxable income matters a lot because when you're measuring income, what happens is a lot of rich people, if they want to, they can just go into their financial accounts on a computer. Within nanoseconds, they can change their entire investment portfolio to tax-free municipal bonds. The federal government does not tax municipal bonds. So you could be a billionaire and your federal income tax can be zero because all your investments are in municipal bonds. So that's one of the costs of high tax rates. Go back to, say, to the 1950s. Is that why Warren Buffett played a less rate than his secretary? That was going around. Warren Buffett, I paid a lower tax rate than my secretary. Is it because she was paying income tax and he probably wasn't? No. In that case, it was because Warren Buffett was bad at math. It's a simpler answer. I don't actually think he was bad at math. I think he was just willing to make a political point and pervericate a little bit because what Warren Buffett wasn't counting, he was looking at back then we had the 15% double tax on dividends and capital gains. And Warren Buffett was saying, oh, look at this.  Well, what Warren Buffett wasn't including is the fact that capital gains and dividend, that was already taxed 35% of the federal level, not to mention there was a 40% death tax waiting at the back end. So he was just being political and not being terribly honest. But rich people, if they want to, I thought you were going to give the example of Ross Perot when he ran for president in 1992. He was saying, oh, my tax rate is very low. Well, the reason his tax rates were very low, almost all his portfolio was municipal bonds. The same thing with Theresa Hines-Carrie. That came up a little bit in the 2004 campaign. So rich people, if they want to, can choose to pay zero tax or they can put their entire portfolio in what are called growth stocks. Those are ones that don't pay dividends. Why would somebody buy a stock that doesn't pay a dividend? Because they expect that the stock's going to rise in value. So it's called the growth stock. Well, the one thing the federal government hasn't figured out how to do yet is to tax unrealized capital gains. So if you're a rich person and you're watching your fortune build up because you've bought stocks that are rising in value, until you sell those stocks, the government can't impose any double taxation. And so they're not getting any revenue. So rich people, if they want to, if you push tax rates up to the levels we had in the 50s and 60s and 70s, they're simply going to change their behavior in ways where the federal government doesn't get any money. Can you expand on that, on how the data that we have about how rich people change their behavior in response to the tax rate? I know that's happened a lot in history. Well, I think the most persuasive data is from the 1980s. The IRS every year puts out something called the statistics of income bulletin.  You can see by income levels how much different people earn. Not individual people, but in terms of the aggregates. How much did people over a million dollars make? How much did people over 100,000 make? How much did people between 30 and 40 thousand dollars make? Not only that, you can see the sources of their income. Was it wage and salary income? Was it dividends, capital gains? You can see what deductions they took. How many people in different income classes took the home mortgage insurance deduction and so on and so forth. So it's a wealth of data. But the one thing I noticed is I went back and I looked at that data for 1980 because that's when we had a top income tax rate of 70%. And you can look at the rich and traditionally in Washington that gets defined as $200,000 or above. You look at the rich people in 1980 who were affected by the 70% top tax rate and you can see how much money they paid. The IRS collected about $19 billion from those people. By 1988, Reagan had lowered the top tax rate all the way down to 28%. And a lot of our left-wing friends said, oh, this is unfair, the rich won't pay anything, the Treasury is going to be starved of revenue. Well, what does the statistics of income bulletin from the IRS showed? Rich people, again, making more than $200,000 a year or above, in 1988 at a 28% tax rate paid five times as much money to the Treasury. Now, it's not all because of the lower tax rate. Some of it was because of inflation, population growth. You know, who knows how many different factors were involved. But there's no question we had a steroid version of the Laffer curve going on in the 1980s because rich people decided, hey, at a 28% tax rate, I'm going to earn more income. I'm going to, and this is critical, I'm going to report more income and the IRS wound up getting a lot more money. So if you want to soak the rich, keep tax rates reasonable so that they don't have incentives to pile their money into municipal bonds and just do tax-motivated types of investing. You mentioned the Laffer curve. Can you tell us what that is? The Laffer curve is simply the notion that if you have a 0% tax rate, the government's not going to collect anything. If you have a 100% tax rate, well, guess what? The government's probably not going to collect anything because outside of, unless you're maybe a genetic communist, if the government's going to steal every penny you make, you're not going to make any money. So the notion of the Laffer curve, and by the way, even Paul Krugman would agree that there's a Laffer curve, the whole debate on the Laffer curve is what's the shape of the curve. In other words, somewhere between 0% and 100% is a tax rate that will maximize revenue. Now, by the way, I should stress, I have zero interest in maximizing revenue for the government. I want the tax rate set at the growth maximizing point, which is going to be a very, very low rate, which is necessary to finance the few legitimate functions of the federal government. But the whole point is, is that the Laffer curve is simply an intuitive way of telling people that, hey, 100% tax rate is going to be too high, 90% too high, 80% too high. Maybe at 70% Paul Krugman raises his hand and says, oh, yeah, I think that's a good idea. But most sensible people, you're going to get down 40, 30, 25 before they say, okay, that's where you maximize revenue in the long run. And then people who actually care about freedom and liberty and economic growth are going to say, oh, but let's go down to a tax rate of 5% or 10% because that's what's going to maximize growth and freedom. Has that changed a lot in the sense that the kind of tax rates we have had in the past, 90% I think before Kennedy took office and 70% before Reagan took office? Are those really discussed anymore? Have we kind of won the battle for over 50% tax rates being a good idea? I would like to say yes, but at several times in my adult life, I thought we won the battle against Keynesian economics, but it's like a Freddy Krueger movie. It comes out from the grave whenever there's a downturn and politicians have an excuse to spend money. On the notion of very high tax rates, let me give you an example of why I'm worried. I told Thomas Piketty about where he is explicitly arguing that you should have tax rates of 70%, 80% and wealth taxes and death taxes and, of course, lots of double taxation on top of that. And the Paul Krugman types of the world seem to be for that. Obama has never been asked, what do you think is the highest tax rate anybody should ever pay? But I wouldn't be surprised if in his heart of hearts he thinks it should be way up at that level because for every question he's ever asked, what do you think of the sunny weather today, he says the rich should pay more. I'm exaggerating, but only slightly. So I do think that there are, on the left, we had made a lot of progress in the 1980s. We hadn't won them over on the issue of double taxation, but we had won them over on the issue of tax rates. So you had Bradley and Gepard and other sort of reasonable, centrist Democrats.  I'm not sure that Hillary Clinton or Barack Obama today would be able to pinpoint when tax rates get too high. It has to clarify something. We talked about we've graduated income taxes and so we're talking about these really high rates, the 90% or the 70%. Do we mean like if there was the 90% tax rate in the past that people making a lot of money paid a full 90% of everything that they earned? They paid 90% of their taxable income above wherever the income tax bracket kicked in, but they didn't earn and report nearly as much taxable income. One of the reasons that Reagan supposedly became a supply sider is that back when he was a movie star, he learned that if you made more than a certain number of movies a year, there was no benefit because, you know, there probably weren't that many effective tax shelters when you were a movie star and so you get up to that 90% tax bracket, what's the point? We see that when professional athletes, free agents, will sign for a lower amount in a low tax state because it comes out to more than a much bigger contract in a higher tax state. Is that something that people really do? I mean, some people would be thinking, okay, look, you say we're going to talk 70% of your income above $300,000 a year.  That's not how salaried employees work. So does that kind of dissuading actually come in for people who aren't hourly employees or picking up work on it? Well, it's not just that you would stop working. It's that, I mean, even at 90%, you're still taking home 10% of that.  No, this is something when I first got involved in tax issues, I confess, I wondered about two because I was getting my salary and, okay, well, if my tax rate goes up, I'm not going to be happy. What am I going to do if my tax rate goes down? I'm going to be happy. But it's not like I'm going to type faster when I'm writing a paper about fiscal policy. But here's the thing I eventually learned. The rich are not the same as the rest of us, or at least they're not the same as me. Maybe you two are millionaires and you should be buying me dinner every night. But if you look at, again, those same IRS statistics of income bolts and that I talked about, you look at that data and what you find is that rich people don't rely on wage and salary income. For those making more than a million dollars a year, two-thirds of their income is from business and investments. And when you get business and investment income, guess what? You do have a lot of control over the timing, level, and composition of your income. So you can decide, okay, it's November. I'm going to go to Tahiti. Now, I can't decide that working for Cato, not to mention the fact that the people on the seventh floor might say, we're Stan Mitchell, but it doesn't save me anything on taxes because, okay, I got the salary and certain amounts being taken out by the IRS and I don't have any flexibility. But if you're one of these people making over a million or heck, over 10 million dollars, 81% of your income, the last time I checked anyhow and I can't imagine it would have changed, is from non-wage and salary sources. And so you're one of those people who can get onto your computer, to your financial accounts and invest in municipal bonds. If you have business income, you have tremendous ability to accelerate and defer and recharacterize and you can decide, okay, I'm going to take this pile of money and invest it rather than declare it as income, which by the way is a perfectly legitimate thing to do because if it's being invested, it's no longer income going to you. But the point is that you have all that flexibility so, yes, you can respond in a very significant way to changes in tax policy and it really has a big effect on savings and investment decisions for the economy. So far, most of what we've discussed has been stuff that's bad for rich people. But does the tax code, the high level of taxes, those 75,000 pages harm low-income Americans as well? Low-income Americans don't really pay federal income tax. Matter of fact, they get a wage subsidy called the earned income credit through the federal income tax so it's like a negative tax for them. For lower middle income and middle income people, they're by and large wage and salary people so a lot of them can file like a 1040 EZ. It's not overly complicated for them. It probably does cause them stress and anxiety because even if you have a simple tax return, people just tend to get very nervous, well, am I missing something? Is the IRS going to come after me? And so even people like that will go to H&R Block or buy TurboTax or something like that just because they're nervous about what the tax system holds for them. I would say the main reason that lower and middle income people are hurt by the tax code is not what's happening to them in terms of their direct tax liability. It's not what's happening to the economy in terms of long-run economic growth. It seems like the economy grows 3% next year instead of 2% or 2% instead of 3%. We don't think of that as being a big thing and actually if we're planning on dying next year, it's not a big thing. We probably wouldn't notice the change to our living standards if the economy grew 2 versus 3 or 3 versus 2. But when you go out a couple of decades with the power of compounding, it makes an enormous difference. If the economy grows, say 1% a year, let's say you're France or Italy, you're growing 1% a year, it takes you 70 years to double your GDP. On the other hand, if you have 3.5% growth, which is what America almost averaged for much of our nation's history, you double your GDP in 20 years. Now think about it from the perspective of a lower-income person. You're not comfortable. You have to work every day or at least five days a week. You can't really afford to take a lot of breaks. If your economy is growing 1% a year, 20 years down the road, that's an enormous difference versus an economy growing 3 or 4% a year. And so I think we don't appreciate how important economic growth is. I sometimes use examples of this. If you go back to 1964, and this staggers people, I didn't believe it when I first saw it, but I checked the numbers, you go back to 1964, Singapore and Jamaica had the same level of per capita GDP. Singapore and Jamaica. Singapore and Jamaica. And now Singapore is well above the United States, and their per capita GDP is something like 15 times as high as Jamaica. Why is simply the difference of compounding of 5% to 6% economic growth year after year versus 1% to 2% economic growth year after year? So when I think about lower and middle-income people and I think about the tax code, I think about the fact that we are shooting ourselves in the foot with high tax rates and double taxation and that's slowing down our rate of growth. And even though in an advanced, mature industrial economy like ours, it might only be the difference between 3.5% growth and 2.5% growth in the long run, it adds up to a lot for people's living standards. Is that data pretty clear in the sense that we look at a place like Scandinavia where there's lower growth rates but higher taxes? Is it a pretty open and shut case that higher taxes kill growth rates and higher government spending is not good for growing the economy? Is that a pretty open and shut case? Well, I think it's an open and shut case. But here's the reality of it. If you look at, say, the Economic Freedom of the World Index published by Fraser in conjunction with Cata and other think tanks around the world, you'll notice that they have five major categories for what determines a nation's prosperity. Physical policy is only one of them and it only counts 20% of your grade. You also have rule of law and property rights, you have trade policy, regulation policy, and monetary policy. So if you're Sweden or Denmark, you get a very bad score on fiscal policy but you get a very high score on the other categories. As a matter of fact, countries like Denmark usually score above America on these non-fiscal policy measures. So I think that Sweden and Denmark and some of these other Nordic nations, I think they're hurting themselves with high tax rates and a big welfare state, but they tend to be very free market in other areas. Now, it's still hurting them. If you go back to 1970, Sweden was one of the richest countries in the world in the top five, or maybe in some cases, top 10, depending on who's doing the measuring. Well, now Sweden's dropped about 15 places. Not because they're poorer today than they were in 1970, but because they've been growing 2% a year and other countries have like, well, Hong Kong and Singapore 5% to 6% a year, but other countries say 3% to 4% a year. So you'll slowly fall behind other countries once you adopt the big government, the high taxes, the welfare state. Now, I will say at least Sweden and Denmark did it right. They did the wrong thing in the right way. They got rich first when government was small and then they adopted the welfare state. Now, if you're already rich and you adopt a welfare state and you start growing only 1% to 2% a year compared to 3% to 4% a year, well, you're a rich country and it's still nice to live in Sweden and Denmark. They're very civilized places. They have actually better rule of law and property rights than we have in America. It might get a little bit cold in the winter, but no one's going to complain about living in Sweden and Denmark if your other choice is to live in Paraguay or Botswana. You mentioned previously and something I think is related to this or might be just an entirely different topic in terms of growth. You mentioned the corporate tax rate, which you call double taxation. Sometimes we hear about the corporate tax rate being either extremely high for America, which is bad for growth, one of the highest in the world if not the highest in the world. Other people have argued that the corporate tax rate maybe shouldn't even exist at all. What is your take on corporate taxation? Well, the bad news is that we do have the highest corporate tax rate in the world. And that's taxing the profits of corporations. Taxing the profits of corporations. Some people sometimes say, well, no, no, it's really the United Arab Emirates, but that's a tax only, it's only a severance tax on oil companies. If you have some regular company, there's 0% corporate income tax. So we have the highest corporate income tax in the world. We used to be second, but Japan lowered their rate. That's a bad thing, unquestionably, because corporations are mobile. Corporate investment, business investment, it can cross borders relatively simply. But then, of course, we compound the damage of the high corporate tax rate because we then double tax dividends and capital gains. And of course, I already mentioned we have the death tax on top of that. Now, having said that, assuming you have an income tax, I do think business income should be taxed, but I think it should be taxed only one time. So you can make a choice, well, do you tax that income one time at the level of the company? Or do you follow it to shareholders and tax it one time at the level of the shareholder? Administratively speaking, it's easier to tax the company rather than track down, in some cases, hundreds of thousands of shareholders. But you could do it either way. But don't do it both ways, and whatever way you choose to do it, have the rate be competitive and low. Well, we're on the topic of corporations who can move, can shift to countries that have lower taxes. One of the things you've written about in the past is tax competition. Tax competition is simply the notion that, especially in a globalized economy, labor and capital, jobs and investment can cross national borders. And I think this really kicked off in a big way back about 1980 when Reagan and Thatcher cut individual income tax rates. And you saw a change in global investment and migration patterns. But then it really began to also take effect on corporate taxes, where Ireland deserves a lot of credit. They used to have a corporate tax rate of type at 50%. Then they lowered it to this bifurcated 30 and 10 system. The European Union said, oh, that's unfair to have a bifurcated system.  It said, OK, we'll just have one low rate for everything of 12 and a half percent. And you saw big benefits for Ireland of that. And other countries were forced, not only to lower their individual income tax rates because of Reagan and Thatcher, but they were forced to lower their corporate income tax rates because of Ireland. And then, heck, it's even applied to things like dividend taxes and capital gains taxes because if you're a well-to-do investor in Europe and you're being taxed at very high rates and being double taxed, what are you going to do? You're going to move your investments to Switzerland or Luxembourg or Miami or Cayman or something like that. And so countries had to lower their double taxation. A lot of countries got rid of their wealth taxes and death taxes. Heck, the richest person in Sweden had moved to Switzerland, the head of IKEA, the founder of IKEA. And guess what? Sweden recently got rid of their death tax and wealth tax. He moved back. So that's just an example of one person where it makes a difference in terms of what your tax policy is. So I think tax competition is a very important liberalizing force in the global economy because it sort of handcuffs politicians and tells them, you may want to rape and pillage rich people, but guess what? The geese that laid the golden eggs can fly away if you're mistreating them too much. And I think what we saw from 1980 till about, you know, end of last decade was a very positive cycle of tax competition. What worries me now is operating through international bureaucracies like the OECD, high tax governments have gotten together to try to constrain tax competition. They want to create something akin to an OPEC for politicians. I've heard you often say that one of the most important characteristics of a tax code is that it's neutral. What do you mean by it being neutral? Well, I suppose I should first say there's no such thing as a neutral tax code because if you're going to tax people for earning income, you're obviously changing the trade-off between labor and leisure. That being said, you should minimize the distortions in the tax code so that you are as close to neutral as possible. Now, we already talked about double taxation. Well, what's that about? It's about creating neutrality between income that's consumed today and income that's consumed in the future. That's why you want to get rid of double taxation on saving and investing. But you also want neutrality in the sense that you don't want politicians saying, okay, if you earn money as a carpenter, you have zero tax. If you earn money as a plumber, you get taxed 50%. We're going to have way too many carpenters then. That's a hypothetical example of a distortion. But in that 75,000-page tax code, we have lots of real-world examples of distortions. And sometimes these distortions are very technical dealing with what's the so-called depreciation schedule of the business investment versus another type of business investment. Sometimes it's distortions, as I said, in the form of double taxation. Sometimes it's, well, actually, one of the worst and biggest distortions in the absence of neutrality in the tax code is the healthcare exclusion. If you had Michael Cannon or Mike Tanner here, they would wax poetic about how this causes a third-party payment or a payer problem because people have this artificial incentive to get as much of their compensation as possible in the form of tax-free fringe benefits. And that has messed up the healthcare system in addition, of course, to Medicare and Medicaid and other government interventions. But you want neutrality because you want... If you want growth and prosperity, you want people making decisions on the basis of what makes economic sense, not on the basis of what minimizes their tax bill. But if you have high tax rates in a complicated system, guess what? That's what people are going to focus on, at least to some degree. Would a flat tax be better than what we have now? It would be infinitely better than we have right now because everyone thinks the flat tax is about having a low rate. And yes, that's part of it. But really, the biggest part of the flat tax is neutrality because it gets rid of not only all the double taxation, but it also gets rid of all the loopholes, preferences, deductions, credits, exemptions, and so on and so forth. So obviously, if you have some type of income tax with a rate above zero, it's not going to be perfectly neutral. But for whatever amount of money the government's going to raise, the flat tax does it in the least damaging, least distortionary, most neutral way possible. Which, of course, is why politicians don't like it because they like having that power.  Whereas if you're on the post office and civil service committee, nobody cares about you. Well, the reason that those tax rating committees are so powerful is because we have this complicated but very important, very intrusive 75,000 page tax code. You get rid of that, replace it with a flat tax and guess what? Ways and means and finance turn into harmless oversight committees. I've heard too sometimes libertarians talk about economists in general, but a consumption tax would be better. What is a consumption tax and would that be better than an income tax? A consumption tax is simply any tax system that doesn't double tax saving and investing. Now, normally we think a consumption tax is something that you pay at the cash register like a national sales tax. Well, that is a consumption tax because there's no double taxation. A value-added tax. You don't pay it at the cash register. It's paid at each stage of the production process but it's a consumption tax. Why? Because there's no double taxation. The flat tax is a consumption tax. Why? Well, it has sort of a vaguely similar approach to our current tax system that you file an annual tax return. It'd be a postcard instead of a thousand different forms. But it's a consumption tax because there's no double taxation. So what a consumption tax really means because that's a public finance term, what it really means is simply a tax system where income is taxed only one time. Now, why is that consumption? Because over your life cycle the amount you earn tends to be the amount that you spend. Now, some people say, well, hold on a second. What if you leave some money to your kids? Well, your kids are going to consume that. So at some point, any income you earn is going to get consumed and if you tax that income only one time, you're taxing consumption one time. Among the kinds of consumption tasks, what do you think of a national sales tax or a value-added tax? If.  If we could take the 16th amendment, repeal it, replace it with something so ironclad that even Ruth Bader Ginsburg and John Roberts couldn't decide an income tax was ever constitutional again, yes. A national sales tax or a value-added tax would be better than our current system just like a flat tax is better than our current system. They're all in theory low-rate, neutral, no double taxation tax systems. The reason I tend to be especially suspicious of a value-added tax is because most politicians who talk about the VAT, they're talking about adding it on top of the income tax. Well, what do you get there? You simply give the government more money to spend and I think that's one of the reasons why when Europe adopted the VATs in the late 60s, early 70s, I think it led to an expansion in the size of government. And I'm very glad we don't have a VAT because I suspect our politicians would do the same thing. Do you see it as a real possibility though? Does that come up in a serious way? I view that as the Armageddon battle of fiscal policy and I do think it will take place sometime soon. As a matter of fact, I'm actually afraid it's more likely to come about when Republicans are in office because if you're a Republican, especially if you sort of tend to be a big government Republican, you're looking at the corporate income tax and you're looking at our current income tax and you have some vague understanding boy, this system is kind of anti-growth but you're also thinking that small government person, well, we do need to raise more money because we have all this Medicaid and Medicare and Obamacare and Social Security spending and the Baby Boom Generation retiring. So boy, we want to raise more money but we don't want to do it with this tax system that we already have that's very bad for growth so let's put in this other tax system because somewhere I thought I heard somebody telling me that consumption taxes aren't as bad for growth. Okay, that's right. They're not as bad for growth but that doesn't mean that they're good for growth. They're just not as bad for growth and on top of a system that's already very anti-growth, well, then you become France. It seems like a national sales tax or value-added tax would be particularly harmful to lower income Americans though because right now they're not paying much of anything in federal income tax but they also spend a huge chunk of their income on retail goods, on food, on the various things that would suddenly cost a lot more whether they're paying a higher sales tax or the cost was baked into their retail price. That fortunately is why Democrats have been a little bit hesitant about pushing a VAT. I think most Democrats at the end of the day will want a VAT because they're not going to want to reform entitlements and something's going to have to give and so they'll decide, okay, let's get this new source of revenue but they're reluctant or at least they express reluctance because they say they don't want poor people and lower middle income people being subject to tax. Now the people who propose a national sales tax as a replacement for the income tax and those are people I actually view as allies they have something called a pre-bate. Now it's called a pre-bate because the government would send a check to households once a month based on projected sales tax revenue on spending up to the poverty line and that would in effect be sort of like the family-based allowance that we have in the current system a family-based allowance that's in the flat tax. So everyone gets to earn a certain amount of money to keep hearth and home together before taxes kick in and if you have a national sales tax you can only really do it through a pre-bate system. Under a value-added tax system in Europe they don't really have anything to protect low income people. So if you're one of these countries like Denmark or Sweden where the value-added tax is 25% it's hidden from you.  So what does the ideal tax policy look like then? There's a lot of these that we've thrown out. It needs to be neutral and not double taxation and other than not wanting that much taxation in terms of policy what is the best way to run any size of government with taxation? Well as I said in my fantasy world we have the central government back where the founding fathers envisioned where you don't need any broad-based tax whatsoever but my fantasies usually don't come true I'm sad to say and so if we have anything even approaching the current government we have now or God forbid the Leviathan that's sort of baked into the cake because of poorly designed entitlements and demographic change some sort of lowest possible rate consumption-based tax is the least damaging way of raising any particular amount of money you're trying to raise now obviously if you have a government like France that's consuming 57% of GDP that's still going to be a very damaging tax system on the other hand if you're a Hong Kong and your government's consuming 18% of GDP well then you can probably raise money without having it have too much of a negative effect on growth. So you'd be looking to at one where you're balancing the budget on your revenues over time even if it's 57% of GDP but that's still going to hurt growth to balance those revenues would still hurt growth. Yes, well for several reasons first of all government spending in and of itself hurts growth because you're diverting resources from the productive sector of the economy and usually when governments are spending money they're doing things like subsidizing people for not working so a lot of government spending when capital spending the economic evidence on that tends to be more mixed but transfer and consumption spending as public finance economists categorize these things those types of outlays definitely have a negative effect on the economy even if tax revenues sort of float it down from heaven and you didn't have to have a tax code that type of government spending would still be bad for growth but then in the real world because money doesn't float down from heaven at least not that it's never coming to my pockets when you have a tax code well it's simply a question of how much damage you're doing on top of the damage caused by the government spending if you have a the lowest possible rate consumption based tax and of course in France it would still need to be a very high rate but if you try to raise revenue in the least damaging way well then the additional damage on top of the damage caused by the government spending is going to be X whereas if you raise your tax system with a class warfare tax code with lots of double taxation then the economic damage might be 3x or 4x. In 1986 we had this you know we've mentioned a couple times we had a very good reform that turned I think it was like 14 tax brackets into 2 basically right 28% and 14% as a top rate now it's been creeping up in different ways with George H. W. Bush and now we're sitting at about 39% or so and we have books like the Piketty book and we have national debt substantial size and we have this idea of becoming social security entitlements crisis and like a loss of the consensus possibly that low taxes are good and always more and more spending the possibility of a VAT so are you what are you going to see what are we going to see in the next 10-20 years are you expecting a real push for higher taxes because of where the left is moving a real push for more revenue with all these things is it going to get worse before it gets better or is it just going to keep getting worse yeah well if I had to bet money I think it will keep getting worse like a lot of libertarians I tend to sometimes be dour and pessimistic because you just look at the public choice incentives of politicians to make government bigger and bigger but on an operational day-to-day basis I try to be optimistic because I do think there is still a streak of independence and libertarian type thinking among the American people you look at these cross-country polls where they ask people is it government's responsibility to give you a job, a house and so on and so forth Americans do answer those questions in a much more favorable way to liberty than say Europeans will answer those questions so I do think that it's not hopeless and I come to work every day at Cato because I think the fight is very much worth having and I think it is possible to win but winning that battle means we have to at some point reform the entitlement programs we have to at some point figure out how to decentralize those entitlements back to the state and local governments because they don't belong in Washington and we are never going to achieve these spending reforms that politicians think there is new revenue coming to Washington and that's why fighting the value out attacks I referred to it earlier as an Armageddon battle I really think it's an Armageddon battle because if the other side gets a vat then not only will I sort of have the usual libertarian pessimism about corrupt politicians big spending politicians but then I think oh my god we have just given up the keys to the liquor store and at that point okay well let's see do I move to Australia, Estonia, Cayman Islands you know what could I do because I'll really really be pessimistic at that point and here's the dirty little secret about fiscal policy and taxes behind closed doors I think a lot of leftist politicians actually understand you can't raise that much money with class war for taxes they talk about it they demagogue about it but they understand to some degree that if you put in place these 1970s style tax rates of 70% or going back to the 1950s 90% they know people are going to change their behavior and so if they want to finance the giant welfare state that's sort of baked into the cake they better come up with a vat it doesn't mean they won't also try to increase other tax rates as well but they know on the other side that a vat is the only way we can have a European sized government in the US thank you for listening if you have any questions you can find us on twitter at Free Thoughts Pod that's Free Thoughts P-O-D Free Thoughts is produced by Evan Banks and Mark McDaniel to learn more find us on the web at www.libertarianism.org


Alright, it's Tuesday. We are on the floor of the New York Stock Exchange with Jim Kramer. Hey Jim, bank stocks are rebounding. Yeah, now let's not get too carried away. Bank stocks are completely in control of the Fed. So if you're buying them today, you better know exactly what the Fed's going to say tomorrow. I don't. We bought, we sold some city last week for action alerts because it ran up and was the best performer. And then rotated into the worst performer, which by some wells, I still feel that's going to be okay. But I am not crazy about buying the bank stocks without knowing whether the Fed is going to signal that there could be a second rate hike. If they are soft at all, then I think the group gives it up. So be very careful. I think you can buy wells, as we did for action alert, because it just hasn't done anything. But if you're going in and you're buying a JP Morgan, you're going to have to really have some very solid evidence that they feel strong about the economy. And I don't know how strongly they feel. I do think that what they're doing is trying to normalize things. Trying to normalize things, JP Morgan can go up a buck. Are also tech stocks in the FANG group are also rebounding? Yeah, now this is not the kind of rebound that I want. It's not, you need to see Mike Ron take out 33. That's one of my non-FANG. But what I'm worried about is that if you bought at the low yesterday, you're going to be banging them out today. So don't get overconfident FANG. Okay, also Alibaba's price target was raised. That's different. Alibaba is a really new story in terms of the accelerated revenue growth. I would buy that stock right here. And then Tesla upgraded at Barenburg? Tesla, look, Ron Barron, a major fund manager this morning on Squawk, talking about it growing to the sky. My issue with Tesla is I don't know how to value it. But I will tell you this. It's not being valued as an auto stock. It's being valued as a tech stock. It's being valued just like Netflix and just like Amazon, so the Tesla bulls will continue to buy it. All right, then Action Learner's Plus, named Western Digital, raising its bid for Toshiba's FANG. If they get this, they're going to have to issue both debt and maybe equity. If that's the case, the equity may be issued in the hole and that's when you get your chance. We trim some at 91 because we've said this is more of a trade than we're typically used to. But if they do get Toshiba, it's going to go right to 100 after they do the deal. All right, and then on Mad Dash on Squawk and the Street, you talked about McDonald's. Yes, I mean, look, McDonald's has been, Steve Easterbrook has probably, has led this company out of the wilderness and the numbers have been very good and Bank of America just put a coda to it saying, you're going to have another good quarter now. I see they're hiring 250,000 people. McDonald's represents along with 3M, really core names in the Dow that people keep reaching to every time a sell-off is completed. And then on Stop Trading on Squawk and the Street, you talked about P&G. Yeah, now P&G, here's what matters with P&G. I've been waiting for Tryon to come out with its white paper. I think Tryon spent a huge amount of time trying to change the management of GE having that just... I think people have put it in this context. Nelson Peltz in October of 2015 called me along with Jeff Himmel on a Sunday. I was out in Oregon visiting my daughter talking about how much... how they're going to work together to get... and Nelson was called in by Jeff to work together to really get things rolling, including a $2 number for 2018. That fourth quarter of GE was so bad and the first quarter with negative cash flow really soured the relationship. And Tryon, behind the scenes, I think, was working very hard to make this change. And I know that they're happy. If they're happy, then they can train their guns on the next situation. And the Proctor, Bruce Kamich did a chart of Proctor, if you're worried about coming in right here, 3% yield are pretty good company. You get Tryon Militating in there, I think you could get to $91.92. And while we're talking about Proctor, yesterday you told us to look at Apple versus Proctor.  Proctor's raised to 23 times earnings. And the analysts from Mizzuho who downgraded Apple, what I was trying to get them to do is think about Apple as Clorox as Proctor. Clorox, by the way, run by Ben Odor, who is a fantastic manager. Some of the, you know, Kimberleys run very, very well. But that doesn't mean that they should have 22-23 multiple, but they do because they're steady growth. And I am wondering whether you can't look at the stream of revenue that Apple has from service. I got mine last night and I said, jeez, I just paid $16 for the New York Times and I just paid $10 to be part of the music club. That's 26 bucks. You know that Apple gets a cut. I just wrote a check basically to Apple, so did the rest of the world. And we look at this and we say to ourselves, this stream isn't worth it. I love the stream. And by the way, the stream is most aggressively being built in China, where the Mizzuho analysts question the Chinese growth. So I am a big believer that Apple is a consumer products company and you should own it with the idea that it's going to get ever higher price 30s multiple. Not a reason to own something, just a reason not to sell it. Ah, okay, important distinction. All right, let's move on to oil. Production rose in May, even with the deal. Yeah, now look, oil, and I'm going to be talking a lot about oil. I have extensive section about oil tomorrow in my talk, in my conference call with club members. Oil is challenged here because of how much is being come out of the Permian. I thought what was interesting was that the Saudis are actually cutting the production that they're shipping here. They had always tried to maintain relationships with major oil companies and it looks like they're willing to risk those relationships. The Permian is doubling in the amount that we have. I'm doing a seminar with Rusty Brazil from RBN Energy before, and then I'm sitting down with him before I do my conference call to be sure I've got my facts straight. But the Permian is saturating the U.S. market. So it's very difficult for oil to lift unless you see a recamp go down and that come out on Friday and the recamp keeps going up. So I don't expect oil to go back to 53. I do not believe the death cross where oil will go back into the 30s. I do think that the Saudis are very clever in to manipulate the price. But as the oils go up, be careful. Jim, you mentioned your Actual Oilers Plus call. That's tomorrow at noon. And Jim, I couldn't think of a better time to have a call. Oh my, working all night last night on it. And then of course obviously you're going to put a lot more into it tonight and tomorrow as the situation is percolating. And the feedback you get from it is just unbelievable. Well, we do get more feedback than anything I've ever done. I started theStreet.com in 1995. And this is the most feedback I've ever had from anything. And boy, do we ever devour your feedback. We're scrutinizing all your questions. Trying to get the ones that we think can benefit the most club members. It's so important. Jim Kramer, thank you so much. Again, it's tomorrow at noon. And for more information on the stocks Jim mentioned, please head back to TheStreet.com.


ER, Entity Relationship Modeling. Entity Relationship Modeling revolves around, it is developed around real world things. Those things can be innate or in-init, meaning living or non-living. A student is a living thing, a course is not something that is living. So we need to look at them, how they are related, how they work together. We will go into more details. So ER modeling, Entity Relationship Modeling. So what is an entity? Entity is a real world object. A course, a student, a university, a teacher and a set of related entities can be there, a student set. These students are the students of the same university, virtual university. They are students in the bachelor's program of a certain degree program or a master's student and so on. Similarly, the sets don't have to be disjoint. A student can be registered in a course, in a certain class and for another course, that student may be registered but using the same class. So these sets don't have to be disjoint. I think you understand or if it's a dual major, it's a dual major a student may be registered in two departments. So the sets don't have to be disjoint. Now these entities which are of real into the things they have attributes. They have the name of the student. They have the address of the student, the father name and these have domain and range. For example, the name cannot be a number and age cannot be negative phone number cannot be negative. And there are different five basic types. I will go into detail in the next slide. Let's go into the next slide. So we have these five different types of attributes over here. So we have the simple attributes, the simple attributes are atomic. They cannot be broken. For example, say it's the telephone number, mobile number, maybe it's 10 digits or it's 11 digits, but it cannot be broken. So that's the simple attribute composite attribute. I cannot identify a person based upon the first name or the last name. So I need I'm not talking with the primary composite attributes is the attribute consist of multiple attributes like the first name and the last name derived attributes. The data is not actually stored in the database. The date of birth is stored. But using the date of birth, I can calculate the age of the person with changes every day. Then I have single valued attributes. A student can have a single unique ID, right? And I can have multi value attributes. A single student can have multiple mobile phones registered in his or her name. And of course, I can have a combination of these attributes also to see that I have entities types of attributes and their combinations. That's going to more detail. So how do you identify the students or the entities based upon the keys? So I have the super key, I have the candidate key. The candidate key is a collection of attributes which uniquely identify an entry in a table. Right now, if I if I remove, if I change the attributes in the candidate key, the uniqueness is gone. And the primary key is that unique key which identify a record or entry in a table. Try to understand there's only one primary key, but there can be multiple candidate keys. These things will become clear when you look at the material. So I have this relationship, a student relationship with the course registered in that course. And of course, I have degree of relationship. The degree of relationship means that how many entities are involved in a relationship? How many entities are involved? So a student is registered in a course. So it's like a binary relationship. One course entity, student entity and the and the registration relationship. Now, cardinality is the size set size from the set theory, the different types of cardinality is one to one. So one entry entity in one set is uniquely linked with the with any other entity in the second set. For example, a person can have only one passport and a passport is assigned to one person. A country can have a single flag and a single flag is associated with only a single company, single country. I'm sorry. Then I have this one to many, one to many. So you see that over here, I have this entity, okay, which is associated with many entities over here, with many entities over here. Right. And of course, one to many can be an example that there is one address that is unique. Multiple people are living at that address.  Because if the address is not unique, how would the delivery be made? Now many to one try to understand there is a slight difference between many to one. I will try to explain it using an example over here. So over here I can have one associated with many over here. A state can be in one region. A state can be in one region. A city can be in one province. There are many provinces, but a city cannot be in multiple provinces at the same time. And then finally is the many to many relationship is that for example, a doctor can have many patients and a patient can have many doctors. So we'll work on this. We'll use them as a basis for developing the ER modeling diagram when we go to the corresponding model. That's all for this model. Thank you.


Here's Saka down the right for Arsenal lays it back to Odegaard right corner of the box deep cross back post Hey Zeus keeps it in nettoes all over the place and it's headed in by Bacchio Saka We say he was asked for danger man And he scores again for the gutters Hugging the touch line infield now one two woods in Chenko back to in Ketya sliding tackle from Max Aaron's penalty to Arsenal Can he save one here for Bournemouth against Arsenal Odegaard steps up left footed sense nettoe the wrong way doubles Arsenal's lead Martin Odegaard from the penalty spot called calm and collected Dabani heads away Bournemouth one and offside play continues Odegaard goes down sliding tackle by Ryan Christie another penalty to Arsenal Michael Salisbury didn't hesitate high havers Against nettoe from the penalty spot runs up stops sends nettoe the wrong way into the left corner again And Arsenal go 3-0 up their second penalty at the afternoon touch under Odegaard right side Intwinging left-footed headed goalwards and headed in Ben White makes it for The local largest stats to Bournemouth misery this afternoon


So you've you've heard for the last several days about all kinds of sustainable energy technologies, and I want to give you maybe a somewhat related but different take on it So we like to think about all of the various devices we can use and sustainable energy These are some of the common ones. So we have photovoltaics things like super capacitors batteries If you want to take sunlight and directly make fuels we might use something like a photo electrochemical cell We can generate things like hydrogen which we can store we might later want to turn that back into electricity So we would use something like a fuel cell The reason I put this slide up is if you look at all of these technologies today They already involve many many nanomaterials nanoscale materials So all of these components of things like photovoltaics or super capacitors if you look at a lot of the materials They're at a very small scale and I think going forward We're going to be able to do more and more powerful things get better energy conversion efficiencies by Exploiting some of the properties at the nanoscale. So that's why We look at nanoscale materials. You've been hearing a lot about energy I told you at the Tomcat Center to tie back into that for a minute We're interested in interconnections and other global challenges. So besides energy there are challenges in human health water food Etc and these are some opportunities that are coming up the pike These also will benefit in many ways Most of them from materials at the nanoscale So I like to think about those global problems having very small solutions And of course, you're probably all familiar with what nanoscale materials mean But we're basically talking about things that are 10 to the minus 9 meters in Size on average one thing that's interesting about working with nanomaterials is it often takes really big macro devices Or equipment to monitor them. So we have lots of big machinery The smaller the material the bigger and more complicated the machinery the apparatus usually is so these are just some Chambers and experimental apparatus in my own lab some of my students So we often have lots of big Devices to both make the materials and I'll tell you about one of the techniques we use to make nanoscale materials And then to monitor what we have we have to use a lot of spectroscopies involving photons and electrons to be able to see And microscopes to be able to see what we've made So I'm going to actually talk about two vignettes or two examples of applying nanoscale materials to energy conversion Systems that my lab works on I'm going to start off with solar cells And then I'm going to give you an example of using nanoscale materials and catalysis So I know you heard I think from Professor Mike McGee yesterday or the day before Talking about solar cells we work with Mike And I'm going to tell you about one of the things we've done looking at perovskite solar cells So it's hard to be Involved in any research at all in solar cells without having heard about perovskite So we like to show various efficiency plots when you look at photovoltaics versus year And if you look at most technologies, it's maybe a little hard to read this But these black dots are silicon crystalline silicon technologies. They're all going up That's the first thing to notice, but generally over the last couple of decades. They've gone up pretty slowly So here's silicon. It's creeping up one or two percentage over those decades here other thin film materials And then there's this red curve here, which is a new material or relatively new. It's just over the last say seven years Has gone up from just sort of a niche material with a few percent efficiency To being competitive with almost with crystal and silicon here above 22% so the current record using these Lead halide perovskites is over 22% Silicon still is great It's really really hard to compete with silicon because it's also efficient and it's relatively inexpensive But what's nice about these perovskite materials is you can make them from solution You can spin them on to some Substrate and anneal them and you can get good solar cell materials So they're solution processable and you can tune the band gap over a wide range and that makes it useful for things like tandem solar cells Which I'm going to mention So tandem solar cells are a good way to raise the efficiency compared to just your standard single junction solar cell which involves typically a PN junction of semiconductor materials and You can get really high efficiency So if you use things that are extremely high quality materials like gallium arsenide, for example And you stack a bunch of these together They can be about 46% efficient, but they're really really expensive So a square meter of this kind of stack of a solar cell costs about $40,000 okay, so this is really useful for things like space application satellites But not going to be on our rooftops anytime soon on the other hand You can calculate that if you take a basic silicon solar cell, which is the predominant technology In in the world right now and you put on top of that one of these perovskites Remember I said you can kind of spin those on so you might be able to do that pretty cheaply on top of an existing solar cell You can get not as high an efficiency as something like a Compound semiconductor like this one, but still quite a good boost and you can do it really cheaply Okay, so that's kind of the the goal of what we're looking at it turns out though to stack materials like this requires lots of control over every layer in in a device so the challenges with making solar cell Tandems using this new perovskite material is that you need to have various layers including this one here Which has to be transparent because you're gonna let the light all the way through to get to both reach both cells in here The silicon and the perovskite cell And it needs to be very much protective. It has to have good electrical properties But also in parts stability because these perovskites the dirty little secret about perovskites is they have great efficiency But they're horribly unstable. They degrade and moisture with temperature and any sort of Active reactive species so we want to be able to protect them So we came into this problem Saying well We think we have a technique for putting down a material here Which will be gentle and protect the perovskite have very good electrical properties and allow us to then do other layers on top of it with more reactive Deposition techniques and we use this with it We use a technique called atomic layer deposition which we can do it relatively low Temperature and put down really interesting electronic materials So if you look at the stack here lots of different materials These are all relatively thin the perovskite itself is 500 nanometers roughly we have these various layers here And we're looking here a few nanometers of this material Which we're going to put down by atomic layer deposition and then continue the rest of the stack with more conventional techniques So atomic layer deposition is called ALD for short. It's basically Technique that's was developed 30 or 40 years ago for use in large-scale displays flat panel displays And over the last decade or two has been widely adopted by the semiconductor industry So it's used for lots of microelectronics probably every chip in every computer now has ALD in some part of its fabrication probably multiple parts But what the technique is is it uses a vacuum system and you pulse in various reactants in the gas phase So you pulse in reactant gas and it'll react at your surface It undergoes a thermal reaction, but it's self-limiting. So it won't react to more than one layer Okay, this is the key part of this technique Then you come in with another precursor that also will react just to one layer it saturates And if you put both of these precursors in you get one atomic layer of whatever material you're interested in Ideally and then you repeat this multiple times and you can grow a film as thick as you want You're typically are growing on the order of one angstrom or tenth of a nanometer per cycle So it's a very slow process not at all useful if you're trying to grow thick films But when you're trying to grow films that are only a few nanometers It's actually a great technique and that's why it's used so widely in microelectronics where everything is really small Also very thin in these solar cells. So these are just some examples of materials that have been grown by ALD This is an example a few years ago My group took a silicon nanowire from each ways group and we coated it with platinum by ALD And you could see by this image the platinum is uniformly coating everywhere around it So it has this nice feature of being able to make thin films that conformally coat all kinds of complex structures Okay, so we We have techniques for growing all kinds of materials this is just to show you the types of gases that we have to flow in there these metal organic precursors they react with things like water and We found that zinc oxide and tin oxide together and make a really good electrical layer for these perovskite solar cells So we we can grow them using these precursors at temperatures around 150 degrees C. So relatively low I Skip that so I mentioned that the perovskites are very sensitive to degradation and one of the very first things we had to check is How we can run this process to grow tin oxide or zinc dope tin oxide on top of the perovskite without degrading the perovskite So my student Axel Palmstrom who ran most of these experiments tried all kinds of conditions and all kinds of temperatures And one of the things about the perovskites where these are x-ray diffraction images They are crystalline. So you see these peaks here with the dash lines that come from the perovskite and As it starts to degrade you get a very clear signature an x-ray diffraction of lead iodide Which is one of the degradation products. So it's kind of hard to miss. So when your perovskite starts to degrade You start to see this very strong perov a lead iodide peak So you can see that depending on the conditions of growing this al d film on top of the perovskite Some of them are great They maintain the perovskite and other ones we start to degrade it into lead iodide So we modified the process to be able to gently deposit the material And then what we did is we put this on a stack So we had a underlying silicon solar cell that actually was Contributed by a group part of this big collaboration at Arizona State Zach Holman's group and then the McGee group helped put perovskite down and we did some of these other layers And so this many many complex layers all went together and right in here is this al d layer That gently goes down on the perovskite and allows us to do the next steps and what we found is it worked really really well So we were able to make this tandem silicon perovskite tandem with efficiencies of about 23.6 percent and very stable. Okay, that's the key thing. Can you keep the efficiency? For long periods of time and we showed that these were very stable because this very thin film helps encapsulate the perovskite and protect it We also looked at Making perovskite tandems just out of perovskite. So this is a perovskite perovskite tandem Where we stack one perovskite of one bandgap and another perovskite of another bandgap together and again Many layers have to go into this and I'll just point out a lot of them involve ALD So that's where we put our ALD layers We choose these of different bandgaps so we can collect more of the solar spectrum and depending on how you wire this up You can do a two-terminal or four-terminal Structure we can get efficiencies above 20% and the nice thing about being able to make a pure perovskite tandem Is that these can now be flexible because silicon solar cells are typically crystalline or polycrystalline and they're not Particularly flexible unless you make them ultra thin like Daniel was referring to Okay, so this is just an example of taking a thin film of about a few nanometers and Completely changing and improving the electrical properties of a solar cell that was very effective. I Want to turn to the second example, which is catalyst so very different type of system But also takes advantage of nanoscale material. So I want to give a little bit of background a catalysis I think you probably also heard from Tom professor Tom Haramio about catalysis and electric catalysis on an earlier day We collaborate with his group as well Incredibly important so more than 80% of all industrial chemical processes use some catalytic step probably multiple catalytic steps But I mean by industrial processes is everything from pharmaceuticals to plastics to petroleum. So it's huge Catalyst themselves are big business. So the sales of catalyst is about 15 billion dollars a year But if you project out the annual value of products that were manufactured with catalysts, it's about a trillion dollars Okay, so incredibly important set of materials Just so that everybody remembers their high school chemistry Catalyst is something that alters the rate of reaction without itself being consumed If you went on and learned more about that later, you probably learned that that's an oversimplification as with most things but the way it actually works is it takes a You know set of reactants and set of products and it comes up with an alternative mechanism Molecular mechanism for the reactants to get to the products that basically takes less energy has a lower barrier So it's faster. So that's basically what a catalyst is doing on the Molecular level and we're very interested in catalyst So I started off the title of my talk is nano Materials or nanotech for sustainable energy or something like that Nanotechnology and nanomaterials have been around for a really long time. Catalyst is an old field the Haber-Bosch catalyst which converts Nitrogen into ammonia incredibly industrial important process Celebrated its hundred year anniversary, you know, a few years ago and that is made up of nanoscale materials Okay, so this is nothing new We've just come up with really interesting ways of making nanoscale materials and characterizing them That we didn't have many decades ago, but but it's been around for a while, especially in catalysis So catalysts tend to be really complicated structures generally especially commercial catalysts in heterogeneous catalysts of the type I'm talking about Chemistry the way that the catalyst speeds up the reaction it only takes place on the outer surface of it So you can have a great catalyst and make a big sphere of it and the whole inner part of that's useless So what people do with catalysts is they try to break it up into lots of little particles You know size particles so that they have a lot of surface area because that's the part that does the catalytic conversion So they tend to have all kinds of complex structures So what catalytic system am I going to tell you about there are lots of many many many important catalytic reactions I'm going to talk about a Cycle here that is a carbon neutral fuel production. Okay, so if you imagine a car you have your internal combustion engine It's it's Combusting something like ethanol or some other fuel it generates carbon dioxide Okay, plants can take carbon dioxide and turn that into biomass biomass Can be turned into something called synthesis gas through a gasification process, which is well known So this is carbon monoxide and hydrogen and it's called synthesis gas Syn gas because it can be used to then synthesize lots of other interesting materials or Chemicals so if we had a catalyst that can take this and convert it back into say ethanol or the fuel Then we would have this carbon neutral fuel production The problem is we certainly know how to do this step and this step happens naturally This one we know how to do but there really aren't great catalysts for going from synthesis gas to good Fuels and so that's what the focus is of the project. I'm going to tell you about What we want to do is take the carbon and waste in the form of co2 and convert it to valuable fuels And also chemicals and the product or type of products that's useful for this or what we call higher oxygenate So ethanol is one of these higher oxygenates It means it has more than two carbons in the molecule and it has some form of oxygen in there Okay, so butanol or acid aldehyde. There are lots of Different molecules. They're nice because they're liquids They can be used as clean transportation fuels and they're very useful as a feedstock for manufacturing other important chemicals But as I mentioned, we don't really have a good effect of catalyst for this and here's one of the problems We take something simple like carbon monoxide and hydrogen just these two small molecules and we want to go this way We want to form these higher oxygenates, but you can see by the arrows here. There are a lot of competing reactions This is always the problem with catalysis. You have to have selectivity for the product you want and Not make all the byproducts that you're not interested in so we can get just hydrocarbons through a well-known process called Fisher tropes We could hydrogenate too early and then we get methanol which is too short Or we can do what I think is the worst possibility go back to carbon dioxide, which we don't want to do Okay, so this is what we're trying to generate Catalyst for and we're we benefit greatly from the fact that here at Stanford We have a big theoretical effort directed by Jens Norskov who can take reactions like this and they can calculate for lots of potential metals or Metal alloys or other systems what might lead to the product we want Okay, so they come up with plots like this and I can see it's too hard to see it here You they're they have different metals listed on here So as a starting point we can go into one of those metals and say let's start with that and try to synthesize that catalyst And see if we can make a lot of things like ethanol Okay, so if you're able to see that plot you would have seen that rhodium was one of the interesting materials on it And it's also been shown in the literature that rhodium is a pretty good catalyst for Converting sin gas to higher Alcohols or other oxygenates and again like I mentioned the way these work is we try to take rhodium Which is very expensive precious metal and we try to disperse it in very small fine particles Inside a powder so that we maximize the surface area So it's sitting on a powder usually made up of something like silicon dioxide sometimes alumina or titanium And so this is called the support We pack a bunch of that powder into a reactor and you flow the gas through and out comes your products in an ideal system one thing we know about What are called supported metal catalysts like this is that the Metal oxide that they're sitting on plays a huge role in what products you make Okay, so it's not just some inert things sitting around that doesn't have an effect and everything's happening on the rhodium It turns out this is really important too This material sometimes Sits on top of the rhodium and in that case we call it a promoter. It's something that promotes Production of the molecule of interest Okay, so for example We can take the standard rhodium on silica or we can put the rhodium on some other metal oxide And we would find probably that the reacted completely differently Or we could take that same metal oxide and put it all around the rhodium And this we would call a promoter and we might get a completely different product so we were very interested in using some of our synthesis strategies to be able to Put down small amounts of material to see whether One metal oxide had an effect on the rhodium different from another and why it Controlled the products the way it did So we can use our technique of atomic layer deposition Which I like to say we've stolen from the semiconductor industry and applied to lots of other problems to take Catalysts that we synthesize through conventional methods These are usually just solution methods where you take a powder and you shove a lot of metal salt in it and it dries And leaves you the metal particles But we could also try to change out the metal oxide support and the promoter and we do that by Coming in and taking our support and adding some other metal oxide on it a very very thin layer Maybe one or two atomic layers thick and then putting down the catalyst or doing it on top of the catalyst So we can get all of these different types of structures to try to understand the interplay between the metal oxide and the catalyst Okay, so I mentioned we use our atomic layer deposition method again The first metal oxide we looked at for this rhodium system was manganese oxide so here's our molecule that we use with water to grow it and And we looked at three configurations one is the standard catalyst One is the catalyst where we actually took the silica We grew a very thin layer of manganese oxide and then we put down the rhodium and One where we first put down the rhodium and then we grew a little layer of manganese oxide on top of that So this is like an overcoat and that's part of the support We can look at this all kinds of characterization of the catalyst you can see that these are all very small So the catalyst themselves, this is a particle size distribution. They're on the order of two or three nanometers So the rhodium is a really teeny particle here, but it's being strongly influenced by this metal oxide that's sitting next to it and We take all these catalysts that we synthesize with slightly different structure We stick them into this packed bed reactor and we look at the product distribution that we get and that's what I'm showing here So this is the standard catalyst rhodium on silica and I'm showing Several pieces of information here. So these are the seal activity So here in gray the size of this bar is how much methane out of a hundred percent that we're forming the green is higher Hydrocarbons, so we don't really care about either of those This little blue line is methanol and the orange is what we want. Okay, those are the higher oxygenate So it does okay the standard rhodium catalyst does okay It makes a fair amount of these by maybe 20% and this number on top is the overall activity So how much of the carbon monoxide and hydrogen do you put in gets converted to any sort of product? That's this number up here These three bars on the right are when we add some manganese oxide to it And the first thing you could see is the number goes up here So we're making more product of all types And happily we're getting more of the product we want which is the orange bar these higher oxygenate But it actually matters where we put down the manganese and we put it on the bottom versus the top These are the two middle bars. There's a different seal activity pattern and that's interesting to us on a fundamental level So we do things like spectroscopy Where we go in with infrared light and we can actually detect How carbon monoxide is bonding to the rhodium we can see this by a spectroscopic signature and we can correlate the products with How many of the higher so we can correlate the species here at the surface with how much higher oxygenate Production we get and then we can connect that with theory which is again is done by the Norsegov group Which can calculate why manganese would have the effect that it does on the product distribution that we see So this all tells us that manganese oxide is a pretty good promoter It helps for more of the product that we want and makes the catalyst more active Um, we can also extend extend this and we did to a bunch of different metal oxide So now that we have this technique of saying we can we can tweak in a very controlled way a supported metal catalyst We can start to look at other metal support interaction So we looked at this comparison of titanium alumina and silica if you look in the literature There have been all kinds of reports that you get different activity and different seal activity with rhodium depending on the different supports But we suspected that what was happening is when people do standard synthetic techniques with these different supports They change a lot about the system They change the size of the particles the size of the pores and they're not having a controlled experiment So we felt we could do a controlled experiment and get rid of the structural effects and just Explore the different chemical properties of these supports by using this fine atomic layer deposition technique And so that's what we did here This is how we grow little layers of titanium This is how we grow little layers of alumina and we can compare that everything looks the same structurally This is the particle size distribution They're spot-on the same rhodium distribution independent of these different metal oxides and Interestingly when we then made all the catalysts and study them we found that contrary to the literature They really didn't vary that much Okay, so the seal activity didn't change that much you could just tell that by sort of the size of the various bars There's some changes, but not anything huge Consistent with our theory that this was really about structure all the literature reports, but chemically they didn't differ that much Let me Sum up here So I have a little bit of time to let you take a breather or answer any questions I try to give you two examples of where nano materials play an important role in energy conversion Or catalytic conversion I like to think atomic layer deposition is a powerful technique for controlled synthesis of nano materials It's one of many interesting techniques for doing that We applied it to solar cells So we were looking at these tandem perovskite solar cells and we also applied it to heterogeneous catalysis Where we can do what we consider sort of a rational design of catalysts to really try to One make better catalysts and to understand fundamentally what's happening in them Lots of Students and collaborators to think so I mentioned Axel Pomstrom Led in my group the perovskite tandem work. We collaborated with Mike McGee's group and Zach Holman's group at ASU with their students and Three of my students worked on the syngas catalysis Noya Yong, Joseph Singh and Aruna Sundi and we collaborated with Jens Norskov Thank you for your attention and I'd be happy to take a couple of questions I think people could probably I mean hundreds of nanometers is pretty reasonable so One thing I didn't mention is people are looking at ways to do rapid processing through ALD So there's a whole push to engineer fast systems And large-scale systems so for example solar applications you might need to do a really large area And you typically don't want to build a vacuum system quite that big although they do for sputter deposition So they're developing things ALD systems that can actually be done roll-to-roll in atmosphere Okay, so as they develop those I think that that number I'm giving you of a few hundred nanometers will increase But for now that's kind of a reasonable now That would take my group forever to do a few hundred nanometers because ours is a slow home-built system. It's pretty slow Yeah Yeah, so I would say that Photable takes in general is more Edisonian I mean if there's such an art to knowing what layer works and what and they're just a ton of people trying tons of Different things to get the right efficient, you know the best efficiency The catalysis has historically been very Edisonian very empirical But the nice thing about having the theory experiment collaboration is that we are working Before we even go into the lab with advanced knowledge of what might work and there's usually quite good Correlation between theory and experiment if there's not then the theorists go back or the experimentalists go back And so that works well, so I would say that's where we're really trying to take kind of a Educated Information before we go and try to make something and hopefully that will translate eventually to things like photovoltaics too But currently that's there's a lot of art It has been it has been but again the Norse scab group and Suncat has been working on now looking at Calculating the effects of various supports, so they are now also able to predict those effects as well. Yeah Yeah They usually they often come about because of students so students will say oh I'm working on something and gee I'd really like to you know go over to use Something in the McGee lab or I really need some theory and so it's often through students that these collaborations occur Sometimes it's kind of top-down because we're writing a grant proposal together or something There's almost never a problem with splitting the work because usually people students will bring different expertise to a collaboration and They will each contribute what their own skill set is and they can work very closely together. So for example axel and Kevin worked Very very closely on those perovskite cells, but they worked on different parts of it Even though they watched each other do you know the full assembly of it? So I think it usually works out quite naturally Yeah, I mean there are different aspects of that There's sort of the bio-inspired design, which I think was the last part of what you asked and a lot of what we are trying to do I didn't mention this, but maybe Tom Haramio did there's like a trying to artificially do nitrogen reduction And we're inspired very much by nitrogen ace and sort of the bio memetic aspect of it. I think there probably are some people doing the direct biological system You know enzymatic catalysis at Stanford, but I'm less familiar With that work. There's probably a bigger effort on the kind of inorganic synthetic That's inspired by biology, but not actually using the biology Okay So you mentioned that perovskite layer is a little fragile to things done. Is it due to Like energy, why can't you use it? Yeah, those even these precursors that we use that aren't plasma Excited they're so reactive that if you don't do it right They'll get in there and just react chemically with the perovskite. The perovskites are pretty complicated materials and they have a lot of Organic parts and organic parts and they'll get in there and react. So the problem with plasmas or other energetic things is Those ions or radicals will just react with them and convert it to something else Which doesn't act like a perovskite


So fast forward back to the present. Who would be a musical artist today? I know you've written Taylor Swift as a pestilence, so it's probably not her. But who would be a musical artist today who stands up to the giants of the past? It stands up to working today. Working today, you're close to today. I was enjoying, I was really very hopeful about Rihanna for a while there, but unfortunately I think that she's not really working with a top, you know, produces any longer. And the new album is an atrocity. It's really terrible. It's sad because there are so many people with talents who are not being developed. It's because our music industry is now very formulaic. Young people can't really move along, studying their instruments and getting their chops over a period of time. There's nothing to draw on in the way that the musicians of my generation could draw on the folk tradition, the folk music.  Well, I'm just saying there are certain moments, certain magic moments of fertility or creativity that happen in many of the arts. You can find certain key moments where there's a confluence of influences and a certain richness. In that very moment, it's a great time to be alive, to be young. For example, Shakespeare would not be Shakespeare if he were alive today. As it happens, he left Stratford for whatever reason, went to London at a magic moment when theatre was flourishing, which was only for a few decades and then it was out again. There's a certain kind of luck. If you're the right person at the right time in any one of the artistic levels. Every album is different. He draws upon a lot of sources from the past. Oh my God, the bloat. The bloat. Okay, blues, no. What can I say?