What's going on everyone? Sam here with latent sports cards and I am doing 2021-22 Panini Crown Royal basketball team all addition 10 box break number five random teams. Here is the list of your teams one more time. As always these these can be found under the results tab of the website and there is a link in chat. So here we go everyone let's pull something cool. I haven't pulled I haven't opened any of this stuff yet so I'm kind of excited to see what it looks like. I think it's eight like the team all Asia exclusive parallels team all as an Asian marketplace that Panini sells exclusive stuff steps through that's good to know I didn't know that one that's actually really good to know that Shea, Hawaii, Dearon Fox, Quentin Grimes rookie, Davion Mitchell, Red Rookie for the Kings and team all exclusive test of time Kevin Durant Nets there you go Nets from Ireland hey what's up Ellie honestly Andrew until Vaughn said that I had no idea what team all if team all stood for anything like Sean and I were talking about that yesterday Sean looks at me and goes what does team all stand Sean like I don't know to be honest Randall Sexton Jalen Green rookie there you go Rockets Kai Jones got Carly Anthony Towns red exclusive and that is Moses Moody rookie royalty red nice one there uh I'm not sure how much a spot was in this uh please gonna definitely be a little less expensive than like Crown Royal hobby would be not necessarily guaranteed anything in this versus the guaranteed auto in jerseys in each box Isaiah Livers Joshua Primo rookie thank you Vaughn got Kevin Durant red Miles McBride there you go there you go Nix on the rookie royalty red oh honestly all star I don't know like I don't even know when these released technically like I cut these are kind of just they like show up at the shop here we go we got autograph Herb Williams for the Pacers that is numbered four of 31 interesting number who's got the Pacers there you go Derek C can't imagine there's Kabooms and and team all I would be surprised Kat Josh Christopher rookie Rockets and Brandon Ingram Pelicans on the team all exclusive I'd be surprised that there's Kabooms in this maybe who knows Frans Wagner rookie for the magic got red Kawhi Leonard Clippers and pivotal players Jason Tatum there you go Celtics congrats on the insert cool one there parallel got Trayman Isaiah Jackson Zion Jalen Suggs rookie for the magic there's Jalen Suggs Jason Tatum again there you go Celtics and Josh Giddy rookie royalty thunder there you go thunder that's a cool one he's gonna be a beast he already kind of is a beast youngest player to ever record a triple double really 19 when he recorded triple double it was like 19 in some odd days but because I think it was like Bynum or somebody was a young guest at one point John and Kaminga rookie Warriors I already go bare got James Book Knight 10 of 10 Hornets there you go Hornets who's got them got Justin L with the booknight bookend 10 of 10 congrats buddy that's awesome clean card with the mojo nice Steph Curry snow globe behind that Warriors congrats on that one that's sick nice step that's solid man Corey Kispert rookie got Devin Booker red and Shaquille O'Neal on the snow globe behind that for the Lakers nice Lakers hit there Dearon Sharp rookie got Dearon Fox red for the Kings I would say that's pretty much it's that it's basically a hybrid that's what hybrid kind of is the like between retail and hobby that's kind of what team all is the good call there Andrew uh Joshua Primo rookie royalty for the Spurs there you go Spurs the red mojo and last box good luck here everyone red Carmelo Anthony Lakers and to finish it off rookie royalty Rockets that is Josh Christopher nice way to end the break off there George why in the Rockets that is going to do it for the break everyone thanks again for watching next up is the second 10 boxes of uh Cron Royal Teemo be right back


Good morning, folks. Steve Rhodes coming to you live from the shores of sunny Delray Beach, Florida. This year, 11 a.m. Update and currently got a sea of red out there.  Trendy's are slightly positive. Otherwise, the other US indices trading to the downside. You've got gold off 4 bucks, silver down 21 cents, nearly nine tenths or percent. Lightspeak crude is up 20 pennies. Natural gas is up a penny. 30 of Treasury printing out at 13102. That's back a half a point. Let's go take a look at that nine panel. Market update chart. We begin by taking a look at the ES mini upper left hand corner. What do you got? You got that good old fashioned consolidation. Now, it's not shown here, but what I can share with you, maybe we'll take a look at that during the Trader's Ed show, is the Oceler and Changeline is what is capping price out on the daily timeframe. Let me give you the current level here. Give me a moment. I'll get over there. The current Oceler and Changeline that was 41.54. You need to close above that to then suggest to rally up to the top of its profile, 4206, which I suspect will happen, especially as long as that spot volatility remains below that 50 day exponential average, which it is. As long as the NQ remains in a bullish position. Now, if you do get a bearish reversal candle today, right now you've got a bearish sash. I don't know it'll be at day's end.  In the case of US dollar index, it is breaking out above its consolidation level area. It is breaking out above the top of its daily profile. A close above 102.01 is going to suggest a change in trend and move to the upside. Goldilocks consolidating with inside his profile and dipping below the top of its daily profile. So therefore close below 2019.40 today could signal move to 1986 to 1996 force. In the case of silver broken through its profile levels, broken through its consolidation does give us a measured move. But right now price has found support at the point 382 retracement of the entire move off of the lows from March the 10th out there. So this is an area of support or could be an area of support. We take a look at the lights we crude out here trading below profile. So it looks like it still wants to get back at least target the high of May the fourth at level 69 84. So far the low today 74 team natural gas. It has confirmed roads meant to make well it does not. It has a roads meant to mitigate our bottom signal that has not confirmed because we don't have a bullish reversal candle. But price still trading with inside that bullish structure profile. We continue to see support at 218. That's a signal to you and I the natural gas getting ready to move up to the 242 level in the 30 year treasury. You can see that consolidation. We got consolidations all over the place folks. It's just the way that it is. Hey, thanks so much for joining us. Stay tuned for the trader's edge show. But if you have to start your Friday, have a fabulous one. We'll look forward to speaking with you again soon. Take care now.


In this presentation, we will take a look at the auditing process related to property, plant and equipment, PP and E, also known or sometimes called fixed assets or depreciable assets. When considering the audit process for property, plant and equipment, those depreciable assets, those things like land, things like equipment, things like buildings. First, a word from our sponsor. Well, actually, these are just items that we picked from the YouTube Shopping Affiliate Program, but that's actually good for you because these aren't things that were just given to us from some large corporation which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased and used ourselves. Bayer Dynamic? Not sure if I said that right, but this is the DT770 Pro 250 OHM Studio Reference Closed Back Headphones. I wear headphones basically every day for a large part of the day. They are important to me. Therefore, I've gone through many different kinds of headphones. I've had these for some time and they've worked quite well. They fit over my ears, but I'm still able to put my glasses on under the headphones. The headphones not pinching too tight on the glasses to give me a headache, which is nice. The quality of the patting is good and it has lasted for some time. I've had these for some time now and they haven't gotten all torn up on me or anything like that. I also like that I have a cord when I'm doing my recordings as opposed to a USB centered headphone because that frees up a USB port and I find the USB headphones to be less reliable. They come with an audio jack that looks like this, which is useful for me because that plugs into my audio interface. However, if you want to use the headphones for some other purpose, I believe it's fairly easy to get a converter to other types of audio jacks. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com, where we have many different courses. You can purchase one at a time or have a subscription model, giving you access to all the courses, courses which are well organized, have other resources like Excel files and PDF files to download and no commercials. These are going to be things that will typically be significant. They're going to be large amounts on the financial statements, so they're going to be something that's going to warrant our concern. Of course, as the auditor, they will in other words be material factors that we need to consider. Now, there are characteristics of property plants and equipment that can make them easier in some situations, such as an audit where it's a recurring engagement. Normally that's the case. Normally we have an engagement, hopefully, that we've been auditing the same client for some time now, and therefore it's a recurring engagement, and we can rely to some degree with regards to property plant and equipment on prior year types of transactions, because these, of course, are long lived type of assets from prior year. Auditor can focus on additions and retirements in the current year. Therefore, amounts from prior periods will have been subject to audit procedures in the prior years. In other words, property plant and equipment, things that last for many, many years, we're going to have a schedule of the property plant and equipment. The things that have been purchased in the past are things that were subject to some degree to audits in the past, and therefore we don't have to really audit the purchasing process, again, as we would in, say, new engagements. We can therefore focus on the types of transactions that are new, the types of transactions that happened during the time period. Those include additions that happened during the time period, things that were deleted or things that went away, sales that happened, or the disposals that happened for property plant and equipment, and the calculation of depreciation related to property plant and equipment. So although then property plant and equipment is a very significant account on the financial statements, we may be able to limit the amount of testing and can be quite complex, by the way, because of course, we're talking about, we could have a lot of different types of property plants and equipment. We could have a very large schedule of property plants and equipment that represents different types of assets that are there. We have different types of depreciation methods that may be used, and we may have different types of depreciation methods, we almost certainly will, between the book value and the tax depreciation. Of course, tax depreciation schedules will differ from some degree. We may have differences between tax depreciation of different countries and different states as well. So it can be a complex system. However, the amount of transactions related to property plant and equipment in the current year, somewhat limited. In other words, we're not buying property and plant and equipment every day as we are with other types of things. It's not a daily kind of process. And therefore, we can audit a lot of the transactions, maybe all of the transactions related to things like purchases and disposals of property plant and equipment a lot more easily that where there's no way we can audit all of the transactions for some other type of accounts. So if we have a new engagement, however, auditor must verify assets that make up the beginning balance in property plant and equipment because they have not been subject to audit in prior years. In other words, new engagements, if we're taking on a new client that we didn't audit last year, going to be much more complex with regards to property plant and equipment because we can't rely on prior year audits for the beginning balances and therefore simply test for the most part or focus most of our testing on the addition, subtractions, calculations such as depreciation as we would in a recurring audit. We have to get that schedule. We have to do more testing for the beginning balance items. And that of course can take more time. Transaction types, what types of transactions do we have for property plant and equipment? We have the acquisition of capital assets for cash or other form of compensation. So we have the purchases of property plant and equipment. Again, there's going to be less of them. So notice when we consider the auditing of these transactions of purchases for smaller companies, we could probably audit basically all the purchases of property plant and equipment to some degree in terms of substantive testing. If we're talking about larger clients, publicly traded businesses, then again, still the amount of transactions related to purchases of property plants and equipment are going to be less than other types of transactions. So we can audit a higher significant portion of them. And of course, the purchase of property plants and equipment is much more likely to be material or a relevant factor, however, because we're purchasing larger items, larger items that will be capitalized, we may be paying cash for them. We may be paying in some other way, we may be financing the property plants and equipment. If we are, then it's a bit more complex because we have to consider, of course, the financing option with the purchase process as well and the valuation of the property plants and equipment with relation to that disposition of capital assets through sale, exchange, retirement or abandonment. So the property plants and equipment may be leaving the organization. That's another type of transaction that can happen. That could happen through the sale. They might sell property plants and equipment. Remember, property plants and equipment is not a normal sale within the normal type of business processes. We're not selling inventory. We're selling some type of equipment like a forklift or something. That's going to be more of an unusual type of a transaction. We could exchange it, which could be a little bit more complex because we have that exchange process happening instead of just basically selling it for cash. We could retire it, meaning we basically retired it and in essence disposed of it or we could abandon it, which would be a similar type of process. Notice that the retirement and abandonment items are things that we're concerned with as an auditor that may have happened and yet not have been recorded. In other words, if someone just abandoned the property plants and equipment or are no longer using it, it may still be on the books and may be fully depreciated. So the book value of it, asset, the amount minus the accumulated depreciation might be zero, but we still have the asset on the books and we have the accumulated depreciation on the books and we should have both of them removed typically. So that's one of the things that could cause some concern, although from a dollar point standpoint might not be a material misstatement. Depreciation of capital assets over their useful economic life. So then we're going to have of course the depreciation process. We're going to have to calculate the depreciation. That's going to be one of the transactions the company does. We're going to be needing to test that calculation. Notice that they only record depreciation periodically. It's usually an adjusting entry at the end of a period, such as a month. So there's not going to be too many of those calculations as well, those types of transactions. So it should be easier for us to audit given the number of them. Leasing of capital assets. So it's possible to have capital leases and the capital leases of course result in a capital asset and they're going to be a bit more complex. So when we see the capital lease, we might want to look into that because the valuation process is going to be a bit more complex to consider. Factors to consider with regard to inherent risk for property plants and equipment. Remember our process here. We want to consider inherent risk, control risk and then set detection risk related to substantive testing inherent risks. You can think of those risk factors as if you took away the internal control. How inherently risky are these items? If we are the company, sometimes it's useful to be able to compare inherent risk factors to different areas. If we had inherent risk related to cash, for example, obviously that's going to be much more inherently risky because it's more liquid. People are more easily to basically want to steal cash or be able to steal cash and be able to use the cash. If we think about property plants and equipment, it's probably more difficult to basically steal a forklift or something like that, a large piece of equipment or building. And it's going to be less easy for someone to basically spend or consume the forklift personally. So notice when we think the inherent risks, those are the types of things we want to consider. Doesn't mean there's not still inherent risk with the forklifts, but the inherent risk factors of course will be different. We want to consider what the inherent risk factors will be with regard to property plants and equipment. Consider the internal controls then that the company has put into place and then how can we do substantive tests that being related to it? So the complexity of the accounting issues is going to be one thing that we might want to consider with regard to inherent risk. It basically depends on the type of transactions involved with property plants and equipment. But because they're larger dollar amounts, they could be material. And if we have some types of transactions related to them, they can be more complex such as a transaction like a capital lease. It could be a little bit more difficult for us to consider. Difficulty to auditing transactions. So we want to consider the factor of inherent risk. How easy it is it going to be for us to audit basically the transactions related to property plants and equipment? Do we have the documentation, all the documentation that is necessary for it? And can we observe basically what the process is that happened? Possibly can we observe the actual equipment itself? Are we in the location that we could observe it? Or is it some location that we can't basically observe? Misstatement detected in the prior years. So if there's misstatements, of course, in the prior year regarding inherent risk, regarding property plants and equipment, then we're going to increase the inherent risk in the current year. Now complexity, if we have a straightforward type of transaction with property plants and equipment like they bought property plant and equipment and they paid cash for it, well, that's pretty straightforward. That's not too difficult for us to consider complexity-wise, although the transaction would be material and therefore something we would want to consider. If they bought it for a loan, then they financed part of it, bought a forklift, paid some cash, financed part of it. Well, that's still not too unusual. We could probably consider that leasing if they bought it as a capital lease or if they self-constructed the capital asset, they made it themselves. Those are two types of things that can be far more complex for us to consider. The lease in the format of a lease as opposed to a purchase, and then we're going to want to put it on the books as a purchase because in substance we believe it is one with regards to a capital lease can be a bit more difficult for us to think about the accounting issues related to it. If they made the capital asset themselves, they constructed it and then used it. They made it not inventory. They made the capital asset property plant and equipment to value that can be a little bit more confusing as well. Difficulty to audit the transactions. The easy type of transaction to audit is an asset purchased directly from the vendor. Again, if you had a transaction where they just said, hey, I need a forklift. They went to the vendor. They bought the forklift.  They went to basically Home Depot and bought the equipment. Then it's pretty straightforward types of transaction. Again, it might be material, something we want to consider, but not too difficult. The more difficult types of transactions are transactions involving something like a donated property. If something was donated, how do we know what the value is because it's not on a market transaction? We want to consider that non-monetary exchanges. If there wasn't money exchanging hands, then that's going to increase the complexity. Obviously, we would consider if it was an arm length transaction that something was exchanged to help us to basically value on a market value method. Then the self-constructed assets, again, that's going to be more difficult if they made the asset. Misstatements detected in the prior year's audit. So of course, when misstatements are found in the prior year, the auditor will increase the inherent risk factor in the current year. Now we want to consider control risk. So recall, we think about inherent risk, then the control risk to then set detection risk. That's the amount of testing that we're going to do. So control risk, control procedures generally part of the purchasing process. When we think of controls and in other words, we've thought about the purchasing process, the controls should be much the same for the purchasing of property planting equipment, considering the fact that it's going to be part of the purchasing process with regard to the assertion of occurrence and authorization over property planting equipment. However, larger capital asset transactions may be subject to additional controls. In other words, the company may have something in place where they're going to say this is the normal purchasing process for normal purchases. If however you purchase something, say over a certain dollar amount, you need additional approval, additional authorization for those types of purchases. So we might have, you know, more type of things that we would have to test over and above the traditional purchasing process with regard to property planting equipment. Business will have an authorization table for approving capital asset transactions. Control activities will also need to identify assets no longer in use. So notice that's going to be another key concern for us as the auditor. Those assets that are now obsolete or not being used that are property plants and equipment, they should be removed. And remember, they're not always removed. And sometimes it doesn't create a significant amount or effect on the financial statements from a net perspective, because the items on the books as an asset, and maybe it's fully depreciated, therefore the book value is zero. But still the equipment's on the books overstated, the accumulation, accumulated depreciation is on the books overstated. And therefore, although the net is zero for that asset, we would still need to dispose of it. So even if the, and that might not be the case, it might still have valuation on the books and they're not using it as obsolete for some reason. So even if it's a net book of zero, we want to have consideration to look at those property plant and equipment assets and remove them from the books. They shouldn't be, you know, on the books. Now, when we consider the property plants and equipment, what we're going to do is we're going to get a subsidiary ledger, of course. So when we think about the property plants and equipment, we think on the balance sheet, we have the asset of the property plants and equipment or the list of assets that are property plants, equipment categorized out by land, building, equipment, and so on. And we have the accumulated depreciation, but those are all lumped together within those categories. We need then a subsidiary ledger, some type of ledger that's going to be breaking out in detail, the supporting type of documentation. We have to have this information because we need to know what's actually comprising the pieces of equipment that are on the books. Now, this can be a detailed and confusing report. We need to understand that. And we also need to understand that there could be, when you consider the creation of the subsidiary ledger for depreciation and equipment, then typically you have to do that for what we're considering, the book value. And there's going to be other types of calculations that are going to be necessary, at least for the taxes, because the accumulated depreciation will be different typically for taxes. So it could be a complex schedule. Information we're going to need on it is going to be the description of the property plants and equipment. So we need to have a list of the property plants and equipment on there. And it should notice that when you're putting together a property plants and equipment, if you're recording property plant and equipment on the GL side of things as well, just note that unlike financial accounting, where we often just put something on the books as equipment, we debit equipment. When we put it on the books in real life, we want to have the description. What is this? This is a cat, forklift, blah, blah. This maybe have a serial number on it. We want to know the description of what is on there. And what we also do not want to do is put something on the books as equipment and lump together five things. So if we bought like five forklifts and one, you don't put the thing on there is five forklifts and debit property plant and equipment for the value of five forklifts because the subsidiary ledger isn't going to give us the detail. We need the detail of all of all the actual equipment broken out because if you sell one of those forklifts and not all five of them, for example, that that would be a problem because now it's on the books as a lump sum one kind of thing. So we need the description on there. We want the location, any ID number. So again, we don't put the books as a journal entry that we typically do with financial account and just debit like equipment. We need the, you know, it's in the subsidiary ledger, it's a forklift. And here's the ID number related to that item. If we're going to sell it, we're not going to use a first in, first out method of flow method. Typically, we're going to identify specifically specific identification of the item, the piece of equipment that we are selling to do that. We need to identify it in some way, such as an identification number. Date of acquisition, obviously we need the acquisition date. That'll help us to consider the depreciation that will be considered on it. Depreciation methods for the books, depreciation method for taxes. So notice we're going to have at least two depreciation methods. It could be quite confusing because different classes of assets are going to have different lives, could have different depreciation methods used possibly given the different classes. And there will certainly be different depreciation methods used between the book depreciation done in accordance with something like generally accepted accounting principles and the depreciation done by the tax code, which is completely different. So we're going to, we want to consider both of those items. We are testing for the book depreciation, generally accepted accounting, but we also wanted as part of our testing to consider and possibly reconcile to the tax in some way, because that's going to be a verification process or can help us to verify considering the taxes are another form of reporting that has been done. We can tie out at least do the total amount of property, property equipment and each category tie out on taxes and on our books. And we can consider the reconciliation of the depreciation methods, salvage value. That's the value that it's going to have when at the end, the estimated value at the end of the useful life that we consider at least the scrap value sometimes called. And then we're going to have the estimated useful life, of course, and that's useful life, the salvage value and the costs are things that are going to help us to consider whether or not the depreciation calculation was done correctly. Now we're going to consider the segregation of duties related to property, plant and equipment. So separation of duties, segregation of duties, key internal control, whenever we think of internal controls, one of the first things we want to think of is the separation segregation of duties. Obviously larger companies are going to be able to have more separation segregation of duties than smaller companies, given the fact that they should have more staff to do so. So first item, function of initiating the purchase of a capital asset is segregated from the approval function. So notice part of this, you're going to see some overlap, of course, with the purchasing process with the consideration of purchasing property, planting equipment. Now why would we need that? Because if it was not segregated, if those functions were not separated, fictitious or unauthorized purchases of assets can occur. This can result in purchases of unnecessary assets, assets that may not meet the company's quality control standards or illegal payments to suppliers. Again, as we consider these, the separation of duties, the segregation of duties, remember that you might often think that, Hey, you know, my employees wouldn't do that. I'm going to hire good people that's not going to happen in my area. But just note, again, as companies grow, you're going to need more separation of duties. And even if you're small, what you want to do is remove any risk factors. The temptation, the fact that an employee can look at something and say, I could commit fraud right now. And if I wanted to, it's actually stressful, you know, because, you know, they're involved in two areas, they can actually say it's possible for that to happen. People could perceive that I'm that that that maybe I am doing, they wouldn't know because I'm involved in these two things. So you want to basically remove that as much as possible, as much as you're capable of doing, as long as it is to the degree that it doesn't increase any problem with the functioning of the organization, remove any, any, any risk factors or any, any temptation to commit, you know, fraud or anything that is there. I mean, you know, don't set the money in the middle of the cafeteria table and expect people to, you know, you're going to be taxing them on their willpower, just not to pick up the $100 that's sitting in the middle of the table. So you want the separation of duties as basically a benefit as well, if it's possible to be putting those in place. Property, plant and equipment records function is segregated from the general ledger function. If this was not segregated, an individual can conceal any defulcation that would normally be detected by reconciling subsidiary records with the general ledger control account. So that reconciliation process, the subsidiary ledger to the control account should be a good control to have. If we have the same person involved, they could adjust those accounts. Then of course, they got that control would be less effective. The property and plant and equipment, PP and E records function is segregated from the custodial function. So the PP and E records, and then the custodial, the people that are basically taking care of or overseeing the actual maintenance or the caretaking of the property, plant and equipment, you could consider them having basically possession in some sense of the property plant and equipment. If this was not segregated tools and equipment can be stolen and the theft can be concealed by adjusting the accounting records. Then we have when a periodic physical inventory of PP and E is done. This should happen periodically. Notice the property, plant and equipment is going to be physical type of inventory or physical type of things similar to inventory in that it has a physical presence. Inventory is something we count for sure. The property, plant and equipment because it's larger and whatnot may not have the physical count as often, but we should still have basically that physical count just to verify the presence of the property, plant and equipment. So when a periodic physical inventory of PP is done, the individual responsible for the inventory needs to be independent of the custodial and record keeping function. And again, remember when we're thinking inventory here, we're thinking inventory of property, plant and equipment, not inventory, the things that we're selling type of inventory. If this is not segregated theft of the entities, capital assets can then be concealed. Now we'll consider the substantive analytical procedures related to PP and E property, plant and equipment. These are the substantive tests. So we've talked about inherent risk control risk. And now we're thinking about the substantive tests related to the detection risk. So these are substantive testing, but they're analytical substantive testings. Remember, these are things like comparing ratios. These are things when I would think of myself as basically or the cozy auditor that's in my own office and the audit firm comparing just numbers and ratios and whatnot. It's instead of the substantive tests that we would typically think of as substantive tests going out, for example, and seeing that the that these property, plant and equipment are there pulling invoices being at the business's office. So these are analytical procedures. We could prepare prior year balances and current year balances in property, plant and equipment and depreciation. So that's our standard kind of thing. What happened last year, what happened this year, what's the difference between the two, what's the dollar change, what's the percentage change that could give us some idea of if the change is significant and what's going on with them. Then we can compute the ratio of depreciation expense to the related PP and E property, plant and equipment accounts. So depreciation expense to PP and E and compared to the prior year's ratios as well. So we can do that ratio analysis and compare our results to prior year compute the ratio of repairs and maintenance expense to the related PP and E accounts. Remember that repairs and maintenance is something that we want to we want to consider because we also want to consider things like is something recorded to repairs and maintenance that should have been capitalized. So this kind of ratio of repairs and maintenance, for example, what if they completely overhauled the entire piece of equipment, then you would think, well, maybe it shouldn't be repairs and maintenance as an expense, maybe it should be something that should be capitalized as as part of an improvement to the actual asset. So that's something that we want to be considered of that's this ratio will give us some idea possibly of that as well. We can compare that to prior years compute the ratio of insurance expense to related PP and E accounts. So insurance related to the PP and E and we can compare that to prior years. And we can review the capital budget. So they should have a budget if you're talking about publicly traded companies, they should have a capital budget, meaning how much they plan on spending for things like capital assets. And we could take that capital budget and compare amounts spent with amounts budgeted to spend.


This is Jeff Deist, and you're listening to the Human Action Podcast. Ladies and gentlemen, welcome back once again to the Human Action Podcast. We are so glad to have you with us, and we are continuing forward with our journey through the book, Human Action. Mises' Magnificent Tome, 900 pages, and we are doing our best to help you work through it. We're doing our best to encourage you to read this book, to wrestle with it, to take the dive, because it's worth your time, and especially in these strange times in which we live where stock markets are crashing, there's some sort of virus spreading across the United States. Maybe some of you are at home, maybe some of you are quarantining, maybe some of you have more free time than you normally do, but nonetheless, it's really when things look bleak that we ought to be turning to original understandings to first principles, and I think this book is as timely and really as timeless as it ever has been. So last week we started with part one of the book, Human Action, and went through some of the more philosophical challenges that that part presents with our great friend, David Gordon. And here to go through part two of the book, Action Within the Framework of Society, is our great friend, Dr. Robert Murphy. Bob Murphy, who is of course not only the author of our Mises Institute Study Guide to Human Action, which we'll link to and which you ought to buy if you want a little help with this book, but he's also the author of the 2015 book, Choice, which takes some of the broad lessons and ideas and principles in human action and really presents it in a more digestible form. Certainly a book worth reading perhaps before or after you get through Human Action itself. So all that said, Dr. Bob Murphy, great to hear from you today. Thanks for having me, Jeff. I'm glad you're doing this project here. Yeah, it's been a fun project. And for people listening today, if you're behind or you haven't gotten the book yet, you can find it for free in HTML format, chapter by chapter format searchable on our website. Just go to Mises.org and type in Human Action. You can purchase it very, very inexpensively, both in a beautiful hardcover, which we call the Scholars Edition and also in a very inexpensive softcover. Use the code HAPOD to get a discount on both of those. And we'll also offer Bob's book, Choice and Bob's study guide, which are going to perhaps make this a little bit of an easier read to you. But the section we're covering today is part two of the book. This consists of chapters 8, 9, and 10. And the Scholars Edition page is 143 to 200, so it's not the longest section. But Bob, what strikes me about chapter 8, which is called Human Society, is first and foremost, the stuff in here is just nothing like what you think of in your macro econ textbook. I mean, this is really weighty stuff right off, right from the get-go. Yeah, I agree entirely. And that's sometimes people ask, like, what's the difference between human action and man economy and state? And I think that you just nailed the difference that Rothbard, man economy and state is an economics textbook or treatise, let's call it. Whereas human action, like, gives you Mises' entire worldview. So he's talking about the Roman Empire. He's talking about here the nature of what is the foundation of society and civilization. So yeah, Jeff, Mises gets into a lot of stuff and a lot of people reading this.  That's not even economics. That's philosophy.  And when did you first hear about the book or come to read it in your own life? I first read it as a senior in high school, but I didn't, I don't claim that I understood all of it. But I did sit down and read the thing as a senior in high school. Wow, that's pretty unusual, I think. Yeah, for me, talking to people, most of them, it wasn't that early. Like, you know, they'd maybe read about Rothbard or something. But yeah, I mean, so earlier I had to encounter Hazlett and then that led me to Mises and Rothbard. And I think I probably read Rothbard first and then I decided, OK, I got it. Everyone's talking about this human action, I got to get it. And certainly Jeff, too, to your point, I didn't even understand why is he calling it human action? Like, the title intrigued me. I was assuming it was going to be like how economies work or the market or something. Well, you've obviously wrestled through this book pretty in minute detail having written the study guide. So I'll ask you the same question I asked David Gordon last week. Is it necessary to read straight through this book? Or, you know, some people want to use it almost as a desk reference of sorts. And what do you think of the organization of the book? OK, so that's something I did want to mention while you had me here. I didn't realize the logic of the organization of it until I wrote the study guide for the Mises Institute. Like, you know, and that forced me to, you know, read the whole thing again, but also to kind of step back and try to synthesize it. So, yeah, it's organized very logically. So part one, the human action, like that's just looking at an individual and choosing means to achieve an end. And what do we mean by action and as opposed to like reflexive behavior? And then part two we're doing now saying, OK, now you've got all these individual actors that are, you know, around each other and interacting with each other. So how does that change things? And then going into part three that you're going to do later, presumably, is saying, OK, now let's assume additionally that you've got society, you know, individual actors who use means to achieve ends and have reason and goals, preferences. They're all mixed up together, interacting with each other. And now we're going to add the institutions of private property and money. So that in the crucial thing there is that allows for calculation. And so that's the layer of just for parts one, two and three, the organization. So it really makes sense to answer your earlier question, Jeff. Yes, you somebody would have to sit down and read the whole thing cover to cover. If you really wanted to understand what Mises is doing in this book. So you don't need to read it to understand Austrian economics, I would say, but you do need to read it if you want to understand the thought of loading on Mises. And I think there's a lot more to him than just, you know, his contributions to the pure Austrian economic theory. Well, of course, we should mention that his critics, I think, would use some of the very features of the book which we like to assail him and say he's going way too far afield. He's getting into all kinds of things which are not economics per se. He's a literary economist where the charts and graphs. So, you know, the idea that we think all this is proper to build up this foundation and borrow from history, philosophy, sociology, whatever he borrows from here, and especially as someone writing in the first half of the 20th century who when economics is really just coming into its own as a standalone discipline. You know, by the mid 50s when this book comes out, the Samuelsons of the world are pretty dismissive of where he's coming from. I mean, let's just throw that out there for the listeners. Sure. And so I guess I would counter that and say I understand the critique, but just look at the results that in the grand scheme of things who gave better guidance even on narrowly economic issues, Paul Samuelson or Ludwig van Mises, I mean, Samuelson infamously in his bestselling textbook. For many additions and going up pretty close to be, you know, just shortly before the Soviet Union fell, was still projecting in his textbook that oh, because the Soviet Union is growing faster, you know, a faster rate than the U.S. eventually they're going to catch up in terms of just economic output. And so, you know, we shouldn't look down our noses at central planning as a way to organize an economy. Sure, there's issues with civil liberties perhaps, blah, blah, blah, but, you know, let's not presume that our way is better. You know, that's not the exact words, but I'm not mischaracterizing with Samuelson's position, which in light of now what we know is late as he was writing some of that stuff. I even think it was in the early 80s. I could be wrong about it for sure in the 70s, you know, whereas obviously Mises gives you a much better take on how should we think about a socialist way of trying to organize the economy. And the other thing too, Jeff, is just, so yeah, I don't agree necessarily with everything Mises says either, but I think it shows in human action what it shows is this is the way a very wise, classically educated sort of cosmopolitan man can, you know, have a good familiarity with all the major branches of human thought and then being an expert and a pioneer in economics in particular. And then what is that? How does he use that to then talk about the scope of human history and important ideas? And so it's a very interesting thing. You know, just like, for example, for people, I don't know if you guys cover this, but like, why did why did the Roman Empire fall? Mises saying it's not enough just to explain all the barbarian invasions well, because they had repelled the invasions earlier. Why all of a sudden did they succumb and he thought it was the price controls? Okay, so I'm sure a military historian, like, oh, come on, you're thinking like an economist, but just that sort of thing where Mises is seeing the implications of stuff. So maybe he's wrong on any particular thing, but it's interesting. I think for someone to read that kind of a person that writer does just hear him pontificate on lots of things. Yeah, yes. And I think your mindset has to be different going into this book. It's not a textbook. Samuelson wrote a textbook. This is a treatise. And treatise means worldview. So when you get into this opening part of part two, chapter eight, human society, I want to read this quote for you, Bob, because he starts off right away on page 143 here. He says, the question is whether society or the individual is to be considered as the ultimate end and whether the interests of society should be subordinated to those of the individual or the interests of the individual to those of society are fruitless. So he's getting into this big picture stuff right from the beginning. And he knew what I thought of when I read that quote. I thought of the Randians, the objectivists. They'd be mad. They'd say, no, no, no, that's not fruitless. The individual should be supreme. Yeah. So this, I don't know if I'm hitting the same thing from a slightly different angle that, yeah, when I was reviewing this last night, Jeff, preparation for a conversation, yeah, I was struck by he, he openly says that it's individual. There was no time at which humans existed outside of society. And Mises believes a standard Darwinian account. So he would say at some point there's homo sapien. And his point was they were always in groups. You know, any baby born who was, we would call human had parents and was living in a community of other humans. So, but nonetheless, just yes, in terms of praxeology, how do you explain things? It's not that the group ever makes a decision. There's individuals and perhaps, yeah, you act differently when you're in a group than if you're by yourself. But that's so, so I think he, he hits it perfectly that he understands theoretically, like methodological individualism in terms of an economic theorist. And to explain human action, you got to think of it that the locus of decision making is in the mind of the individual. It's not that the group makes decisions per se, but yet Mises also, you know, doesn't, doesn't take that insight or that approach and then end up, you know, saying weird stuff like, Oh, doubles tennis isn't libertarian because, you know, you're playing with a team. You know, that kind of stuff. And for him, society really is cooperation. That's almost the definition. Right. And, and that's interesting too. So let's make sure we hit, we hit that point that there's a sense in which Mises is very rationalistic when it comes to explaining society. So he's quite clear that social bonds, you know, where they come from, he thinks it's this feature of reality, namely the higher productivity of, of labor when under the division of labor that in terms of autarchy that when people engage in the division of labor, everybody just more physically productive. And hence that's the reason to engage in social cooperation that we all benefit from cooperating and being a part of society. And then the problem though is, or the issue is you can't go around killing people or robbing banks if you want to be part of a society that's just not going to work. That sort of antisocial behavior. But yeah, it's, it's not that we have tender feelings and altruism. And that's why we engage in social bonds. Mises thinks he said, no, it's that it's a higher division of labor productivity under the division of labor that drives the whole thing. And he thinks we ultimately, like people understand that at some level. So to be clear, it's not that Mises thinks people rationally plan society and someone thought, you know what, why don't we have a huge society in civilization? That's not what happened. But people acting, you know, rationally in the mechanistic sense or the way a mainstream economist would mean it, step by step doing things in their own narrow self-interest that then spawn, you know, the growth of society. But Mises does think it's, it's, it's a rational evaluation and people realizing, yes, it makes more sense to cooperate with my neighbor here than to not. And yeah, the, the sum total of all those decisions to get along with each other because there's benefits. That's, you know, that's rational. That's what society is. Well, I have to say that as a lay reader, a lot of Mises's utilitarianism bleeds through in this chapter. And there are some things where there's tensions. There's tension obviously between viewing the individual as the rational actor and talking about social cooperation. There's tensions between saying economics doesn't prescribe anything, but of course liberalism isn't attempt to learn from proper economic doctrine, which he would view it from a utilitarian sense and apply that to improving society. So clearly liberalism is a political doctrine. It's a normative in a sense. And there, there are tensions in this chapter. It seems like he's going, he's going, you know, pretty round about in his approach here. So yeah, let me summarize what I think he's claiming. And then, Jeff, if you want to push back on that, which I'm happy to enter because you're, I'm not, I don't call myself a utilitarian or even a consequentialist. And Mises certainly is one. And so I ultimately, I think he's wrong to talk about that. But yeah, he, what Mises thinks and the distinction to Mises between economic science, which is positive, meaning it's, you know, there's no value judgments smuggled in. It's like, just like physics doesn't rely on the value judgments of the scientists involved. Economic science per se is value free, but liberalism is connected to it, you know, classical liberalism. And Mises is saying, oh, economics, it doesn't have any value judgments. It doesn't say what's good or bad, but liberalism still assumes that most people want to have prosperity rather than poverty, that most people like to have houses rather than not having shelter, that reducing infant mortality is a good thing, you know, that sort of stuff. So he's saying, if you plug in the actual desires and value judgments of the vast, vast majority, even the people who vote for socialists are doing it because they think they're going to end up with bigger houses and, you know, a study or stream to understand economics and what it says about socialism. So Mises is saying that that's what liberalism is. You take economic science in terms of saying cause and effect and then say, all right, since we don't want to live in a world that's characterized by frequent business cycles or where there's no economic calculation, that's why we're not going to embrace socialism. We're not going to embrace, you know, central banking. So economics per se doesn't say socialism is bad. It just says socialism will lead to murder and the allocation of the means of production. And so now we as liberals don't want that. So that's the way Mises thinks he's cleverly side stepping, you know, the fact value gap and stuff like that. But surely the point of economics is to improve our lives to help us understand the world better and be happier, healthier, wealthier, wider as a result. It's not just study for its own sake. Right. And I don't think he would dispute study physics and math or whatever, but nobody, you know, it helps us. It would be a bad thing if all of a sudden all the mathematicians died. But that doesn't mean that math itself, you know, has value judgments built into or is an objective. I think that's that's what he would say. So because remember what Mises is trying to guard himself against is like the Marxist saying, oh, all the economists and their results and their theories and models are all designed, you know, to aid the bourgeois and so Mises point is no. What we're demonstrating here, this is pretty straightforward as follows from, you know, logic. Well, and of course, utilitarianism has the benefit of not having to convince anyone of normative principles and we all have very different views on when it comes to normative principles and Mises gets into this on page 147 with his claim against universalism. He says, look, the problem with universalism is that, you know, by who's authority, who's God, whose order do we choose? You know, honestly, for my perspective, whether you think Mises makes a utilitarian case for laissez-faire, whether Rothbard makes an ethical case for laissez-faire and for New Liberty, whether Hoppe makes an argumentative case for it. You know, these are problems we can we can think of on a philosophical plane, but we have much more immediate problems, which is that government's too big and it's wrecking our economy and we're seeing the carnage just in the last few days. I personally I don't like to get exercise over this point, but Bob, maybe you do. So I guess I don't know if this is helping to answer that. So what I've always thought was a sort of inconsistency in Mises is that he's actually better and nobler than his ethical framework would make him be in the sense that Mises clearly, I would say Mises could have had a much more comfortable life measured in terms of material things if he had played ball. You know, maybe he still would have had to leave Nazi Germany just because he couldn't control his ethnicity. But in terms of once he came over to the United States, you know, Mises clearly could have been less dogmatic and whatever. And I think he could have done better for himself just because he's an extremely intelligent person. And so I think, though, that that wasn't an option for him. Like, you know, the truth burned within him and he had to speak the truth. And so I if you then asked him to explain that, why do you act like this when so many other people don't?  I think it's just because he was a principled guy and, you know, it would have offended his sense of duty or something.  So I appreciate that, but I'm not a utilitarian. And so I think there's that element involved where, yes, there is this economics per se is value free. But yeah, the things we write about, we're doing it out of a sense of justice. You know, like what the Fed does, it's not like, why do I write about it?  You know, whether the average person working at the Fed thinks like that, maybe, maybe not. But the, you know, in terms of what the institution is doing to the rest of society, I don't think it's just a matter of they're making an intellectual mistake and it's my job to go correct error. Just like if I see someone using the wrong grammar on Twitter, I might be a wise guy, correct? No, what the Fed is doing to me is worse. I don't think he really believes that too. So even though he's trying to make it look like, oh, morality is merely just a set of hygienic recommend rules of thumb to achieve your ends, I don't think he really believes that or he doesn't act like he actually believes that. Well, I agree. And as you read this book, what strikes me is that you can't separate the man from the ideas. The man meaning his life experiences, the time in which he wrote the context. I mean, we like to think that intellectual ideas just have purchase on their own and that people who present them don't matter as much. That's not really true. I think that's a little bit of a libertarian foible that people run the world as much as ideas. But what's interesting here, Bob, is even in a chapter this philosophical, he does bring in some more standard econ concepts in the form of the Division of Labor and the Ricardian Law of Association. So he has a little section on that. And it seemed, I don't know, is that out of place here or is it necessary to make his point? Oh, it's necessary to make his point. Because remember, his whole point is the underpinning of society is the higher... Well, it's two things. It's the higher productivity under the Division of Labor and the fact that people recognize that fact. And so that's what is the ultimate foundation of social bonds according to him. And then everything else flows from that. That, okay, given that we're just so much more productive if we work together and cooperate, then what can we say about what sort of rules do we need to follow in terms of dealing with each other to make sure we don't threaten that cooperation? Because we already... What a disaster that would be if we had to rely on our turkey. So it's necessary, as an economist, to explain, you know, what we would... People learn as comparative advantage, meaning that even somebody who's better at everything, who's, you know, more physically productive in terms of how much stuff can I produce per hour of my labor over... Even over every possible good, still benefits by trading with somebody who's inferior in all respects, measure in absolute terms, because again, of comparative advantage. So it's like the expert lawyer hiring, you know, support staff, even if he can type faster than any of his employees, still he focuses on the case and has them do, you know, the typing. Or a doctor, even though he could take your blood pressure better than the nurse could, still it makes sense for the doctor to have support staff to do the, you know, simple things like weigh in, take your blood pressure and whatever, so that the doctor can maximize the time spent just on the stuff that the doctor excels in. So that principle, yeah, Mises goes over in this chapter, but he needs to, because that's what he's saying is the ultimate foundation of society. So let's just say in the current context that Americans can produce very complex technological products like iPhones and space rockets better and cheaper than the Chinese, more efficiently and the products are much better. But let's say we could also produce a cheap Walmart t-shirt better and more efficiently for $3 instead of the Chinese $4 version. Under Ricardo, we should still focus on the software and the cars and the tech and not make t-shirts here, even though we might make t-shirts a little better than the Chinese, we should still buy them from the Chinese. The only quibble I would have and what you just said is the way you said even though we could make it at $3 and it would cost them $4, so I don't think that would be the case. So in other words, you could say even though one hour of an American worker's labor can make more t-shirts than one hour of a Chinese person's labor, so if you're measuring it in physical things, even though we can make more t-shirts per hour, still it would make sense for us to import the t-shirts into export jet aircraft to them. That's what I think the argument is, but it would still be, it would then be cheaper is my point. Right. Well, I don't think we can make t-shirts cheaper than the Chinese Bob. I think we should keep buying them at Walmart. And let's hope that this coronavirus thing doesn't result in long-term disruptions between American consumers and Chinese producers, which I think is actually a very healthy relationship for this country. I also think it's a piece promoting relationship as awful as the Chinese government may be or as awful as you may think it is, we don't improve or correct that situation by impoverishing the Chinese people through restrictions which prevent us from buying their cheap t-shirts, and we don't do anyone any good by making that, let's say, single mom who works a couple of jobs have to pay a buck more at Walmart every time she buys a t-shirt for her kid. So that's just my little aside today because we seem to be in a new era of China bashing as a result of this coronavirus. You know, Bob, you mentioned Darwin earlier, and that's so interesting because he gets in towards the end of this chapter, he gets into some really interesting philosophical stuff. He talks about Darwin and says, well, life is not just human life as opposed to animal life. Humans are different because of our degree of social cooperation. So we're not just in this struggle against microbes to exterminate them. We have the notions already set out of social cooperation and division of labor. And so it seems like he is not dismissing Darwin, but he's trying to put Darwin in context here and say that rational human life, human action within the context of society is not just this gross Darwinian struggle. Exactly. And this is why, remember, in the beginning, we were saying, you know, it's important to read this book because it's not merely economics. You're right. So in an economics textbook there'd be no reason to talk about Darwinism. Why would you? But here, Mises is getting into, I think, partly to defend the honor of the economists because they were accused of being social Darwin.  But Mises point is, you're right, Jeff, he's not saying, oh, Darwin's good for biology, like for, you know, beavers out there in the in the pond, but it doesn't apply here. That's not what he's saying. He's just pointing out it's incorrect if people try to justify it like to say, oh, we shouldn't have hospitals or something. Just let the weakest die off and that'll be good for Homo sapiens. And that's what Darwin would reckon. Mises say, no, that's incorrect. That right now our preeminent feature, the thing that we have that makes us special, like our, you know, just like the turtle has its shell and, you know, the cheetah has its speed and so forth. The elephant's big and it's got tusks and it's, what do we have is our reason. That's the thing that we use just, you know, because we're not physically, we can't compete with certain things and also, you know, bacteria also can, there's a sense in which they're just as good and evolved as we are. But his point is that our reason is our preeminent feature. And so the social cooperation under the division of labor. He's saying that's what humans do. That's how they adapt to the environment. And so, you know, the fact that we take care for our kids or something or send them to school and there's a latency period. I mean, that's all, that's what we do. That's how our species manages to maximize the genes that it passes on to the future generation. So that's our adaptation. So it's, yeah, modern liberalism. He said, meaning by wish him in classical liberalism, it also doesn't, he says, believe that men are created equal in a physical sense. Obviously it recognizes there's innate differences in our social system where there's a quality before the law is the one that's most conducive, he thinks, to fitness even in a narrow Darwinian sense. So there's no conflict. Yeah, it's really, the whole chapter is really interesting. There are sections here that, again, remind me of objectivism. There are sections here that remind me of all kinds of things. So you're going to enjoy this chapter. It's really, it's a rigorous read. It's the kind of stuff you're just not going to find in economics today. I mean, there are whole sections here, Bob, where he's talking about the fable of the mystic communion, for example, where he's saying here, you know, you can, you know, ideology or correct ideology and correct learning can actually overcome some of these animosities between different racial groups, between linguistic groups, et cetera. I mean, imagine opening a, imagine an economist today trying to write a book and especially hoping that book gets picked up by some academic publisher and widely distributed so he gets rich off of it like Samuelson did, writing a section called the fable of the mystic communion. I mean, this is just so far beyond in a field from what we think of as economics today. It's really pretty remarkable. Oh, yeah. And you're, of course, right that there's no way this would get published, you know, as a book. They would look at the manuscripts and say, whoa, give us the economics here. You can cut out all this other stuff. Yeah. Well, so chapter nine, the next chapter is very brief. It's called the roll of ideas. He gets immediately into the sort of the interaction between reason and praxeology. And what strikes me is interesting, especially in the current context, when we've got this divide in America, red versus blue, urban versus rural, Trump versus hate Trump. You know, on page 185 of the book, he has really what I think is one of his most famous and oft repeated quotes where he says, you know, our problems are purely intellectual and we need to overcome them intellectually and deal with them as such. And we shouldn't think of the supporters of different ideologies as villains. And this is a huge, this is a huge problem that are, that we, what we have to face and address is intellectual error. And I wonder if we could talk to him today, you know, this is written in the 1940s, so we're 60-odd years on, or excuse me, 80-odd years on. I wonder if he would still agree with that, because in Trump America, Bob, boy, the two sides see some villains on the other side. So I think what he's getting at there is it won't do, like if the job of someone defending ideas is to defend them, you know, intellectually and fairly and not cast aspersions on the motives or the, you know, intellectual honesty of the people who are attacking the ideas. I think that's what he's, so you're right. He does seem like he's saying more than that. I grant you, Jeff, and so I guess I would, I don't know what the climate was back then, but I, you know, certainly nowadays I don't think that the major disputes among, like, wonkish people or, you know, people working in various think tanks and stuff, I don't think it's purely just honest error if that's, so I don't know if that's exactly what you mean, or if he just really means that, you know, it's not enough. I think, because I think part of it, Jeff, too, is he's responding to the Marxists who they weren't, you know, when presented with what he would call the theorems of economics that shows how their schemes aren't going to work. They didn't try to grapple with it.  You know, they're just the tools. So I think since Mises knows, no, my ideas are right. He's saying I'm willing to face anybody in intellectual battle on a fair playing field. You know, we won't bring personalities into it. So I think part of it is that is what he's saying. Well, and it goes to this idea of capturing intellectuals. Hayek had his idea of how we produce intellectual content from a sort of a top-down model. We get second-hand dealers and ideas, and then Rothbard came along and said, no, no, no, that's not right because there's an awful lot of intellectuals in academia and in government who actually benefit from the current system. So the question becomes, are our problems simply intellectual error or is there some sort of nefarious self-interest in the status quo involved? And I would venture, Bob, that the truth is probably somewhere in the middle. There is that, but another nuance here is certainly, like at the end of the book, Mises makes it crystal clear that it's important for people to educate the masses. Like the general population needs to know the importance of private property. So they have to be expert economists, but it's crucial for them to know. And that's partly from the stuff we're getting into right now. And this stuff where Mises is saying, ultimately, all governments rest on public opinion. And so the people are going to get the government they want, the regime they want in the long run, whether through ballots or through bullets. And so I don't know if that makes him come more on Rothbard's side in terms of strategy. In other words, Rothbard saying, let's not bother trying to convince the people at the Fed to do the right thing because that or the people at Harvard or MIT because they're never going to let's take it to the people so that the people at Harvard or MIT lose their prestige and their influence. I don't think Mises would necessarily disagree with that. Right. Well, it's a nice quote. And I think it appeals to our better angels. And we ought to maybe sometimes take the time. And I certainly suffer from this. Take the time to step back a little bit and just say, hey, people who view the world differently from us are not necessarily evil. There's a lot of reasons behind how they arrive at their worldview and hating them and attacking them is not necessarily either morally or pragmatically the best way to go. I think we could all probably benefit from a little bit more of that. And but can I say one more thing on that? Let me just because I don't want the listener to totally miss it. So I think for example, if we're talking about like what's motivating, you know, the Hitler's regime in the 30s and early 40s, I think Mises would, of course, Mises wouldn't say, oh, it's not that Hitler was a bad guy. It was just he was a mistake. Of course, no, Mises, of course, would agree. If anybody's a bad guy acting immorally, it's Adolf Hitler. But I think his point would be in which he says, you know, in human action and elsewhere that the idea is motivating the Nazis in terms of what they thought they were doing and why they thought their actions though in conflict with standard morality were good for the German people or for the nation state or whatever, those were faulty ideas. In other words, they actually weren't doing what was in Germany's narrow self-interest. So I think he's saying there was a sense in which even that was ultimately based on intellectual error, even though, of course, yes. So I think that's, that's partly what he's getting at. Right. And again, this whole chapter is about the role of ideas. So he's telling us, for example, that Mises, let's be clear here, Mises is not a traditionalist in his, in his mindset. He's a, he's a liberal and in many ways a radical for his time. But nonetheless, when he's talking about praxeology and ideas, he says, you know, society always comes to us temporally and we inherit from previous generations not just a stock of physical goods and services and material wealth, but we also inherit their ideas to which our thinking owes it some of its productivity. So here he, you know, he's talking about society being the creation of ideologies that came before us. He's, he's not, he's not being a traditionalist, but he is acknowledging that in the context of praxeology and understanding action and the role of ideas, the role that ideas play in them, that we do have to understand sort of where man comes from. And I think that's an important point to make here. He's, in other words, he is, I think, tacking the blank slate that every generation born anew can start over and that everything we know about the past is just wrong and retrograde. Yeah, I agree with you. He's partly recoiling against that and it really is just an interesting way of thinking about it that saying that we inherit the thoughts of our ancestors through language primarily and that makes our thinking more productive. Like it, just like our ancestors could hand over shovels and our thinking is way more productive than if we just used our bare hands.  Like that, it saves us time at the very least if we can read previous thinkers and see how they hashed out debates and whatever so that making our thinking more productive from the get-go, that's really a very good example of the past. And I see this a lot on Fin Twitter, financial Twitter. I see a lot of economists and pseudo-economists saying, oh, everything we know about economics is wrong and we can just throw it out the window and it's all just as you mentioned earlier, Bob, it's all just cover for business interest and I think what society would not want to have the wisdom and knowledge handed down to it of the shovel? Think how much easier it is to move earth when we have this burn it all down mindset in economics when we look around us and as unhappy as we may be with politics or whatever it is, the material abundance around us in the west, I really distrust people who say, oh, this is all bunkum and we need a whole new economics. Right, and I think that's just underscoring why it's important to read a thinker like Mises because the difference between those people and Mises, among others, understands just how rare it was for this combination of conditions that needed to be the case for the industrial revolution to take off. Right, so he's familiar with history. I think a lot of people don't realize just how poor almost everybody except the ruling class was for most of human history until, you know, 1700s or so. And so that's, they just take it for granted and Mises knows that no, you can't take it for granted. It's a very specific relationship with the things championed by the classical liberals that allows this, what we look around and see and that yeah, and thinking is a part of that, the ideas that are involved underpinning that and yeah, if you're gonna throw those ideas because that's the thing, is those people don't realize how much, they don't realize the role of ideas whereas Mises does and so that's why he's saying it's really important to protect the integrity of some of these core ideas.  Well, it's true and hopefully we're not seeing a new reality here in America as markets are crashing and this virus seems to be affecting things that, you know, one of our big problems here is that we don't have much knowledge or understanding of real poverty and Mises, you know, straddling the 19th and 20th centuries is someone who understood what life was like back then and it was very, very different and a lot of things we take for granted today, even a middle-class guy like Mises couldn't take for granted then because they didn't exist. So, I'm going to go into the math water and this relates somewhat to chapter 10, the final chapter in this part of the book, Exchange within Society, where he's moving into how exchange works and he lays out the concept of autistic exchanges between social or interpersonal exchanges and autistic exchange is just, you know, think of a person alone somewhere who wakes up and decides to spend his time doing X instead of Y there's some opportunity cost involved there and involves him or her versus when you get into cooperative exchanges between people then that's that's really one of the foundations of society and what interests me Bob here is that he gets into this idea that there's sort of two kinds of ways that humans cooperate together two kinds of social cooperation one of them is contractual where there's a logical relationship is symmetrical between cooperating individuals and then there's a subordinate method of social cooperation where the the relations between people are more asymmetrical and this sounds a lot to me like Franz Oppenheimer's political versus economic means of dealing with each other it sounds like power versus market it sounds like voluntary versus involuntary it sounds like a lot of libertarian themes are bound up in his description here but he just uses different language right and so one of the specific terms he calls it hegemonic like there's a hegemon and so that's the thing that he's distinguishing from contractual and what I jogged my memory because I was looking over the study guide that I wrote for this thing on this section Jeff and I remembered that it so even though of course the just like the Oppenheimer distinction or like the Rothbardian distinction between stuff that's voluntary versus stuff that's you know would be considered aggression and that's a hugely important distinction to make I don't think that exactly corresponds to Mises talking about contractual versus hegemonic because he classifies the family as a hegemonic institution Mises does and so I don't think he would say that there was aggression so the distinction he says here is an hegemonic body a man neither gives nor receives anything that is definite he integrates himself into a system in which he has to render indefinite services and will receive what the director is willing to assign to him he is at the mercy of the director the director alone is free to choose so I think Mises point is that children it's not like they signed a contract at the beginning of the family and everybody knew what they were I mean the parents could just change their mind next week and say from now on now you gotta take the garbage out too can somebody inform my children as soon as possible that I am the hegemon because not working out you feel like you're the director who's free alone free to choose but that's so that's what he is getting at and yes obviously in a market economy the virtue of going from feudalism to capitalism is that these hegemonic bonds that were widespread you know got narrowed and mostly that was contractual well and it's very interesting on page 198 where he he makes a statement because there are a lot of illusions to democracy in this book there are a lot of illusions to social cooperation in various forms but you know he doesn't have any blinders on here he says the state as an apparatus of compulsion and coercion is by necessity a hegemonic organization so you know when we go through these endless debates about Mises's politics versus you know Rothbard's Ancapism or whatever I mean this is a very clear statement here where he understands what the state is regardless of of his own views of the state's role in a liberal world I mentioned this in the study I got too but just to underscore it yeah it's when we ask was Mises an anarchist or an anarcho-capitalist like Rothbard so if you have to give a quick answer the answer is no he wasn't because he in many places you know says why anarchism is wrong but when you read Mises's actual you know elaboration on that it's clear that what he means by anarchism is lawlessness or a lack of law enforcement let's say so in other words Mises says oh the reason the anarchists are wrong is because they think we can just trust everybody to fight for civilization but Mises thinks nope that's that's naive there really are anti-social individuals who left unchecked would destroy civilization so that's why we need the state to smash those people or put them in cages and so you know Rothbard I think would just say well why do you assume the state has to so yes that function is necessary some you know men with guns ultimately have to be prepared to stop bank robbers and rapists and serial killers organizes that so it's again like I say Mises nowhere in his writings that I've seen except arguably with the stuff of the secession if you push it down the individual would be an an kept by any stretch but technically I think his arguments it's just more he was assuming that the state has to provide those services and of course we have to think about the context in which he's writing which is just coming out of World War 2 here at all of its horrors there are and I'd love to be able to speak to him today some of the stuff he wrote in liberalism and national economy it would be interesting to see what he thought about that given the developments post World War 2 in the West and how at least from our perspective as liberals classical liberals a lot of things got worse and that the second half of the 20th century was not particularly liberal obviously he lived into the early 70s but you know some of his quotes about democracy as it's the mechanism for peaceful transfers and subsequent to him having written that in the West I'm talking about which would very much bring that into question you could look at Spain you could look at Kosovo the former Yugoslavia you know democracy doesn't always yield the happy results and the other thing we have to understand is that we're reading Mises as fans as people who want to learn and benefit from this great mind he wrote thousands and thousands and thousands of pages you're not going to agree with every word and you know that's just the way I think for someone born where and when he was the late 1800s and what is now Poland near Ukraine you know that anarchism had first of all distinctly left wing flavor to the term it conjured up a bomb thrower a society wrecker you know so a lot of these are semantic differences but I absolutely think he believed in a limited state and we should read him with that in mind but what strikes me Bob about chapter 10 here exchange within society at the very end of it he just has you know a page and a half a quick page and a half called Calculative Action and he makes this point that you know we can always we can always create ordinal values and preferences he's not getting into value theory here yet but he says we can always sort of order our preferences but the ability to apply arithmetic to our preferences the ability to use using math is actually you know a huge huge benefit to mankind and marks a turning point in human history and in human society the ability to calculate using arithmetic and it's just this sort of little throwaway page and a half but if we think about what it means in the broader context of like the socialist calculation debate etc it's really profound yeah I'm glad you honed in on that because that's when I was doing the study guy and then when I was writing choice so I like that was later I wrote the study guide first and then a few years later I did choice and had re-read human action you're right the more I was reading human action each time I was realizing calculation was a more central thing in Mises world and I know that like if Joe Salerno heard me say that or something he'd probably be like where you've been Murphy but it for whatever reason I'm basically saying this is the turning point in man's evolution or something and yes just so the listeners get what he means he's not talking about like using geometry to be able to build bridges even though of course he would agree yes it's good that Euclid did what he did and that helps even modern day engineers what Mises I think means is stuff like imagine if shepherds couldn't count their flocks or imagine or just this bookkeeping and you know how that's the underpinning of this enterprise is to be able to take because if it weren't for money prices and this you know Jeff goes into the socialist calculation if you didn't have money prices there would be no way to figure how do we use arithmetic to guide action in the world in anything remotely that we would call economic right that it would just be a stream but yeah you could if you were running a factory you could look at the quantity of oil you know measured in barrels that went in ways and so if we could measure the physical amounts of inputs and measure the physical amount of outputs but how would you know if one was more valuable than the other that's not chemistry that's not biology that's not physics it's a market valuation that's what you mean and so that's a very subtle thing and Mises is saying you know he's so that's where he's going now into the next part of the book is action with when calculation is available and that's really where he gets an economics proper just trying to show that dividing line and how big of a dividing line it is that you could have action without calculation like Robinson Crusoe just on an island you know isn't able to calculate the capital value of the stocks of coconuts and his fishnets but you know it's a simple enough thing where he can kind of guide his actions without that stuff but in a modern society you need to be able to use just basic arithmetic to help guide your action and the point being there's no way to get the arithmetic in there without using money Well it also goes to this point that's being made by a lot of Finn Twitter today that money is just this construct and we can use it however we want and governments can create it or repeal it and it doesn't matter all that much the MMTers argue that it's just something that we can produce when in effect although he doesn't get into it here what Mises is suggesting is that the the a risel of money and money calculation is actually a turning point in human history and it's something we ought not to sleep on Oh right exactly that for him I mean that's really the distinction between you know why can't socialism work it's because they don't have genuine market prices denominated in money that they can come up you know the central planner can announce exchange ratios the way you know longer somebody would recommend the mathematical socialist economists but Mises point those aren't the right numbers like that's arbitrary whereas there is something you know quote real let's call it or fundamental about or natural if you want to use that loaded term about money that's emerged through voluntary relations and that we have money prices as the market determines them that that's important that helps guide action and that you can't numbers that you generate through some other institutional mechanism don't do the same thing socially as market prices do when they arise from private property and the use of money well it's a short but fascinating section of the book ladies and gentlemen you're really going to enjoy this if you haven't got the book you haven't read it you've been thinking about it again we're going to exhort to you to do so find it at our store mises.org find Bob Murphy's book choice which is really an excellent exposition of some of the ideas in this book and I think it's it's the most important thing Bob's ever done it's a book that all of you need to own and read also his human action study guide if you're struggling if you want a little bit of help with this book we'll put that we'll put a link to that in the show as well and so we hope you're you're trying this book we hope that this series a podcast spurs your interest in it and gives you the motivation to go out there and read it because again when life and society seem to be getting weird I think that's the time for all of us to return to first principles and the kind of knowledge that Mises provides as opposed to the white noise you're probably reading and hearing out there in the social media sphere so all that said Bob Murphy it is fantastic to talk to you I want to thank you for your time today thanks for having me Jeff I was glad to participate the human action podcast is available on iTunes SoundCloud Stitcher Spotify Google Play and on Mises.org subscribe to get new episodes every week and find more content like this on Mises.org