Today in health care we're not managing health, we're managing illness. We wait on people get sick before they come into contact with the system and in the future we're going to have to manage health throughout the lifespan. Now how are we going to do this? Well the first thing we have to do is we have to consider a very proactive approach to health care where all the stakeholders are involved in the system that are going to be able to make the best decisions of the best time and essentially that means that we have to give them information and knowledge and giving health care practitioners, patients, all the other stakeholders knowledge means you're giving them power. The only way we can give them knowledge is by unlocking value from all the data that we have access to and in recent years we've had an unprecedented kind of expansion in our capacity to generate and access data, data from the molecule, data from the person, data from population, and data from the system and if we can harvest all of that data and use very smart analytics to unlock knowledge from it then we can build a new model for health care where we have early detection of disease, use of persuasive technologies that are based on hard data and good analytics of that data to try and engage people in management of their own health. That's what we're trying to do an insight in particularly in the personal sensing group. We do a lot of work where we take sensors and try and understand how we can use those sensors to unlock value from them and but essentially by means of trying to better understand and enhance human behavior and performance. We do a lot of work with patients with chronic disease, people who have sports injuries, people who are involved in sports who want to try and find a better way to, you know, have a better sporting performance as well as populations who are at risk of falling, etc.


Thanks. Well, normally I never speak from a prepared text. And this time, because it was a keynote, I prepared the text. And I'm going to try to stick to it. But what that means is I don't know how long I'm going to be speaking, which also means I don't know how much time you all have for questions, which is a lot more important than any speech I could give. But I'll try. I think I have about an hour. What I want to talk about today is essentially the theme of the next panel, the challenges of the 21st century. And for old guys like me, it's amazing how far into this century we already are. Time seems to fly the older you get. And this century began with a war that still hasn't ended. But the circumstances that surrounded the commencement of the war in Afghanistan are really quite different today. The government that we wanted to displace is long gone. But its key support is far from destroyed. The Taliban continues to operate both inside Afghanistan and from safe havens in Pakistan's tribal areas. It's been joined by other groups, like the Haqqani network. Al Qaeda, whose act of mass destruction triggered our war in Afghanistan, is really now a minor player in that country. But its offshoots are spread far and wide, from Yemen to Syria, from the Horn of Africa to the Sahel and Mali, something that we didn't anticipate on 9-11. Our most crucial ally in those early days when I was serving in the Pentagon was Pakistan. It's now become a major question mark for American policymakers. Is it still part of the solution? Or with its own homegrown Taliban and its on and off support for the insurgency in Afghanistan? Is it now part of our foreign policy problem in Central Asia? Russia sprang to the support of the United States in the days that followed 9-11. Today, it's re-emerging as a major rival to American influence in the Middle East. Having re-established itself as a critical actor in the Syrian Civil War, just pick up today's newspaper and you'll see how the summit between our president and Mr. Putin has not gone exactly swimmingly. Like Russia, Iran was prepared to cooperate with us in the removal of the Taliban and the reconstruction of Afghanistan. And in fact, in Russia's case, Moscow agreed after some hard negotiations but still agreed to forgive all $8 billion of Afghan debt. We chose not to work with Tehran. 12 years later, Iran has now crossed a whole bunch of red lines that were set either by us or by Israel or by the West generally. And it may soon be close to the threshold of acquiring nuclear weapons capability that threatens to destabilize the entire Middle East. China, which we faced down during the Taiwan crisis, Taiwan Strait Crisis of 1996 and which barely avoided a clash with us during the April 2001 Hainan Island EP-3 incident, pretty much stood on the sidelines in the aftermath of 9-11. Today, flexing its military muscles and supportive claims in the East and South China Seas, deploying its navy to support anti-piracy operations and learning quite a bit from those operations, it's continued to a massive force whose anti-access area denial strategy poses a far greater challenge to the United States than ever before. When the United States attacked Afghanistan, the Arab world had seen little change in the previous quarter century. The traditional monarchies continued to amass money to buy arms that they didn't really use, while the secular kingdoms continued to be ruled by the same dictatorial kleptocratic families, many of which had seized power in the 1960s and 1970s. A dozen years later, the Arab Spring had removed the leaders of Tunisia, Egypt, and Yemen. The United States had fought an eight-year war in Iraq. They resulted in the replacement of the Sunni strongman, Saddam Hussein, with a Shia strongman named Nuri al-Maliki. And NATO, backed by the United States, had toppled Libya's Muammar Qaddafi, who had previously reached an agreement with us and with the West to dismantle his nuclear program. In the past decade, Turkey's been the most stable Muslim state in the Middle East, as of last week. That's no longer the case. In fact, it's ironic in a way that while Iran held elections after which people literally danced in the street, Turkey's streets are bloodied by clashes between liberal protesters and pro-government police, as well as independent thugs. When the Twin Towers were hit in September 2001, the United States appeared to be at the apogee of its power, economically as well as militarily. The previous year, the federal budget had been in surplus. The national debt was being reduced. The stock market was soaring and the dot-com bubble had only just begun to burst. Today, we continue to struggle toward recovery after the Great Recession of 2007-2008. It's only begun to bring what for a time were runaway budget deficits under some degree of control. But that control has come with a steep price tag, the sequester that no one believed would come to pass and now promises to remain part of the budgetary landscape for perhaps another year, if not longer. And full disclosure, I was absolutely convinced that there would be no sequester. Now, hopefully, I'll be wrong again. Even without a sequester, the Defense Department anticipates a fourth round of budget cuts. And these are in addition to the Gates cuts to 2011 Budget Reduction Act and the sequester itself. So any further cuts are a fourth round. As a result, and with the exception of the personnel accounts and defense health accounts, which have been protected from any reductions, operations, procurement and research and development have all suffered and are likely to continue to do so. Now, you may ask me, well, wait a minute. All that we know officially is that the Milpers accounts are protected. That's true, but defense health is part of O&M, operations and maintenance. And nobody's touching that. And if you don't touch that, you've got to cut other operations and maintenance expenditures, which means exercises, training, and all the kinds of things we do to be a credible ally and a credible threat to those who aren't our friends. And in fact, America's credibility is an ally. Tarnished not only by the cold shoulder it turned toward erstwhile allies like Egypt's Hosni Mubarak and Pakistan's Pervez Mesharaf, but also by its Iraqi adventure, stands to be further undermined if it continues to cut back on operations as a result of the sequester or indeed any further cuts. Moreover, our country is increasingly looking inward. Marine Americans of both parties have taken President Obama at his word that nation building begins at home. Likewise, the opposition to increases in defense and foreign assistance spending has become increasingly bipartisan. The only constant since the turn of the century has been North Korea. The latest Kim, young Kim Jong-un, is no different from grandpa or papa. North Korea remains as isolated from the world community as ever and as hostile to the West and the United States in particular as it's been for more than a half century. That kind of consistency we could do without. So let's take a step back in light of this and review our predictive capabilities. Few of any American analysts predicted that the United States would go to war in Afghanistan. Few are still anticipated that the Afghan war would drag on to become America's longest or that the simultaneous war in Iraq, once hailed as a slam dunk, would consume the better part of a decade. Then again, with the possible exception of the Iraq war, which was initiated by the United States, few of any of America's wars were foreseen well before they began. Clearly, in a mere dozen years, the world has fundamentally changed. The threats to stability have changed. As I mentioned, only North Korea, though it's now under new management as it were, has retained the hostile posture that was formulated by Kim Il-sung in the late 1940s. Predictions about what the world might look like a dozen year hence, much less about the next war in which the United States might find itself, are therefore exceedingly hazardous and likely to be wrong. A dozen years before the Berlin Wall fell, no one predicted that it would or that the Soviet Union would collapse in its wake. And in the late 1980s, as I mentioned, no one had heard of the Taliban while Saddam Hussein had been actually an ally of ours in the Iran-Iraq war. No one anticipated that the so-called Arab Spring would begin when a small-time vendor would emulate himself in Tunisia, that several leaders would fall in the wake of his suicide, and that Syria would erupt in civil war. Nevertheless, and generally speaking, military planners and analysts, I might add, have tended to straight-line whatever might be the current state of affairs in which they have worked to identify future potential contingencies. Now this might not be exactly the same thing as what's called fighting the last war, because, for example, for 30 years, American military planners deliberately downplayed any lessons or requirements derived from the Vietnam War, which was the last major war prior to Operation Desert Storm. Nevertheless, straight-lining is close enough. Straight-lining means the presumption of a fundamentally stable world condition, however good or bad it might be, and the anticipation of continued reliance on the same strategies, operational approaches, tactics and weapon systems that are currently in vogue. Today that means anticipating continuing straightened economic circumstances for the United States and its major allies, the growing economic and political power of the bricks, the continued resurgence of fundamentalist Islam, and in response, the increasing reliance on cyber, unmanned vehicles and special operations forces as the primary focus of American combat operations for the foreseeable future. Now certainly other capabilities, notably maritime air and space, have not been ruled out, but these other capabilities have been far more vulnerable to budget-driven program adjustments, which is a nice way of saying cuts. Indeed, it increasingly appears as if budgets are the driving factors behind strategy and the anticipation of threats, rather than a limiting factor, once threats and the basic strategy to cope with them have been formulated. The Department of Defense is currently on the verge of completing the strategic choices and management review, and of course, being the Pentagon, there's an acronym called SCIMR, SCMR. This review represents the third strategic review in four years, beginning with the quadrennial defense review of 2010, the review that led to the so-called pivot to Asia the following year, and now the strategic choices and management review, the SCMR, which being budget-driven will invariably rob the pivot of much of its credibility. Shortly, the Department will be undertaking yet another QDR, with a result that will have had four strategy reviews and changes in five years. In effect, budgetary fluctuations are driving strategic fluctuations. So many changes in strategy means there isn't any strategy, at least none that allies, adversaries, and neutrals can understand. And Americans too are having a hard time knowing exactly what America views as its international role over the next several decades. States and non-state actors who might have malign intentions toward the United States can only take comfort from such strategic confusion, to the extent that the state of America's defense spending influences their behavior at all, and it's not clear that they will cut back on their designs just because we're cutting back on our budgets. It is only to encourage them to pursue their objectives more aggressively. At the same time, America's inability to predict future contingencies muddles its strategic posture even more. Is China an adversary or merely a rival? 100 years ago, Britain was still smarting from its costly victory over the Boers, a war that went far longer than they anticipated against an opponent that they thought was a slam dunk. And had Germany, Britain did, had Germany as both its major trading partner, sound familiar, and its most serious military competitor as well. It was not evident that the two countries would go to war, until, of course, they did the following year. But history doesn't repeat itself, and there is no evidence that points to an American-Chinese confrontation a year from now. But the absence of a credible and consistent strategy that would help minimize the likelihood of war is, to put it mildly, not very helpful. The same applies to Iran and North Korea, both of which may be emboldened by America's seeming lack of a strategic compass. In particular, even if the United States is pivot to Asia, avoids the budget acts of the SCMR, and the QDR that will follow it, America will be hard-pressed simultaneously to protect its posture in that region and in the Middle East at the same time. How Iran's supreme leader, who, notwithstanding a new seemingly more moderate president named Hassan Rouhani, how that leader continues to control national security policy will, who continues to control national security policy, will interpret a downsizing of America's Middle Eastern presence is a major cause of concern. To the extent that Tehran views America's interest in the region on the wane, it will discount Washington's threats of possible military action in the event that Iran enriches uranium to the point that is on the verge of nuclear weapons production. That, in turn, could trigger the military response that virtually the entire American national security community, myself included, wishes to avoid. Whether the long-term ramifications of any such response would only be negative, be they worldwide Muslim hostility to the United States, Iran acquiring the bomb some years later, or the spread of nuclear weapons elsewhere in the region, or any combination of the three is simply unknowable. More fundamentally, can we be so sure that the international environment will remain the same in 10, 20, or 30 years' time? Already, we're seeing several of the bricks losing their economic steam. India's growth rate will be closer to 5% rather than the 9% or so percent that's been over the past few years. It's poor infrastructure, illiteracy, corruption, and bureaucratic mismanagement promises to continue to bring downward pressure on its growth. Brazil, with its continuing heavy reliance on the public sector, I believe it's about 40% of the working population is employed by the state. Likewise, has begun to show signs of a slowing growth rate, despite its ongoing exploration and initial exploitation of vests energy reserves. South Africa, another of the bricks, has yet to realize its vast potential natural wealth. And Russia, the R in the bricks, suffers from corruption, a lack of the rule of law, over reliance on the oil and gas sectors, and a frighteningly low life expectancy rate, especially for its males. Moreover, it's increasing authoritarianism and willingness to pressure smaller states, just ask the Georgians, has once again prompted fear in Europe that at some point the current peaceful era may come to an end. Finally, that most powerful of the bricks, China, has its own problems. Inflation is rising, as are wages, both of which are leading to a decline in the growth of foreign investment. Corruption and the resilience of state-owned enterprises are distorting economic growth. There's a growing prosperity gap between the countries north and south, while minorities, whether in Tibet or in Xinjiang, remain restive. Can a breakup of China, so recurrent in its history, happen yet again? Or would its leaders, fearing they are losing control over their increasingly assertive population, resort to a foreign adventure as a nationalistic ploy? Of course we don't know, but we need to hedge against either possibility. And China's far from the only state that could break up. We're witnessing that possibility in Syria today and could see it in Iraq tomorrow, where the Kurds, increasingly self-reliant, have virtually lost interest in Baghdad's unitary regime. Iran is also an empire, with Kurds, Balux, and Azeris, all having multiple allegiances. Mike the Molas, fearing for their own survival, finally crossed the nuclear rubicon. And if so, what will the West really do about it? Then there's Pakistan, nuclear armed, radicalized, with a powerful military and a troublesome Taliban. Can Prime Minister Nawaz Sharif, already once deposed by the military, bring some order to his chaotic country? Can a war with India continue to be avoided? Can in America, with less international credibility, resolve another South Asian crisis as it did twice before when fighting and cargo threatened to explode into full-scale war? We may be surprised by other developments as well. What will happen to Turkey's growth and power if the rioting that we're witnessing today leads to Erdogan's downfall? What will happen to Jordan and its beleaguered King Abdullah if the flood of Syrian refugees continues unabated? Will Saudi Arabia remain intact once its own King Abdullah, or perhaps his successor, departs from the scene? Will more African countries break apart as Sudan has done? And if so, what are the implications for the further growth of Islamic extremism on that continent? Finally, and in that regard, will Islamic extremism continue to roil the Middle East, Africa, Southeast Asia, and other parts of the world? Or will it subside, as it did, for example, during the 8th and 13th centuries? One could go on and on about scenarios that might seem far-fetched today, but when seen in the light of even the past 30 years, are far from unrealistic. The key word in addressing these possibilities, and that, of course, is all they are, is a word that has just been used, hedge. The United States certainly has the wherewithal to hedge, and will increasingly do so in the next few years as it begins to exploit more of its energy resources that hydraulic fracking and related technologies are making available to it. Hedging doesn't mean jettisoning the capabilities it has today, be they military, diplomatic, or economic. It means adding to them in a judicious manner. In the military sphere, it means expanding, not contracting, our maritime, air, space, cyber, and missile defense forces. It means preventing the shrinkage of our land forces. It means retaining our advanced special operations and unmanned system capabilities. It means, in a word, preventing our current budgetary woes from undermining the forced posture that will be ours for decades to come. It also means beefing up our diplomatic resources, be they consulates in states where they're sorely lacking or military assistance for those states whose interests converge with ours, but as resources are wanting. And it means rethinking our economic assistance programs and our use of our economic clout as our oil and gas reserves are increasingly exploited while our intellectual property continues to expand at record levels. There are too many people, including some in our own government, who would like our country to offload many of its long-held international responsibilities and in turn, and turn in on itself. They see the years when America established its current international economic system as a bygone era, its leadership of alliances as a vestige of the past, its military might as an anachronism. They're not realists. For realists are people who want America to employ its force with care and foresight to recognize that America's uniqueness means that its political culture cannot be summarily transferred to other states via regime change. Instead, these kinds of people are pessimists at best and defeatists at worst. They see American leadership as something that is no longer attainable. And I might say they're entitled to their views. It's just up to the rest of us to ensure that those views are never realized. Thank you. Well, there's time for questions, and I'll be happy to take any that you throw at me. It doesn't mean I'll answer them, but I'll take them. I've silenced you all. No such luck, please. Doctor, that's probably the... My name is John Richmond. I'm a foundation member. It's probably the gloomiest report I've ever heard on world affairs. I don't know if you want to give that to the United Nations someday. You really didn't talk about America's innovation, the fact that we have survived all these crises through the centuries. And I think innovation is the thing that America will prevail. So perhaps you couldn't talk about American innovation. Well, yeah, I mean, I did mention, first of all, oil and gas, and I said technological innovation, and my real concern isn't that we can't prevail. My real concern is that we turn in on ourselves. 3D printing, good example of the kind of thing that we clearly have a lead on. We've had a lead on cyber for quite some time. The issue is not either our physical or intellectual resources. The issue is our will. That's my concern. And am I pessimistic? Well, I'm pessimistic to the extent that we've become complacent about the sequester. That if you recall, the history of the sequester was that people in the administration concluded that there was no way Congress would live with a sequester because defense would be cut. And the Republicans could never stand for it. Well, guess what? There was no deal. The Republicans stood for it. Not all Republicans today support getting rid of the sequester to protect defense. Yes, the House Armed Services Committee and on the Senate side, the minority on the Senate Armed Services Committee and the defense appropriators, yeah, they're all for protecting defense. But not all Republicans are. Tea party certainly isn't. And so you've got, and that's why I said this is a bipartisan thing. You can't blame one party or another. We seem to have, we seem to be going through this bipartisan ostrich-like approach to international affairs. That's what worries me. It won't take very much to turn it around, but it needs to be turned around. Does that make me pessimistic? I'm not pessimistic about the United States. I'm just concerned how long it'll be before we turn it around. My goodness, okay, yeah. My name is Betsy Morris. I'm from our- Speak up a little bit, please. I'm from, my name is Betsy Morris. I'm from the Norfolk, Virginia distance campus in the government accountability office. So my question is a little bit more detailed. And by the way, you are a rockstar to me because in my early years at the GAO, I read many of your memos in policy, so it's nice to put a name with a face. Could you talk a little bit about the planning process and the QDR? And I fear, given what you said and the discussion about innovation, will we be here in two years talking, saying that the QDR didn't do what it needed to do? We don't really have a strategy forward and the Defense Department is budgeting based on cuts. Well, some people say that we should really get rid of the QDR, but the QDR is simply a lineal descendant of the defense guidance, the defense planning guidance. It's had different names over the years, but there's always been a document that the Department of Defense produces that sort of outlines its general goals and its immediate objectives and then the effort is to align those objectives to budgets. And what the QDR normally does is just that. But now you've got this skimmer which is doing exactly the opposite. It's not the first time that the Department has adjusted strategy to budgetary realities. No question about that, but I think this may be the first time it's been explicit about it. And by becoming explicit about the fact that budgets drive strategy, you run into two problems. The first is you no longer have true planning documents. So I don't know what the QDR will look like. Once, you know, if this mentality is absorbed by the Department, then the QDR will simply be another budget-driven document. The second problem is if you allow budgets to drive your strategy, you're probably gonna overlook things because it's so much easier, basically budgets are marginal changes each year. That's what they consist of. Well, sometimes you can't just make marginal changes to your strategy. You've got to look at the world around you. Part of what I was just saying is the possibilities for completely different directions leading us to different paths of possible warfare or whatever. Those kinds of non-linear developments tend to get lost when you do budgetary types of predictions. And that's my concern about straightlining. It's a natural tendency. Where I am today is where I'll likely be tomorrow. And therefore what I do for today is what I'm likely to do for tomorrow. You cannot straight-line world developments. It never happens that way.   I mean, how can that possibly affect Hassani Mubarak? Much less Bashar Assad. That's where budgetarily-driven planning documents really get you into trouble, I think. Yes, sir. Good afternoon, Professor. Lee Cordner, NCC 93 from Australia. If I understand your thesis correctly, the greatest challenge to the United States in the 21st century is the United States, right? The internal challenge of your own bureaucracy and all the rest of it. But I just wondered if you could perhaps broaden the canvas and talk a little about non-traditional threats to global security, regional security, that sort of thing. In other words, you alluded a number of times to non-straightlining, the need to think much more broadly and innovatively. So from your perspective, what are some of those other key issues that need to be considered? And I guess the second part is, how do you see this inwardly-looking US administration dealing with them? Thank you. Well, right now, of course, the most obvious non-state threat is Islamic extremism. It's kind of akin, by the way, to anarchism in the early part of the previous century. They actually bumped off one of our presidents, the anarchists did, crown princes in Europe, parliaments. I mean, actually, if you look at the damage they did, it was in many ways worse than what the Islamic extremists have done today. There may be other kinds of non-state actors that we haven't considered. The real issue becomes, how do you deal with them because the laws of war are different? And it's not just a matter of whether you try them in a civil or a military court. It's, how do you fight them? You don't have a forward edge of battle area like we did in the Cold War. To me, the issue is twofold. One, as you say, and I said it, the challenge is the United States, if it looks inward, will not serve as the great deterrent or maybe the great enforcer in appropriate moments, not always, when these kinds of threats arise. But the other is something worse. I don't, you know, many people say, well, if the United States doesn't do this, our allies will do it. You know, you Australians are a good example of taking care of the Solomon Islands and some other places where we've almost contracted out to you to keep stability in the region it's not for us that you're doing it, it's for yourselves. And we trust you because you're amongst our most reliable allies. You fought alongside us for a century.  The problem is that I don't see any of our allies stepping up their defense spending in anticipation of our looking inward. I don't see anybody saying, well, we have to make up for the fact that those Americans now have a sequester. Quite the contrary. And even your country. You had some really great plans a few years ago. I don't know how many of those are getting realized now.  So that means more change. In which way will that go? Look at the Royal Navy. You know, the shrinking Royal Navy, which the only competition it has with the British Army, who's shrinking faster. Look at Libya, where the British and the French took the lead and ran out of gas awful quickly. And it's still not publicly known just to what extent the United States really helped out there. And there's some good reasons for that. But it's pretty clear that that help was needed. Well, what happens if the United States keeps turning further and further inward? If our allies don't pick up the slack, as they're not likely to, and we do straight line where we are today, and as I say, I hope we don't, then there's a serious problem. And the ultimate outcome of that is all we're doing is encouraging the bad guys to throw their weight around even more. Whether it's in the East China Sea or the South China Sea or the Middle East or wherever. That's my concern. Yeah, Karen. Professor Zachime, I believe you were one of the think tank scholars that signed a letter recently talking about defense spending and decreasing the rate of growth in defense spending. But you ended your talk today saying we've got to be robust across all domains from cyber to everything else and the services have to be strong. How do you kind of make sense of those two seemingly very different perspectives? Well, they're not entirely different. I think we spend a lot of money on things we shouldn't be spending our money on. And I'll get to those momentarily, but I don't believe that even if you found all the possible efficiencies that you could find in the defense budget, you would be able to avoid not having some kind of break, B-R-A-K-E, on these ongoing cuts. Now, how could you save money? Well, we know some of the easy ones that are easy to talk about and hard to implement like base realignment and closure. I wouldn't bet the family farm on BRAC. There are others that maybe because of this financial budgetary crisis might happen. For example, better scrutiny of our wartime contracting. I was on the wartime contracting commission. We identified, and we came to, we finished work in September of 2011, and we found that beginning with the war in Afghanistan and through that period, the end of that fiscal year, out of $192 billion spent, $60 billion were wasted. That's a lot of money. And so if you have more scrutiny over subcontractors, you have an internal audit capability, which the Department of Defense doesn't have, DCAA, the contract audit agencies, a very different kind of animal. If you have offices in the Defense Department, both the joint staff and the Office of Secretary of Defense, where you have someone at the three-star or the Assistant Secretary level, whose job it is to watch these things, you might realize savings. It's not clear to me, although I'm sure if some folks in uniform will be very upset, why we need commissaries? Why can't, that's one I would contract out. I guarantee you, Walmart can do the job. They seem to do it for everybody else. Still another area. We tend to lump contractors as one big group.  There are contractors that build things. There are contractors that think about things and analyze things. And then there are contractors that basically retire out of their jobs, flip their badge and go back to the same job. And it's those contractors that I think we can cut. And I know that many civil servants belly ache over that and say, my God, I have all this work. But the truth is we've developed a culture where if you've got somebody that will do the work for you, day or night, weekend, Christmas, New Year's, whatever, you're gonna offload that work to that person. It's a natural reaction. I think if that person disappeared, the civil servants would be taking on more because that would also be a natural reaction. I think we can cut a lot of what are colloquially termed butts and seats contractors and save a lot of money in doing so. I also think we can cut civil servants, but not through a meat ax. I mean, apparently we've added 100,000, excuse me, that was the contract, we've added, yes, 100,000 civil servants since 2000 in the Defense Department. Now, you don't wanna cut out the young people.  You can come in with your master's degree that you got and never take another course for the next 40 years while you're serving in the Defense Department, which kind of means you'll be a little bit behind on technological development. Well, you don't wanna cut the person who's just come out of grad school and is at the cutting edge of this stuff. So what do you do?  My experience is that once a person hits about 45, that's what all they're thinking about. Okay, when am I gonna get my pension and what am I gonna do with it? So you incentivize them to get out. You won't have trouble from the unions. You won't have the last in, first out kind of syndrome. You'll keep your senior executives who have the historical memory and you'll save a ton of money. So that's just a number of things. There are others that, hey, why shouldn't there be a moratorium on people leaving the Pentagon that you can't work for a butts and seats contractor for three years? That'll already change things big time. So there are things that can be done. Defense health clearly is another one. But the truth of the matter is that all of this is kind of irrelevant in the big fight we have, which is over taxes and entitlements. And defense has been caught by these two big elephants. Defense is collateral damage. That's my biggest concern. If we were able to solve the debate over raising taxes on the one hand and lowering entitlements on the other, then I don't think we would be having this kind of a discussion about how much we can spend on defense. And remember too, we are at historically low interest rates. Once those rates start moving up to historic levels north of 4%, you effectively have accounted in your debt servicing for virtually at least half the Pentagon's budget, if not more. So there's lots of things that can be done here. Lots of ways to slice this cat and still get the kind of capability I was talking about. Yes, sir. Sir, Commander Brook DeWalt, Navy Public Affairs. You touched on this briefly at the end of your last question. But we seem to spend so much of our time focusing on the military side, three to 5% GDP, as what can we do with our portion of the problem? But we don't seem to have a lot of discussion about how that little bubble is in context to the bigger picture, the other 95%. Can you address any of that? And maybe why we're not talking about that? Well, why we're not talking about it is politics, but I'll address the first half of your question. No, seriously. This is a hot political issue. And my biggest worry is that everybody now is sort of comfortable with the sequester. So you just bury the issue and let the sequester do its damage and whatever. And that's why I think defense is collateral damage. Look, the law, the 2011 law, essentially presupposed like Graham Rudman did in the 80s, that defense accounts for 50% of the problem, which is true if you look at all controlled expenditures. Once you look at entitlements as well, not so much social security, by the way, but Medicare and Medicaid, defense is 20% of the problem. That's a big, big, big difference. And so once you're talking about 20% of the problem, you've paid for it. You've paid for it with the Gates cuts, you've paid for it with the budget control cuts, and you've certainly paid for it with the sequester now. But that's not how we look at it. And as I say, defense is not really at the heart of this. It was only at the heart of the issue when it was presupposed that the Republicans would put it at the heart of the issue. Once they didn't do that, it's no longer, you don't see debates about defense in the context of what needs to be done, in the context of a grand agreement about what to do about the debt. And there's something else as well. Our deficits are going down. So everybody's starting to feel complacent about it. Why are they going down? To a large extent because of the sequester. Now do we wanna wait until we impose some kind of taxes on the oil and gas that we're gonna find in the Dakotas, and that'll help our budget even more? Well, that's not gonna come all at one time. And any decisions that we make this year, next year, the year after, about what our forces, what kinds of forces we buy, and what kinds of programs we research and develop, they're gonna have an impact for 30 guys in the Navy, 50 years. I mean, you know, we're talking about really long term.  I mean, 50 years ago was what? 1963, Kennedy was shot. I mean, look, my son who's now in his mid-30s, when he was in high school, one time he said to me, Dad, did you ever hear of Robert McNamara? So I said, yeah, I know Bob McNamara. He goes, you know Bob, Robert McNamara? I said, yeah, why? He goes, but Dad, he's in my history book. 50 years, 50 years from now, we're gonna be in the history book, but the weapons that we're buying today will still be there. And that's why it is exceedingly dangerous to say, well, we'll wait until we get this whole tax and spend and entitlement thing right before we start worrying about what to do about defense. And it's even more dangerous because we cannot predict that world, which is what I tried to outline with some of the things I said. I hope I don't get nasty telegrams from Beijing.  That's not the point. The point is, we just don't know, and we have to hedge, and right now we're throwing that hedge out the window in my view. Yes, sir. What would you recommend as a way ahead to create expectation management? No, it's a fair question. So what should we do? I think, given that we don't have the standard bad guy, I wouldn't even call China the standard bad guy the way the Soviet Union was. Well, what we do need to do is start with what interests do we really wanna defend around the world? Okay, we can't do it all, but what would we like to do? And that was the old way of doing things. And then given what we would like to do, how do we think we might get there? And that would include things that we don't normally think about. I think one of the more important things that Andy Marshall has done for the department over the practically a century given Andy's age is thinking about things that folks in their daily inbox, outbox kind of work just don't. That needs to be brought in at the outset. And then we need to see, okay, given the budgetary realities, can we in some way account for these other things that might happen? Can we, do we buy systems that are more flexible because we wanna account for those things? For instance, one of the greatest debates that's gone on, oh, at least in Centoven and Smith, McNamara years, is what to do about aircraft carriers? Classic argument, if you run aircraft carriers for any particular mission, they usually don't come out cost effective. And that's PA&E or CAPE or whatever you call them, that's what they've always said, and they're right. But if you want something that does a reasonably good job, regardless of mission, you can't beat an aircraft carrier for that. So that puts a tremendous emphasis on flexibility, but flexibility is the kind of thing that seems to get lost in the wash when you start with budget driven exercises. If you start with your sense of a potential threat, you move to strategy so that you now know what your ends are, and then you start thinking about your means, you're gonna wind up with probably a more flexible force. That's what I would recommend. Well, I guess I really have silenced you all. Thank you very much.


All right, ladies and gentlemen, in this lecture we're going to get to the second of what I see as the two crucial institutions of a free economy and a free society, and that is freedom of exchange. And we'll contrast it with, at least ostensibly well-meaning, restriction of exchange, restriction of voluntary exchange by government. And again, the argument I'm making, I want you to consider, is that the incentives for people to pay careful attention to the well-being of others are much stronger where we have freedom of exchange than where the government can interfere with voluntary exchange. And I'll get at this initially with a story. Oh, the story comes up in a moment, first of all, just to frame it a little bit. How many of you believe in freedom of contract? That is, how many of you believe that competent adults should be free to make whatever contracts they wish with others? And you, like most of my audiences, say, raise your hand, say, yes, you do, when you ask that question in the abstract. But I like to point out to my audiences that in fact there are many interferences with contract that they believe in very much. For example, do we, do you believe in the freedom of contract to work at whatever wages and hours one wishes? Many will say, many will say no, they believe we should have minimum wages, we should have maximum hours laws. How about workplace safety rules? Should people be allowed to make contracts to work in unsafe factories? Many would say no. How about the selling of stocks and bonds and derivatives? Should people be free to handle those contracts that they want without full disclosure, such as the Securities and Exchange Commission requires? How about the practice of medicine? Should people be free to practice, to contract with whomever they wish to set their broken arm or prescribe medicines for them? Do we believe that lawyers should be unregulated, I shouldn't say unregulated. That lawyers should be unregulated by government, that people should be free to hire whomever they wish to write up a will or a contract for them. Should we be free to hire whomever we want to do electricians work? Or, as I think many people believe, should that freedom of exchange be limited so that only competent electricians are allowed to practice and so on? These are the kinds of questions that I'd like you to consider. And I want you to consider the idea that in all these cases, because of the incentives that are in play, we're going to be better off with allowing freedom of voluntary association, freedom of voluntary exchange. Because the incentives there, even though there will be problems because incompetence will practice and people will distort the truth for one another, even despite that, the incentives in freedom of exchange and that institution of freedom of exchange are very strong for people to pay attention to others' well-being. And by contrast, when we allow governmental interference with voluntary exchange, even for good reasons, that interference tends to be abused. People tend to take advantage of the governmental power to interfere and use it to their own advantage at others' expense so that on the whole we'd be better off allowing full freedom of exchange between competent adults. Alright, and I'd like to get at that with a story that illustrates some of the problems of interference with freedom of exchange, and this comes from the area of hairdresser licensing. And this is the area that I choose because just by chance I was told a really interesting story by an eighth grader about hairdresser licensing, which I then wrote up in one of my first articles published in a national publication. Here's the situation. I was new to this philosophy and this economics. I'd been invited to speak to an economics class at a local school, and while I was there, the teacher said, would you want to speak to some other classes? I said, sure. I was in an eighth grade history class. This was at an all-girls school in suburban Baltimore. And I was describing some of what my professor Walter Williams says in his wonderful book, The State Against Blacks, about how occupational licensing laws get rigged against competitors, especially competitors who don't have the educational advantages. And as I was describing this, a very thoughtful looking black girl in the second row with a little smile playing about her face, raised her hand, and she said, something like that happened to me. I said, well, tell me what was it? She said, well, one of the five-year-olds in my community in my neighborhood was going to have a birthday party, and all the little girls wanted to get their hair done for the birthday party, and some of them wanted their hair done in gold braid, and I'm good at that, so I agreed to do it for them. Now, as I understand it, gold braid was popular at the time. This is the 80s, I think. It was braids close to the scalp and gold thread woven amongst the braids in decorative patterns. And she was good at it. And so she charged $5 a pop, keep that number in mind.  She said she had an outfit she wanted to buy, and so she wanted to make some extra money, and she agreed to do it. So Charissa was happy because she had the income and the little girls were happy because they had their hair done, and it seemed for a while that everyone was happy until one of these five-year-olds before the party was stopped by a woman in the community who said, who did your hair for you? Charissa said the little girl's name was Devin, so Devin says, Rissy did it. And that night, Rissy's mother, Charissa's mother, got a phone call from a neighbor saying, I understand that Charissa is doing the little girl's hair for pay. She should realize that she's not a licensed hairdresser, and so what she's doing is illegal. And if she keeps it up, she's going to get in trouble. So I looked at Charissa. I said, well, what did you do? And she said, basically, what do you think I did? My mother said, we can't have this. We're not going to get in trouble. You cancel the other appointments. She said, and that was the end of it.  Now, what is the ostensible purpose of hairdresser licensing? Officially, what's supposed to be the purpose of hairdresser licensing? Safety. Public health. To protect the public health and safety, exactly. Fewer scissor deaths. Pardon me? Fewer scissor deaths.  Yes, that's the ostensible official purpose. Based on Charissa's story, what is the actual purpose of hairdresser licensing? To form a cartel. To form a cartel? To raise the income of the hairdressers. To raise the income of which hairdressers? The ones who are licensed. The established licensed hairdressers. It's to cut out competition. That little story indicates the danger of even well-meaning government intervention for the best purposes. That intervention can get taken hold of by special interest groups and used in ways that are not for the public interest, but against the public interest. A little bit more detail on this. I was fascinated by what Charissa had said, so I did some research. I went down to the Baltimore Board of Cosmetology and asked for a copy of the test, because I wanted to see if what Walter Williams said was true, that the test was rigged against poorly educated people, because the practical part of the test they could get through, but they couldn't get through the written part, because the written part was too difficult. Well, of course, they looked at me like I was nuts.  But I said, well, could I see the regulations? And they said, yes, sir, and gave me a 56-page booklet of regulations about who could do hair under what conditions in Maryland. And in that 56-page booklet, there were four pages that had anything to do with health and safety regulation, as far as I could see. And that was in two virtually identical passages, one for the beauty salons and one for the beauty schools. The provisions in there, and I was not cherry picking here, the provisions in there meant to protect the public health and safety that I could see where as follows. I'm quoting here. Salon employees must wear clean clothes, wash their hands, and keep their, I'm quoting now, keep their curling irons, quote, free from rust, grease, and dirt, close quote. I read that, and I thought, is it necessary to write that down that curling irons should be free from rust, grease, and dirt? Should the public thank the regulators for putting that in there, because otherwise they'd be going to beauty salons with rusty, greasy, dirty curling irons? It didn't really seem plausible to me. Here's another one quoting further. A minimum of 12 combs and four brushes shall be available for each on-premises employee licensed to perform beauty culture. Implement, this is my favorite, listen carefully. Implements to be used for pressing and thermal waving shall be adequate in quantity and variety to perform the complete service. Implements to be used for pressing and thermal waving shall be adequate in quantity and variety to perform the complete service. What I make of that is that you need to have enough to do the whole head, so that women don't walk out of the salon with only half of their hair done. Doesn't seem to be a very necessary requirement to me. And guys, I'm not cherry picking. These are all the ones that had fundamentally to do with health and safety. So what was in the other 52 pages of that booklet? If it wasn't about health and safety, what was it about? Certain skills the hairdresser had to have, no. Not skills. Qualifications. Qualifications. It was about who was allowed to practice. And there were various limitations such as limitations on age and that sort of thing here, just a couple of them. There was a 17-year age limit. No one was allowed to take the examination until having already put in 1,500 hours of training. We're serving as an apprentice in an approved beauty shop for at least two years, full time. All these little qualifications, which appear to be right along the lines of what the economists who have studied this have said, these regulations get captured by the regulated group and used to exclude competition. You're with me? Okay. That's the term you want to remember is the capture theory of regulation. The idea that the experts in a particular field are the ones that the legislatures go to in order to pass the proper regulations. After all, what are the right regulations for electricians or for hairdressers or for plumbers and so on? Who's going to know why the electricians, the hairdressers and the plumbers? And so in the drafting of the legislation, they influence them in their favor to cut out the competition. Is it a little bit facile for me to suggest that we shouldn't have hairdresser regulation? I want you to consider that for a moment. Because in the absence of government regulation of hairdressing, would there be no regulation at all? Or would the market process, would market forces regulate in some way? If hairdressing licensing laws were sunsetted in your state wherever it was, would you be worried when you then went to get a haircut? No. If not, why not? Take a moment and think about that. We'll do this just briefly because then we'll get to a harder case. What are the kinds of forces, the kinds of incentives in the market process that would lead to public health and safety in hairdressing? We're talking about getting rid of hairdresser regulations, but not about getting rid of tort law. So if someone burns me or cuts my ear off, then I can sue them. Good for you. I mean, presuming the lawyer doesn't cost an exorbitant fee, but we should get rid of that lawyer regulation as well. Well, yes, to be consistent, there should be freedom of exchange in the law also. So we get rid simultaneously of hairdresser licensing and lawyer licensing. That's worth considering. Tort law, yes, there would be that fundamental institution of a free society. If you harm someone, you must make him whole. I mean, even if we go outside the legal system, if I walk into a place and see greasy, rusty, dirty curling irons, I will say, I will get my hair curled somewhere else, thanks, and walk out. Or if my friend says, oh, I wouldn't go to that place. They've had like 30 thither deaths this year. I also wouldn't go there. So word of mouth is a very important regulating factor. But then the companies know, okay, well, to get Tucker in the door, we need to have clean curling irons and not kill people with scissors, and they'll compete to make sure that their stores are safe. So companies have an incentive to provide good quality in order to get repeat business. Dakota? I was just going to say that the internet has forever changed competition. Good for you. When I want to eat somewhere, or for instance, if I'm going to take an Uber driver or pick an Airbnb, I do it often based on rating and comments. And so that's a system which almost regulates itself. If you have bad comments or bad ratings, people won't even walk in the door. I think you've made a profound comment. I've written a couple of blog posts and an article on that. The development of this rapid feedback through the internet, I think has made a lot of regulation just completely obsolete. And the Public Service Commission could simply go away now that we have the real-time two-way rating of drivers and riders. Nothing more is really needed, I think, to regulate that. We could debate that. But let's stick with hairdresser licensing. Other things that would give you confidence that you get a good haircut. Who else has an incentive? You mentioned the salons have an incentive to establish a good reputation. Who else has an incentive to establish a reputation? The hairdressers themselves. The hairdressers themselves. And how might they do that? If we're worried about hairdressers having good credentials for some reason, they could note those on their application. Sure.  Beauty schools have an incentive at presumably with maybe a little bit less than 1,500 hours instruction to give somebody a certification. So, you've got the ones I was thinking. The salons who provide information. Beauty schools provide the certification. Information vendors such as on the internet that you're talking about to Dakota. One other kind of institution I would mention would be insurance companies. What role might they play? Well, they would diffuse the risk among lots of people. Yes, but I'm thinking of actually reducing the risk, reducing the harm. What I have in mind is that if you own a beauty salon and you apply for insurance, the insurance company is likely to ask you, well, they don't want to pay damages to people who have these scissor problems. They might say, well, we'll ensure you as long as you give us some assurance of the quality of your stylists and your barbers. So there are those incentives in the market to keep up the quality of hairdressing. But hairdressing is too easy because there's too little at stake. So let me ask you to do a similar kind of thought process with the much tougher issue. And here we're very much focused on this question of if we had real freedom of exchange, which would mean regulation just by market forces, would that be adequate? So let's take what I think is probably the most emotionally worrisome topic for all of us, and that is pharmaceuticals, drugs. What I'd like you to do is to take a few minutes and think, suppose the FDA's authority to forbid exchanges when, say, a pharmaceutical company has a drug that it's ready to put on the market, the FDA can say, no, you may not put that on the market until we've put it through our tests. If that ability to forbid exchanges was eliminated and the pharmaceutical companies and the doctors or their hospitals or their patients were free to buy and use the drugs, what assurances might we have? What forces would there be in the market that would tend to lead toward the public health and safety with respect to pharmaceuticals? Or would it be horrible and people would be getting poisoned and having horrible side effects all around? What are the things that come to mind? Again, take a moment and think, what are the various things that come to mind that might provide good regulation from the incentives of the private sector? So aside from the ones we already mentioned for hairdressing, which I think play a big role. Well, let's review them then, okay? Let's review them. Tort law. Tort law. If a pharmaceutical company misrepresents or is negligent in their testing of a drug and is harmed, they can be sued. That's going to be quite significant, okay? Let's attach that to their insurance companies. Drug companies like to get insurance, right? What role do you think the insurance companies might play in this? Merck or Pfizer goes to them wanting insurance. What restrictions might the insurance companies put on them? They want to know what's being cooked up in the lab and whether it's dangerous. Whether it's been properly tested. Yeah, what are we ensuring? So the insurance companies would have a strong incentive to make sure that the pharmaceutical companies were putting safe and effective drugs on the market, right? Good. Next. What else? Oh, ones we've already done? Well, yeah. There's word of mouth also. And interestingly, word of mouth among doctors is very, very significant. They write in the journals about the success of different procedures for treating people. The success or the difficulties they've had with things. And that serves in large measure to regulate what drugs are prescribed. And then you mentioned the internet and reputation. Certainly the drug companies care about their reputation. So I've interrupted you twice already. Go ahead. So I guess the difference between drugs and hairdressing is that I can't really tell at first sight whether or not a drug is safe or not. Good. So I think that an important knowledge surrogate that a lot of customers have, especially for over-the-counter drug, is brands. So yesterday I walked into a store I'd never been to before and picked a package of Tylenol off the shelves. And I didn't take time to read the warning label. And I bought it without a second thought because that brand and the reputation that they have served as a knowledge surrogate for me. Good for you.  Some wacko injected cyanide into Tylenol tablets. And people died. A couple of two or three people died, I think. Is that right? Two or three people died. What do you suppose Johnson & Johnson, the maker of Tylenol, did? They had to mobilize this huge public relations campaign to save their brand and talk about how they were doing all of these new things. And as I understand it, as I remember it, they didn't need any public relations campaign other than what they just did. They recalled every bottle of Tylenol in the world and threw it away. And then they didn't issue any more until they had invented or had someone invent for them and developed the safety caps that we now see all the time. Before that, there were no safety caps. After that, the safety caps were ubiquitous. So Johnson & Johnson took a terrible financial hit to save their reputation and assure their customers of the quality of Tylenol, which is right down the lines of what you're saying. So there's reputation and the brand names. What else can we think of? Well, you talk about brands, but there's also certification. Good for you. And certification where maybe you don't trust a company to have like, well, we're Pfizer and the Pfizer Board of Scientists say this drug works perfectly effectively and it's completely safe. Like, you know, that's not, especially trustworthy. They have their own hidden outs. People say it is. So they need independent third parties. Something like Underwriters Laboratory. That's where I wanted to go. Tell us what Underwriters Laboratory does. So Underwriters Laboratory is an independent, essentially, certification agency that will look at any kind of electronics charger, microwave you plug in, almost anything that goes into the law these days. Insulation, but also insulation, bulletproof vests, all kinds of, as of 2000, 14,000 different types of product. Wow. Underwriters Laboratory certifies. And now why would, in a setting of free exchange, why would a manufacturer go to the extra expense of paying Underwriters Laboratory because that's what they have to do. They go take their product and pay Underwriters Laboratory to test it for safety. Why would they go to that extra expense if they can market their product without getting the certification? You know, a sort of naive answer might be like, well, the customers themselves would look at the seal and see if it was there or not. But it's like with Underwriters Laboratory, most customers don't even know what it is, but it's the wholesalers and it's the retailers who look at those things and if they saw that it didn't have that kind of certification, they probably wouldn't want to stop you. Hilton Hotels buys probably literally hundreds of thousands of irons and they won't buy an iron unless it has that stamp on it because their insurance company tells them if you don't buy this and have a safe building, then we won't insure you and the whole chain of responsibility works pretty well. You all have done beautifully with this, better than I could. See if there's anything on my list that I left out. Underwriters Laboratory, Consumer Reports again, the use of the internet and insurance. All right, good job. So that... I mean, I would just say that this private system would have... we were talking a lot about preventing bad products from getting to consumers, but I think that one thing that a private market does that the government regulation might not do as well is they would allow good things to go through easier, whereas... I shouldn't have been hired to give this lecture. We should have let this crowd do it. You're getting right to the point that I want to get to next, which is the comparison. Let's compare the imagined regulation by market forces we've just been talking about with the facts of the regulation by the Food and Drug Administration. What are some of the downsides of that? So, I know Milton Friedman was famous for making this point.  Good for you. Let me just repeat that for emphasis to make sure everybody has said it. Those people in the Food and Drug Administration do not want to be guilty of letting a bad drug go through that causes birth defects or something else like that. They're very cautious about that. Continue. But if I deny a good drug, not that many people, maybe a few doctors will know and a few people with rare diseases will know, but ultimately, there's little cost to me. So, if I'm on the border about letting a drug through, I should always reject. It's kind of a game theory thing. I should always reject a drug if I'm unsure. All right, that's right. You've got it exactly right. The term is type one and type two error. The type one error is to let a bad drug through. Type two is to don't let a good drug through. The point is that the personal consequences for the people in the FDA and the institution of the FDA are quite severe. They're very bad consequences to let a bad drug go through because there are congressional hearings, there are faces on the front of the newspapers and the victims are on the cover of us and People Magazine and so on, and there's a big flap and a lot of bad consequences for the people in the FDA. Therefore, they're particularly careful and there's a great deal of research about this that you can see to back this up. So what is the consequence for the public health and safety of this excessive care, excessive carefulness, we should say, on the part of the FDA? One consequence is what's known as the drug lag. It takes a long time to get a new drug to market because there's so many tests to go through. And I recently heard an estimate about what it costs from beginning to end, from the beginning of the research to getting the drug on the market. In round numbers, what does it cost a drug company to get a drug onto the market? I think it's $70 billion. I heard a billion. Oh, a billion? A billion. Maybe it's, I think it's a billion. But it was not in the millions, it got up to a billion. So it's very, very expensive. Now, if it's that expensive to get a drug to market, how eager are drug companies going to be to produce drugs that address a very rare disease that only a few people get? Why bother? They won't be able to get paid the million dollars back by only a handful of patients. So there are fewer drugs brought to market and they take a longer time to be brought to market. Now, what are the consequences for the public health of that? This is negative, those people. They're in their disease. This is grim and this chart I'm about to show you comes from more than 10 years ago and nothing has changed in the interim. Here are some examples of type 2 error by the FDA. Let me, I'll read it to you here. Thrombolytic therapy which dissolves blood clots was delayed for two years and estimated 22,000 deaths resulted. The way this is calculated, I'm pretty sure, is that when the FDA does let a new drug go through, they say this is a good drug. It should save however many lives every year and so on. So you take the number of lives it would save, they say it would save per year times the number of years they have delayed the drug and you can come up with a number of the avoidable deaths that have occurred as a result. Thrombolytic therapy delayed for two years up to 22,000 deaths. Interleukin-2 which was available already in Europe treats kidney cancer 3,500 deaths. Misoprotol prevents bleeding ulcers about 8,000 to 15,000 deaths resulted. And there are many other examples like this. This has led one economist to say that statistically, as he sees it, the number one killer in the United States every year is the FDA. Which is an interesting, it may be too strong, but it's an interesting way to think about it. The point I want to make is this. Of course, unless the listeners to this talk are very different from me, initially on thinking about the idea that the FDA should not be able to ban drugs from sale is a horrifying idea. It's maybe more horrifying for me than for you all because the thalidomide disaster which resulted in deformed babies occurred when I was old enough to see the pictures in Life Magazine. And so I've always been a proponent until I really studied it of the FDA. So the idea that the FDA should lose that authority is scary. And so that's why I emphasize the damage that the FDA's over-conservatism can cause. In no case are we going to get a perfect world with perfect results. Whether we rely on regulation by market forces or regulation by the Food and Drug Administration, there will be problems. The question we need to ask ourselves is, under which set of rules, which set of institutions, will the problems be lower? Will be less? And it looks to me pretty clearly now that I've thought about it for a while that given the incentives in the private sector, people would continue to be very careful. But we wouldn't have the over-caution from the FDA that results in so much unnecessary and avoidable death. All right, I believe we have finished this recapitulation. There are private sector alternatives to government actions. We've got the civil society versus political society. Private ownership and freedom of exchange versus government ownership and restriction of exchange. The incentives in the civil society institutions are healthier. That's the claim that I offer to you and we'll let it go at that and take questions. What do you think about the type of government programs that don't give them the authority to ban something but set certifications for a product that has a certain designated location of origin where authentic cheddar cheese from England where you don't have to submit it to it but you're just not allowed to sell it under the name of whatever certification of quality but it's a government managed program. What do you think about those type of things? I think they're much less problematic. But I still think they're unnecessary and those restrictions about content about how you market something should be handled in the civil law with things like copyright and truth in advertising litigation that sort of thing. I don't see that it's necessary for the government to do that. It's not inherently objectionable but again, there's such a strong temptation if it's mandated that a company get the government's approval to market its product as real feta cheese, say. Then there's a strong incentive for competitors to go and lobby the government to get certain kinds of products labeled as imitation feta cheese or imitation whiskey. There's a true case from that where everybody considers there's two kinds of whiskey. Two processes. One is to put it in the barrels with the charcoal and another is... I don't even remember which maker it was but they wanted to get the other one called imitation whiskey. That process I think would be very much subject to capture and that might be more problems for the customers than just letting people advertise as they see fit and pulling them into court if they seem to be advertising falsely.


All right, James P. Madonna from the Facebook group Everything is Food. I just arrived. It's Friday The March, I believe March 23rd, 2018 Roya Hibachi Grill in Buffet, Saddlebrook, New Jersey All through 46 West. I am going right for the duck, whatever's left of it, roast duck The duck that's out of luck You know, now I know why it's out of luck Scraps Nothing but scraps left Slim pickings, slim pickings for the duck All right, we could get some of those shrimps a little a little surf and turf There's the Mongolian barbecue party room I told them they should have a hook make a hookah lounge out of it and have belly dances in there All right, here's the sushi bar See what we got here flounder flounder filet There he is the chef the chef of the future the chef of the best Good good That's the best thing about this place is the mystery of you never know what entree is going to find Always something different, right I was going to get some shrimp But let me um You know what I'll do I'll check out the fried calamari The fried calamari right now is all crumbs crumbs calamari Oh my god, look at this I'm a day late in a calamari short Oh, look at this Ah, they'll bring out more They'll bring out more no tentacles, but what are you gonna do? All right, this should this should do it Marinara sauce on here And now what I'm Actually, but you know to be honest with you here. We got some Be honest with you these are not bad These fried shrimps are actually quite good. They look like they're butterfly butterfly Butterfly fried shrimp very tasty I think it's the quality of the batter and also if the oil is hot enough The fried food will not be greasy That's one thing that the average person doesn't know When you deep fry the oil must be Must be very hot. There he is Good roll grape leaves I'm gonna have to catch that on the way back But I do need lemons. This is not gonna This is not gonna do and they also need lemons for the For the crown They're actually They're literally put it over there. You know how much I love lemons. This is an accident waiting to happen Oh, sure enough an accident waiting to happen. Well, there goes the cup The cup is useless to me New Zealand green-lip mussels Richest source so far one of the richest source of omega-3 fatty acids and very good for arthritics fresh mozzarella tomato and Latino moots salvatore mercurio Salvatore mercurio dessert table Haven't tried that. You have no idea what this It's like adjourn. It's like a German chocolate cake is Super fudge cake so on and so forth, but of course I will wait for the tre lecce to come out later Okay, here we are a big a big menagerie of What I call surf and turf to start it off for this Friday here at Royal Hibachi grill and buffet 246 West Saddlebook Natures Okay round two here we go Get some Pick up where I left off where I didn't have room some roll grape leaves some roll grape leaves Mario petrus the creator roll grape leaves all right Just want to say Hello to salvatore mercurio the king of moots The grand imperial mystic ruler the grand poobah of mozzarella of lactation king of lactation Did they put out more calamari? Yes, they did Do I want any right now? I don't know I know what I'm going for I'm going some for some nice grilled um Brussels sprouts Okay, many people do not like Brussels sprouts Just like they don't like mushrooms But I don't care. I love them It's in the cabbage family like little punching bags grilled Brussels sprouts now I could grab some cauliflower All right, you know what let me take a big chunk of cauliflower cauliflower also in the cabbage family. Okay Here's some squash Zucchini and longer yellow squash. I'm going to let that pass All right, let me see what we got going here It's the chinese entrees Uh, I guess steam dumper. Oh, look at that steam dumplings or sticky bun general tizos chicken No one in at any chinese takeout can explain to me who general tizos is Every time I every time I ask a chinese takeout who general tizos is You know the chicken nobody knows who he was general tizos I gotta I gotta do research on google I gotta find out who this guy is general so or two so yeah general sauce chicken Then is general chen There's another guy I have to I have to look up Uh, you can find everything on google. I guess it's like sticky pork bun All right whiting Too lazy to deal with the bones I'm gonna pass Let me check on see if they put out the hardcore sushi yet And not yet. I'm gonna wait Unagi is good though This is um, nah, nah, nothing hardcore Not yet. It might put it out I love these, uh Mr. Rossovator, Mercurio Mario Petrus And Natalia Rodriguez Anthony Laura, Nick von Raven Nathan Bates, I love these soup bowls with the handle these Asian soup bowls.  It looks like salmon filet All right I'm gonna wait for the hardcore, uh sushi So nobody knew who General Tso was Nobody knew nobody knew Okay I don't see any lamb. I'm disappointed. I'm disappointed A beef kebab Some greens over there. That should be healthy Maybe there was a chopped collie greens Uh, you know, let me try one Let me try a kebab Let me try a grill kebab No relation to Bob Baluch Or Bob Ballistic. All right, Bob Baluchi. Isn't that funny? Let's see what we got here He doesn't say what it is, but it certainly looks like collie greens I'll tell you, you take raw greens of any kind and put it through a good quality slow masturbating juice extractor like the Yomega like the one Mario Fetcher's the creator uses the slow masturbating juicer And if you don't detoxify from raw leafy greens dark leafy greens, you'll never detoxify General Tso. General Tso I say so what right? This color mark came out All right No tentacles I'll take two rings. Here's the fruit. We got the kiwi odd Very very good for digestion And 500 times more effective than cough syrup fresh pina pineapple Here's cantaloupe Not on hot orange strawberries Chocolate I mean, whatever. These are I think I think they are loquats or leaches I gotta get some when I come back to the dessert Cumquat loquat or leaches was that leachy or or loquat or cumquat? This there leachy cumquat loquat Cajones fruit Yeah, all right, no problem no problem Okay, here we go Here we go in honor of our salvator material. Okay I'm going to go for some fresh mozzarella The the emperor of mooks the emperor of mozzarella salvator material The imperial grand high exotic mystic wizard of mozzarella of all lactation and cheese making This is round two and according to how I feel it might be the last round Before dessert if they do not put out Any hardcore sushi and sashimi Okay, here we go trade the tray leachy is out and they put a dent in it already Here's some baklava seems to be Adequate, you know what instead of the chocolate cake Maybe I'll just have an ice cream or Maybe some fresh pineapple Can't go wrong with fresh pineapple Hmm For digestive purposes Hey, what happened?  It's not good