Welcome everybody. Thank you for coming out on this very rainy day. It was a very busy political season. I know a lot of you are working on campaigns. Thank you for taking time away from whatever children or whatever else you have going on. For those of you that don't know me, I'm Christine Moravito. I'm the president of the Greater Boston Tea Party. Lots of tea party people here. There's also lots of objectivists. Welcome. The objectivists in the room, if you would raise your hands so we know who you are. Very good. And for those of you who don't belong to either group, if you're a fan of the free market, you are in the right place. You're among friends. So I'm very excited about our speaker tonight. He has been a friend of the Greater Boston Tea Party since the very beginning. We spoke at some of our early rallies and we watched his progress. I've been very happy to see how his career is progressing. And I want to introduce right now someone that I have had the pleasure to get to know over the last few years. And without her help, this event would never have happened. So I would like to introduce the fabulous Catherine Van Arnau. Everybody, thanks so much for coming tonight. On behalf of the Greater Boston Tea Party and our treachery, Christine Moravido, welcome to this special presentation by Iran Brooke. He is president of the Iran Center for Individual Rights. His articles can often be found in major publications such as the Wall Street Journal and USA Today. And he appears regularly on national television. Programs such as The O'Reilly Factor and Closing Bell. And he currently co-authors a column at Forbes.com. He was born and raised in Israel and served in the Israeli Military Intelligence Service. After receiving an MBA and PhD in finance from the University of Texas, he became a finance professor. And he's currently managing director, a chair of the Financial Advising Center. He became an American citizen in 2003. And he's co-authored neoconservatism in obituary for an idea and contributed to winning the unwinnable war, America's stealth-scribbled response to Islamic totalitarianism. And just recently, he's co-authored with Don Watkins an immensely important book, which I hope you all have a copy of, there for sale. The Free Market Revolution. How Iran's ideas can end big government. The authors see a revolution in the way people think about markets. They defend capitalism as the only moral economic system in history. The authors take the objective disposition that capitalism consistently frees the individual to make the most of his own life so he may pursue his own happiness. Our mission at the Greater Boston Tea Party is to educate and advocate for limited government, free markets, free speech, individual liberty, and personal responsibility, all tenants of the Constitution of the United States of America and the Bill of Rights. We're working to save America. It's a battle of ideas, and our speaker tonight has great ideas. We could say revolutionaries. So please welcome a fellow warrior to the party. Thank you all. It's a real pleasure to meet you tonight. And yes, I think the first talk I did was on the water in the pew on the 4th of July 2009. 2009 with the Boston Tea Party. We could have actually thrown the tea into the hallway. So I'm here to really talk about this book that we just came out with, and I know we've run out of copies, but I hope that if you like what you hear tonight, you'll go to Amazon and buy a copy that's available in cable and audio and any format you want. And what the book really tries to answer is a really, I think, important question that all of us face. In a sense, I'd say anything that believes in free market faces a mystery, a conundrum. We all know, we all know, that capitalism, freedom, free markets work. I mean, everybody really knows that, don't they? It's kind of obvious.  We've been running an experiment for 200 years. Think about the history of the last 200 years as one big experiment in political economic systems. We tried it all. We tried really close to pure capitalism, all the way to real pure communism. We've tried every single mixture of the two possible, and the evidence is in. We've run it, and we've run it across time in the same country. We've run it across different geographies, so we've run it in different cultures, and the results are always consistent. The more economic freedom you provide people, the greater the wealth, the greater the standard of living, the better life is, at least from a material sense. The capital GDP is higher in countries that are free than in countries that are not. And when they become less free, they become less wealthy, but less successful. And you can see this over and over again. You can see it in Europe right now. You can see it in Europe today versus Europe in the past. You can see it in America. If you compare our economic growth and our economic success today versus what it was 100, 120, 130 years ago, it's incompatible. In those days, we were growing at GDP rates that only China comes close to if you believe any of their numbers. Those numbers in America were real. Real numbers. And at the same time, we absorbed enormous numbers of immigrants. Millions and millions of people came into this country, and yet we still grew incredibly. It wasn't unemployment, people found jobs. Because it turns out that capitalism creates more jobs than people. And economic growth. Real incomes during the 1970s doubled twice. What are real incomes doing right now? Well, they're not quite as flat as the left would suggest that they are, but they're going up a little bit. What you see in real income, what the left does is it looks as just compensation. But if you add benefits, you see that real income is increasing. But at a very low rate. What's economic growth? 3.3%. But what's economic growth in a really good year in America in the 21st century? 3%. 3.5%. Why can't the economy grow at 6%, 7%, 8%? There's no economic growth? And again, you can chart this. You can, you know, the United States used to, just 20 years ago, the United States, or less than 20 years ago, 13 years ago, the United States was number three in the World Economic Freedom Index. You know, how free we are. Anybody want to guess what we have today? Number five, please. We were 10 last year. This year, 18. We've dropped another eight points in the last suit. We're dropping like a rock under Bush and under Obama. But the point is that we know the results. How many of you have ever been to Hong Kong? You got to go to Hong Kong once before you do. It's an amazing place. It's just stunning because it's a rock in the middle of nowhere. There's nothing in Hong Kong. There's no natural resources. 100 years ago, there was a fishing village there. That's it. And today, the skyscrapers in Hong Kong went to shame New York City. I mean, it's an amazing place with over 7 million people. And people came there from all over Asia. And what's astounding is that Hong Kong has, it shouldn't be astounding at all, but what's seemingly astounding is that Hong Kong has no safety net, no social security, no Medicare, no Medicaid, no free healthcare. It's just free. They respect property rights broadly. And they leave you alone. Just like America did in the 19th century. Guess what? People want to come from everywhere. They came there. They left societies that were guaranteed all this stuff. And were poor to a place that didn't guarantee anything and was rich. The capital income in Hong Kong today is equal to the United States. Equal to the United States. On this little rock in the middle of nowhere. So we run an experiment. We know the results. They're unequivocal. Unequivocal. Even Paul Krugman knows this is true. He won't admit it.   Because this is staring you in the face. This is not controversial. Freedom, free markets work. They always work. If you want to know about the financial crisis, ask me why that wasn't caused by free markets and why was all the government asking me in the Q&A afterwards that videos go lower on that on the web. So there's plenty of material like that. Capitalism doesn't produce the kind of financial crisis that we have regulations and government controls do. Okay, so here's the mystery. We know this. It's like writing them in our face. The evidence is in. The empirical stuff is the numbers are consistent. And yet, what is the pattern of the United States over the last hundred years? Away from them. Away from them. And that's true right now, today. I mean, it's not like we have an election a status who wants to expand the role of government and a free market guy who wants to shrink government dramatically. We don't. We have a status who wants to grow government dramatically and a status who wants to grow government slowly. And I'm all for voting, by the way, for the guy who wants to grow government slowly, but let's be realistic who we got. You know Paul Ryan, the radical? He's a radical, right? He's going to balance the budget in 2040. Government spending grows every year under Ryan's plan by 3%. 3% faster than GDP. Why don't they say it's going to cut a lot? Because under Obama's budget, the government grows by 5% every year. So they cut the rate of growth. In Washington that's called cutting spending and it's called shoving grandmothers off cliffs, right? Because that's what Ryan has been accused of. Ryan is a moderate. He's got a status, not a moderate free market guy. But he is. He is who out there represents cutting government. Free markets. Free emphasis on the F. Free? Ron Paul. Ron Paul's not running this time and he's gone, right? That's it. Gary Johnson? Gary Johnson's not going to get elected, so I talk about him. And he's not going to hold any office after the elections, because we always have exactly zero influence. So why talk about him? The fact is that in the political world, nobody is in spite of this evidence. In spite of the fact that we know that capitalism works, in spite of the fact that all the evidence suggests it works, nobody advocates for it. Nobody's fighting for it. Nobody will vote for it. Let's say we had somebody, Gary Johnson. Gary Johnson's pretty close to four free markets. He would actually cut government spending. How many votes is he going to get? Nothing. Because his ideas are not popular. If Paul Ryan is getting killed over what he didn't propose, imagine what the treatment he would get is if he actually proposed something radical. People say, you're on. Why don't you run for president? Other than the fact that I was born in Israel and I wouldn't want the job, I would lose by a landslide. America's not ready. But the question is why? Because again, the evidence, the empirical evidence is there. It works. There's something about capitalism. There's something about free markets that makes us resent them. That causes us to be instinctually as a culture rejected. When there's a financial crisis, when there's an economic crisis, always, always, always the first, you know, the first blame is placed with free markets, with bankers, with Wall Street, with capitalism, with markets. Immediately. Before the evidence is even in. Before anybody's looked at the facts, we immediately know it must be Wall Street. I mean, when this financial crisis hit, maybe you forgot, but all the headlines were capitalism is dead. It's all capitalism's fault. It's nonsense, but that's what everybody thought, and it was almost instinctual. There's something about markets, and about capitalism, and about freedom that we don't like. And we're willing, because of it, to ignore the evidence. We're willing, because of it, like Paul Krugman does, to lie. We're willing, because of it, to ignore everything. What is it? So what is it that's so horrible about capitalism? What's capitalism about? What do people make these kind of things? Money. What's that? Money. Money to make a profit, right? I mean, it's not just about money, right? Nobody goes to work just about money. But Steve Jobs wanted to make something really pretty and beautiful in his own image. This was about Steve Jobs. And it's about money, because the profit margin in these, at least the original iPhone, was something like 50, 60%. If you really cared about me, it would be, you would have sold it to me halfway. But he doesn't care about me. Steve Jobs doesn't wake up every morning thinking, how do I, you know, maximize Iran's lobby? He thinks about how do I maximize Steve Jobs' lobby? And when I went to buy an iPhone, right, in 2008, the economy was spiraling out of control, and I went to them all to buy an iPhone, because I wanted to stimulate the economy. That's why you guys go to them all? Why do you go to them all? Because you want to make your life better. So what is a marketplace of health? The joining of what? Of people's what? It's people pursuing their self-interest. The businessmen pursuing their self-interest to sell stuff and to make a living and to make a profit and to succeed. The consumer's self-interest in buying stuff and clothing himself, buying nice clothes, you know, iPhones, shoes, bags. It's about self-interest. And yet, what have we taught about self-interest? From when we're very little, what have we told? It's wrong. Why is it wrong? What is morality about? What's ethics about? What's the good about? What's noble in life? The purpose is not to get the right answer. Not noble. It's about being selfless. It's about taking care of others.  Think of others supposed to be selfless. What's the essence of virtue? Sacrifice. Sacrifice means what? Giving something up and getting what in return. Nothing less. That's the essence. That's goodness. And what is self-interest? Selfishness. Selfishness. Selfishness. Which is what? Which is we don't really trust it. Which is kind of bad. It's putting yourself first. And we're taught that selfishness and self-interest mean exploiting other people, taking advantage of other people. And yet the market place is a place where people come together to pursue self-interest, to be selfish. I had a smith knew this in 1776 when he wrote The Wealth of Nations. I always remember when that book was written, right? Great year. But he says in The Wealth of Nations that the baker makes the bread not to make you happy. He doesn't know you, doesn't care about you. He makes a bet to take care of himself and to take care of his family. He's trying to make a limit. And the grocer who sells you the bread doesn't really care about you. He cares about himself.  And because you're buying his stuff and he's trying to make a profit and he's trying to take care of himself. And if he's taking care of himself and all these people in the market place are taking care of themselves, we know that's what capitalism is about. That's what markets are about. And yet morally, we're told that's wrong. There's something offensive about that. There's something wrong with the profit motive. We hear it all the time. Profit, you know, does all companies make too much profit? Drug companies? How can they make profit out of drugs that people need? Profit is a negative word in our society because it's selfish. Take Bill Gates. He builds Microsoft. He builds this company. In the process, he makes for himself tens of billions of dollars. And while he's doing this, what do we think of Bill Gates? Evil rich guy. Evil rich guy. We think, okay, he's a good businessman but from our perspective, we think, oh, there's a model guy. There's a good businessman. What's that? Did the clear ministers go after him break up 10 companies, Microsofts? No, they didn't break them up, but they did go after him. We think of him negatively. Or at best, we think of him neutrally from an ethical perspective. Now, when does Bill Gates become a good guy? When he gives away his money. When he retires, stops making profits and starts giving it away. What do we live in? Building stuff, creating. Changing the world. Which is what Bill Gates did. He changed the world. That, from an ethical perspective, we view as neutral. Giving it away, that's good. And after this deal, I think I can get it to say to him, Bill Gates, how do you think, what would it take for Bill Gates to become a model hero? You'd have to give it all away, and if you could show some suffering, you know, show some blood or something, that would really help. Because that is the model framework in which we live. We believe it's suffering, that's sacrifice, that's pursuing other people's interests above your own. That is nobility, that is goodness, that is butchoo, that's morality. Now, when do you think Bill Gates affects more lives? When does he do more damage? When he makes his money, or when he gives it away? He makes his money. He's affected every human being on the planet with his software. I don't know if we have an internet today without his software. Think about all the things that the internet provides and makes possible in terms of medical innovation and information. Rising standard of living is all over the world because of Microsoft. But he's helped a lot more people through his profit seeking activities and yet he gets no credit for that and he gets all the credit for his charity. I mean nothing wrong with charity but why is there something wrong with profit? Why is there something wrong with business? Why is there something wrong with making a lot of money? Now who lost when Bill Gates made all that money? When you buy when we you bought his product did you lose? You paid 100 bucks for software. Why didn't you lose? It shows to do it. Sometimes we choose to do losing things. You wanted the software more than the 100 bucks. You wanted the software more than the 100 bucks. Otherwise you wouldn't have given up the 100 bucks. So to you the software was worth more than 100 bucks. So what do we call those kind of transactions? You gain and you gain. We call them win-win. So win-win is what Bill Gates did at Microsoft. That morally is suspect. Lose-win which is what sacrifice is. You don't expect anything in return. That's normal. There's something screwy going on here. And it's no surprise that we don't trust capitalists. Because capitalism is about these win-win. It's about profit. And yet we don't think it's noble. We don't think it's good. We don't think it's valuable. Not from an ethical perspective. And I'll tell you that people vote. People think not about their pocketbook. It's not true that people vote their pocketbook. If people voted their pocketbook we would have a thriving capitalist economy today. People vote what they think is right. What they think is just. What they think is noble. And capitalism isn't just right to noble. Free markets are not right just to noble. People won't vote for that. I'll get you. You've got a question. Yeah. I mean, when I look at Microsoft, he also used Bill Gates used the patent system to create a monopoly. Maybe underneath it all, it's not really the free market system. We can talk about patent found. A monopoly in a sense of of course there are going to be patents in a free market system. You couldn't have a free market system without recognition of property rights over intellectual property. So I don't think that's a constraint in free markets. I don't believe in a patent system or intellectual property myself. We disagree on that. So what's the solution? Because the two things we point out in the book that this causes this perception of self-interest. One is, because we have a perception of self-interest of bad, we don't trust capitalism. And we don't trust businessmen. And when you don't trust businessmen, what do you want to do to them?  You have to catch them. Because you know they're doing something bad. We all know these businessmen are bad. And if we walk into, you know, there's an elevator out there. And you look up and you see the little thing there that says that a bureaucrat has inspected this elevator. And you go, whew. Now I feel safe. Because we know in a free market elevator manufacturers would make defective elevators and kill their customers because that's how you make money in a free market, right? What do we need? Government. Government. To send somebody to hire a whole bureaucracy to inspect elevators because we don't trust business. We don't trust the marketplace. I can show you how there are five, six different ways in which there would be private inspections of elevators. You know, there's so many different people that are interested in making sure elevators are safe. But we don't trust them because they're all motivated by what? The profit. And we know profit somehow and it is bad. It leads to bad actions. So we create regulations because we don't trust the marketplace. The biggest example is, I don't know how many of you were touched by this, was Saab-Ains-Oxford which passed in 2002. Saab-Ains-Oxford is a counting bill that was passed after Enron and WorldCom and those and they caught these crooks, right? And it cost the US economy somewhere around 1.5 to 2 trillion dollars of GDP. I mean, that's a huge amount. One of the most expensive piece of regulation in American history. And yet, what did it do? It was there, the whole regulation was to create rules to look over the shoulders of CEOs and to make sure that every number, everything, abided by rules that some bureaucrat had decided are right. And the purpose was to catch crooks. How many crooks is it called? Did it prevent financial crisis? No. Can anybody know how much it passed the Senate by? 98 to 0. So now a single conservative voted against this thing. I was in Bellorelli's show in 2002 just after Enron and WorldCom and Bellorelli wanted to fire every CEO in America because said there are crooks we just happen to catch these guys and I go, no, these guys are crooks we caught them, good, put them in jail but everybody else in America, at least is innocent until proven guilty and there's actually no reason to think they're all greedy they're all profiteaking. So by definition they're all crooks. Well, of course. Bellorelli is not known for consistency. Bill is, Bill is flexible. Very much where the wind is blowing not exactly the most principled guy when it comes to ideas. So if you hold this view of self-interest you can't trust businessmen, you have to regulate and there's no end to that. There's no end to regulation. I would argue that this financial crisis was caused by the regulations that came earlier they created an environment in which this had to happen. So what's the solution to the financial crisis? More regulations. Dodd-Frank, I will guarantee you can check on this in a few years that the next financial crisis and there will be one sooner rather than later probably the next financial crisis will be caused by Dodd-Frank and that the solution to it will be new regulations basically heading towards nationalizing the banking system which is where we almost are today because the big banks are almost just entities of the government. It's always more the last time we deregulated anything the last time we truly reduced regulation on a significant scale was in the late 1970s and early 1970s and the Jimmy Carter and the Von Green but that was a very brief period everything else has been increased regulation and I would argue it's because of the perception of businessmen themselves interested in their fault as crooks second thing it causes us to do is if your moral responsibility is towards others if your primary moral responsibility is to be self-less is to take care of your neighbor if you are your brother's keeper if your responsibility is to take care of people who need who people are in need people who are suffering people who don't have as much as you have then all the government is doing is helping you out it's helping you be more moral it's taking your money and giving it to people who need it how can that be better all redistributive redistributive programs are based on their purpose somebody needs health care it used to be very poor people they really don't have enough health care the quality of their health care nobody was dying in the streets the quality of their health care was not as high as the middle class we need to improve their health care because that's our thing how can anybody say no we believe that our moral responsibility is to take care of them we're not doing enough voluntarily so we're just going to force you to help them we call that Medicaid and then there are old people with the same issue so we call that Medicaid and then there's another group that's not quite here and not quite there but they really need better health care so let's add them to the list and then it grows and grows and how many dollars of every health care every dollar of health care spent in the youth economy how much is spent by government today through one of these programs 49 51 51 more dollars to spend by government in health care than we spent why? because we keep adding on hoops so then these children children how can you not care about children and these children are not poor enough to get Medicaid but they're not wealthy enough supposedly to get to buy private insurance so why can't we help them and then you get a Medicare-Medicaid situation you get a health care situation today we are unfunded liabilities unfunded liabilities for Medicare-Medicaid or some way between 65 and 125 trillion dollars that's the amount of money we promised minus the amount of money we think we're going to get from taxes what we cannot we can't fund we don't have any source for is probably over 100 trillion dollars you can't tax that you can't find that money you can have to renegade those promises there's no way there's no way you can ever fund it but nobody's saying it nobody's talking about it and when Paul Ryan offers a moderate solution he gets attacked because our mall code is so strong we have to help them we have to take care of people and if we don't take care of people then what's it all for we'll print money we'll tax people to death we'll do whatever it takes we'll have economic growth tell with the capital standard of living tell with all those things that's not consistent but that's just reality so the entitlement state and the regulatory state what we have today are consequences of our moral thinking of our ethical thinking they have nothing to do with economics in real life in free markets elevators don't collapse in real life in spite of the stories you hear about the past McDonald's will not kill its customers with tainted meat if the FDA doesn't have an inspector go and approve the meat but it doesn't matter we don't trust it so my argument what I'd like to propose which is controversial revolutionary is that we need all coded we need to change our approach to ethics we need to change our approach to morality if we're going to ever change our approach to economics to politics to moving this country in the right direction just making economic arguments is not going to work we've tried that it doesn't work because just economic arguments people don't vote they're popular what people want to know is that it's white and we need to make the argument that capitalism is good capitalism is just, capitalism is fair capitalism is moral capitalism is ethical and I'd argue as Ayman argued that morality is not at the end of the day about being selfless it's not about being self-sacrificial that morality at the end of the day is about taking care of self of taking care of one self that morality is about self-interest that being good means living a good life it means living a flourishing life it means choosing values of virtues that make you a happy successful person that make you live a full complete life that lying cheating, stealing are not self-interested values is Bernie Madoff self-interested you think so? did he sit down and think what's going to make my life the best life that it could be ah, I'll cheat and steal from my best friends that'll do it Bernie Madoff didn't sit and think Bernie Madoff did what from his friends and family and how did he do, what thinking process do you think he went through, to get to the conclusion that would make him a better person he don't think you talk to these crooks time and time again, they don't think they emote he wanted money he's like a little, you know two year old they don't think they want that toy they're gonna get that toy, they're gonna yell until they get it Bernie Madoff didn't yell, he just stole but he acted like a three year old a two year old, that's all he did he emoted, do is he happy did he cheat, no not even not now, before he was caught if you ask him now, he says he's happy in jail than he was before he was caught probably because his nightmare is at least over he knew whether it was by his family, by his friends by somebody, he couldn't get away with it, and he couldn't get away with it in his own mind he knew he was a rotten human being you can't escape yourself lying, cheating, stealing, I'm not so interested it's not about money money's just one little aspect of life lots of other aspects of life you can be the richest person in the world the ability made up and have no friends nobody to love you, have no relations with anybody, have nothing in your life is that a good life? no, so he's not self-interested there's a word for what he is self-destructive he was destroying himself he was a women worshipper he was driven by his emotions but to call himself interested Steve Jobs is self-interested Steve Jobs is a guy, I think he did wake up every morning and say how do I make my life the most funny to me how do I make the best life that I can be by creating beautiful, amazing products by managing the best company in the world but can that kind of attitude and Bernie Madoff be in the same category now Steve Jobs self-interested, Bernie Madoff is not he's not and we need to purify that term Steve Jobs is not going to build elevators to fall down I mean he cares about the exact curve of the iPhone you think he's going to do something that actually hoods his customers that's the mentality we want, that's virtue that's morality somebody who cares about his work to the extent that he does somebody who's truly self-interested capitalism is a system that makes Steve Jobs as possible it's a system that rewards them and it says that they're the good guys Bill Gates is a good guy from making the money we all benefit from it he benefited from it, he took care of himself he lived a good life and we all are better off for it that's what makes it good we need to be able to justify and raise up that Bill Gates and Steve Jobs of the world for being great businessmen as morally virtuous as noble as the essence of goodness and then if they want to give their money away through charity fine, but that's not the essence of what's good when we can look at people and say yes, be productive be rational be honest, having integrity but creating your own life for yourself making the most of your own life if we can look at people and say that's what morality really is about that's what nobility and virtue are really about then capitalism is easy capitalism is just a political system that leaves them alone to do it when we teach our children that the essence of morality is for them to be happy for them to be successful for them to achieve real values not booty-made off-topic values but not sacrificial values real values in this world that they'd be happy and successful in this world if we can really teach them if we can believe them capitalism is easy it leaves them alone to do that I'm almost done and then I'll take questions and I think it's to some extent this attitude towards self towards happiness, towards success is in the American spirit it's in the American spirit like it's in no other people's spirit it doesn't exist in Europe people don't think in those terms in Europe people still think in terms of happiness in terms of success in terms of personal responsibility they don't in other countries and there's a reason for that and the reason is this country is founded on these principles this country does not in its founding documents say you are your brother's keeper it does not in the founding principles say you should maximize social utility you should redistribute wealth to those who are needy and not trust anybody who's out for a profit those are not the principles in this country this country is founded on the opposite of all that it's founded on the idea that each one of us owns our own life is responsible for our own life but also owns the benefits, the rewards that come from living a good life I mean that's what the American Revolution is about if you think about the American Revolution think about 1770s what are they fighting about what's the big battle between us and England and really us in Europe because what they're fighting against is a whole different philosophy a whole different way of life which is European in Europe who does your life belong to the king the state, the landlord the tribe the group the pope somebody else's your life is not yours it's somebody else's they can tell you what to do when to do it and how to do it your life is nothing the wars that Europeans fought for centuries and centuries and centuries they would just send masses of people to die and nobody cared because they were nothing it was you belong too America is the first country in human history and in some sense it's the only country in human history that was founded on the principle that no your life belongs to you and why do we have a government to secure these rights to secure our institute to make possible your life to make sure that nobody takes your life away from you that nobody interferes with your life that nobody coerces you to do something you don't want to do we didn't create a government so we could serve the government I mean, Kennedy's statement I have a Kennedy statement don't ask what country can do for you but what you can do for the country it's anti-American I mean that founding fathers viewed the country as your servant it was there to protect you and leave you alone otherwise to protect you from harm, to protect you from cooks to protect you from fathers who wanted to kill you or take your land protect you from what he made of, you can't even do that that was an easy one they couldn't even do that because it's so busy regulating every aspect of our lives protecting us to be their servants we have become government servants instead of them being our servants this country's founded on the principle that your life belongs to you now that itself answers we have an inalienable way what does an inalienable mean cannot be separated from you or removed by any way nobody can take it away even a majority can't take it away even if all of us vote to silence me you can't do it we have a right to free speech that means a right means nobody can take it away including by the way a majority this is why we're not a democracy not a pejoritarian democracy we're whites based government so we have an inalienable right to what to whose life our lives we have a right nobody can take it away nobody can touch our lives that doesn't just mean that they can't kill us because you choose to live nobody can tell you how to live your life nobody can tell you nobody should be able to tell you according to our declaration of independence what kind of elevator to build other than the marketplace other voluntary decisions that other people but nobody can force you nobody should tell you who to give charity and who not to give charity to today we're all forced to give charity welfare medicare, medicare, social security if you have a right to liberty liberty means to act, to think, to act your own thoughts, your own actions again however you choose to do them as long as you don't violates somebody else's rights which means hood somebody else and hood we mean hood hood is feelings it's not what the founders meant they meant physically damaged and in the most self-interested political statement in human history you have a right to pursue happiness every one of us they don't tell you how to achieve happiness what path to take way to go to get find it no they just say you have a way to go up and pursue your happiness this country is the country of the pursuit of happiness there's no other country that comes close in that sense in its founding document that's the spirit we need in this country we need a country of individuals pursuing their own happiness and feeling morally righteous about it and what we need to capture is the moral righteousness freedom is good freedom is right, freedom is just because freedom is how we pursue our happiness thank you all the analogy about the elevator the reason government regulations exist and granted once it's established it can run amok but sooner or later somebody is going to build an effective elevator because they're going to skimple the materials and if it's a product it's not going to harm too many people that greatly that's one thing, a thing like an elevator that's the reason because of the occasional bad apple a greedy person, a self-destructive person however you want to look at it there has to be some sort of protection and then you get into a slippery slope of course you do and the principle is this who do you think is better to find the defective elevator some government bureaucrat who makes $35,000 a year who has no incentive built in to getting the worst case scenario I guess he loses his job it probably doesn't even do that because he's part of a public union or a marketplace an insurance company that's ensuring the building a developer who you are building an elevator for the building in which the development happens the future clients who are going to use that elevator might hire an inspector to inspect the elevator can we imagine a free market solution to this all motivated by the profit motive not just by my $35,000 job of course we can the problem is we don't let our imaginations go there because we immediately go somebody is going to slip up, I'm not sure somebody does how many cases of you know electric gadgets right plug in the wall radios, TVs how many of those blow up and kill me say this question because you'd expect them to it's pretty weird electricity I'm not an electrical engineer but it's pretty sophisticated stuff 110 volts here I guess 110 volts not good for you 220 you are really not good for you why don't they happen there's by the way no government regulation there's a private laboratory there's a private laboratory system that certifies these things doesn't happen so they're going to be crooks, no societies are going to be crooks I'm not a utopian I don't think everybody becomes an angel they're going to be crooks and crooks should go to jail government should catch crooks and put them in jail but the market works to optimize it's win-wins trading is a win-win and the people who are who cut corners, who cheat not to the point of killing people let's say but just cut how well do they succeed in business in a real free market, not very well they're the ones who lose the people who succeed are not the corner cutters not in a free market not over the long term I wasn't sure which one I was I think historically speaking where we get some of the ideas that government needs to be involved if you go back to the Industrial Revolution because you were talking about 100 years ago if you go back and you look at situations like the low mills you look at the triangle fire that occurred you look at the commission in factories there was an enormous amount of problems and I think that's what you're seeing where people have the idea that government needs to step in so I'm going to challenge you and ask you how did the marketplace take care of it then because it didn't have a historical understanding well let me challenge you to start with an understanding first and then I'll try to explain the flaws that existed we are taught history by the people who have the existing system we are taught history by people who want to regulate want to control, want to redistribute we are taught that the rubber barons were these evil guys who exploited everybody left and right that is not the reality it's not it's not the reality now were they unsafe working conditions yeah, sure they were we were still figuring out what safety even meant we were still figuring out what kind of conditions how you got safety think about where were we before the industrial revolution how safe were farms how was life expectancy of the farm 38 38 how many kids made it to age 10 on the farm 108 108 sounds radical but way less than half of all kids born made it to age 10 way less than half made it to age 10 that's like before the industrial revolution and then we get the industrial revolution we see kids in factories and we go oh my god kids are working in factories but they're living they get well into their 50s now how did that happen and what was the alternative the alternative was back to the farm and died so yeah it takes time to figure out what your new standard is which remember that the standard was when the industrial revolution started was farming was death at age average age life expectancy was 38 to 40 by the end of the industrial revolution it's close to 50 that's a huge increase and they're soon after that at 60 so we're learning workers in the beginning are so desperate for a job because they don't want to go to the farm because the farm is so horrible they're so desperate for a job they're willing to take on a lot of risk but then they get used to the work and now they say wait a minute it's unacceptable that you use this machine in this particular way we've got to make changes so there's an evolution if you would put a bureaucracy in charge of the industrial revolution to to make sure the air was clean and everybody was safe and no children worked we'd still be in the farms it would have never happened this evolves gradually it takes time it takes time for the market to find mechanisms to solve these problems I'm not saying it's instantaneous but life is not instantaneous at the end of the day life is risky life is risky there's no life without risk and you calibrate how much risk you're willing to take depending on what you're used to and in 1960 people were willing to take on a huge amount of risk have you seen those pictures of the building in the skyscrapers in New York with those guys walking on the beams I mean no ocean inspector would allow that but you tell them that they can't do it they would be horrified they were used to those kinds of risks that was part of their life it was nothing as compared to the lives they lived before they got an opportunity to make a living taking those risks so yes sitting in the 21st century today looking back or sitting in the 21st century looking at Indonesia and saying why are kids working in Indonesia? how horrible is that? and I'm saying no it's a wonderful thing it's a wonderful thing that children are working in Nike sweatshops in Indonesia because the alternative is those kids dying those kids starving in the fields because I don't know that you're writing checks to keep them alive we're not there's not enough money in the world to keep alive all the children that would need it and why would we? no so let them have a job and they'll learn a living and they'll create enough wealth so that their kids won't have to work in the factories and will go to school all the labor laws passed in the United States there were almost no children working in factories for two reasons parents don't want their children working parents want them to go to school but how many schools existed in the beginning of the 19th century? almost none there were no schools there was no public education what do you need in order to have schools? money and was there any money in the beginning of the 19th century? no history history is complicated history is about what happened before not just what happened in the middle it's what happened before what happened in the middle what happens in there why did we have schools at the end of the 19th century? why didn't we have schools at the end of the 19th century? because we didn't afford it if you'd raised taxes to have public schools in the early part of the 19th century you think you could have done it? no you could have worked in a farm or died child labor began when the first human being was created children have always worked the only period in human history the children haven't worked is the last 120 years because of the industrial revolution we have so much work we can spoil our kids we don't even send teenagers to work anymore so and you have to view it as evolutionary and yes, horrible things happen that people learn from and would have done differently if not for government intervention but it's a slippery slope and once you start, there's no way into it and bureaucrats don't know better than the marketplace does they don't she was next and then I'll start and we can move on so one statement I think people vote because they want to be safe it's not like what's going to be safe in this moment and then the question that I have is I understand that unions got started in order for people to organize what standards they wanted to work around in the beginning of the 19th century is there a place for them today and can you just comment on what that is sure there's a place for unions potentially today in certain professions but not with government protection the problem with unions is not unions if unions, if you can organize this union and I as the boss could fire you then we'd be fine the problem is that we have all these laws that treat unions differently that protect them you can't fire them you have to negotiate for so many days you have to do this, you have to come into business how I deal with my employees so I don't think there's anything wrong with unions if they don't get special treatment by the government and you have to go back to laws in the 1930s and the early 1940s that were passed that protect unions and that make it very difficult for employers to deal with unions and give unions political power political power of white economy the power of force which they shouldn't have if they're completely voluntary if joining a union voluntary and dealing with unions voluntary for your association as part of one of the principles in our constitution I don't think you can get a public union there's a whole different story they're playing with our money getting back what's the difference between him and John Corazon why isn't John Corazon going to jail he's a politician what makes him special what makes him special is he's well connected we don't live in a system you know what what was the sense in which in the Declaration of Penance it says all men are created equal does that mean equal outcome what does it mean equal rights and equal treatment under the law equal rights and equal treatment under the law that's what this country responded we don't have that anymore if you're a well connected politician then you don't get treated equally and indeed if you're a businessman you don't get treated equally you're going to get treated worse and if you're a politician you're going to get treated better there's no equal protection under the law anymore we've lost that Corazon should be in jail but he was a senator he was a governor right he was best friends with the guy regulating him the system we have today is completely and utterly corrupt we don't have the constitution anymore it's a fictitious document that judges once in a while refer to vaguely and they who have no understanding of the document none of the judges do and yet it doesn't exist for literal purposes of our lives unfortunately that's the tragedy of America today is we live in a democracy where we can vote anything and democracies turn into what when you can vote for everything what are democracies turn into mobs it's pressure group politics who has the most who is the loudest who bangs on the table the hardest they get their way that's what we've evolved into what does it mean to say a law today is not constitution there is no standard I mean Judge Roberts proved it in getting the general population free markets and capitalism differently isn't your biggest obstacle the mainstream media which keeps reminding everybody that these are bad how do you overcome that there's an enemy much worse than the media because the media is just at a consequence the media is just the outcome the much worse are universities and therefore public schools because the universities train the public school teachers the universities train the media when the media need experts they bring them in it is if you want to do one thing good for your country stop giving money to your alma mater starve them they are the bastion of everything bad in this country is it Harvard and Yale and Princeton anybody the better the school the worse what they teach I mean there's a direct call at Brown I was just at Brown on Thursday it's horrific what they teach in these places that's the enemy the media is superficial the media is just capitalizing of what our children are being brainwashed that's the enemy the other enemy is public schools public schools are the enemy public school unions they dominate by curricula that is anti-american that teaches history you know non-history doesn't teach history teaches that capitalism is bad when they teach communism they never mention 200 million people communism killed right our kids don't learn history they don't learn economics they barely learn how to read and write that's the enemy if you want to fight the one most important thing we could be fighting for more important than any political battle more important than anything else is to privatize education is to fight against public schools public schools are the enemy and the only way you get sanity in the school system is to privatize them I'm not talking about vouchers I'm not talking about tax credits I'm talking about selling them all get the government out of our kids' minds it's none of the government's business what our kids are taught it's our business let's create a real free market in education why do entrepreneurs and really really smart people try to figure out how to make this little phone do something just a little bit better I mean who cares is this going to make life that much different imagine that brain power going into trying to figure out how to make education a better product imagine what would happen if you unleashed a profit motive and the innovation and technology into the field of education and got the steam jobs in school to figure out how to build a school that would make more money than the school across the street how do you do that by teaching kids that because that's all we care about but I don't see that happening public schools how about charter schools I mean charter schools are better but they're still government one there's no government running the education that's not going to work and I'm saying look none of what I'm saying right now is going to be easy none of what I'm saying right now is around the corner this is a long term battle but if you wanted one thing where you would have more leverage than anything else in terms of changing the culture it's getting rid of public schools now I know that's unpopular I know it's hard to do but our entire agenda is unpopular and hard to do and yeah at the same time we fight incrementally politics you vote for Obama because he's marginally better but you also have to keep a big picture in mind if you care about the big picture you care about the future of this country again my view is nothing more important than education I'd like to ask you a question if self-interest is a better moral system then shall I call otherly interest and I agree with that then how come from like a Darwinian perspective we aren't as a society slowly moving and choosing in that direction because I think we're seeing a shift of moving and choosing into other interests because evolution doesn't work on society evolution works on animals in the wild evolution doesn't work on us we don't kill off we don't kill off bad ideas so you know it's an ideological battle you have to convince people and the problem is that the other side has 2,000 plus years of moral teaching on the other side which is very ingrained in the culture much more ingrained in the culture than any theory of economics it is emotional it goes right to the roots of what people consider goodness and righteousness and what makes them good and it's very very difficult to challenge but there's another reason so being selfless who has an interest in convincing all of us to be selfless be the beneficiary of what we do so people who want to control us people who want to control us altruism and altruism doesn't mean being nice to people altruism as a particular meaning other is an altru in Latin as other it's otherism it's placing the wellbeing of others before you own it's the focus on other people at your exclusion your own exclusion who wants you to be altruistic you really want to control you because they get to tell you look there's somebody suffering you have to help them and by the way I can help I can be the middleman I can get to take your money take a piece and give some to them or you don't know what's good for you you don't know what's in your self-interest I do I have this unique knowledge the philosopher king way back we all are too stupid to know what's good for us we all are too stupid to see reality and know reality there's only a certain class of people philosopher kings who see the like we're living in a cave all we see are shadows only the philosopher king sees the sun and the real stuff in reality so who gets to guide our lives the philosopher king so those philosophies are all about controlling people and I'm not saying it's a conspiracy I'm just saying it's ingrained in them the politicians, the leaders think about a tribe if you want to try to gather a tribe going back to evolution what is the leader the tribal leader want you to think that you don't own your life he wants you to think that you owe him his life now he's never going to say that the leader is never going to say Hitler never says you owe your life to me now what does Hitler do he's more sophisticated than that he says you owe your life to the Aryan people to the tribe now who knows what's good for the tribe only I do so you owe your life to me but I can't say that because you'll see through me so I create an Aryan people or a tribe or something like this to make it palatable but that's how they control us that's how they try to control us to put us down and it goes back to tribal societies thousands and thousands thousands of years ago and it's going to take a lot of work and a lot of thinking and a lot of effort to break away from those tribal chains that we still have and by the way the founders did it the founders did it that's a great achievement they did it what happened why did we deteriorate backwards anybody know public schools? cons in a sense so if you're a wealthy Bostonian and you wanted your kids to get the best education in the world what would you do in the late 19th century you sent them to Europe and if Harvard wanted to become the best university in the world what did it do? it hired European professors so the reason where we are today is because we brought in we imported a whole European ideology through our university and it's grown and grown and grown and it's never been combated because while the founding fathers were great political theorists America has never had a philosopher to defend its comprehensive so when the European philosophy started coming in nobody objected and they've taken over today universities how many professors are left of center 90 plus percent even in business schools it's 70 plus there's no area in which anybody and by the way the center is very left when people say I'm right of center that's meaningless to me because the center today in America is so left today the Republican party's platform looks like the Democratic party's platform 40 years ago and the Democratic party's platform on economic issues looks like the socialist platform from 40 years ago the whole political map is lifted and shifted left so center is way over there my left yeah sorry so sometimes it seems like a country doesn't quite fit the crime and that corporate people can rationally make a decision then we're going to make a lot of money and suffer a few losses later on certainly you can make your argument for a pharmaceutical certainly financial services a lot of their settlements are pretty trivial so what do you say we're crisis well I mean the financial services industry is the most regulated industry in the world they have too big to fail why should they consider failure at all of course they're going to ramp up risk taking take as much risk as possible get the biggest bonuses they can and walk away when it all fails because they never held the culture accountable accountable because I think the financial services industry is basically being nationalized I don't think it has to be that way but that's the way it is too big to fail all the regulations the positive insurance all of that is a form of controlling bankers to misbehave so they do I don't see where drug companies you know are behaving bad I don't now they're very regulated they're very regulated they become so regulated today that they almost do no R&D the risk profile of trying to develop a drug today given the FDA and giving them out of regulation they almost don't do it they become marketing firms but the COX-2 inhibitors were 20, 30, 40, 50,000 people died those and the settlement was not that large I don't remember what the COX-2 inhibitors were they were anti-inflammatory pain drugs oh these are like the salvo, salvex, dextrose yeah so I mean that's a classical example of regulation gone nuts so you develop a drug you develop a drug you test it the FDA tests it it's approved it's not fraud as far as I know you sell it in the marketplace well no you have a lot of trial trials yes and the trials show that it's safe right that's why the FDA approved it so you spend I can't remember what the numbers are the numbers are I mean incredible to develop a drug it's out there in the public and it turns out that you missed something in the trials that people are dying who's at fault the government no I mean why is anybody at fault who's at fault why should anybody pay anybody I mean who's who's at fault who did I mean if they did the trials right if there was no fraud if they weren't lying to people then you know there's those T-shirts that say shit happens life is risk sometimes people accidentally do things that hurt other people but when are they liable when do we want to put them in jail we want to put them in jail and they do it on purpose we want to find them a huge amount of money when they do what when they're negligent when they should have known but if they couldn't have known if they did all the trials and they got crossed all the T's and dotted all their I's it's not clear to me that they should be paying huge amounts of money and the settlement should be out of this world I mean we used to have a legal system in America that said that if you couldn't prove gross negligence or at least negligence then you couldn't claim anything accidents happen that's life but it's much worse than this of course right because what was the one what was the authentic drug that they called vials so here's the drug called vials that's out there tens of millions of people taking this drug and some people from what I read this is the only drug the only drug that alleviates their pain and their pain is excruciating and this is the one medication of all the medications out there that alleviates their pain it turns out it increases your chances of heart disease and I'm making it on the numbers grander because I can't remember them exactly I'm trying to have a heart disease by 10% let's say I'm willing to take the risk who are you to tell me I can't you're the FDA right why can't we make those decisions without doctors why isn't the requirement for the drug company just to provide me with accurate information and let me decide what risk I want to take for some people I read articles some people said it's so excruciating I'd rather die this drug was the only drug that helped me and you at the FDA decide no you can't have this drug or how many drugs are there out there with your experimental on cancer I mean there was the one on breast cancer right it turns out it worked on very few women on most women it didn't have any effect it might even have a negative effect on some but on the final stages of breast cancer with some women were going to die anyway it actually had a positive impact just very small now so why not let them try it why is it your business if I'm going to take a risk with my life there has to be some regulation if it's if you're doing trials there has to be otherwise you can have just phase one trial and ok that looks tested through people so let's imagine the government wasn't involved could you imagine a system that evolved that would take care of that problem so the government it's just about companies doctors medical associations pharmaceutical companies all these entities and patients and now we're trying to figure out a system that would protect the patient could we figure something out with our government I think that would be very difficult I mean I agree with you someone should have a choice should have a choice however I think there is still a role for government to play maybe not as much as it does but there is a role somewhere for government to take why could you have private labs testing, authorizing, approving and those labs need reputations those labs didn't have the force of government in the sense of saying you can't take this drug that's illegal that they would have the ability to tell the AMA or the doctors look this drug is not safe we've tested it it's not safe this drug is safe or this drug is safe in these circumstances but not in these and let doctors and patients and medical that's a very complex situation where if you face one, two, three trials and that's a very complex complicated situation I agree with you completely and that's why I would much rather have it in the hands of private medical in the hands of the government what happens I think is we get the FDA and I think all regulations do this is because it passes through government entities it has to be standardized it has to conform to only certain methodologies we lose a lot of innovation we lose a lot of progress and we get stuck and what is the incentive of the FDA is the incentive of any government not to have massive failure that's the incentive is the incentive to save people the fact is no the incentive is not to help you there's a incentive is not to have failure why because what happens if there's failure what happens if people's lives are saved nothing he doesn't get a bonus the incentive built into the system that's why these are slippery slopes if you want to create an FDA that works well it always turns into the monster that I think it is today because the incentive built in is not to optimize the incentive built in is to be as safe as possible and that's what we have today where you don't get personalized medicine we're never going to get personalized medicine with an FDA you're not going to get real information you're going to get viox increases risk of heart disease pull the whole drug pull it all and blame the drug company so of course the FDA approved anyway so I don't think you can I don't think there's a middle role here I don't think there should be regulations I don't think the government has a role to play I think the government is there as the founders envisioned it to protect us from crooks and criminals and fraudsters they should be catching people selling snake oil right as medication they shouldn't be telling us what medication is good for us and what is not that is what the private markets are brilliant at doing they're very very good they're very very good I mean the amount of literature that comes out on which cell foam is better which automobile is better I mean if there was a real marketplace for drugs for drug information and if doctors were willing to take on personal responsibility not just accepting FDA but taking on responsibility of treating their patients with the best buck drugs available all the research necessary to do that it's complicated but that's what markets are that's what the beauty of markets is they simplify a complication I work for a pharmaceutical company and I would just like to say it sounds to me like you it doesn't sound like you're saying no to all regulations just regulations when they infringe upon life liberty as per suit happens is that well give me an example of a regulation that doesn't fit into the suit well the example I was going to go to is prior to 1937 there were no laws in the books as far as this came from out of the food drug cosmetics act in 1937 prior to that time there was no law you could put a drug out on the market know that if it was going to kill people and there was no ability for you as a person that died or had family member to die from that so for me it's hard to say that regulation is no good no so you need laws to protect the lives and property of individuals you need laws that protect us from people who would violate our rights so some regulations but I wouldn't call those regulations there's a different stream regulations and laws there really is regulations are not there to protect you from crooks they're there they're preventive law they're there to regulate how the pharmaceutical business does its stuff with the hope that the end result is that you will be better off laws say a law would say something like you cannot sell product X if it's actually product Y you can't lie about your product because that's fine that's what it would say oh it would say you cannot knowingly knowing sell a product that will hurt somebody else with our full disclosure that it will hurt somebody else that's not a regulation that is a law and there's a big difference because the regulations once you accept regulations regulations are to regulate to dictate how businesses do their business they're not to protect you you also jumped on one of my other points that I inspired is the child data laws from back in 1900s and I'm with if I'm 10 years old and I help support my family and I want to go to work I think that should be something I should be able to do so I just get in when it comes to safety you can't commit yeah but you can't have a cake and eat it too the laws should protect you from fraud the laws are not going to protect you from risk they shouldn't protect you from risk that's your responsibility look personal responsibility should be something I don't know anything about airplanes I don't know anything about drugs I don't know anything about airplanes but when I go on to an airplane to fly I'm not relying I don't think any should be relying on some government bureaucrat I'm relying on the fact that the airplane manufacturer builds planes that will fly and that the pilot doesn't want to kill himself and that the company doesn't want the pilot to kill himself I'm relying on everybody else's self-interest now if I'm told that it's a 737 but it's actually a Mongolian main then that's fine but as long as the information provided to me is real it's my job to assess whether I want to get on the plane or not so there are no regulations for how long a pilot can fly no absolutely no so a pilot could be it could be on the flight date for 24 hours I don't think that would happen I mean again this is where we get this is where the rubble hits the road they have to change it to regulation they have to take parts out through regulation yes but the question is what would the airline companies want would they want to kill their customers would they want to put their customers at risk see this is the call I trust the profit motive of the airline company I trust that when they are putting a pilot on the plane they do not want that pilot to kill me and I don't it's not because of regulations it's because it's because they want to make money so why does it reduce the odds over the years I don't know I mean my guess is that if it's legitimate that the airlines would have done the exact same thing as new information is learned about people's ability to concentrate to stay awake and so on the airlines would have done the same thing but regulations often safety regulations often follow the patterns that are happening in the industry anyway I'm much more trusting of the profit motive of the people involved in the business than they are of government trying to control these kind of things I don't think the government cares the profit motives at times you have the encounters who can weigh okay well seven people are going to die from this and it will cost us 7 million but that's what they do every day but is that good yes absolutely so how many of you how many of you let me think about this what's a good example GM I drive a really really nice Audi I could probably get into a crash driving 70 miles an hour and walk away my son drives a 2002 Ford if he has the same accident he's not going to walk away we make those decisions about how much risk we're willing to take every single thing we're making that decision for ourselves like that Mongolian plane that you don't know is Mongolian well that's hard if I don't know if it's Mongolian but you know when you buy a cheap car that it is less safe than an expensive car if you care about safety I buy a Humvee because anything that goes into the Humvee will be destroyed before the Humvee is but that's the reality we make risk reward trade us every single day and we should because if you try to live a life with no risk you're dead it's the most boring pathetic life possible so the question is should we or should some European and I'm saying we should and often we don't have enough information so we have specialists who do doctors consumer reports magazines waiting agencies good ones free market ones that's what the market provides so I'm thirsty for information guess what people will supply it to me because there's money to be made in supplying it that's what I'm saying now I thought you were going in a different way the people who think short term they're the Bernie Maier and they're gonna they are gonna build the defective elevator it goes back to them yes they will and people might get hurt they do today and people do get hurt and that's what we have a legal system for that's why you go you sue them you bankrupt them you drive them out of business you do what's necessary and the court system works very very well in doing that it's retribution because people will cut corners I think less people would cut corners in a free market than do today the more regulations you impose on people the less diligent they are the less careful they are the less proud of the product they are I think if you leave it to them they'll make better clients they will be exceptions and those will have to be taken care of and that's what you have a legal system for I did a while ago I forgot you've already asked me? one of the two of you how about the EPA let's say I want to build a car that actually could get zero emissions but say I want to modify my old car I've just got a gas mount out of it but I'll be violating some of my laws to make it more efficient car and EPA will fire me I don't believe in any regulations so I mean it's like one of those things and some of the people out there who actually can design a car can get fired by the government I don't know any of my cars but I believe you one of the amazing things is that we basically today drive the same car as we did 50 years ago there's a big difference between the cars we drive today and the cars we drive 50 years ago same by the way with airplanes the airplanes are about the same as they were when those first Boeing 707s I think they were came into commission it's the same airplane it's just got fancier stuff and now they have Wi-Fi inside the airplane is the same so the second other step of innovation was called the Concorde and where's that? there's no innovation in the world around us and we don't care anymore because we're used to this slow pace the only place there's innovation is in phones some computer stuff but this is Facebook that's the innovation or degradation we're not innovating and we're not innovating because we're not free so innovation requires freedom we're not innovating in education we're not innovating in airplanes we're not in any business that has regulations you don't get innovation and that's true of the automobiles industry the automobiles industry is crippled by regulation why did Detroit go bankrupt? bankrupt because of fuel regulations because you couldn't build the right so fuel regulations require you on average on your fleet to have a certain percentage of gas per mileage but it turns out because of labor costs and technology manufacturers are very good at building what? big cars SUVs they profit margin SUVs very high but they're very bad at building little cars so what would happen in a market? in a free market they'd build only SUVs and they'd let the Japanese and the Koreans build the little cars they'd be a splinter but they can't because if they only build SUVs then they'd violation of the law they have to build small cars in order to get the average to the right number but nobody wants these small little cars they have to sell them real cheap which means they lose money on them which means they drive them into bankruptcy but if we let them just build whatever car works for you then they'd build the cars that they would make money off of and the Japanese would specialize in little cars and the Koreans would specialize in something else but we destroy that because we require them to have these averages so everywhere you look everywhere you look when there's failure you'll find these regulations and they're often in ways that are not obvious I remembered what it was we put all this stock in regulations thinking that they're going to keep us safer and all but what what would stock the pharmaceutical companies from paying off these people nothing I mean I don't think it happens much in FDA but I suspect it happens with elevated inspectors I mean I worked in construction I was a civil engineer in a previous life so I think it happens all the time and it's much more likely that you can pay off a bureaucrat than you can pay off somebody who's working in a private company and all of these regulations get passed on to the consumer they're paying for all of this oh no question but this is why we don't have innovation we don't have real progress we don't have economic growth it's because businesses profit-seeking businesses are burdened by regulations that inhibit their ability to create the products that we want and that we would be willing to pay for it's not a difficult story I mean you could get the US economy going at a significant economic rate all you did all you did was dramatically cut regulations on business you could do away with sarbanesarty.frank Obamacare and five other things and the economy would start growing dramatically and at the same time by the way I get rid of all government subsidies to business all the subsidies stole the markets and that should be the Republican platform if they ran on this they would win if they wouldn't win in the last fight we will first thing we pass in Congress first thing we will do is cut every subsidy to business that exists all of them even to our friends farm subsidies alternative energy subsidies existing energy all the subsidies are gone that's about a half a trillion dollars off the budget so if you get a cut defense and entitlements that's not gonna win you friends but go after business that's good and it's good for business it's good for business not to get subsidies it's good for business to have to compete really compete so that would actually be the platform cut all subsidies to business and they would win but of course they don't do it why don't they do it because they need those campaign contributions for those businesses who get their subsidies it's a game right I'll subsidize you and when an election comes you write nice checks to me and that way I can't stop subsidizing you because I want to keep getting those checks and Republicans are guilty of this as Democrats are and that's why you really need to get new people in there who have a completely different attitude about this yeah no I got behind you sorry thank you for writing this book I have a quick comment and a quick question one I know for well I know the second hand knowledge that you're right about the regulations in particular for the FDA that you take a radioactive medicine for a cancer or something you have to model how it goes through the body so you know how much goes through the cancer how much goes through the rest of your body that's coming and the regulation for doing this the model that they use is not something that looks anything like a human being it's a round egg and this is the standard and so you know the the company that was making this just basically said okay fine we'll do this but it was just a waste of time they wanted to know exactly where the drug was going how long it was going to be there so that they knew what it was actually doing they would never realize I'm just doing the regulation and so that's a side my question is is that you say that we need a moral revolution what thing can I do first thing tomorrow morning or Sunday what can I do in the short term to help get there I mean the most important thing you can do to get there is live a life your own life that is consistent with this kind of world that is project to the world a sense of life is good and fun and I'm enjoying it and I'm living it for myself that to me is the most don't apologize for your successes don't apologize for living life through its fullest and embracing life that to me is the most important thing and then I think we need to fight the common perception that people have about business and about greed and about self-interest and just speaking out just when somebody says well those greedy drug companies all they do now greedy drug companies are what keeps millions of people alive and what's holding them back is so stand up for the specifics for the things that actually reflect I believe in the profit motive I think the profit motive is good somebody complains oh jeez those greedy people at Apple making so much money off of my iPhone they don't buy one it's about taking the idea and then applying it to all the different topics that come out but dealing with it quah ethics and quah having pride in your own life and in people's achievements and not capitulating to this person needs it and the answer to that is okay but why is that my problem I mean it really is that statement somebody needs something is not a claim in your life your life does not belong to whoever needs something from you you might want to help you might not want to help but it can't be your obligation from the moment you're born because you have stuff that somebody else gets because they need it you have to stand up for what's yours and I think just having that I mean I'd like to ask can you imagine you know George Washington filling his taxes I mean those long lines binders telling the government all about his life and what he's conducting and what I mean can you imagine Thomas Jefferson walking through security in an airport I mean they treat us like sheep they treat us like no nothing like our life doesn't matter and we just roll with it we just accept it so my number one thing is to get a backbone we've got to get some self esteem we've got to call them on it we've got to send them some garbage some nonsense you have time to give a short take on the Federal Reserve sure am I taking the Federal Reserve as very short and sweet Federal Reserve is just an example of a government monopoly it's a monopoly over money there's nothing the Federal Reserve does that the free market couldn't do just like the Post Office and it's run about as effectively as the Post Office the difference is that if the Post Office screws up then people might lose their mail not big a deal when the Fed screws up we all suffer we all go down and the Fed screws up all the time it has to and this is my quick analysis we all know that price controls anybody who studied economics knows the price controls don't work I mean even Krupp knows price controls you remember Nixon tried them you remember he closed off prices it doesn't work what happens when you set prices when a bureaucrat set prices economics 101 that's been known for a very long time how do prices get established in the market place supply and demand and where does supply and demand come from millions of choices that we all make when a bureaucrat tries to set a price where does that price come from it's there not the millions of choices he doesn't know what people would choose so he can't predict what supply and demand would be so any price the bureaucrat will set will be wrong I mean he might get lucky and set it right but it would be wrong it won't be the point with supply and demand matches so he might set it too high what happens nobody wants to make bread nobody wants to buy it supply and demand don't match you get what you get so much of bread and you have to trash it all you have to throw it all away that's who we are if he sets it too low nobody wants to make bread everybody wants to buy it what happens shortages lines if you're a bureaucrat where you are likely to set a price too low or too high too low because you want people to think you're nice you want a lower price wherever the prices control in the world China Iran, they're always set too low and they're always shortages so what do you mean always shortages and the shortages not because the market failed the shortages is just you set it too low so nobody wants to produce it because there's not a profit everybody wants to buy it because it's so cheap so you run out very quickly what is the price the Federal Reserve sets interest rates interest rates how does it decide what the interest rate should be how does it decide what is it interest rate in the free market what is the supply and demand whose supply and demand would we like bread is the people who want to eat bread and the people who make bread what would be the supply and demand for interest rate borrowers and lenders so what price do I want to lend my money and to what price does somebody else want to borrow my money and the supply and demand just like any other product in the economy would matter a certain price which is the interest rate now the Federal Reserve comes in and it says no we're going to determine this price we're going to control this price and guess what happens it gets it wrong it gets it wrong and when it gets too low what happens nobody wants to lend but everybody wants to borrow now the now this is a trick Federal Reserve has one on top of that it contributes its own money so it's not dependent on the people who want to lend because it prints money it forces them in a sense to lend so then what happens what happens if you lower interest rates to zero everybody wants to borrow I want to borrow money in zero I don't want to borrow money into it it would be ridiculous not to borrow money into it because then it could put it in something get a return pay off and I make a profit so what happens when interest rates are very very low everybody borrow remember when interest rates went 2002 2002 they were 1% you know when inflation was in 2002 3% when you set interest rates below the rate of inflation you're basically setting interest rates at a negative real rate guess what people do when you're basically paying them to borrow money that's what a negative real rate means they borrow money we all borrow money we got mobiges we took our car loans we backed out of credit cards you see per capita debt ratios in America they went like this of course they did because they Christ at load demand was infinite so everybody bought money the key to the financial crisis the reason the financial crisis happened is the low interest rates in 2002 and 2003 why did they all go into housing? because of the American housing policy because of Fannie and Fannie and the Federal Home Bank and the interest deductibility of your mortgage payments and all of that which funneled the money into housing so housing went up but the key was that Federal Reserve always messes up and then they tried to fix it in 07 right and they started raising interest rates they sucked the money back in and what happened they raised them too high and suddenly we couldn't afford our variable rate mobiges that we took in a good time and we started defaulting and that was a trigger to trigger the financial crisis but it's the Federal Reserve and right now we are interested 0 a low 1% was inflation 2% to 3% something bad is going to happen financial crisis is in our future because of what the Fed is doing right now we just don't know where and when it's going to happen the Federal Reserve does not exist these things should be controlled by the market there's actually no the only reason the Federal Reserve exists this is the paradox but this is where it comes to ethics what happened before there was a Federal Reserve? the markets the markets determined this there was a gold standard I mean the government intervened but no idea who had a lot of power JP Morgan bankers did individual bankers particularly JP Morgan had a lot of power and he was brought in in 1907 there was a huge financial crisis and JP Morgan got basically all the bankers into a room and they negotiated they literally saved the country literally saved the country from disaster in 1907 so how do we reward him? we reward him by dragging in front of congress beating him up as an evil capitalist who was exploiting his customers and who had too much economic power and that was in 1913 famous hearings in front of congress he was called names and so on so we decided that we didn't like the fact that JP Morgan had so much power so we were going to create a Federal Reserve to take power away from JP Morgan now why didn't we trust JP Morgan's power because it was to serve who's interests JP Morgan we don't trust self interest we don't trust the problem so instead we created a bank 10 times more powerful than JP Morgan 10 times more powerful than any bank in the world we call it the Federal Reserve we put our rich man at the top and we trust him now why do we trust him? we do trust him, we trust him much more than JP Morgan what does he eliminate him? well we'll get the middle man in a second but why do we trust Bananke and Greenspan and we don't trust JP Morgan no because they're in it for the public good they don't get a bonus they're not driven by the profit motive they're not self interested because they have no accountability and they again they screw up and they destroy the economy JP Morgan could not have destroyed the economy the Federal Reserve can we had inflation in the 70s some of us were like back then 70s were bad who caused the inflation in the 70s? the Federal Reserve you can't have inflation without a Federal Reserve who caused the Great Depression? we know today who caused the Great Depression this is not controversial offended so they shouldn't be a Federal Reserve that was my short answer Obama's a genius he came into office and it turns out that the government was subsidizing banks to make student loans so he said wait a minute it's inefficient I agree with him let's cut out the banks and the government will make student loans directly and that's what he did and student loans have gone through the roof and everything but of course what's the real problem? government is subsidizing the government shouldn't be subsidizing student loans why do you think tuition is going through the roof? government is buying whenever the government subsidizes stuff what happens to price? why a health care cost going through the roof? because the government buys 51% of all health care why a veterinary care prices going down? animals are getting better treatment today than ever in human history or animal history I mean we spoil our pets we give them cat scans we do massive open heart operations on them and the cost of all that is going down why? because there's no government subsidizing but I checked the vet won't treat me no I will lazy lazy the price of lazy is going down because it's not regulated and lazy technology, new technologies in lazy cause the price to do what? go down or up? go down or up? new technology in medicine doesn't cause the price to go up it's how we pay for the medicines how we pay for the technology that causes the price to go up so student loans are going up because government is subsidizing government should be subsidizing student loans banks should be giving out student loans there should be a bank problem people should get realistic about college they should send their kids to colleges they can afford not to colleges that their kids are going to have to be mortgage their life for their futures nothing wrong with something good, cheaper universities it's ridiculous what's going on and of course what are the universities doing with their extra money? adding to their endowments adding to their endowments, what else? the number of faculty has not increased that much they pay a lot more but that doesn't explain all of it what is growing a lot? the administration the administration is exploding universities at Brown University the other day I did a debate and they had to talk to one office for the room another office for parking, another office to get tables they couldn't get a stable people had to bring tables from home because the university needed two weeks notice if they wanted to get tables in a room that had already been approved we multiply the bureaucracy if you look at the administrators it's something like three times more administrators today than 20 years ago at universities with the same faculty and the same number of students because they're making huge amounts of money so they spend it and why are they making so much money? because the demand isn't shrinking because the demand is being subsidized by government once you start regulating subsidizing the starting markets it is truly a slippery slope now can you stop doing government loans now to students? no because nobody can afford any university because the price is so high and the adjustment period would be painful and nobody wants paying no politician wants paying politician wants instant gratification because we as an electorate want instant gratification so you can't fix it now instead do you go all the way to the point of Greece before you because the problem is what does history tell us happens after economic collapse? chaos which is followed by it's almost it's never the case there's no example in history that economic collapse people go oh we should have advocated for capitalism let's fix it it doesn't happen they look who's the strong man who's going to help them out and save them not because he's going to save us but because he's going to slow it down right now the acceleration of stateism is such that we could collapse I mean just to give you some numbers we have $100 trillion of unfunded liabilities by 20 it's between 60 to 120 I think it's closer to 120 but we have by 2025 2025 a little dollar of government revenue from all tax sources covers social security, Medicaid and interest payments on the debt there's not a dollar left over for defense for any other function of government those four could shoot every dollar of revenue and it won't be 2025 it's going to happen a lot sooner because there are assumptions of ridiculous they assume economic growth and they assume all kinds of things we are heading towards economic catastrophe not just financial crisis tell me to stop I guess it's specific to the cost of medicine wouldn't you say there's also possibility that more than just the fact that regulation is there but the culture the culture that's demanding regulation specifically lack of self-responsibility and a lot of medical costs are due to preventable things it's only their own life so people living unhealthy lifestyles and they for driving up the hospital the cost of their own health care I think that's absolutely right and they don't bear the cost they live on healthy lifestyles and then they somebody else is bearing the cost of treating those unhealthy lifestyles but it's also true I don't know what the white cost of health care is so people say we spend 19% of GDP on health care is that high is that low if I could live to be 150 would I want to spend 22% of GDP yeah so if it was a good 150 there's no right price the only right place you find out what the right price is is in a market place where people's real you know willingness to spend money on health care is matched with the supply of health care and you match them up and you see how much and some people might spend a lot on health care some people might spend a little on health care and some people might say to hell I'm going to have a lousy lifestyle but then I'm going to pay for my health care later on and some people say I'm going to have a great lifestyle with my health care costs people make all kinds of choices that's the beauty of a market place regulated industry regulated world we all have to fit into a box we all have to fit into somebody else's vision of what is right and what is wrong first financial crisis of the mortgage market collapse and you know it was interesting how I've been following that and I can understand how it happened it's very interesting it's very methodically laid out very well analyzed I'm looking for what the next will look like and I can't find nobody knows nobody knows we don't know where the bubble is going to be until you're in the middle of the bubble and it's too late and then you don't know when it's going to go I mean I thought housing was overpriced it was a problem I thought it was overpriced in 2000 when my wife and I sold our first home and bought another home and it was ridiculous and I told my wife this is ridiculous housing is too expensive it's going to collapse and she laughed at me and said you always say that and you know and she was right 2004 the new house will be bought double in price again and we sold it and moved into our much bigger house and I said this is insane and then from 2004 we bought the house it went up another 30-40% and I said we should sell and rent we'll make a fortune and she said this is what you always say and of course it happened that I was right in 06 but of course I was wrong before I mean you can't predict these things and you can't tell what's going to happen all I can tell you today is that something bad is coming and when you hold the rate of interest at zero for three years and he's not going to change your front of the two and you print money like there's no tomorrow which he's doing, like QE3 is not even Q3 it's QInfinity because he's putting no limit on it so he's willing to print money forever they have to be bad consequence is it going to be hyperinflation that is possible imagine Ronnie gets elected he cuts regulations he cuts corporate taxes we all feel great about the economy well go borrow money businesses start borrowing investing the banks start taking all the reserves they have and lending money out that two, three trillion dollars the Fed just printed starts circulating the velocity of money goes up and you got hyperinflation the good thing that Ronnie did the reducing regulation will be interpreted as causing the hyperinflation Ronnie will get blame for it but then imagine the Fed sees that hyperinflation coming and raises interest rates and sucks all the money back in but over does it, which I'm sure they'll do and drives the economy back into the inflationary cycle and we have a depression either one of those things is going to happen and that's just one possibility given the outcome of the election there are a hundred other possibilities all you can say is that when you cause an effect you do something that's really, really don't bad stuff will happen exactly what that stuff is I mean government bonds now again, I've been saying this for five years don't buy government bonds now for the last five years it's been the best investment you could make and you've been wrong I've been wrong for the last five years full disclosure but the fact is that interest rates don't make any sense they don't make any sense if you buy those bonds when interest rates go up I don't know when but they're going to go up you will lose a lot of money so it's things like that but you can't predict where but the best book on the financial crisis if you're interested in the financial crisis it's out right now it's a financial crisis yeah, the financial crisis and the free market is fueled by John Allison John Allison just became the CEO of Cato it's on Amazon and the free market cure it's a copyright open and it's by John Allison A-L-L-I-O-S and it's the best book by far that explains what happened and warns about what will happen just one more question maybe okay, back this is a real narrow tax policy question first, what's your take on refundable tax credits and secondly I've also heard some free markets fairly decent free market economists favor the idea of taxing that it be lobbying those two ideas and the interactions are those I guess I would get now when are we refundable tax credits this is a negative income tax I'm against both of them I mean a negative income tax is again in a form of redistribution of wealth Milton Friedman believed that if you did it you could simplify and lower the tax code dramatically it was proven wrong they adopted his idea and were still screwed I mean nothing could happen I'm sorry I'm against them it's just a way of me distributing both my view is that everybody should pay taxes every single American should pay taxes they're going to be taxes and they should be as low and as flat as possible and the best tax if you had to have a tax and if you could get rid of the income tax and guarantee that it would never come back would be a consumption tax because a consumption tax everybody pays and you pay based on how much you consume and you never want to tax production because production is making stuff which is good not the consumption is bad but consumption is destroying stuff consumption is destruction housing yeah I mean housing is not an investment house consumer you used ours but the best example is ice cream you produce the ice cream and consuming the ice cream makes it go away you've destroyed the ice cream now it's good that you've destroyed the ice cream don't even use it but consumption is getting rid of stuff and production is creating stuff you want to encourage creating stuff so I would advocate for a flat consumption tax on everything no income tax no any other tax no capital gains tax because who pays the corporate taxes corporate taxes are consumption tax but they're hidden so there's stupid consumption tax because you can't keep track of it shareholders don't pay corporate taxes shareholders don't pay because they buy the stock on an after tax cash flow basis they know what the tax rate is they don't pay the taxes the only people who pay corporate taxes are the customers the people who buy the products the tax flows directly to them by the way who pays the cost of regulations customers and it might drive the business out of business the business might lose money as a consequence anyway flat tax tax on lobbying is an awful idea because lobbying per se is not a bad thing so if you're microsoft and you don't lobby look what happens to you you know how many dollars like something spent on lobbying before the justice department went after them zero not a penny you know when after them unhatched the senator from utah republican in the early 90s would have hearings about the fact that microsoft is not lobbying and how dare they not lobbying how much money did they spend today on lobbying tens of millions a year does it make sense I want them to lobby it's the only way they'll survive what you should tax you can't do this but what you should tax is politicians they should put in money every way new regulation you need a tax you need to stop that because when you tax something you need to stop it when you subsidize something you need more so if you tax politicians you get a few more some of the things if you want the book it's available on kindle audiobook and hardback public on amazon but most bonds and normal stores have them I've got a blog it's capitalism .inran that's my blog that's my blog I've got facebook twitter youtube so there are plenty of opportunities if you want to follow and see what's going on but I really, the book is written is not an academic book it's written for you guys so if you're all interested in what's going on in the world today and how to fix it and how to address it it's very grounded it's very disworldly so I hope you all buy the book and enjoy it and we need to keep fighting whoever wins this election we'll take the two parties don't go away