Still good morning. Good morning everyone. That was a wonderful start. By the way I'm the deputy head of biomedical engineering. This is my first official external duty as the deputy head. Thank you for the trust from the department and the dean's office. This wonderful event make me think sort of remind me what I did in 2015. So many thanks to the dean's office. It's really wonderful to celebrate the accomplishments of our associate professors. It's my great pleasure to introduce to you Dr. Joseph Rospoly. He joined Purdue BME in 2015 after getting a PhD degree from biomedical engineering at the Texas A&M University. But his footsteps have been everywhere in continental US and elsewhere and I'm sure he's gonna talk about his assignments throughout his his his growth. He's got some really good research collaborations with top notch medical schools including the University of Texas Southwestern Medical School, the University of Pittsburgh Medical Center, IU School of Medicine and the University of Virginia School of Medicine. And also he's got really really good collaboration with GE Healthcare. As you know this is really hard for a assistant associate professor. So what he has been doing he's focused on electromagnetic modeling and radio frequency coil design for MRI for magnetic reticence imaging. So you see these capital equipment in many hospitals and he's really improving the coil design of those machines. So really big deal. He's designed over 30 coils for 3T and 70 MRI and he has got a lot of awards at Purdue including the Impact Faculty Fellow. This is for undergraduate course transformation. So Joseph has been really really a frontrunner in the department on undergraduate education. He's also got teaching awards Willis A Tacker Prize for Outstanding Teaching in Biomedical Engineering and Mentoring. So basically he has been really a frontrunner in terms of undergraduate teaching, graduate mentoring. So without further ado and let me just present to Dr. Joseph Ruspoly. Thank you very much Anand. I appreciate it. Honored to be your first official engagement as our interim head. Also I want to thank the college for putting on this series. It's been many years that it's been doing so and the tenure track is a grueling long experience. It could be a marathon just like a PhD program with ups and downs and it's wonderful to celebrate successes and to share perhaps some lessons learned along the way for our colleagues. So thank you very much. Ten minutes is not a very long time to go through. You know what I'd love to share with you. I could do a few power hours easily but I think that's you know what draw people like me to the profession standing in front of a captive audience. So I'll just start with some of my background. The places I've lived could be seen on this part of the globe. When I was young I moved around several locations on the east coast of the mid-Atlantic region. My father was in the Navy so every two or three years we packed up and moved somewhere new. Usually it was somewhere in Virginia or Maryland. There were highlights there. I actually lived on Camp David from 1983 to 85 during the Reagan presidency and of course many military bases. But the formative years I'd say started when I was 10 and my father was assigned to Pearl Harbor. And I was lucky enough that after that assignment he retired and found a civilian job out there. So much of my upbringing was in Hawaii. If you've been out to Oahu, Hanama Bay is a popular snorkeling spot on the east side of the island. Near Cocoa Head our house was maybe a couple miles from there. It was just idyllic beautiful society multicultural. Just loved everything about it but very expensive to live. And you know when the time came to graduate I ended up leaving. But meanwhile while I was there I was very interested in computers. I was building computers for family and friends. At the time it was buying different components and motherboards and putting it all together. I was writing code and Pascal and writing early web pages just in raw HTML for companies as well as personal interests and I was the webmaster at our high school. So I knew I wanted to do something to do with computers but I was also fascinated by electrical engineering in general. So I chose to go to the University of Virginia since I'd lived in Virginia before and I was able to get in-state tuition in my third and fourth years because of that history there. I double majored in electrical engineering and computer engineering. They were separate programs at the time and ended up writing two undergraduate theses. One for engineering and one for a minor in Chinese history. So at a time I was one of the few people that could speak at length about the policing of the British administration in Shanghai in the latter 19th century. It was quite an interesting topic on the side of my engineering courses. But upon graduation I never honestly gave much thought about graduate school. I had worked with talented TAs but I really was interested in getting a job, making some money, getting out of debt, etc. And there were a number of companies that recruited around there. I had offers from defense contractors in the D.C. area but I somewhat wanted to move west and I was intrigued by a job offer at Dell Computers in Austin, Texas. So I ended up moving there. I lived in Austin area for eight years. It was a wonderful place to be in your 20s. Austin's always changing. Supposedly you know you're from Austin if you can complain about how great Austin used to be. But it's still a wonderful city. And I ended up meeting the young woman who would become my wife there. She was attending University of Texas at Austin to get a master's degree in special education. And then she became a school teacher at the local public schools. And so we were married. She decided a couple years later that she wanted to get a PhD. And she went back to UT Austin. Got a PhD and got her first academic position at Texas A&M University. And so I was still working for Dell and she was starting at Texas A&M. And she'd come home from work and talk about you know all the wonderful time she had mentoring students that day, teaching courses, doing research. And I was driving into my job and I had great colleagues there and it paid well and it was there was a defined career path. But I realized I had an early midlife crisis that I'm thankful I did have. Because I realized I wasn't gonna have personal fulfillment you know staying in an industry job similar to Dell or the other companies in the Austin area. So now that she was an assistant professor I decided to quit and go to graduate school myself and it made plenty of sense to do so at Texas A&M University and College Station. I wanted to build on my electrical engineering background but pivot maybe to something that had to do with medicine. I really wanted to help people more immediately. You could say at Dell that you know you're building these data center servers and they're going out and doing wonderful things for all sorts of applications but I really wanted that more immediate impact perhaps even working in the hospital setting as part of my career. So I found a lab there that was mainly electrical engineering oriented and you know ended up getting into hardware design for MRI as non-set radio frequency coil design and ended up then coming to Purdue. But what brought me to Purdue obviously tremendous international reputation for excellence. The other opportunities I had were you know the caliber of engineering students and peers and the faculty that I would have didn't compare. So I was very excited about Purdue in that regard. There was an alumnus that I also admired nearly a hundred years ago. Edward Mills Purcell who got a double E degree in 1933 and would go on to win the Nobel Prize for his discovery of the NMR phenomenon which led to MRI and I really appreciated his philosophical view of research in his Nobel speech talking about at his doorstep great heaps of protons quietly processing in the Earth's magnetic field in the snow and I really connected with that and I'd remembered that from before I was introduced to Purdue in Indiana. But at the time it was preeminent teams that were carrying out most of the hiring here and for me it was the engineering healthier brains preeminent team that drew me to Purdue whereas I could tell you all about the literature and MR hardware electromagnetic modeling. I was more familiar with the engineering healthier brains initiative through watching Frontline and Professor Tom Tolavich who led that team back in 2011 first you know discussed the dangers of repetitive head impacts through collision sports and so I was honored to join that team and work with all the colleagues Eric Noman and others in that preeminent team but I have to be honest Purdue also you know is exceptional in their partner placement program. My wife not even being in the College of Engineering it's not common to have a program that provost does a wonderful job here at really facilitating partner placements across colleges and that also played into our decision. Purdue was in the midst of doubling down and investing in MRI hardware and resources here on campus about a year after I came Purdue opened the MRI facility with a three Tesla human scanner from GE healthcare that I'm now at the director of and there's a photo of my group at the time at the opening ceremony of the facility so very exciting time to come here. I continued my work with Professor Tolavich and the neuro trauma group my little area that I carved out was doing MR spectroscopy on collision sports athletes so gauging the concentration of different metabolites in the brain and longitudinal studies before football season during and after recovery and also diffusion tensor imaging where we looked at white matter integrity throughout the same time course with a nice little graphic here of one of our participants white matter in 3D. I also stuck with what I considered my more bread and butter which was the radio frequency coil design and electromagnetic modeling for that it was for ultra high-field magnetic resonance so I worked with different partners as as non mentioned including the University of Pittsburgh we had NIH support for these studies where succinctly to say high-field MRI you can no longer have a single coil that transmits and excites protons in the body. The shorter wavelength requires that you have more than one in this case we have 16 independent coils or you could think of them as antennas for magnetic fields and they're all operating independently and ideally you have a nice uniform magnetic field that's created but in the not ideal case you know MRI could act a bit like a microwave and heat up tissue so really this is all research only seven Tesla MRI and that's because the safety aspects of it have not been hammered out enough and that's where a large part of my research lies in performing electromagnetic modeling to ensure safety with parallel transmit hardware and we've also spent a good time on breast MRI as well because that's something I've carried through since my early days as a doctoral student and then here taking advantage of our three Tesla scanners we've developed a class of wearable coils the initial motivation indeed was for breast MRI so to be able to have a wearable array of coils that can provide better image quality for a woman getting a breast MRI which is normally done prone with a very fairly uncomfortable position but my my hope was if we could do this supine wearing either a stretchable array similar to what you see at the bottom right and these are easily manufactured with conductive thread and embroidery machines so I've partnered with GE healthcare to evaluate some of these coils including this 60 channel array that's now with their partner at Stanford surgery and radiology for evaluation so very excited to continue this work and this has brought me one of my patent applications here at Purdue as well and then finally I just wanted to touch on service opportunities and that's beyond you know serving in committees here one service opportunity that I jumped on and I'm very glad I did was an international working group through my primary organization the International Society for Magnetic Resonance and Medicine and this was a three-year effort that culminated in the 120 page white paper with experts around the globe so I was I was chairing the RF safety subsection which was the largest chapter of this white paper and it was really a great opportunity to make colleagues and friends around the globe also though to manage a group of different colleagues who sometimes are competing in the research realm so that definitely has helped my future collaborative opportunities and international reputation but finally it all comes back to the students they're countless faculty peers and mentors here too many to list really but as well as undergraduate students in my lab I think about 30 so far but the graduate alumni for my group have gone on to very prestigious postdocs I'm very proud of them all and I wouldn't be here without these graduates and I also have a wonderful current cohort of students across BME and electrical engineering that I continue to work with and it's really that's why we're here for our students and just one of the highlights of the job in my opinion to be able to mentor them and watch them grow so I think I'm already over my 10 minutes as quick as that seemed thank you very much thank you Joseph questions I think we can allow two quick questions Joseph I do have a question I was reading your your biography and different people you work with so what lessons did you learn from your experience chairing the RF safety working group that that's great question on that working group you know they're experts from France Germany England's Korea and as I mentioned some of them might be competing for grants some of them might have alternate approaches to how they feel experimental hardware should be validated or even designed for high-field MRI so when I was given that opportunity I talked with some more senior colleagues who have been in these types of working groups before for advice and one one that really came through and was relevant here was to not let everything boil down to the least common denominator where everyone is an agreement otherwise you end up putting a white paper out that really has no meaning and would be not quite as impactful so there were many difficult conversations in the meetings we had over the years and you know we have to we had to come to consensus through voting it wasn't always unanimous and but we also wanted to be inclusive to include all the different approaches but really to make sure that we didn't let things kind of go down to the least common denominator. Well quick question anybody okay let's give another round of applause to Joseph thank you very much


So this is going to be a section demonstration of the pancreas and the bed of the stomach.  So in order to see the bed of the stomach, we'll have to lift up the stomach. And that's what we are doing right now. So what are the structures which are located in the bed of the stomach? Let's start from the one which is visible in front of us. This is the pancreas. This was covered by the superior leaf of the transverse mesocolon, which also is part of the bed of the stomach. And running along the upper border of the pancreas is the splenic artery. That also forms part of the bed of the stomach. Apart from these three structures, the other structures which form the bed of the stomach are left kidney. Above that will be the left suprarenal which we cannot see, the spleen where my finger is pointing and the left dome of the diaphragm. So these seven structures form the bed of the stomach, namely the pancreas, the transverse mesocolon, splenic artery running along the superior border of the pancreas, the upper part of the left kidney, the left suprarenal, the spleen and the left dome of the diaphragm. So this whole region is the bed of the stomach. If you look closely, you'll find that there is a space where my hand is located between the bed of the stomach and the posterior surface of the stomach. That space is referred to as the omental bursa or the lesser sac. And in real life, we can enter this space by slicing a ligament which was located here. That is called the gastrocholic ligament which was extending from the greater curvature of the stomach to the transverse codon. So once we slice it, we enter the omental bursa or the lesser sac. The clinical significance of this bursa or the omental sac is that in case of the pancreatitis, fluid can exudate out and it can collect in the omental bursa. That condition is known as pseudo pancreatic cyst. So that is all for now. Stay tuned for the next video. Thank you very much for watching. Dr. Sanjay Sanyal signing out. If you have any questions or comments, please put them in the comment section below. Have a nice day.


Chainsaws are incredibly powerful and versatile and really fast. Something is going to go wrong. However, when you get rid of the things that you don't need, you kind of find the things that are important to you. To be able to take this raw log, and within a day or two days or whatever long it takes, have a piece of art or whatever's in my head, that is really amazing. It's an amazing amount of power to like have immediate expression in a solid form. Ah, little skinny thing.  I was trying to find people that were doing large scale pieces of art, so I approached her about making her piece for the legation. I had a little apprehension. I wasn't sure exactly what kind of an image we would get. I was just so impressed that she's given me weather and she's given me wind. It was a very personal piece. It didn't seem to be coming from some other source. It was something coming out of her. It can be really difficult to imbue a sense of dynamism and movement into something as rigid as wood. She started to incorporate fine art techniques.  I think that really brings a whole new level of craftsmanship to the carvings that she makes. As a kid I used to climb like super tall fir trees up to where the branches were breaking under my hands. As a kid I didn't realize that I could easily die probably. My grandfather was a littler. He would give me little projects because I was always fascinated by it, but I inevitably would like cut myself one time and give up or it would take too long. Maybe if he would just give me a chainsaw. My family on both sides were really creative people and I was always told by all of them growing up you cannot be an artist for a living. I was leaving my old job and I wanted to start my own projects. I didn't know what I was going to do yet. When I first met my husband he gave me a chainsaw. It's kind of a weird thing to end up doing. It's not every day that a tall beautiful woman asks you for a chainsaw but when they do you kind of have to accommodate. I like being active and I like using my body but it took me a while before I could carve for more than a few hours at a time just because it's stamina. It is incredibly physical. If I can't move it, that's a struggle. I don't think she could physically allow herself to fail. I knew from the second she cranked it and made her first cut that she was a chainsaw carver from then on like I could see it in her face. There are no classes. You can't go to college and learn how to be a chainsaw carver. R. L. Blair and Doug Moorland are the ones to give me my first introduction. Doug Moorland and his family own Cadillacs chainsaw carving gallery down in Manchuk, Texas.  Get after it. Embarrass yourself. It doesn't matter. Everybody's going to support you for putting forth the effort and she did. It was kind of eye-opening how different this was from traditional woodworking. It has its own set of tools and different lifestyle. They were really the beginning of this carving journey. Griffin was, yeah, she's natural. She can take a 2D cartoon and turn it into a 3D object. There's not very many people that are able to do that. People kind of find chainsaws frightening. At least I did. Too many scary movies. She can take something so sort of utilitarian and create something really beautiful with it. I watched her go from in the span of five years to having never started a chainsaw in her life to winning awards in Australia and the Australian National Championship. It's really fun to be able to have a front row seat to her career. It's like getting to watch a cool new movie every day. I think of chainsaw artists as kind of the rock stars of the art world.  They really feed off that energy too. Friends, family, people that I haven't seen in years that will come out to me and talk to me about carving. I wouldn't even call it like a calling I think it's just this shared enthusiasm. For this piece I'm kind of going a little bit more freestyle trying to find where everything is. Once you get in tune with it and you move with it it is almost like a dance. I think it is really tied up with how you're feeling in the moment. I like how immediate this is and to be doing something so scary and like handling it is really kind of exciting and it does make me feel really powerful. I think that until the day she can no longer lift the chainsaw physically she will be at chainsaw carving. There's something about this that's special. I really just like when putting a lot of work into something having something to show for it at the end of it it's the most satisfying thing I've ever done.


Thank you, everyone, for coming. Good afternoon. Also, thank the Mises Institute for inviting me. So what I want to talk about today is the political economy of policing. So what is that? So the political economy part is what I mean by it, actually, is the economic analysis of the institutions through which policing is provided. So what is policing? So that can refer to what most people have in mind when they hear police, like government agents enforcing laws, hopefully protecting property rights and keeping people safe, but not limited to just that, but also the non-state provision of the enforcement of property rights protection, not just both commercial, but as well as people doing non-compensated labor, volunteering their time in neighborhood watch or buying their security systems and cameras, so trying to be inclusive here. So not just your elite government police, but also your elite private security. So what I'm doing here is kind of a comparative institutional analysis, both of your government provision and your non-government provision. And the key, the light by which I see everything else, is through economic calculation. So Dr. Solano talked about the problem of calculating under a system of socialism, but the economic calculation problem, it's not just limited to socialism. It can also occur in an otherwise market-oriented, I don't know if that's a good one, a market economy when you have government agencies operating within it. So I have a picture here of Mises's bureaucracy, which I think after this talk, everyone should go buy a copy. I'm probably gonna lobby for that to be one of the books included in the box. It's not only 100 pages, it's a great read, but how Mises defines bureaucracy is that it's an entity that can't engage in economic calculation, as opposed to an organization manage for profit or it can depend on profit and loss calculation. So when we think of a typical government police department, it's run bureaucratically. They can't engage in profit and loss calculation. I mean, they can calculate their costs, which are meaningful because they go out into the market and acquire labor, some capital goods, some police cars, some guns, some tasers, these things that have market prices, using resources that other people bid for, but they can't calculate profit because their revenue is disconnected from the voluntary market exchange. That is, I mean, they mainly get it through taxes or taking your stuff. Otherwise, through a non-taxation means, I'll talk a little bit about civil asset forfeiture later. But there's this disconnect. It's not people expressing their desire for government-provided policing. They're not exchanging their money, demonstrating they prefer the government-provided service more than they prefer the alternative use of that money. So that's a bureaucratic police department. By contrast, private security bought voluntarily on the market, at least in an ex-ante sense, people buying it are demonstrating they prefer those services over the alternative uses of the money that they're spending on them. And this has a lot of epistemological implications. So as I mentioned, police departments are bureaucracies that can't engage in profit and loss calculation. So they have to find some other way, excuse me, of measuring performance. Most of them, it's not like they go out and collect surveys of how much people like the services they provide. They don't say they don't leave us a Yelp review. They don't do these things. So they mostly rely on data they just collect incidentally. Things like reported crime, arrests, clearance rates. So clearance rates being, when there is a reported crime, if they arrest somebody for it, they consider that a clearance. Not necessarily convicted for it, but we arrested someone. And with these figures, like, okay, reported crime went up. Maybe we need more money. Reported crime went down. Thank you, you're welcome. So these things, you see, they're very limited from what we can tell from these things. It's very different than profit and loss calculation, which a for-profit firm can tell whether they've allocated resources to more highly valued uses. And I wanted to mention Eleanor Ostrom and her colleagues. I think they engaged in what I consider probably the best social scientific research. I mean, it's not economics, but they're the crown jewel of the social sciences, but the best they could do under the circumstances. So starting in the 70s, so at the time in a research question of interest or maybe probably something just taken as gospel was that municipal services should be consolidated. That's wasteful to have, like, if you think of Pittsburgh, Allegheny County, there's all kinds of little police departments. It's like, why don't we just have one big one? We'd get rid of duplicative services. I'd be more efficient, you'd have better training. And so she goes out to test this question or to the extent that it can be tested. So she was in Indiana, one of the cities, research was Indianapolis, where she'd find, I guess ideally, you'd find comparable communities. So those near Indianapolis receiving policing services from the Indianapolis police, comparable neighborhoods that have their own independent police department. And she'd go ask people, are you satisfied with the police? Well, not just satisfied, but all kinds of things. How easy is it to get in contact with the police chief? How many police officers can you name? Like all these kinds of things. And then also, well, what's the cost per person? And she found some of them, well, what she generally found was those with their small independent police departments were generally more satisfied. Sometimes they cost more, sometimes they cost less. But from this, we can't determine, like, are consumer preferences being satisfied? As if people like it more, but it also costs more. Well, maybe people are willing to pay that. Maybe they'd prefer to pay less, but have less preferable service. But we don't know. So I guess I bring all this up, just to show under a system of bureaucracy, it's extremely hard to tell whether people are actually satisfied that they'd be willing to pay for these things, even with the best research that can be done. So by contra, now moving away from bureaucracy, talking about policing services being provided through voluntary means, economic calculation is possible. Even in a psychic sense, or be careful here, not calculation, but people know, or can know whether they've made a psychic profit. You go buy security cameras for your house. You feel more protected, whatever. You were willing to give up that money. It's like, oh, resources have been allocated to more highly valued uses. Commercial enterprises can engage in actual arithmetic calculation when they spend money on either hiring contracted police or having their own employees provide security in-house. And they can do this, might be in a variety of ways. In terms of additional revenue, if we make, say our business establishment, people feel safer, maybe they, we increase revenue. It's not necessarily the case that they can tell, this was the marginal contribution of greater security.  We see revenues go up, maybe we can infer that that was the cause of this security. Or similarly, with losses prevented, say we're dealing with retail theft, we hire some loss prevention specialists. We can see what were our losses beforehand, what were our losses afterwards, and we have a monetary value that we can compare to what we have to pay this loss prevention guy. And if we pay him less than the, I guess it's a counterfactual, we don't know how much loss we're actually preventing in the counterfactual, but we can estimate it. So there are these means of telling whether, in money terms, security resources are being allocated to more highly valued uses. So in thinking about a bureaucratic police department, since, again, going back to Mises's bureaucracy says, here's for-profit management, here's bureaucratic management. Bureaucratic management can't be done according to profit and loss, so how do they make decisions? Well, if we observe them, like, go look out the window, you can see a lot of the Auburn police driving around. Their production process seems to be mostly, they'll respond to calls for service, and when they're not doing that, they wait for calls for service, or maybe engage in vehicular patrol, or just park and have some donuts. But they mostly wait for, it's very reactive, and even when a crime does occur, they'll go investigate, detectives go investigate crimes, so it's very reactive. They do make some proactive decisions. They do respond to incentives. I think a good example of this is after the 1984 Crime Control Act, this opened some loopholes for civil acid forfeiture, which you might be familiar with, so civil acid forfeiture is when police can seize goods that they believe have been used in, or are the proceeds of a crime, so they spot you have a lot of cash in your car, that, oh, is that drug money? And they only need a probable cause standard to actually seize this, and the reason they're interested in this is that they can supplement their own budgets with this. A lot of states require that, if police do do this, I mean, they don't have to get a conviction. Civil acid forfeiture, not criminal acid forfeiture. In the state of North Carolina, for example, it's supposed to go into an education fund. But this federal law made it so that police departments could bypass that. They could get in a partnership with the DEA and they'd split it 20 to the feds and 80 to the local police department. And so they decided to reallocate resources based on this. Bruce Benson, a Florida state economist, he found that near Tallahassee after this that police, well, property crime went up. Police officers dedicated fewer resources to preventing or investigating property crime and more towards drug crime, because that's where the money was. So they do respond to incentives like this. Yeah, I mean, an additional example, Ferguson, Missouri, where Michael Brown was killed. There was a DOJ investigation. They found that a lot of police departments were engaged in writing a lot of tickets for, you know, ticky tax stuff. You got these cracks in the sidewalk leading up to your house. You don't have matching blinds. That this was a way of making money. So they do respond to incentives and some of these have monetary rewards. But as you see, it's not connected necessarily to what consumers want and are willing to pay for. A couple additional institutional differences between government police and non-government police that I think are important is that government policing takes primarily, takes place primarily in the public domain or a so-called public property, I don't necessarily like that term, but maybe it's more accurate than public domain because that might have the implication that it can be homesteaded. But like what I mean there, like public streets, et cetera, like these don't have a capital value. And so if you try to, I mean, you could engage in a street beautification project, I guess, but you wouldn't have a capital value for it because it's not traded on the market. So you can't tell whether those investments were worth doing. So this has implications for the allocation of resources and whether we can tell whether certain investments are value added. A second, or an additional institutional difference is how both government police are constrained and how non-government police are constrained. So government police are constrained, at least say in the American case for example, by constitutional guidelines about searches and seizures, what they can do that without these restrictions maybe they'd be even more abusive. Whereas non-government police don't have these, they're not bound by the constitution the same way. And so I'll talk about how, well that affects how they engage in policing, how differently they are constrained. So now that we've talked about some of these institutional differences, I wanna talk about the implications these have for trade-offs within policing. That is, there are these inherent trade-offs that in a bureaucratic framework, we're just unable to tell whether we've found the optimum of this trade-off according to what consumers want. So I'll talk about each one of these. The first, I've decided to label convenience slash dignity and security. So you're probably familiar with that Ben Franklin quote about the trade-off being between liberty and security. And if you trade liberty for security, that you lose both and deserve neither. And it's my argument here is that trade-off isn't necessarily the case. That is, if you have the liberty to choose the security you want, well then, while you have your liberty, you can choose more or less security so that the real trade-off might be something like convenience. Some mundane example is like computer passwords. Like there's a trade-off between convenience and security. Like if you're using the same password for all your accounts, that's more convenient but you're probably less secure. Whereas if you wanna be more secure then you might have to give up some convenience. So that's what I mean. I don't think if there's not a monopoly provider of security, you don't necessarily have to give up your liberty. The second one, this issue of constraints and security. That was just meant about constitutional constraints. And then this question of whether to use force or how much force to use. I'd say this itself can be subject to economic calculation in the right institutional setting. And then these last two points related to some research I've done on police unions where police unions will negotiate in their contracts for increased job protections that make it harder to punish them when they're being bad. So those are the last couple of things we'll round out. So let's dive in. So, a pleasant picture here. So thinking about this trade-off between dignity and security. So, when you think about the mission of the Transportation Security Administration, I mean, it's to keep people safe while traveling. But there's this trade-off. I assume for now that they're not engaging in security theater. That's what they're doing actually increases security. But there's a cost to dignity.  They want to find this optimal trade-off. Like they don't just, and probably a lot of them don't enjoy this, but somebody made the rules that they have to do it. Maybe some of them do enjoy it, but say what they really want to maximize, regardless of whether they enjoy it or not, is that they want to find this optimal trade-off. That they don't want to engage in undignified acts unless the benefit in terms of security is worth it. But we have these incommensurate things. How do we measure dignity versus security? Well, the thing is, when this is bureaucratically provided by the TSA, we can't, it sounds grammatically funny, but we can't know. We can't know whether they're actually doing that. I mean, if we imagine instead in a different institutional framework, say the airlines themselves were the providers of security, security screenings. I think that would seem incentive aligned, at least, that, I mean, they don't want to just be insecure. I mean, they have billions of dollars of capital goods at stake, but they don't want to engage in security theater, especially if, well, maybe if they could fool people, but they don't want to engage in undignified acts if that's not actually increasing security. So if that were a matter of choice among consumers, like you choose this airline and they offer, okay, maybe you just go through the metal detector and what, that's through this competitive process, they could figure out the optimal trade-off between what consumers want and also protecting our capital goods, but they wouldn't want to unnecessarily inconvenience travelers, because they want travelers to come with us, but we also want to make sure our capital goods are protected. So I would argue that it's only through this institutional framework of private property and free exchange, rather than a monopoly provider of security, a bureaucratic provider of security, where this optimal trade-off can be determined. And we can look at different examples of this. So I mean, one more within the private sector. So this here is a picture at a Kroger in Fulton County. So it depicts, so within a Kroger grocery store, there's additional barriers with one entrance and exit. Looks like it's protecting things like laundry detergent or other items. I guess these were the things that they found were more often stolen. And you see the headline says, some customers upset over changes at a Kroger. So here, they're facing a similar trade-off, right? Some customers may feel alienated by these additional security measures. So you have this decrease in dignity or convenience. And Kroger's only going to want to do that if that sufficiently, say, prevents loss, if the dollar value of that loss prevented is greater than however many customers they might lose. I mean, yeah, people will complain. They'll probably still shop at Kroger, right? I don't know. But they don't want to do this unnecessarily, right?  But only in this institutional framework of private property and free exchange can they determine this. A similar example of this. This is a convenience store in Baltimore. See this lady behind a lot of glass to protect herself. And people complain about this too. It's undignified, but this entrepreneur behind the glass is trying to determine and can do it because of profit and loss, whether it's worth even while operating a convenience store like this where, well, faces an increased risk of theft. And even though this might alienate certain customers, like, oh, I feel like I'm a zoo animal here being behind this glass. Then, turning to the second point, which, let me go, constitutional constraints and security. So, Mises in bureaucracy talks about these constraints, bureaucracies are supposed to be subject to rules. I mean, that's what bureaucracy is. Well, you can't calculate, so follow these rules. So he says, if one assigns to the authorities the power to imprison or even to kill people, one must restrict and clearly circumscribe this power. The law determines under what conditions the judge should have the right and the duty to sentence, and the policeman to fire his gun. So, this should be subject to rules. Constrained, it can't just depend on officer's discretion. It has to be bounded within certain rules. But this leads to certain problems. So in line with this, according to the law professor Randy Barnett, which he agrees with Mises, you gotta constrain government here. But this leads to a dilemma of vulnerability. So he says that a society that includes extensive public property holdings is faced with what might be called a dilemma of vulnerability. Since governments enjoy privileges denied their citizens and are subject to few of the economic constraints of private institutions, so that's the poor thing. They're subject to few of the economic constraints. Their citizens are forever vulnerable to governmental tyranny. But he goes on to say, so if they're gonna be, you wanna decrease their being subject to governmental tyranny, so you put these constitutional constraints on them that they can only search you under certain conditions or certain conditions as we met if they arrest you. But this dilemma of vulnerability is, this leaves you vulnerable to others, non-governmental actors. So if we think about order maintenance in the public domain or extensive public property holdings as Barnett terms it. So government police are constituting to strain their ability to maintain order in the public domain. So for example, laws against certain disorderly activities such as vagrancy or loitering or panhandling or soliciting for prostitution or public intoxication. The Supreme Court has voided these for vagueness. They say these laws are too vague. Like if this, we don't know if this lady, is she handling a cab or is she advertising her services?  So the Supreme Court says these are too vague, we can't have these laws because as they are enforced they might be arbitrarily enforced. But if, so this is to solve the dilemma problem with government police officers, but then it does leave you vulnerable to, the vagrants, the loiterers, the panhandlers. So it's like choose who you wanna be vulnerable to. So this is the dilemma of vulnerability. And so the problem is, well, maybe think about Rothbard wanting to unleash the police. You're on the wrong side of the trade-off. Because they can't, without calculation, they can't determine what the optimal trade-off is here between this dilemma of vulnerability. So by contrast, if we think about private security, so these have a picture here of the Beatles of Burlington arcade. They got cool outfits, but they're considered one of the oldest private police forces in the world. So the Burlington arcade, it's not video games, it's an upscale shopping area in London. And they have certain rules that if American police tried to enforce these in a public domain, it would be considered unconstitutional. So for example, they prohibit whistling, because whistling used to be this code among pickpockets in the area. So no whistling. You can't make clucking noises because this was a signal among ladies of the night that their services were available.  But so the constraint here is they're not constrained in the same way as, like, they don't have a First Amendment constraining them against, you know, if you consider clucking or whistling speech. But they're constrained in other ways. They don't want to make rules that make this property undesirable by consumers. They only want rules that will increase the value. Or if they do decrease the value to some people, the value is increased commensurably to others. But we can compare those because they can gauge in profit and loss calculation. Sorry if that sounds too much like a broken record, but like I said, it's like the light by which I see everything else. These things that you can know because of the institutions of private property allowing you to calculate profit and loss. Then moving on to this question of whether to use force or how much force to use. So this is a picture of, so a few years ago, there were these two men, they're being arrested here. They were in a Philadelphia Starbucks. And they were sitting in there. They didn't buy anything. One of them requested to use the bathroom and they were told by the manager, you gotta buy something or you gotta go. I mean, it's a busy place, you're taking up a table. And they chose to do neither. So the police were called. And the police reiterated to them like you either gotta buy something or leave. And again, they didn't do either. So they were arrested for trespassing. And here the police basically did their jobs right. I mean, it's like, here's trespassing. Starbucks is fully within their rights to eject these two men. But this ended up being an entrepreneurial error. Like if you've heard about this case, it was a big PR disaster for Starbucks. Ended up closing 8,000 locations for a day for some kind of training. I think the CEO met with these two men. I think it might start a scholarship in their honor for young entrepreneurs. They said they were there to make a real estate deal, but they're wearing sweatpants. So what I wanna say, maybe from a legal perspective that Starbucks was fully within their rights, but from a profit making perspective, an entrepreneurial perspective, it was probably better for them had they tolerated this nuisance rather than use force to deal with it. And they can only know that because, well, Starbucks is subject to profit and loss calculation. Whereas, I mean, the police department, like I said, the police department itself, they were acting as the agents of Starbucks, but I mean, like I said, they didn't break any rules. They did their jobs as they were trained to do. But because this took place in a context where there's economic calculation, they're able to determine whether it was worth it to use force here. And might I add, so you might know, this saga continues with Starbucks and enforcement. So more recently, a few Starbucks locations have closed because they went too far the other way. They became too tolerant. So in Seattle, for example, Starbucks employees were, they just felt unsafe, too many people shooting up in the bathroom. So economic calculation allows them to see that they've gone too far the other way. So they're trying to find this optimal trade-off. I mean, we don't wanna use force too much, but we also don't wanna become too tolerant of certain behaviors that people don't wanna come in here and people don't wanna work for us. Some of those locations ended up closing. But again, this is only because Starbucks can engage in profit and loss calculation. So last couple things I wanna talk about. So with police union protections. So police unions negotiate for job protections that make punishing police officers more difficult. This, we can effectively think that as a, or think of that effectively as a pay increase. So it's like professor, granting professors tenure to the extent that that actually gives them some job protection. If you think, okay, I got these two job offers like this one pays this amount, this one pays the same amount, but there's also this chance of obtaining tenure. It's like, oh, well, all else held constant. I know what I'm picking. So the one offering tenure could offer less in wages to the extent that people think job security versus higher wages as a substitute. The one not offering tenure is gonna have to offer more money. And it's the same thing for police officers. All else held constant. More job security will decrease the level of wages that have to be offered. And there's pretty clear examples of this. I find interesting. So in Chicago, for example, there were years where the city is like, oh, we don't have a lot of cash. We can't really raise your pay as much as you want. And the police union says, well, we'll take more protections in lieu of higher wages. And the city's like, okay. And so you see how the city might like this. They're like, oh, well, this is budget neutral. You know, any costs that come in the, any costs that occur monetarily will come in the longer term once we, well, which is what they found. They, certain officers with these protections, they were extremely hard to fire and creating these civil liability costs for the city. But nobody remembers that when the decisions were made. And then later, so the Chicago police, or the city of Chicago had this police accountability task force. I think Lori Lightfoot was on it. And they recommended getting rid of certain, some of these protections. They said this, because they're the police accountability task force, we want police to be more accountable. Well, these protections, so an example of protection might be officers get fired, they can appeal to binding an independent arbitrator. And about half the time, these arbitrators give them their jobs back. And ostensibly, this is to prevent arbitrary firing, because this is a very big issue. I won't get too much into, but with private sector employment, private sector employers are relatively unconstrained as well. They're not trying to obtain profits. They can, they have, they're less constrained in wanting, in being able to hire people they like, who aren't necessarily more productive. And so in that sense, public employees might be more vulnerable to firing, but then you have all these civil service laws or union protections that make it harder for them to be fired. So anyway, I just want to, sort of that what I'm talking about in terms of these protections, but to finish that story, about the police accountability task force. So they recommended getting rid of these protections and the fraternal order of police president came back to them and said, yes, we would be willing to forego these protections. Just bring your checkbook. So if you pay us more, we'll get rid of these protections. So they clearly see these as substitutes. So this leads to, I think, an interesting question. So a trade-off between, say, lower taxes and greater police accountability. So as mentioned, at least some police unions are willing to negotiate away protections in exchange for higher wages. But how much are taxpayers willing to pay? That's what I find interesting. You see certain surveys of people saying like, yeah, the police need to be reformed, but the same surveys never asked like, okay, how much are you willing to pay for that? I wonder, well, maybe people are willing to pay. I don't know, but people seem to think that, oh, we should just get rid of these protections. Well, they don't think of the secondary effects like, you've lowered police pay. You're going to have a different pool of applicants likely. So this is a trade-off here, and we can't know what the optimal trade-off is without markets, and it wouldn't be taxes, but it would be individual buyers of security. How much are they willing to pay for greater accountability? And then, I think this is an interesting political economy issue, and this, I think is related to the fact that we can't calculate the optimal scale of police provision in a bureaucratic framework. So most police departments are at some kind of municipal city level, and there's a lot of heterogeneity. There's different people who, people who are paying the bulk of the taxes, the ones who would probably be like, yeah, give more protections, lower my taxes. They're generally not the ones suffering police misconduct. So just an additional issue whether you have bureaucratically provided policing that you're not able to determine these optimal trade-offs because consumers aren't actually able to express their preferences in a market setting. I mean, you have voting, but that's just really very crude at best. Just not a substitute for determining opportunity costs. And then lastly, a related issue, this trade-off between misconduct and what I'm calling de-policing. So the de-policing label is, or some called it the Ferguson effect, that police officers, they're worried about getting in trouble. It's like, I don't want to be on the evening news if I try doing my job. And even in certain cases, as we found, like I would argue, in my opinion, sometimes like, yeah, they do things well, but then LeBron James is tweeting about them. Like thinking of the Makaya Bryant case where it involved a woman about to stab another woman and a police officer shooting, and it seems like in my estimation justified. And it's like, well, this led to a lot of negative publicity. But the point is to the extent that police are able to, I'm just gonna stay in my car. I'm not gonna be proactive because I don't want to put myself in more situations. That's what I mean by de-policing. Okay, so primary justification for these protections by those who are more protections, such as qualified immunity. So qualified immunity protects police officers from civil liability if they violate someone's civil rights and are sued. If they, I think the legal conditions are, if they do so in a, I guess, good will, to the best of their abilities, they didn't try to violate civil rights. And there's not a historically established, through precedent that doing this thing violates civil rights, then they're not gonna be held personally liable for it. And the justification for that is, well, we don't want police officers to be afraid to use force in situations like this. Like you're in a high pressure situation where people are using lethal weapons. You don't want police, well, the argument goes that you don't want police officers to be hesitant to use force. But if you don't have these protections, then they'll pull back, engage in de-policing. So this is a trade-off. You'd rather have more misconduct or de-policing if police are unprotected. Of course, say, this is only a problem when you have monopoly provision of a government bureaucracy providing policing, where they do have the less constrained, they can shirk. That's what I'm essentially talking about. They're shirking when they engage in de-policing. Again, if I wanna go sit in my car and eat donuts, that's shirking. I can only do that because there's not market competition. So an entrepreneur trying to satisfy consumers wants to find this optimal trade-off.  Certainly don't want guys going out with guns blazing. Maybe economic calculation will determine that to be the most efficient response. But no, they wanna minimize their liability while also protecting clients. If they're shirking, if they're minimizing their liability too much, then a competing entrepreneur will provide services that are better on that spectrum. Only minimizing liability to the extent that they're not unjustifiably leaving their clients unprotected. So to conclude, the provision of policing faces many entrepreneurial issues, as I've pointed out, but bureaucracy is about strictly following rules.  It's like, you just do these things. You know, they're like Joe Friday from Dragnet. Like, just the facts, man. It's like, everything's by the book. And then, you know, in those buddy cop films, you have like the buy the book guy. That's the bureaucrat guy.  Practically speaking, policing, it's not a standard situation. It's not like the DMV, where if you meet these conditions, I will issue you a license. It's not easily subject to bureaucratization in that way. And well, not to imply that the DMV is easily subject to bureaucratization either. I mean, there are trade-offs there too. I mean, Walter Block will tell you all about that. All the, you know, tens of thousands of people dying on the road. Like, is this worth it? We can't know without economic calculation. We have road socialism. So I don't want, I just don't want to apply that to DMV. Like, oh yeah, this is a great case of bureaucratization. Like no, there are, I mean, maybe in worse costs there too, of tens of thousands of people dying. So by moving policing outside of the realm of economic calculation, but making it bureaucratic contributes to a lot of these problems we see in policing. And I think one of the important implications in thinking about police reform is that, I mean, that might push you towards one side of the other of these trade-offs, but as long as you, like, reform, but keep it bureaucratic is not reforming in such a way that it's subject to private property free exchange, these things that create market prices through which economic calculation is possible, you can't resolve them. You can't find that optimal trade-off. So it's unresolvable in that sense. So that's all I have to say for now. Thank you for your attention. Okay, I think we have about four minutes for some questions. So I think Manuel said it best. Keep it concise. Keep it about what was asked. Be brief, no introductions, no anecdotes, no attention seeking. Have you done any research into specific areas? I know Detroit at least was looking at utilizing private police forces in order to help kind of rebuild their image by having better security. Do you know how successful that was if it's being successful, et cetera? Oh, well, regarding Detroit, I mean, a pretty well-known private policing service in Detroit is the Threat Management Center. You can, so the purveyor of that, Dale Brown, he's got some great interviews with Tom Woods in which he talks about the things he does. I don't know of the city of Detroit, the government trying to utilize this. A big problem for them is that they promise so much to their public employees. And so a lot of, much of what their current taxpayers are paying for policing is for services rendered in the past. It's to pay for retired police officers. I mean, created a great entrepreneurial opportunity for Dale Brown to enter. So I don't know of the city being involved, but he himself, I mean, he has quite a profitable business, a lot of mostly commercial clients, but also a lot of residential clients. So, yeah, I don't know if this, you think the city would be interested, I mean, it might just be a death spiral, I think, as if things gets worse, tax revenues go down. But yeah, so if you're interested in Detroit in particular, and I'd say just private policing, I think Dale Brown and Threat Management Center, are very interesting. Go check out those Tom Woods interviews. So in a system with private policing, how would qualified immunity work? And if we were not to have qualified immunity at all, what would be the best way you believe? And I know you said there are, there's never a best solution, it's always about trade-offs. But what do you think the best way to keep them accountable would be? Yeah, so, qualified immunity, I don't think any non-state actors, I think there was some legal bells over whether workers in contract, I don't like the term private prisons, they're all, the government's their only customer, I call them contract prisons, there was some debate over whether they're subject to qualified immunity. But essentially in the privacy, you don't have this. There's, so there's vicarious liability, the whatever the individual employee is gonna be doing, their employer is going to be liable. So there's not anything comparable to qualified immunity, if that makes sense. They're like, either them as an individual or their firm is going to be civilly liable if they do things that a court determines they committed a tort. So it just, this fits in well in the discussion about these firms, they want to minimize that liability. I find it interesting, there's a Canadian private security service called Intelligard and they're really early adopting out of body cameras, like they'd have guys carrying cameras around, there's actually footage of a guy getting like roundhouse kicked and he drops back up, but they did this to protect themselves, right? A lot of police unions have fought against body worn cameras, saying this changes their working standards, so it's subject to union negotiation, where for privately, they want to minimize their liability, like essentially, yeah, if you're doing things right, then you want that footage to protect yourself. So, say in these ways, yeah, they want to find that optimal trade off, we want to minimize our liability, but not so much that we're not protecting our clients. So it's a, yeah, you wouldn't have a substitute for, you wouldn't have anything like qualified immunity, just be that firm subject to civil liability, and so they have to find that optimal trade off and compete with other entrepreneurs also trying to find that. We're out of time, so thank you, Dr. Fegley. Thank you.


The former president of Ghana, John Mahama, has raised the lamb over the practice of capital flight from corruption amongst the developing countries. He said the development would worsen their growth if the international community does not enhance and enforce the convention and declaration against corruption. Mahama gave the warning while delivering a keynote presentation at the 53rd annual conference of the Nigerian Institution of Estates of Years and values in alluring the state capital. With the theme asset valuation as a global anti-corruption to the Nigerian experience. The World Economic Forum estimates that the global cost of corruption is at least $2.6 trillion annually. The cost of capital flight from corruption will worsen the growth of developing countries if the international community does not enforce the conventions and declarations against corruption. Mr. Chairman, the international community has embarked on a global anti-corruption fight across several sectors including the real estate sector. While these initiatives have had a variable impact at staunching the flow of illicit financial revenues, definitely more needs to be done using all instruments available to the international community and individual nations in the fight against the conquer of corruption. Through transparency, Nigeria can better tackle corruption in the real estate sector and asset sector. Nigeria, like my country Ghana, however, is yet to maximize the potential of asset valuation as a tool for nation building and the fights against corruption. Our countries must constantly strive to improve and enforce existing global anti-corruption conventions designed to curtail the negative impacts of corruption on our national economies. If we are sincerely and genuinely desirous of meaningful development, we must do something about corruption, meaning why governments alone cannot succeed in preventing and fighting corruption and corrupt practices without the cooperation and collaborative efforts of the private sector, state agencies, and critical stakeholders including the professional organizations, particularly the estate surveying and valuation professionals whose roles and services are charming and key to the economic development.


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Yn ystod y cyfan yw'r grffwch yn cyflawni gwaith o'r Portugol, os ym Llisbon, Caterina Carreras. Mae hyn yn ddigonol i'r cyfan ystod o'r cyfan sy'n gwneud y 3D sy'n gwybod. Yn i'n ddod, mae'n gwybod, mwy gŵr o'r cyfan yn gwybod, mae'n ddod ystod o'r cyfan sy'n gwneud cyfan o'r cyfan o'n gwybod. We are Fabrica. Fabrica is a creative research lab funded by Benetton based in Italy. It's a residency programme for young people of all different creative disciplines from video making to interaction design, graphic design, music, creative writing and we are a representative of the design department which is the department which focuses on products and furniture and installations. I'm Dean Brown, I'm from Scotland. And I'm Kersti and I'm from London and a product designer. I'm Georgia, Benelato and I'm a further designer as well. Mexico Bands is a project about nomadic structures, nomadic living, travelling, pop-up culture, small spaces. So the project was inspired by this temporary structure. It's a structure that we found in an antiques market in Scotland and basically the structure is a kind of redundant structure from many many years ago. What we think it's for is for fishing or for sheltering you when you're like at the beach or something like this. But basically there's kind of clues about what it's about. What we do know is that it's no longer in use, it's a kind of redundant old fashioned idea. And this project is kind of about trying to revive the structure and find contemporary interpretations for what it can be used for now. This is the mobile museum which is a project by Philip Bone who's a graphic designer from England and myself. And it's called the Mobile Museum. Basically it's a mobile museum and in that sense it is everything that a real museum has but on a micro scale. We try to curate small exhibitions which are always related to the location and related to the place that it travels to. So every time we come to a new place we have a new curatorial theme. For Luxembourg we chose the theme of money and everything that you can see here is an item that's been donated to the museum by international creative people responding to the theme of money. We think that if you put all these things together they kind of speak very loudly and they speak bigger than each item on it. Yes we have merchandise, we have postcards, in previous events we've had posters. Sometimes we've had coffee shops. In the first event in Milan we had a coffee shop but in this case we had so many contributions that we didn't have space to have a coffee shop. So this is the net cabane, this is my cabane, I'm Georgia. For this cabane I decided to start from the original one that probably belonged to fishermen so I decided to use the rope because of that environment and so I decided to combine the ropes with the structure because they can work really well together in the way that the rope helps the structure to be fixed and the structure helps the ropes to draw and to define this space. So I decided to do a kind of space, a room where the ropes define the ceiling, the sides and the floor and basically these two materials together works really well in that sense. This cabane is called Softfold and it's by Marie Desanc and Margot Keller who are both French industrial designers and they were kind of using fabric as a way to kind of define a small room. So they're playing with this idea of the fabric becoming the wall and the fabric becoming the floor. Basically it's a kind of chill-out room for reading a book or using a laptop or relaxing and it's sort of like blurring the boundaries between textiles and structure and furniture. A really interesting detail is this neon light where you have this yellow piece, you have a neon light installed inside. You have a cool blanket that can basically be folded over and covering yourself if it's cold. This little table here is designed especially for a laptop. The circle on the top is for the cable to pass through. So basically it can kind of be like a home office space or a reading space or a space that's really easy to travel. Basically because everything's made of fabric you can pack it very easily and take it somewhere else. Okay, so this cabane is by Valentino Carretta and Gustavo Milion who is a Chilean photographer and an Italian product designer. So the cabane is about going back to nature and this canopy and the photo was by the photographer so he wanted to pick this environment and I guess it's also taken from this idea that the structure was made to be outside. So all the elements as well are using the materials in their sort of basic states. So using like the trunks of the wood with the mirrors to sort of reflect this canopy. So this is my cabane by Casey Minns. My cabane was looking more at maybe more awkward spaces and the idea of a waiting room. So this idea that you have to face time and be more conscious about time. So this was what the project was about. This was about counting days in the year, more about time hours in the day and then this was more about seconds and minutes. So it's this whole principle that you have to... Facing time is about facing your own existence and that's what this cabane was trying to discuss. But also by the fact that this structure is temporary that was another layer about this whole idea of time and temporality. This cabane is by Amory Poudre, a French designer and Brian Wood who is an American graphic designer and it's called Rod. Basically what they wanted to do was to use the cabane structure itself and only the cabane without adding anything but to make an interpretation without any extra ingredients. So this was their challenge. And basically what we see here is a half dismantled cabane and then the structure that was removed from the cabane is creating this new piece which is a kind of sculptural interpretation of a clothes hanging rack or something kind of ambiguous but basically you get the sense that it could be used for something. It was kind of talking about flat pack culture and deconstruction culture but not in a very poetic way. And basically what we see here in terms of the colours is that you can really relate to the individual elements because you can see that the blue piece here is corresponding to the blue piece there. So there's a kind of coordination between the original cabane and then it's new interpretation. And I think also they were very much interested in the fact that the cabane structure in itself was well designed so in a way adding something to it wasn't the answer which I think is quite interesting. We're looking at it.


Okay, I think we're ready to begin the one o'clock session. I'm glad to hear the macroeconomic enthusiasts show up and we'll have another application of capital-based macro this afternoon. I call it kings and hi-hack head-to-head, partly because when the two principles debated, they tended to talk past one another. And I wouldn't rectify that. So we're going to put them head-to-head and it turns out it's not as hard as you'd think. There they are. But it didn't go well and the hi-hack dispaired and Keynes assumed he had won, as in fact he had not on the grounds of the logic of the macroeconomics that he advocated, but on the grounds of the attractiveness of the policy recommendations that it suggested. So the politicians certainly were more in favor of Keynes than hi-hack. Well, I want to try to turn that around this afternoon. You know, very briefly about divisions and frameworks of these two principles. So I write that Keynes' vision of the economy suggests a circular flow framework in which earning and spending are brought into balance by changes in the level of employment, not by changes in prices or interest rates or wage rates, but changes in the level of employment. Hi-hack's vision of the economy suggests a means-ends framework. It's not a circular flow, a means-ends framework in which the means of production are transformed over time. Time is there on the ground floor in hi-hack's theory over time into consumable output. So I'm going to subject you to a brief review of the Keynesian circular flow framework. I'm sure many of you, if not most of you, have seen one version or another of it, but you haven't seen my version, okay? So stay tuned here. We represent business enterprises at the top, business organizations, and that's just a facilitator to get the different people in the economy in line with one another. On the bottom, I put all the people are down there, they're workers, consumers, investors. And the way this works is that part of this flow is a flow of labor and other factor services. Now that other factor services kind of gets lost in Keynesian theory, it seems to be all labor. He theorizes in terms of labor, but suggests that, well, everything else sort of works in tandem with labor. So it's labor and factor services. And of course, businesses have to pay for that is called income. People get an income for laboring, we sort of knew that. And on the other side of the diagram, we get goods and services. Those are produced in the business organizations with the use of labor and other factors, but people have to pay for it. And that's expenditures for consumption and investment. So that's the story there. Now I bring in a policy from the outset because Keynesianism is nothing without policies. And here we have the Federal Reserve managing interest rates, I've got it turned off right now, let me turn it on. And my circular flow circulates, it doesn't do that in textbooks. And it's circulating pretty slow. But don't wonder, the interest rate is up at 6%. So if we use a Fed policy and just turn the interest rate down to 2%, it'll circulate faster. And don't worry about the ultimate consequences of that. That's the way it works. Slow back down. Okay, enough of that. Now that's Keynesianism. And Hayek, as you saw in the last lecture, argues in terms of the structure of production. Well, there's a lot of difference between those two frameworks. And I'm going to show you how to get from one to the other in the process, showing what all is wrong with the Keynesianism. Now you've all learned this from the textbooks and from principles 101 or whatever. The Keynesian system is an equilibrium when income equals expenditures. Notice it's not when demand and supply prices are the same, or when the interest rate is at its equilibrium level, it's when income equals expenditures, y equals e. It's y for income because little i is interest and big i is capital. So income equals expenditures. For a wholly private economy, then y equals c plus i. Add the government sector to be c plus i plus g. And here at Auburn, I'm very careful to spell out the holy, wholly private economy. Some of the people in this region of the country think holy means h-o-l-y.  All right, here we've got expenditures and income. And of course, to show that expenditures equals income, and that's the equilibrium condition, we just draw a 45-degree line, and there it is. So the economy is in Keynesian equilibrium somewhere, who knows where, right now along the 45-degree line, the line itself identifying all possible combinations of income and expenditure points, okay? So now we add to that the consumption equation, which just shows how much people consume on the basis of their income. And it's an upward-sloping curve.  And when they do earn, the more they earn, the more they spend. But they don't spend as much more as the amount that they earn. So the slope is something less than 45 degrees. And we can show, hey, the intercept is how much they spend if they have no income. The B is the slope of the line. It looks like this. You've all learned this in macro 101. And then we just pile investment on top of that. Investment in this model, that's the basic model of Keynes, is just autonomous investment. That is what it is caused by, if anything, animal spirits, we assume. So investment depends neither on current income nor on the rate of interest. It depends only on profit expectations, which themselves are not well anchored in the economic system. And so that sort of gives you a clue that this economy is not going to be very stable, all right? Consumption in an investment, as well as government spending, are portrayed as additive components of total income. The three components are distinguished largely in terms of their stability characteristics. Why those three? Well, one of them is stable, that's consumption, one's unstable, that's investment, animal spirits. And G is seen as being stabilizing and supposed to offset the instability of investment. That's the world view there. Now, we see where that equilibrium level occurs, all right? Which doesn't necessarily imply that labor markets are clearing. In fact, chances are they're not, unless we're lucky. It might be a particular level where markets clear in labor. In fact, we're going to start out that way. But you can see what we have. We have income horizontally, and then consumption plus investment. That's what gives us our equilibrium. So the holy private economy achieves an income expenditure equilibrium on Y equals C plus Y. Note that income itself rather than wages, prices, and interest rate is the equilibrating mechanism. So if income is the equilibrating mechanism, then the economy is going to be in trouble, all right? Because it'll push income down to whatever it takes to get the equilibrating, it'll push income up to whatever it takes. And it's all driven by the unstable investment component. Okay, here we go. Kane says it's only by accident or design, that's his terms there, that the economy is actually performing at its full employment level. Some of my students ask, well, what else is there except accident and or design? Well, of course, it is spontaneous order in the market process. And so that's what's being eliminated. Can't be that because prices, interest rates, and so on, are not doing their job anyhow. They're not doing what they're supposed to be doing. So we assume here that initially, full employment conditions prevail if only by accident, just a good starting point for the developing theory. Okay, now when I say we're at full employment, what I must mean is that we're on the production possibilities frontier. And if we trace across like that, we say, okay, we're on the production possibilities frontier, lucky us, it could have been otherwise. In capital based macro, full employment implies that the economy is on the PPF. The PPF itself being defined in terms of sustainable output levels of consumption and investment. And now we show the labor market and we show sure enough it clears at an equilibrium wage. Now the way Keynes would describe that is, let's see, I probably have it here. In Keynesian macro, full employment implies the labor market clears at the going wage. He calls it the going wage. I think he introduced that term, the going wage. And the going wage is whatever the wage rate happens to be, and it tends not to change very easily, certainly not in the downward direction if it needs to, sticky downwards. So the going wage, the going wage itself having emerged during a period in which the economy was experiencing no macroeconomic problems, all right? But as soon as it experiences macroeconomic problems, we're in trouble because it doesn't change, or at least it doesn't fall. All right? So labor income, y equals w times n, and at least in this country we use n stands for labor. Don't ask me how that is, but n stands for labor, the quantity of labor. So it's just the price times quantity of labor. So labor income is fully representative of total income. Such that changes in labor income stands in direct proportion to changes in total income. That's strange because the other factors, capital and land, they all either move up and down together, up together or down together, but there's never any movement of one against the other. Isn't that strange? But that's it. And so labor income would be that rectangle there where you just multiply the wage rate times the number of work for hours and scale it up by whatever proportion of total inputs are something other than labor. That works at least for Keynes. Okay, let me bring back my E equals y curve. And look at this, according to Keynes, a collapse in the investment activity, the collapse being attributed to the waning of animal spirits. He uses that term, animal spirits, three times on a page and a half. And you assume that, okay, that's what he means, whatever that's supposed to mean. Okay, so the animal spirit is primarily a cause of the downturns. In response to the reduced investment and hence reduced employment opportunities, the economy spirals down into recession and possibly into deep depression. Well, let's watch that. Well, there's the animal spirits. Okay, so that would take the wind out of anybody. So the investment curve moves downward. And of course, now you see expenditures is less than income. We have disequilibrium and what happens is the economy spirals down because you have excess inventories there. In other words, you have income and then consumption investment and whatever's left is excess inventory. So the economy spirals down until it reaches a new equilibrium. That actually equals y again. So there's the change in investment and there's the change in income. What you had to learn when you took the course is that there's a multiplier effect because of the particular slope of that consumption line.  It could be 2, 3, or 4, something like that. So income changes disproportionately to investment in a positive way. In other words, it's a larger change, okay? Notice also that consumption falls too. Not the consumption equation, it doesn't fall. But since we spiral down, then the level of consumption is something less. So when investment goes down, consumption goes down. That's sort of hardwired into the Keynesian system. And that by itself tells you that this system is not going to work very well. Isn't that right? Okay. So the simple investment spending multiplier quantifies the relative rates of the downward or upward spiraling. Now, look at the labor market. What happens to the labor market according to Keynes is not that the wage rate changes. It's just the demand for labor changes that shifts to the left. But wages are sticky downwards. And so at that wage rate, you have unemployment. And again, the Keynesian solution is to pump up the economies of government spending or printing press money, whatever it takes to get the economy back to where it was. Note that the going wage keeps going, even after the market conditions that gave rise to them are gone, okay? The going wage got going back when we had no macro problems, whatever that was, okay? Now, from this point, I'm going to skip, I've done enough of this. I'm not going to have time for much more. So I'm going to skip to morphing from the circular flow to the means ends framework. That would be the hyacinth, all right? So we've got that straight. We know what the Keynesians look like. So the nature of the Keynesian stylized spiraling associated with recession and depression and inflation becomes more transparent when the PPF is in play. So let's put it in play like we did before, and it looks like that. Again, where full employment would just happen to be, a wane of animal spirits causes investment to decrease in with it income and consumption. The economy falls inside the PPF, so now I want you to look at the PPF and see what movement there is when this C plus I falls, all right? So now the economy moves inside the PPF. That's the story. And that's totally consistent with what Keynes is saying. He said, he doesn't bring that along. He doesn't show the PPF. He showed we're inside the PPF. And as before, we have a sticky wage rate that doesn't equilibrate markets for labor. The further waning sends the economy deeper into the PPF's interior. Now, there's a further waning. There it goes again. Okay. And there more reduction in demand for labor, but no change in the wage rate. Now, if we just draw a line, moving inside the frontier and beyond, trace out a linear relationship showing how consumption varies with investment. In other words, if we put these things back on there altogether, you can see that's sort of the path that consumption and investment can take. You can go northeast or you can go southwest, but it never goes along the PPF. You can't go along the PPF. And so that's the track along which the economy moves in the Keynesian view.  I get to call it that because nobody else draws it. So I'll name it what I want. Because it all depends on demand. How much demand is there in consumption plus investment? If it changes, then the economy moves along that constraint. To show that I've derived this C, note that if investment were to fall to zero, the economy would settle into an incoming expenditure equilibrium with Y equals C. In other words, that vertical intercept of the demand constraint is consistent with there being no investment, of course. And so it's all consumption, whatever there is of it. Now, one thing, just looking ahead for a minute, look at that line, look at that line. See, one of the things Keynes did was sort of design his policies or design his theories with what he was seeing out his window. And of course, he was writing this in 36 after the big crash in this country and in the Western world, really. And what he saw was both investment and consumption falling. The economy crashed, all right? Both in the US and certainly in Britain. And so that crash, as much better represented, Hyak would say, by that orange arrow we had in the last lecture. So he's seeing something that looks empirical. The whole economy is crashing. He's trying to reconcile, well, how did this happen? Well, he didn't think it happened because of bad policy. He thought it happened because markets don't work very well. And so that's the way he justified his system. I write an equation for this. I don't want you to even copy this down. But what you can do, if you want to, is take these two equations, c plus i and c equals a plus b y. So that's total expenditures. Equals c plus i. And you can work them to remove the y and show how consumption moves with investment. And what you get is the equation of that line. You have the intercept of a over 1 minus b. You have a slope of b over 1 minus b. And that equation, c equals, you can read the rest of it. That's the equation of that line. That's based solely on c equals a plus b and the addition of consumption and investment. Now, I'm going to skip a part here just because it takes up too much time. But Keynes, when he drew this line, he says nobody recognizes this. But they ought to understand it. And he comes up with even a simpler formula than I do because he had a zero intercept for the consumption equation. And he says, the conclusion appears to me to be quite beyond dispute. Well, it is quite beyond dispute if you accept all of his assumptions that the wage rate won't change. It's sticky downward. That investment is autonomous and moves with animal spirits. And so on, if you assume all that, then yes, you can get this equation. And he says, yet the consequences which follow from it are at the same time unfamiliar and are the greatest possible importance. What's the importance? The importance is that if government understands that, it knows when to have stimulant packages. It knows when to pump money into the economy to make it run and so on. That's what's going on here. OK, to keep track of interest rate movements, the loanable funds market can be brought into view. And here it looks like I'm doing something sort of against Keynes because, like I said before, he threw out the loanable funds market. And here we put it back in. There's a supply of it and a demand for it. And I can show you here then why he threw it out. Because he came to believe that the interest rate didn't affect anything. And it goes like this. Though Keynes argued that neither savings nor investment dependent in any significant extent on the interest rate, he also argued that both curves, as conventionally drawn, shift together, leaving the interest rate unchanged. Those curves are virtually welded at the intersection and they can move left and right. But it doesn't affect the interest rate. Let me show you how that works. There's the demand for investment falling as C plus I fell. But because it fell, income falls. The economy goes into recession. And if income falls, you can't save as much. So the saving curve shifts too. Spiraling downward of income implies that the supply of loanable funds also shifts leftward, leaving the downward pressure and relieving the downward pressure on interest rates. So that would be the way that the loanable funds market works. So why do we need to keep track of the interest rate if both of those curves change at once? Now here's the thing I discovered after I got this far on the model is that one single graph in Keynes was this graph that I just drew. Let me show you. His isn't as pretty as mine. And he's committed the ultimate sin in drawing a graph. Do you see what his ultimate sin is? Didn't label the vertical axis. Come on, Keynes, do better than that. OK. But he put R on the horizontal axis. R meant rate of return on investment. So that's an interest, really, interest rate. So he's got the axis reversed. He's got interest on the horizontal axis. And if you read the passage, his investment, then he says or saving. He means hand saving on the horizontal axis. So it looks like that. It still doesn't look quite like mine because it shifted around. But if we flip it over and rotate it, we can get it to work. Flipped over and rotated 90 degrees, and it looks like that. Now, those are funny supply curves. Most supply curves are concave the other way. He just screwed up there. And several of those shifts curves, I think I say that, some of the saving curves are intended only to demonstrate that income is a shift parameter. And so I'm going to knock those out, all right? And now I've got that same graph that I had in my PowerPoint. And Keynes uses it to make the exact same point, OK? What he says is that if that demand shifts to the left, then the supply will shift to and by the same amount such that the interest rate doesn't change, all right? So that's just dead on what we've got in our graph. And that's strange because this graph is just wholesale neglected by other macroeconomists. Some of them can't make sense of it. Maybe partly because there's no label on the axes and the thing is flipped around and so on. Who knows? OK, so it's that same graph. Keynes also denied that an increase in saving would have the effect imagined by the loanable funds theorists. Keynes' paradox of thrift, as articulated in his general theory, is to the point, every attempt to save by reducing consumption will so affect incomes that the attempt necessarily defeats itself. OK, so don't save because the economy will fall into depression. People have less income out of which to save, all right? Who just don't do it? And you can see it that way. Let me do that again because you've got to watch everything go at once. Even the demand constraint shifts in this case. And the economy ends up, as it normally does in Keynesian way. OK, to try to save more, you'll instead earn less. All right, once again, the economy is in the dumper. OK, now, how's our time? OK, we're pretty good. To resolve Keynes' paradox of thrift, requires only that we replace the Keynesian cross, which reflect the economy's circular flow with a Hayekian triangle which depicts the beans and the ends in their temporal sequence. Let's do that and see what we can come up with. Let me clean up the diagram. The level of consumption that appears as a part of the Keynesian circular flow also appears in the capital-based framework as a consumable output of a temporal sequence of production activities. So there's consumption in the Keynesian theory. Well, we can use that level of consumption, but realize that the key variables that give rise to it are the variables of that Hayekian triangle. OK, so now, I've got the thing set up with the triangle and I'm still going to use the Keynesian vision. This is what is the payoff, I think. You use the Keynesian vision and then switch to the Austrian vision. So the level of, let's see, we had that. Keynes, however, assumed a fixed structure of industry. He does that in the early chapters of the general theory. We assume, what, for purposes of simplicity, or do we really believe it, that the structure of industry is fixed? Well, if it is, we're in trouble right there, all right? But his analysis is based on a fixed structure of industry, which I take to mean a fixed structure of production in the Hayekian literature, which in the current context implies a Hayekian triangle of fixed shape, the only live issue being the triangle size, which represents the level of employment and the extent of capital utilization. We began as before with the economy functioning at its full employment potential. But now, when I show you this full employment potential, notice that it's not associated with a particular stage.  The labor market is representative of each and every stage of production that make up the economy's capital structure. So let's see how that looks. OK, so it's not specific to a single stage. All the stages have that same labor market. And I guess they would if that structure was fixed. If it was always fixed, then, yeah, it would. Looks like that. The market mechanisms in play here are still those envisioned by Keynes. So I'll use his market forces and show you what happens. Then we'll turn around and use Hayek's market forces. In accordance to the paradox, an increase in saving causes the economy to spiral downward to a less than full employment level, an increase in saving. All right, so here's the supply of saving. Let's increase it. There it is. It goes to the right. All right, goes to the right. And what does that cause? Well, you know, Hayek would say, if people save more, there's more investment materials to take possession of and increase the economy's capacity and so on. And Keynes might have a thought about that, but he says before, yeah, but before that happens, the economy falls inside the frontier. And when it does that, of course, that supply curve shifts back because at a lower level of income, then people can't save as much, even though that's what they tried to save, with a higher income. So that's his paradox of thrift again. So look what all changed. We're still back to the same old interest rate. And again, this is why Keynes doesn't be not paying that much attention to interest rate. It always turns out to be that same thing. But now the triangle hasn't changed in shape, but it's changed in size. And a lot of it that was used before is now just idle. And that's a depression. That's the problem. Even the demand constraint changed because the parameters in that demand constraint make that necessary. Okay. And again, here's the labor market according to Keynes. In other words, it's the same old wage rate. Wage rates are sticky. So you got unemployment. You've got a slack economy. You've got the same old interest rate. That's Keynes, all right? And so you need some government policy to fix it. Note that the sole effect on the structure of production comes from the initial reduction in consumption that derived demand effect works undemandaged on all the earlier stages. See, he doesn't pick up the interest rate demand or the interest rate effect, the discount effect, so-called, and the reason he doesn't is because the interest rate doesn't stay down any time, hardly any time, because that saving curves shifts back left and we got the same old interest rate. Or even if he did, notice the interest rate down. He's already assumed a fixed structure of industry, so that's not gonna have any effect. The interest rate is effectively out of play. The leftward shift of the savings took the downward pressure off of interest rates in any case, the capital structure is assumed to be fixed. That's Keynes now. This is all bizarre, I think. It's pretty bizarre, but this is Keynes. And what makes it more bizarre is the title of his book is The General Theory. Well, how general is it? To me, it's a quirky, quirky theory, all right? But it's one that suggests policy changes that the government is thrilled about. They're gonna take credit for beefing up the economy and so on, okay? Now I'll just reset the thing. Now, what I've gotta do is morph this thing back to the Austrian view. And what's interesting is I'm gonna make three changes. There's three changes. And I want you to think about which one, if any, or how many would probably be unacceptable to a professional economist today? Who would just balk at these changes I'm gonna make? Well, let's see how it goes. Three modifications are needed to transform the Keynesian vision into the Hayekian vision, right? And the first one is divide the structure of production into stages. Because if it's fixed, like Keynes says, you don't even have to talk about stages. So that's an easy thing to do. See, it's almost done now. Okay, so we've divided it into stages. Allow for stage-specific labor markets in which wage rates adjust to changes in market conditions. So we can't make do with just one labor market. It's one per stage. I'm just gonna use two stages because they don't have enough room for the rest. Well, let's do that. All right, so they both have labor markets. They look the same now, but they can change in different ways depending on what happens to the interest rate. Okay, that's the story. What else do I, oh, the third thing is to get rid of that Keynesian demand constraint. Boy, that's nice. How do we do that though? Watch. Watch. Watch. Feels good, doesn't it? Feels good, doesn't it? Okay. Now a little hyperbole here, but that's okay. So the paradox of thrift becomes a gateway to growth. The thing can work, okay? So with wage rates and interest rates, both adjusting to changing market conditions, the economy can move along as PPF will glory be and the structure production can adjust to an increase in saving, Hallelujah. All right. So here we got an increase in saving. Oh, the market is at work for you and for me. And again, I don't know if I said this before, but one of Keynes' remarks was that Mr. Keynes' aggregates conceal the most fundamental mechanisms of change. Not to take sides here, but rejected. Okay, there you have it. Thank you.