Charles Murray | Capitalism and Virtue: Reaffirming Old Truths

I'm Michael darling I'm the chairman of the Center for independent studies and it's my pleasant duty to welcome you all this evening to the 28th annual John Byrne Iceland lecture of the center for independent studies it's my special pleasure to welcome our speaker dr. Charles Murray who's well known to many in this audience and I also extend our many thanks to the companies and supporters who have organized tables for themselves and their guests charles murray is renowned as an original thinker and has been known to us at the CIS for some time now he's been a guest speaker at a number of our events particularly our annual Concilium conference his first visit I now find out was 25 years ago in 1987 not long after the publication publication of his path-breaking and enormous Lee influential book on welfare policy called losing ground knowing the quality of Charles's thinking and the clarity of his presentations I very much look forward to his lecture tonight on capitalism and virtue reaffirming old truths the JonBenet third lecture was established in 1984 and it was named after the late john by nathan of adelaide who was the first chairman of what was then the center's board of trustees the principal purpose of the lecture is to examine the relationship between individuals and the economic social and political elements that make up a free society the first lecture was delivered by Professor Israel 'krsna of New York University and over the years the lecture has been presented by an extraordinary range of speakers across many disciplines including the Nobel laureate in economics professor James M Buchanan the Czech president václav Klaus Peruvian novelist nelle Nobel laureate in literature Mario Vargas Llosa the chairman of News Corporation Rupert Murdoch satirist and author PJ O'Rourke and economic historian Neil Ferguson for any of you who are not members of the center or involved with its activities in some way I urge you to consider joining there are few organizations like the CIS in Australia unlike say the United States where think tanks play a much more prominent role in public debates and the formation of good public policy the CIS is probably the most recognized of the independent think tanks in Australia in the past 12 months for instance its output in terms of both volume and quality has been remarkable its profile in the media has really never been higher while its membership and support growth have been vigorous and have helped us through the troubled economic times of the past few years but we believe the importance of clear independent non political research on national policy issues is that the importance is important now as it ever was I urge you to think about joining the CIS and support its many dedicated people who are part of this important Australian institution promoting Liberty and a free society and a better future for all Australians the programme tonight is that after the first course charles murray will be introduced by a professor ken minogue ken is a renowned Australian political theorist who spent the bulk of his professional career at the London School of Economics and we're delighted that he's been in Sydney for the last several weeks and could be with us tonight and it's the first time in the history of this lecture that a former lecturer has been in the audience because Ken gave the beneath earned lecture in 1992 so it seemed appropriate to ask him to introduce Charles tonight thank you for being here and I hope you'll enjoy the evening ladies and gentlemen forgive me for interrupting the conversational delights of this Beneatha dinner but it is my happy task to introduce rather briefly Charles Marie his evening as benign --then lecturer I have long admired his grip on social data his lucidity of expression and above all his courage as an exponent of classical liberal thought and practice he has written a great deal in his public just published of course coming apart the state of white America 1960 two thousand ten and twelve and ten which tracks the emerging division in American life between a tertiary educated class like you evolving a distinct culture of zone culture distinguished from less successful majority of Americans as one reads any writing by charles murray a nagging doubt sometimes arises one things yes but almost immediately mary is ahead of you and the question is matched with an argument that deals with it he had fascinating things to say about the underclass in the past with in some cases special attention to its British version Mary not only has a remarkable grip on the often often difficult data by which we grasp what is happening in society around us he interacts with it I have just been reading brave new world which incidentally is quite a good book with which to track Mary's book because it deals in a way were the same theme namely the human passion for happiness and this provoked in my mind the memory of an essay by its author Aldous Huxley about lectures he suggested that lectures had little point in our world because the propositional content of a lecture can be read in about a third of the time it takes for the delivery lectures were Huxley thought an anachronism leftover from the Middle Ages when books were scarce and scholars were forced to communicate their doctrines person-to-person similar arguments sometimes invoke the Internet as the coming revolution in education I think this is quite wrong the point about a lecture is that it goes well beyond its propositional content and reveals the scholars enthusiasms hesitations doubts sometimes even his or her evasions and much else on the occasion of a lecture and in particular unnamed lecture such as the beneath on speakers an audience for a short time enjoy a community of question arguments and discussion that is central to our intellectual life one might call it I suppose a discussive community it is this capacity to constitute even if only briefly discuss of communities of this kind that is central to our enjoyment of freedom I admire Marie's lucidity but I admire even more another of his virtues namely courage this became very evident in 1994 when he wrote with Richard Bernstein the book called the bell curve intelligence and class structure in American life the reason this is courageous is that whenever the issue of justice arises gender justice ethnic justice social justice any kind of comprehensive justice it seems a remarkable thing happens all concern with intelligence or even general competence goes straight out the window the whole question of ability has been banished by the force of political correctness and now in his new book Mary is at it again concerned with the place of intelligence in development of contemporary modernity Mary is thus not afraid to face the kind of abuse and misunderstanding that any kind of in correctness is likely to provoke and as I have characterized lectures you will understand that merely to undertake such things requires a certain recklessness it is a form of intellectual self revelation and revelation always has its dangers everything of course has its dangers and you will no doubt to be observing that I am myself at this moment in a very dangerous situation I am in danger of crossing the line beyond introducing a speaker on the one hand and blundering into the lecture space itself burbling all about issues that will soon arise I must immediately cut this knot let me then simply Express on behalf of all of us our welcome to Charles Marie on his grand CIS occasion as the benign lecturer for 2012 it's always a problem on the introduction is more erudite than the lecture let me begin by expressing my thanks to the Center for independent studies and selecting me to deliver the benign lecture tonight I've been admirer of the work of the CIS since 1987 and my first visit to Australia and it's a great honor to proceed to follow the distinguished list of lecturers who have preceded me including especially Ken Minogue this is my fourth trip to Australia all under the auspices of the CIS this one's a little bit different because not only is it my fourth visit I now have an Australian son-in-law I have a daughter who will undoubtedly become a naturalized Australian citizen and I have two Australian granddaughters if I become any more Australian I'm gonna have to start paying taxes and this is also a message to any of you in the audience whoever needs speakers at events I am going to be a very easy sell you pay the plane ticket I'll show up every time I come here and I do presentations the question of the back of my mind is always since I'm talking about American problems why really do the people in this audience want to hear what I have to tell them tonight I feel a little bit less apprehensive about that than usual because the story I am going to tell about the United States is really not so different from what's been happening in Australia gathered from what I've talked when I've talked to Australians that's been in my impression I've also had the privilege of reading the manuscript of a book by Nick cater that suggests that a lot of the problems I'm talking about have their analogs in Australia so whereas I am not so brash as to try to tell you the exactly how America's experience parallels Australia's Australia's I invite you to make those judgments for yourself as I go along alright here's the situation in the United States capitalism has become a dirty word in the recent presidential campaign the Democrats successfully portrayed Romney not as the creator of wealth in his experience at Bain but as a destructive manipulator of power to enrich individuals at the expense of ordinary Americans more broadly President Obama tried a tactic that has always backfired against American politicians in the past at courage in class warfare and this time it worked none of this happened just because of Barack Obama nor has it happened because of the financial meltdown in 2008 and the subsequent Great Recession Barack Obama and the financial meltdown reified longer-term trends in a nutshell over the course of the last 50 years the United States has seen a divergence in classes that is different in kind from anything that America has ever known part of that divergence has led to a new lower class that has dropped out of the institutions of American civic life especially marriage and work but the other part of the divergence and my topic tonight is that we have seen the development of a new upper class that is increasingly segregated from and ignorant of life in mainstream America the nature of that new upper class has contributed mightily to the antagonism that we are now seeing toward capitalism in the United States and my purpose therefore in in this year's benign --then lecture is to describe the larger historical forces that have been at work and I think they have analogs in Australia then turned to how they are manifesting themselves and conclude by talking about what might be done over the course of the 20th century and especially during the last half of the 20th century two large historical forces reshaped America's social structure brains became much more valuable in the marketplace and America's university system became much more efficient at finding talent wherever it existed and not only sending it to college but sending it off to elite colleges let's consider each of those separately first brains became more valuable in the marketplace imagine to illustrate this someone in to 1912 a hundred years ago who had spectacular mathematical abilities and was a complete social dork and nerd the kind of person that you wouldn't trust to send across the street to buy a loaf of bread what could that person do in 1912 to make a living he could be a math professor maybe although probably not a very good one or he could be an actuary things like that but that's pretty much it now it turns out the people who were mathematical prodigies very often have exceptional programming skills so what might that same person without any social skills whatever what can he do for a living now well he's going to start by juggling the six-figure offers from Google and Apple and if he's really a gifted pure mathematician he can go to the work for the Clontz the the quant hedge funds and realistically expect to become wealthy beyond the dreams of avarice I have a friend of the Sun actually of Richard Hearn Stein who works for Renaissance technology was one of those he barely got hired because he's merely an astrophysicist and they really do prefer pure mathematicians and I have met some of his colleagues at Renaissance Technology who were all fabulously wealthy and believed me when I used to talk about enormous mathematical skills and zero social skills they got some of those people working for them the increased market value of brains applies to all professions suppose for example attorneys suppose you're an attorney in the United States in 1912 okay you're going to make a good income you're going to be sort of at the top of your local income hierarchy but you're making the amounts of money if you're in private practice that people can afford to pay for ordinary legal skills you'll make a good income but you aren't gonna get fabulously wealthy suppose you're a corporate lawyer you make a corporate salary again you're doing well but nothing special what can you do if you are an intellectually gifted lawyer in 2012 well if you are able to put together the incredibly complex deals of international mergers you can be worth a commission of millions of dollars suppose you are really gifted at negotiating the the regulatory process in Washington DC and you can get a regulatory decision that will mean tens of millions of dollars to the bottom line if your corporate client you're going to be worth that four figure hourly rate that you are charging those that same thing has happened in business as well throughout all of the professions in which being really smart gives you an added edge if you are also industrious and ambitious and all the rest of that the potential rewards financially in the United States have just mushroomed second large historical force is that we got a college sorting machine in the United States that got really efficient at identifying talent and shipping it off to the best colleges I'll use my alma mater Harvard as the example of this in 1952 the mean entrance test score the SAT for those of you who are familiar with with the United States testing system the mean entrance score on the verbal test for Harvard put the average Harvard freshman at the 80th percentile of students who took the test in other words the average Harvard a new student was bright enough to go to college their prime college material but nothing more special than that and an awful lot of the kids were sons of rich people by 1960 just eight years later the average Harvard student was at the 98th percentile of all those who took the test in just eight years Harvard went from a place with a lot of rich kids in a few super smart ones to a place with lots of super Mars smart kids and a few rich ones and that was going on all over the university system throughout the country and it's been going on now for more than half a century why is this important because College is a crucial socializing experience and the socializing experience at elite colleges is especially powerful it happens at a time when youngsters really really want to fit in and they walk away from that experience both having gotten to enjoy the the the Mannion ship of kids who are smart as they are which for many of them would be the first time in their life they've been around that environment and also socialized to the distinctive tastes and preferences of an intellectual elite second thing is that elite employers recruit and elite schools and so the graduates of elite schools are disproportionately concentrated among the staffs of the most influential firms in the financial and the corporate worlds and of the most prestigious newspapers and magazines and publishing houses and media outlets and they are also prominently of represented disproportionately represented in Washington's incestuous world of bureaucrats lobbyists and lawyers third the the kids who go off to these elite schools super smart as they are tend to end up marrying each other suppose that you were the CEO of a company in 2000 1912 a hundred years ago were you married to you got married when you were 21 or 22 and you married some version of the girl next door now there's nothing wrong with a girl next door but she is not systematically screened for IQ if you if you are the CEO of a company in 2012 who are you married to the first place you didn't get married until you were in your late 20s or maybe in deep well into your 30s and when you did get married you didn't get married to the girl next door your firm was having litigation with his other company there's a really cute lawyer with the Yale Law degree and you ended up marrying her well she is systematically screened for IQ that kind of thing has been going on systematically now for a long time if you doubt it go online and go to the New York Times website and bring up the sunday page that shows recent weddings the page that some of us refer to as the merger and acquisitions page really smart people meriting really smart people and it goes on or not well there's nothing wrong with that we all like to marry people who get our jokes but a few things happen as a result of that the parents don't just pass on money to their kids the correlation between the midpoint IQ of parents and their children is 0.5 which means it's by not perfect by any means buddy it's high enough that it does a couple of things first is that means that the children of those successful people are also likely to be quite smart even more it means that the next generation of super smart kids are going to be overwhelmingly drawn from parents like that and so as you go through the generations you systematically change the composition of the successful and the old adage about shirtsleeves to shirtsleeves in three generations no longer applies quite as much as it used to the tenaciousness of the new upper class in sustaining itself across generations is a lot greater fourth the combination of the wealth that is commonplace among this new elite and their shared tastes and preferences and the limited number of urban centers in which these most prestigious geo jobs are concentrated means that the new elite flocks together as never before I used census data to create a an index based on postal codes which we call zip codes that combined family income and the percentage of people in the zip code with college degrees and I use that index to rank all 37,000 ZIP codes in the United States from top to bottom I called those ZIP codes in the top 5% of those super zips well in a lot of the country especially the smaller cities there will be a you know a a neighborhood in town which is a super zip but it's surrounded by zip codes that aren't they're fairly isolated in that regard but the influential people in the United States the people who run the country who have national influence on the culture or the politics of the economy tend to live in or around four areas Washington DC New York City Los Angeles California and San Francisco California okay and if you go to those you have a completely different problem with super zips namely they cluster together let me give you the example of Northwest Washington DC and its associated state associated zip codes there are 13 of those zip codes where if you know Washington at all this is where the movers and shakers live Northwest Washington McLean Virginia Bethesda and Chevy Chase Maryland Potomac Maryland all right of those 13 zip codes 11 are not just super ships they are not in the top five percentiles they are in the top percentile and more specifically in the top half of the top percentile that's 11 of the 13 the other two they are in the bottom half of the top percentile furthermore okay so that's already pretty big bubble those are surrounded by an additional 80 zip codes with a total population of 1.7 which are all super zips it is like this city comprised of people in the top 5% of the population in terms of not just money but also of education hasn't this always been true I mean haven't the rich people always live together in neighborhoods well yeah but it's the different than it used to be 50 years ago as today there were neighborhoods in the United States which is where the rich people lived I'm sure you have counterparts in Melbourne and Sydney in the United States North Shore Chicago Upper East Side of New York Northwest Washington Bel Air and Beverly Hills in Los Angeles and so forth I calculated using 1960 census data with a median income and the median percentage of educated college-educated adults was in those 14 neighborhoods the average family income in 1960 in those most elite neighborhoods in the country was 84 thousand US dollars that's not expressed in 1960 dollars that's 84 thousand dollars in today's dollars that's not affluence let alone wealth 26% had college degrees now it wasn't that the rich people didn't live in those 14 neighborhoods they did but there were lots of other people who live there too and put your average couple in those neighborhoods including among the rich people was likely to consist of a guy with a college degree and a woman with the high school diploma so you had an enormous amount of cultural heterogeneity at socialization heterogeneity that was built into the most elite neighborhoods today in those neighborhoods at a dinner party you are not going to see couples one of whom has a college BA and the other one has a high school diploma they're all gonna have college degrees most of those are going to be advanced degrees a whole bunch of them are going to have come from elite schools they are now the dominant cultural force which in the nation's most powerful cities are not just neighborhoods anymore but contiguous areas covering many zip codes and hundreds of thousands of people I've been talking about the distinctive tastes and preferences the new upper-class what am I talking about well I'll give you some examples that you can compare with Australia's version of the new upper-class which is heavily represented in this room get married later average age of most people get married the United States is still early twenties and among those with the kinds of credentials I'm talking about late 20s is young to get married and late thirties is not uncommon to get married the new upper-class is uncommon ly thin and fit I look upon myself as in a state of rebellion against this they know their cholesterol counts and a lot of them know their percentage of body fat they eat lots of whole grain green vegetables and olive oil when it comes to alcohol they drink variably of wine and boutique beers when I'm at receptions people buy the new upper-class I'm usually the only one walking around with martini and it's definitely the only one walking around working on my second there there's television the average television in the United States is on 235 hours a week whereas if you talk to the members of the new upper class about their television doing habits you get a couple of different kinds of response one of them as well you know we got rid of our television a couple of years ago the other one is yeah we have a television but you know we use it watch DVDs good movies the classic movies maybe Downton Abbey you know if if you have a very hip new upper-class couple they may watch Mad Men but beyond that they really don't have the least idea they are never exposed to the reality shows the game shows the soap opera is the popular hit series and all the rest of it which make up so much of American popular culture it's just all invisible to them there are dozens of other tribal customs of the new member class but you know what I think some some of the things I've just said resonate with regarding the people you know and that isn't that different in Australia nothing about all this is necessarily bad you know being thin and fit is good it's it's it's good that you get married when you were mature and ready to do it and the new upper-class does get married and stay married and remarkable numbers compared to everybody else especially that's good the new upper-class woman when she gets pregnant behaves impeccably she doesn't drink she doesn't allow herself to be exposed to secondhand smoke she eats precisely the right diet monitors her body weight during pregnancy and when the infant is born bombards that infinite with intellectual stimulation from the moment of birth and sometimes from the moment of conception well this is all good up to a point you know but the problem is not that the new upper class has bad habits but that they are increasingly isolated from an ignorant of mainstream America they are living in a bubble when I was writing the book coming apart I was trying to get away to have my readers who remembers the new upper-class recognize that what I was saying was true and I finally decided the best way to do that was to create a quiz and let them take the quiz and score themselves so that they could look at themselves and say okay this is where we stand there are 25 items in it it has serious questions such as have you ever lived for at least a year in a neighborhood in which fewer half of the people have college degrees it has some questions that poke fun such as in the last year have you stocked your fridge with a mass-market American beer the new upper class has an incredible disdain for mass-market beer their beer has to be a special dark harvest ale made by Belgian elves they that the question you know sounds like I'm poking fun but it actually captures part of the variance I want to capture if I were to name what I consider the most important question out of the 25 it is this have you ever held a job that caused a body part to hurt at the end of the day carpal tunnel syndrome does not count that questions important because if you have never held a job that caused a body part to hurt at the end of the day you are fundamentally unable to empathize with people who do it gives you a whole different perspective on life when you know what it's like to come home every day with something aching and if you don't have that you don't get a whole lot of things the quiz was a big success something approaching half a million people have taken online versions of it and I'm also happy to say that among the new upper class people are very happy to get high scores which means they are not in a bubble and very worried about having low scores which indicates they are well I say that based on the fact that at AEI where I tested this on a lot of the young people the interns those who got high scores were high-fiving each other and those who didn't run happy this could be just a reflection of the new upper class kids want to get high scores on tests no matter what they are but I would like to think that it's in the right direction you can get a high score on my quiz even if you live in Park Avenue now but you grew up in a working-class or middle-class environment you may be completely encased in the bubble in your day-to-day life now but you still remember what it was like what scares me are the children of the new upper class they go to elite private schools from kindergarten on they spend their summers at tennis camp or an exclusive resorts where their parents vacation they go to excellent colleges and they spend their summers after that interning for Greenpeace or for Brookings Institution then they get their law degrees their MBAs and move seamlessly into the same upper-class bubble as adults that they've lived in all their lives and they don't have a clue about how ordinary people live and at the same time they are making decisions that affect how ordinary people live worse yet they are likely to have an extremely condescending view of what ordinary people are like people who have been cocooned in the new upper class they're aware that they've gone to schools where everybody's pretty smart they may realize that they've never really known anybody who's in the bottom half of the distribution of IQ but unfortunately what a lot of them infer from that is that those people must be really dumb they don't know any of them they are unaware of all the ways in which good humor and common sense and ability to cope with adversity and general human competence are found across the range of human beings including among people who don't score well on verbal analogies questions or quadratic equations problem is the people who have these condescending views are in a position like Mayor Bloomberg to say well I don't think we should allow people to buy large cokes because they won't make the right decisions if we do that so we will restrict their ability to do that that that kind of syndrome about protecting people from themselves has run rampant in the United States and elsewhere and it's a reflection this kind of condescension the condescension of the second and third generation members of the new upper class has not gone unnoticed by the rest of the country in their ideologies the Tea Party and the Occupy Wall Street movement could not have been more unlike but a great deal of the energy that both movements drew from came from a sense that a detached elite runs the country setting rules for the rest of society they don't have to observe themselves and you know what they are right regarding the members of the new upper class who run the government the solution must be political if you give bureaucrats the power run our lives and nothing will restrain them except taking that power away from regarding the members of the new upper class in the private sector the solution must be cultural what can be done answering that question that requires us to think about what happened to turn the mood of the country so far from America's historic celebration of success what happened to make capitalism a dirty word two important changes in objective conditions have contributed to that change in mood one is the rise of what I will call collusive capitalism collusive capitalism is not new it's always been the case but it seems to be increasing part of the recent deterioration involves collusion among people in the private sector what's known as crony capitalism nobody's been able to put numbers to this that I know of in the social sciences we don't know for a fact that it's increased but I will tell you this that talking to people who have an inside view of corporate America and I know a lot of those through AEI they all have stories to tell about the ways in which boards of directors and senior executives scratch each other's backs often times of the expense of shareholders or consumers but I submit that the problem of crony capitalism is trivial compared to that the collusion between entities in the private sector and the public sector in today's world every business's operations and bottom line are affected by rules set by legislators and bureaucrats and the result has been corruption on a massive scale sometimes it's retail a lot whereby a single corporation gets a provision put into the tax law that gives it a special break sometimes the corruption is wholesale when the government creates a market that wouldn't exist otherwise and really screw things up that is not actually written in my text but screw things up seems to be the appropriate way to describe it the poster child for this corruption is the subprime mortgage crisis why on earth would investment houses on Wall Street create all those exotic financial instruments for trading in subprime mortgages because the federal got in its wisdom wanting more homeownership among low-income people what a wonderful thing to want passed legislation buttress by regulations that are not only subsidized such loans but in many cases required banks to make them whether they want it or not guess what if you make it possible to get rich by lending money to people who are unlikely to pay it back clever people will take advantage of it many of those clever people in Wall Street behaved irresponsibly without thinking about long-term consequences they even some of them behaved despicably but the only reason they got the chance was because the government created the temptation most of the public is not aware of the specifics of the degree to which the government triggered the financial meltdown of 2008 but in one way or another collusive capitalism has broadly become visible to the public and increasingly defines capitalism in the public mind the second change in objective conditions has been the emergence of great fortunes made quickly in the financial market you know as part of that's just because it's so obscure as to what they did to earn that money if you if you're making money by selling a product or good that people want people understand why you're rich and they don't mind that's why Thomas Edison and Henry Ford were American heroes and wise Steve Jobs was an American hero when he died last year people don't mind the fact that Steve Jobs died with 7 billion dollars when you've made your money in the financial markets it smacks of weird financial instruments nobody understands an insight knowledge and hocus-pocus you can explain to them and guess what what's going on there is these people who have made billions of dollars have also greatly increased the efficiency of the allocation of capital and that's in a very important factor in economic growth that's true but explaining that simply and persuasively is really hard and also well somebody explain to me how these zillions of trades meinen made in nanoseconds by the quants that yield their profits because of tiny fractions of pennies and those zillions of trades well somebody explained to me sometime how that increases the efficiency the allocation of capital because I've asked a lot of people and so far I have not gotten a good explanation anyway the bottom line is with regard to great wealth in the financial markets it looks to a large proportion of the public as if we've got some fabulously wealthy people who haven't done anything to deserve their wealth in most cases they're wrong but it's hard to explain why in some cases they're probably right and so that's where we stand with a new upper class that is increasingly isolated from the rest of the country and with capitalism under sustained attack by both the population of large and by the presidential administration there will be in power for another four years so what do we do I don't have any policy solutions I'm a libertarian and libertarians don't do policy solutions but if I can't do that I can talk about the need for cultural change cultural changes happen historically but figuring out how they happened and what triggered them is really hard they come from national conversations they started through mysterious ways and eventually lead to widespread changes in beliefs and and behavior here are the changes that I try to push along in the way I can which is to write books the overarching theme is that we must reconnect capitalism and virtue the first part of that process must occur within the hearts and minds of the members of the new upper class and it begins with restoring the concept of seem leanness when was the last time you heard that word used 50 years ago in the United States the undisputed luxury-car because we didn't buy a BMW or Mercedes in those days was the Cadillac and yet if you went to American businesses around America you'd have senior executives who could easily have afforded the most expensive Cadillac who drove Buicks instead because to have a Cadillac would be too much of a show-off you'd be getting too big for your britches that's an Americanism that I don't know trance translates to Australia or not people didn't build 20,000 square foot home even though they could afford to it would have been been unseemly those kinds of things were accompanied the sense of unseemly us by the entwine maneuver of the old upper class with community activities I know that there was a northeast elite and Beacon Hill in Boston and the 400 in New York who were a socialite elite and had their cottages and Newport and so forth but I'm talking about the upper classes that existed in Chicago and and Kansas City and Cincinnati and the rest of the country and what I'm describing is extremely accurate about that which is that people in senior positions were deeply involved not on a grand philanthropic scale but in local activities they were deacons of their churches they participated in the fundraising committee for the local YMCA they went to Rotary Club meetings their wives went to PA tbta meetings if we go back even further to the beginning of the 20th century you had these fraternal organizations that included people from the working class and middle class and from the upper-class and the members of the upper class were extremely proud and publicized their their membership in those organizations the tradition goes all the way back to the days of Tocqueville there is a wonderful quote in democracy in America in the United States de Tocqueville wrote the more opulent citizens take great care or not to stand aloof from the people they they keep constantly on easy terms of the lower classes they listen to them they speak to them every day you had generations of children propagandized using mcguffey's readers which were the readers used throughout american schools which had all of these stories really good stories actually that all had moral lessons and a lot of those stories extol the virtues of initiative and entrepreneurship and that sort of thing you had other stories which praised the the virtues of self-restraint personal integrity and concern for those who depend on you the freedom to act and a stern moral obligation to act in certain ways we're seen as two sides of the same America coin little of that has survived the new upper class in the United States still does a good job of practicing a lot of the virtues but it no longer preaches them it has lost self confidence in the rightness of its own customs and values and it preaches non-judgmental ism instead correspondingly we have watched the deterioration of the sense of stewardship that was once so visible a part of America civic culture so we need to make the moral case for capitalism anew not because it hasn't been done before it's been have been done very often but because at this moment in history we have to start restoring a vocabulary and a way of thinking about capitalism that is no longer visible here is my own best effort to very briefly say here's the moral case for capitalism the United States was created to foster human flourishing the pursuit of happiness and the means to that end was the exercise of Liberty under the rule of law capitalism is the economic expression of liberty the pursuit of happiness depends on economic freedom every bit as much as it depends on other kinds of freedom you cannot separate them you may be asking by the way what do I mean by happiness that very complicated word the definition I use is lasting and justified satisfaction with life as a whole comes for its straight from Aristotle and for that matter it's consistent with the definition of happiness and lots of other traditions happiness in that sense living a satisfying life a deeply satisfying life is produced by a relatively small set of important achievements that we can rightly attribute at least in large part to our own action Arthur Brooks who's my new boss at the American Enterprise Institute has very usefully labeled as such achievements as earned success earned success can arise from a successful marriage children raised well a valued place as a member of a community devotion to a faith earned success also arises from achievement in the econom realm which is where capitalism comes in earning a living for yourself and your family through your own efforts is the most elemental form of earn success successfully starting a business no matter how small is is a kind as an act of creating something out of nothing that carries with it far greater satisfactions than can be measured by the amount of money it brings in finding work for yourself that not only pays the bills but is something you enjoy is a crucially important resource for earn success if we accept all that we then have to ask well under what system do you have the best chance to pursue happiness in these senses and the answer is you have the best chance when you have the greatest freedom to act in the economic realm the role of government is to establish the rule of law so that informed and voluntary transactions can take place and to use tort law to help people hold people liable for the harm they may cause others everything else the government does inherently restricts economic freedom to act in pursuit of earned success now I'm a libertarian and think that almost none of those restrictions are justified but if you want to disagree and say yeah they are justified that's fine with me but people across a wide view range of political views need to acknowledge this truth every intervention that erect barriers to starting a business makes it expensive to hire or fire employees restricts entry into vocational or prescribes work conditions and facilities interferes with economic Liberty and usually makes it more difficult for both employers and employees during success people with a wide range of political views that can also acknowledge the fees into these interventions do the most harm to individuals and small enterprises Exxon can deal with the regulatory state just fine thank you very much in fact large corporations often welcome the regulatory state because they have the resources to manage it and they can achieve competitive advantages against their their smaller and weaker competition the same rules that big corporations can deal with just fine can often crush small businesses and people's trying small businesses finally people with a wide range of political views can acknowledge that is what has happened incrementally over the last half century has led to a labyrinth in regulatory system irrational liability law and a corrupt tax code and sweeping rationalizations of all those systems ought to be possible with bipartisan support to put it another way the United States should find it possible to revive a national consensus affirming the capitalism embraces the best and most essential things about American life and that freeing capitalism to do what it does best won't just create national wealth and reduce poverty but expand the ability of Americans to achieve earned success than to pursue happiness well if we're going to make the moral case for capitalism in those terms the new upper class must start by Rhian gauging with the life of the nation as a whole now in doing that I'm often misinterpreted as if I want people to go off and live in the slums and be missionaries I don't mean that at all I am asking American members of the new upper class to think about the way they live their lives I want parents who grew up in modest circumstances and are now wealthy and successful - and had to surmount a lot of challenges and and defeats and of course their life - think about this would they really prefer to have had the childhood that they are giving their children luxurious and protected if the answer is no if the answer is actually a great deal of what made me what I am today came about because of the challenges I had to meet as a child what does that say about the way you're treating your children I want people who live on two acre Lots walled off from the life of real communities and which are facing real human needs to ask themselves whether they're missing something by doing that more broadly age old human wisdom has always understood that living a satisfying life means being engaged in the stuff of life with the people around us and by the stuff of life I mean the elemental of defense of birth and and raising children and comforting the bereaved and celebrating our friends victories and commiserating with their defeats and dealing with adversity and applauding the good in scorning the bad that kind of cultural renewal that I seek requires merely a rediscovery of what our self-interest is a renewed understanding that I can be pleasant to live a glossy life which the new upper class has gotten very good at but it can be ultimately more rewarding and more fun to live a textured life and to be engaged with other people who are living textured lives this does not require embracing some weird New Age Creed it requires instead a return to long-standing deeply held views about why America Civic culture has been something to cherish I will say parenthetically that it seems to me to bear a lot of similarities to the Civic culture that Australians have cherished for that matter I could rephrase what I'm trying to accomplish here I want a lot of the new American upper-class to reacquire the sense of mate ship which formerly it had and which it is lost making the moral case for capitalism and the terms I've described also requires us to return to the vocabulary of virtue in the United States as I'm sure is also true in Australia we have an awful lot of capitalists in the new upper class who do have a sense of stewardship who love to do business with a handshake who have a strong sense of what constitutes ethical behavior and and refused to deal with people who violate those standards I'm probably talking about an extremely large majority of business people in both the United States and Australia the problem is that they are tongue-tied at least in terms of America capitalists who have behaved honorably and with restraint no longer have either the platform nor the vocabulary to preach their own standards and to condemn capitalists who behave dishonorably and recklessly somehow the moral case for capitalism and the virtues of self-restraint integrity and stewardship that must accompany capitalism have stopped being part of the air have stopped being part of the National Civic catechism as they once were we should not only adhere to those virtues as so many of us already do we also need to be open about what we are doing and why and openly condemn those who do not adhere to those virtues well in conclusion the capitalists of the new upper class faced two tasks one is to show the middle class and the working class that members of the new upper class cherish their mate ship with their fellow countrymen far more than they cherish being rich another is to remind those in the new upper class were oblivious to the moral grounding of capitalism that paying a lot of taxes can never make up for the rot in the culture that they are encouraging the capitalists who see capitalism as nothing more than a convenient way to make a lot of money threatened to destroy the heritage of Liberty that is at the heart of what makes America America a new upper class committed to the principle capitalism can't nurture and revitalize that heritage do I have any good news at all well yes as I have made these points to audiences of the new upper class in the states I keep hearing the same thing and the generic version of that response goes like this I've already been worrying about these things people tell me I thought I was the only one that's a misapprehension that is easily solved the impulse is to be engaged with those around us to seek the company of others who are trying to live their lives honorably to live lives that are productive to live lives that have transcendent meaning our impulses that have made America and Australia work in the past they are old ideas whose time is ready to come again thank you very much you

Channel: Centre for Independent Studies

Views: 6,028

Rating: 4.7142859 out of 5

Keywords: Charles Murray, seemly, behaviour, virtue, morality, collusive capitalism, crony capitalism, elite, elitism, Belmont, Fishtown, Coming Apart, Centre for Independent Studies, CIS, cis.org.au, classical liberalism, think tank, liberty, independent think tank, policy, www.cis.org.au, Bell Curve

Id: 0uYxvft6Adg

Length: 54min 17sec (3257 seconds)

Published: Thu Nov 29 2012