- Welcome to our first episode
of Chicago's Best Ideas. And let's see. How about we just begin with
some administrative stuff like, what will happen? Where's your food? And all that kind of thing. So because we're in this room-- like there's lunch provided. You can get it after the talk. And then you can bring
it to your next class. You can get everybody
else around you envious. So that's number one. And then I thought I
would just say something about the history
of the CBI series because it's kind of fun to know
because you're a law student. You should know history. And then we can
get into the talk, and I'll try to make it
relatively short because 1 out of 10 people needs to
ask the question afterwards, so they will learn
more from questions. And so here we go. So first of all, the idea
of CBI, as we call them, was started at the Law
School's 100th anniversary. And the idea of each talk
is the faculty member tries to talk about some idea
that came out of this Law School that was like a great
idea or an interesting idea or a well-supported
idea or something. So for example,
the talk could have been like what's the
Coase theorem and then a little explanation of
it followed by what's its effect in the modern
world, or what does the speaker think the good and bad
about it or some modernizing of the ideas. So it's not like
aren't we great? Aren't we great? Well, we are great. But aren't we great? But then it can be
like-- let me tell you what I think of it today. So that's what
we're going to do. And my talk really
is centered on what I think is really three
of Chicago's Best Ideas rolled into one. But the opening move is
about a well-known book by our colleague, Prof. Richard Epstein. And his idea was called Simple
Rules for a Complex World. So I'm going to explain his
idea first and then give you a couple applications
of it, some that are in his well-known
book translated into like 15 languages actually. And then talk a
little bit about it. We'll puzzle about
some solutions to it. And then again, it will
be your turn to question, and I'll try to answer them. If I don't get to your question,
you can always email me. And I'm happy to talk to
you about it afterwards. So you have to run off
to your next class. And then we'll figure that out. So here's Professor
Epstein's idea. Again, Simple Rules
for a Complex World. It's something like if
you're normal before you come to law school, like a naive
citizen, an intelligent naive citizen, we think that
complexity is really good. Every time you
see a simple rule, you think, it should be
a little complicated. You drive on Lakeshore
Drive, and the speed limit is 45 miles an hour. And then everybody
says, that's ridiculous. That's a simple rule. Just one speed limit. That's no good. It should be a different rule
on rainy weather, good weather, how crowded the
road is, day, night. That would be a complex rule,
like 15 different speed limits. That would be a better world. Most people think before
they come to law school, life should be complex. Oh, you have tax deduction. Let's do this, and we
give to that charity. This and that charity. It should be complicated. And Epstein's
insight or claim is-- no, no, you can come down. It's fine. Raise your hand if you want
somebody to sit next to you because you need new friends. [LAUGHTER] OK. Come on down, really. So Epstein's idea is no,
actually simple rules are really pretty
good, and there are a lot of reasons
he likes simple rules. And again, I'll give examples. But his main idea which
I'll come back to at the end is that the more complex-- first of all, it's easier to
understand the rule is simple. That's kind of obvious. But also, the more
complex the rule, the easier it is for people
to bribe the government or get their way
around the rule. Or interest groups
will get involved. They'll change some of
the rule and all that. And really, going to be in
the business of trying to-- Epstein would say
government should be in as little
business as possible. But when it does
get involved, you should have simple rules that's
much harder to manipulate. And the book shows this in area
after area after area of law. So I'll give you an example,
a pro simple rule example. I mean, he's mostly
interested in property rights. But let's do a different rule. Say for example,
you have a patent. You want people to
invent things, and have a productive society
and all that. So at first, again, if
you're a normal citizen, you would think as
many people do today when you take patent
law you'll see this. Many people think, oh, we
really need a complex rule. We have this very simple
rule in government, a pretty simple rule. If you invent something that
reaches a certain category, then you get a patent
period of certain length. Oh, how could that be right? It should be the
patent period is longer for some kinds of goods,
shorter for other goods, maybe for-- you have some cure for COVID. It should have a patent
period of a certain length to empower the production
of information over there. But maybe it's something less
complicated or more complicated should have a different
patent period. And there are many
proposals out there for very different
patent systems, depending on the group. So someone should
study [INAUDIBLE] and figure out the
optimal patent period. And you see the problem
with patent law. On the one hand, the
longer the patent, the more people are
encouraged to invent things. On the other hand,
the longer the patent, the more this is monopoly power
that the patent holder has. And law should be trying
to figure out the divide. How could it be that
the same divide is true in all these industries. So we should figure that out. That's basically most
people's reaction. Epstein's insight,
well-known insight, was to say, well, not so fast. Because the more you have
different patent period for different industries,
the more people in industries will lobby the government
and maybe even bribe the government. Let's say interest groups will
form, and they'll go like, me, me, me. Oh, my industry. We really need a
longer patent system. Look at this example. Look at that example. It should be longer and shorter. Over there, it should be
shorter or marginally longer. And Epstein's thing
is, hey, that's a waste of time and effort, what we
call here a transactions class. And B, maybe not such a
good idea in the first place because there's no reason to
think that the government will get the rule right. The government will be so
influenced by these interest groups that it will
probably end up with the wrong patent period. I have a feeling in
the back of his mind is the more complex the
rule, the more government will get involved. He's pretty libertarian. He would like less
government involvement. So if you have to
have a simple rule, maybe you'll get a little bit
less government involvement in the first place. That's basically the
simple rules I'll give. Let me give one other example
so you get the hang of it. And besides, I've tried to
say a few funny things there, and no one's laughed
at any of my jokes. So I'm kind of a
little insulted. So I'll try another one. We'll see if it's funnier. So every five minutes, I'm
going to pause and tell people in the back to come on down. It's ridiculous to
stand in the back. Come on down. OK. So here's another example. Take taxes. Our income tax system is
really very complicated. It's not just an income tax. Probably an income tax, the
sales tax, the property tax, this tax, that tax,
and it's complex. You follow your form, or your
company that files its form. The deductions for this
and exclusions for that. It's really a very
complicated tax system. And it gets more and more
complicated over time as people either lobby
or legislative groups figure out oh, well,
we can manipulate this, manipulate that. And maybe there should
be a foreign tax credit, and we should do this and that. And the code gets longer
and longer and longer. And Epstein, I think,
correctly says, well, on the one hand, a complex
rule might make sense if you had a brilliant
government it might structure the income tax to get really
very, very clever work effort on behalf of people
and invention effort, information effort. It could be complicated and
very sophisticated and good. But in reality, it leads
to a lot of bargaining with the state or
lobbying with the state. And the system
becomes very corrupt. Oh, I want my kind of
entity would be tax exempt. I want my kind of entity to
have a $500,000 exclusion. And the system gets so
complicated that when you look at-- anyone who's taken
tax law knows this-- and everyone should
take tax law. It just looks like
wow, line after line after line in the
internal revenue code just seems like interest
group influence. It's like so political. We'd be better off if we
just had a simple system. Of course, the system is not so
simple to get rid of all that because people could still
lobby about the rate of tax. People will then want a lower
tax rate or higher tax rate. Maybe that's too complicated. What's income? What's not income? In fact, Epstein
likes a flat tax. You know what flat tax is? Every time there's
a new election, somebody says, I want flat tax. Let's just have a flat tax of
18% of all the income you have. And Epstein says, well,
that might be pretty good. Maybe people would stop lobbying
so much for different taxes. They would still argue about
what the rate should be, but that might be simpler. So he likes the
flat tax [INAUDIBLE] Notice you might say,
well, why stop there? Why not an even simpler tax
like maybe the sales tax, sales tax on everything? But then people would
say, correct me. Well, that's pretty regressive. Poor people need to eat
about the same number of food as Bill Gates. Maybe a little bit less is
what they're able to eat. But Bill Gates is not
a big consumer of food, doesn't like fancy restaurants. It would seem a little
odd to live in a world where Bill Gates
paid as much tax as the average law professor,
like a well-known really underprivileged, low
paying, down group. Thank you for laughing. [LAUGHTER] So OK, he's not crazy, Epstein. Well-- [LAUGHTER] He's not totally crazy. And he said-- and he essentially
says without saying so, well, a flat sales tax to raise all
the government money, that may not be such a good idea. And income tax is
probably a good idea, but a flat tax would
be a little lower. Anyway, I think you see the
idea that its simplicity versus complexity. How do we know which is better? Epstein's famous
idea is simplicity is much better probably because
it eliminates a lot of interest group influences, eliminates
a lot of complexity of even knowing how
do you live your life, knowing what the income
tax is really like. If it was just a simple
rule, a much better idea about when to go to
work, when to retire, when to build a factory. It would really be much
simpler, and he likes all that. Now before I go to problems
that raise [INAUDIBLE],, notice a couple of
Chicago Best Ideas that are really related to this. So our most famous
of Chicago Best Idea is surely the Coase theorem,
a Nobel Prize winning effort, developed in this very building. It's kind of exciting. And it's also, when you think
about it, a pretty simple rule because the whole idea
of the Coase theorem is something like the government
throws a rule out there, throws the property right out there-- and it doesn't really matter
whether it's the right property right. Like who should get
the property right. And the optimistic version
of the Coase theorem. It doesn't really matter because
people will bargain around the rule. If they give me the rule that
I'm entitled to all your income in the future, I own you
because you're a law student and I educate you. You will essentially pay me-- no, no, we're not
coming to Law School like let's come up
with a deal where-- this is an exaggerated rule. Let's come up with a rule where
I will have some incentive to go to work, so I'll give
you law school tuition. And then while they work I
get to keep all that money. If I assign-- if the governor
or somebody or even the King of England has signed everybody,
all the land of the Uni--or what came to be the United
States, people would come. They wouldn't want to do
anything with the land, and they would eventually
say to the King, I could really mow
the grass over here. I can grow crops over here, if
I have the rights to the land. And they would pay to buy
land, and then property rights would be allocated accordingly. This is like the most optimistic
version of the Coase theorem, it's a very libertarian
idea, like if you can count on people to
have some idea of what the future would look like. And if you can count on people
to bargain with one another and speak the same
language and all that stuff that you've learned in
your 1L year, then OK the rule really doesn't matter. Notice how simple the rule is. Just assign the property
right wherever it is. People will bargain
within the rule, and the world will
be a better place. That's again, very
Epstein-like though the Coase theorem was before Epstein. Another CBI idea was developed
by-- in corporate law, just to show you that this is
all over the place, whereby Easterbrook and Fischel. And their idea was there's a
big problem in corporate law. Being a legal problem
of corporate law. What about ideas that you
develop within the corporation? You work for the
corporation and you, while working for the
corporation, have a good idea. You discover oil, and then
you want to leave the company and start an oil company on your
own or go to another company. Should you have the
rights to that idea, or should the corporation
be able to say, we basically own you. While you were working
for us 9:00 to 5:00, you had this idea of
where to look for oil. So you have stolen a
corporate opportunity by going somewhere else. Again, very much like the the
Coase theorem, like Epstein. Easterbrook and
Fischel say, look, this is a very
complicated area of law. The governing rule should be
the corporation owns everything. And then in order to get
you to work for them, they will sometimes say, oh, if
you develop an idea here, it's yours. Or they will sometimes
say, you can leave. It'll make us look good. Other employees will
want to come here, so we'll let you have it. Think about your own life. You go work for the
government or a nonprofit or for a law firm. And you write a novel at night. You can imagine a world in
which the law firm said to you, we got you 24/7. We can send you
assignments all the time. Your writing that novel,
really stole time from us. We own the novel. It's a corporate
opportunity that belongs to the corporation,
meaning the law firm, not really a corporation. And then they don't do that. They basically say, if you
wrote a novel at night, it's all yours. And why did they do that? Because it makes them a
better employer and people want to go work
for that law firm. They know that if you
did not own a novel, you'd never write
a novel at night. And there are great novelists
in [INAUDIBLE] law firms. [INAUDIBLE] So again, that's the
Easterbrook/Fischel idea, it's really the same thing. Let's have a very simple rule. The corporation owns
all the property. But actually, people will
bargain around the rule or the corporation will
voluntarily change the rule because it wants you
to go work for them and wants you to
be more productive. OK, I think you get the idea. There are three
Chicago famous ideas, and they're all about a very
simple rule about ownership and then equal bargaining
around the rule. Lots and lots of
law is like this. Many, many areas of
law are basically simple, unique
allocations of rules. I made a list of them, which
probably won't interest you but only interest me. But property law,
very simple rule. Contract law, very simple rule. One person wins and
one person doesn't. It just goes on
and on like that. Patent law, I already said. There are other areas of
law that are not like that. Tort law often likes a
division of the rule, comparative negligence
sort of thing Family law likes the
division of the rule between members of couples. So there are some areas of law
that are binary you might say and some areas of
law that are simple. One person owns. That is a major theme
in law and something that the Chicago basic idea
or famous idea [INAUDIBLE].. Now let me tell you
a puzzle I have. Or one more example just
because it will come out later. The government's rules
start out very simple. For example, the government
used to run the post office. I'm sorry. Most people here
are pretty young, and you probably don't
know what a post office is. There used to be this
thing called mail, and they would deliver the
mail to your house like twice a day in the beginning. Underground and some
places like Manhattan, above ground and other
places, very, very efficient. And then it started
getting inefficient. And so FedEx and other
companies grow up and-- compare them for a minute. For many, many years,
the post office says, the governmental entity
really follow the simple rule principle. It was one price for
a letter, basically. And they didn't do
boxes in the beginning. They didn't do
anything like that. They did mail of a certain type. And there was one price. FedEx came along, and
they said, no, no, we're going to have many, many
different prices, depending on what it weighs,
how big the package it fits in, how
fast you want it. If you want one day delivery,
it will be more expensive, two days. Forever will be
no date delivery. So FedEx pricing system
was really a complex rule. The government's rule
was really very simple. Well, most of us now-- so in a way, it
conforms Epstein. Epstein said great, simple rule
government, very, very good. But most of us now
would say, I don't know. FedEx is probably better
than the post office. With FedEx by using varied
rules seem to do a better job. It made money unlike
the post office, which costs you a fortune
in taxes in addition to mailing a letter. And the FedEx is
much more reliable and actually shows up on time. And the government with
all its advantages-- free post boxes anywhere
they want and all that. It's really very inefficient. So why is that? It seems like the
government's simple rule which follows the
Chicago Best idea doesn't seem to work so well. And the FedEx seems
to work really well, and it has complex
pricing mechanism. Of course, the
post office is now probably FedEx a little bit. Its pricing system has gotten
a little bit more complex. This is all over the place. The government chose who could
be a taxi driver and who can't. Having a taxi
license [INAUDIBLE].. For many years, taxis were
like a fixed price system. The government controlled,
a very simple rule. You think Epstein would like it? Well, no. Along came Uber. And Uber's doing
pretty complex system. Depends on time of the
day, depends on the demand, depends on how many
cars are out there. It's real complexity. But we look on
our phones, and we can see the complexity
divided and how much it cost. So complexity seems to
work very well over there. This is a general theme
that I now want to question. And the question
is something like-- a lot of times when you look
at what the government does, a good way to judge the
government, I think, is to try to compare
the government to the private market. It's a good check on government. Try to see where the
private market does a better job or worse job. And then if I'm running a
piece of the government, I always like to
think, well, how is the private market doing? Maybe I should be a little
bit like the private market if the private market delivers
the service really well. That's what happens in
the post office, right? Post office, you probably
imitate what FedEx does. I have to give a little
anecdote while I'm there, which I haven't told in a
while and I can't help it, so. As you know, President Obama
taught at this Law School. And one time-- so he was,
as they say in China, an employee of mine when I
was dean of the Law School. OK. So one time, we
were having lunch, and he was not yet president. That was not funny. He was not yet president,
but it was clear that he was going
to be the president. And we had lunch together. And he was like feeling me out
for like members of the faculty that I thought would be good
at or would like government [INAUDIBLE]. And then we go through a
few members of the faculty and I say, no, no, no, because
I wanted them to stay here. [LAUGHTER] And then occasionally
I'd go, oh that person would be great at this. And he said, oh,
well, what about you? Is there a job you really like? I'm not promising anything, but
is there a job you really like? And he probably thought I was
going to say something like, be a judge Yeah, I really love my job. I'm not leaving it
for one of those jobs. And I said, well, actually,
I've had this lifelong desire to run the post office. [LAUGHTER] I'm not kidding, because
it seems so inefficient. And I think there are a lot
of things-- he's like, really, like what? I said, well, for
starters, we should have three time a week
delivery instead of six time a week delivery. And then have half as many
people running the post office. And I gave a couple ideas
I have for post office. Then he just looks at me
like I am a total idiot. And he says, so
you think if I am the president I could
have changed the post office by appointing you
to run the post office? And he just looked
at me and said, you have no idea how
the country works. I would never have enough power
to change the post office. It's a-- dream on. It cannot be changed. You need to do like a really
unimportant job like Secretary of State or something like that. The post office, no, no no, no. Really chasing me a little bit. What presidents can
you [INAUDIBLE]?? Oh, anyway, so I like this
idea of the government should be looking at
the private sector, and the private sector
does something very different from the government. If it seems to be working
well, then maybe the government should imitate the
private sector. We should think about how
the private sector does. So for example-- hospitals
are the most famous example of this. About half of our health
care, serious health care, is delivered by government-owned
hospitals, usually state or city. And half of it is run
by private enterprise. And it's interesting
to compare them. And if you're running
the state-owned hospital, you would want to look at how
the private hospitals work. So for example, a real
problem with hospitals is that you have
to wait a long time to see a doctor because
people don't show up for their appointments. If you're running a
government hospital, you probably want to look well,
how does the private market control as we try to
make sure that people keep their appointments? And then you might want to
copy it in the public sector. There may be pricing, how do you
deal with insurance companies. You probably learn a lot by
copying just like the post office is copying FedEx. It might be-- even taxis
have begun copying Uber. It might be that you should do
this with many, many things. So when you apply it to
today's topic, wait a minute, this is very complicated. Epstein says we should
have simple rules in the public sector. And we've seen some simple rules
that seem to work pretty well. When you look at
the private sector, it's full of complexity. When I think about
airline seats, it's very complicated
and beautiful. They change the price
depending on how people have reserved seats. They change the
price for complexity for where it's landing. Then different private
market pay more for getting a good
seat, a bad seat. It's really a complex
pricing system, and it seems to work very
well, even better than Uber, so to speak. Well, wait a minute-- I can give you a lot
of examples like that but I think you get the idea. The private market seems now
to really love complexity. So why should public market
also like complexity. We like the fact
when we compare-- I think most of us think
it's very clever when the private market
varies complexity, varies prices a lot,
and other attributes. You go rent an apartment-- it seems sort of crazy if
you went to rent an apartment and they said, well, apartments
here are $1,000 a month And you said, well, I really
want a two bedroom apartment. They said, $1,000 a month-- apartment. Oh, I really want
the 10th floor. $1,000 a month-- apartment. You would think that a simple
rule was a crazy thing. Of course, it's a
complex rule, depending on what size of apartment you
have and the floor it's on, how much has been renovated,
and all that kind of thing, how long your lease is for. So it goes on and on. The private market
is very complex. So why is the
government so simple? They draft somebody. Everybody gets the same price. They do the equivalent
of renting something out. Everybody gets the same price. Now the private market
is not always simple. I think in the military, in some
sense, it's very, very simple. If you are a private, you get
a certain amount of money. That's simple compared
to private market. But on the other
hand, of how you get promoted is very, very complex. How they buy airplanes
is very, very complex. It's not more complex
than the private market, but they're both pretty
complex over there. Large parts of the government
pricing are very, very simple. And yet the private market-- I might have said
this backwards. The public market
there seems very simple if you follow Epstein's
advice, the CBI advice. But there the private market
seems to thrive on complexity. So maybe the
government should be imitating the private market. So that's a sense
of a puzzle that I want to solve before I finish
and grade for questions. The question is, well, why is
the private market so often complex in a way that
seems very productive. Meanwhile, there's this
argument by Epstein and others that the public should
really be very simple. There's a real advantage
to simple rules. And there's a real--
on the other hand, the private market
has complexity. If it's really valuable
for the government, which I'll call the public
market-- if it's really valuable
for the government to learn something from
private enterprise, then maybe this argument should
be that the government should be much more complex because
the private market is really incredibly complex. The only part of the private
market that's not complex is nonprofits. Everybody pays the
same amount of money to take a course, for
example, on the margin. We don't say, a
course is crowded, now the price is
rising for the course. But the private market
would mostly do it-- we're a nonprofit,
so we don't do that. We try to make you feel
like everybody's equal and oh, you know, all
that kind of thing. Of course, we are complex with
your different scholarships. Colleges do that even more. It's really quite complicated. We're not allowed to bid
for student athletes. Well, of course, companies
do bid for private athletes and so forth. So the private market sometimes
hides this complexity. But the basic idea
and I think everybody is clear like if it's true
that the government should be simple, why is that-- why
doesn't the government want to learn from the private
market, which tends to be increasing complex all
the time as it figures out pricing and doesn't charge
the same amount to every piece of food in the supermarket
and all that sort of thing? So I think there are
three kinds of answers. You're going to have
your own but I'm going to offer three
kinds of answers to that, and maybe the third is
something we'll learn from. The first one is
maybe the most obv-- they get a little bit more
complicated as we go along. The first one is
something like, I'll call agency costs to sound like
a Chicago law professor, which is the private market
has a lot of advantages over the government. For starters, if you're an
employer in the private market, you can fire people, right? It's really easy. If they don't do a good
job, you fire them. And you can char-- you
can give them commissions. Oh, if you sell more cars,
we'll give you a commission, pay you more if
you sell more cars. Private market is
yeah, it's complex, but that's because the
manager of the firm has a lot of possibilities,
a lot of variation and it has freedom to do things. I think the hiring and firing
is really the main one. If you don't do a
good job, you're fired, at least in
the United States. The countries that
don't allow that, not doing so well actually. So the private market
seems to really thrive on this kind of openness of
the entrepreneur to hire, fire, give raises
over there, promotions over there, et cetera. The public market cannot
do that for good reasons. Probably it's afraid
of favoritism. So once you're in
the public service, everybody at that grade
gets the same pay. It's very, very hard to fire
a public employee, almost impossible. As you know, for schoolteachers,
if they're really, really terrible, they just
move them to some room and have them sit there all day. Firing them is just
almost impossible. So they don't get paid more
for being a good teacher. In the private
market, of course, they would get paid more
for being a good teacher. So the public market is simple. You'd think Epstein
would like it. A private market is complex,
and I think we understand why. There are these
big agency costs, and the private
market solves them by being flexible in a way
that, for probably good reasons, we don't let the
public market do it. It's not a
profit-maximizing firm, so it doesn't have
this flexibility. Instead, there's not a
lot of playing favorites in a lot of kind of ways. OK. Another way to say
this is we might say, we bind the government
to simple rules. We not only have simple
rules, but they're bound to have simple rules. We don't let for the public
market, that is the government, be as flexible as possible. I'll just call that dismissing
employee solution, which I think is really a big deal. The second one, maybe
a little less obvious, which is the private market
has this real advantage. They don't think so, but
we consumers think so. They have this real
advantage of repeat play. If you're a building contractor
in the private market, you do a good job because
you want people to tell their friends to hire you. If the building goes up
and it goes up on time. And then other people hire you. Whereas the public market
doesn't really have that. It's a solo buyer. And it's really-- and seller. And it's really hard for
it to have a repeat play. If you think the military does a
bad job, it gets too much money and doesn't do a very
good job, you can't say, all right, you're fired. New military, come on in. It doesn't work very well. Sometimes you can do it. You can have public schools
competing with private schools, for example. But usually, it's very, very
hard for a public market to have real repeat play. And by not having a
repeat play, it really needs to be governed by
very different rules, whereas the private market,
we let it fool around with hiring or firing or
pricing or this, that. Doesn't do good job? Well, I'm just going to
move on somewhere else. And then they are controlled by
this repeat play opportunity. So that's a big difference
between private and public. The third explanation, I think,
for this private and public distinction is, I think, the
most important and goes back to the Chicago Best Idea
that I started with, which is more or less, you have
to worry about interest groups. So in a complex world,
think of a tax code. If it's complex,
you get a deduction for this, bigger
deduction for that, 20% off over there,
exclusions over there. Interest groups do play a
very, very important role. They can come in and
say, well, your code is already 500 pages long. Why don't you just change
this rule over there to this kind of use of property? Or why don't you change
that rule over there? I mean, if you're
Chicago and you pay property tax
on your building, there's enormous play
of grant seeking. Grant seeking, meaning
you form an interest group and you go there. And then the government wants
you to have an interest group, so you bribe them or take
them out for free lunches or contribute to
their campaigns. It's just back and forth between
the government and private enterprise of oh, we have
this thing to give you. We can give you monopoly power. Give us something in return. And then I'll give you a license
to this, a license to that. And it's just playing
back and forth between the government
and the private sector. This does not occur
in the private market. I mean, what can an
interest group do? It can go to Whole
Foods, and it can say, we'll take you out to
free lunch if you sell my favorite kind of peanuts. And Whole Foods would say,
what are you, like crazy? First of all, I have peanuts
that aren't selling very well. I'm going to get fired. I'm motivated by the market
and by my boss and so forth, whereas the government is
not motivated that way. So the government has
all these "bennies" to give out, mostly kinds
of monopoly in power. You can't just start
a new hospital. You can't just start
a new school even in the public market. You certainly can't
start your own military in the public market. You can't even start
your own police force next to the public market. So you're really beholden. And now the question is, where
do interest groups do best? Meaning from our point of
view, where they do more harm. Do they do more harm
in the simple world, or they do more harm
in a complex world? This is actually a
complicated question. In a simple world, every time
the interest gets its way, it's huge. Imagine that the whole world is
governed by a flat tax of 18%. And now you get some interest
group that comes and says, I was kind of thinking
maybe that's more if you lower the flat tax to 16%. Well, if the government could do
that or would do that in return for donations to
campaigns or whatever, that would be like billions
and billions of dollars gaining to all these companies
or maybe to all of you as your graduated
from the Law School. But everybody watches
that more carefully. It's a little hard to see that. And besides then, there'd
be other interest groups that want more government
spending that would battle it. No, no, no, we need
more taxes so you can buy more goods and all that. So really, I think-- if you think about it, interest
groups do much, much better in a complex world. The more rules there
are, the more room there is for an interest group
to go like, oh, just one. Just little small advantage
over there that maybe you should use this kind
of wood when you're building that little platform
over there to get handicap access. We have such a rule in Illinois. You don't even notice this
kind of rule over there. And the interest
group does very well. If there are a thousand
government rules, interest groups can come and
manipulate four at a time, one at a time. They can get their way
without anyone noticing. So I think that's a really
pretty good explanation of why the government is
probably better off having simple rules. It's much harder
for interest groups to come in and do their
thing at our public expense, whereas the private
market probably doesn't suffer that
problem, he does a good job. And the interest group,
in the private market if there are 15 kinds
of gasoline sold and 4,000 kinds of coffee
sold, that works pretty well in the private market. It's not like interest
groups come and say, I'll bribe you to sell
more vanilla coffee. No, the market will
take care of that, and there isn't room for
extraction like interest groups, whereas
the government were to supply our coffee like whoa. You'd have interest
groups crawling all over the place to make
money and deny us Plein Air. Oh, goodness. You can only imagine
the government running that, it would really be awful. So I think that does get
back to Epstein's thing about the advantage
of simple rules, and maybe he is actually
on to something. I want to conclude
by just saying, I think in your generation,
speaking out to law students-- I think in your
generation, probably the government will
get more complex rather than more simple. And that's because information
is easier to acquire. The government, just like Whole
Foods can monitor everything we buy and figure out
what price to charge and what products to have. The government can do that also. Information is cheaper
than it used to be. And so the government can
watch a little bit more carefully like what
roads we go on, who's going to buy electric
cars, what's going to happen. And probably the
government will also become more like
Uber, if you will, and monitor our
information and then maybe have more efficient rule. And there might be much
better rules just the way the private market
has more complexity. So it might well be
that, in the end, the government will become
more like the private market with more complexity,
but we'll also be able to monitor the governmet
a little bit better because we will also have information
about what the government does. So I'm actually pretty
optimistic about this. Maybe that's wrong. So I promised that half
the time will be yours for questions and answers. I was going to bring
little presents to throw people who ask good questions. But I'm not going to do that. I'm going to count on you
to ask good questions. And more hands up. the shorter answers
will be-- and so forth. So why don't you be
aggressive and ask questions. Please. - Yeah, so-- - And I'll repeat
every question, both for the recording
and because-- I'm sure your question
will be clear-- but I can mangle it and-- - I mean, we'll see about that. I don't know. But I don't know
too much about this, but I assume in administrative
or regulatory rulemaking, there is less special
interest power. That could be wrong, but
that's just an assumption. So insofar as that is
true, is that one solution to this problem, right? Because sometimes
I mean, it does seem like complex
rules are better that are able to achieve
whatever the goal of this rule is. So is divesting power and giving
it to some regulatory body a solution to this problem? - So let me repeat the
question with a little-- [LAUGHTER] --twist, negative twist. It goes something like, well,
the problem is democracy. [LAUGHTER] Like there are always
politicians over there, and they want money, and they
have ways of giving out stuff. And so therefore, complex
rules make them more powerful. So isn't the solution to have
an administrative state-- let's have the environment
controlled by an agency, and they'll be like
lifetime employees. And then as long as we
can get talented people into the agency,
they can come up with more complex
rules about what we ought to be able to dump
into the river and whatnot and at what price. And their rules might
get more complex. It might be less subject to
an interest group pressure because the agency
is just there. And only in an oblique way
does it need interest groups to like it better. Is that sort of-- is
that a fair question? Well, call me
old-fashioned, but I thought that we did things like
became an independent country and fought World War II in
order to be a democracy. So I thought we were
supposed to like democracy. I know that, for
reasons I don't get, that's not very popular
in this building. In this building,
most professors seem to love the
administrative state. Like oh, agency
this, agency that. They can solve-- any
problem you name, an agency can solve the problem. They have experts. They'll do
cost-benefit analysis. They'll do this. They'll do that. That's just not my
experience with agencies. I don't know about yours. When will they give up? The environment does not seem
to be in very good shape to me, and it's been
controlled by agencies for a long period of time. So I think that the problem-- so
now I'm going to be political. I think the problem with
believing all the good things about agencies is to say, well-- it's a little bit
like universities. It's impossible to ever show
anyone that the agency's not a good solution. Because whenever you
say, oh, the agencies are not doing very well. Look at the environment. Or, the agency's
not doing very well, look at the public schools. A majority of people,
meaning law students, would say, oh, that's
because they're underfunded. You've just got to
give them more money. And then they can have more
employees and more experts then they'll do a better job. And then people
on the other side will just say-- whether they're
liberal or conservative, will just say, well,
how will we ever do a test to know whether agencies
are the right solution? Whenever I say they're
not doing a good job, you say, well, that's
because they're unfunded. I've never heard anyone say
an agency is overfunded. So this worries me a little bit. So I don't know how to
judge whether agencies are better or worse than
democratically elected people. So I understand
what you're saying. That maybe the more we have
agencies, the more complex the society will be. And when you vote
for the president, it's very hard to
change your vote based on whether agencies grew
or shrunk or whatever it is. It's very difficult. So yeah, that's a-- it's
a different kind of topic. It's like, do you
generally have faith in administrative
agencies or not? I have a feeling the
answer is in between. I have a feeling that in
some industries, if you will, some areas, we think an agency
probably works pretty well. And in other agencies--
in other areas, we probably think agencies
don't work very well. So the ultimate question
is not simple rules-- this was going to
be my conclusion. The ultimate question
is not simple rules versus complex rules but
rather what should we allocate to the public
sector and what should we allocate to the private sector. And I'll give you that
the public sector mostly includes agencies. So that, I think, is the big
battle for your generation. Should the government grow,
stay the same, shrink? Should the private
sector expand, shrink? It's actually a very
difficult question. That, I think, is really
what you're asking. And I don't have
the answer to that. I think it's experience. The mail is a classic example
of people in the public sector groups. You're like, oh, well, look
at them deliver the mail. We should have
FedEx run the world. And then there are other areas
where the private sector just seems to be awful. Until electric cars, they
just couldn't make a car, like at all. Does that mean
maybe the government with some agency
should be making cars? That seems a little
bit hard to believe. So it's hard to know the right
allocation between the private and the public sector. I think that's really what
your question is about, and I think your question
is better than any answer. I don't think we really
know when the agency should expand or shrink. Who else wants to have
their question not answered? - Right. So there's been
recent discussion sort of reassessing the
feasibility of a carbon tax, saying that it's never really
politically feasible even though it's a simple rule and
it's a lot easier to apply. And some of the
arguments that I've heard at least it's never
politically feasible, people aren't going
to bite for it. And the alternative-- - Why don't you give us the
short version of the question? Because I can see people
getting a little impatient with all the-- - Yeah, sorry. I guess I'm wondering
because it seems like the more complex
subsidy is more feasible. Maybe I was wondering if you
could talk about the behavioral , behavioral psych, behavioral
econ sides of this complexity, simplicity. How's it received? - OK, so I'm going to
repeat the question. You're doing a little bit what
Epstein does on the other side. So you're picking and choosing
your example, which is OK. So if you pick-- I pick military and other
examples and patent law. So you're picking carbon tax. It seems like a carbon
tax is really a good idea. And therefore, we say, look,
that would be very simple, leaving aside what the
rate of tax would be, it's not so simple. But wouldn't a
carbon tax would be easier than having your massive
agency control the environment. Oh, complicated rules are there. There's a simple rule that
would seem to be a good idea. I think your question
is, well, why don't we have that simple rule? But that might go back to
the government and agencies. I mean, the government
enjoys having complex rules over there. They get a lot of
lobbyists, and they get a lot of interest
groups lobbying, oh, let's run the
river this way. And let's do that. Let's do that. The private sector, which is
controlled by the government there, lobbyists,
they don't really want a simple rule because
that would take away a lot of the power to alter
the government's rules. And the legislators
themselves don't really like the carbon tax because
that would take away a lot of their power
to extract payments from the private sector. Are you with me? So it's a very
complicated example. Let's assume the carbon
tax would be a good idea. I think it'd probably
be a good idea. Epstein would certainly
think it was a good idea. So why don't we
have a carbon tax? Well, I've given you
the solution, I think, which is solution number
three in my example. So there are probably
many examples like that where we can think
of some simple solution that seems like a really good idea. Again, leaving out--
you have to argue about the size of
the carbon tax, what to do with other countries
that don't have a carbon tax. How do you fix them? It's not so easy to
have a carbon tax, but it seems a little bit
better than what we have now. I'll give you another
example that will give away personal preferences. Why don't we have a
guaranteed annual income? That seems so much better
than 1,000 different ways of trying to help people who
are less fortunate or less well-equipped. Oh, you do a little bit
of that, and we fund this. And we forgive loans over there. And then we forgive
loans over there. Then we gave tax credits. They only give food stamps. Then we give this-- It's so complicated. There's so many
opportunities for fraud and so many opportunities
for interest groups to get involved. Why don't we just get rid
of a hundred different ways that we try to
redistribute income and just give people
flat-out money, have some faith that they
can run their own lives. It would be so simple to have
a guaranteed annual income. Same idea as your question? So again, you can see
all the opposition to it. Well, wait a minute, there are
all these employees running the thousand ways of internally
redistributing the income, they'd all be out of work. They're all going to
lobby, don't get rid of me, don't get rid of me. There are all these
interest groups that like, oh, food stamps. I can make money doing this. And I get that. And I give it over
to this worker. A guaranteed annual income
would be very, very simple, but you just don't see a
lot of people wanting it. And indeed, somebody
runs for president saying I want to do a guaranteed
annual income, doesn't say out loud I then want to get
rid of 50 other programs. And you guys don't vote for him. You vote for some
incredibly old guy. But to people like me, this
seems really confusing. I don't want any of you
to complain that old White guys are running the world. And then on the other
hand, offered a simple rule by a young guy who didn't even
have the courage to be White. And then you go, oh, no, no, no. He likes markets. Oh, we can't have him. No, no, no. He didn't go to the University
of Chicago undergrad. We can't have him. So it is a little bit
like it's very hard to talk people into certain
kinds of simple rules. That's why Epstein,
a famous libertarian, is unpopular in a
way in the press because he is [INAUDIBLE]. Simple rules, like let's get
over all this complexity. But I don't think it's a
surprise that about why we don't gravitate towards him. OK. Please. - How much do you think,
like in the FedEx example-- How much do you think
it's about the rule being simple or complex or just
that there is an alternative to the government rule? So we could have imagined
FedEx being the simple rule if the government were
a complex rule, right? - So I'm not sure how
to answer this question. Let's try. Imagine that the
post office actually had a very complicated pricing. Don't I think some private
entity would arise and say, we're going to attract
a lot of business because we're going
to really be simple? - Right. And so that it wouldn't be so
much about whether the rule was-- - Yeah, that's kind
of interesting, not that your question
wasn't interesting. But that's kind of interesting. I don't think it would work
because I have probably more faith in markets than you. But let's try an example. Let's compare government-run
parks to Disney World. So Disney World is
really pretty complex. You can buy tickets. You get in front of the line. Things have different prices. They sell land around there. It's fairly complex. And their competitor,
in some way, is national parks in a sense,
or in Chicago, local parks. Most of them are free
or virtually free. So the public market
is very simple. It's free. It doesn't really control
who's going to cause more this or more that
and who's going to control animals and not. More or less, it's open. I mean, maybe local parks
are a better example. It's just there. It's very, very simple. I think you're-- and
that's a good example of the government's simple
and the private market more complex. It's price discriminating
in an efficient kind of way, efficiant, not inefficient. And I think your question
is something lik-- well, could it be the
other way around. Imagine that the public
parks were very complex. Like, you pay more for how
many hours you're staying here. You pay it more if
you park your car. You pay it more if you
take a picture over there. It could really--
well, that's what Disney World does essentially. It could be very complex. I think your question is, well,
if the national parks were very, very complex-- oh, you go drinking
on the Point. Oh, $8 for you that time. Three drinks, $21,
special discount for you. I mean, that is exactly
the way Disney World works. They try to figure out optimal
pricing to get more money but also to reduce your
consumers-- to increase your consumer surplus and takes
some of it away and all that. I think your
question says, well, if the parks were very complex-- in the way I just described,
somewhat jokingly, but not entirely. Wouldn't the private
market then offer Disney World 25 bucks, just
come do whatever you want? I don't think so because
Disney World would-- maybe Disney World wouldn't exist. But Disney World would still
have an incentive to price just above your reservation price. It's not like there's
anything to be gained in the private market
by offering a one-price system. In fact, all the
one-price system will do is there would be
long lines at Disney World by all the people who want to
pay more than what the fixed price was. And Disney World wouldn't
be extracting gain from all the people who want
to go to the front of the line. So I don't think it
works in flip fashion. I think the private
market would always step in to try to do what
people want at a price that the public
market isn't offering. So I guess that's my answer. I might be wrong, but at least
that's my first blush answer. Yeah? - You seem to bring up
complex choices that are options that private
markets provide is offering some efficiency gain. But reading interviews
of CEOs of big companies, they seem to be saying-- - We're obviously not
giving you enough homework. [LAUGHTER] You really sit around reading-- - If you were my professor,
I wouldn't have time to read this. But they seem to bring
up very similar problems, like the CEO of Pepsi Co
can't get rid of divisions. And there's a lot of
interest groups within it. And that actually a
lot of private markets that are very
inefficient and also need to be applying
Epstein's same rules, that we should be creating-- - OK. So the question is
well, wait a minute isn't the private
market also have these-- well, I can't remember
what they're called, these agency cost problems. It's not so easy to
hire and fire people. Well, it's compared to what? Compared to the public
market, it's much easier. I mean, CEOs, they're like
first year law students in Yale. They're just like whining. I mean, come on. Really? It's like that hard to
be CEO and fire people? They do it all the time. So of course, it's to
their advantage to come and say, oh, you have no
idea how hard my job is. It's really hard. You should pay me
another $100 million. It's really a very hard job. I mean, that's absurd. They can fire people. They can move them around. They can promote. They can change prices. So I'm not saying they
have a perfectly easy world in a complex world. I'm just saying compared
to the government, they have more
opportunity to be complex. So I guess I don't
buy the initial thing. Moreover, when the
government does it-- imagine the government
now turning-- say, this example. Imagine the government
now turning parks into careful pricing. People would go crazy, and
politicians would lose. They wouldn't get reelected. There'll be enough
people who would be like, it's really not right or-- what do you guys call it again? Fair. It's not fair. The government said, no, no,
no, you don't understand. It's really efficient. We need more people to use the
park from 6:00 AM to 9:00 AM. And you're all
coming at 11:00 AM. It's too crowded. We want to encourage you
to come at the right time, so we change the
prices by time of day. People would go nuts. Whereas when the private market
does it, everybody is like, oh, yeah, OK. The CEO gets to do it. It's your company,
do what you want. If it's not a good idea,
other companies will arise, and they will say, oh-- that's I guess your question. Other companies will
arise, and they'll say, oh, it's fixed
price for everything. Oh, by the way, a
special discount if you come at
6am, leave by 9am, sort of like parking
in private places. So I think it's just
compared to what. And I have a lot of faith. Please. - How does the private right
of action fit into this? - Could you expand the
question a little bit so that I can summarize it inaccurately? - Would be considered
as simple rule, or would be considered
market forces [INAUDIBLE]?? - You mean if we had more
private lawsuits or fewer? Which way are you going? - [INAUDIBLE] - I'm happy to
answer the question. I like the topic. I don't yet see
the relationship. Which one do you think
of is more complex, more private rights
of action, or fewer? - I'm not sure. I was wondering what you think. - OK. Are you about to take
an exam and you want me to give you the answer? [LAUGHTER] OK, that's pretty good. OK. So the question is-- I'm going to give my
version of the question. It's something like-- well,
where do courts fit in on this? The more we allow people to
go to court, the more private rights of action-- include more examples. The more people can go to
court, is that more complexity in the public sector
or more simplicity in the public sector,
getting courts involved where the government
itself is not involved? Is that fair? Is that a fair version
of the question? Oh, well, there are-- I don't know. There are a lot of
ways to answer this. One would be going back to
the question about agencies. I guess you could think of
courts as a kind of agency. They can't be fired. These are lifetime judges. And so we could delegate
more things to them. The way to delegate
more things to them would be to allow them
to hear more cases. The way to do that would be
your private rights of action thing-- You don't like the environment? Bring a lawsuit and say, I'm
going to say-- currently, the government would say, I'm sorry, you
don't understand me. But the rule could
be oh, no, no, you can bring a lawsuit
saying the police are sleeping under the bridge
and not doing a good job. You can bring a lawsuit
and say, the environment is going terrible. You guys should be running
O'Hare a little bit better. And right now, we don't
allow those lawsuits. We think that elected
officials, the government will decide who to
monitor, who to control, who to put lawsuits
against even, and so forth. So one way to make the
government bigger in a sense-- I don't know whether simple
rule or complex rule. The simplicity would be that
anybody could go to court and sue. The complexity
would be that courts have to issue rules
that themselves might be quite complex. Right? It wouldn't just be
winning or losing because people could
bring suit after suit after suit varying in the
complexity of the solution. Am I getting the question right? - Yeah. - Oh, now, I'm kind of into it. [LAUGHTER] Well, OK. So I'm going to give
a non-answer answer. Have you had a course with
Professor Easterbrook yet? OK, well. let me describe
a course with him, and then I'll tell
you my reaction to exactly your question. So Judge Easterbrook, like
Judge Posner before him-- and not Judge Wood because
she has a different view of private rights of action. I know some of you
have her class. But Easterbrook's a
really good example. Like when you listen
to Easterbrook talk about O'Hare Airport, or
listen to Easterbrook talk about the environment. I mean, he's kind
of unbelievably well-informed about
these things, kind of genius about these things. And you find yourself
thinking, like you, wow. If only we could have more
private rights of action, people could run to
Easterbrook's court. And Easterbrook would say,
oh, well, solution to that would be to have
a carbon tax that went up to this and this level. And beyond that it would be
progressive and far away. And then we'll do an exception. For everything, we can
outsource to Bulgaria because they don't
have enough pollution. And he would get it right. And he would figure out
who can handle pollution. So when you meet
Easterbrook and you hear him talk about these topics,
you begin to think like, wow. Why are the federal
courts holding back? If Easterbrook is normal
and we gave more lawsuits to the federal
courts, then the world would clearly be a
much, much better place. OK. The irony is that
Easterbrook would say, it's none of my business. Federal courts should
have less control. It's a democracy. And Congress should decide this. And I'm not intervening
where Congress hasn't said I can intervene
or the Constitution said that I can intervene. So there's a little
bit of irony there. Just when you need people-- Chicago graduates, I might add. Just when you need
people, you think, wow, if only they ran the world,
democracy is like, drunk compared to Easterbrook. I really have this feeling
every time I hear him on tele-- You're looking fantastic. You can run the world for me. And then you realize well,
not all judges are like that. All you need to do is-- all you need to do is go
to like 10 lunch talks at the University of Chicago. And you begin to think
like, well, I don't know. [LAUGHTER] Some of these judges are nice
people, but I don't know. And maybe democracy is
a pretty good thing. It's very complicated like
when you want to give things to courts and when you
don't and where you think democracy does a good-- Same with the agencies. Some people go work
for the government, and they come and say,
well, the people working there were really fantastic. Their underling, not so good. So you're not sure how much
to assign to various agencies because you don't
know if the person you meet who comes to your
lunch talks is really good. You don't know what they'll
really get to decide things, or they'll have to outsource. And the Internal Revenue Service
is a very good example of that. You're just not
sure what you want. So I think that's
kind of my answer. It's really complicated. The more you thought your judges
were really extraordinary, the more you'd like them
to have more business. The way to get
them more business would be have like,
projects [INAUDIBLE].. Let foreigners sue. Who cares? Anybody can bring it to court. We should do that. Immigration policy is
a really good example. Should it be run by Congress? Should it be run by an agency? Or should it be run by courts
getting really involved? I have no idea. I doubt you have
any idea, that's a really complex problem. Probably there are
very few citizens who want completely open borders. In my family, I'm the only one. Most people like, no,
this just can't be right. Stop thinking of global
welfare and all that. Well, would Easterbrook
come up with a better rule? Will the Congress come
up with a better rule? There'll be some states
that would be winners, some states that are losers. So I don't know if
private rights of action really do a better
job over there. But if you do, the person
to get would be Easterbrook I think would be a good rule. But thank you for your question. Please. - I was thinking how you think
selective enforcement might-- - What? Selective enforcement. - Selective enforcement might
teach the simplicity story. My thought was that it
might encourage more like [INAUDIBLE] bargaining. And that might not
be what we want. My thought was like a police
officer pulled me over on Lakeshore Drive like, oh,
officer, you don't understand, my wife's in labor,
whatever, whatever. Versus, no, actually
we considered all of those
exceptions to this rule and you don't fall
under any of them. - Yeah, OK. I think I'm getting to
understand the question. It's really very similar
to our prior question. I don't mean that in a bad way. It's something
like, well, if you don't like courts
in every situation, maybe what you like is to try
to have selective enforcement, like try to have common people
be police or common people controlling the environment. And they should be allowed
to make exceptions. Same with taxes. Nah, maybe they
should figure out whom to audit, when
to give a break, when not to give a break. Your example of police is
trying [INAUDIBLE] but yeah, you could do this
with any areas of law. - I think my question
was different. I think my question was-- - It was a good question. First of all, it
was a good question. - I think my question
was like, if people are going to have selective
enforcement in the world, people would probably misbehave. - And that's complexity? - Is it that having
a simple rule might facilitate more of that? And that might be a drawback. - Might facilitate more
selective enforcement. - Hmm? - You think it might encourage
selective enforcement? - I think simple
rules might encourage selective enforcement. - I don't really
see why that is. - Because-- - I think it'd be
the other way around. - Well, my thought was that it's
such a simple property right? And so then there's much
more scope for bargaining. - Yeah, but the more
complex the rule, the more the enforcer
has all sorts of ability to move you around
along the rules. So I'm not really sure. I think if I were a
government official who really like to be in charge
of selective enforcement-- when you think
about your example, police stop you on the road-- if police want to
follow my car-- I am really a pretty
careful driver. But if the police
want to follow my car, they can probably find 10
violations every minute. There's so many rules. It's so comple-- oh, oh, you're
going to cross the line get in to a lane. Oh, you didn't do this. Oh, you didn't see that sign. Oh, there was a vehicle
on this side, turned out to be a police officer. You need to move lanes. Ah, you didn't do that. So they have incredible ability
to be selectively enforcing. So I don't know which one leads
to more selective enforcement. But it is otherwise
the same idea. I mean, I'm with you on that. It's the same idea. I think selective
enforcing is inevitable. Selective enforcing is kind of
funny when you think about it. Can you imagine saying to the
military, OK, go invade Iraq. But you decide, you completely
decide whom to shoot and when. You know, because you have
more information on the ground. Whoa. Like then it seems like the
simple rule is really move from top down or something. Like it's not obvious
what the right rule is. So it has simple rules like the
president decides to invade, and all that. So I don't know. I think it's really
very complicated. So I guess my answer is no. I don't-- You mean I don't think
simple / complex is related to enforcement. I don't really see
the connection. Maybe selective enforcement
is just inevitable. I think there is time
for one more question. Who has waited the
longest to ask a question? Please. - Imagine [INAUDIBLE]-- - What's it like,
the last question? You feel powerful? - Yes, I feel very powerful. - OK, then why don't you go? - Imagine the President had
you as his shoulder angel, what would you be pushing him to do? [LAUGHTER] You're such a
different generation. What does shoulder angel mean? - I don't know, personal
advisor, his conscience. I don't know. - Oh. - If I gave you a seat
in the Senate tomorrow-- - I understand. You mean do I like-- do I myself like
simplicity and complexity? - Would you-- - I don't think you understand-- law school's not about me. It's about you as society. I'm not a normative guy. I'm happy to the
answer to the question. I don't know. Like you know-- But OK. Well-- - Another question would be-- - No, I like-- OK, so I'll answer it. [LAUGHTER] I think I like
competition between a public and private sector. To me, that's the ultimate
question, as discussed earlier. What should the government do? What should the
private sector do? So I like things like schools,
hospitals, other things, where each sector can watch
what the other sector does. And we can evaluate the
sector based on how well those compare to the other sector. I like even more-- oh, now I'm going to
answering your question. I'll like it even more
comparing our performance to other countries. So for example, look at
things we do very badly. I'm going to finish with this. So here's a favorite of mine. Think of things
we do very badly, meaning we spend a lot of money
and we don't get good results. Sometimes we get great results. I'll take university education. We do very, very well. Public schools in Chicago,
we do very, very poorly. We spend a huge amount
of money, and we do worse than 46 other countries. It's really embarrassing. So health care, we have
average life expectancy around the world, but we spend
like six times as much money per capita than most
other countries. So those are two areas where
I would say, uh oh, we're like really in bad shape. So what I would do
there is I would go look at the other sector. We don't have that really. I like the competition
between entities here. I would go look at countries
that are doing very well. In the case of health
care, for example, Italy does very, very well,
spends much less money than we do. And they have increased life
expectancy compared to us. So I would-- now, if I were the government, I
would sa-- if I was president, I would say, starting
in three years, we're going to do
exactly what Italy does. Whatever they do, whatever
they pay for, whatever they do, we're going to do the
same thing because they're doing a better job. That's what I would
do, both competition within the country
and competition outside the country. Let's think of what we-- the
way they're trying to copy our universities, we should copy
their health care and not where we go, oh, American
exceptionalism, or nuh nuh nuh nuh
you know, like-- Well, thank you so
much for coming. Go get lunch. [APPLAUSE]
