"Life After Capitalism" with George Gilder

[Music] during the break we were talking uh and since there's so many good questions and george's uh discussion is actually supposed to be a follow-on to that we thought we would more or less continue in this mode but george i'm hoping you just give us a couple of minutes a summary of what you hope to do with life after uh material or life after capitalism rather than i think we'll continue well we just talked about uh we're and we're talking globally because uh these gilder fellows are all around the world and it's exciting to speak to this global audience because there really is only one economy as the supply ciders asserted from the beginning the only real economy is the global economy and you can't really isolate various portions of the global economy through the system of prices uh everything affects everything else and so these efforts to sequester particular economies in the name of nationalism or avoiding a virus or whatever the purpose may be are ultimately futile they can't stop the process of learning that we're describing now we were talking about goals and isaac newton's real launch and defense and propagation of the gold standard in the early 19th century through the 18th century through the whole world economy and there was really one money and that money was uh gold every currency could be converted ultimately into gold and to replace this simple system where money was time and uh and this measure applied equally across the whole global economy to replace the system today has taken the world's largest industry now a lot of people might imagine that the largest industry in the world must be food production or transportation or you know some construction housing shelter but but that is wrong by far overwhelmingly the biggest industry in the world economy today is currency trading this is this vast system of currency trading that replaced that singular gold standard that previously provided a worldwide money and currency trading today proceeds at somewhere of the bureau of the bank of international settlements in switzerland has a tri-annual accounting of all the currency trading and the last accounting was 6.7 trillion dollars every 24 hours every day 6.7 trillion dollars a day of currency trading and and this was up 30 over three years from 5.1 trillion and since then uh the british in london estimate currency trading so you can guess that there's been another 20 30 percent it's probably up to around 8 trillion dollars in a day while world trade is essentially stagnated we've had the coveted recession where there's uh but currency trading goes on and what i call was a hypertrophy of finance and increasingly it represents a kind of cancellation of capitalism and this is what i mean by life after capitalism that uh governments central banks have captured money and they are manipulating it for their own purposes to uh award their own cronies their own political um [Music] associates and targets and that they're uh stealing time from our our uh when when governments manipulate money when central banks manipulate money they're really manipulating time they're stealing time from the future uh from our children and grandchildren and and uh this is the real um as a symbol of a general move of the various institutional forces in the world economy to take it over from the market processes that prevailed to a greater extent in previous eras and allowed this enormous surge of learning that this accumulation of knowledge that we enjoy today in which gail has uh recounted uh so uh uh persuasively and uh so uh so but uh the fascinating thing about the study of time prices is it shows you that entrepreneurs all over the world uh they uh kind of ignore all this noise and they uh focus on uh the uh true facts of the economic world they focus on they look they can learn even under conditions which are quite hostile to uh individual liberty and and prosperity so that's the the life after capitalism um you might imagine with governments all over the world asserting themselves in the name of health care with covet or in the name of climate change they're taking over energy markets in the name of climate change they're taking over health care uh in the name of fighting a virus that is uh if you really scrutinize the numbers in the history of it is far less menacing than previous viruses that the human race has learned to overcome and i've recent i believe that just as economic growth is learning our immune systems learn and uh i'm gonna in my in our chasm conference we're having in november in seattle we're having a a conference uh devoted to the future of technology in this predicament i'm going to be uh debating with neil ferguson the great stanford historian who's recently written a book a book called doom which uh propounds the idea that globalization air travel immigration tourism intermarriage between different societies and cultures all these forces make us more vulnerable to pandemics and diseases and and other disasters and and uh but uh this whole thesis um is contradicted by the learning that our immune systems have achieved and over the very period that um these pandemics uh have occurred we find our immune systems are becoming more educated more have learned how to deal with new kinds of viral threats and as a result of the spanish flu in 1918 was 50 million people died around the world and and the asian flew in 1957 58 millions of people died more than uh and young people uh death rates among young people went up 34 in the united states with the asian flu of of 1957 and 58 and by contrast uh coronavirus is a is really almost a trivial of that and so uh and as globalization has come as trade becomes increasingly international as as tourism uh covers the globe and millions of people are in the air moving around the globe our immune systems are learning systems and they become capable of dealing with new threats in the same way that the economy becomes more robust against new threats through the process of learning and so this is another kind of episode in learning that gail was describing uh the zoom and uh all the innovations that are emerging from this crisis of uh global health that we're supposedly under under undergoing today so i would just have a question for you george uh you know we think about we think about steve jobs and elon musk and these great innovators jeff bezos uh you know imagine if they had decided to become currency traders you know i have students that that come to me you know weekly and say what should i major in i want to make money and you know the big kind of money thing today is finance you should major major in finance and what i would just tell you is yeah it's important to learn finance but but the talent and the skill and the innovation and creativity that you have uh can can create much more value outside of that finance yeah that's what i would just encourage you to do is is to think beyond finance into this world where you can you can really create uh something that's going to change and and create value for for every one of us yeah i mean it it really is just preposterous that the biggest industry by affect that that currency trading is 70 times bigger than all trade and goods and services around the world it's just a ludicrous bizarre a kind of parody of capitalism you know we looked at we looked at uh students what they were majoring in in the us and japan in the 70s and you suddenly had this shift for us students they all wanted to be lawyers yeah so they all went into law instead of engineering and japan continued to i mean the us has like a hundred times more lawyers per capita than japan does it's similar with china i mean china has uh thousands times more engineers now than we do we're all right so we had all these students that that were studying engineer and and they've shifted to finance instead of engineers so we got distracted with with legal systems and financial systems that are are important they're important to a an economy that this fundamental you know how does innovation occur in the world where things are really created new things that create value it typically doesn't come from lawyers and finance guys that's right and they're using all this talent that you know in an area that's that's not yielding the kind of returns that we could we could be getting the real innovations as peter thiel describes them are zero to one there's something completely novel and new yeah and uh there's a lot of innovation that's one to end one test any number which is imitative innovation that perceives all around the world where an idea in silicon valley spreads to taiwan and the middle east and africa you know that's a globalization of existing ideas but the real um pioneers the real creators of new wealth are zero to one and peter thiel's and peter thiel is going to be um keynoting our cousin conference so that's that's an exciting development so the the reason i'm developing this information theory of economics is because of a real limitation of the prevailing economics the prevailing economics really can't accommodate surprise and we and thus it can't really accommodate creativity most economic models treat creativity as something exogenous something outside the system and it may come from colleges or government laboratories or something in their models but it's it's exogenous and what information theory allows is us to sort out all these issues that we've been discussing today um the you know the currency trading and the finance and the law and in all these areas and what their appropriate roles are government versus enterprise and and uh claude shannon who invented the bit and the bite really defined them and uh who invented information theory as we currently know it and apply it through the internet and the computer industry and and uh and [Music] defining bandwidth and the capacity of particular channels said that information is essentially unexpected bits information is surprise and this information theory that he developed is the most successful sort of science that's emerged in the 20th century it was it really is behind the computer industry the the internet and all our cloud computing and all these systems artificial intelligence all are have flourished from this information science that that shannon introduced and back in 1948 in defining the bit and the bite as and uh and defining bandwidth and and uh and and the key point that comes from shannon's information theory is information is surprised is one thing and and the other is that it takes and and surprise he defines as entropy yes if there's a mathematical um analogy with with thermodynamic entropy and uh the boltzmann originated and so he says that information itself is surprised but uh it takes a low entropy carrier that's all the sort of institutional structures the channels for uh the beds right to accommodate high entropy surprising creative advances so when i when we're communicating we've got to have a channel or a way that a channel that's clear that doesn't have noise that doesn't interfere with our communication and then if you don't have this clear channel then the information is infected with noise and it degrades the value of that information that doesn't doesn't happen so so this idea of being able to have in an economy this channel that's clear of noise that's free of distortion that's the institutions and the laws and the the environment that allows entrepreneurs to pursue their creative acts without the noise of is the currency going to change in value tomorrow what's the regulations going to be tomorrow right you know i need to have the stability that allows me to pursue this creativity right you got to have both you have to have stability to pursue creativity that's right so low entropy carriers high entropy creativity and and uh when uh if uh and this is uh [Music] the critical principles that that allow for the first time really to incorporate surprise in economic models you know economic models are full of averages you know and averages when you think about it are really reducing information they're there and and so the interest rate uh gives you the sort of average return of uh on investment across an economy the profit and loss right is the entropy the surprise so and it's the profit and loss that really govern all these uh amazing advances and time prices and innovation that your account in in your time price revolution i think uh gail and marin toopey is uh gayle's uh time price revolution is really a fundamental change in economics that uh is um going to have to be adopted now you know this is a great moment uh where this where this global um internet faces a terrible crisis of hacking you know the internet is a giant copying machine and it's been hacked hacked constantly the more we spend on security the less security we get we expose the um and uh and and world money world money is being hacked by central banks everywhere they're hacking the money so we have the communication system being hacked and the world money being hacked and the remedy is has just emerged uh the this challenge a hacking challenge facing our communications and monetary systems has uh generated creativity and unexpected development of what i call the cryptocus and the side of shannon's information theory he began with cryptography during the second world war and wrote a paper on cryptography which is really the science of noise yeah and uh and now we're integrating cryptography with our global networks and our global money and the cryptocosm and the blockchain which creates a low entropy ground state for creativity in the future so i think the emergence of the blockchain um uh it's embodied in bitcoin which is a flawed solution for money but uh a step forward and but thousands of new cryptocurrencies have emerged and and they're all working out and i think they're all ultimately gravitating toward a recognition that time prices are the true prices and that uh as a cryptocurrency arises that uh incorporates the truth that money is ultimately time where tokenized time it's uh it's how you have toy coins are kind of tokens of time that you can uh use to overcome the obstacles of barter across an economy and you can have fungible uh transactions across the world through tokenized time so the the fundamental values really that we see in economics is this ability to trust one another and we've got to have systems in place that allow us to trust more and more people the reason that we've been able to to escape poverty is we've been able to expand our trust uh scope to more and more people and we being able to trust a stranger is really yielded this phenomenal uh result in wealth and value creation for both parties and so so as we move forward learning and trusting both of those things policy should be looking at what is this policy going to do to encourage learning is this policy going to prevent learning from happening that's the problem with covet right now you can you can talk about whatever you want to but have we have we limited learning with the policy and some would argue yeah we're limiting learning because we're not trying these different alternatives and then the other element is trust how do we establish trust on one another and ultimately an economy is based on trust and and trust is this idea that we've got to have this channel that's free of noise that both of us can agree on that we're going to trust this thing and then we can trade we can't trade until we can trust yeah good insight we should move to questions uh definitely yeah and so we hopefully have a time for a couple questions but george had mentioned something about uh time price theory so gail i'd like you to just answer this one question okay um from a nose run short so for time price theory will you and uh two p maybe write an academic paper with the hypothesis to get the concept in the literature and are you optimistic that the concept of time prices will be recognized and accepted by the economics profession i mean i know some of the core of it is but what do you think uh about getting this concept sort of broadly accepted or at least discussed yeah time prices were actually adam smith talked about time prices believe it or not in in his uh book in 1776 he essentially said we buy things with money but we pay for them with our time you use uh you know some scottish old english words but that's the essence of what he said so time prices have been around uh a long time uh william nordhaus talked about him there have been other economists julian simon one of the one of the economists that we we write about a lot he talked about time prices so our hope is is we have written these papers and published them and our hope is that that uh more and more economists will come to to uh incorporate um this thinking in in their of economic textbooks is your web page you have uh our readers can go to your web page you can go to humanuh humanprogress.org and that's a website that's sponsored by the cato institute my uh my colleague marion tooby runs that and if you go to that site and look up the simon abundance index that will lay out all of the academic work and the equations that we use to develop the theoretical or the conceptual framework and what we what we did is we developed this conceptual framework about how to measure abundance and then we used this toolkit or this framework to look at all of this different pricing data so initially we went back and looked at these 50 commodities uh back to 1980 uh we're working on a book right now uh that uh goes back clear to 1850 and looks at things we look at uh all kinds of different products you know from bicycles to the price of sugar uh real quick on sugar uh the the time it took you to earn the money to buy one pound of sugar in 1850 how many pounds of sugar do you think you could get today 227 pounds all right so life has become 120 not that that's a good a good thing the time price has stopped during this period right population was went from a billion people to almost eight billion people so the more population the more which i'm going to explain tomorrow the more population the more um more creativity right and and the more abundance and the mistake that thanos made and if thanos had read our paper if he had if he had if he had read george's work he would have realized that he was his his framework was incorrect that he shouldn't be counting things he shouldn't be counting atoms he should be thinking of the value that's created instead of looking at the piano and counting 88 keys he should have been listening to the music that you can create this infinite music that that you can create with just uh this this kind of physical limited resources so we move from counting to looking at prices to looking at time prices and then looking at the change in time prices over time that framework is and go from zero sum games where a gain for one person is necessarily a loss for someone else which is zero some economics is like marx in economics is essentially zero some economics and to um yeah if you believe that we have a fixed number of resources on the planet and then we just have to divide those up we had another person everybody's slice is going to get smaller but the reality is is human beings innovate they make the pizza bigger more people come they actually make this pizza bigger so not only do do individual slices get larger but we have more people so the more pie is getting larger much faster than our population is increasing yep and with all the sugar and pizza we're also getting a lot bigger so there's always trade-offs on these things i suppose well i want you guys to tackle this one question because it connects actually um the stuff you're talking about time prices with george's work in life after google so let me just read the question from dave krueger she says currently the value chain of digitized personal information is controlled by relatively few corporations google facebook twitter and so forth if individuals were able to control and therefore monetize the use of their own personal digitized information what would be the impact to innovation and the time price of digitized personal information that's a dense question so if we were able to somehow privatize this information that's right now held by these few companies would this have um this is a toughy but i think it's a very interesting question well in life after google i discussed this issue and uh brendan ike is one of the great figures in the history of silicon valley he was a founder of netscape the founder of mozilla of creator of javascript which is the most prevalent computer language at various times across the internet and uh now he's invented the brave browser that uh the goal of which is to give individuals more control over their own uh data i'm i'm uh i think that uh the dominance of google facebook twitter at all is uh overrated that uh these these companies are um reminiscent of ibm and microsoft at previous eras that uh when they were considered to be utterly dominant i mean the idea that a google and a facebook could emerge in the face of the supposed complete control of the internet by microsoft or yahoo before that um was uh seemed uh very dim so i i think that uh as i explained in life after google where where uh google has a flawed economic model of uh of being overwhelmingly dependent on advertising and uh and they call them ads but in fact we know they're minuses we most of the time we don't want the ads they they don't contribute and and so so i i think that that uh that this era will provided we allow uh new companies to rise up and challenge them as one came by discovery institute yesterday uh an amazing company that is contriving a new search engine and content generating capability that can displace both google and wikipedia that it uh and at the same time allow each individual to control his own search and his own content and and of course blockchain is all devoted to uh to providing individuals with control over their own identities and owned data so i think i think this problem that people are talking about are is being solved by new technologies and by new entrepreneurial creations and the big threat to it frankly is these uh politicians who think they can regulate these companies and and uh and turn them essentially into government entities and the one thing that closest to eternal life is a government bureaucracy and and really the politicians who want to regulate facebook and and amazon and google and all these great companies are are are likely to destroy them in the process without opening the way for uh alternative creations which are not predictable today they're they're going to be a surprise like that company his name was uh philip parker came by yesterday and uh and and um launched this really uh entirely new technology that uh at least theoretically uh can uh replace google and yeah so so there are these are surprises and they're an information theory says information is surprised so here's here's would be my take on it look there's always going to be the biggest company in an industry i mean there's always going to be the number one company the issue is is does that company have the power to prevent other companies from competing with them and and the way that other companies compete with them is by learning faster so what we see is when those companies go to government and use government to limit other companies from entering the market and bringing their learning to the table that's where the problem arises so government regulation really is a form of preventing new learning from occurring and that's the danger that's where we end up with a status quo you

Channel: Discovery Institute

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Id: SP1aU1UN9T0

Length: 36min 34sec (2194 seconds)

Published: Tue Jan 25 2022