The Economics of a Stateless Society | Robert P. Murphy

welcome I'm glad for the big turnout it helps when there's no competition I'm glad you're all here let me just as a matter so you're not on the edge of your seats and I disappoint you I know some of you have seen my online talks about private military defense and like police and judicial activities I'm not gonna cover that in this talk that's what's called the market for security so I do that one on Friday so this one is other you know it's a sort of hodgepodge of various issues of you know how could things be handled in a free society I also want to make just a quick announcement some of you may be interested to know so I think a lot of you've noticed my son's been down playing chess and he played a faculty member here I'm not gonna say who it is but let me give you a hint by the transitive property I can now beat friedrich hayek in chess so you can figure out so we've narrowed it down all right so so economics of a stateless society so for one thing is why did we why do I use that term stateless there's a thing going back where some people make a distinction between the state and government and like state with a capital S and government with a small G and I used to think oh who cares about that but more recently I've had a change of heart so I try to you know sometimes you slip up in casual conversation but I do try to stress the state cuz some people the way they use government they mean it just as a more general like there's Authority so they might say oh there's government within the church or the family any sort of hierarchy at all even if it's consented to ins in some manner so that's why I'm trying in this talk to stick to also be saying stateless also just so you're not getting confused really what that what the goal is from a Roth party and perspective and what motivates the people who are you know the faculty at this event is a free society I think that's the more positive goal so statelessness is necessary but insufficient for a free society right so that obviously Martians come and blow up the world or something that would be stateless but you know we've it's I'm not sure what you did get rid the NSA so it's it's uh not sure it's a toss up all right so that's that's where we're coming from with this one let me motivate this by giving a very interesting quote here so this is from an intellectual I'll tell you who it is in a second but let's just consider the statement for if the bulk of the public were really convinced of the illegitimate II of the state if it were convinced that the state is nothing more nor less than a bandit gang writ large then the state would soon collapse to take on no more status or breath of existence than another mafia gang hence the necessity of the state's employment of ideologists and hence the necessity of the state's age-old alliance with the court intellectuals who weave the apologia for state rule and so I I like this quote because it underscores I think even libertarians sometimes fall prey to this misconception that the reason the state has so much power and influence in society is that they have more guns than people orgies they do they just have tanks and we don't so therefore that's why they're in charge and that's not really correct at Mises relying on the on the insights of David Hume would often stress that in the long run there's no such thing as an unpopular government okay even and you might say oh come on maybe like in Western democracies but but you know what about authoritarian regimes no you can see this principle there the most clearly it's precisely in the most totalitarian regimes where they have the strongest tightest control on the media the schools you know what people don't have internet access right so if it really were you know the North Korean government were in charge of the government there's this North Korean state were in charge because of the fact that they could just kill people and that you know any dissent wouldn't be tolerated then they would say yeah go ahead teach whatever you want the schools because if anyone steps out of line you know we'll kill them that's not what they do though they very tightly control what ideas that people have because they know how fragile their rule really is I said the people running the show they they know just how fragile is that's why they have to worry about public opinion that's why they have to have this whole system of intellectuals court intellectuals who propagate falsehoods and you know myths about like when you think about US history the normal way that's taught is just a succession of US presidents right as opposed to Ivan this was the age when this entrepreneur you know did his thing or this inventor did such and such whereas you know it's supposed to be this as a period of different rules by the person in the White House that's the way it's typically taught and it's not a coincidence okay so so that's the importance of a week like Mises University that yes there's other particular strategies like seasteading in the Free State Project or political action whether to educate the public or just to you know try to elect more libertarian officials but all these going underground off the grid so forth but all those things require more of the public to agree with the spirit at least of the stuff we're teaching this week right like even if for example drugs were still illegal if nobody in your neighborhood was ever gonna call the cops on you then it wouldn't really matter all right you see so it takes the public has to cooperate with the authorities and ultimately as Mises says it's not enough for the ruler to have an army because why do the soldiers point their guns at the population instead of turning around and pointing them at the ruler and you know coos happen there are violent overthrows of the government and so Mises point was ultimately its ideas that matter so who was the this might surprise you who actually wrote this this really provocative passage it was a young Janet Yellen in grad school no it wasn't it was Murray Rothbard now now why did I do that I just told you not to trust the court intellectuals because I'm here with the tie doesn't mean what I'm saying is right okay trust no one all right there apparently there's probably apocryphal but I was reading on like the Sicilian Mafia and well stuff came from and apparently there's a story about how the the Mafia Don takes his young his oldest son but when he's still a young kid takes him out like it hasn't stand up on some building that's you know like maybe this tall is this jump off I'll catch you and the kids like no daddy I don't want it come on come on I'll catch I'll catch you the kid jumps and he just lets him smack into the ground goes trust no one all right so all right so here's I'm going to jump in to a bunch of specifics but there's a general presumption for voluntourism so no matter what the issue is it's odd that normally the way the argument goes for oh and yeah yeah sure freedom works for things like TVs and ice cream cones but in this particular issue and the the interventionist will give some particular social situation we need state intervention because of the data right and they'll go through and list why standard profit maximizing business wouldn't be applicable in that situation but what's odd is it's like everybody in the world can understand there's this glaring gap here where people want something to be done and yet the only people who seem to not be able to recognize that are the profit seeking business people right and so the idea is that silly yeah it might take some ingenuity there might have to be some cleverness in how can we charge and make money solving this genuine problem that we all agree people have here but it's odd that the one set people who apparently can't recognize their other people who would make a bunch of money from fixing the problem so this is a probably a bit dated but the principle is the vanilla ice I know like two of you now know who this is because his iconic song he has a lion if there's a problem you all solve it and so okay I will have to get a different reference for next year all right so let's talk about money so here's an area where a lot of people just assume of course you need the state to provide money all right they can't even conceive oh you look around look at there's money that's just provided by states all over the world so of course that has to happen but as menger taught that no actually historically money emerged first voluntarily in the private sector and it was only later that political States coerced and took over that area so how did that how did that form so just talk about something like gold so Menger and I'm here I think you guys may have gotten a version of this already but let me just reiterate the story really quickly not just for its own sake but also to show the type of explanation and something that you could call a spontaneous order so first of all mangar and by the way let me just mention this isn't just that Austrian fanboys are saying oh we like the way Menger handled this know back in the day I think was like in the encyclopedia of economics Mangler had the article entry on the origin of money okay so it was he was acknowledged at the time in the late 1800s as he was one of the people who really had written the best exposition of how could money have emerged spontaneously if that's the word you want to use or without you know some central planning organization or some wise king so for what one thing is Menger pointed out the problem with the so called state theory of money right the idea that look if there's this thing money it's clearly not natural right like words we say we're where the trees come from well that's obviously something that was was natural you can talk about evolution or you can talk about God but it's not that humans had anything to do with why trees are there but money is clearly something that came from human beings and so then that it's a natural and it's also very useful and so it's a natural inclination for people to say so therefore there must have been some wise person or group of rulers way back when who invented this thing because they can't conceive of how else could it have arisen and so manga pointed out there's a lot of problems of this number one we don't have any evidence of that right you would think if somebody invented money we might remember that person it might have been record you know somehow and that that's that's not the case he says also even if it were true that's some you know so people are engaging in barter let's say and then some wise person has this great idea like you know what what if instead of trading things that you directly value and accepting trade what if we and he like picks up a stone and says what if every one half of every transaction involves people accepting these stones that are by themselves not something that you would value that would sound really stupid right I mean we now haven't grown up in this world we understand that actually that does make sense but you can see how back then that would that would seem crazy and then furthermore even if he could like maybe the King says all right everybody has to when you're selling something you gotta accept these stones first and don't worry when you want to buy something you trade in these stones for it so that's why it'll all be a wash in the long run and we'll all be more effective and efficient even if he could convince his subjects to go along with that perhaps you know because he's threatening them somehow what would be the purchasing power right so if originally you were gonna sell horses for so many eggs now here's the og I have to first sell the horses for stones well to know how many stones do except you need to know well how many stones trade for eggs to know if this is still a good deal or not afford maybe I just don't want to sell well how would you know that because the egg seller is in the same boat how does he know how many eggs to sell four stones right so you see it's it's hard and this is another area where I think even we talk about fiat money even a lot of Austrians and libertarians sometimes say oh the reason this is veil is because the government has guns and makes it valuable and it has to be more complicated than that right because you wouldn't know just from scratch what's the purchasing power of even this fiat money supposed to be so just just keep that in mind that there's a lot more involved when to get people to accept and use something as money okay so that's great it seems like megger makes some good points but then how how did we get there it's almost like he seems to have proven yeah money can't exist how would it ever get off the ground and so the story he tells is I'm obviously simplifying it here boiling it down for the just the basic story is that even in a state of I'll say barter that the more technical term would be direct exchange but even in that state some Goods would have a bigger market than others some things would be more saleable or we could say more marketable so things like eggs in beef and so forth would have a wide market where something like a very sophisticated telescope it could be valuable but only a very few people would want to buy that thing right and so if you're going into town to trade and you're carrying a bunch of eggs you're gonna quickly find somebody on the other side of that you know who wants eggs and hands whatever you want but if you're going to town with a really sophisticated telescope and you want horses what are the chances you're gonna find someone on that day who's selling horses and wants a really sophisticated telescope so you see it you see the problem there so mangers said what people would do who are in the position of wanting to unload goods that are relatively unmarketable even though they might be very valuable is they would do indirect trades right they would take something as a stepping stone so they found someone selling eggs who wanted a really fancy telescope they might trade because they know if I have a bunch of eggs I'm much more likely to find someone selling horses who wants eggs than wants this sophisticated telescope so that's the the first link there and the argument and once you accept that which you know seems pretty straightforward it's snowballs right so then what happens is things that initially just because of their attributes and people their desire for direct consumption or production desired a certain good and it was relatively marketable now its marketability gets enhanced because there's a second layer of people who accept it because they're gonna trade it away alright and so things that initially were a little bit more marketable now are a lot more marketable because more and more people accept them in a trade just intending to hold them temporarily to unload them later all right and that process snowballs and if one or two Goods gets to the point at which just about everybody realizes oh yeah I'm not gonna have trouble unloading that so I'll so whatever I have to sell I'll sell take that thing and then go trade it away for whatever I desire we'll go up that's money that's what money is it's a medium of exchange that's universally accepted so and then the things that why gold and silver there it's because if you think about what sorts of goods would be very useful in that role things that are you know very durable like cattle could could work in some respects but it's you have to feed them they go to the bathroom there's all sorts of problems with them if you want to buy something that costs half of a cow it's hard to make change right so there's things like that whereas gold and silver there's really nothing wrong with them they're pretty good on all the dimensions of what would make a good medium of exchange and that's why over time the market embraced gold and silver is the money's where is something you might felt like what about diamonds the strike against diamonds is they're not homogeneous right it's not that a pound of diamonds is a pound of diamonds if you have one huge diamond that's more valuable than a bunch of smaller diamonds that have the same weight wears with the goal that doesn't work like that cuz you can just melt gold down and it's a pound of gold or an ounce of gold is an ounce of gold okay so that's mangers story about how money could have emerged just using a notice there nobody planned that outcome so and this is a subtlety so it's not that we're saying rationality wasn't involved and this was just so just money emerged and it was kind of this weird thing everybody was making very specific means and appraisement but what they were doing was just saying okay I want you know I have this telescope I want to get what I say horses and there's a guy here offering eggs for a telescope I will make this trade because I know I'm more likely right so that's a very rational thing to do there it's not we're not just appealing to some tendency or propensity to trade you can see why that person's improving his own position the way he evaluates it but he wasn't thinking ah and then when others start doing this 10 years from now we're all gonna be using money and that makes more sense than barter nobody was thinking like that it just sort of naturally happened each person looking you know fairly short term where this result was something that was the result of human action but not of human design okay what about coins okay so you can say all right that explains maybe why gold could be the money in a community but what about actually having coinage that's something that state around the world right now do but again this was originally you had private mints that would take the gold and silver and stamp them into coins and it was only later that you know states political institutions crowded that out and took over that that function so that this isn't a science fiction George Celgene actually has a book on this going through and it's showing pictures too so it's not only that the money the coins that were privately produced were possible that they existed they were actually much better-looking coins than the stuff that the states produced because they had to be there was in competitions so to be clear the private mins they didn't make gold money gold was money by itself all they were doing was they they it would be a matter of convenience to for example if a merchant was selling something for ten ounces of gold and you walked in there with just a block of yellow metal they could you know they would have to weigh it they would have to try to assess its purity whereas if there was a company that would take the actual blocks of metal and stamp them into very recognizable coins with a certain insignia that would be hard for counterfeiters to match and on the on the circumference they had ridges so it'd be hard to shave off you know bits of gold so you're sure of the fineness and weight of it that's what the mint did that's the service that provided it was just certification that this really is an ounce of gold or you can tell this is an ounce with very little inspection compared to just the raw metal as it were okay and so that really happened so since mints were competing with each other that's why the coins would have to look nice that was one of the attributes why would you carry coins from this men versus another wealth of things were really ornamental and pretty to look at that would give them a slight edge and of course they also had to be hard to counterfeit and so forth all right what about banking that's another area where it seems like Oh clearly you need to have heavy regulation at least of banking because otherwise the public is gonna be taking advantage of no again here this is standard you can see how this would emerge it's very inconvenient to just rely on gold coins and so there'd be a role for banks to issue notes for example saying the bearer of this is entitled to one ounce of gold at the Murphy bank or at the rothbard Bank or whatever and they could be a hundred percent reserve I won't get into that because I'd you know did yesterday and I'm saying even this service that that is providing a genuine service to the public right if you get to be pretty wealthy and you have thousands of gold coins in your possession you're vulnerable to robbery right and so you could go get the storm at this place that has a big vaults and armed guards and cameras and insurance and then they give you you know debit card modern times are back then they could give you paper notes which are very easy to transport if you're gonna make a large purchase it's a lot easier to hand over some high denomination notes than to have bags of gold coins or you could write checks you know that the bank could certify that yes this person has whatever ten thousand ounces of gold to his name so he can write these authorized checks and there can be a very you know they can check their signature and bla bla bla to make sure it's a legitimate transaction right so there's plenty of reasons that banks would emerge and did emerge historically for volunteer through the voluntary market let me just mention here that what we're told that regulation and central banks are supposed to do is the opposite of actually what they do in practice right so the claim is oh without heavy regulation if you just had lazy fair in banking banks would be issuing you these notes the public would have no idea what they were there'd be fly-by-night companies and you know merchants would be accepting notes and then they'd go and the bank wouldn't exist anymore things like that and so we need regulation to protect the public from wild inflationary booms caused by these wild cat banks and actually that is one hundred percent backwards that in the voluntary private sector where there's just standard contract enforcement where banks don't have special privileges there would be very sharp limits on no issue because if any one bank issued more notes than its competitors did its reserves of gold would quickly get drained right that because it you would you are a merchant you're accepting let's say you accept notes from anybody what are you going to do with them you're not gonna hold notes from some bank you don't recognize you're gonna go to your bank and deposit them and so the end of every week or month the bank's all settle up with each other with clearing transactions and on that if your customers turned in more notes than this bank's customers did visa vie each other the one Bank settles up by sending net gold to the other Bank get settled up and so if one bank is issuing paper notes like crazy and doesn't have the goal to back it up then its clients spend more in the community the other banks accumulate notes drawing on that Bank and it runs out of reserves so there were strict limits on credit expansion from any one Bank in that kind of a system central bank's their function what's one of the things you go look at the historical controversy or discussion one of the functions of the central bank was to be a lender of last resort so that is not at all telling private banks hey don't lend too much don't be too aggressive in your loan policies if we're here to bail you out if you get caught with your pants down that's what you need a lender of last resort for is if you get caught and people you owe people more money than you can pay them at the moment that's when the central bank comes in to to rescue you so that institution far from promoting conservatism among commercial banks actually gives them the incentive to inflate more and then also obviously tight regulation restricting free entry of new firms into the banking sector allows a cartel to form right because even if all the banks you know remember that mechanism I said two minutes ago what if all the commercial banks agree with each other hey let's just all of inflate in unison so our notes you know cancel out each other and we can all make more loans and earn more interest income and then we won't have a net drain of reserves cuz we're all doing it together they might do that but then some new bank can set up shop that has a higher reserve ratio and it will drain the reserves from all the expanding banks but you can't do that if it's really hard to open up a new bank and right now it's very difficult to you can't just open up a new bank it's not like opening up a pizza shop okay and so notice again all the things that are in place allegedly to protect the public actually protect the the banking sector and allow them to inflate more okay the famous question who would build the roads I always forget to look up at Tom woods has my favorite quick one-liner response to this he says something like that yeah it's kind of amazing that this is the go-to objection to libertarianism it's like there's consumers over here and there's Walmart over here and they can't figure out how to you know they're all just scratching their head saying how can we get together and write and notice it's it's not like it takes some secret knowledge to know how to build a road you see it I mean like it's where as you could see with things like you know when we'll get into this on a Friday talk if you go to that we want to talk about military defense you can kind of understand someone thinking well gee the NSA and the FBI and the CIA they know suits things that the private sector doesn't know and so that's why they need to be in charge of keeping us safe from the Russians or whoever but when it comes to building roads it's not like yeah the government or the political authorities know certain things about asphalt that nobody in the private sector know you seen I'm saying all right ok also besides just the theoretical appeals I'm making historically again we see the same pattern the early Turnpike's they were raised constructed privately there was and there were there are mechanisms to to overcome what you could call the free rider problem so there are a bunch of merchants in a certain area they knew if they built a Turnpike that went through there that they could attract you know traffic from you know so like people are going from here like this major city to this major city and let's say there's a town in the middle they would know if we make it convenient for these people to go right through our town this way then we'll benefit from them stopping and buying stuff along the way from us rather than stopping somewhere else and so the the merchants in an area might all chip in to help contribute and build a road where they're not stopping people every two feet and charging a toll they could have free access roads like that where the local merchants are the ones putting up the money because they know it'll more than pay for itself and the extra traffic they're gonna get all right and there were like public shaming campaigns and things in certain areas where you know somebody who was the advocate of building this privately financed Turnpike would get contributions from the major merchants and then if somebody was holding out you know he might publicly let people know that hey this one guy is gonna benefit from this and he's not big so they couldn't stick a gun to his head but the point was there were plenty of mechanisms to try to get financing for so-called public goods short of sticking guns in people's faces all right and this did work historically and it was only later the government's took it over okay on this issue some people said oh my gosh if this were the case I mean in some cities red lights would mean go and green lights would mean stop and it would just be complete anarchy and chaos okay so number one obviously that's silly okay with like it's not that we have different definitions of what a centimeter is around the world and yet it's not that if you try it you know some scientists try to publish a paper and they have a footnote saying by the way when we say centimeter we mean and they said some huge unit of length you know that they would just wouldn't get published that'd be crazy alright so it's not that you need force to make sure that there are standards that people voluntarily embrace on the other hand it's good that in certain settings there would be some variety and some experimentation and so if you've never heard of this guy later go google hans Mondamin so he I think he's Dutch he's a road engineer and he has what at the time were very unorthodox view so he doesn't believe in signage or lights and in his mind if if you have to put up a light or a sign to regulate the traffic flow you built the road wrong that it shouldn't you shouldn't have to have give that extra information just the National design and layout of the road should give the drivers what they need and he was a big proponent of traffic circles and you know the drivers would go up to there and they would be confused and not know what to do and he said exactly that's what you want you don't want people zoning out and just not paying attention because oh it's alright if there's a red light I'll stop otherwise I'm not even paying attention to what I'm doing he said that's how you hit pedestrians is if you're not really painted and the stet if you're a little bit confused as a driver you're looking around you're alert you're not going to hit somebody and he did this thing I can't find that on YouTube now but I did see it he's talking to a reporter explaining his views he goes up to an intersection that he designed it's like a traffic circle it's crazy there's cars all over the place he turns around ya backwards and he and he starts walking backwards across the street into the traffic right so he was hit and killed but still the point no no he didn't get hit and killed so his point was he was showing how much he trusted his design that he knew the oncoming motorists were very alert and they're not gonna run into a guy ok so again I'm just I'm not saying that's necessarily the solution but my point is we just assume that the way the state builds may Taine's roads now is the way it ought to be done when no it's a cliche about how in many areas there's potholes in the roads and it's terrible so that you know who knows what it would look like but don't just assume the way that the state maintains the road network right now is the correct way and it's up to the market to prove it could maybe match the performance of the state why would you think that okay Walter block makes the point if you look at the the fatalities it's not as if there's two people every year who die on the roads right there's lots of fatalities and his point is if a private company we're causing all these there'd be congressional hearings and yet the way it is now if people die it's just oh well yeah driver error leave guy must have been drinking or he was going too fast or get his brakes checked people don't stop and say gee maybe we shouldn't have the political system be in charge of designing and building and maintaining the roads maybe that's why there's so many deaths at this intersection okay beyond all that stuff this simple phenomenon of traffic jams all right so if you're not from a big area this might not be a huge deal to you but if you like New York LA Chicago Houston it is crazy just how much time people waste every day Russia we're going to and from work in the city and these are very productive people that time is very valuable so I don't have the estimates at my fingertips but I think it's like in the billions of dollars in terms of just lost productivity these high productive people sitting in traffic beyond that I do think the murder rate in New York would go down if you privatize the roads because of people how aggravated they get and I'm losing it and they just you know go I'm I'm not even kidding I'm being serious all right so also something like Bridgegate I don't know if you guys know what that is but Chris Christie got in trouble he's governor of New Jersey and there were seriously like if they literally proved it happened but there were very serious allegations that some of his key staffers to punish some mayor some Democratic mayor who had supported Christie's reelection campaign as governor deliberately shut down some eight or some roads I think was the George Washington Bridge on the top deliberately shut them down during rush hour one time to punish that mayor to cause massive traffic snarls and then there was some he's like something I think somebody died because he was in the ambulance or something and and so that was a huge scandal and people say that's currently why maybe Christie didn't get picked as Trump's VP because of that reason but the point being if we are from scratch debating whether the political system or the profit and loss system should build and maintain roads and I said well you don't want to trust the political system because maybe just as a personal vendetta they might deliberately cause huge traffic jams that inconvenience thousands of people I'm sure they're critical oh yeah I'm sure somebody would do that geez that you know whereas know that literally happened apparently okay so you see and why not the only reason it was bad for them is they got caught it's not that you know they they lost out on the other you know that the officials who made that call where thousands of dollars poorer because they had fewer people passing the toll that day right you could say this the political authorities missed out on the revenue but so are the people who made that decision do not directly get to pocket that revenue that's not their money would be corruption if they pocket where as a private company is not going out of the vendetta just implement some policy because they hate some guy across the street and lose thousands of dollars or at least they will personally feel that they would have to really hate the guy to do that they're like if you're willing to pay it okay asset forfeitures there's a huge thing now where governments like the police this was a big thing I can't remember which interstate would but there's a nursery that went through Nashville where the deal is people would bring in money in the cars buy drugs and then go the other way with the drugs and the police set up roadblocks that allegedly to stop this trafficking but coincidentally they set it up on the side where the money was coming in they weren't trying to catch the people with the drugs they were stopping people who had cash in their in their trunks seizing it and there are horror stories where like people who don't trust banks or some guy was in the middle of something and he was moving and he had you know thousands of dollars like $80,000 in cash in his trunk because he was gonna go buy a house and just he was you know a person for some reason he didn't trust the commercial banks what a nutjob and you know there was it wasn't like you know he had a bunch of white powder in the back seat or something you know say hello to my little friend no he he's just a regular guy and he had a bunch of cash and the cops start with that suspicious and they took it and he has to prove he's not a drug dealer to get his cash back right so there's all sorts of things like that that wouldn't be able to occur I mean the reason the state can get away with that kind of stuff is because because they own and control the roads that's partly why they have such dump so it's again it's not merely an issue of traffic jams by that I didn't explain the reason traffic jams occur is because the price is too low that's just a standard short I just think about supply and demand graph what happens if the price is too low too many people want to use the resource compared to the quantity supplied that's a shortage that's what traffic jams are they're shortages okay so the price is too low if it were privatized the price the tolls would initially shoot through the roof but at least rush-hour would be you know fast and then with those huge profits people would build more roads and tunnels and bridges and so forth okay the last thing involuntary blood draws there's another thing now - we're at DUI checkpoints or whatever they will against your will like hold you down and pull blood out and test it again and people were you know that went to the Supreme Court and things but that's the reason that happens is because the government's the one in charge of the roads right if it were a mark a private company in charge of these roads here and another company on these roads here if you didn't like their policy you would just drive on the competitors roads whereas you know if it's the local government doing it it's it's harder just to say I'm not gonna I'm not gonna go to Albuquerque anymore whereas you could easily say I'm not taking route a I'm taking route B that this company maintains okay what about public so-called public transportation again if you if you liver in a big city or have lived there you're gonna know exactly I mean if you haven't this might not make sense to you but this is basically what the subway looks like in New York City at certain times of day and so what they will do I mean literally the subway comes in it opens if it's like four through six pm and certain areas where a lot of office workers are going home for the the subway opens people literally go in and talking about like in terms of there's not much of volume left inside the subway car that's not human flesh I'm being serious and so but notice that doesn't happen on airplanes right it's not like you get into the plane and and some guy sitting on your lap and somebody's on your shoulders and they're you're saying okay we're going to Tokyo now we strap in and he said why is this oh because it's a popular you should have known you should have flown it at 3 a.m. that's that's the solution they don't do that or a movie theater opening right you go to like the opening of the New Avengers movie or something it might sell out but the theater owner doesn't let everyone pile in and sit on you to go watch Captain America right because they mean this is silly guy said because they know we want our customers to have an enjoyable experience what you do is you raise the price or you build more capacity you don't just let anybody pile in so that the thing so that the rationing mechanism is to make the good or service less enjoyable to the user that's not what a private businesses but the state does that because they don't care the people run in the subway whether they make more or less profit those bureaucrats don't earn bonuses for earning a profit again if they got caught doing that that would be embezzlement if they said no we we raise tolls and we limit you know we put in turnstiles and strictly enforce them and we had police to make sure people weren't going in beyond just the seating capacity in the standard standing room and then you know then we raised the prices to be able to accommodate that and we made an extra billion dollars last quarter and now we're gonna give ourselves bonuses of 100 million each for this new plan you know people would flip out they said what are you doing you're charging us more money and pocketing it that'd be corruption and so that's why the political system doesn't do that and you end up with craziness like this all right what about free and compulsory schooling okay so government schools are often a euphemism for prison in some communities and here I mean so I don't just mean like oh I'm miserable I don't wanna have to learn algebra I mean in some areas like literally you are in physical danger if the kids they have to go to certain schools and again it's it's not it's precisely the groups of people that interventionists say would be left behind and not taken care of in a free market and that's why we need to have free so-called public schooling is because of these underserved communities that you know the rich capitalists would ignore it's precisely those people are getting terrible education and are often in literal physical violence situations because of this they can't even not go to school because it's against the law also it's not a coincidence I would say right it's not just that the people running the state apparatus mean well and they just haven't paid attention at what they weren't aware that there's shootings and knifings and schools and so forth and the test scores are pretty poor no they know full well so I think the real reason in terms of long term why is it the state insists on having such a strong presence in education it's for the reason I said in the beginning that the people running this know full well how much ideas matter an ideology is important and this is how you maintain for example that US history is nothing but a succession of which president will happen to be in office for that four years okay and so home schooling other non-traditional approaches vastly outperformed these establishment ones and also let me just mention though I think there's like about half to let's say half the people who are currently in college shouldn't be and I don't mean because there's stupid that's not what I'm saying I'm just saying there's a certain type of person like when I when I first was teaching I could just tell that in the class half of the students I would say they really it's it's they just they were there because they had to because they knew oh yeah I have to get a college degree to get a job you got to do this and it was really just four years of checking the box whereas let's say the other half were actually interested in the ideas and again I'm not saying the one group was smarter than the other in many cases there were plenty of really intelligent people who I thought this is such a waste for them to be sitting here watching me draw marginal cost curves they're not gonna ever use this stuff they should go out and you know get more business experience right away they're wasting four years here not only they're spending money but they're missing on a potential job experience alright so the way I try to get regular people to see this point as I go the other way and I say what if we changed the expectations so that everybody to get a job to be considered a normal citizen and to have good loving parents had to go get a PhD in something right we could see how that would be crazy you say no that would that would just water down when a PhD meant if everybody if the standard rule was any educated person had to have a PhD in something you would realize they'd have to lower the standards and those programs and it would just be an arms race if everybody has to get a PhD then that doesn't signify anything and so it's just now instead of having to have a bachelor's degree you have to have a PhD it would cancel out largely and it would just we would all lose four or five more years of our life rather than productive okay and so you can see how that would be kind of crazy so I'm saying what are the chances right now we're at the optimal position and where as we admit insisting on more schooling would be a problem no maybe dialing and back actually would make more sense and it's clearly with all the government support given to education in terms of subsidies and mandates and so forth you can see how it's pushing people well beyond whatever that optimal level would be okay what about safety regulations I'm gonna speed up here because I got a couple more topics I want to hit whenever there is a foodborne illness or a plane crash even though the state apparatus is officially in charge of keeping that stuff safe safe for us to make sure those wild cat free enterprise nut jobs don't run the show and have shoddy products and adulterated food and so forth and crazy Plains where there's no oil changes that's what we have the FAA for the FDA did it so whenever people die whenever there's disaster under the state's regulation why people don't say huh maybe the state's doing a bad job no it's always thank goodness we had the you know FAA there we need to beef up their funding when there's a plane crash right that's that's weird it's like what could possibly happen to make people doubt the current system they always look at the failures under intervention ISM and say that's what would happen under the free market except more so which is just weird if you think about it okay so just look at the comparative institutional analysis when there's a plane crash the FAA typically will get more funding if there's some particularly agree like if some inspector got caught being drunk and he didn't go look at the planes and he might get fired or something but it's not that the program is gonna get its budget slashed because you're doing a bad job they're gonna get more funding if you're in Congress and there's a bad plane crash and you vote to cut the funding of the FAA that'd be crazy people go nuts what are you doing they need more money so that's weird where if they fail they get more money so why would we expect them to do well in that scenario also I don't have time to get into it here but the standard libertarian critique of the FDA is that they have all these unnecessary regulations and insistence on test procedures and so forth to bring a new drug to market such that right now it costs over a billion billion with a B dollars to bring a major new drug to market so that's true and so that's partly why those drugs are so expensive because they have to be otherwise it wouldn't make sense and that's why you have drugs developed for mass markets not for real niche illnesses because it just they don't can't make money off of it that's all true but the flipside is also true that the FDA approves stuff that is actually so dangerous that it shouldn't be used under under standard metric of you know risk reward and yet the FDA is very reluctant and sluggish in admitting it made a mistake and yanking the thing from the shelves and because the FDA approved it that sort of gives its blessing and makes people more likely to use the thing than if you just had a total free market so here it's not that consumers on their own would have to go and do tests on pills there would be private certification agencies right now there are magazines like there's best pills worst pills I think it's a subscription service they this was true as of like five years ago or so when I was doing research for a book that magazine correctly anticipated all of the recalls the FDA would do months or in some cases years before the FDA reversed itself so let me just restate that this magazine that was giving consumers feedback and insight into which pharmaceuticals were safe or not was saying these particular items the FDA has approved we think they're not safe we think the FDA will reverse itself eventually and it was corrected in all of those cases and in many cases that took years for the FDA de to admit it had been wrong in particular go look up the Vioxx scandal just to see in the most egregious case okay what about vaccinations so again here private schools and so forth they can have whatever rules they want a private school can say to attend here you need to show us you have these vaccinations that's you know and under free society they're fine to do that they're free to do that other schools can say the opposite they can say you know what we don't insist on this what so it's the point is you don't need a political system to enforce it it's not that regulation or standards necessarily has to flow from the course of political process also this is an ironic area because by its very nature if your signal my kids vaccinated then in general that your kids should be free you know should be safe from these illnesses right so it's it's odd that this is when we're a lot of it's a hill a lot of people die in and say yeah I like the libertarian view but not I mean come on we have to have mandatory vaccinations and the counter response to this is interesting so I was in an argument with somebody you know I was saying I don't think the state should enforce vaccination policies let the schools and you know workplaces come up with their own policies and and they're pretty nice and I made that second point and I said by the way if you like the vaccines I think they're good then just okay give them to yourself and your kids and then you'll be safe from this stuff right they said well no that's not enough we need to have what's called a herd immunity we have to have it so that most people get it because there are people who because of their you know frail system or whatever if they got the vaccination it could be deadly to them and so since they can't get vaccinated we need to enforce just about everybody else gets the vaccination so that we can't have an outbreak and so notice though they're admitting it went from these vaccinations are totally safe and only Jenny McCarthy know there nutjobs could possibly not want to give their kid this stuff too well some people might die if we gave them the vaccine so that's why everyone else has to be forced to do it and so now we're just quibbling over who is it safe to give it to or not it's gone from this blanket science vs. tinfoil hat wearing nut jobs to we're disagreeing the political authorities say this group it's safe to administer to and some parents disagree with that judgment so now you can see that this is really a very nuanced thing and clearly I would you know give the prerogative to the parents okay the last thing I got 30 seconds here I'm gonna solve the immigration problem you ready okay so first of all is with things like prayer in school so hey do you think that in the government schools there should be prayer you know can and/or the 10 commandments there's no good answer to that the people on both sides have legitimate points so same thing with immigration with the authorities in Washington enforcing national borders yes the both sides make valid points and there's no ultimate solution so it's it's you're not going to have them that's part of the problem that's why you don't want to have the political authorities mandating a one-size-fits-all solution okay let me just mention though there's no such thing as a right to travel freely okay when it comes to things like malls fancy restaurants country clubs or your own house of course you can enforce borders you're not you know restricting someone's freedom about there's no freedom to travel through this region unmolested by any sort of intervention that that's not sure there's no such thing as the right to move around the right to migrate so ultimately in a free society private landowners would set whatever policies they want so let me just demonstrate I'm gonna solve this with PowerPoint it would look something like this okay so we're worried imagine the current continental US goes Rothbart II and next Thursday this is the way it would look conveniently only people with very short first names bought these parcels of land now now the so they set whatever policies they want okay now the problem is you say what if what about pan-pan is kind of crazy she's a big fan of ms-13 and Isis and so she is not gonna do much about this border right there so that's why we need to have you know Washington DC come and put troops and build a fence watch this guy's ready damn the people around Pam can enforce it okay and so the point being that yeah it's it's a hard problem how much time not I mean I'm being glib here it obviously is a hard problem but the point being that is with everywhere else just private property that's really the only solution so yes we can quibble and say okay given that this isn't going to happen next Thursday what should the US federal gov but my point is there's going to be no good satisfactory answer there whatever we say is going to be inferior compared to legitimate private property where people enforcing the borders on their own land okay I am done here so thanks everybody [Applause]

Channel: misesmedia

Views: 16,531

Rating: 4.8679867 out of 5

Keywords: Debt, Government, Economics, Austrian School, Murphy

Id: 7rfkoOQ4IpE

Length: 46min 50sec (2810 seconds)

Published: Sat Jul 21 2018