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June 4, 2012 - Freedomain Radio - Stefan Molyneux

01:19:17

2155 Ancient Rome, Middle England, and the Long Slow Death of the Welfare State - Stefan Molyneux of Freedomain Radio hosts the Peter Schiff radio show!

Stefan Molyneux, host of Freedomain Radio, hosts the Peter Schiff radio show, and discusses historical examples of the endless corruption, debt, degradation and endgame collapse of the historical welfare state. He is joined by Lawrence Reed, chairman of the Foundation for Economic Freedom.

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	Good morning, good morning, good morning, everybody.
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	Shiftomaniacs.
	It's Stefan Molyneux from Free Domain Radio standing in for the Peter Schiff radio show.
	And today, hold on to your dials, we've got a gripping show about history.
	No, no, no, don't leave.
	Don't leave yet.
	I know, I know.
	History is often portrayed and by many is experienced as incredibly dull memorization of incredibly dull facts.
	When was the War of 1812?
	But I'm telling you, history is essential for solving the problems that we are facing as a society, as a civilization, as you may know I'm calling in from Canada.
	So when I say I, I mean we, the heirs of the Enlightenment and of Greek philosophy and of Roman law and common law, which we are trying to save from the increasing predations of an ever-expanding state.
	So we're going to talk this morning about two very, very important and instructive areas of history that point the way out of the current mess that we are all facing.
	Massive deficits, ever-increasing regulation and control, debt, unfunded liabilities.
	It's all, as the song says, been done before.
	And yes, I'm not going to sing it.
	Not this time.
	Maybe later.
	So we're going to talk about the parallels between ancient Rome, remember that republic that also had a very large welfare state and massive debt and the debasement of currency and inflation, and an empire.
	So we're going to talk about the Roman Empire.
	With the great Lawrence Reed, who is the president of the Foundation for Economic Education, or FEE, which is a great free market think tank, quite different from the Keynesian Socialist Welfare Organization, which I think is pronounced free, for now, anyway.
	So, I'm going to start off by talking about a meeting.
	A meeting that occurred in a bar.
	A bar called the Pelican Inn and the reason that it's important that it took place in a bar is you have to be drunk to think that socialism makes any kind of sense.
	So on the 6th of May 1795 a bunch of judges and other folk got together And they were facing a big problem.
	The poor were not doing well.
	The poor were doing catastrophically badly in the late 18th century.
	Now, you know, we all know the sort of Dickensian thing, the free market, the exploitive capitalists were regularly grinding children into caviar and overworking everyone and so on.
	But it's always important to remember that the Industrial Revolution, which came after the Agricultural Revolution, you need an agricultural revolution first, because in order to have industrialization, you need excess food in cities and all that kind of, you need laborers who aren't involved in farming.
	So there was an agricultural revolution that came first that expanded the food supply, but it came at the cost of the poor.
	So the traditional medieval model was you were a serf who was sort of bought and sold with the land and so on.
	But what happened was when agriculture began to improve for a variety of reasons I won't bore you with now, you got more population, more people survived, infant mortality went down and so on.
	And what happened then was the land that people had got continually subdivided and subdivided.
	You know, if you have seven kids and seven acres then each kid gets an acre and then you keep subdividing it to the point where it became really problematic.
	So what happened was there was this thing called the enclosure movement where The aristocracy, the landowners and landlords and so on, they sort of bought out the peasants and enclosed the land and they enclosed the common land.
	It used to be all of this stuff where you could let your cows and sheep graze and they all enclosed this.
	They used to have the right of scouring the harvest for little bits of food and they got rid of that because it all became part of the marketplace.
	So they enclosed the land.
	This kicked a whole bunch of people off the land.
	And this was sort of the base of industrial worker capacity that was taken over by the Industrial Revolution.
	But they weren't doing well.
	1795, there had been a couple of years of bad harvests.
	Really, really not good when you're like three calories away from starvation at any given moment.
	And, of course, England had gotten involved in the wars of Europe starting in 1793, which meant that there was no trade with Europe.
	You couldn't import food.
	Now, of course, the movement of food is really, really important because, you know, if you're in a farm, a local area, maybe your farm's doing well, but a farm 20 miles away might be doing really badly for whatever reason.
	So the free flow of food is really important in keeping people alive.
	In Europe, remember five to ten percent of the population sometimes would starve to death in any given year.
	It was wretched.
	And so the poor weren't doing well.
	And so what did these judges, these fine upstanding citizens decide to do?
	Well, what they decided to do was to create a welfare state.
	And there was some poor relief before, but basically what they said was, okay, Bread is getting really expensive because of these wars, bad harvests and so on.
	So what we're going to do is we're going to top up.
	We're going to impose a tax.
	I mean, we're going to increase the tax that was already on the landowners.
	And we're going to take that tax.
	We're going to give it to the poor based on two things.
	The size of their family and the price of bread.
	This was put into place only in the south, not so much in the north.
	This has long term effects.
	Remember the north in England remained the industrial factory area and the south was more financial and this is one of the reasons why.
	So they put this into place.
	It was called Spenumlem based upon the town that this was all set up in.
	And so they put this in place.
	So if you were poor and you had a big family, you got a lot of money.
	If you were a landowner, even a small landowner, if you just owned an acre or two, you got nothing.
	You were excluded from that.
	So you had to be landless.
	You had to have a big family and the price of bread had to be high.
	And that's what happened.
	So immediately, of course, this ran into problems.
	Because when you subsidize workers, what happens is the employers cut their wages.
	Right?
	Or they certainly don't let them increase their wages.
	Because what happens is the poor don't have the same drive to increase their wages.
	They won't keep looking for better opportunities.
	They won't demand more money because they're already subsidized.
	So what happened basically was that The wages stagnated and even in some areas declined in the South.
	Now in the North they kept rising where this welfare state was not put into place.
	It's kind of a good lab because it's the same country but it's two different approaches.
	One was let the poor be more in the free market.
	The other was let the poor be trapped into a welfare state.
	And so that was not great.
	Now another thing that happened was if you had property you couldn't get this welfare.
	And so what happened was people who just had a small amount of land, they couldn't compete with the subsidized workers, with the workers who got the welfare.
	So they had to sell their land and join the workforce.
	And that was a huge problem because more workers means lower wages again.
	And the way that the taxes work, and again, this is all so familiar to us now, is that if you were a large landholder with lots of employees, lots of workers, then you paid much less per capita than people who were just farming with their friends and family.
	And so again, you had people shutting down their farms and joining the large agricultural concerns.
	During this time, the poor, you know, bred fiercely.
	There was massive increases in crime from 1810 onwards, in particular the crime of poaching.
	It was just nutty.
	And there were real strict restrictions on movement.
	You lived in a parish, like a county, right?
	And you couldn't go to another county because nobody in that other county wanted you if you were poor because they were afraid that you were going to start taking welfare and raise their tax rates.
	So really draconian controls over people's movement began to be put into place.
	So all of these things have happened before.
	We're going to talk about this a little bit more after the break.
	What happened and how we can solve it.
	History is the map of the future if we look at it right.
	This is Stefan Molyneux from Peter Schiff.
	I will be right back.
	9 out of 10 historians agree.
	If Thomas Jefferson and Thomas Paine were alive today, both would be Schiff Radio premium members.
	Somewhere up there, Thomas Jefferson is looking down with great pride.
	Schiff Radio continues right now.
	Hello, hello, and we're back, ladies and gentlemen.
	This is your exciting history lesson of the future.
	This is Japan Molyneux for the Peter Schiff Radio Show.
	Please remember, I'm looking forward to your calls.
	We're going to take them soon.
	You can call 855-4-SHIFT. That's 855-472-4433.
	It's funny, you know, I was just thinking, I came across this Spenumland This is the historical welfare state.
	Really the first welfare state that was put into place since the fall of the Roman Empire, which we'll be talking about in a few minutes.
	And this was when I was studying history.
	I did a master's in history focusing really on the history of philosophy when I was in my 20s at the University of Toronto.
	And I remember thinking at the time, this is really important.
	Nobody taught it to me.
	I never came across it in any textbooks.
	I just came across it while I was doing research for other things.
	I remember thinking, boy, you know, if I have to host a radio show in about 20 years, this stuff is going to be grippingly essential.
	So, Swedenland was a welfare state that was put into place just in the south of England.
	It never went national.
	People tried to make it go national, but never did.
	Created a lot of the same problems we're seeing today, and not just on the side of the poor, but on the side of the state.
	It really reads like the description of the John Galt factory disaster in Atlas Shrugged by Ayn Rand, who of course could describe this stuff very well, because she lived through all this, right?
	Her father's business was taken from her by the communists.
	And what happened in particular was...
	The poor became a problem.
	They became something that people didn't want to have around.
	See, the poor, normally, in a free market system, if the poor people come in, that's usually great for the hirers.
	Because, you know, it drives down wages and eventually they compete their way back up.
	If you're an employer, you love lots of poor people coming in.
	But when you have a welfare state, it becomes a problem.
	Because now they can prey upon your wallet involuntarily through the forced redistribution of wealth that the welfare state represents.
	So what happens with the welfare state is you get very tight controls over the movements of people.
	Very tight controls over the movements of people.
	I mean it's still hard to believe.
	But as of about a hundred years ago, there was no such thing as a passport or a green card.
	You just go on workplaces.
	And the control over people's movements that arises from the welfare state is really important and has incredible historical precedence.
	So people would sometimes leave a particular parish in the 18th century or 19th century to go and find work somewhere else because there's just no work.
	And do you know what would happen?
	It's truly quite amazing.
	Their houses would be demolished.
	The landowners would demolish their houses because they were terrified of them coming back.
	If they've got six kids or whatever, they go off someplace.
	They don't want them to come back because those six kids are no longer labor opportunities but tax liabilities.
	And think of all the border controls that are very important to the Republicans and to some degree the Democrats and certainly to the people in Arizona along the south of the US. They're really terrified of migrant workers, of undocumented workers and so on.
	And it's not because they drive down wages because it's not like a lot of Americans want jobs picking fruit.
	But they're concerned about the preying upon the public purse.
	And all of this stuff has happened before.
	This terrible game of cat and mouse, which is in the undocumented workers situation in the US, between a third to a half of economic activity in the world is in the grey and black markets.
	All of this is occurring as well.
	Poaching in England this time became endemic because Because what happens is it's so terrible and it's so predictable.
	And anyone who tells you that they've got a great solution for poverty, you should ask them, what history have you studied to figure out what went wrong before?
	Because everything in human history, everything in human society, every conceivable act of social engineering has been tried before and found terribly wanting.
	So people, you know, Lyndon Johnson's Great Society said, hey, you know, let's redistribute income.
	Has that ever been tried before?
	Have you studied it?
	And do you know what went wrong?
	And they say, who cares about that?
	We have good intentions!
	Ah, good intentions.
	What is that road to hell paved with?
	Oh, I don't know.
	It'll come to me soon.
	Good intentions are just horrible.
	Henry David Thoreau said, if ever a man comes to my house, To make me a better person, I run screaming out the back door.
	Something like that.
	I mean, there's nothing so dangerous as a person with good intentions and the power of law.
	And good intentions don't matter at all.
	They don't matter at all.
	What matters is knowledge.
	Good intentions are no cover for knowledge.
	Let's see.
	I see some guy.
	He's gripping his side and bent over doubled in pain.
	And I grab a butter knife and attempt to give him an appendectomy right there in the subway.
	And he dies.
	And I say, no, no, no.
	You see, I thought he was having an appendicitis attack, so I wanted to save him.
	My goal was to help him.
	I had good intentions.
	Well, the judge and the jury and the prosecution would say, to hell with your good intentions, sir.
	Did you know how to perform an appendectomy?
	Did you even know how to diagnose an appendectomy?
	I would say, well, no, but I did watch a couple of episodes of House MD, so I feel I'm pretty much up on it.
	Well, into the clink I would go, my good intentions nonwithstanding.
	In fact, it would be my good intentions that would cause the disaster.
	So people who have good intentions but lack knowledge are about the most dangerous people.
	In the world.
	Now, let's listen to the great historian, Carl Pollyanni, who wrote about this in 1957.
	He's a great writer.
	If you ever get to read Pollyanni, he's just fantastic.
	He wrote about this in 1957.
	He wrote, The Spenumland law which had sheltered rural England and thereby the laboring population in general from the full force of the market mechanism was eating into the marrow of society.
	By the time of its repeal, huge masses of the laboring population resembled more the spectress that might haunt a nightmare than human beings.
	But if the workers were physically dehumanized, the ruling classes were morally degraded.
	The traditional unity of a Christian society was giving place to a denial of responsibility on the part of the well-to-do for the conditions of their fellows.
	The two nations were taking shape.
	To the bewilderment of thinking minds, unheard-of wealth turned out to be inseparable from unheard-of poverty.
	Does that sound familiar?
	The widening gap between the rich and the poor, the 99% and the 1%?
	To continue, scholars proclaimed in unison that a science had been discovered which put the laws governing man's world beyond any doubt.
	It was at the behest of these laws that compassion was removed from the hearts and a stoic determination to renounce human solidarity in the name of the greatest happiness for the greatest number gained the dignity of a secular religion.
	Don't you just love that language?
	I mean, I would love it if people were well educated enough in government schools to really appreciate that kind of language.
	But this is all what we have seen.
	When you pay people Through force, charity is a different matter.
	Charity can be very helpful, but when you just give people money through the power of the state, it corrupts It corrupts the poor and it corrupts the ruling class.
	So in the spin and run thing, of course, the way that people would take in money through taxation and the way that they would pay it out all became political favoritism and vote buying, exactly as it is now.
	Once you start to pay the poor, then you buy the votes of the poor and you corrupt and degrade.
	See, this went on for about 40 years.
	It was repealed about 40 years after its inception.
	And this is pretty much where we are now.
	40 years or so, a little bit more than 40 years since the beginning of the welfare state, the real welfare state in America.
	In England, this system was pretty much done until 1971 when the welfare state started back up in the same way, right, to basically buy votes.
	So what the ruling class was doing was they were buying the poor, buying their loyalty, buying their votes, and they were also heading off the social unrest that comes from people being hungry.
	What happened with the Arab Spring?
	Was there a philosophical revolution?
	No.
	People were just starving to death.
	The price of wheat went up 40%, which, when half of Egypt is living on two bucks a day, is enough to put people into the streets with rocks and Molotov cocktails.
	So this is what happens, not because they care about the poor.
	If people really cared about the poor, they'd change course when the poor did worse.
	Because what happens is you trap the poor into the system, and then, because the system becomes abominably expensive and corrupt, 70-80% of the money paid into the welfare state goes to bureaucrats, not to the poor.
	So the costs of the welfare state continue to go up.
	You have to have draconian controls and then you have to start reducing benefits.
	You get people addicted to the drug of dependence and then you reduce their benefits slowly.
	Not fast enough that they can actually take drastic action and change their lives.
	Just slow enough that they're dragged down into the depths of what used to be called pauperism.
	Which we now just call perpetual poverty.
	And this hardening of the underclass is the result of state power.
	It has happened before.
	It is happening now.
	Until we learn the lessons of history, it is going to continue to happen again.
	We must, must, must Look back into history.
	Spenumland is a great place to look.
	I'll spell it just because it's all British.
	S-P-E-E-N-H-A-M-L-A-N-D. Sounds like some horrible thing that would serve you in a cafeteria mystery meat.
	But no, it's a fascinating system of welfare that was put into place and then taken out of place the moment it began to threaten the ruling class.
	Right?
	So once the poor become corrupted enough and the system becomes corrupted enough and nobody wants to do business with you anymore and manufacturing flees as it did from the south to the north.
	Who wants to set up a manufacturing facility in this kind of environment?
	Then they will turn on the poor and cut off their supply because it threatens their interests and that's what's going to happen here I'm sure as well too.
	So stay tuned!
	We are going to Talk to the great Lawrence Reid.
	I've had him actually on my show before.
	He is the president of the Foundation for Economic Education, author of Striking the Root, Essays on Liberty.
	His journalism in political and economic affairs have taken him to 78 countries.
	And he's going to come back and talk about the parallels.
	Oh, I just think this stuff is so great.
	I hope that you guys like it.
	If you don't, let me know and I will go back to other things.
	He's going to talk about the parallels between the First Republic and what may be the last, Rome and America.
	We'll be right back.
	I'll be right back.
	You're breaking up.
	We'll be right back.
	Hi everybody, this is Ben Bolton from Peter Bain Radio, standing in for Peter Schiff on the fine 4th of June 2012.
	We're just waiting to get Lawrence Reid from the Foundation for Economic Education patched in.
	So there are some things that are very obvious in the parallels between ancient Rome and modern America.
	And of course the two that are most obvious are imperialism and the welfare state and people know a lot about the imperialism of ancient Rome but they're not quite so clear on the welfare state aspect of it and this is very very important this is one of the things that happened in the later Roman Empire Let me sort of give you the brief story before we get Lawrence online.
	The brief story is that Rome began as, and we have to exclude slavery, and we have to exclude the fact that there were no rights for women and children because we judge a historical period by what came before, not by all the standards we have afterwards.
	Otherwise, every doctor was terrible before antibiotics were invented because they didn't prescribe antibiotics and that would be an unfair standard.
	And so out of the chaos of warring tribes in Italy came Rome.
	And Rome had a commitment to free trade.
	To free trade.
	Unfathomable.
	Virtually unprecedented.
	Even Greece, which had a commitment to philosophy and war and so on, did not have the same level of commitment.
	to free trade and this was a very very powerful aspect of Rome.
	They waged war and expanded their territory and in the expansion of that territory they allowed for free trade.
	Really for the first time in human history this free trade area had opened up.
	And that really was quite astounding because it meant that people could generate the kind of wealth that free trade allows.
	That's so essential and important.
	If you want to look for the foundation of the Roman Empire, if you want to look for the foundation of, I would argue, any world historical empire, any great power, If you look at the basis of it, it is liberty.
	This is the great danger of liberty, which is that liberty, particularly economic liberty, creates opportunity, creates the division of labor, creates marginal utility, creates all of these wonderful things that allow for wealth to increase.
	And what happens then is the government uses that increase in wealth in two ways.
	One, it uses it to increase its own tax revenues because once people are making more money, you can tax them more and you won't get a revolution.
	And two, it uses next year and the year after and the year after that tax revenue as collateral to borrow.
	And I think that's really, really important.
	And so from that aspect, when you have a free market at the beginning, You have a problem because the free market generates wealth, the wealth feeds the power and the size of the state, and the state then goes on world conquering exercises of military might that collapse and decay the wellspring, the fountainhead, dare I say, of wealth generation.
	Wealth breeds money, money breeds the state, the state kills the freedom, the state kills the free market.
	And this is all very, very important to understand.
	So there are just astounding things that happened in late Rome.
	So this guy Clodius was elected in the later stages of the Roman Empire.
	And what did he offer?
	Free wheat for the masses!
	Free stuff!
	for the masses.
	This is a demagogue in the style of Barack Obama who offers you a whole bunch of stuff and will only ask for vague responsibilities in return that are never quite defined and certainly never extracted.
	And this was very successful.
	He got into power.
	He gave these people all this free wheat.
	When Julius Caesar came to power, okay, Rome had one million people in it.
	Rome had one million people in it.
	When Julius Caesar came to power, 320,000 of them were on government grain relief.
	Government grain relief.
	And that was really bad.
	He managed to drag it down to about 200,000, but, you know, a couple of decades later it was back even higher than it was before.
	Emperor Nero once declared, Let us tax and tax again!
	Let us see to it that no one owns anything!
	He's the guy who fiddled while Rome burns.
	The actual reality, of course he didn't fiddle while Rome burns because the fiddle wasn't invented for about a thousand years after he was an emperor.
	But what happened was Rome is remembered for its empire and its public works.
	In other words, it's remembered for its socialism, not its capitalism.
	It's remembered for the effects of force, not the effects of freedom.
	And that's always quite tragic.
	Because Nero actually burnt down large sections of Rome because he wanted to have his own little Legoland and little construction projects that were going on.
	And what else did Rome do?
	Ah, yes, well, Rome, of course, got involved in farm policy.
	Oh, everything old is new again.
	History is a grim cycle until we learn better and see the true lessons of history.
	So you've probably heard that over in the European Economic Union, which is the complete opposite of the truth.
	There really is no such thing as Europe.
	It's just a bunch of land and people.
	They are actually against any kind of economic sense and I think the word Union cannot exactly be applied to the internecine currency warfare that is currently going on at the moment.
	But in the EEC, they have these lakes of wine and mountains of butter and slaughter the animals, and they just destroy a whole bunch of stuff.
	And the same thing happened in Rome.
	Another emperor ordered the destruction of half the vineyards because he wanted to raise the price of wine.
	But enough of my babbling.
	Lawrence, do we have you on the line, my friend?
	Yes.
	Hi, Stefan.
	How are you?
	Very well.
	How are you doing, man?
	Okay, thanks.
	Sorry for the bad connection there a moment ago.
	I don't know why it happened.
	Oh, no sweat, no sweat at all.
	Okay, so, we were just talking, well, I was rambling about the similarities, of course, that people know, imperialism and welfare.
	What are the other similarities that you would point to that we could learn from when looking at our current system?
	Between, I'm sorry, against the first part?
	Sorry, between the U.S. and Rome.
	Oh, U.S. and Rome.
	Well, both civilizations were founded in similar fashion as a revolt against tyranny.
	And when Rome broke free of the rule of the Etruscans in the 6th century BC, they were so alarmed and concerned about the concentration of power that they created a republic and dispersed power, created a legislative assembly.
	There's a strong similarity to the birth of America.
	And for the first 500 years, roughly, the Roman Republic thrived in an atmosphere of relative Peace and freedom and free enterprise, as did the U.S. for much of our early history.
	But late in the Republic period, people began to discover that they could vote themselves for a living instead of just working for one.
	And that gave rise to the birth of the Roman welfare state.
	Government continued to grow.
	People depended upon it for virtually every aspect of their lives, ultimately.
	And that led to the concentration of great amounts of power, a massive amount of government spending, deficit spending, multiplication of the money supply in order to pay for a lot of these things.
	And of course, increasingly, we found that in ancient Rome, as people became dependent upon the central government, they became less independent personally.
	He who pays the piper calls the tune.
	So ultimately, they became Serfs or slaves of the state, which became all-powerful, and in the end, they lost not only their liberties, but their treasury and their very existence as an independent and great empire.
	Yeah, one of the things people don't know, I think, is that from its height of about a million people, after the fall of Rome, there were only about 17,000 people living in the ruins of Rome throughout the Dark Ages, which was really quite tragic.
	Now, of course, one of the things that happened in Rome was catastrophic inflation.
	They debased the currency.
	I think you pointed out in an essay that the denarius went from 94% silver to 0.02% silver.
	So there was that aspect and of course there was the influx of treasure from the conquest which much like Spain in the 17th century caused massive inflation but were there other causes of inflation other than just the debasement and the military conquest?
	What was driving the inflation?
	Well it was not just the military conquests and the need to extend control over this vast and growing territory for much of Roman history but you had a budding welfare state at home which started first With the need of the leaders of Rome to pay off soldiers and the veterans,
	but the problem with every welfare state is once you begin to concede that this or that group can by some right live at the expense of the rest of society, the problem is where do you draw the line?
	I mean, lots of other people come forward and say, hey, I'm pretty important too.
	Why shouldn't I get some of this?
	And before long, Virtually every group of people in Rome, from veterans to poor people to middle class to rich businesses, were looking to government as a way to get something they couldn't get voluntarily and freely in the marketplace.
	So government became a massive redistributive apparatus, and although they taxed ever harder to pay for it all, increasingly that wasn't enough.
	And so they began multiplying the money supply by reducing the precious metal content in the coins, That led to soaring prices and eventually wage and price controls.
	Which were catastrophic, right?
	I mean, there was literally blood in the streets when wage and price controls were imposed because people were no longer bringing food into the cities or bringing their goods to market because they couldn't even cover the cost of production.
	That's right.
	It was in the year 301 AD that the Emperor Diocletian issued a famous edict, Edict of 301, which imposed comprehensive wage and price controls under penalty of death And the result was the same as it's been with every experiment with wage and price controls,
	going back at least as far as Hammurabi in Babylon in 1750 BC. When you fix a price by decree that's below what it otherwise would be in an open marketplace, then you have less incentive for producers to produce and bring to market, and more incentive for consumers to demand more.
	So you had shortages, you had A great deal of bloodshed in an effort to enforce these laws, and the Roman economy just fell apart big time and never recovered.
	Right.
	And now it's doing the same thing again and probably for the same reasons.
	Now, Lawrence, can you stay past the break?
	I think you mentioned that you had another appointment to get to.
	Fantastic.
	If you can hang on, we'll come back right after the break and we want to discuss the parallels that can change about how we're dealing with the existing system.
	This is Van Molyneux for the Peter Schiff Radio Show.
	We will be right back.
	You're now enrolling in the Peter Schiff School of Advanced Economics.
	Twice the education of a Harvard MBA. For one one hundred sixty-eight thousandth the cost.
	Hi everybody, it's Stephen Molineux, standing in, sitting in, lying in for Peter Schiff.
	We have on the line Lawrence Reed, who is, I think we're going to refer to him as the High Emperor of the Foundation for Economic Education.
	Lawrence, you still there?
	Do we have the Lawrence on the line?
	Well, let's just double check.
	We'll wait to see if he's got him on the line.
	We wanted to talk a little bit about what happened towards the end.
	Now, the fate of Rome is not going to be the fate of the West.
	Radical depopulation of the cities, invasion by hordes of Germans and other forms of barbarians is not going to be the case for North America for a variety of reasons.
	But what happened towards the end of the Roman Empire was, I think, very, very interesting.
	We all know the barbarians invaded Rome and took it over, but not many people know why.
	Why?
	I mean, if you're comfortable in Germany, why would you want to come to Rome?
	Well, what happened in the late Roman Empire, of course, was the empire got hyperextended.
	Massive problems.
	The empire was huge.
	In fact, I don't know exactly how many military bases they had overseas, but I wouldn't be surprised if it was roughly about 700.
	Did we get Lawrence Beck?
	Yes, I'm here.
	Oh, hi Lawrence.
	Listen, I'll ramble on later.
	I just wanted to touch base with you about a question.
	Of course, we know that there were people who were clamoring for a bigger welfare state and a maintenance of the welfare state.
	What was the other side?
	Was there a Tea Party in ancient Rome that was clamoring for smaller government?
	Well, I suppose that the best example of a Tea Party type activist would have been Cicero.
	He was raising the alarm about the collapsing republic In the first century B.C., with the growth of welfarism all around him and increasingly men of great arrogance and conceit trying to seize power and concentrate it, he was out there saying, this is not what Rome was all about.
	We're going to lose our liberties if we continue to follow this path.
	So he would have been, I guess, a Tea Party activist type.
	In later decades, you found that The opposition to the Roman welfare state centered around Roman Christians who were persecuted for their faith and who felt that there was a higher authority than the Roman emperor.
	But when they finally caved in and became part of the welfare state bandwagon under Constantine, then there really was very little opposition left, and the whole welfare state continued to grow and then collapse in barbarian invasions in 476 A.D. Now, of course, one of the things that happened towards the end of Rome was the Roman reliance on mercenaries.
	They, of course, tried to conscript everyone they could, but they really could only conscript in cities.
	There wasn't much point trying to find people in the countryside, so a lot of people, younger people in particular, left the cities, which decimated the tax base.
	Again, it's really hard to tax people outside of cities, because the cost-benefit ratio is much different.
	And so this reliance on The mercenaries also seems to parallel, I think, a common late empire situation.
	I wonder if you could comment on that if you'd like.
	Yeah, I think that is a factor.
	They had a vast territory to defend, but maybe the most important observation to make with regard to mercenaries is what was happening among Romans themselves.
	Increasingly demoralized, they just didn't have the spirit to defend what was left at home.
	In fact, at the very end, many of them welcomed the barbarian invasions because they felt that almost anything was better than the tyranny of their own tax collectors and their own regulators.
	So increasingly, the Roman people themselves just sort of gave up and said, you know, in effect, we're working our tails off for this rotten regime and we're suffering as a consequence of it.
	Who wants to fight for it?
	Yeah, and the conscription would often last 20 years.
	I mean, they just drag you off to foreign countries to get stabbed in a situation where there's almost no health care, medical care of any kind that was useful.
	I mean, putting leeches on your open chest wound isn't going to do much to last you longer.
	And yeah, so I mean, there was this, because the containment of the state failed, there was this desperation.
	Now, if I remember rightly, and it's been a while since I took this course, was one of the things the barbarians were looking for, were they not mercenary armies just looking to get paid?
	Oh yeah, that was a factor.
	There were mercenaries who served in the Roman military who came from the Huns and the Visigoths and the Goths from the Germanic areas.
	And to many of them, this was a path to wealth and to power.
	To join the Roman army meant that they would live better than as tribesmen back in their territory, and it could even conceivably be a path to power.
	Right, and so this characteristic of late empire, which we're seeing as well with the American empire, and to some degree the European economic empire, which is a loose use of the phrase, but you see an undercutting of the domestic tax base at the same time as you have fixed unalterable liabilities on the part of the state.
	Would you agree with that?
	Yeah, absolutely.
	Look at our tax base today.
	With regard to the income tax, about half of Americans pay none at all And that's not an argument in favor of raising taxes, but it does note that, you know, we tax because we spend.
	And if we spend too much, there's no tax that can be fair that can pay for it all.
	And that was the problem in ancient Rome.
	They just had massive demands to spend for the military, for the welfare state, and in the end, productive people just threw in the towel and the place collapsed.
	Right.
	So, just before we get to the next break, I'd like you to talk a little bit, if you can.
	I know prognostication is a dangerous game for anyone, but how long did it take for the Ark of Rome to fall from its height, and where would you put America in that continuum at the moment?
	Well, it's very tricky to make these time comparisons.
	Things didn't move quite as fast in so many ways in ancient times.
	But the Roman experience is basically a thousand years, with the first half of that roughly 500 years being a period of a republic, and the second 500 years being a very different imperial empire with a strong welfare state.
	So it took a thousand years for Rome to rise and then fall.
	America seems to be on a path of rise and fall that's much more compressed in time.
	We are at a point in terms of our debt load and the size of government.
	One minute.
	Rome took hundreds of years to get to.
	So that suggests that we're rather late in this cyclical experience, which raises, in my mind, all the more importance of putting an end to it as quickly as we can.
	Yeah, no, I think that's very true.
	And I think one of the things that's different in Rome, the machinery of repression was much less powerful than it is now.
	And so that's a big problem as well.
	So in ancient Rome, a slave could grab a sword and wouldn't be wildly dissimilar from a centurion.
	But now the machinery of control and monitoring and repression is so much greater that you can have smaller groups of people rule larger groups of citizens.
	I think that's going to make for a different exit.
	Anyway, listen, I'm sorry we're coming up to the end of the break.
	I know you've got somewhere to get to.
	I really, really do appreciate your time.
	This is Lawrence Reid, who is the president of the Foundation for Economic Education.
	I think it's fee.org.
	I highly, highly recommend checking out his website.
	Thank you so much for your time.
	We really appreciate it.
	We will be back after the break.
	It will be more history, or if you would like to call in, we would really love to hear from you.
	According to my prophecy, 2012 will be the last Father's Day ever because the world is actually ending in what looks like a fiery zombie alien apocalypse.
	Heads up!
	It's 855-472-4433.
	I don't know when they decided that they wanted to make a virtue out of selfishness.
	Your money.
	Your stories.
	Your freedom.
	The Peter Schiff Show.
	Alright everybody, it's Devan Molyneux from Freedom Aid Radio standing in for Peter Schiff.
	Let's take our rocket sled through history from the hot air of ancient history to the tight little bubbly burpy gas of modern day New York soda bands.
	So, Mayor Bloomberg, I think we've got a cue or two that we can listen to what our good friend Mayor Bloomberg has to say about the government's increasing commitment to fighting obesity.
	Can we roll a few of these and let's have a chat about those?
	You announced this on a Thursday.
	Today is Friday and it's a national holiday.
	You know what the holiday is?
	It is National Donut Day.
	That's right, and it's a real thing, not a national holiday, but it is National Donut Day, and your administration has come out in support of National Donut Day.
	Two things.
	It sounds ridiculous.
	It doesn't sound ridiculous.
	One donut's not going to hurt you.
	It's in moderation.
	Most things are okay.
	Number two, just think about what National Donut Day is.
	National Donut Day celebrates a lot of young ladies during World War I called Donut Lassies who went and gave donuts to our soldiers while they were fighting If anything in moderation works for donuts, why not with soft drinks?
	That's exactly what we're trying to do.
	That's exactly what we're trying to do with soft drinks, is get you to drink in moderation.
	So instead of getting the big 32 ounce, get two 16 ounces if you want.
	But history shows, all the tests show, what you'll do is you'll probably only drink one.
	Happy National Donut Day.
	And thank you very much.
	Wow!
	Isn't that amazing?
	The government is now telling you what to drink.
	Well, of course, this is just a continuation of the government controlling what you eat through farm subsidies and the ridiculous food pyramid and about 1% of spending in the government healthcare regimen in terms of food is to promote fruits and vegetables.
	The rest is to serve the farmers' interests who are hanging off the teats of the state.
	Now, of course, obesity is a big and growing problem, particularly in the United States, but as usual, as always, of course, nobody is ever talking about root causes.
	Why?
	Why are people getting fatter?
	Is it because more food is available?
	Well, that's not the case, because Europeans aren't getting fatter, even though they have access to the same crap that we do.
	So, what is happening?
	Well, I mean, there's lots of complex reasons and I welcome, of course, your calls on this.
	This is a very, very interesting topic to me.
	I find it absolutely fascinating, so please feel free to call in and complain or praise or differ from me at 855-472-4433.
	But here is my argument in a nutshell.
	I'm not claiming it's decisive, but I'm telling you that the statistics and the science seem to point very strongly in this direction.
	Huge change in society.
	I lived through this in the 70s.
	You know, my parents got divorced, most people's parents got divorced.
	A huge, massive, fundamental, unprecedented change in American society, which was really, which really is the destruction of what used to be called the traditional family.
	So in 1965, 93% of all American births were to women with marriage licenses.
	Almost all children were born into a marriage.
	Over the next few decades, this Just changed enormously.
	In 1970, 11% of births were to unmarried mothers.
	By 1990, that number had risen to 28%.
	Today, 41% of all births are to unmarried women, and for mothers under 30, the rate is 53%.
	53%.
	There is a strong, very strong, I would argue, conclusive correlation between coming from a single parent household and being overweight.
	For reasons that are only not obvious to people who are indoctrinated.
	You know, the 20th century, and I still count them in the tail end of this horrible, horrible experiment, has been the eclipsing of common sense with massive ideology.
	And that is something that really, you know, communism, oh, we have private property.
	Well, that's really strange.
	We have a family.
	Well, that's really strange.
	Let's have ideology eclipse and destroy the concept of private property and the nuclear family, which is really the goal of communism.
	And we have suspicion of higher authority.
	No, no, no, let's have higher authority to do everything for us.
	Tell us where to go to school, what licenses we need to work, whether we can work, how we're going to help other people, what kind of medicines we should take.
	The list goes on and on.
	And medical experimentation is not even close to the end in terms of its intergenerational impact.
	So now we've had this thing which says, okay, well we don't need the traditional situation where a dad goes out to work and provides and the mom stays home and raises the kids.
	It can switch, but you know, that's the traditional arrangement.
	I myself am a stay-at-home dad, so I hope I'll get a few anti-sexism points from that.
	But we've had this experiment.
	We say, okay, let's take the dad out of the equation and substitute state power.
	The blood money of violently transferred income.
	Let's see how that goes.
	Well, it's going terribly.
	And childhood obesity, which of course results in adult obesity so often, it's just one of the many symptoms that goes on with this.
	And so this is the tragic thing that we were talking about the welfare state in Post-medieval England we were talking about the welfare state in ancient Rome and now we're talking about the welfare state in modern America.
	The welfare state has fundamentally reshaped the family as Thomas Sowell has said, a very famous economist has said, the welfare state has done what even slavery couldn't do to minority populations which is destroy their family structure.
	I think in African-American households, over 70% of births are to non-married women.
	And we've substituted the state for the dad.
	And what does that mean?
	Well, it means more kids in poverty and people in poverty tend to eat worse.
	It means that a parent's time is not split with another parent's time with regards to the children.
	They have much less time for child, much less time to prepare food, much less time to go shopping for good groceries and children left unattended much more often and particularly in poor neighborhoods, the surrounding neighborhood gets more dangerous and more scary and so the parents are like, stay home and play with your Wii.
	Oh, and here's a bag of chips because I have to go back to work.
	And the correlation between this, the correlation between mental health issues, a child from a single-parent household is almost 400% more likely to require the services of a mental health professional.
	I've actually done a show on this recently.
	You can check it out at freedomandradio.com if you like.
	But this is just an example of the kinds of catastrophes that are brought about.
	Rise in obesity as a result of massive social engineering, the displacement of the father by the welfare state and social programs and public school education, the substitution of Government power for intimate fatherhood and the result of this of course is catastrophic and what is the solution that is put forward by the government?
	What is the solution that is put forward by the government?
	Have two pops instead of one.
	Well, I would argue that the pop really in question is the traditional use of the word pop as in father and not the bubbly soft drinks that are there.
	And of course it won't work anyway.
	I mean, it's all complete nonsense.
	None of this stuff is going to work.
	People will just, if people want 32 ounces, they'll just have 16 ounces and the government, sorry, the vendors will say, hey, free refills.
	They'll charge a little bit more and you get free refills.
	And then people will drink probably even more.
	But the idea that you can solve something like obesity which is caused through in large part through social engineering is just wretched.
	I mean people they say well kids should be more active but then you have to be forced to sit in these little dumb sardine rows of dusty dull incomprehension in government schools watching some squeaky antiquated government worker make horrible noises on a blackboard With a piece of chalk.
	I think they've gone to whiteboards now because that's what you call progress in a state of society.
	We've got to make these kids sit for four to six hours a day.
	Got rid of P.E. time.
	And what did they did?
	They classified pizza as a vegetable because it has tomato sauce.
	Because they said we need to get more vegetables into our kids because of course that's the job of the parents but now it's become the job of the state and you get ridiculous situations where they've classified pizza as a vegetable in order to fulfill the mandate.
	None of this stuff is going to work.
	The root causes of social problems go back to government programs from decades ago.
	Trying to whack little symptom solving band-aids on the back end now is just worse than ridiculous.
	Just another proof that increased government intervention will always lead To increase government intervention until it collapses, or we stand up and stop it.
	So looking forward to your calls.
	This is Stefan Molyneux for the Peter Schiff Radio Show.
	We'll be back right after the break.
	You've heard of Karl Marx, right?
	Well now, meet his worst nightmare.
	This is the Peter Schiff Show.
	Alright, it's Stefan Molyneux.
	Karl Marx's worst nightmare was actually a man named Gillette.
	Did you see the Old Testament beard on that fella?
	Dude, doesn't your wife like to be kissed?
	Who knows?
	Anyway, interesting fact about Karl Marx not many people know.
	Do you know that he complained about capitalist exploitation of the working class, but he banged his maid, made her big with child, and then abandoned her?
	Because, you know, that's a way to not exploit the working class who's actually working for you.
	Just something to mention that you can judge a moralist by his own actions, at least to some degree.
	So, for those callers who managed to stay awake through the history lesson of the first hour, I really appreciate your time.
	I think we have Greg from Charlotte, North Carolina.
	You had a question on regulations versus safety?
	Yeah, I did.
	I just had a question when regulation actually meets safety and where do you draw the line with government intervention and I wanted to kind of give you an example in my line of work.
	That was all right.
	Yeah, please do.
	Yeah, I'm an airline pilot, and normally, for the longest time, they had regulations where, you know, a pilot could get hired on at 250 hours, but, you know, then we had about two crashes, one in 2006, one in 2009, and they decided to change the regulations to make it that you need 1,500 hours to get hired.
	And, you know, I'm usually with Peter, and I say, you know, regulations, and I admit that it'll hurt the, you know, the business of the airlines, but, you know, at some point, I think safety sometimes comes in priority.
	Yeah.
	Yeah, look, I agree with that.
	And this is something where there is a rational calculus in the world.
	You know, we all say human life is sacrosanct, but that's not true.
	Frankly, it's not true.
	Because if we reduce the speed limit to 10 kilometers an hour, 30,000 plus people wouldn't die every year on the roads.
	But, you know, everything else would be thrown into complete chaos and maybe people wouldn't get enough food because it would take forever to deliver it and so on.
	So there is a rational calculus that goes on.
	I don't believe that the government in conjunction with heavily subsidized and protected unions can do it.
	I have a different approach to regulation.
	I will spin it your way and you can tell me if it's a swing and a miss or whether I've connected with something.
	My solution to regulation is to get rid of the legal shield called the corporation.
	So if you run an airline and you make unsafe decisions, you make bad decisions, then you should be personally liable for those.
	So if an airline goes down with 100 people or 200 people, an airliner, Then you should lose your house and go to jail and all of these kinds of things.
	Assuming that there was negligence, right?
	That it wasn't just crap happens, to put it as nicely as possible.
	But unfortunately what's happened is the people who make bad decisions at the top are shielded from any exposure from their personal assets because they have insurance through the corporation.
	And so because there's no personal liability, then we can expect an increase of irresponsibility.
	The only control mechanism for irresponsibility is consequences.
	If I don't go to work, I don't get a paycheck and if you dilute that with things like the welfare state if you pass kids even if they aren't doing well then you maybe get a short-term benefit but it's a long-term expense and corporations as a whole are not at all a free market phenomena.
	They are created, invented, controlled, maintained and protected by the state largely to the benefit of the economic masters who really like corporations because they can pull all the money they want out of a corporation but then when the corporation loses money or has liabilities they're not personally hit for anything.
	So I think if you got rid of that legal shield, then people would have a very, very strong incentive to make sure that things were as safe as possible.
	Does that make any sense to you?
	Yeah, no, that does make a lot of sense.
	It's just, you know, when things were getting tough and there's starting to be a shortage on pilots, you know, they like to hire, you know, with as much experience as they can.
	But when it came down to either the planes flying or experience, they're going to make the planes flying.
	But that did make quite a bit of sense, how you put it.
	Sorry, there's one other thing that I would mention as well, is that I can't imagine, like if I'm one, I don't know how much, a couple hundred people that an airplane will hold.
	I can't imagine that, let's say you double the pilot's salary.
	You want some much more experienced guy.
	So you double his salary.
	I can't imagine that per person that's going to add up to a whole lot.
	You know, a couple of bucks ahead per flight.
	Yeah, it's one flight, a couple of hours, right?
	So I would be really happy to pay an extra 10 bucks or 20 bucks to have a really super experienced pilot who knows who can do what that nutty guy did and land the plane on the Hudson River, I think he did, if things go bad.
	I'd be really happy to pay a little extra for that.
	And so if the government really wants to keep airliners safe, what they want to do is eliminate taxes on airplane tickets, which run into the hundreds of dollars, at least here from Canada, get rid of airport fees because that should be paid for through taxation, and that gives both the airliners and the passengers more than enough money to get the best possible pilots.
	How does that strike you?
	I mean, you're the expert.
	You know what you're doing.
	This is just my thought.
	Yeah, no, I mean, that definitely makes sense.
	It's just in that you're exactly right when it is supply and demand, when it comes to, you know, where pilots want to go.
	It's just, it's gotten real complicated with the days where, you know, with the economy ahead, it used to be people would just, you know, pay their dues and then move on and get more experience, but you've got people stuck at lower levels and at really extremely low wages, and, you know, that brings in as much experience as you might imagine.
	Yeah, and, you know, as far as I understand it, flying is like 99% boredom and 1% sheer terror.
	And I want the guy who's had that sheer terror before, the man or woman who's done that, so that they know what to do in that moment.
	Is that a fair assessment?
	Right.
	Oh, yeah.
	You're paid to sit there when something goes wrong, pretty much.
	Right.
	Like, the autopilot has turned on me and now is asking me to leave by the pod bay doors.
	No way.
	That's how the spaceship.
	Something like that.
	Anyway, thanks so much for your call.
	I think we've got enough time to dip into Sean, who's got a question on oil and gas prices from Oklahoma City.
	Are you on, Sean?
	Yeah, I've actually got two comments.
	The first comment is this.
	We all agree that a minimum wage destroys jobs, right?
	Yes.
	Okay.
	With that said, why do we only apply that That theory, or that principle, to the lower class, and we don't apply it to the upper class.
	The Federal Reserve, through artificially low interest rates through bailouts, provides a minimum wage to Wall Street.
	Okay?
	That's exactly right.
	And as a result of that minimum wage, we are guaranteeing Wall Street They are costing jobs.
	But at the same time, we then turn around and we beat up the little guy, call him lazy, call him a welfare bum, call him everything else, when the very policies that we say will destroy jobs indeed destroys jobs, okay?
	Yeah, let me just put a comment in there as well because not a lot of people understand this, that cartel monopoly licensing is a form of minimum wage for the upper classes.
	So the license you need to be a lawyer, the license you need to be a doctor, the monopoly control over these professions, just to name two of many, many plumbers, you name it, right?
	This is a form of minimum wage because it artificially raises the price of these professions to a minimum because it reduces competition and raises the barrier to entry and so on.
	There's two ways of saying the same things.
	Well, I actually forgot my other comment, but while we're at it...
	Oh, sorry, sorry.
	I think that is why nothing...
	I don't understand why in our politics we exempt that class Because that's the class that runs the media.
	That's the class that runs the newspapers.
	That's the class that runs the media.
	And the media aren't going to talk about the welfare state for the rich, which vastly outstrips, I would guess, in terms of spending the welfare state for the poor.
	I mean, if you include the military industrial complex, In this, which substantially raises the wages of the companies involved.
	I mean, it's a massive subsidies for the wealthy.
	So I completely agree with you, but we're not hearing about it because the rich point at the poor, and the poor don't have anyone to point at the rich.
	Well, okay, but why does the Republican Party, do they believe in the welfare for the rich and absolve the welfare for the poor?
	Or are the Republicans just a bunch of stupid asses that think that welfare only goes one way?
	I wouldn't call them stupid because they get in power fairly regularly and the only thing that I can retain my pride in is to imagine that I'm not actually ruled by idiots.
	That's the only way I can retain a shred of self-esteem in this situation.
	No, they're not idiots.
	The Republican Party knows that a large number of Americans will respond to free market rhetoric.
	But they also know, and the evidence is very clear from Ronald Reagan, who increased federal spending significantly under his reign, I think it went up by two-thirds, to George Bush II, who massively increased spending and cut taxes, that the free market rhetoric that the Republicans put out remains almost empirically exclusively rhetoric and rhetoric alone.
	So I don't think they're dumb.
	They're just saying what people want to hear with no intention of following through.
	Or even if they have an intention, they hit the power structure and fail.
	Well, that brings up my point.
	Thanks for reminding me.
	You brought up Ronald Reagan.
	Everybody credits Ronald Reagan for this massive boom that took place, his tax cuts.
	Thirty seconds.
	Tax cuts.
	But the reality is, wouldn't we say that what brought about this massive boom over the last 20, 30 years was the huge savings that resulted by double-digit interest rates?
	Where all of a sudden we take interest rates from three to almost 20 to fight inflation as a result.
	We accumulate a huge, huge reservoir of savings, and at the same time...
	All right, listen, we've got to take a break.
	If you can hang on, it's a great chat.
	We will come back after the break.
	Sean, if you can hang on tight, that would be fantastic.
	We now return to The Peter Schiff Show.
	Call in now, 855-4SHIFT. That's 855-472-4433.
	The Peter Schiff Show.
	Alright, we are back with Sean, a caller.
	And Sean, I must share with you something that you don't need to know.
	I have a three-year-old daughter, so all that's going through my head is the theme song for the kids' show, Sean the Sheep.
	But, because you're calling into this show, I'm guessing you're not in that category.
	I think you had something else that you wanted to comment on, which we had to cut off for the break.
	Do you want to go ahead?
	Yes.
	Are you there?
	I am.
	Okay, yes.
	The comment being this.
	You know, we credit tax cuts for this, you know, the Reagan tax...
	It's a great boom, and certainly that was a part of it, you know.
	But really, I would say the biggest thing that's contributed to the boom and the reason why tax cuts won't work to propel us to the...
	Reagan couldn't do today what happened in the early 80s simply because what the tailwind that Reagan had hit his back was the massive reservoir savings that we accumulated as a result of the double-digit interest rates.
	Okay, so let me just make sure I understand.
	So you're saying that, of course, under Carter, we had what the Keynesians said could never happen, which was stagflation, right?
	High inflation and high unemployment.
	Right.
	And so because of that, people squirreled their money away, and that created a massive reservoir of savings, which then were looking for a place once the liberalization of the economy happened a little bit after Carter.
	They found it was like a pent-up demand for capital investment, which then resulted in a boom.
	Is that your general approach?
	Well, yes, absolutely.
	A pent-up savings that was ultimately put into a forced liquidation mode by the Federal Reserve that then started taking interest rates down ultimately to zero.
	That's what this boom was about, was going to massive savings to then almost a negative savings rate.
	Yeah, look, I mean, all booms, and this is sort of my argument, and, you know, I'm an amateur economist at best, so take it with all the grains of salt that you want, but in my opinion, all booms that are not directly related to a shrinking of coercive interference in the marketplace, government power, regulations, control, taxations, tariffs, you name it, all booms that do not result from a minimization, control, shrinkage of government power are artificial and will crash.
	So yeah, if there's pent up savings because of bad economic policies and then they then come pouring out but the government continues to grow then there will be a crash.
	People think that the boom and bust cycle is somehow inherent to capitalism but I'm very much with the Austrians on this and that I love lederhosen.
	Who doesn't?
	But I also like their argument that it is the expansion and contraction of the money supply that causes the busts and the booms and the busts and the booms and they I think the only economic school to explain why it happens in the capital sector first and only then in the consumer sector and why it then hits the capital sector first and only then the consumer sector later so I'm a big fan of that school of thinking so whenever there's a boom and there's no shrinking in the size and power of the state in fact quite the opposite there's a perpetual expansion in the size and
	power of the state Look for the bust because it is artificial.
	It is based on credit.
	It is based on an inflated money supply.
	It is based upon borrowing.
	I mean, a lot of the boom that happened...
	I mean, the economy was pretty stagnant in the 50s because you had like a 90% tax rate for the top tier of individuals and huge taxes on corporations that liberalized in the 60s, but the government grew.
	And so a lot of the wealth that the baby boomers have got It's based upon the fact that they just didn't have to pay for a whole bunch of stuff that normally they'd have to pay for.
	Because the government paid for it, like roads, like charity for the poor, like all of the public work spending and so on.
	And even the military was largely paid through deficit financing, but it generated economic activity.
	So you've got huge growth in economic activity, but if it coincides with debt, it's all artificial.
	And of course, we're still trembling over the precipice.
	They keep pumping more steroids into this dying muscle, and all it's doing is twitching now.
	Well, let me ask you this.
	The Republicans say we need to go back to Reaganism.
	We need to create the environment that Reagan created to bring about another boom.
	I agree.
	Are they then willing to take interest rates to double digits to create that environment?
	In other words, let's take interest rates to double digits.
	Look, you and I both know that there is no conceivable way the government can take interest rates to double digits.
	Because that's gonna just crush them on interest payments on the debt.
	The interest rates are at zero not because they care about growing economic activity.
	All that interest rates at zero means is that banks can make easy money by borrowing interest at near zero and then buying bonds for a couple of points.
	They're absolutely terrified that any rise in interest rates is going to swallow up the budget and interest payments on the debt.
	So that's why they have to keep them crushingly low.
	I don't think there's any conceivable way that they can raise interest rates at the moment.
	What will they do then if inflation then goes to double digits?
	Well, they will collapse social spending and they will collapse military spending.
	The politicians, they don't want to lose power.
	Right now, they stay in power by lying to people about their intentions.
	I'm going to cut this, I'm going to cut that.
	We've got Arnold Schwarzenegger taking his Conan the Barbarian sword to budget meetings in California and leaves the state economically crippled.
	Reagan himself said, Reagan himself is a really challenging and complex figure.
	It's a really, really big topic.
	One thing I absolutely loved Reagan for was his uncompromising moral stance against communism.
	I mean, that had really been missing and lacking for a long time.
	And people have been scared about taking a strong stance against communism ever since the McCarthy hearings when he correctly pointed out that there were myriad Soviet spies in the State Department and then got pilloried by the media for, well, pretty much 40 or 50 years and will still continue.
	Ann Coulter's efforts, to the contrary, notwithstanding.
	But he had a fantastic moral clarity about the evils of communism, which is one of the things that I actually quite admire about people who are from the religious side of things is that they have a lot of moral clarity about evil.
	People from the secular side of things are way too, you know, well, it's just a different system and, you know, they have their historical precedents too.
	But he took an uncompromising moral stand against it, which was great, but he was unable to tame the domestic spending beast.
	Even if he wanted to, he was unable to tame it.
	So when the interest rates begin to rise and they can't pay off the debt, they will simply collapse social spending.
	And this is going to be unbelievably brutal for the poor, and naturally it's going to get blamed on those of us who have been advocating free market policies low these many decades.
	I'm sorry, I kept talking over your interruptions, but please interrupt away.
	Oh, did I put you to sleep?
	No, I'm here.
	Okay, listen, I'm so sorry.
	We've got another caller in.
	I want to make sure that we split up the radio time evenly.
	But thanks, Sean.
	And please feel free to call back any other time that I'm on the show.
	It was really, really interesting.
	A very enjoyable chat.
	We have Adam from Rochester, New York, who is either calling from the post office or wants to talk about the post office or is currently in a box being mailed by the post office.
	Would you like to pick one of those three, Adam?
	I'm calling from Rochester.
	I wanted to talk about the technicalities of privatizing the post office or public schools, things like that.
	I heard your bit on, I think it was in, I don't know, a bit you did on Ron Paul about, you know, how Trying to privatize those institutions would end up with the workers chaining themselves to buildings or just revolting in those types of ways.
	But I don't see, I guess, why it would be such a problem, I mean, assuming there would be major steps along the way, but to auction off the post office to the highest bidder out of the private sector, because then wouldn't it be in that the highest bidder's interest To satisfy the union,
	even as expensive as it would be, what would be the problem with a politician, an honest politician, Ron Paul or anybody else, being able to set that up and maybe the government won't get that much money for it because Well, sorry, let me interrupt.
	Let's roll through this scenario.
	I think you're sort of saying, you know, somebody's gonna bid for the post office and so on.
	Now, the post office is losing catastrophic amounts of money.
	I mean, it's mind-bendingly catastrophic amounts of money.
	And a lot of this has to do with the union, right?
	And look, I always get flack about union.
	I have no problem.
	with unions.
	I think getting together, my wife and I have a perfect union.
	I have no problem with unions.
	I don't like the fact where political force, power control, exclusivity, strike busting and so on, like beating up scabs and so on, this is not good.
	And forced union dues are a violation of freedom of association, blah blah blah.
	But why would somebody want to bid on taking over the post office unless they could radically reform the contracts with the workers?
	You wouldn't because then you'd be doing is taking on a massive liability.
	There's nobody who's going to bid money for an organization that's losing billions of dollars a year unless they can change the inputs and outputs, economically speaking, of that organization.
	Does that make sense?
	Yeah, but what if they're able to just sell the assets and just let the liabilities crash into the government as it is?
	Oh, you mean so what if they simply privatize all of the assets of the post office and sell those off and then keep the union contracts run by the government?
	Well, yeah, I guess the union contracts is the technicality.
	Is that the barrier?
	I think it's more than a technicality.
	I think it's the whole deal.
	I mean it's the union contracts that make it so crazy.
	I mean it's kind of crazy in a way to have one price to mail everything everywhere and of course mail is becoming progressively less important.
	And mail is mostly spam anyway.
	Mail is mostly just junk mail which nobody signs up for and you can't ever get out of.
	You can have a do not call registry but you cannot have a do not spam me with junk mail registry because that would end the post office completely.
	I can't remember what percentage.
	A massive percentage is all this unsolicited spam, which is heavily subsidized for local businesses and even non-local businesses.
	So the question is, what are you going to do with the union contracts?
	If you turn them back to the government, well, that doesn't do any good.
	I mean, you've got, I don't know how many hundreds of thousands of people.
	They have jobs.
	You turn the contracts over to the government.
	What are they going to do?
	Is the government going to keep paying them the salary for not doing the work?
	Well, that doesn't make any sense.
	What are you going to do?
	Are you going to try and reduce the wages or are you going to try and reduce the benefits?
	What's going to happen then?
	First of all, 40% of the people who work at the post office are ex-military.
	I'm not sure that you really want to put a lot of lighted bamboo stalks under their fingernails.
	Going postal is a pretty strong term which has a lot of historical legitimacy, but they're going to go nuts.
	They are going to...
	You're going to chain themselves to the post office.
	They're going to drive at one mile an hour in their postal trucks through all the major arteries, killing all the traffic and destroying the economy.
	They're going to riot.
	Quebec students are rioting over about $175 a year extra in tuition fees.
	They're rioting, rioting over that.
	Look at what's happening in Wisconsin.
	We'll talk about More of this after the break.
	It's a really, really great question, Adam.
	Stay on the line if you want.
	Let's talk this through.
	But unwinding this stuff is not going to be very easy.
	We'll be back in a few.
	If knowledge is power, then the Peter Schiff Show is a uranium-enriched 10,000 megawatt nuclear reactor.
	Stay plugged in.
	Stay brilliant.
	This is the Peter Schiff Show.
	Alright, this is 10,000 megawatts from Canada, which means 10,000 megawatts with an igloo, an A, and free crappy healthcare.
	So, we're talking with Adam from Rochester about the post office.
	And let me just give a real brief spiel, then I'll get your feedback on it.
	Talking about privatizing the post office, what would be required?
	Well, you have to collapse the cost of the post office for any private investor to want to take it over.
	I mean, there's still a place for mail.
	People got to get stuff delivered from their online stores and so on.
	So there's still a place for physical mail, of course.
	But you have to collapse the costs.
	And people will go to the wall.
	And look, picture it from the standpoint of a post office worker.
	I mean, he's endured a crappy, neurotic, horrible, dysfunctional work environment where he's mostly been surrounded by the Wayne Knight character from Seinfeld for most of his life.
	But he's been hanging on there like grim death because of free healthcare and a big retirement bonus and guaranteed this, that and the other until he shuffles off his mortal coil.
	And these have been the foundations for his major life's decisions.
	And he's put up with a lot and he now expects to get what is due.
	And if he doesn't get what he's due, then he's going to go hog wild and he's going to have a union that's going to go hog wild as well, right?
	You start to mess with the union, you start to mess with the income of some seriously dangerous people who quite often seem to have ties with some rather shadowy underlords of the crime world.
	And so it's a pretty dangerous thing to mess with.
	I think people who want to take a political solution should at least be consciously aware of the fact that it seems that it's almost impossible to be able to make these changes without having to deploy force.
	These people are going to go on strike.
	They're going to clog the streets.
	They're going to chain themselves to things.
	They're going to make peaceful protest lines, marches.
	They're going to kick the crap out of scabs.
	And you're going to have to bring in the riot police and you're going to have to use your water cannons and you're going to have to break this stuff up and restore the free flow of traffic and so on.
	And what's going to happen then?
	Remember, we're surrounded by a hysterically propagandized mob of narcissistically entitled dependents.
	So what's going to happen is, you know, some libertarian whoever gets in power and begins to mess with government contracts and these government contracts of course will be taken to court.
	They'll be recall elections just as Scott Walker is suffering through in Wisconsin for the mere act of attempting to get these people to pay a tiny little bit more for their own entitlements and to say we're not going to negotiate things 20 years from now because those voters aren't around at the moment.
	And look what's happening to him.
	And so there's going to be massive resistance on the part of the government workers.
	And as a result, you're going to have to bring in the troops.
	And then what's going to happen is the media is going to say, look what happens when we get a libertarian president.
	Look what happens!
	There's blood in the streets and there's going to be some picture of You know, some teacher or some government worker who's, you know, fallen down and is bleeding, and ah, this is what libertarianism does.
	Remember how nice things were before the libertarians came in, and now there's blood in the streets, and this will sully and catastrophize the name of libertarianism for a pretty indefinite period of time in the future.
	So, I just want to get your thoughts on that, if you're still on the line.
	I haven't put you to sleep completely, but what do you think?
	Yeah, no, I'm still here.
	So, our conclusion is that the union's requirements are so high that A private company, I mean, UPS, FedEx, or something, even if we gave them the assets of the post office, they wouldn't be able to make it economical,
	to make a deal, a feasible deal that the union would agree to, that they would allow the privatization and continue to work with all their ridiculous requests, but that, you know, the private company wouldn't be able to raise postage prices or something to offset those costs and maybe dwindle it down over time or I mean they wouldn't I don't know there's no way to do that.
	Well of course raise look I mean raising postal rates is just going to diminish service so So to raise postal rates, you would have to get rid of junk mail.
	Junk mail is ridiculously subsidized, so any private company is subsidized by the state, right?
	Any company that took that over would have to raise the price of junk mail.
	I think that'd be a great thing, because I'm a rabid environmentalist, and I think junk mail is terrible, so it should have the full market cost for its delivery.
	And so that would toast junk mail for the most part, which would toast 80-90% of what the mail carries.
	And so what would happen then?
	Well, you could raise your postal rates.
	You'd have to raise them like 5 or 10 times or more just to cover the losses from the end of the...
	The junk mail.
	And how many people then are going to want to spend more for crappy postal service rather than spend less for really great FedEx and UPS service?
	Again, I'm no expert in this.
	This is just my amateur idiot, economic mind churning way.
	I just can't see how raising rates is going to do anything other than cripple your investment.
	I'm sorry if I've crushed your hopes about privatizing the post office.
	Maybe there's a way to do it.
	I'll be back tomorrow, for those who are interested, if you've got better ideas of how to do it.
	I've seen this kind of stuff right up close.
	How entitled, how enraged, how frustrated, how manic.
	How crazy these people get.
	And of course, remember, the majority of people in the media are part of a union or depend on people who are unionized.
	This is why you don't see a lot of anti-union films, right?
	Because the media, the movie industry is run by unions, controlled by unions.
	You don't see a lot of that stuff going on.
	And so, given that the media is controlled by unions, how is the media going to deal with any kind of union busting?
	Well, they're going to portray it in a way that is pretty catastrophic for anyone who's attempting to bust the unions.
	People make the decisions based on the media.
	I mean, who has access to philosophical first principles anymore?
	You, me, and all of the other listeners to my show and Peter's show.
	But very few of us have access to first principles and say, well, it's the initiation of force that's wrong, it's violations of property rights that are wrong, and all of the rest of the media garbage, the light and dog and pony show of nonsense, the kaleidoscopic echoes of nothing, controlled, empty status nonsense, doesn't mean a damn thing.
	What matters is first principles.
	So few people have access to those first principles.
	They're simply going to rely on the emotional manipulations of the media and the money shot of subjugation of whoever happens to be hit by a rock in one of these riots which then can get blamed on free market libertarian philosophy forever.
	I mean, good heavens!
	People are still blaming.
	People are still blaming the Great Depression of the late 20s and all the way through the 30s and into the 40s.
	Like the 13 or 14 years of grinding economic destruction.
	They're still blaming that on the free market.
	They're still blaming that on the free market.
	So I say stay away.
	Let the people who made the mess have to clean it up.
	Stay away from the corridors of power.
	At the moment, that would be my suggestion.
	Because if we grab the helm after the Titanic has hit the iceberg, all we will be remembered as is the people who were in charge when the ship went down!
	So, that's my strong suggestion.
	Politics is great for education.
	Politics is great for bringing people out of the matrix slowly, but it is not great for actually achieving our goals at the moment.
	We need a smarter, more enlightened, and better educated population before I think we can start to make these changes.
	That's my argument.
	I certainly don't claim to have any kind of monopoly on how things should go in the future, but that's what reason and evidence has led me to accept.
	So, thank you so much for the callers.
	I really, really appreciate that.
	That means I didn't have to bleed into my show material for tomorrow.
	I will actually be back tomorrow.
	I think after the market excitement from last week, Peter has been helicoptered away and then teleported to an undisclosed location.
	But he will be back on Wednesday, but I will be back tomorrow morning at 10 o'clock sharp.
	With some gripping different kind of stuff.
	I know Peter is a big expert on the investments and the economics.
	I thrash around a little bit in that area.
	My specialty is a little bit more on the history and philosophy side.
	But I will be back tomorrow morning, and we will have some very interesting conversations about the lack of responsibility that the 1% currently has, and how little that has to do with the free market.
	I know, I keep beating that same drum, but until the world hears the drum, we've just got to keep beating that drum.
	It is never freedom that fails.
	It is always and forever a force that fails.
	All catastrophes have a gun in the center.
	We will be back tomorrow morning.
	Thank you everybody so much.
	Thanks to Peter and to the crew for enabling this great broadcast.

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