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Aug. 4, 2012 - Freedomain Radio - Stefan Molyneux
54:55
2184 Booms and Busts, Mises vs Keynes - And Religion As a Bulwark against Tyranny
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Hi, everybody.
It's Stefan Molyneux from Freedom, Maine Radio.
Hope you're doing very well.
I have, dare I say, the inimitable.
Inimitable?
There's a good word for you, Bob Murphy.
He is an adjunct scholar of the Mises Institute, the author of the Politically Incorrect Guide to Capitalism, the Human Action Study Guide, which I believe is about gymnastics, the Man, Economy and State Study Guide.
And your latest book is The Politically Incorrect Guide to the Great Depression and the New Deal.
And you are, I think, pretty much engaged in a Bloods and Crips schoolyard taunting match with Paul Krugman.
Perhaps we can start with that, because I think it's really shameful that he hasn't taken you up on your very kind offer.
Well, sure.
So, as many know, I'm an Austrian economist.
Paul Krugman is a Keynesian.
And I challenged him to a debate on business cycle theory, because the Austrians tend to think the exact opposite in terms of the solutions that the government should implement.
And because he has publicly said, in a Barnes& Noble, this girl emailed me once and said that she raised her hand and he was doing a book signing and said, hey, why don't you debate an Austrian?
This was a few years ago.
And he said, oh, because no one takes them seriously.
I wouldn't want to give them a platform.
So I cooked up this silly idea, like, okay, well, he's not going to just do it if I ask him nicely, so let me try to, you know, make a joke out of it.
So I challenged him to this public debate where people are making pledges that will not go to me or recruitment, but the money goes to a food bank in New York City if he agrees to debate me.
And so that's the deal.
And so to sort of put pressure on him so that he and his fans have to come up with reasons for why it's not worth him taking an hour to debate meeting when the money's going to go to the food bank.
So as of right now, the pledge totals around $75,000.
The quirk in this is if someone does make a pledge commitment, They actually don't get charged unless the debate happens.
So I keep telling all of my fans, hey, if you actually think, and I sort of agree with you, oh, come on, Krugman's never going to debate you, Bob, well, then there's no risk.
You might as well, you know, pledge $100 because that's never going to happen in your mind.
So anyway, all that stuff is at KrugmanDebate.com.
The bigger the number gets, The more I can do with it, like certain right-wing...
Oh, I would certainly pledge $100 for that.
I would love to see that happen.
And the great thing about debating a Keynesian is that, okay, so you say $75,000 goes to a food bank, but because he's a Keynesian, he can just type a couple of extra zeros and give them three-quarters of a million dollars.
I mean, just one keystroke, because that's their plan.
So that inflationary aspect, I think, really is going to benefit the food bank quite a bit.
And the thing, too, the actual mechanics of it, most of the people pledging, of course, are Austrians or Libertarians.
It's not, Krugman's fans don't care about him debating.
So it's really like, you don't want to redistribute 75 grand from a bunch of tightwad right-wingers into the hands of people who will go out and spend the money?
Come on, you know.
Okay, so let's just, if you can, let's do two seconds on the major aspects.
I know it's a tricky one, the major aspects of Keynesianism versus the Austrian approach to the business cycle.
I'm not even going to try and paraphrase it because you'd spend more time correcting me than you would just explaining the theory, but give us a nutshell what the major differences are in the theories.
Well, for me, the major differences are that the Austrians think that the reason for a recession or a depression with a small d is that there was a preceding boom period that was caused by monetary inflation.
Usually coming in through the banking sector, and that lowered interest rates compared to what they should have been that made entrepreneurs start too many projects.
So in the United States, for example, from the period of, let's say, 2001 to 2005, Most Austrians would say Alan Greenspan had interest rates that were too low, trying to juice the economy after the dot-com crash.
And the Austrians would say, that far from helping the economy, that was just setting us up for a bigger crash.
That interest rates really mean something, their prices, and they have work to do, just like the price of oil means something, it's not just some arbitrary number.
By the same token, the market rate of interest Does something, and in the Austrian perspective, that's the primary thing in a market economy that helps coordinate production decisions over time.
And that's what keeps things on an even keel so the economy grows at a sustainable rate.
If you push interest rates low, that gives an artificial illusion of prosperity, and that's what a boom feels like.
Well, gee, everyone feels rich.
Consumers feel rich because interest rates are low, so they start consuming more.
They get plasma screen TVs, SUVs, and whatever.
But entrepreneurs also feel like there's a bunch of capital around and they start long projects.
So then that eventually hits a wall because physically there's not enough stuff to go around and that's the depression period.
So from the Austrian point of view, ironically, the recession is when reality has set in.
Yeah, it's painful, but it's because we realize we've been making mistakes for five years during the boom.
Whereas the Keynesians, in many respects, they don't care what caused The prior boom, in their mind, the diagnosis of the recession, the problem is, uh-oh, there's insufficient aggregate demand, and we have to, first of all, fix that, and then down the road, we can worry about structural reforms, blah, blah, blah, but in their mind, the clear and present danger is let's get demand up, Even if it means doing the exact same things the last time.
And this is, I won't cite you as an example, but Krugman, Ezra Klein, people like that, who are Keynesian policy wonks out in the blogosphere right now, they keep talking about Brad DeLonge recently, another Keynesian, and this guy a professional economist, Recently was saying, all we have to do, and he showed a graph of various spending components, and all we have to do is fix residential housing demand and the recession's over.
So, I mean, they just keep saying, without realizing the irony, all we need to do is have the government and the Fed pump up housing prices again, and we'll be fine.
When, in the Austrian view, it's that mentality exactly that got us into this mess.
Right.
So in the Austrian view, interest rates should be low because people are saving a whole bunch of money and therefore the price of borrowing that money goes down because there's an excess in supply.
And when you start tinkering with the interest rates, you really are sending wrong signals to entrepreneurs.
And I think this is why the Austrians, and it's one of the most admirable aspects of the theory, I think, why they say that it hits Capital markets, it hits the sort of B2B stuff before it hits consumers, the recession and the reverse in the recovery.
Is that a fair characterization?
Oh yeah, exactly.
So yes, you're raising the bar here on the technicalities of it, but sure.
So in terms of the stylized facts, when economists come to business cycle theory and they want to say, hey, what kind of theory can we come up with to explain these apparently normal, natural, periodic ups and downs of a market economy, one of the stylized facts, like you say, is that the swings in prices and in employment and stuff like that Are more severe in the capital goods sector or the investment goods sector.
So if you're some factory that's making parts for drill presses, your business is probably going to be booming more during the boom period and crashing harder during the recession than the local retail place that sells sweaters.
You know, they're going to see up and down too, but they're not going to see nearly as much as some of the, what Austrians would call higher order stages.
And so in the Austrian framework, Our theory can totally explain that.
Whereas the Keynesian view, where if things are just a matter of, oh gee, demand for some reason just collapsed, then it's not clear why there would be these pronounced shifts in certain sectors, but not in other ones.
Plenty of times Krugman himself on his blog has tried to blow up the Austrian theory by using data and showing, oh look, employment in mining and manufacturing and housing construction hasn't fallen more than demand in retailing, so you guys are wrong.
And then I go through and show that he was using absolute figures instead of percentage figures.
And if you do percentage, you can see that it fits in totally consistently with the Austrian perspective.
So things like that.
You're exactly right, Stefan, that there's things that the Austrian theory would predict qualitatively about what a boom and a recession would look like that the data fit those facts, and yet with the Keynesian perspective, at least certain ones, the sort of naive one that I've seen Krugman putting out, That those particulars, there's no reason they should look like that versus some other way.
And this is the thing that's always bothered me about the Keynesian model, which is that, as you say, in a sense, they just play this whack-a-mole game, and they don't care where the moles are coming from, which seems to me kind of important.
And they always say, well, we'll deal with the structural stuff later, and later never seems to actually come.
But what I find so interesting is that An economy that is dynamic and free market and in its creative destruction phrase, you would expect to see, you know, like waves on the ocean, stuff's coming up, stuff's going down, but not as a whole.
You know, that's sort of the thing that's really important.
Everything that has to do with the whole of the economy It seems to me it has to be monetary, because that's the one thing that's in common with all of these economic transactions.
So yeah, you might have a bust in this particular area and a boom in this particular area and so on, but when the economy as a whole, rather than there being waves on the ocean, if the entire ocean is going up and down, you have to look at that which is in common, and that's why I think the ignoring of the monetary phenomenon, I'm not saying they ignore it, but the lack of emphasis on the monetary phenomenon and the Keynesian stuff just seems to me to miss the whole thing that's in common between all these transactions.
Yeah, so two things.
First of all, yeah, you're exactly right.
In terms of me personally, why do I just, in my gut, think that the Austrian story is what's going on?
And sure, we can quibble about specific nuances in the theory, and of course it always needs to be improved.
But in terms of me thinking big picture, what is the cause of business cycles in modern market economies?
You're right.
I think it has to be monetary, particularly coming through the credit markets.
Because only changes in the overall quantity of money and interest rates, in my mind, could possibly explain these huge economy-wide booms and busts.
But in fairness to the Keynes, they also might diagnose it as a monetary problem in the sense that they might say, oh, there's a panic for some reason.
Everybody wants to hoard money.
And then because of sticky prices, sticky wages, blah, blah, blah, that's why aggregate demand falls Below what it needs to be to maintain full employment.
In a sense, they could come back and say to you, no, our theory is monetary also, but not in the same way that the Austrian is.
Is this what they talk about when they say that because there's a crash, consumers lack confidence and therefore we need to reinstill confidence by adding to their purchasing power?
That just seems like a very psychological explanation that seems a little bit out of place in this claimingly and empirical science.
Yeah, and unfortunately, I mean, different Keynesians would say different things about what the particular causes.
So they're all agreed, big picture, the problem is there's not enough aggregate demand, and then they have different reasons as to why in this particular bust, demand may have fallen compared to some other ones.
So, like, historically, they thought a standard post-war recession...
Happened because there would be too much spending and that would push up price inflation during the boom period.
The Fed then would get nervous, would jack up interest rates, and then it was the higher interest rate that made everybody pull back.
So just like you and I would agree with, other things equal a higher interest rate.
Consumers don't consume as much and businesses don't invest as much.
And so they thought, oh, that's how they would explain it.
And so that's why they thought there was this trade-off between unemployment and price inflation.
Whereas now on this particular bus, they're saying, oh, this is kind of like a 19th century panic where there's a problem with the banking system.
And because people's savings 401 s are crashing, their homes now are volatile in price and everything.
So now everyone's just panicked.
And that's why they're hoarding money.
And so this is a whole different knot to crack, and this is harder, and that's why we've got to have much bigger government this time around and do all sorts of crazy stuff.
Even lowering interest rates to zero isn't fixing things.
Can you imagine?
I find this topic fascinating, but I just want one more piece of feedback from you, if you can.
There seems to me two particular nail guns to the throat of the Keynesian theory.
One is, and I'm sure there's more than two, but the two that I am aware of that I think are the most important.
Number one is this idea that, well, we'll just stimulate when the economy is down, and then governments, because they're just so rational, empirical, and moral, will save and add to that reserve fund when the economy does well.
I mean, the past...
I don't know, 5,000 years of government history, the Roman Empire, the British Empire, the experience of Spain dragging all that gold over from the New World and destroying their own economy for 400 years.
I mean, it would seem that that is not even close to a rational understanding of public choice theory.
And the second thing is, I mean, the 1970s should have been a complete detonation of the Keynesian theory because of the stagflation, which was considered impossible under the theory.
How is this vampire still dragging itself through our dreams?
Well, again, I can just focus on Krugman because I read his work.
When I say work, I mean his blog.
I haven't slogged through his academic stuff.
He's the one, the Keynesian, that I read the most, so I don't know how other ones would answer, but what was funny, he somehow tried to do some jujitsu Where he tried to explain away the 1970s stagflation and say like, oh no, that wasn't really, that's not a challenge to Keynesian theory or just to say, oh yeah, all that was is we just had to take expectations into account.
So yes, there is a Phillips curve, the Phillips curve showing the alleged tradeoff between unemployment and price inflation.
He said, but now it's just an expectations augmented one.
And once you take that into account, so yeah, we can explain all that.
And what was funny, though, is that David Henderson, who blogs an econ log, busted Krugman on this.
Krugman at one point said something like, you know, there's this right-wing myth that the Keynesians were caught flat-footed in the early 80s by their views about inflation and unemployment, and that's not true at all.
And he, like, started quoting from some apparently Keynesian textbook at the time, saying, see, so this is totally in line with Keynesian.
And Henderson, who had worked in the Reagan administration, and apparently Krugman was also, like, in the Council of Economic Advisors or something at the time, And Henderson quoted from some internal memo that Krugman had his name on saying that he was totally wrong.
They thought unemployment was going to go way up or inflation was going to go way up or something like that in the early 80s and they were just totally wrong.
So, you know, Henderson was saying, so either Krugman wasn't a Keynesian at the time or right now he's backtracking.
To answer your question, in economics, of course, you know there's no such thing as a controlled experiment.
After the fact, any economist, and I'm sure Austrians do this too in their own way, can tinker with stuff and explain ex-post, oh no, our theory can handle that, because you always have the get out of jail free card, other things equal.
So the Keynesian has not felt compelled to totally abandon his Apparatus because you can always tinker with stuff and sort of explain, oh yeah, that makes sense, what happened in the 70s.
But you're totally right that going through that, there was this view that the government could either cause large price inflation or allow for high unemployment if they wanted to get inflation down.
And so having both high at the same time should have been impossible, and yet the 70s showed that it wasn't impossible.
And the collision between Keynesianism and the public choice theory, which basically I think Brian Kaplan's book, The Myth of the Rational Voter and other books that I've read, you know, it's pretty clear, at least it seems pretty clear, that expecting the government to, in a sense, work on generational plans to smooth out the economy like some surfer on a...
On a wave, it just seems like, because governments, of course, have every incentive to print and spend and borrow and spend and bribe and spend and borrow and print, and almost no incentive, in fact, huge negative incentives to pull that stuff back.
But isn't it kind of essential to the Keynesian theory that the government is able to save during the good times?
Otherwise, you're just going to end up digging yourself further into deficits if you lavish spending on every downturn.
Well, yeah, you're exactly right that historically, the standard Keynesian prescription or paradigm was to say, we want to balance budget over the business cycle.
So they were saying, yes, in times of recession, the government should run budget deficits that are anti-cyclical, meaning that when the economy is going down, you want the government's spending to be going up and deficits to go up, because in their mind, That's how the government adds to aggregate demand.
If the government's running a deficit, a budget deficit, by definition, that means it's spending more than it's taking in through taxes.
And so in the Keynesian view, therefore, it's adding to total spending.
But then the flip side is during the good times, like you say, Stefan, you know, you can't just keep running up deficits.
So during the good times, you've got to be running surpluses.
And so they would say, yeah, We believe in balanced budgets too, just like the right-wingers do, but not in any given year.
We're not wed to that.
It's over the...
But what's funny is, since then, I've seen Keynesian bloggers and so forth say, well, you know, we don't really need that.
we could run deficits perpetually because the idea is like you could have a 1% GDP deficit forever.
And as long as the economy is growing at 2% per year, then the debt to GDP ratio would just stabilize at 50%.
And so they're saying, see, that's fine.
So I've seen many Keynesians drop that and say, we don't need to actually ever pay off the debt.
It's just as long as the absolute debt in terms of dollars doesn't grow and consume the entire GDP nominally.
So I quoted that and I was telling those bloggers, just keep blasting that as loud as you can.
That's good for us.
Keep saying that, that we should just run deficits forever.
Well, and the fact that the US is around, what is it, close to 100% now?
I mean, the fact that it's blown way past the 50% thing would, I think, give any rational and empirical actor pause in forwarding a theory.
But, you know, my particular opinion is that Keynesianism I mean, I know that's a ridiculous thing for me, some idiot on the internet to say, but Keynesianism makes no sense, but it's incredibly useful to people in power.
It's like, ooh, we have a justification to borrow, spend, print, and bribe.
You, sir, are the new intellectual heroes of the court.
And it seems to me it's just whatever is the most useful to those in power It tends to be put forward as the most valid theory.
And Austrianism, of course, is incredibly not useful to people in power.
It requires them to go against every political instinct they have, to go against every special interest group that got them into power, to go against all of the greedy voters nosing their way towards the sow's teat of the state.
And so because it is not useful, it is considered ridiculous, although it seems I've never seen a very good argument against it.
Sorry, that's a minor rant, but I just think it's useful, so they use it that way.
Yeah, I mean, it's certainly I agree with you when we're trying to explain historically what the heck happened like in the 1930s all of a sudden.
I mean, there were some prominent people that we would call free market.
I mean, they weren't down to the last jot and tittle of libertarian theory, free market.
But certainly from a general pro-market perspective and very suspicious of government intervention, Economists at the time and then they just sort of got rolled over for the Keynesian Revolution and so I think you're exactly right that one of the ways to explain that historically is to say that governments realize this is a great doctrine,
that we can use this to justify things that we want to do for other reasons and make it look like, you know, give us some patent on scientific respectability and then in terms of government funding of higher education.
So it's not shocking that The faculty at Harvard, MIT, and the people running all of these prestigious journals are certainly more Keynesian than they are Austrian.
But having said all that, I don't think that's the total whole story.
I do think, like the general theory, Keynes' book that came out in 1936, If you read it, you can understand why it's such a big deal, because he's a very clever guy, a witty writer, and yet it's sort of incomprehensible.
So it seems like it's a work of genius, and he makes it look like he's bringing special relativity to the Newtonian classical economics, that he's trying to show Oh, when there's full employment, my whole system reduces to the free market classical approach, but I can also handle the case when there's not full employment.
So he did a great PR job of making it look like his Keynesian apparatus was a general theory, and that's where his title came from.
So the way he positioned it, I can understand why even economists who had no skin in the game would think, oh wow, this is definitely an advance.
This is amazing.
Now we understand the economy better.
Especially because in the middle of the Great Depression, even though you and I know, governments were implementing all sorts of anti-market measures.
So that hardly was a failure of the free market.
But if you were just thinking, it seems like nothing's working.
We need something new.
And then this thing comes along.
You can kind of understand why that may have swept the minds and captivated people.
Yeah, yeah.
And now, of course, there is talk about, what is it, QE666 or something like that.
QE3, I think, is being talked about.
And there's this belief or this argument that the problem with the last stimulus package was it wasn't big enough, it wasn't implemented quickly enough, it trickled down and so on.
To me, I go back to the abacus.
There's this naive mathematics that is so important to me, and I'm sure it is to a lot of people, which is that stimulus is simply deferred debt.
You're filling in the present by hollowing out the future.
I know the idea is, well, you jumpstart this thing and the economy is going to start to grow like China on steroids and you get 6%, 7%, 8% and so on.
But, I mean, that's, I think Tyler Cowen's written a great book about how all the low-hanging fruit has kind of been picked for productivity improvements and so on, and expecting this huge growth from a stimulus package when there's all this debt and malinvestment in public sector and huge dependency, what, 30 or 40% of Americans get there.
I mean, it's a different world than it was in 1936 in terms of the size of the state and the size of the free market, the amount of debt, the amount of deficits, the imperialism and so on.
The idea that we're just going to spend some money now and everything's going to magically align and work itself out as if the spending money now through the stimulus package is not a huge malinvestment and, you know, that the secret trick of economics is overseeing what's missing.
You know, the fact that all these jobs aren't being created because there is this You know, spectacular or high-profile investment in government projects.
It just, you know, it almost seems like too obvious to even have a debate about.
Like, just deferring your debt and malinvesting in the present, how on earth is that supposed to turn things around in the long run?
Well, yeah, and you're exactly right, and it follows again from the fact that in the Keynesian model, they simplify away, they assume away certain things, so their actual formal models, like the mathematical ones with all the bells and whistles, are actually very simplistic.
And in the world of the model, yeah, that policy solution works.
And so they think they're being real rigorous and scientific, saying, oh, few Austrians just write words on pieces of paper, but here I've got a model and I can prove to you that assuming, as long as my assumptions are close enough and I correctly put my finger on the thing that's driving the real world results, Well then my policy solution will lead to improvement.
But what's funny is, so of course we can show, well no, if we tweak the assumptions and make it more realistic, now all of a sudden you're throwing gasoline on the fire.
You're not putting out the fire.
And then you go and say, okay, well then let's look at the data to see, because that's their whole view, right?
They're saying it's okay to make a model that simplifies things, that has false assumptions, so long as you then go and corroborate it with the empirical evidence.
But empirically, you see all kinds of cases where massive government stimulus goes hand in hand with an awful economy.
And you're right.
They always explain that away by saying, well, the economy was sick, so it's no wonder, it's not a surprise that when they come in with a stimulus, the economy's still bad for a while.
We expect, but...
For example, with the Obama stimulus package, there's plenty of cases like that where all of a sudden they come in and approve this thing, and oh man, the economy was worse than we realized.
Whereas, I keep saying, what would the world look like if we Austrians and other critics of Keynesian policies just supposed for the sake of argument that we're right?
Wouldn't the world look exactly like this?
Or where when governments started doing more Keynesian, before the book came out, measures in the early 30s, that Great Depression just kept lingering on and on and on?
So in other words, it's saying, look around you, wherever the governments have put these massive stimulus packages into place, the economies are always awful.
And the way that the proponents vindicate it is they say, oh, well, we think things would have been even worse in the absence of that.
Right.
Yeah, so the doctor says, this will cure you, and then you keep getting worse, and then he turns around and says, well, yes, but you would have had at least two arms fall off.
And it's like, but that wasn't the plan.
The plan was to make me better, not to just keep me from getting worse in some unspecified way, although I feel worse every day.
How could that conceivably sustain itself?
Well, sorry, let me just say, because there is an argument to be made that government programs or this sort of interventionist government economics, they don't just support government programs, but in a way, they really are government programs.
It's like some 70-80% of economists end up working for, you know, the Fed or associated banks or, you know, people who track the banks or some sort of public sector entity.
So I think it's really tough to go.
I don't know if there are any Austrians left at the Fed.
I talked to some guy recently who was on the show who left in disgust.
I think Alan Greenspan.
Oh, let's not even start on Alan Greenspan, because my head will just explode.
I mean, the amount of betrayal that he put into the cause of freedom by backing away from his, oh, I thought they could self-regulate the banks.
Anyway, that's another topic.
But I mean, it's some huge percentage of economists who end up working in this interventionist sphere, so it seems quite likely that they would have these interventionist beliefs, otherwise they couldn't do anything there.
Right.
Well, if you did want to talk about Greenspan and have your head explode, that would help my career because I would be the last guest ever with Stefan Molyneux when your head exploded during the interview.
This isn't about me, it's about you.
Oh, my suppressed hair goes spraying out through the top of the camera, right.
Yeah, you're certainly right, and it's funny because you want to be careful about just, first of all, rhetorically.
You know, if you're having a debate with somebody, you don't want to make it look like the reason you're saying what you're saying is because you're getting paid to.
So just because the audience is then, you know, some of them are going to agree with you, but then other ones are going to think you're a jerk.
Sorry, are you saying that the $75 for each time you agree with me that that deal is off?
I kind of thought that was between us.
Oh, sorry.
Edit out.
Edit out.
Be sure to edit out.
No, I agree.
It doesn't invalidate someone's argument to say that they're being paid for it.
Nonetheless, of course, basic tenets of economics, people respond to incentives.
It's not indifferent.
Here's what I think happens more, and I'm a consultant, and I've worked with other people, so I've worked at places, and I notice I do this too, and I think this is a natural human thing, and you can always rationalize everything, but What I've noticed that I might do is if I were completely independent and just had a $10 million endowment somewhere that was shooting off dividends and that's what I lived off of and I really didn't need income from anybody,
I would probably say different things on my own blog that I'd say.
So it's not that I ever say something because someone's paying me to say it and I don't agree with what I'm saying, but it's more sometimes I think There's things I would say except I know, oh this guy over here wouldn't agree with that and he's paying me to do something over here and so there's no reason to get him mad at me.
Be a diplomatic.
Yeah, there's that kind of thing.
You can totally rationalize it.
Or if I used to work somewhere, I don't want to badmouth the person because then I'm like, well, potential future clients might think, well, you used to have him as a client, now you're badmouthing him.
There's all kinds of ways you can make it.
I'm being real classy and being discreet when somebody else looking at the same behavior would say, oh, you're just keeping your mouth shut because you want to keep getting paid.
There is a spectrum there, and probably most of us do it to the extent that we're not independently wealthy.
But yes, it has to affect things if the Fed is directly or indirectly putting bread on the table for lots of economists.
It shouldn't shock us that, gee, how come it seems like most economists don't want to get rid of the Fed?
Right.
There are very few industries who work to put themselves out of business.
And I mean, an Austrian at the Fed table, I mean, he would just be a monosyllable, right?
No, no, no, no, no, no, no.
I mean, how much are you going to pay someone that just gives you a negative all day?
Well, he might say, are you nuts?
No, hell no!
Okay, so we also, we talked a little bit before the show.
I think it'd be interesting.
This is one of the first questions I ever posed on one of my call-in shows, and I'd like to get your thoughts on it.
It seems that there are some people, that was certainly me, right?
So I started reading...
Objectivism and some of the Austrian stuff when I was quite young.
And for me, it was just like, well, of course.
How could you even argue this?
I remember, I think it was Leonard Peikoff who said, you know, in his useful enthusiasm after Attershark came out, he said, well, in a year, all these regulations will be gone because the case is so clear.
It's so passionately put forward.
It's so compellingly argued.
And I think that's true even today.
But there are lots of people who come across some of the basic arguments and...
Well, most people just seem to like, you know, it's like Superman with bullets, you know, it just doesn't penetrate.
And what do you think, is there any, is it a matter, I'd like to think it's a matter of brain size, but I mean, there's lots of smart people who get things wrong.
But what do you think primes people for being so receptive to These, I think, basic axioms of freedom, property rights, non-aggression principle, and so on.
And how is it different from the people who just are amazingly jujitsu in their ability to ward off these arrows of truth?
Okay, that's a great question.
I think one major element of it is...
That some people, if they're gonna embrace some kind of doctrine or some sort of thing that helps them explain the world, they're gonna really research it and think it through and take it to its logical conclusion.
And so if you start dabbling in libertarian political philosophy, if you're this sort of person, you're not just going to then add it to your repertoire and say, oh yeah, and other things equal individual liberty is pretty good too, but you have all these competing other things.
It's like, well no, if I believe that, where does that principle end?
And you just keep pushing it to see, you know, what's the logical stopping point.
So that's why it sort of makes sense that there's plenty of people that call themselves minarchists because there, there is a bright line saying the government should only do things related to judicial services, military defense, police, that sort of thing, whereas it really wouldn't make sense if you said, oh, I'm a total minarchist, except I think there should also be food stamps.
That would be kind of a weird position to hold.
And so I don't find many people who think that.
And then also, of course, another totally consistent worldview is to say, oh, I'm a complete anarcho-capitalist, or I'm a complete pacifist, or so on and so forth.
So that's why I think there are people that are just like that.
And that's also, it's not just on our side.
I mean, there's Marxists and so forth, too, that I'm debating them on their websites and whatever.
I don't do it now.
I don't have time.
But when I was in grad school, I used to do that because I was just curious.
And I noticed the same sort of personality types.
And that's also why you can see Marxists having internal squabbles just like the libertarians or the Austrians do about, you know, arguing over little doctrinal points.
It's the same social phenomenon.
So that's, I think, a big part of it, is that certain people, if they're going to get into something, whether it's music or watching Scorsese films or whatever, or political philosophy, they're not going to be lightcore about it.
They're going to go all the way and then...
The people that you and I are friends with and associate with and that are our fans happen to be those people because they took it all the way and you and I are crazier than most.
So what you're saying is that the ideal t-shirt for our movement would be...
I put out for consistency or libertarians, we go all the way, baby.
Or something like that.
So, okay.
And I think, I mean, as a parent, I'm sure you notice this as well, as I can hear in the background.
Is your son having fun?
I mean, one of the things I notice about my daughter, which is fantastic and, you know, it's an incredible philosophical education being a parent, is...
Consistency, consistency, universals, universals.
How far does this go?
Well, this thing is a chair.
Is that a chair?
No.
Well, why not?
And this constant division.
And I think that there is a phase in childhood where we try, and I think it's an essential phase, where we try to universalize as much as possible.
And I think that there's something in...
Libertarians or people in the freedom movement that, and maybe true of Marxism as well, where we carry that over.
Whereas a lot of people, that process seems to get sort of pushed to one side or cracked or broken or cast aside.
But I think we've managed to hold on to that childish, childlike, that childlike desire for consistency.
And so for me, when, you know, I first heard the argument, taxation is theft, it's like, okay, well, yes, it is.
Now, whether it's justified or not, we can sort of talk about, but it certainly is the initiation of force to remove property against someone's will.
And so for me, it was like, okay, I think maybe I just managed to carry over some of that stuff from childhood where consistency is what you're really striving for.
I think a lot of people tend to, for pragmatic reasons or for other reasons, they just are more comfortable with going into that soup of keeping everything separate and having all those contradictions that they can live with.
Yeah, you're exactly right.
And another psychological aspect of it that I forgot to mention is I think also there's a certain personality type, and this can either be considered as a compliment or a criticism of such people, and you and I are good examples of it, of thinking, if something doesn't make sense to me, if I can't figure out why that should work, I don't care how many authority figures tell me it makes sense, I'm going to say they're idiots and I'm right.
So that's an admirable trait sometimes.
Other times it's obnoxious, and we probably are both sometimes.
But yeah, you're right.
Just taking your kid to the park, and the kid wants to go, and there's some kid that's got a lot of toys, and your kid says, oh, I don't have any.
Let me go grab his toy.
Any 99.9% of parents are going to say, no, Jimmy, you can't do that.
That's not yours.
And as a kid says, oh, but he has so many, he's not even using that.
That's not even an argument.
That's no.
Bright line rule, you can't take what's not yours.
And yet that same parent then was going to go vote on raising property taxes.
To pay for that kid's education at the government school because, oh, those rich people down the street, they're not using that money and I really want my kid to get educated.
So it's amazing how, you're right, the rules we teach little kids do not generalize in many adults' minds to issues of politics.
Yeah, it's a wonderful opportunity to teach children about the marginal utility, the diminishing marginal utility of the extra toys.
And I think that's what kids are really looking for in playgrounds, I think.
Good old econ lecture.
Yeah, and of course, too, if the other kid's parent is good, he or she will say, oh, you know, Jimmy, or not Jimmy, I don't have two Jimmys in the story.
John, why don't you share with this kid?
So the correct thing is for the kid who's got a million toys and isn't even using it to have the toy end up in the hands of the kid who really would like to play with it.
But the mechanism is it's got to be voluntary.
And it doesn't make, you know, that's just clearly what it is.
And you cannot just go take the kid's toy, even if in your mind it's always not hurting anything.
I mean, that's...
So, libertarian is what we teach our kids, and yet for some reason, with adults, it's like, well, yeah, but now there's something really bad that would happen, and so then those rules go out the window.
Well, you know, Bob, it's one thing to talk about toys, but we're talking about food and shelter.
People will die without...
And, you know, so you raise the stakes and then you break the principle.
But it would seem to me that the higher the stakes, the more you'd need principle.
But that perhaps is an argument for another time.
Now, the last thing we were going to talk about was religion.
And I think now that we've solved Keynesianism...
We've solved the mystery of how to convert everyone to rational free thinking.
I think if we dust off and solve the topic of religion and freedom, it's a pretty good morning's work.
I certainly would go to bed for the rest of the day and feel like I've earned my daily bread.
And there does seem to be—I've heard this argument from a number of both atheists and theists in the libertarian movement—that religion, particularly Christian religion, is a good bulwark or a dike against encroachments of state power.
I have some—I think there's some empirical arguments against that.
I mean, if you look at, say, Germany in the 1930s was the most religious country in Europe, and that was not much of a defense against Nazism.
Italy in the 1920s was almost uniformly, of course, Catholic, was not much of a defense against fascism.
Russia in the late 19th century was incredibly religious, and that was no defense against communism.
So I have some criticisms of it, but I was wondering if you could just, you know, encapsulate your thoughts on religion and political liberty in three and a half minutes.
Go!
So I certainly, let me just put out, so in case people don't know my background, so when I was going through undergrad, I was raised Catholic, my parents were Catholic, but it was kind of a, I would say, soft core environment.
Like I think a lot of the priests at the church where I went thought the devil was a metaphor.
You know what I mean?
So they were not like biblical literalists or anything like that.
I think it was more like just try to be a good person and Jesus showed us the example and that kind of stuff.
For some of them, to the younger guys, so that was the message I took.
And then, so by college, I called myself, I thought it was a clever title, I called myself a devout atheist because, meaning, you know, I was really committed to it and I would try to evangelize and, you know, I wasn't a jerk about it, but I would really think I was freeing people from these superstitions.
And then, for various reasons, I came and now I call myself a born-again Christian.
I'm just giving that background for your listeners who don't know me.
So let me, so first of all, yeah, what I am still trying to figure out is why American evangelical Christians are so pro-military.
Well, excuse me, so pro-US military.
Everyone else's military is evil and fallible, but the US military for some reason, you know, and worse, they might make an honest mistake.
And I, so I don't know, I'm still trying to figure out exactly what's going on with that.
I think because the idea of the military is selfless and you're risking your own life for the greater good, I think that's part of it, but there's something else going on there and I haven't nailed it down.
As far as the historical stuff, you're right, I can't disagree with the specific examples you said, but what I would say is I hope you would also agree that in totalitarian regimes, they do try to break down the church.
I've talked to people who were persecuted in the former Soviet Union and in North Korea.
I know a guy who has an operation in North Korea right now, and he goes once a year, and the guy's a Christian.
He hands out bread to people, and from the government's point of view, he's just feeding people, but underground, he's got a network of churches and stuff, and it's like cloak-and-dagger stuff.
He actually smuggles Bibles in a thing.
So why do the regimes do that?
Well, because they know if you believe that there's some higher power than the regime, then you want to stamp that out.
So there is that element, too.
Well, sorry, I think, to me, a point of refinement, which you can certainly obviously disagree with, The regime will be anti-religious if the religion does not recognize the regime.
Of course, as you know, throughout history, religion has said that the king is appointed by God, divine right of providence, and so on, and therefore, this is the old Lutheran argument, you obey the king.
As you obey God, because God sanctions his, so, but of course now an atheist doctrine, and, you know, that's sort of an insult to an atheist, because, you know, it's not, you know, communist doctrines are specifically anti-religious, and therefore you would expect them to go against the church as a competitor,
and for the church to go against them, but of course there's a lot of symbiosis between religion and power, you know, this, I mean, not a particularly The noble point in Catholic history was its relationship to Nazism and to fascism, because they didn't specifically go against the church they found a way to accommodate.
And there may have been good reasons.
You could say, well, they helped get some Jews out, and I think that's all incredibly noble.
But I think the totalitarian regimes that are anti-religious will set up this antagonism, but it's not always the case, even with very authoritarian regimes.
Yeah, you're right there.
I agree with that.
Also, too, I wish I knew more about history because I'm speaking loosely here and things that I vaguely remember reading in college.
But I think it's even with the divine right of kings and so forth that we think of as, oh my gosh, in the period of so-called absolute monarchies and things like that, that actually...
I think, especially for people who are fans of Hans Hoppe's work on Democracy, The God That Failed, and so forth, there was a sense that even back during periods when I think many of us think of, oh, the government could just do whatever it wanted, because if you thought that God literally handpicked the emperor or the king or whatever, But there was still a sense at the time where there were certain things that just, no, you can't do that.
So in other words, if you are God's representative on earth, but the people believe in a certain role of this is what the government's role is, this is what the church's role is, it would be hard for you then to overstep that boundary.
Because you're claiming my source of legitimacy is the Bible, and if the Bible teaches you that this is what the church is about, it's hard for me then to trump that.
Whereas if you can break people down and say, no, there is no such thing, and I'm just here because this is the way to better feed you, there's no check.
So I agree with you that they'll use it and co-opt it, but I think ultimately a true totalitarian wouldn't want there to be that lingering view of there's this higher absolute power that ultimately if I overstep, Right, right.
No, I think that's a fair point.
And certainly, of course, the priesthood has acted as a check on some expansions of You could say where it threatens their interest or whatever, but nonetheless, I think the actions have been that they have done some very, I mean, think of Poland, of course, solidarity, and the fact that the Russian Orthodox Church survived many decades of incredible repression and brutality, murder, and violence under the Soviet Union, and kept some of the more liberal traditions alive.
And it's one of the frustrating things about Russia, they were so close to getting to something rational, and then, you know, this communist thing took over.
Yeah, so I think there is definitely competing power interest there, and there are ethics within the church, of course, that do oppose secular authoritarianism, and I think do act as some checks on it.
Sorry, you were just about to say.
I think there's two different ways to tackle this issue of, you know, is theism or Christianity in particular receptive to or hostile to the sort of political views that you and I hold or anti-political views?
And so one thing would be just to look at history and try to say empirically what does it look like, what the correlations are, and that's tricky because you can always interpret stuff one way or the other.
But I think also another way would just be to look at the doctrines themselves and see What would the actual doctrine say?
And it's true, there are plenty of biblical passages like Romans 13 is the most famous in terms of a Christian arguing with me over anarcho-capitalism would say, well, Bob, you say you're a Christian, but what about this passage?
But it's pretty clear that Your authority comes from above and if you think the government is doing something that's against God's will, you're not supposed to obey that command and so on.
So I've actually noticed talking to some evangelicals might bring up issues of a private legal system or whatever.
They're like, oh yeah, that's kind of like the framework of the judges in the Old Testament or something.
So the idea of not having some...
Hey buddy.
Not having some earthly person who is the...
Top of the pyramid, that doesn't shock evangelicals, I've noticed.
And it's true, it's not like I convert them into anarcho-capitalists, but I'm saying, with them, the idea is not as crazy as it is with a standard run-of-the-mill American who's an atheist, but also, you know, voted for Barack Obama or something.
Like, to them, the idea of getting rid of the government legal system and replacing it with something more spontaneous is horrifying.
Whereas, you know, if you think that God is the source of all order, then the idea of getting rid of some man-made institute, because the Christians think man is fallen, so that's a good way I approach it, and say human governments are, of course, man-made, and so they're fallible and corrupt at their core, right?
And they're like, oh yeah, of course they are.
Right.
Well, and I will also say that I have really admired the moral courage of Christians in the libertarian movement.
And I've sort of been mulling this over, and I think, of course, the focus on the afterlife does grant a kind of perspective to challenges in this life.
You know, like you're going for the big ring, you're going for the big prize, and so the hiccups of the everyday become much less important.
And I just have seen real, and I sort of won't name any names because I'm not You know, but some real moral courage, I think really the peaks of moral courage that I've seen in the libertarian movement have come out of the Christian aspect.
So I really want to sort of give props out to that because, you know, empirical facts are empirical facts and this is what I've seen.
And I think it has something to do with, you know, and you tell me you were born again, right?
But it has something to do with, you know, going for the big ring of heaven and avoiding the big pit of hell gives you a kind of courage in the everyday that otherwise might be a little easier to shunt aside.
Let me just, I appreciate the kind words, and by the same token, let me also be conciliatory and say, I won't say the guy's name because I don't want to put him on the spot, but when I was just new in the faith, so to speak, one guy said to me something like, the biggest problem with Christianity is Christians.
Meaning, like, we think they're obnoxious, too.
So we want to put that on the table.
Especially, like, in evolution debates and stuff.
I mean, I've seen people say stuff and I'm just like, oh, come on.
Okay, so, but back to your point, just to refine it, it's not so much Let's say the government grabs me and they're like, okay, you better recant publicly or we're going to kill you.
And certainly my faith would give me courage to speak truth to power.
But it's not because, oh, I would be sinning if I lied and I don't want to get sent to hell.
It's more, I don't fear death because I know I'm going to go be with Jesus in paradise.
So it's more that you're not bold because you're afraid of getting punished.
Even worse later, if you chicken out on this little test, it's more you're not afraid of things that an atheist might be afraid of.
Right, right.
And I think that does give some extraordinary moral...
I mean, there are atheists who have great moral courage as well, but I, you know, if I had to sort of cast my lot, I would say that it edges towards those, the people of faith, a little bit more.
You know, I think that may have something to do with, you know, atheism still has to work on the problem of morality.
I mean, it does not solve the problem of ethics.
You know, all of this, you know, tendency towards material determinism, which I find repugnant, or this tendency towards, well, it's evolutionary productive to cooperate within the tribe is like, yeah, well, it's evolutionary productive to have a hierarchy that's true to the top of and pillage everyone too.
I mean, what does, you know, a third of people in the East come from one guy named Genghis Khan.
I mean, he did pretty well biologically with rape, pillage, murder, and theft.
So, you know, the evolutionary aspects of the growth of morality, the tendency which Sam Harris had just put a book out on determinism, where he's trying to change people's minds about the fact that they can change their minds, again, just makes my head explode, that wrestling that atheism has with ethics.
You know, I go with Nietzsche's.
You give a man a why, and he can bear almost any How?
Give a man a moral mission, give a man a sense of his place in the moral journey of mankind, and you can overcome almost every obstacle, save death, and even that you can meet, as Socrates did, with some grace.
But I think until atheists are able to solve the problem of ethics, I've taken my own swing at it for what it's worth, I think that they're still going to be shy of the theological moral courage.
That's my sort of basic Basic pitch.
I don't think it's impossible, but I do think it's something that atheists really need to focus their attention on.
Well, that's good.
And don't sell yourself short.
I mean, you now have the Molyneux Institute named in your honor.
That's right.
You're a humble guy, and I appreciate that.
And you know, if Libertarian Lutheran comes out with a porn film, Rod Long has got the perfect name for the starring role.
I just wanted to mention that up front to return the favor in praise of the name.
I actually think, you know, because he's a professor at Auburn University, and I think the standard convention of how they generate the professor's email addresses, it would have been longrod at auburn.edu, but they made an exception from the rule in that case because they didn't want that to be, and I don't remember what they called it.
Okay, hang on, buddy.
We're almost done.
So, yeah, you're exactly, I like what you're saying, and I think that's true.
Let me put it this way.
And maybe someone will argue, okay, well, Bob, you knew that subconsciously, so that's why now you embrace Christianity, because you knew you needed that as a crutch.
Morals are not a crutch.
Morals are essential, I think.
Let me just put it this way.
Looking at the prospects for what the governments around the world have been doing and all the surveillance and how they're able to fool the masses and everything, and how even people that I think, come on, you know that this is wrong and you're not saying anything, I kind of think if it were just pragmatism and people weighing costs and benefits and saying,
well, you know, a libertarian perspective, like, I would be personally wealthier if we had this and so I'm going to try to advocate for that because it's just a pure thing of my limited time on earth and I want to have a higher standard of living.
Even though we could know it would make sense if the whole world embraced freedom, I'm not sure it works for any individual right now to stick his neck out.
No, it doesn't.
The argument from effect always leads to compromise, in my perspective.
You have to have a principle.
That, you know, as again, what Socrates says, you know, the righteous man does not care even if a decision or a stand leads to his life or his death.
He only cares if it is the right thing to do.
You have to have a principle.
In the short run, calculating consequences will always lead to compromise, because compromise will certainly serve your biological needs.
I mean, you'll get to reproduce and all that, and the people who stood up usually didn't.
And you have to have a principle that is larger than you, that is universal, that is worth sacrificing immediate comfort for, And I think atheists have not found that.
I think they found that in some aspects of criticisms of religion, but criticizing religion, even if it turns out to be valid, is not the creation of an ethic that will cause people to fire up their moral courage to stand up and speak truth to power and do the right thing despite the negative repercussions.
Sorry, I didn't mean to take over your speech, but I think that the secular habit of calculating consequences leads to inevitable compromises and the disaster of all.
Right.
And so, like, if somebody were asking me, like, if it were just up to us, I would say, I think in the long run, we would lose.
And the bankers or whoever, you know, whatever group you want to say is the shadowy people running the show would take over.
And yet, you know, so for me, it's like, well, Thank goodness that there is this higher power and this is some big story that's unfolding.
In the end, it's all going to work out because of literally divine intervention.
I think that's partly a reflection of my personality.
I think you're more optimistic than I am, whereas I'm actually kind of cynical, and so my faith is the kind of thing that keeps me from just completely falling into a pit of despair and cynicism.
Right.
Well, I'll try not to open that trap door at the moment because we are doing a video.
I don't want your head to slowly descend at the end.
Listen, I want to make sure that people get to...
You've got a new book that you're working on.
You've got a consulting website.
I want to make sure that people get access to your great work.
And I also really wanted to recommend to anyone who's listening to this...
Bob is a truly fantastic speaker, and I mean, just by the by, we mentioned this privately, but he was hosting the roast of Chris Lawless at Porkfest.
Just a completely stellar job.
I mean, it was just hilarious, and it was a tough act to follow, and so you're entertaining.
Of course, you've done a musical number recently, which I won't ask you to reproduce right here, but, you know, get Bob out to speak at your event.
He's just fantastic.
I wanted to mention that.
And also if you can give your web statistics to make sure people can get a hold of you if they need.
Well, thanks for the kind words.
And of course, I appreciate what you're doing.
And I've talked with so many people that are saying that you brought them into libertarianism and so forth.
So that's keep up the good work.
My website is consultingbyrpm.com or if you just Google Bob Murphy, free advice is like the nickname of the thing and you'd find it that way.
All right.
Well, thanks, Milbaba.
It was a real pleasure.
I hope we get to do it again and have yourself a great day.
Get back to your parenting.
That's the important stuff.
Thanks, Stefan.
Talk to you later.
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