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Oct. 9, 2012 - Freedomain Radio - Stefan Molyneux
32:57
2235 Freedomain Radio Behind-The-Scenes - Preparing to Host the Peter Schiff Radio Show

A preparatory speech for a radio host gig -

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Time Text
Hi, everybody.
It's Stefan.
Hope you're doing well.
This is a prep speech for hosting the Peter Schiff Show early June 2012.
Well, hi, everybody.
So I'd like to talk...
This is going to be the history show.
No, don't touch that dial.
History is often seen as a dull recitation of duller facts.
When was the War of 1812?
But it doesn't have to be that way.
History is an incredible instruction manual for battling those in power.
Because the disasters generated by those in power are so evident.
Not just the disasters, but even the length of the disasters.
How long will a fiat currency last?
Well, you can look in history to find any one of the thousands of fiat currencies that have been tried before, and you'll find 30 to 40 years.
And if you count the true US fiat currency as not just dating from 1913 with the creation of the Fed, or in the 1930s with the confiscation of the gold, but really from 1971 when the gold window was completely closed, well, we're at about 40 years.
This has all been done before.
It's all been done before.
And I'm going to talk a little bit about some of the lessons of history.
When I was doing my Master's in History at the University of Toronto, I came across a very fascinating example of the welfare state from 1795.
Oh, this is going to be gripping stuff.
It really is important.
It's really important to figure out what has been done before.
It's also really important to figure out Whether the people who are advocating the current system know anything about the previous experiments.
This is very, very important.
So, if someone says, well, I'm a fan of the welfare state, or history is a great way to combat those in power.
So, you know, my fantasy debate in the 1960s when the great society, the debt society really got going, would be, it would have been great to ask people, it would have been great to ask people who were advocating this, LBJ and all the other craptastic politicians from hell, it would have been great to ask them and say, well, what historical precedents do you have for this system working?
It's a great, great question to ask people who are really involved in and big fans of state programs.
What historical examples do you have of this system working in the past?
Now, if they give you that 20-yard stare, then they know it's just a power grab under the guise of ideology.
Oh, you care about the poor!
Well, great, I'll set up a program that will steal from you, Which will get your support based upon your caring for the poor, right?
See, most politicians don't care about the poor, frankly.
I mean, if they did, they would change their programs when their programs ended up harming the poor.
They're not interested in harming the poor.
They're interested in finding out what you care about.
You know, like a torturer really wants to find your soft spot.
Hey, if I do this, it really hurts you?
Good to know!
And politicians want to find out what you care about so they can use what you care about to gain power over you.
Oh, you frightened of terrorists?
Great!
We'll use that to get power over you.
Oh, you care about the poor?
Oh, the old?
You care about the old?
Well, let's use that to gain power over you.
They don't actually care about the old, the poor, or terrorism.
They care about power over you.
And they will use your susceptibilities to gain power over you.
And the only time that they will end their destructive programs is when the destruction of their programs, the generalized economic depression, malaise, catastrophes, hyperinflations, actually threaten them as the ruling class.
Then they will back away.
But usually, almost always, not until then, and sometimes they just don't back away in time.
And the whole crap fest goes down the tubes.
As is the case in which we'll talk with the great Lawrence Reed, head of the Foundation for Economic Education later.
You see, most people in society claim that what they're doing is virtuous, claim that what they're doing is moral, claim that they are just in hot pursuit of the goodiest of the goody-two-shoes that you can imagine.
And that's what they say.
But good philosophy, which really should just be called philosophy, because bad philosophy is not philosophy.
It is quite the opposite, it's sophistry.
Good philosophy says, I don't really care what you say.
I don't really care what you say.
I only care what the evidence is.
I only care what the empirical evidence shows.
I mean, can you imagine if we had politics and science?
If we had politics and science...
Then the tallest scientist's theory would generally win, because generally it's the tallest guy who gets elected to office.
The scientist with the greatest hair would get his way.
And there would be no peer review at all.
But the guy who was the most eloquent and most passionate and most persuasive would gain the accolades of all the other scientists in the known universe.
And would be praised forever.
And nobody would ever test anything.
There would be no labs, there would be no measurements.
They'd say, whoa, Einstein, man, that's some crazy hair.
That's some crazy hair, man.
So, that theory of relativity has got to be right.
General, yeah, we'll give you the special one, too, because I'm telling you, that really is some crazy hair.
And Nietzsche would be famous not, because of the quality of his thinking, but because of the size of his mustache, which truly was rather spectacular.
Really looked like he had some sort of ditch rat.
Two of them, in fact, stapled under his nose.
Maybe he did.
It was Germany, after all.
Who knows?
Where was I? Oh, if I had a dollar for every time that happened.
I probably do.
But the empiricism is what counts.
Thanks.
And sophists and liars and politicians, but again, I repeat myself, they hate evidence.
And because they hate evidence, they don't look into precedents.
Because precedents, of course, are hugely important when you are trying to solve something.
When I was in business, read the Harvard Business Review.
Why?
Because they have case studies.
Famous for their case studies.
So you can see if something has been tried before.
And if something has been tried before and failed, then you better try something different.
You better try and figure out why it failed.
And you should figure out what happened.
And how you can avoid the specific conditions that caused it to fail before.
Well, So when somebody says, I'd love to put a welfare state in, they say, okay, well, what historical precedents are there for the success or failures of welfare states in the past?
And it's sort of like the twin studies.
It'd be great if there was a country where some of it tried a welfare state and some of it didn't.
You can sort of see the effects.
Well, in history there is such a laboratory, such a twin studies.
And it's called Spenumland.
Now, Spenumland was a scheme cooked up in 1795 in a bar.
Because, you know, you have to be drunk for this stuff to make any sense.
But it was a scheme that was cooked up to address a legitimate problem.
A legitimate problem in England was you had a series of bad harvests, and also you had the British involvement in the Napoleonic Wars, which cut off food imports from...
France and from the continent.
Food imports was really, really essential.
Really essential.
I won't go into the whole history of it.
Fascinating though it is.
Maybe we'll save that for another time depending on how interesting people find this stuff.
But food imports, the mobility of food was essential to ending the general curse of European starvation, where five to ten percent of the population in some given years would just starve to death.
Even though there may have been food 20 miles away, an excess of food.
It might have been just, you know, these particular people, crops got attacked by jackdaws, or I don't know, some ancient pharaoh's curse was put on there.
They had no food, but 20 miles away, there'd be lots of food that they'd be running In excess, but without free trade, there was no way to transfer this.
So there was this thing called the enclosure movement.
Oh, how far back should I go?
I'll dip into that one.
Okay.
So the enclosure movement was originally you had these serfs who had this land, and it was, of course, hereditary.
And for a long time, the population was just reproducing itself.
It wasn't too bad in terms of the subdivision, right?
So, if you had two sons, you'd divide your plot in half and so on.
But then when the population began to do better and better, and you got more and more kids surviving as a result of the beginnings of a free market.
No one talks about the Industrial Revolution.
The Industrial Revolution was an after-effect of the Agricultural Revolution, which came about because of a freer trade in crops.
Free trade in crops is what underlines or underlies the The potential for a city.
You have to have agricultural efficiency in order to have cities, because cities don't produce their own food.
So you've got to have an excess of food to even think of having a city, and you've got to have an excess of food to even think about having industrialization.
And everyone thinks that the Industrial Revolution, the Agricultural Revolution, was what came first, what came before that.
It started in the 13th, 12th, 13th century, when they finally figured out, hey...
If we don't put the bridle around the horse's neck, they can pull a whole lot more, put it around its shoulders.
I mean, again, these things, they're little, but they add up to the difference of millions of lives saved or starved.
So in the closure movement, when people began to have more and more kids, they began to subdivide all these lots more and more, and they got to be really crazy.
It was like trying to plow a field of spaghetti when you had to keep to each strand.
I mean, it got really subdivided.
And so what happened was, The enclosure movement began to sort of buy people out and began to just sort of enclose all of this stuff, which means that a lot of the historical rites of the peasantry are gleaning, which is, you know, picking up the excess crops left over from the lord's fields when he hired them to...
To harvest his fields and access to the common lands.
The common lands were enclosed and privatized, really.
So the land was rendered more efficient.
Now, this made things pretty difficult.
So there was more food, which was great, but people lost or had bought out or had stolen.
Well, it was all stolen, of course.
What are the landlords paying the peasants with?
Well, they're paying The peasants with the rent that they're charging the peasants for the land that's been in the peasants' possession for generations.
It's all nonsense and falsehoods.
But what happened was they had less and less land.
And so this created a big pool of laborers available for industrialization.
But it meant that the price of bread became really important.
It doesn't matter so much the price of bread if you're growing your own food, but it really matters if you're like a landless laborer.
And what happened was, because of the couple of bad harvests and the enclosure movement and the involvement in the European wars, people began to get really hungry.
The price of bread went up and up.
And so, the Spenum land resolution was passed by a number of the North counties.
And in it, they basically guaranteed a minimum living wage.
It was really based on the price of bread.
So, you would get a top-up in your salary if you met a couple of conditions, right?
So, if you had kids, if you had a family, like a wife, and if you didn't have land, if you didn't have land, if you had land, you were exempt from this.
That you would be topped up based upon the price of bread.
So the price of bread went up, then you would get more top up.
And remember, this really generally applied to landless peasants, to migrant workers, itinerant workers, and to a small degree, to a much smaller degree, to the industrialized workers.
There were some factories in the north, of course, that were starting up.
And so this was, again, in a pub, people who were drunk and they said, let's solve the problem of people not having enough to eat by giving them more money relative to their need and relative to the price of bread.
I mean, this is a communist principle, from each according to their ability to each according to their need.
So, what happened?
What happened?
Well, my friends, what happened was, first and foremost, wages collapsed.
Right?
Ah, of course.
Of course.
I mean, just think about it.
You've got an employee who's just won the lottery.
And then they come in and they say, I want a raise.
Right?
I mean, wouldn't part if you just laugh at them?
I mean, it's an extreme example, but it's like, what do you mean?
You just won the lottery, you got a million dollars tax-free in your bank account, and you want a raise?
No.
Now, what happened was, because there was a supplementation of wages, the wages declined.
People said, oh, well, if I pay you less, then you're still going to be fine for food.
So I can pay you less.
And there was a race to the bottom, because the worker who said, no, this is supposed to top me up, this is supposed to be a mountain, not a valley, topped up.
And they would say no to the lower wages, but the guy next to them would say, okay.
And in this way, the wages of the capitalists offered were being driven down.
Now, was it because the capitalists were mean bad guys?
No, because there was a race to the bottom for them as well.
So if you didn't pay people lower wages, which you could because their income was being supplemented, then you faced a competitive disadvantage in the price of whatever it is these people were producing, whether it was food or goods or houses or whatever.
And this is something that has more recently been understood in economics, the degree to which systems adapt to change circumstances.
People think, oh, this guy's making $10,000 a year, so if you give him $5,000 a year more, he's going to have $15,000 a year, as if there's no adaptation within the system as a whole, within the economic system as a whole, to a 50% increase in income.
So wages plummeted.
What else happened?
Well, small landholders were not allowed to gain these subsidies.
So what did that mean?
Well, it meant that they were at a significant disadvantage And they also had to pay because the rates were charged on landowners for the most part.
So they had to pay and they weren't eligible for the benefits.
And this was not good.
And the way that the rates worked, it favored the large landholders, because per capita, they paid much less in rates.
So if you were a family farm of six people, you paid a lot more, even with smaller land per capita, like per head, you paid a lot more for the poor rates, for basically the tax to subsidize or to pay for the Spenum land project.
You paid a lot more.
And this puts you at a significant disadvantage.
So what happened?
Well, a lot of small landowners sold their land and went out as workers where they could now collect this subsidy because they simply couldn't make it otherwise.
And of course, you see what happens is, and this went on from 1795 to 1834.
And what happened, of course, was that everyone said, oh, look, capitalism is destroying the workers.
But it's not capitalism.
It's not the free market.
This is a coercive redistribution.
And it doesn't matter what the intentions were.
It doesn't matter what the intentions were.
It matters whether people had looked into the past to figure out what had gone before and what had gone wrong with what had gone before.
And if they didn't do that, then their intentions don't matter.
I mean, if I am not a surgeon, but I grab a butter knife and attempt to perform an appendectomy on a guy who seems to be holding his stomach in an unusual way, and I say, well, I was trying to save him from his appendicitis, people would say, well, are you competent to diagnose?
Are you competent to do this surgery?
Do you have experience?
Are you trained?
Do you know?
We'll say, no, I just saw a TV show about it once.
Well, then I would be charged with assault, of course.
And people who attempt social engineering who've not studied history make all the same mistakes.
Of course, they don't teach you this stuff.
I mean, why would you not have heard about a failed welfare state?
What an incredibly important lesson to learn.
Well, of course you've not heard about Spenumland, right?
Because to know about Spenumland would be to have an intelligent historical precedent for what is going on today.
And there's another one which we'll talk about, the Roman Empire.
We'll talk about that.
What else happened?
Well, you got more money the more kids you had.
Oh, I wonder if we've seen that before or since.
Well, so you got a significant amount of kids.
And that was a big problem.
Also with the people who were selling their small holdings and going onto the free market, this also depressed wages.
Because the domestic small-time farmer couldn't compete, so he sold his land, went into the market, this further drove down wages.
Over time, as these kids grew up, and remember, it didn't take a long time for kids to grow up for them to be economically significant because of child labor, this also drove down wages, which raised tariffs.
See, it got to the point where it could no longer even remotely be called selfish or exploitive on the part of the hirer to charge less for the laborer, because the person who was hiring had to pay these enormously increased taxes, and the only way that he could get that back was by cutting back on the wages and letting the taxes subsidize the income, or at least the food, of his workers.
So, tax rates went up enormously.
Wages went down significantly.
To the point where, and again, this is something we've seen, we've seen, we've seen over and over again.
It's happening right now.
So, wages went down significantly to the point where it really didn't help you that much to work anymore.
Do you follow?
So your wages have gone down because there's this huge supplement that's coming in.
Significant supplement.
I shouldn't say huge.
Significant supplement that's coming in.
To the point where you say, holy crap, I've got all these kids, and if I go to work, my take-home pay increases very little compared to when I stay home.
And so people gave up on the habit of work.
They had so many kids, they had to stay home.
They gave up on the habit of working, and pauperism became endemic.
What else happened?
Well, two other factors occurred that I think are significant.
The first was that you had to be in what was called a parish.
You had to be in a particular geographical location.
You had to be a resident of that location in order to receive the benefits.
Because the local taxpayers didn't want to pay taxes for people who were just, you know, dipping in to do some work, pick up some benefits.
So they wanted to drive, when the rates got high enough, they wanted to drive and turn people out of their homes.
Because it was a crushing liability.
Because, remember, only some of England did this.
Other parts of England didn't do this.
This is the laboratory experiment.
And so the landowners, the aristocrats, the capitalists, for want of a better word, the mill owners, the factory owners, the large farm owners, they wanted to drive the poor off their lands because the poor were rendering them uncompetitive in the marketplace.
And rendering them uncompetitive sounds pretty abstract.
But rendering them uncompetitive is like going to a bar to pick up women with a goiter on your neck, you know, or some massive giant second-head pimple coming out of your forehead.
That is rendering you uncompetitive, and that's a pretty significant problem.
You know, you don't speak English when applying for a job in America.
That renders you uncompetitive.
Well, that's a pretty significant problem.
So you see there was scenes in "Liaisons d'Acheruse", "Dangerous Liaisons", where they're turning out the poor.
They're removing the poor.
Well, this was because of Spenumland, because of the welfare state.
This wasn't because...
I mean, frankly, capitalists love poor people because they can get them to work for less money than rich people.
Why would they want to turn out potential workers from their lands that they could get on the cheap?
Well, this happened because of this welfare state.
So landowners would actually demolish houses and turn people out.
You know, once their contracts were up, when it came time to renew their lease or renew their rents or whatever, they'd say no.
And other people wouldn't take them in.
It was desperately horrible for the poor.
Unbelievably horrible for the poor.
They had all these kids, they'd lost the habit of work, and now they were being turfed out, and where did they go?
Other people didn't want them to come settle there because they became a liability to other taxpayers.
Rather than welcoming, you know, a big influx of workers on the cheap is great for a region economically.
You know, they bid up the wages, everybody starts to do better, it's great.
But when you become an enforced liability, then people don't want you.
And this turned enormous numbers of people homeless with lots of children.
I mean, unbelievably terrible and horrible results.
Labor mobility was crushed.
Labor mobility is very, very important.
Look at all the people leaving Detroit because there's no work.
What if they weren't allowed to leave Detroit?
What kind of lives would they have?
Well, Labor mobility was crushed, because each little parish, you had to stay there to get your subsidy, and if you moved, you didn't get your subsidy, and if you moved to some other place where there was a subsidy, you wouldn't get it.
They wouldn't give it to you, they wouldn't let you settle there.
So you had these incredibly draconian games of cat and mouse, which you can see, of course, in the case of the black market, the grey market, the...
The illegal immigrant market and so on.
Fruit pickers and so on.
It's this game of cat and mouse.
Increasingly, Ducronian measures had to be put in place to deal with the problem of people coming in to settle to attempt to get welfare.
People say, we don't want people to come here.
Well, why not?
Keep them over there.
Because everyone's afraid that these people are going to come in, breed, consume resources, and wreck you tax-wise.
Well, it's all been done before.
It's all been done before.
Now, the long shot of this, the upshot of this, was that wages in the areas that weren't under Spenum land rose considerably.
In the sort of 40 years that it was running, wages rose considerably in the areas that weren't covered by this horrendous welfare state aggression.
Violence, expansion of state power, social engineering, call it what you will.
And that was terrible.
And this, of course, happened for a long time.
It didn't immediately stop the moment the legislation was repealed.
It didn't stop right away.
And, of course, this changes the culture.
This has massive permanent...
Think of the war in Iraq and Afghanistan.
What effects has that had?
Or will that have on American society and culture over the long run?
Massive effects.
It lasts for generations, these decisions.
And so wages were depressed.
Work ethics were destroyed.
People were...
They had a different relationship with the state than they had before.
They had a different relationship with the state than they had before.
And these kinds of effects is what happens when you put these kinds of systems into place.
Thank you.
Thank you.
It's sort of a microcosm of the story in Atlas Shrugged, the John Galt story, or the story of the John Galt factory.
And, of course, Ayn Rand could write about this so persuasively because she had lived through it.
Her own father's business was stripped from him, and they were forced to live communally, and, I mean, she'd seen all of this stuff before.
She was like a time traveler from the future of America saying, beware.
And, you know, of course, how many people are listening?
A few.
And some even in power.
Paul Ryan apparently quite motivated by objectivism, but, I mean, the system is the system, and the motives are the motives.
So it's about 40 years that this stuff can last, which, of course, in those days was enough for two generations or more.
Now it's not quite enough.
It's about a generation and a half now, because people are having kids much later.
But that's about as long as it lasts.
So, the Spinamland experiment was also put into place.
This is also very important.
There's a number of benefits that the ruling classes get from the welfare state.
I mean, there's obvious ones, right?
Which is that they get to bribe people with their own money and their own opportunities and the blood, sweat and tears of their children, largely unborn.
So they get a constituency of dependents.
Which, you know, these people are going to vote, and they're going to vote in people who want to give them more and more money.
Thank you.
Of course, right?
And that's pretty bad.
Thank you.
But also, high food prices lead to riots, lead to the sheep throwing themselves against the barbed wire enclosures.
That's not good either.
That's not good either.
And to minimize the potential for these kinds of revolutions is very important for those in power.
So it's really important to understand the degree to which those in power Gain from these short-term benefits.
Now, of course, in the long run, they end up being hit with higher taxes.
They end up being hit with capital flight.
So, you know, in Spenum land, if somebody's looking to set up a factory, where are they going to go?
Are they going to go to the place where there are all of these high taxes and unmotivated workforce and lack of labor mobility and all of that?
No.
And so in the long run, once the effects trickle upwards, once the effects of these kinds of disasters begin to be felt by the ruling classes, the decimation of the tax base fundamentally, the decimation of the productive livestock that they feed on, Well, then there's a change.
And the change is brutal.
But don't think for a moment that once the welfare state begins to threaten the interests of those in power that they won't simply snap their fingers and toast it.
They will.
I mean, that's happened many times before.
I mean, anybody who studied Rome, which we'll get to next, knows that what happens when the ruling class does not change course It's very disastrous.
It's the end, actually, of the civilization.
A massive depopulation of cities.
All of the great catastrophes that we've seen in various dystopian stories throughout the years.
The empty cities.
The line from Fight Club about skinning elk in the canyons underneath Manhattan's skyscrapers and so on.
I mean, this all happens with chilling regularity.
Now, the difference, of course...
I mean, a couple of differences in Rome versus now, which are, you know, significant, to say the least.
A couple of differences.
One of the differences, of course, is that in Rome, there were no weapons of mass destruction.
There was no very advanced weaponry that could be used to control the masses.
You know, a slave grabs a sword, he's not at a wild disadvantage from a centurion.
And so the dependent classes really could not be Kept down in the same way that they're kept down now.
Couldn't be done.
Now, of course, the state has much, much more power and can do all of these terrible things to control and maintain control over surveillance and mass weaponry and highly trained elite guards and so on.
So, the state can do a lot to sort of invade and control But really, not much.
Much more than it could in the past.
Alright, better stop.
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