July 22, 2017 - Freedomain Radio - Stefan Molyneux
10:18
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| Hey everybody, it's Stefan Molyneux. | |
| Hope you're doing well. Are you ready for your daily argument? | |
| Well, it's coming at you like a freight train, whether you like it or not, so get ready quick. | |
| So we're going to talk about economics this morning. | |
| Wait, wait! Stay awake. | |
| This is important and relevant stuff. | |
| So... There's really no intellectual discipline within the species that contains more sophistry, misdirection, lies, and verbal contractual profiteering than the field of economics, for the simple reason that if you can get people to believe lies about economics, you can, through the mechanism of state power, profit enormously. | |
| Like if you can convince people that it's really bad to have foreign widgets imported to your country because it's unfair trade, well then you can jack up the price of domestic widgets without having to worry about, you know, say, other widgets coming in and undercutting you. | |
| So, when it comes to economics, there's huge incentives for massive amounts of lies. | |
| Funnily enough, the first people to be bought and sold in economics tend to be economists. | |
| You can find an economist to argue just about every side of everything. | |
| But the reason why we need a discipline called economics, particularly when the state has so much control over the economy, is for the simple reason. | |
| That we kind of see what's immediate and we don't see what is hidden. | |
| That is the really, really important thing when it comes to economics. | |
| So a lot of economists or a lot of people who talk about economics will look at a tangible immediate benefit to a particular group, but they won't see the hidden costs to other groups. | |
| So think of the government saying we're going to spend $5 million to create 50 jobs. | |
| It's actually pretty efficient when it comes to the government. | |
| It's $5 million to create 50 jobs. | |
| So what happens is the people who get those jobs and the visibility of those jobs, you know, maybe those people are paving a dirt road or something like that. | |
| And so you drive by and you say, wow, my tax dollars at work. | |
| Look at that. They're paving a dirt road. | |
| Maybe the dirt road doesn't lead anywhere. | |
| Maybe it leads to Alaska. We don't know. | |
| But The point is that you see the visible benefits of that, and the people who get the 50 jobs are really keen on it, and the people who get their roads paved are really keen on it, and so that is a big incentive to get it done. | |
| But that's not economics. | |
| That's just obvious, right? | |
| What's not obvious, of course, is the hidden costs. | |
| That the $5 million has to be taken out of people's wallets or out of people's bank accounts or, you know, out of people's tax payments. | |
| Or you have to raise the money through debt or you have to sell bonds, which defers the cost. | |
| But basically the money has to be taken out of the economy at some point in order to pay for that $5 million. | |
| So what happens is... | |
| You have five million dollars less of economic activity elsewhere in the economy, but no one knows that they've lost anything. | |
| The people who get the jobs are very obvious and very keen on the gain. | |
| The people who've lost don't even know that they've lost. | |
| So let's say, to tax the local citizenry, the $5 million to create the 50 jobs, it most likely is going to cost, let's just say, we'll make it even, 50 jobs, right? | |
| It's probably going to be more. Make it as fair as possible. | |
| So the 50 people who get the jobs because the government spend the $5 million, they're very happy. | |
| But the 50 people who otherwise would have got a job if the government hadn't taxed that money away, they don't even know. | |
| What they've lost because the job ad never appeared on the internet or in a newspaper. | |
| So the people who gain, it's a very obvious, tangible, immediate gain. | |
| The people who lose often don't even know what they've lost and very rarely will ever know what they've lost. | |
| So they're not a constituent to argue against the spending, right? | |
| So you have people with very, very tangible benefits and people who don't even know what they've lost. | |
| This is very unfair in the realm of political advocacy. | |
| I'm going to go march for the job that I conceivably could have had but have no proof of because the government taxed 5 million bucks to create these 50 jobs. | |
| It doesn't happen that way. | |
| So it's up to the economist to point out the hidden costs rather than the visible benefits. | |
| And the politicians, they're all cutting ribbons on the visible benefits, but it's up to the economist and the intelligent thinker to talk about The hidden cost. | |
| It's like that broken window fallacy, you know. | |
| Someone throws a rock through a window and you're like, woohoo! | |
| Economic activity, you know. | |
| But, you know, if you key the car of an income professor, usually they don't thank you for making them wealthier. | |
| Not that I'm suggesting you should. | |
| So, a window gets broken. | |
| And what happens? | |
| Well, the window maker gets paid a hundred bucks or a thousand bucks or whatever to fix the window. | |
| And people say, wow, that's good. | |
| Now he's richer. | |
| But The $1,000 that was spent to fix the window is not spent on something else. | |
| It's not spent on mowing the lawn or buying a lawnmower. | |
| It's not spent on getting a haircut or a whole series of haircuts. | |
| It's not spent on a small vacation. | |
| It's not spent upgrading a factory. | |
| It's not spent... So you have this net economic loss because you've consumed $1,000 worth of resources to restore the window to where it was before it was broken. | |
| So you're out $1,000. | |
| You understand that? Otherwise, you know, we just keep people hammers and say, break everything in sight, and magically we'll all end up wealthy. | |
| So, sure, the guy who repairs the window is like, I'm richer, I'm better off, right? | |
| And so he's not that he's usually in favor of people smashing windows, but he economically benefits from the window being broken. | |
| However, all the people who otherwise would have received that thousand dollars, they're spread out, they don't know... | |
| The sort of path not taken, the other timeline where they would have made all that money. | |
| And so there is no incentive that way to oppose these kinds of things. | |
| It's the visible benefits rather than the hidden costs that make everyone confused about economics. | |
| It's like the old war argument. War is good for the economy because you have to replace things that are broken and you have to create shells that are destroyed. | |
| No. War is good for the warmongers. | |
| War is good for politicians to create unity and conformity and obedience in the masses. | |
| War is good for the warfare complex, the military-industrial complex. | |
| Sure, they're richer. | |
| Go and spend trillions of dollars invading countries in the Middle East and Afghanistan. | |
| Sure, those guys are richer. | |
| But what about everyone else who otherwise would have jobs, who otherwise would have opportunities, who otherwise would have raises? | |
| They don't even know what they've lost. | |
| Everyone who gets the trillions of dollars knows what they've gained, but all the other people don't know what they've lost. | |
| So they can't lobby against it. | |
| It's the difference between concentrated benefits and hidden costs. | |
| So if you are a sugar manufacturer, then you have a very big incentive to half the government ban sugar imports. | |
| You'll make millions and millions of dollars so you can spend 10% of that hundreds of thousands of dollars to lobby your congressman to ban sugar imports so that you can jack up the price of sugar or at least maintain a high price of sugar. | |
| Now the consumer, the individual consumer, is going to pay an extra buck or two a month on sugar. | |
| So what is their incentive to get together, to rally, to oppose the imposition of import restrictions on sugar? | |
| A couple of bucks a month, it's not even worth making a phone call or two for a lot of people. | |
| So that's the problem. | |
| Concentrated benefits through state power, diffused costs, means that the incentive is always very great for the lobbyists to achieve their goals. | |
| But the incentive is almost nothing. | |
| It's almost non-existent for the general population to oppose whatever the specific lobbyist wants. | |
| And this is the reality. This is why the state control of the economy is so disastrous. | |
| This is why the state needs to be separated from the economy in the same way that the church And the state needed to be separated. | |
| So let's look at the case of immigration. | |
| So this is very interesting. When third world immigrants, let's say low-skilled immigrants, pour into America, as they have by the hundreds of thousands of years, what happens is they drive down wages if they get jobs. | |
| And that means that low-skilled Americans In other words, Americans who've gone through the crappy government education system. | |
| Low-skilled Americans are screwed because you get this constant wave of people coming in to compete with them for jobs, driving down wages, or at least not allowing wages to rise as they should. | |
| Desperately terrible for low-skilled Americans, which are a very vulnerable group in society. | |
| So, the other thing that could happen with immigrants, low-skilled immigrants who come in, is they go on welfare. | |
| Now, if they go on welfare, of course, taxes go up for everyone, debt goes up for everyone, and that's pretty tragic as well. | |
| But even more importantly, for big business and their allies on both the left and the right among the Democrats and the Republicans, big business love immigration because it either drives down the wages of their workers or, through the welfare state, it stimulates demand for their own goods and services, right, for the goods and services the big businesses can provide. | |
| And it stimulates demand without anyone having to lay out a desk or a broom or a part of a factory for anyone to work in. | |
| So it creates massive demand for goods and services artificially stimulating the economy without the businesses actually having to provide a job for anyone. | |
| So, either driving down the wages of low-skilled workers or stimulating artificial demand for their products, it's fantastic for a big business, which is one of the reasons why it's so hard to secure the borders of a country. | |
| And, of course, the politicians, the low-skilled workers from the third world, will reliably and regularly vote for bigger government, vote for leftist policies, so the Democrats love that kind of stuff. | |
| So, this is all very important stuff. | |
| Don't just look at the immediate benefits. | |
| Look at the hidden costs. | |
| Look at what's behind Look at who's being harmed, who doesn't have a voice, and shining the light of truth, reason, evidence, and compassion on those who don't have a voice, on those who've been shafted and don't even know how badly shafted they've been. | |
| I think that's a decent job for a moralist, so please go out and spread the word. | |
| Thank you so much for watching and listening. |
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