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July 13, 2019 - Freedomain Radio - Stefan Molyneux
29:39
The Philosophy of Economics with Stefan Molyneux
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The Welcome to this Gold Money Podcast on Monday, the 4th of February, 2013.
Today, I'm with Stephan Molyneux, philosopher and host of Free Domain Radio.
Hello, Stephan.
Hello, Andy.
How are you doing?
Tip-top.
Now, in a recent YouTube video, you said there will be no economic recovery in the West.
Where do you think we are at the moment, at the beginning of February, 2013, and what do you think is going to happen next and over the next couple of years?
Ah, the easy questions.
I like it when you love me a softball.
Well, where we are at the moment is a system that is desperately scrambling to escape the consequences of its own inefficiencies and immoralities.
So there has been, of course, over the past few hundred years, there was a strong movement in the West towards free markets.
And free markets really revolve around two things, as you know.
One is the non-aggression principle.
Don't initiate force against others, don't steal, don't cheat, and so on.
And the other, of course, is a respect for property rights.
And starting, you could really say in the post-war period, although in America it started earlier than that with the Great Depression, There was kind of an infection of socialism that came out of, of course, a lot of Marxism and the Fabian socialists at the turn of the 20th century, George Bernard Shaw and all those lovely people, wherein it was abandoned, this idea of free markets, of private property and free trade and so on.
And we began to move back to, frankly, a medieval mindset.
And this has resulted in a massive increase in the growth and size and power of the state, which is, of course, a pretty strong result of the two greatest wars in history in Europe in the 20th century, of course.
And what's happened is the government has stepped in to displace things like family stability, things like personal charity, and that's caused a huge shift in our society.
I mean, it's been kind of gradual, but it's so enormous that once you sort of see the before and after snapshot, it's pretty catastrophic.
And this has all cost huge amounts of money.
And this has really only been possible because the government has taken over the Money supply has taken over the creation of money and, as a result, has had to take over interest rates.
Because, of course, as we all know, when you print money, that's inflation.
And the inflation that you see in prices is only an effect of the inflation in the money supply.
And if the government prints a lot of money, then it pushes up inflation rates, which, of course, is the price of money over time.
And what happens then is it goes bankrupt, trying to pay interest on its own debts.
And so as soon as you control money and use it to buy off various sections of the population by printing money rather than raising taxes, then what you do is you have to control interest rates.
And these two fundamental things, the money supply and the interest rates, are absolutely essential in a way that it's so hard to... you can't overemphasize it enough.
It's so absolutely fundamental.
to the efficiency and operations of the free market.
If the government is jigging with the money supply, it's like randomly raising and lowering the temperature of a lake.
I mean, it's like every single organism and even the entire ecosystem around the lake is fundamentally affected.
And so the government's to pay for all of the obligations that it has bribed citizens with, which it pushes off in three major ways, right?
It pushes them off If you go to the government and say, give me $1,000, and it says, I will, I just need to raise your taxes $1,500 to do so, you'd say, hey, wait a minute, that's not a good deal.
But the government hides this predation through debt, of course it borrows, through printing money, and a sort of wide variety, crushing down interest rates and so on.
And also by giving people stuff in the future, right?
So say, well, I'm not going to give you $1,500 now, but don't worry, your great grandkids or your grandkids will have to pay for your lavish public sector pension or retirement benefits and so on.
And so it buys people, but doesn't charge them at the time.
This creates huge unfunded obligations.
It creates massive debt and it creates the requirement to constantly escalate The money coming into the system, which is this quantitative easing and these emergency loans we see descending on banks in Europe and so on.
So this is all reaching its climax.
I don't think it's too far away.
The youth unemployment in Europe, which is 50-60% in various places, the impending disaster of health care and monetary requirements of the aging and retiring baby boom generation, and I mean the demographics of lowering birth rates, all going to come together And the system shall need to be rejigged, I think, just a little bit.
And that's going to be the challenge.
It's going to go one of two ways.
Either we're going to let the chips fall where they may.
We're going to say, look, we had this massive experiment In prussian style education and socialization of industry of money of retirement of charity families and all that so we just gonna return all of this stuff to the free market gonna return all of this stuff to voluntary transactions and trade.
And that will be a short, sharp, but relatively painless transition.
This was done in Canada about 15 years ago.
Canada tackled its national debt, cut government spending, like in a real way, not just cut increases in the future, but actually cut it significantly and it was fine.
And this was done under Clinton in the 90s where they cut welfare significantly and people just got jobs.
It wasn't that bad.
So people will adjust if they're given the freedom to do so.
But that hurts a lot of rent-seeking special interest groups who really enjoy the big fiery moat of government power that allows them to gather cash from all and sundry.
So either there'll be a huge contraction in government power and a huge growth in the free market, which will be wonderful and will be, you know, six to 18 months will all be done.
Or we're going to go into some Japanese-style self-concrete poured entombment phase where the government keeps trying to jig everything and nothing gets better at all.
And that's why hopefully the difference is up to people like us who are trying to make the case for freedom rather than subsidization.
Okay, so you came up with two options.
We can either go to a free market and we can let the chips fall where they may, or we can go to a kind of Super Japan, three or four lost decades.
I'd like to give you a third option, and that might be actual kind of Paul Krugman-ism kind of conflict to get our way out, as in the Second World War.
So of those three options of a free market, a kind of Super Japan, or some kind of conflict in the world, what kind of chance do you think do we have of having the free market?
Oh, I don't know.
It's really, of course, you know, it's very hard to predict the future.
I think that free market thinking is definitely having an upswing.
And so, and of course, the Internet is responsible, I think, largely for that.
It's opened up direct lines of communication.
It's really, it's going to depend on people's commitment to promoting the free market.
And I mean, that sounds like, you know, it's sort of weird thing to have commitment to, but I mean, it literally is the difference between life and death for hundreds of millions of people.
And people should be very committed to helping the needy poor and people should be really committed to the free market.
I mean, if you think of the hundreds of millions of lives that have been saved, the 50,000 people a month climbing into the middle class from poverty, just in China or in India, It's a huge commitment to life, a huge commitment to potential, to opportunity, to happiness.
And so I think that we really need to be fully committed to that.
And that means really pushing it, really pushing it hard, not just on blogs, but in our personal relationships.
And if we have people in our lives who are opposed to the free market, we need to make the case pretty damn forcefully to them.
Because they are going to, if they get their way, they will be responsible for war, for predation, for poverty, for disease, for the collapse of opportunity and freedom and possibility for billions of people.
So it is kind of a grim battle.
I hope we can win people over to our side, but I'm certainly willing to make this a relationship test in my life.
You know, if people are All kinds are committed to coercion through government statism.
Well, I'll make the case for them, but if they stick to their guns, I'm afraid we are on opposite sides of the ping-pong table.
So I think if we're really committed at that level, I think we'll make some change, but I think if we're just blogging and talking about it, I don't think we'll win.
Okay.
Well, I won't push you on options two and three because you are more of a philosopher than anything else, but how should people prepare themselves for these oncoming situations, do you think?
Well, sorry, you had just to jump back, you did talk about the war possibility, which of course is... I mean, I think that's worth discussing, if you don't mind, because I think it's a pretty significant possibility.
When governments make commitments that they can't keep, they tend to kill off the recipients in one form or another.
And so the war option is definitely there, but with the exception of Israel, No nuclear power has ever really engaged in a conflict, you know.
Once the nuclear mushroom cloud might actually have incinerated the political leaders, magically they found, blessed are the ways of the peacemakers, and found ways to wage war other than in a direct sort of World War I and World War II conflict style.
So there have been a whole bunch of proxy wars, but people are, you know, running out of locations to have these proxy wars.
And I don't see that there's going to be war between countries in the West.
I think what is much more likely to happen is that the governments are going to end up warring against their own citizens.
Because you don't war against other governments, they've got nuclear weapons, so that's not fun.
But if you get to war against your own citizens, i.e.
you can't pay them, they have a revolt, you begin to repress them, I think that's much more likely.
Because, you know, the governments can take us on without risk, but they can't take take each other on without risk anymore so I don't think they will.
Okay especially in Europe of course where we're all completely disarmed.
So let's let's kind of skate along the conflict side of things.
How do you think people should prepare themselves for kind of like a Japan 2 kind of depression?
That's yeah that's that's a big question and I tend to focus my answers more on people who have less money because people who've got decent amounts of money can usually write out just about anything.
But for the people who are not doing so well or who are younger and haven't had the chance to accumulate resources, I say get skills that are portable, really invest in your human capital, like learn trades, learn things that are going to be of use to people that you can barter with, that you can use in not the black market, because that would be advocating something illegal, but in the barter market, which would be legal.
I think that's important.
Stock up on some food.
You know, you'd be surprised, well, probably people wouldn't be surprised to have read Lord of the Flies, how quickly the thin veneer of society gets ripped off when people get hungry.
It took a doubling of the food prices in Egypt to provoke a violent revolution.
And so, I think, you know, up your skills.
Have a community of people that you really trust.
You know, get to know people around you who are going to stick by you in times of crisis and to develop an economic network and a trading network That is valuable.
Look for alternate currencies that you can use, obviously gold and silver, bitcoins, other kinds of gold money, other kinds of currency substitutes that are going to be much more valuable in a time of inflation.
And so I think those are things that I think would be important.
I mean, there are other things you could do, like getting a second passport and so on, but those things might not be as easily available to at least most of my listeners, perhaps not yours though.
Yeah, quite expensive.
Now, I tend to divide the world into two kinds of Austrians.
The black Austrians, who run the central banks, who pretend to be Keynesians, and the white Austrians, like us, who actually would like to implement Austrian-style policies.
Do you think that the Keynesian central planners in these central banks actually believe in what they're doing?
And if you think they do, are they panicking at the moment, or pretending there's a recovery?
Or do they actually believe that there's a recovery going on?
You know, I hope you don't mind the forcefulness of my answer because I feel very strongly about this, but there's no person who has been studying any of this stuff for any amount of time who can possibly believe that either a continuation of existing policies or, God help us, an expansion of existing policies can possibly lead to anything good whatsoever.
So anybody who says, well, you know, you see, we need to maintain government spending or to increase government spending because the poor need the welfare state and this and that, This is a person who is mouthing incomprehensible, anti-empirical, anti-rational platitudes, and it is an extremely dangerous person.
The only people who care about the poor are those who are focused on expanding freedom, economic freedom.
That is the only thing that reliably helps the poor and gives them opportunity.
The welfare state has been catastrophic for the poor, it's destroyed families, it has trapped them in a permanent underclass, and it has deferred a staggering amount of truly Biblical poverty by creating massive debts.
Real wages have declined.
Job opportunities have declined.
Avenues to get out of poverty to the middle class, particularly through manufacturing, have declined.
And so anybody who is focusing on continuing these policies cannot be doing so out of any rational or objective examination of the history of the last couple of decades.
And so, no, I don't think that they believe anything.
I think that what happens is people want to take your stuff.
I mean, this is, you know, there are producers and there are parasites.
I'm with the objectivists on this one.
And the parasites want to take your stuff.
And taking your stuff by putting a gun to your ribs is kind of risky.
You might be a robot from the future who will take their head off.
You might know kung fu.
You might have a gun yourself.
So they don't want to do anything that brave, so to speak, and take something.
So what they want to do is bamboozle you with a bunch of bullcrap, basically, twist your head around with really foggy language, and get you to cough up resources of your own accord.
So they won't call it theft, but they'll call it taxation, right?
They won't call it selling off the unborn.
They'll call it a national debt.
And so These people will grab at whatever theory will get you to empty out your pockets.
And this is unfortunately the history of philosophy in the world, is the history of that, those ideas which are the most convincing in getting people to give up their property.
And Keynesianism was just, it won over the Austrian school.
Because it was much more useful to the people in power.
I mean, what use does Austrian economics and sound money have to your average democratic politician?
I mean, it would be catastrophic for them.
So, I don't think that they believe anything that they say.
I think they're just saying whatever it takes to get people to give them money without a fight.
Yeah, I think the economists are the same there, aren't they?
Because Austrian economics said, we don't need many economists.
So all the economists said, I'm a Keynesian now, in the 1930s.
Which kind of killed Austrians off in the 1930s.
I mean, how many economists work in something that really is close to the free market?
How many economists work, say, for software companies, which is pretty much the least regulated aspect of the economy?
No, they're all working for hedge funds and the hedge funds are all preying on the money that's forced into the stock market by the government.
I mean, who the hell wants to be in the stock market?
We're all forced to be there because otherwise the money gets stolen from us if we don't put it in retirement plans or What have you.
So how many of them work for the U.S.?
Half the economists work for the Fed.
Almost the rest of them work for Academia, which is a state-protected unionized cartel.
I mean, so how many economists would you actually need in a free system?
So they're all just saying whatever they can to keep their own rent-seeking jobs afloat.
So yeah, I mean, there's by and large an extremely corrupt class.
Now, one of the things they've been bamboozling us with is a global fiat money standard since 1971.
Now, how have they managed to fool rational people into accepting this, do you think?
Oh yeah, the idea that if we have one currency – well, I mean, good heavens!
Having one current is completely mad.
I mean, just have a look at the European Economic Union.
I mean, this has just been a complete catastrophe.
And I think the catastrophe has occurred even faster than some of the most pessimistic prognosticators anticipated.
So the idea is, of course, that if you give government more power, that you get more order.
I mean, this is the basic idea.
And this was the idea that was fought very hard throughout the 17th and 18th centuries.
They said, if you give the government more power, you end up with more chaos, because you have whim-based people with armies at their disposal attempting to promote their own personal agendas to grab power and war with each other and bribe people.
So you end up with chaos if you give the government more power.
Unfortunately, the government has done a great job of indoctrinating people.
I mean, it should do a great job.
It's got kids for 12 years, six hours a day, so it should be fairly easy to indoctrinate at that level, but it does a great job of indoctrinating people into thinking if there's a problem that appears chaotic, then you need government power To solve that problem.
That's what they argue.
Of course, the reality is that the chaos almost always results from government power, and more of it will increase chaos.
If there's a world currency, all unified currencies are a race to the bottom.
We see this in Europe.
So, in Europe, I mean, Greece, why does Greece want to join the EU?
Because it gets to hook into the lending rates that Germany has achieved by not being Greece.
Not being something, spending their way into a Mediterranean oblivion.
So of course Greece runs in and they'll lie and they'll cheat to get their way in because that way they get to borrow at a much lower interest rate.
And so whenever you join together groups in a coercive union, It is always at the bottom, and Germany, to its credit, has managed to resist some of that, but I think Ford has recently changed all of their computer systems to anticipate a reintroduction of the Greek drachma because they anticipate a break-up of the Euro.
It simply can't possibly continue.
It's like driving across the country and there's you and a coked-up drunk guy in the car next, like in the seat next to you, in the passenger seat, and you say, hey, you know, there's two of us in the car, we've got a long drive, I'm sober, you're coked up on Jack Daniels, so let's share, we'll just, you and I, we'll just split the driving, I mean, what do you think is gonna happen?
Boom!
I mean, this is the, it's the lowest common denominator in an ever downward spiral whenever you unify these things, and that would be much worse with the world currency, but they want another abstraction to hide behind, that's all.
Okay.
Now, in the 1920s, we saw the fall of the Weimar Republic in Germany, of course, and then we saw the rise of fascism in Europe and various other strongmen like Mussolini and so on.
Now, as Greece leaves the EU and everything else, how do you think we can avoid this pattern of strongmen arising again?
Well, that's tough.
You know, weak people need strong leaders, and the government is all about dissolving the spirit of the people in the acid of propaganda.
So it is going to be very tough.
And of course, another thing that's happened in Europe, of course, as the birth rates have declined, immigration has increased, and the immigration tends to come from non-Western cultures, you know, Muslim cultures and so on.
And, you know, those cultures may have some wonderful things to offer, but a history of Greek philosophy, Roman law, the Renaissance, the Enlightenment, and all that kind of stuff, they do not have.
And this is a big problem.
You know, one of the reasons Germany was so aggressive in the 20th century was it missed out on the Enlightenment, it missed out on skepticism, it missed out on the philosophical revolution of the post-Renaissance period because they had 150 years of violent, bloody religious conflict.
You have seeping into the European tradition some very anti-European, frankly, medieval cultures.
And so the xenophobia that's going to be felt by some people is pretty significant.
But they needed workers who had lower standards, and they needed people to replace the people who weren't breeding.
That's human beings, at least intelligent ones, don't breed very well in captivity.
And as the state gets more powerful, the incentive to have children goes down.
And so there is going to be, I think, a cultural conflict in the West.
The only way to avoid it is to continually hammer the principle of non-violence, at least not non-initiation of force, and respect for property rights.
All deviations from that must be won over, if possible, and attacked if they resist, because it really is a fight for the dawn or dark of the future.
Well, I'm hoping that the EU collapses peacefully and breaks up into Scotland and Catalonia and Wales and various other places.
What do you think the chances are of the United States breaking up peacefully into Texas, Alaska, Hawaii, etc.?
I don't think particularly high.
Because the federal government just has so much violence at its disposal.
And so, you know, maybe, I don't know, maybe Hawaii or something, but Hawaii is incredibly socialist, so I don't think that that would go particularly far.
I don't.
A breakup of Europe seems to me more likely because European integration was a very artificial, bureaucratic, top-down driven kind of thing and there's lots of people who really don't like it.
Unfortunately, the poorer countries have become very addicted to the easy lending policies they've received as a result of attaching themselves to more responsible countries.
Those countries would not want to.
What will Greece gain?
I guess they'd devalue their currency and try and screw people that way or something.
But I think in Europe, there's much more likely to be a breakup.
In America, I mean, what?
The last time they tried a breakup in America, they had a civil war.
And I think that would be a very good thing these days.
Okay, so if Europe does break apart peacefully, the euro hopefully will collapse and maybe we can get towards a kind of sound money system based upon privately produced monies.
Do you think that that's possible?
Do you think we can get rid of the central banks and get rid of their fiat money printing presses?
Oh boy, I hope so.
I really do.
It's one of these things that If you're interested, of course, as you know, Andy, in improving the human condition, that you really want to make sure that you focus on money first and foremost.
I mean, it's not very exciting.
It's not something that they're going to write a Les Miserables musical about and take on the whole bank.
But it is something that is so essential for human freedom.
Those who mess with money mess with lives.
Those who mess with money mess with freedom.
And those who control money control people, because we are all so dependent upon The huge efficiencies and divisions of labor that's only possible through a monetary system.
We are a money-based life form, and those who mess with money, I mean, you might as well be messing with our DNA.
And so I hope that we can.
It's a funny fight to try and bring to people.
People envision the moral fights of mankind as You know, pouring out of trenches, machine guns blazing, and so on.
This is a much more fundamental and a very different kind of fight.
I think in the long run, in the long run, and unfortunately it does sometimes be a depressingly long run, the future does win out.
We do have this incredible medium of the internet, which is like the Gutenberg press of the modern age.
And the Gutenberg press led to the breakup of Christendom and led to the founding of the Renaissance, the Enlightenment, and all that kind of good stuff.
So once you get better and raw information into the hands of people, then they really can do some incredible things with it.
But I think people need to see our moral courage at full flag.
You know, they need to see that we take this fight very seriously, that it is the most essential fight of mankind.
I mean, and for the religious among us, this is what the only time Jesus got really pissed off was when he took a whip to the money changers at the temple.
And that is not a bad Motive to be working from.
Money is life.
Cash is life.
Cash is freedom.
And we do need to really pour all of our moral energies into this fight.
Yes, we will prevail.
I hope that we will prevail sooner rather than later.
But in some ways, of course, that's up to us.
Most people who don't know what the problem is will just follow whoever's the most certain.
And let's hope it's someone of peace and reason rather than some Mussolini or Hitler.
Now, you're putting a lot of emphasis on us and people like you and me who are trying to do what we can to help people who are suffering from all these various Stockholm syndromes and Oslo syndromes and so on.
Is there anything that those people can do for themselves, do you think, just to try and help themselves get out of these mental restrictions?
Yeah, it's, you know, it's a scary thing.
I mean, the movie The Matrix, you know, I said it before, it's one of the greatest metaphors ever.
The idea that we live in an illusion.
You know, most people, they live not in reality, they live in a world of words.
I'm actually just working on a documentary, modestly called Truth, really just goes into more detail, but we live in language.
And when we live in language, we are incredibly controllable.
If we live in reality, like if we live in tangible things, in facts, in evidence, in things that are, then we're not nearly As manipulable as if we live in a world of words.
And so people think of themselves as a citizen or a resident of some country, but that's not true.
I mean, you're a tax cattle and the country is a tax farm.
I mean, that's the reality of it, that you are a kind of livestock and you're a free range livestock for the most part.
You can choose your own education and profession, but you can only do that.
You're only allowed to do that because it makes you more profitable.
to the owners.
But the world is not countries.
The world is farms.
And we are not granted any more freedom than that which is considered productive for the farmers.
So once you live in a world of reality, where you say, well, no, taxation is theft.
Government is violence.
Law is an opinion with a gun.
National debts are enslavement.
Once you start living in reality, then you're much harder to push over.
But if you live in a world of words, then it's like trying to dance on a cloud.
You've got no solidity and no basis and people couldn't define your virtue and courage in and out of existence almost at a whim.
So trying to get people to focus on what is real, you know, the fact that there's a gun in the room called the state that is pushing and organizing everyone's behavior, disorganizing everyone's behavior, getting people to live in the reality of the coercive system that we live in is the first step.
I think people naturally recoil against evil.
Which is why evil constantly needs to redefine itself as the good.
But, you know, the guy who takes the safety off the gun when no one else has a weapon, that's the bad guy.
It's not that complicated.
Evil is the guy who initiates the use of force against the peaceful.
The war on drugs is evil.
The welfare state is evil.
And taxation is evil.
And national debts are especially evil.
Because...
The unborn have even less of a say than the voters in a democracy, and that's saying quite a bit.
So once we start to live the world of reality, then we can start to change it.
But it's a pretty horrifying transition to see the world as it really is.
Yeah, this control of the language.
You said the word we when we have Prime Minister David Cameron saying our debts need to be paid off.
Where did I come into this?
Where did I borrow this money to pay him a high salary?
It just seemed very, very odd.
Is this going to be just a one-off, one-hour documentary?
Or is it going to be a serious, this truth documentary?
Well, it's going to be a series.
I'm obviously trying to encapsulate it as much as I can in the first hour, but yeah, it's going to be a series over time.
Sort of getting a very good production team together, which I of course would love to work with again in the future, and everybody seems to be having a lot of fun despite the fact that it's quite a challenging subject to encapsulate.
But yes, it's truthtodocumentary.com if people want to go.
We're going to have a preview out in a week or two of the first 10 minutes and most of the rest of the film is coming together very nicely, so it should be out in about 8 to 10 weeks.
Yeah, I love most of your documentaries, especially the one where you started talking about The Matrix.
That was a really good one.
Is there any way where people can also listen to your kind of regular free domain podcasts?
Never!
No, of course.
Yeah, I don't know.
I mean, I think we've had like over 50 million downloads now, which is, I think, quite good.
And so I think that's, you know, 50 million points of light that otherwise wouldn't have been there.
I'm happy to have those constellations in the night sky of our mental landscape.
but people can go to freedomainradio.com.
Podcasts are all free.
There's no ads.
They can check out.
I've got a bunch of books there that are all free.
And I do a Sunday show every 10 a.m. Eastern Standard Time.
People can call in with whatever questions they want, and I will try to throw a philosophical spin on some hopefully useful answers.
And her YouTube channel is youtube.com forward slash Freedom Aid Radio if people want to check that out.
And I recommend that if people do go there that they watch one called The Handbook for New Farmers, which I found quite fascinating recently.
Anyway, it's been great talking to you today, Stefan, and thank you very much for your time today.
Thank you very much for your time.
I appreciate it.
It was a real pleasure.
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