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July 13, 2019 - Freedomain Radio - Stefan Molyneux
29:51
Why Libertarianism Fails Part 1
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Hi everybody, hope you're doing well.
It's Stefan Molyneux.
I'm just going to give you a moment or two to get over the shock that you're probably feeling at seeing me outside My lair.
The lair of the Red Room.
So, I'm hoping that the wind isn't too bad.
I'm down here in Miami with my lovely wife.
We are getting ready for a Freedom Aid radio conference.
And why, oh why, you may well ask, and well may you ask, am I doing a podcast or a videocast when I'm on vacation?
Well, because a podcast has been rolling around back and forth in my brain for the last little while, a couple of days, and I know it may seem that I do these podcasts, but the basic reality is these podcasts kind of do me, and I just sort of go with the inspiration, which at times is rather insistent, and I was up till like 4.30 in the morning this morning because I couldn't get this podcast thing out of my head, and I was
Unable to do the podcast in the middle of the night because we're in a fairly small condo, so I thought I'd get it off my chest and hopefully it will make some sense to you.
So, one of the things that I've talked about, not here in a while, is the question, which I think has got to be paramount, paramount, First and foremost in the thoughts and minds of every libertarian every freedom lover anybody who's interested in reducing eliminating the power of the state and Superstition and the cult of the family and all of the things that hold tyranny over our minds.
I think it's got to be absolutely essential To focus on this very central question.
Why do we fail?
Continually perpetually and catastrophically why is it that 300 plus years after Adam Smith approves that free trade is beneficial, does the average person not know, average educated person, not know the benefits and not be able to recite the benefits of free trade and small government or no government or the benefits of capitalism.
Why is it that the definition of capitalism remains so screwed up and confused for everyone that this current state of state-driven mercantilism and favoritism among state-protected corporate elites and protection and this all considered to be capitalism or or God forbid the sweatshops in the furnace totalitarian ships of The East are is considered to be capitalism.
Why is it that there has been such a catastrophic?
Failure on the part of people who are interested in economics and liberty to be able to communicate to the point where our ideas have become Common coinage, where it's just like, boom, it's understood.
And I've sort of got some, shockingly, got some ideas as to why I think that is the case.
And I'm going to sort of share them with you, get them off my chest, and then we can both get back to what we were doing, me relaxing in the sun, playing beach volleyball, swimming, and you, whatever you're doing.
So let's get this out the way and see if it makes some sense.
There are two disciplines which I think libertarianism is really, really founded on.
There's two disciplines.
The first is philosophy and the second is economics.
The philosophy, the philosophical aspect of libertarianism represents the arguments towards the equality of humankind, natural rights, property rights, the moral justifications for a non-coercive, a non-aggression principle-based view of existence.
The ethical absolutes that drive the philosophy or the ideals behind libertarianism.
And the practical consequences, the arguments for effect, as I've called them before, require some knowledge of economics.
So that you can at least counter, using more than just abstract moral ideas, you can counter the arguments which say, well, you know, if we get rid of protectionism, Our local industries will die.
All of the basic stuff that we need to understand in terms of economics, particularly Austrian economics, in order to counter some of the practical, sort of, quote, practical arguments that are launched against libertarianism.
Now, the two disciplines, the two human disciplines that I submit have failed the most catastrophically and persistently in humankind are Wait for it.
Yes, philosophy and economics.
Those two disciplines have been, in my mind, the most catastrophically misrepresented, misunderstood, failed paradigms, the worst stuff that the human thought has ever seen.
If you compare something like philosophy to the physical sciences, we can see the difference.
The physical sciences have the scientific method.
They have achieved massive leaps and bounds when it comes to an understanding and elucidation of what occurs in the physical realm.
If you look at other disciplines that are subsets of the physical sciences, things like medicine, nutrition, astronomy, biology, all of these disciplines have made enormous strides in the past few hundred years, particularly since the Baconian Revolution in the 16th century, and are part of the lexicon of every educated human being.
There's nobody who's scientifically literate who's... I mean, okay, there's a few, but in terms of the general understanding, there's no scientifically literate educated person
Who doesn't believe that the sun is the center of the solar system, and that Earth spins around the sun, the sun spins around the galaxy, the galaxy's floating through space, the universe is, what, 15-20 billion years old, there was a big bang, nearest star is Alpha Centauri, 4.3 light years away, light travels 186,000 miles per second, it's 9 minutes from the sun, it's 2 seconds to the moon, all these kinds of things.
There's nobody who doesn't really have a general grasp of these things.
There's a lot of people who are scientifically literate, most people who are scientifically literate, and everybody who's scientifically literate and not religious accepts the basic tenets of Darwinian evolution, the survival of the fittest, natural selection, and so on.
There is... and the basics of health, right?
The viral theory of infection, all that.
The basics of health and nutrition are all well understood and generally accepted by the vast majority of the population.
Who are educated, scientifically literate, not retarded by superstitious religiosity.
The world is round, and you know, all this kind of stuff.
Now, when you compare that to a discipline like philosophy, which has... It's a little windy here in sunny Miami.
If you compare that to a discipline like philosophy, which remains basically in a Post-Reformation catastrophic clusterfrack of competing ideologies.
everything from some Marxism to postmodernism to Nietzscheism to Kantianism to Randism, Randroid, Objectivism, to the stuff that I'm building, which, of course, I think is the right stuff at Free Domain Radio.
When you look at what has happened to philosophy, which has had over 2,500 years to develop, there's still no philosophical principles that are widely accepted by the generally educated population.
In fact, they'd have a hard time telling you what the hell any of those philosophical principles are.
It's remained mired in a kind of subjectivist religiosity, you know, 2,500 years after the pre-Socratics did their thing and began to develop the science of philosophy or the discipline of philosophy.
And it is a catastrophically failed, disruptive, destructive discipline.
Nobody turns to philosophers for the answers to anything except perhaps a little old me from time to time.
When you look at the successes in just a few hundred years of the physical sciences, and you compare those to the catastrophic clusterfracks of philosophy over the past 2,500 years, where there's no centrally accepted tenets that are generally understood even by the professionals, let alone the educated layperson, massive, massive problems.
When you look at the discipline of economics, Again, in terms of its penetration into the generally educated layperson, well, first of all, even within the profession, there are massive, massive splits.
I mean, there are Marxist economics, there are Keynesians, there are Austrian economists, there are the Hayekians, the Chicago school, I mean, the public choice school.
There's massive fractures and cross-disciplinary aggression and infighting and politics and all of the mess that is associated with a messed up, quasi-religious "discipline of thought." It's all post-Reformation, Anabaptists versus Ingalians versus Calvinists versus Lutherans.
There's all this sort of nonsense, right?
So when we look at these kinds of situations, what we can see is that there is no real...
There's been no real success in getting the ideas centralized, even within centralized, agreed upon, even within the discipline.
I mean, physicists, biologists, geologists, all of these people accept, fully accept, the scientific method as the criterion for lying about global warming, sorry, for determining truth from falsehood in the physical sciences.
And the mathematicians have that sort of rigorous Euclidean logic and so on, which they use to determine truth from falsehood when it comes to mathematical theorems.
And so in the physical sciences, in mathematics, in medicine, nutrition, all of these places have these objective criteria, even in places where the criteria is somewhat gray in the realm of biology and so on.
There is still a very widely accepted methodology of classification of the Lamarckian system and so on, and they all accept evolution and all this.
So there have been massive strides in every set of rational-based or quasi-rational-based human disciplines, except for philosophy and economics.
Except for philosophy and economics.
Until the small task of squaring those two theories and getting them sorted out, which is a lot of what I'm trying to do in my own small way at Freedom Aid Radio.
Until those particular tenets are sorted out, there's no possibility that libertarianism can ever have any particular success.
In fact, it's only going to have disaster after disaster.
Libertarianism as a political philosophy, if we go back to the classical liberals and back to Adam Smith over 300 years ago, And then the Ricardo and so if we go back to those people we can see that it's just been a massive catastrophe relative to all of the other scientific or rationalistic human disciplines So why is it that all of these other disciplines?
have Had such remarkable success while in sort of penetrating informing and educating the the intelligent layperson who's interested in these things until to the point where there's generally accepted tenets in all of these particular propositions and
You could say, and people have made this argument, that the reason that, let's just say, forget philosophy for the moment, the reason that economics has failed so catastrophically is because by drawing our attention to the hidden costs of transactions rather than the visible benefits, that economics is a counterintuitive science.
I don't find that at all convincing myself.
I mean, dear sweet heaven above, there's nothing as counterintuitive on the planet as, say, the theory of relativity, right?
That as you get closer to the speed of light, time slows down, mass increases, that two spaceships traveling opposite from each other at sea at the speed of light, when they measure their distance, the acceleration of their relative distances, that It should be twice the speed of light, but they will in fact measure the speed of light.
The blue shift, the red... All of the stuff that goes on in the theory of relativity is such a mindfrack that there's just no way that that's even remotely intuitive.
The idea that life, the glory of human consciousness is basically an ascension, if we want to use complexity as the definition of ascension, is an ascension from basically lightning striking a primordial soup billions of years ago through single-celled organisms, To the miracle of Britney Spears.
I mean, that's just, it's so completely and wildly counterintuitive.
The fact that the Earth is round is wildly counterintuitive.
So the fact that the Sun and the Moon are the same size, or sorry, are not the same size, though they appear the same size, completely counterintuitive.
The fact that Aristotle went nearly mad trying to figure out why the tides occurred, because he couldn't imagine that the Moon, being so distant, would have an effect on it, completely counterintuitive.
The heliocentric model of the universe, completely counterintuitive.
I mean, even when you look at nutrition, right?
What tastes bad is good for you, and what's bad for you tastes good.
That's counterintuitive.
Every single science is counterintuitive.
If you look at quantum physics, completely counterintuitive.
Sixteen million dimensions all tied together with string theory.
I mean, it's a mindfrack from the nth dimension.
So, the fact that a discipline is counterintuitive to our daily experience is not something that, to me, credibly explains why Economics has remained such a baffle-gab, mind-frack of a discipline that has not penetrated even with the truth that economists almost all accept, like the value and virtue of free trade in both labor and capital and goods.
There's no explanation as to why it hasn't penetrated the general consciousness or become part of a standardized worldview of an educated layperson.
Even things like Freudianism and so on, which is also pretty counterintuitive, right?
All of these things have had some success penetrating the general consciousness of people, and Marxism is completely counterintuitive and false.
It still has a strong ability to get into people's minds in a very solid way.
So it's not It's not that it's counterintuitive.
That's not why economics has failed so much.
So let me just check my battery life here.
I think we're alright.
So I'm gonna take you on a little spin, a little mind spin.
I can't do the philosophy thing because basically that's just...
UPB, the Introduction to Philosophy series, which is free.
I'll send you the free books if you want them.
Or come to my website at freedomainradio.com to pick up the books where I go through the philosophy of ethics and how we can rationally derive absolute and objective ethics without appeal to superstition or the lies of superstition or the guns of the government.
So go do all of that if you want.
I'm not going to deal with the philosophy one right here.
I'm just going to talk about the economics side of it.
But let me sort of explain why I think economics in particular has been so disastrous in terms of its general widespread acceptance among the educated lay population.
Somebody posted something recently which is around this general terror of monopoly.
If we have a free market, one company is going to end up dominating every other company or one DRO, dispute resolution organization, the state substitutes that are sort of private insurance and mediation.
Companies that I suggest as a model by which a society can flourish in the absence of a government, that one of those DROs is going to take over all the other DROs and get a new government and Microsoft is going to end up owning your kidneys and you're firstborn and all this.
This terror of monopolies, which is, of course, just a kind of boogeyman that scares you away from actually being free in your life.
My wife has a monopoly on me and I couldn't be happier.
And of course, those people who are terrified of monopolies always talk about Microsoft and other voluntary companies.
They never seem to talk about the public schools, but that's another issue.
But somebody said, well, of course, what happens in a monopoly is a company is going to go and get all of this money.
I'm going to use this palm thing here.
We're all about props here.
Let's look at the palm as the company that is going to take over the other companies, and the fingers and the thumb as the five companies that it's going to try and take over.
I'll just go through this very briefly and then explain why I think economics has such a tough time penetrating people's minds.
This company in the middle wants to take these five companies and merge it into itself, to borg it into itself.
Sorry for those who are just listening to the audio, but boy, there's some pretty gripping graphics going on right here, let me tell you.
So...
Let's say that, just to make it simple, right, so this company in the middle here wants to buy these five companies, four fingers and a thumb company, and each one of these companies costs a hundred million dollars.
So it's going to go and it's going to get investment for half a billion dollars and it's going to go and buy these five companies, merge them into itself, have a monopoly, crank up the rates, screw the consumers and pay off Well, this of course has a certain kind of, I don't know, idiot plausibility, if you don't mind me putting it that way.
And I'll sort of explain to you, and I'm sure it's fairly obvious, two main reasons why this could never happen.
because it has a monopoly and so on.
Well, this, of course, has a certain kind of, I don't know, idiot plausibility, if you don't mind me putting it that way.
And I'll sort of explain to you, and I'm sure it's fairly obvious, but there's two main reasons why this could never happen.
The first is that if you want to go and buy five companies to gain a monopoly, and each company is valued at $100 million, there's simply no, there's no possible way that you will get these companies for $500 million.
Absolutely, completely, and totally impossible.
So what's going to happen is, let's say that you are the businessman who's, you know, rubbing his invisible Fu Manchu mustache and says, I'm going to get these five companies and I'm going to have a monopoly and screw the consumer and so on.
So you go for $500 million financing, and all of your financiers are such completely retarded financiers that they think this is possible.
And so what happens is you go and you say, all right, I'm going to buy this little piggy, this little pinky, I'm going to buy this company, boom.
And that company is now bought and absorbed into the main company for $100 million, right?
And then you make a bid on the next company, right?
You can't do this all at once, because these companies, we have to try and do it in a more subtle way.
If you do it all at once, everybody will be totally aware of it.
And what I'm saying is going to happen will happen even more rapidly.
So you buy one, of course, you don't want to try and absorb five different companies, five different IT systems, five different stuff.
You don't want to do that all at once, five different products, you completely implode, right?
So you buy the first company, a hundred million dollars, and then you go for the second company, right?
And what happens?
Well, the owner of the second company says, Hey, wait a minute.
This guy looks like he's going on a monopoly spree.
Huh.
So, uh, let's say that he then says, okay, well, I'm going to sell, but I'm not going to, I'm no longer going to be a hundred million dollars.
The first company that gets bought is a hundred million dollars.
The second company is not a hundred million dollars anymore because it's that much more valuable.
Because, let's say each of these guys has 10% of the market and the palm company has 50%.
So by the first company gets 60%, the second company gets 70%.
That's worth more than going from 50 to 60.
Going from 60 to 70 is worth more.
So he's now going to charge $125 million.
Now the next company that comes along that gets you from 70 to 80 is worth that much more.
He's going to sell for $200 million.
And then the next company is going to sell for $300 million.
And the last company to go down is going to charge a massive amount because he knows that that gets you from 90 to 100%.
He is so incredibly valuable.
That that last guy is going to completely screw you, and there's just no way that your 500 million dollars is going to be able to cover the cost of all of the five companies.
Now, given that that's a reality, that the last person to sell to the Monopoly company is going to be able to completely make an out-and-out bandit Bonnie and Clyde style fortune, then every single company that's one of the four fingers, one thumb companies, each one of these companies wants to be the last to sell.
Wants to be the last to sell.
Like if you have a row of houses and they want to build a highway and there's no eminent domain or other status kind of mafia slut techniques for getting the property from you, you want to be the last house to sell because you're going to be able to get the most money.
So these guys aren't going to sell.
They're going to wait for somebody else to sell first so that they can be the last company to sell to get a huge amount of money.
So there's simply no possibility, even in this situation where you get the financing to cover the price of the companies, that you're ever going to be able to buy these companies.
There's no way, because each one of them is going to hold out saying, After the first one is sold, once we realize what you're up to, we're going to hold out and get the most money from you.
So there's just no way that it could work that way.
But let's say that it was going to work that way, and four companies were bought for $400 million, and let's say, magically, we overcome this earlier obstacle, and you're going to get Joe Thumb Company, and you put in an offer for $100 million, and let's say he's considering it, right?
Well, there's a technique, which I'm sure you're aware of, called shorting a stock, where you make money if the stock goes down.
And you can Google this to figure out how it works.
It's kind of cool.
But you make money if the stock goes down, right?
So what happens is, once you've got these four companies and you're very close to getting a monopoly, your stock price is going to go up, right?
So if you're Joe Thumb Company, what you do is you say, I'm interested, let's talk, right?
And then this guy's stock price is going to go way up.
But what you do is you short the stock, if you're Joe Thumb Company, and then you just decide not to sell, and you make a fortune off the resulting plummet on Joe Palm Company's massive conglomeration.
His stock price plummets, all the money transfers to you, you expand at this guy's expense.
This was actually done in the 19th century by some of the, quote, robber barons of American capitalism, this very technique.
That you engage in talks with a company striving to be a monopoly, which drives up its stock price, but you short the stock, and then you simply break off the talks, causing the stock price to go down.
You clean up and use that to expand and compete against this guy.
So you're Joe Thumb Company.
You have a whole lot of extra capital.
Joe Palm Company has much less capital, because stock price just went down.
You just made a whole bunch of money.
He's got all of the costs of absorbing these four other companies.
He's got a huge loan that he's got to pay off, which he borrowed to buy these four companies.
So he's completely crippled, and you've just got a huge amount of cash with which to expand and compete against him.
So, I mean, this kind of stuff is just impossible in a free market situation.
And this stuff, I mean, this is not brain surgery.
What is that, ten minutes?
You guys got this probably within the third word.
I'm so sorry, I'm long-winded, but as I said, it's windy here, and I'd like to be part of it.
So, the question is, why is this so hard for people to figure out?
Why?
I'm going to put forward a very sort of brief theory as to why, and maybe I'll have a chance to get into it in more detail when I get back to Toronto next week, but I'm going to sort of put it to you this way.
The reason why this is so hard for most people to figure out, the reason why they say, Joe Palm Company can just buy these companies for half a billion dollars, have a monopoly, screw the consumer, own the market, blah blah blah, it's because it's so hard for people to conceptually jump and say, each one of these fingertips is actually a palm.
Right?
So, if I'm coming to buy your company for, you say, well it's a hundred million dollars, I'm gonna give you a hundred million dollars, you're gonna sell the company.
But the problem is, every time you make a decision, you affect everybody else's decision-making in a free society, in a voluntary society.
So if I'm going to come and try and snap up all of these companies in the market, everyone who owns those companies and their shareholders and all those people are going to be perfectly aware of what I'm doing and are going to jack up their prices accordingly, right?
So we all look at it like this guy who's the palm company is just going to snap up the finger and thumb companies and they don't have any say in the matter, really.
They're just going to respond to the initial conditions and they're not going to adjust They're negotiating strategies based on the fact that other companies are being bought up and so on.
So we have a hard time turning the palm around and realizing that palm company has a one-to-many relationship With the fingers and thumb companies, but each one of those fingers and thumb companies is actually a palm company which has all these other relationships with its own stockholders, with its own economic calculations, with its own preferences, with its own maximization of resources, which is the foundational drive of these kinds of entrepreneurial environments.
So how is it plausible That we can look at this situation and say, well, the Palm Company, which has the 500 million dollars, is just going to go and buy up all these companies, and they are not going to change their position or react to the situation in any way, but it's just going to kind of get rolled over and bought out.
How is that plausible?
How is that remotely believable?
As I have said before, as I am doubtless going to say until I am blue in the face, which means back in Toronto, In January.
The only reason that this could be conceivably plausible is because of our families.
Because of our families.
And because of our public school education.
Right.
Because in our families, for the most part, our parents told us what to do and we just weren't allowed to negotiate.
We weren't allowed to provide alternatives or options or counter their wishes.
They just told us what to do and we had to do it.
And then we got punished if we disobeyed.
So in this situation, our parents are the palm companies and we just They just do what they want.
They do what they want and they call it moral or whatever.
We don't really get a chance to negotiate back.
Even if we had this at home, I guarantee you didn't have it at school.
Your parents didn't sit down the way that your local pizza parlor does and says, "Hey, how can we serve you better?
How could we make your experience of being our customer better?" Your teacher never sat down with you and said, how is it that we could make your environment, your learning environment, how could that conceivably be better for you?
What could I do to make this better for you?
To make your learning more enjoyable?
And your parents didn't sit there and say, how can I be the best possible parent for you?
How could I make it so that you would choose me over every other parent in the world?
We never had those kinds of reciprocal relationships when we were growing up.
The authority figures we had in our lives were the palm companies and we just rolled over and did whatever they said.
And yeah, you know, we got the hundred million dollars, so to speak, and we got taken to Disney World and we got taken on vacations and so on.
But I'm talking about a very foundational capacity to negotiate and to, when our parents make decisions, to have that affect us and have us respond with our own decisions in return.
To have more of a win-win negotiating participatory relationship with, you know, the understanding that our brains are developing and that they're parents and so on.
That's not at all the norm in parents, within families.
In fact, I've never seen that.
Maybe you've seen it.
I'm certainly happy to hear about it if you have.
But I've never seen that.
And I've certainly never experienced that in either the private schools or the public schools that I've been to, and I went to quite a few because we moved around a lot when I was a kid.
You just sit there and passively take whatever the person in authority decides to do.
And you may fight them, but you never win fundamentally, right?
So we can talk about the philosophy thing another time.
And if you want to know more about my theories, just pick up my book on truth.
It's like 11 bucks.
I'll mail you a free copy if you're low on funds.
You pay me if you like it.
I don't care.
I just want you to get the book.
It's also in PDF and audiobook, but that book is my argument as to why, from a philosophical standpoint, we have such a tough time maturing philosophy into a recognized and generally accepted discipline within society.
I'm going to put forward this argument now, and I'll come up with a few more examples next week, as to why This thing like, well, there'll just be a monopoly who rolls over all the other companies in the economy and ends up totally owning the consumer and no one could do anything about it and, you know, the motives that drive the palm company are not exactly the same as the motives that drive the finger companies and so on.
The only reason that that's believable is that, catastrophically, sadly, appallingly, pathetically, disgustingly, Was our experience as children.
That's why it seems so fundamentally believable that this occurs.
And this is why this is the hurdle.
This is why economics does not take off.
Because when we start to turn the hand around and look at the palm company as just another finger, so to speak, we are bringing a lot of Pain to the surface from our own histories, from how we were dealt with as children, from how we were sort of ordered around and bullied and told what to do and bribed and all that as children.
And I think that's a foundational aspect that economics is just not able to overcome as yet.
But and that's really the approach that I take when I talk about personal liberty in this conversation.
So thank you again for listening, as always.
And thank you for letting me get this off my chest and get some sleep on my vacation.
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