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July 14, 2019 - Freedomain Radio - Stefan Molyneux
39:09
521 The Business Cycle Part 1
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Good morning, everybody.
The 21st of November, 2006.
We are Free Domain Radio plus one day.
Free Domain Radio anniversary plus one day.
366 days, 520 podcasts, 1.4 or so a day.
Kind of makes me wonder what I did with my life before Free Domain Radio, doesn't it?
Well, I drove and humped to myself and listened to audiobooks, and what was the point of that relative to what we can all do together?
To bring some illumination to this benighted world.
So, I hope you're doing well.
I wanted to take a little tour onto the magical world of economics this morning and do my best to explain, using the Austrian school, so named because Austria has the most interesting economy perhaps,
The Austrian School of Economics has a very interesting approach to the business cycle that I think is worth having a wee bit of a discussion about because, of course, it is one of the main criticisms against the free market that it is somehow massively involved in a perpetual and destructive business cycle wherein there's these booms and these busts,
these sort of 1929 stock market Boom, followed by the catastrophic Great Depression bust.
And of course, we've all lived, if you're over 12 and you've ever had a paper route even, we've all lived through these to one degree or another.
And so I think it's worth having a chat about it.
There is a fascinating...
A series of explanations around the question of the business cycle that has been the sort of the Fermat's last theorem of many economists.
And the Austrian school, which was really founded by Ludwig von Mises in the 19...
Well, he started writing in the late teens of the last century, the early 1920s.
I'm not going to go in a whole description of it, because if you really want to hear or read more about it, go to mises.org, and that will explain why I use the word Mises in the song, the Freedom Main Radio song, which is Podcast 500.
So, I wanted to talk a little bit about the Austrian theory of the business cycle.
I know it sounds like the dullest topic in the world, but really it's absolutely fascinating.
And it does a lot to sort of explain the world and to help us once more understand that the scapegoat is, you know, whoever's pointing at the scapegoat is the scapegoat.
You know, that's the... What's that old thing from when I was a kid when there'd be some wretched, you know, dead cat fart in the room?
And then you'd say, what's me?
And then someone else would say, he who denied it, he who supplied it.
And that is almost always the case.
You can absolutely apply the dead cat fart principle to politics.
He who denied it is he who supplied it, and in particular, the scapegoat, right?
I remember when I was in theater school, some, I can't remember the play that I was in, but the...
The professor said something to do with the anti-Semitic hysteria and genocides in Germany in the 30s and 40s.
He said, well, you know, if your life is wretched and your life is hellish and I point over to somebody and I say, it's your fault.
I'm sorry, it's that person's fault.
Well, of course you're going to get all angry and go and thump that person.
And I said, well, I don't think so.
I said, I think I'd probably get angry at you.
Because you'd be the one pointing out the other person and that it was their fault, which means it would most likely be your fault.
Now, this applies to everything except me, right?
Because, again, I sort of want to point out that it's important to have two sets of moral standards.
So, even though I point out that it's the state's fault, the fault of the government for, you know, the difficulties and trials and tribulations of many of the problems in which you live, It doesn't mean that I'm responsible for taxation.
You have to have power in order for the scapegoat principle to work.
And my media power remains waxing, let's say.
Wax on, wax off. It's sort of hard to understand the impact of the Austrian theory of the business cycle or the Austrian theory of economics as a whole without sort of understanding what came before it.
Now, there was, of course, a great deal of consternation in the economics community, in the community of economics of economists, around the Great Depression, where you had, you know, 20% unemployment, 25% unemployment, and it just went on and on and on.
And there really is this theory that the Depression went on It reached its nadir in 1932, 1933, but it never really recovered.
It certainly didn't recover to pre-depression levels.
And then people have this belief that the depression lasted until the war.
And this is sort of the bigotry that you get against the free market, where they say, well, it's got these wild oscillations, and then for reasons that make no sense, it goes into this Great Depression, and then it's only saved by war, right?
So obviously, who would want a social system like that?
Wild oscillations, you know, the stock prices drop almost as fast as the stockbrokers from alleges, and then you have these, you know, gritty, handed, hard-faced farmers wandering the Midwest in search of locusts to eat, And, you know, masses of shuffling unemployed, looking for thin gruel soup from the soup kitchens.
And then the only way the system can save itself is by ordering the deaths of tens of millions of people through war.
I mean, what a nightmare.
Who'd want anything to do with that system?
I mean, of course, that would be a pretty horrible system to get involved in.
It's just, you know, none of it's true, right?
I mean, except for that...
Sort of minor caveat.
It's a great fairy tale with which to scare people into becoming socialists, communists, and state worshippers.
But, you know, the minor caveat being that it has no relation to reality.
And like most propaganda myths, it is the exact opposite of the truth.
And again, I'm not going to claim to prove that to you in a single podcast.
This is probably going to be two, though.
But I will at least give a little bit of context before we talk about the actual business cycle and sort of why the economy peaks and then crashes and then levels and then peaks and then crashes and you get one of these every sort of seven years.
And sometimes, like in 1973 to 1977 or 1976, they last a hell of a long time.
I mean, just to understand the human cost, I mean, if you happen to graduate in 1973 or 1991, you're toast.
I mean, you've got a couple of years there where your resume sucks, and it's really hard to get work, and the work that you get is substandard, and you get bitter, and your sort of student debts pile up.
I mean, it really can be an absolute mess.
And people get sort of jerked around, and they get angry.
I mean, totally understandable, right?
So, there's a gentleman, an enormously entertaining and totally corrupt rich fruit name, Lord Maynard Keynes.
Doesn't it sound like someone out of the Jungle Book?
Oh, Lord Maynard Keynes is after the tiger, what?
And he came up with a theory that was slightly after but intellectually parallel too in its initial wave with the Austrian theory.
We'll talk about his theory first so you can understand how the Austrian theory of the business cycle is different.
But he came up with a theory that basically worked something like this.
And this is a very, very great oversimplification, but I still think I'm doing it justice because I think it's a very simple and silly theory.
But that's easier for me to say in hindsight with the wisdom of history and the wisdom of people who know a hell of a lot more about economics than I do.
The Keynesian Revolution, which sort of overswept the Austrian School of Economics.
The Austrian School of Economics, very briefly, is just, you know, free markets good, government intervention bad.
And it's not, I mean, there are lots of practical reasons as to why they believe that.
There are certain ethical reasons as well, too.
But for the Austrian school, government intervention always leads to more government intervention.
So, for example, in the Austrian school, if you say, well, milk is too expensive, so I'm going to put a price freeze on milk, right?
You know, the government says, milk now costs a buck a gallon no matter what because milk is too expensive.
Well, of course, the reason that milk is expensive, assuming that the free market is working, is because there's a shortage of milk, right?
If there's not enough milk and people want the milk, they're going to bid up the price.
And when you put a price cap on milk and you say, well, milk is now going to be X and you can't charge any more for it, well, of course, all that happens is people stop producing milk, right?
So cows will get slaughtered rather than be kept as milk producers because there's no price cap on meat.
There's a price cap on milk. So who's going to spend their time producing something that's unprofitable, right?
And for the same reason that if your job was suddenly capped at three bucks an hour, you probably wouldn't do your job, right?
Sad, illegal immigrant laborers excluded.
But... the...
The question then always becomes, well, what happens after that?
Oh, we've kept the price of milk and therefore milk is no longer being expensive.
Well, people stopped producing milk.
Now, milk was already scarce to begin with, which is why the price was high.
Now, because the price of milk was high, people were always trying to produce more milk and bring it to market because it was very profitable, which meant that, of course, the supply increased, the price goes down.
That's how the market constantly reallocates resources to maximize productivity, profitability, and utility.
But when you put a price cap on milk because milk is scarce and people have bidded it up, then people stop producing milk, which means that milk becomes even more scarce, right?
Which means then you have to provide subsidies to people to produce milk, right?
And that's sort of a problem, right?
So you provide subsidies to produce milk, so then lots of people get into producing milk because there are all these subsidies.
And then they stop producing other things.
So then the price of other things begins to go up, right?
Meat and so on, right?
So then because there's a subsidy for milk, the cows that were going to get slaughtered now are kept as milk producers.
So then the price of meat goes up, right?
And basically you could go on and on and on, but basically you can't affect one aspect of the economy without throwing everything else out of whack, creating all these messes.
And of course once the government has stepped in to intervene on the price of milk, Then everyone and their brother starts lobbying the government to do X, Y, and Z. The government gets further corrupted.
The lobbyists get corrupted.
The consumers always end up getting screwed.
And you end up with this totally multi-hundred billion dollar net of subsidies to farmers.
This, of course, destroys the economy of the third world.
I mean, the amount of human misery that is produced by this stuff is just unbelievable.
You can't imagine it, how much human misery is created.
The one thing that the third world could do in the absence of industrialization is produce To produce groceries for the first world, right?
That would be a hell of a lot better than charity would be to give them our business, but that's never allowed, right, for a variety of reasons.
The subsidies, they just dump all of the food on the market that is subsidized from the first world, and that destroys the farming income of the third world, and also those subsidies, as well as foreign aid, get snapped up by Third world dictatorships, they use the food to feed their army, the money to buy weapons from the first world, and then the first world stares at the wreckage of the third world and wonders, gosh, I wonder what's wrong with these people that they can't seem to get it together?
Anyway, enough of that tangent.
Let's have another tangent.
But Keynes basically said, look, there's this cycle in the economy.
And the cycle is inbuilt to capitalism.
And the cycle is a combination of things like inflation is caused by things like unions bidding up the price of goods.
By capitalists being greedy and raising prices and then the collapse is caused by the fact that people just suddenly get turned off buying stuff because it's so expensive and then there's a crash and you know that there's this constant sloshing back and forth and spilling over like one of those wave pools out of control you know just jetting and spilling up and all this mess and so basically you need an agency external to the profit motive, the government, As if the government is not...
Boy, I've seen my tax bill.
I don't think that we can say that the government is not particularly interested in the profit motive.
I just wish that the profit motive wasn't at gunpoint.
But, of course, then it wouldn't be the government.
So Keene says that we have this natural built-in aspect of capitalism that there's overinvestment in what are called capital goods.
Which is like business-to-business stuff.
Like if I want to make a tub of margarine, I first have to order the margarine-making plant, which is prior to selling anything to the consumer, you have to buy a whole bunch of stuff from other businesses, right?
Which I'm sure you're aware of, right?
So if you're setting up a small business, you need to buy, you know, stationary, and you need to buy networks and servers and computers and And desks.
I mean, this is all stuff... I mean, this is not exactly capital goods, but you sort of get the idea.
In a factory, this would be capital goods that you use for the purpose of producing something for profit.
And he said there's this constant misalignment that people are hysterical, they go nuts, so you need a sort of rational oversight of the economy.
And the way that Keynes proposed that this was going to work was something like this.
Whenever the economy is growing too fast, the government will tax...
Things, right? To slow down the growth, it will increase capital gains tax, it will increase corporate tax and so on, so that it sort of puts the brakes on the economic growth, so you're not sort of lurching back and forth as if I were driving you.
And then when the consumer demand goes down and the economy begins to slide into a recession or a depression, then the government will use the excess money that it is taxed during the good times to stimulate demand in the bad times, right? So it's sort of like a pacemaker.
And so the government's going to have this big kitty of excess money That when consumer demand goes soft and people start getting laid off in factories, the government will go in and buy stuff which will stimulate demand, keep people employed in factories, and then it will sort of smooth out the wild oscillations of the business cycle.
And this is how a lot of talk still you hear, oh, the economy is overheating, inflation is going up, and therefore the Fed is going to raise the interest rates, and oh, the economy is softening, and the CPI is down, and the orders for capital goods is down, and construction is down, therefore the government is going to stimulate the economy by buying a bunch of stuff or giving money to corporations to buy a bunch of stuff or whatever.
It never seems to be direct tax rebates to consumers, but then you wouldn't want to let us handle our own money, right?
So, there's sort of the one aspect of Austrian economics, and again, this is pretty oversimplified, but I think in the essence is quite accurate, who says that all government interventions lead to greater government interventions, lead to a crippling of the economy, lead to a further corruption of an already corrupt political system, and is a complete and total disaster, and so we shouldn't do it, right?
It might feel good the first time, like smack, I guess, which is horse, not spanking.
Anyway. But it might feel good the first time, but we don't want to do it because the road that it leads to is very, very bad.
And on the other hand, you have the Keynesian Revolution, which says government intervention is essential.
And in the absence of government intervention, capitalism will self-destruct with these wild oscillations.
It will create socialists because everyone will be so pissed off that they're rich and then broke and then middle class and then broker.
And so in order to save capitalism from communism, because the communist critique is that capitalism is inherently self-destructive, And so during the problems of the Great Depression, one of the arguments that was put forward by Keynes was basically to say, look, Russia is doing fantastically, despite the bloodbath of the Stalinist purchase and the massive famines in the Ukraine that killed about 10 million people.
They didn't believe all this stuff.
They thought it was just capitalist propaganda and that Stalin was a great old Uncle Joe, glad to meet you, kind of good shake hands fellow.
They said, well, look, communism is doing fantastically because they have...
State control of the economy, so they have all of the advantages of rational planning of the economy and blah, blah, blah.
So they believed all the propagandistic bullshit being put out by the Western intellectuals that all made the pilgrimage to Moscow, saw a bunch of well-fed gulag prisoners, all the zveks, and then walked away saying, well, I have seen the future and it works.
And you heard all this kind of nonsense.
So everyone thought that communism was doing fantastically, and the only way to save capitalism was to introduce basically socialistic or communistic elements into the economy in the form of government management.
So it's like, here's how we save the patient, is by taking over his nutrition, right?
Because he obviously can't feed himself properly.
He's like a binge-purge kind of guy, so we have to take over his nutrition.
Because if we let him alone, absence of intervention, he's going to kill himself.
And that really was a lot of...
So there were two sort of scare scenarios.
One was that government intervention leads to more government intervention, and the government which governs best governs least, and in fact it would be ideal if we could find a way to have no government.
But very much a classical liberal approach, or what used to be called laissez-faire, Which comes from the French merchant who when the king asked, what can we do for you?
He said, leave us be. Stop interfering.
Stop giving us subsidies and taxing some people and giving other people favorites and tariffs.
Just leave us alone and we'll be fine.
Leave us alone.
Laissez-faire capitalism is where people get to operate economically and to a large degree socially and politically.
Without the violent interference of various state programs, and that's really the approach taken by the Austrian school versus the Keynesian school, which says capitalism self-destructs in the absence of wise, benevolent government management, and therefore we need to give the government this approach to smooth out the business cycle.
So basically, the government has two ways of managing the supposed oscillations of the natural free market.
The first is that when the free market is growing, then it can tax and it can raise interest rates.
So when it raises interest rates, then it raises the cost of borrowing money to expand your business.
So it raises the cost of borrowing money to buy capital equipment, to open up new sales offices, to whatever.
So it raises interest rates, it raises taxes, that's sort of the way that it Deals with inflation and with a hyper-accelerated, whatever they mean, overheating economy.
An irrationally exuberant economy, as if exuberance is irrational.
And then when the economy starts sliding into recession, then it basically can spend all of the money that's wisely put aside during the heavy tax years and the heavy raised interest rates years.
It's wisely, of course, because the government does this stuff, wisely puts all the money aside and then releases it back to the economy when the economy is in need of a boost.
And, of course, it seems a little...
Well, I mean, the whole theory has been proven to be complete nonsense for a variety of reasons, but one of the central ones, of course, is that the government simply blows all the money that it taxes during a boom time and never seems to do anything positive for the bad times.
But most fundamentally, the Austrian school has been proven completely correct because the Austrian school said that the business cycle is essentially a monetary phenomenon, that the business cycle is essentially If not completely, a phenomenon involved with the printing of money by the government.
And we'll sort of get into that perhaps a little bit.
I think this is going to be a two-parter.
I don't want to rush through that part because it's quite complex, though fascinating.
So the Austrian school basically says that it's got nothing to do with irrational exuberance and it's got nothing to do with massive miscalculations from entrepreneurs, that it is always and forever.
Inflation and the business cycle is fundamentally a monetary phenomenon.
And all of the nonsense that people talk about starting this and stopping that and the other, that they're pushing the wrong levers, right?
Because the lever that's being pushed that is causing the business cycle is the printing of money, and we'll sort of get into that a little bit later.
So saying that the government's going to tax this and subsidize that and bring money in here and put money out there is entirely nonsensical, right?
It's like trying to steer a ship by flushing the toilet.
I mean, you're busy, but you're not doing anything that has any effect on the direction of the ship.
And, of course, the Austrian school goes even further and says that The Great Depression, of course, which is the greatest example of a sort of what they call a market failure, a market simply fails to deliver what it should, that that was, of course, essentially a monetary phenomenon,
right? That there was massive overprinting of money in the 1920s and then that the money supply was cut by one-third between 1930 and 1932, which caused a massive collapse of the economy and the fact that the government took for itself in 1913 with the creation of the Federal Reserve,
which is, of course, a private bank, has nothing more to do with the federal government than federal express does that the government basically created a private bank with the monopoly to print money and then the successive waves of going off the gold standard that was completed I think in the early nineteen seventies was one of the reasons why as the fundamental reason why the economy has gone through so many wild swings in the twentieth century because the government has a sole right to print whatever money at once And since money is a reflection or a mirror of the amount of goods and services in existence,
and given that the goods and services grow relatively slowly, wild swings in the money supply are going to cause both inflations and depressions.
So, we'll get into that, the reasoning behind all of that a little bit later, but it's hard for us who've grown up, who are older.
I was born in 1966, and I've never, except for the past couple of years, I've never known a time when inflation was not enormous.
I mean, just to take a small example, when I was 11 and I first came to Canada, A candy bar was a dime.
And literally not 10 to 15 years later, it was a dollar.
So you'd had enormous inflation.
What is that? A thousand percent inflation over a period of 10 or 12 or 15 years.
And this really has been something that has occurred in the West since the Second World War.
Since the Second World War, you've had this perpetual inflation.
That occurred. And it was sort of 2%, 3% under Eisenhower, 4% to 5% under LBJ. Sorry, under Kennedy, 5% to 6% under LBJ. And then under Nixon and Ford, it went up to like 13% inflation.
And... So obviously, and this is after all the Keynesian stuff had been put into place, and Keynesianism was the dominant philosophy, so that didn't really work very well.
And Keynesianism, though, had a real mental grip on the government and on the government lackeys, right?
Remember, enormous amounts of economists are hired by the government banks and the government-controlled banks.
So it's not too surprising that economists are fairly pro-state, since they are state lackeys and paid vassals.
It's sort of like wondering why nobles are pro-king when they get their meat and drink and homes from the king, right?
What are they going to do?
And so this was all sort of cooking along, and everyone thought this was the best thing ever until the 1970s hit, and you began to have something called stagflation.
And stagflation was when you had both high unemployment and you had high inflation.
high unemployment and high inflation.
And this was inconceivable to the Keynesian theory.
This was never, ever, ever supposed to happen with the Keynesian theory.
And when you have high unemployment and you also have high inflation, the Keynesian theory goes out the window because there's no lever that you can push or pull.
So if you're supposed to have high unemployment, then the government is supposed to spend an enormous amount of money, but that's also going to drive up inflation.
Because the government is taking a lot of money out of circulation, and the government is dragging money out of the capital markets to invest, because the government didn't have any money, it was already in debt.
Or the government's going to borrow, which takes money away from other people who want to borrow it to invest.
So basically... In order to lower the inflation, the government was supposed to increase spending, but because it didn't have any money it could only steal from capital markets, which meant that the interest rates were going to go up, which meant that inflation was going to increase.
So there really was no way for the government to solve this issue using the Keynesian model.
And, of course, this had all been perfectly predicted by the...
I shouldn't say perfectly predicted because there is no perfect prediction in human affairs.
But the process had been very well predicted by the Austrian economists, particularly Hayek.
And not our good friend Milton Friedman of the Chicago School, who veered back and forth between lip service to the free markets and slavism to statism.
I forgot to mention this in my chat about Milton Friedman, but his solution, of course, to the problem of the money supply was to have a computer installed by the government, to still have the government have the sole monopoly to print money, but to have a computer installed in the government offices which would spit out a fixed amount of money, additional money every year.
And, I mean, this is the dream world that this brilliant man lives in, or, you know, not really the dream world.
He actually... He believed that the government would simply have this machine capable of printing untold wealth for the first individuals to get their hands on the money and untold loss of wealth for everyone else once the inflation hits from overprinting money.
But he imagined that this magical money creator that can cement the fortunes for generations would be sitting in a box created by the government, programmed by people employed by the government, but that the government would never tinker with it, would never mess with it, and so on. And when the interviewer asked, that I listened to, when the interviewer asked him, what chance do you think that this proposal of yours has of being enacted?
And he said, absolutely no chance.
There is no chance at all.
And I just thought that was wonderful, right?
I mean, not only is it a bad idea, but he himself admits that the idea that he spent an enormous amount of time and effort trying to work out has absolutely no chance of being...
Oh, man, it's too funny.
Oh, good heavens.
I mean, if he was a doctor, you could sue him for malpractice.
It's just a real shame that you can't do that with economists.
But maybe in a free market you could.
I certainly think it would be worthwhile exploring that.
So this whole issue of stagflation was a severe blow to the Keynesian theory, because you had two events occurring simultaneously, high inflation and high unemployment, that were supposed to be impossible, because according to the business theory it's one or the other.
And for which the government had no remedy.
And Nixon, you know, the great Republican free marketer, tried price controls, but of course all they did was cut off the supply of goods, right?
I mean, when you impose a price, all you do is create...
When you impose a price control, as we talked about earlier, all you do is you create a shortage.
It's almost instantaneous.
And, of course...
Cops? No, not for me.
How nice. But all that you do, you create a shortage, and that's almost instantaneous.
Whatever you tax, you diminish.
Whatever you subsidize, you increase, which is no shortage of why there are more poor every year relative to producers, because the poor are subsidized and the taxes are incurred upon producers.
Not that I'm saying the poor shouldn't be helped.
It's just that they shouldn't be subsidized in a fixed and permanent way, which is a lesson that human beings have to learn every couple of hundred years.
They just forget this.
I mean, if you go back and look up something called Speedham Land, which were all the Elizabethan poor laws, you'll see sort of what I'm talking about.
S-P-E-E-N-H-A-M-L-A-N-D, I think it is, but it's fascinating to see just how this fixed subsidy for the poor is a lesson that just has to continually be learned over and over and over again to make sure we're not merging together and sandwiching with another car.
That would be a grim end to a relatively accurate podcast, I would say.
So... The explanation of the problems of stagflation were held by the Austrians who had kept for like four decades.
Austrianism had been kept alive by Hayek and a few other diehards.
And four decades, you know, doesn't sound like a long time.
Sorry, that damn sheer chicken possession is still a problem.
I should never have offended that voodoo guy.
But the issue that occurred is that it took four decades for this thing to come back.
And, of course, that doesn't sound like much, but that could be your whole career.
You might have spent your whole career.
As an economist or as a professor being sort of considered a fringe lunatic, right?
Like the people who are called gold bugs who are for a gold standard that is universal and so on.
These people are called gold bugs and considered to be crazy lunatics who are totally out of touch with the real world, right?
Because the real world is government whim, not material reality, right?
That's the social metaphysician that you want to be, right?
But that could be your whole career.
Somebody could have gone, you know, birth to death, right?
Like we say, well, communism only lasted 70 years and now they're free.
Well, what if you happen to be born in 1917, right, in Russia?
Your whole life was lived in slavery and fear and then you're dead and you don't get another life.
So it's not like Russia's now free and all the people who were under communism were enslaved and brutalized and frightened and murdered and their families were killed and they were dragged off to war and then they were starved and whipped and, oh, man.
So, I mean, it's all well and good to talk about the country as a whole, but each individual suffers enormously, and that is not something that can be recovered later on by the country becoming free.
People get to be born again in freedom.
I'm sorry, and I know that that's a specious and hyperbolic approach to say that we have something in common between an economist who is rejected by his peers and a...
Somebody starving to death in a gulag.
Don't you love drivers, I'm telling you.
You know, we have a block here up ahead where they're doing some construction.
And, of course, the left-hand guy is just whipping by, right?
And not letting the people in, as if sort of it's our fault.
We should have known that there was construction in this lane.
You know, it's these...
I'm a big fan of the little civilities, saying thank you to waiters and letting people in.
That kind of stuff I think is important to ethics as well because it gives people a sense of the benevolence of the world.
Believe it or not, doing those little things, letting people in, being polite to service and all those little details, holding doors open for people who have packages.
It gives them a sense of a benevolent social order that is spontaneous.
It's actually quite a good argument for anarcho-capitalism.
If, of course, everybody's sort of mean and cutting each other off and storming through doors on a cell phone without holding it open for anyone else, then it's a little easier for people to believe in the virtue of the government in a sort of weird way, right?
So I would say that the ethics of the little things are sometimes important arguments.
As well, because they lay the foundation or the groundwork for the ethics and the big things.
So I would certainly suggest that that's a worthwhile thing to do when you can.
Because, you know, the people who cut me off and who drive around me or drive past me when I need to merge from a construction lane, I'm not setting them free.
I'll set you guys free, absolutely.
As if it's up to me. But I won't set those people free.
You'll stay in the stage. We'll go to Libertopia.
But... This issue, which was well predicted by the Austrians, and for which there seems to be a good deal of speculation, and I think it's probably quite true, for which the enormous and shocking win for the Nobel Prize in Economics went to Hayek in 1976, I think it was, which of course raised the prominence, and I think it was in 1976 or 1977, sometime around then, that the first...
The first Austrian Scholars Conference kept going, which of course Mises, who'd been teaching at New York University for about 300 years, was prominent and there was a number of other Austrians.
And some of the people who were Austrians when the theory was first in vogue came back to the fold, sort of became Austrians again.
And gave up on Keynesianism.
And Keynesianism, you don't hear as much of it anymore.
It's still used in the popular media because the popular media is retarded and doesn't like anything new and just likes to sort of harp on the same old prejudices over and over because, you know, they're selling to people who just like to hear mirrored back to them because they've been brutalized by state schools and don't like anything new because...
It will force them to understand how little they've been taught to think for themselves, and so people just like to stay in the comfortable rut of old, squalid, stupid nonsense just because otherwise they realize, right, if you don't ever run, you don't sort of realize that you've been crippled, right? If you don't ever try and get out of the wheelchair, then you feel a lot less crippled.
Especially if you don't think you're crippled, right?
Then instinctually you don't want to get out of the wheelchair because then it'll reveal that your theories about yourself are false and that you really were greatly harmed by public education or your parents or whoever taught you all this nonsense.
So, but it sort of went out of vogue and the important thing to remember is that Keynesianism didn't win out of any sort of empiricism and it didn't win by disproving.
The Austrian school's approach to, say, explanations of the Great Depression or the business cycle as a whole or these sorts of things.
It simply won because, and this sort of happens to an unnerving degree in human affairs, Keynesianism won because it just became fashionable.
It just became cool.
I mean, it sounds ridiculous, you know, that the misery of two generations was founded on a sort of fashionable whim.
But that really does seem to be the case.
I've never seen a specific, and of course, you know, there's lots of people out there with more expertise, but I've never seen any specific repudiation of the Austrian school through Keynesianism that is sort of point-by-point refutation.
And it just sort of won, well, for me it won for two reasons.
One is that it was, you know, kind of cool and fashionable, and it was on the socialist side, which was very much in favor to that point, as it remains now.
Even by these sort of Republicans or so-called free marketers, but it also won because intellectuals...
I mean, I don't think there's any proof for this, but it does sort of follow logically, I think, based on economic theories.
It doesn't seem to me too, too surprising that economists who primarily work for the state, or who work in state-agent industries like investing and so on, which we've talked about many podcasts ago, but...
The practice of being an economist is almost exclusively either a public intellectual position because you are beholden to the government directly or indirectly in the form of being a professor or something like that, or you work for a bank or an investment house, which are adjuncts of the government, right? There's not a whole lot of economists in the computer field, right, in the software field, because...
Well, we like to keep our hands relatively clean in that sense.
But in the fields that are the least regulated, there are very few economists, right?
And if you look at a magazine like The Economist, it's all about the state, right?
It's all about the government, right?
I mean, the economists are just slaves to public policy and sort of coercive social institutions like the state.
And so, to me, it doesn't seem too, too unlikely that economists, who, like everyone else, are looking out for their direct and personal economic interest, that economists should be greatly in favor of a doctrine that will vastly increase employment for economists, right? I mean, that doesn't seem to me...
I don't think that's conspiracy theory to say that people generally prefer conditions under which they make a lot more money.
And, of course, even, I mean, you may say, well, these people are all professors, but, of course, that's not the case with economics at all, right?
It doesn't matter whether people are professors, right?
If you raise the demand for your profession, even if you yourself are not going to partake of that demand, then you yourself can negotiate a raise, and not an insignificant one.
So if you make the demand for economists that much greater, like if outside the academic profession, then you are going to end up in a situation where you're going to be able to bid a whole lot more for...
And you're going to be able to charge a whole lot more for your services because there's greater competition outside of your services.
So either direct employment by the state or a bidding war for economists because of the growth in state employment, these things are all very central.
And we'll talk a little bit more.
Sorry, I didn't quite get to it, but I wanted to put in some background and talk a little bit more Thank you so much for listening.
I will talk to you soon.
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