If something is wrong for you or me, it is also wrong for the cop, the soldier, the mayor, the governor, the general, the FED chairman. The president, Seth does not become acceptable when called taxation counterfeiting, when they call it monetary policy. Kidnapping, when they call it the draft mass murder when they call it foreign policy. Welcome to Keith's night. Don't tread on anyone today.
We have a professor of Economics at George Mason University, a senior fellow of the fa Hayek program for advanced study in philosophy. See, politics and economics. Mr. Boudreaux. Thank you so much for coming on. Thank you for having me. When you say free market capitalism. What does that mean? For me, it means that there's a heavy strong presumption that every adult can use his or her property as he or she he or she sees fit, they can sell it, they can use it.
They can destroy it. They can accumulate, they can build on a, they can deal with it. It's a strong presumption. I understand that you can make good re you can make plausible reasons for having that presumption rebutted in. Certain circumstances, but in all societies that Prosper that presumption does remain very strong and it is relatively seldom overturned.
So that's what I mean by free markets and and the resulting exchange ratios the prices at which people sell their products including their labor Services, is also determined by voluntary exchange and not by tradition, and not by the day. Dictate of political authorities. And what would you say? You've been very critical of government intervention? What would you say is the main difference between doing something in the market or having using the state as the mechanism to achieve a goal?
Well, in the market, the in the, the actions are voluntary and they are discrete. So you, and I agreed to do this, this program on, whatever terms we agree. I go to the supermarket. I agree to pay three dollars for a gallon of milk in the Agrees to give me a gallon of milk in exchange for my three dollars. And we don't have anyone superintending, our decisions. They don't have any one
overriding, our decisions. And so there's a strong presumption that when two adults engage in voluntary trade both adults gain from that trade, of course, people make mistakes, but that's true in all Realms of human endeavor. So the presumption is that when people exchange voluntarily property that belongs to themselves, rather than property that belongs to others that eat. But because in each case, Each person is made better off the accumulation of those exchanges
makes everyone in the society. Better off. Now, say, I am a progressive, who believes that the consumer. It's very difficult to have knowledge about all the products you use throughout the day, in order to have, whereas these big corporations. They have so much money. That why would they care about One? Customer out of the billions? They have potential. My question to you is, as the free market Advocate, who protects the consumer competition, protects the
consumer. And if a corporation for each, from each consumers perspective, that her is one of many customers for the corporation, the corporation cannot afford to treat each consumer in that way. If the, if the corporation mistreats me, then word, gets out to other consumers, and other consumers, that are less likely to deal with that Corporation. If you look at, actually, the way corporations, big corporations are incredibly sensitive to what consumers think about them.
Of course, you can find exceptions. You can find acceptance, almost any rule in human behavior, but corporations are incredibly sensitive. The public to their Public Image and just my colleague, Tyler Cowen wrote a wonderful book earlier this year called big business called big business in Praise of America's great Anti Hero or something like a subtitle. And he makes the point. I think he's correct.
If you look at, actually the performance of large corporations in market economies, they have done far more to improve the living standards of ordinary men and women van have any intellectuals than has the state. Because As businesses know that the greater their success at satisfying consumers, the higher will be their profits, the higher, or their profits. The greater is the Temptation for other people, other Corporation other, entrepreneurs to imitate them, or to try to outdo them.
That's the competitive Dynamic Market process. And that is what that is key to what has driven, our standard of living to the astonishing height, at which it rests at that breast, which it is today and will continue to rise. Long as the market is, it continues to breathe? So, say, I not only care about the consumers, but I also care about the workers that very bad can working conditions can
exist. And if there's not a regulatory state to sort of keep an eye on these corporations, the state representing us obviously through our elected representatives. Then how then who protects the workers in the absence of the state. Overseeing Worker regulations such as OSHA. Competition once again, I don't have to work just for my employer. There are many employers out there who would like my services in one form or another.
Now the I work for my particular employer because that particular employer gives me the very best bargain given all my preferences and and options. There are other places which I can, I can work. Very few Americans have worked for only one employer in his or her life. Very few. Americans fact, I would say no American has only An option of working for one employer. If you look at the data on worker, pay it tracks, very
closely worker productivity. There are claims from time to time that there's been this disc decoupling, between compensation and productivity, you know, if you want to, if you want to diss the market, you you got to find reasons why the markets not working, but when you look at the data carefully as I and a, and then my graduate student Lisa Elliot Allagash really did
a number of years ago. We looked at the data on American worker, pay an American worker productivity and we found along with some other Scholars. Some other Scholars at other universities. We found that worker pay tracks productivity. The reason worker pay tracks worker productivity because if my employer doesn't pay me what I'm worth, then I am to likely to get bit away. And so it's my Obviously would like to pay me a pittance to work for it, but I'm not going to work for a pittance.
And the reason I'm not going to work for pittance is because I have other employers who are willing to pay anymore. So this competitive process just as it pushes the price of consumer goods down, as far as possible and increases the quality and abundance and variety of consumer goods. As much as possible. That same competition raises, the work raises wages, and fringe benefits to Heights as high as possible as well as the quality of jobs Americans.
Today. I think a lot of Americans today are under this myth that somehow American workers are being mistreated and abused. And the general fact is that that's simply not not true. Again. Of course, you can find exceptions or 150 million jobs. In today's American economy, nearly 160 million actually, but overall the typical American workers.
Highly paid. Well, compensated, and working in conditions, by the way that are as comfortable and as safe as Any time in history, now, see, I fear that monopolies will exist in the absence of a state, sort of intervening making sure companies don't merge in merging. They will create less competition. They will give me as the consumer less choice. And in fact, well, I don't want to go there.
That's the theory. So another words, the monopolies will almost become more powerful than the state. In in the way of They'll control a large portion of the resources. They will be able to bid up the price. I will have no bargaining power. As a consumer, nor a worker is the existence of monopolies. In our a justification for State intervention and a argument against free market capitalism. No, you know, you can tell that story and you can certainly tell a logically coherent tail where
that might happen. But both Theory and history lend no. To that story first, just just look at history. There's no example in history that I know of in which private firms have gained power in the market on their own without government, support to harm, consumers over any length of time at all.
You know, we Americans we had the story of American antitrust and when I was a young scholar, that was a major focus of My research, the history of American antitrust policy and what I, and my then colleague, Tom dilorenzo and some other Scholars, Gary, live cap, economic story, what we found largely through independent research, is that in the 1880s to the First Federal antitrust, statute was passed in 1890, the Sherman Antitrust, Act. And so you'd think if the story
is correct at the Sherman Antitrust Act was enacted in order to rid the American economy of these monopolies that were rise, and you'd think that they'd be evidence during the 1880s. Sweeping up to 1890 of monopolization of high prices of of worker wages, being kept way too low of the reduction, and output of a reduction in the quality of consumer goods, we find just the opposite.
If you look at what happened in the 1880s, was a period in American economic history of incredible economic growth. It did give rise to large firms. That's because of the railroad and the telegraph, they were making the market larger.
And so, with a larger market larger sized, firms become Sufficient to serve those markets and so we did have larger firms but the accusation that standard oil for example or the Chicago slaughterhouses in the 1880s and 1890s were monopolies in the way that economists use the term is simply not borne out by the facts quite the opposite. These firms were driving prices down. They were driving outputs up and they were driving quality
antitrust. The antitrust legislation that we had in the United States was in fact enacted. To protect consumers from monopolist. They were enacted the statutes work at the federal and state level. They were enacted to protect existing less efficient producers from the competition of these very firms that were accused of being monopolist. And so there's no history lens. No support to those people who worry that merges. A large firms.
Will will undermine a competitive economy and in economic theory, it's pretty simple. As long as the government doesn't restrict entry entrepreneurs are Totally creative and fortunately incredibly persistent and Incredibly interested in making a buck that when an opportunity when offers are constantly on the lookout for opportunities to satisfy consumers in ways, that consumers aren't well. Satisfied at the moment.
That's what you make a profit. And when, if a firm isn't adequately treating its consumers, if it from isn't adequate treating its suppliers, it such as workers that presents a profit opportunity to other entrepreneurs. They sweep in and they offer better products. They offer better jobs. This is the story of American economic growth. This is a story of growth in all market economies, including Great, Britain, when markets have have been free when the state intervenes.
It's almost always whether it's the intent or not of the intervention. It's almost always the effect of the intervention, not to promote competition and to help consumers and workers. It's the opposite, it's to stymie competition and the harm consumers and workers. That's what history shows and we have good, good good theory of understanding why? That consequence emerges, why are some countries wealthy and some countries?
Poor, the simple answer? Is this the extent to, which they're so, I like the economic historian Deirdre McCloskey. He's way of putting it. Rich countries or countries, that have made. What she calls the bhujbal bargain. We agree to play by the, by the rules of the market. So so entrepreneurs are free to innovate. Which means free to to cause existing producers to go bankrupt.
So that resources, move from less efficient to more efficient uses consumers, get new, and better, and less expensive products. And so if consumers, if a society makes the Buchwald bargain, where the the large number of people in that Society are willing to play by the rules of the market economy, then those and, you know, respect private property rights, you have Something close to a rule of law. The government isn't isn't excessively intrusive. Look in my ideal world.
I suspect in your idea where government be really, really tiny. If it exists at all. I have since I was your age, I have learned that the market is more robust than I once thought it was. It can actually stand up to a lot of beating and abuse. I don't Advocate that beating and abuse, the world would be better if that beating, and if you didn't occur, but It's not the case that the slightest intervention here.
The excessively High taxpayer is going to cause Society to cause a market oriented Society to crumble, into in into Rubble. It takes a lot to destroy a robust market economy. And so, that's why over the long run. I remain optimistic, but but, but, but we in the United States are wealthy to the extent that our ancestors have, and the extent that we Continue to stick to this to have made and continue to stick to the bushwa whose real bargain. We still largely honor entrepreneurs.
There's freedom of entry into most markets government doesn't Isn't So arbitrary. Yet that it destroys Enterprise. And as long as those little niches of Freedom exists, we will continue to prosper again. I Would like the government to be much smaller. I would like Texas to be much lower. I like regulations by government to be much fewer. Things would be even better. But but we still do, have I think a more or less a bushwa society and that can save us from a lot of evil and a lot of
calamity. You wrote an article titled. You are richer than John D Rockefeller. I'm curious. What did you mean by that? And how do you measure wealth in an economy? Yeah. So obviously, at one, at the ultimate level, how wealthy you are, how materially well-off you are or how wealthy you feel is a subjective matter. But what I meant by that is, if you just look at the access to material goods and services that people have today.
Compared to the material goods and services that John D. Rockefeller had a hundred years ago. I wrote I wrote the piece in 2016, but still applicable 2020 19. And so John D. Rockefeller was arguably the certainly the richest man in the world. Certainly one of the richest Americans famously Rich. He had things that you and I don't have and you and I will never have, he had many many homes. Get a home in Newport. He had a, you know, he could buy a nice.
And if you wanted you and I will never be able to buy an island or have Prime beachfront property. So, in that sense, he is richer, but in a lot of Senses, we are Richard, we have. Oh, I don't know. Antibiotics, which, for me is a big thing. If I or you get a blister or cut ourselves while while doing yard work, there's very little risk that will die from any infection that we get because we have antibiotics.
And we had these Little many of which you can buy over the counter, you know, antibiotics spray and antibiotic bandages, John D. Rockefeller didn't have that air conditioning. It's a hot day here in Northern Virginia and without air conditioning. How would be really uncomfortable? John D. Rockefeller didn't have air conditioning until the very end of his life. He died in 1937. He did not have jet travel.
He could not pick up. A little slab like a cellphone and and talk to people whenever he wanted in real time. He and 19 before 1920. He could not listen to a commercial radio broadcast. He certainly didn't have television, didn't have YouTube, didn't have the internet and
have laptop computers. The range of food that he had available is was to him, even though he was the one of the wealthiest people in the world was much smaller than the range of food that you and I have within five miles of where we live. If we live in any any place close. To a even, a medium sized,
American city. So compared to there are lots of things that John D. Rockefeller did not have that ordinary Americans have today and they and these things are in such abundance that I think it's a fair argument to say that ordinary Americans today are at least as wealthy as, and perhaps even wealthier than in a material sense as John D Rockefeller. One way, I put it in my piece. Aces. If you know, if you take a real careful survey of the life of John D Rockefeller in the late
1910s, and your life today. And ask yourself. If you could go back to 1919 or 1916 and live like John D Rockefeller, what would it be? What would it be worth to you? Would you have to be paid to do it? Or would you pay to do it for me? I would have to be paid to do it. I would not want to live without antibiotics. I mean I want to Without air conditioning. I would not want to live without radio and television or the computer or the internet or you know cars that don't break that.
Don't break down a cell phones. These are things that we take for granted. It's an irony of the market that it provides an abundance of goods and services at so cheaper price and frankly. So reliably that they don't have to be around for very long, but they become part of the background like white water to a fish. We just take them for granted. And it's ironic, that people will complain about capitalism while tweeting on their iPhones.
They don't see the irony in that, but it's highly ironic. When you, when you think about it. Look what we're doing here. We are talking about. Where are you physically right now? Chandler, Arizona. Yeah, you know, it would back back in John D Rockefeller. Thursday would take, probably at least three days by railroad for me to get from Northern, Virginia to Chandler, Arizona. And by the way, I probably would not want to be in Chandler, Arizona, in mid-august without
air conditioning. What's the temperature outside? There are five annotated. Yeah, but it's dry here is getting up to 95, but it's humid. So pretty bad in both places and yet neither you nor I want to suffer. We're not we're not going to die if heat stroke because we're in an air-conditioned places and so just just just what we're doing today. We take it for granted. We think it's normal. I'm talking you and I are talking in real time and we are separated. By almost 3,000 miles.
This is astonishing yet. We take it for granted, and what gave would gives us? This is the Bourgeois bargain. It's the Innovation and the dynamism of market-driven capitalism. Now say hi. Look out at the world and I see very, very rich people with billions of dollars in net worth and I see homeless people in the same country in the same city. If you go to San Francisco, does the existence of monetary inequality justify State intervention? And is it an argument against
free market capitalism? No, it does not justify state in intervention. As long as the inequality of wealth was earned by through a process of voluntary. Changes, I don't see that. It's anyone's business. How much Jeff Bezos has or how much Bill Gates or Warren Buffett have been. Obviously if people get to the extent that people get their wealth by predating on others than that. That that wealth is unearned, but what is on what is dis undesirable about that
distribution of wealth? Is not the distribution itself. It's the manner in which the distribution came about. And and you know, I think people when they worry about wealth inequality, a lot of this concern, some of his I think you just plain Envy which is a sentiment that good parents teach their young children to avoid.
It is a natural human emotion. I get it because I'm human but it's not a sentiment that we should be that we should be proud of it went on those occasions when I feel Envy ice-cold myself. I don't like myself. I try to try to rise above that, that base sentiment. So I think a lot of the hostility to wealth inequalities Envy just knowing that. That some Jeff Bezos has more money than me. I wish I had that much money and some envious, but a lot of the concern I think is that it is
well, meaning and sense. It is not driven by Envy, but it's driven by. Economic ignorance. A lot of people have this notion that that that wealth in the world. Is this Big Blob and it exists. If not in fixed quantities, independently Of Human Action and human institutions. And if wealth is just this Big Blob of stuff out there that has nothing really to do with your choices, or my choices, or the institutions of the society, in which we live. Then if you happen to grab a
larger chunk than I have. Or if a larger chunk happened to fall onto your House, then fell into my house, then it might be difficult to justify. But of course. Well isn't a a pre-existing chunk of stuff that exists.
It's created, wealth is created. You know, the the first book first book in modern economics, my by discipline, it was written by in 1776, by Adam Smith. And full title is an inquiry into the nature and causes of The Wealth of Nations into the causes of The Wealth of Nations. Wealth is causes. And for most of you History, not much wealth was caused because we weren't very wealthy. We fortunately in the past 200 so years have stumbled upon a set of social institutions is
bhujbal. Bargain that mycoskie talks about. That allows the creation, the causation of a great deal of wealth for ordinary men and women. And what people who complain about income inequality, many people who complained income inequality forget. I don't realize is that if you just start willy-nilly, Eating the fruits of wealth creation, you will destroy, or at least greatly hamper, the institutions and origins of that wealth itself. And so you'll have a lot less wealth to to distribute.
And also there's this when wealthy. So so Jeff Bezos, I don't know what magnitude one, but multiple of wealthy has more than me, you know, several hundred thousand times more wealth than me and I'm, you know, I'm pretty well off, even by American Standards, but he's vastly more Rich than me, but this Jeff Peace. Be so seats a 170 thousand times more food than I do is the quality of his wine 170 thousand
times better than mine. Will he live a hundred seventy thousand times longer than me. He says computer 170 thousand times better than uses Healthcare hundred seventy thousand times better than you know, all right. In some cases. It's not better at all. I bet when he has a headache, he takes exactly the same thing. I do. Bayer Aspirin. I bet he eats the same number of calories as I do. I bet the Sir, and his home is identical to the temperature in
my home. She probably sleeps the same number of hours that I actually need to sleep Swift because he's more productive than I am and so much of it. Jeff the great majority of Jeff Bezos has wealth and this is true for other people. Like him is not tied up in a bunch of consumption Goods that he's gobbling down its invested in companies that produce outputs that make your life and my life better, that create jobs. For fellow Americans and people around the world.
And so if you if you see the government seizes a great deal of Jeff Bezos as well. It will take resources from where they are being used to produce, not for Jeff Bezos directly, but for you and me and countless other people and and be wasted in whatever programs, the government uses those, those resources for. But, but again, but on this issue, I, My ultimate argument is an ethical L1 if Jeff Bezos,
didn't steal his wealth. If Bill, Gates didn't steal his wealth and they are entitled to the. Well, I am not entitled to it. Even if you can tell a fully coherent story that the world would be made better off by taking his wealth and giving it to me. I'm not entitled to it. So it's not mine, and I don't want it. So say, I only care about the polar and the general well-being of the nation state. Why should I someone with such a big?
Mark Advocate, something like free market capitalism because free market. Capitalism is proven historically to be the greatest benefactor of the poor and the middle class free market. Capitalism, is done, far more for the 99% than is done for the one percent. Sure. It's Rich to everyone. But, 300 years ago, the elite the 1% They had solid roofs above their head. They had solid floors beneath their feet. Feet. They could take Leisure, they could educate their their
children. They had, they could snap their fingers and get white when the servants would run in and like, the chandelier right Ordinary People. 99 percent people didn't have that. Most people had thatch roofs above their heads and they had dirt floors beneath their feet. They didn't have, they didn't have indoor plumbing. They didn't even have Windows on the Huts that they lived in. In many cases, they used farm animals for heat.
They died, really early. They had no very seldom had opportunities to learn and and for cultural enrichment. And and what capitalism is done with free market capitalism is done. Its greatest achievement is to bring material prosperity to ordinary men and women and their children and that material prosperity in turn has allowed ordinary men with Women to have two League dignified, meaningful lives in a way, that was simply impossible when we were living
hand-to-mouth subsistence. Existences, prior to the Industrial Age. I got two more questions for you. I want to respect your time, say I am an environmentalist. And my primary concern is about the well-being of the environment. Surely. We need a state to protect the environment and deal with externalities is my care for the environment. Just reason to support state intervention and opposed free market capitalism.
I can tell, by the way, you asked the question that you understand the economics of it. Yeah, you can, you can make a case that if externalities negative externalities, when economists call negative externalities exist. So, you know, pollution out of the smokestack, then the market doesn't work often in those circumstances to cause private actors to behave in a socially responsible, way. You can tell that story but have to keep two things in mind.
One is The state itself is State officials themselves are affected by the same, lack of information, and lack of property rights that sometimes cause private individuals to not act in in the socially best Manner. And so turning power over to the state that doesn't necessarily cause the problem to, to be improved, you have to trust State actors to do. What's right. You okay? You can tell a coherent story
where that might happen. But if you look at the most powerful states in the past 100 years, they have been the states that have they have ruled over countries, that have had the worst pollution, Soviet Union, Eastern, Eastern Europe, pollution, and those countries under the collectivist governments of the 20th century have have been much more lenient on polluters then have Western governments. It's the second thing to keep in mind.
So the first thing is the danger of granting the state power to interfere in markets. The goose may be killed, that's laying the golden eggs. We the state might eliminate pollution, but at the same time eliminate the the the wealth that we all like the markets to provide second thing to keep in mind is that if you look at the actual environment that we ordinary people live in, I like to put Wait, we today are lucky to be able to worry about things like global warming and species
loss. I'm not saying here that we should worry about those things. But we're fortunate that most that so many of the environmental problems that Afflicted, our ancestors have been solved that. Now we can turn our attention to problems that are far more speculative and whose consequences are far more distant than where the environmental damages and that ravaged our ancestors. Prior to the Industrial Age. That was the wind or Plumbing. That I don't have to your mat.
You don't need much of an imagination to figure out how bad that would be. Again. We will living beneath fact proves and on dirt floors. They were no antibiotics. The one of the greatest pollutants in human history is is bacteria or bacteria that killed us. We have this great anti balut anti pollutant called antibiotics that when we get a cut or we get infection somehow, take the antibiotic and that pollution goes away. That's Brought To Us, by the
way, by industrial capitalism. We have, we have Eric. Again. We have air conditioning flush flush, toilets. We have antibacterial soaps. We have cleansers in our home. We have these machines in our own car washers. Dryers and electronic dishwashers. All of these things, make our personal environment a lot cleaner. And so, our personal environments in which we personally live, today are far cleaner, then with the environments in which even the rich lived, 200 years ago.
And so now that those environments are clean. Okay, then we can turn our attention to worry about what's going to happen to the global environment. 75 75 years from now. And the reason people can and do dispute what's happening. And what are the best approaches to deal with that? But let's stop and thank industrial. Capitalism the bhujbal, bargain the Bourgeois ideal for cleaning, our personal environments, making a personal environment.
Actually antiseptic and and spotlessly clean compared to what those environments were for the vast majority of all of our ancestors. And finally, one book, if you could recommend one book for everyone in the world to read, what book would that be? Wow, what a great question. Any constraints. I mean, so you're asking my so the book that I found most influential. On me. Fa Hayek's, the first two volumes of f. A Hayek slaw legislation and Liberty, but I can't just say one.
I would say Julian Simon is the ultimate resource. Oh, that's a good one. Gotta send a copy to Paul are lick and Thomas. Malthus is great. Boudreaux. Thank you so much for coming on. I greatly greatly. Appreciate your time. It's been a pleasure being with you. Thank you.