From Monarchy to Democracy

0:00Okay, the subject of this lecture is from monarchy to democracy. This is obviously one of the main subjects that I cover in my book about democracy, I talked about monarchs already in the previous two lectures, about the role of monarchs in feudal societies, which we can refer to as basically pre-state societies.

0:55And then in the last lecture about the position of monarchs as heads of state The period of state and the transition from the feudal stage to the monarchical state, roughly speaking historically and only talking about Europe in this case, The period of feudal monarchs is roughly the period from 1100 to 1500 and then from 1500 until the end of World War I.

1:44That is the period of monarchical states, the later stages, constitutional monarchical states, and in the earlier state what we refer to typically as absolute monarchies. As I said, the discussion during the last two lectures referred mostly to the development in Europe and I will come back to the European development, that is to Christian monarchies and the transition from Christian monarchs to democracy in a moment I want to say a few things about the institution of kings and monarchs in general, even outside of the European scenery.

2:49In a way, monarchs are, so to speak, the more typical form of rulership, whether pre-state or state rulers, than any other form. democracies, a very rare event in human history, and in a way it is easy to explain why that is, because patriarchy is, so to speak, one of the most natural institutions that you can imagine. You have, of course, fathers as the heads of households, and by and large the idea of kings was modeled after the structures that you find in households.

3:53Kings were typically regarded as the head of extended families, or the head of clans, or the head of tribes, or later on then, of course, the head of entire nations. But along the lines of the idea, this is, so to speak, a natural development similar to what we see in each family developing. All kings try to associate themselves with some sort of religious, or give themselves some sort of religious dignity and in many places on the globe, The kings were considered to be either gods or incarnations of gods or descendants of gods or as people who acquired godlike status after their deaths.

5:17And kings in all societies try to provide, in a way, two functions. On the one hand, the function as judge and priest, that is, so to speak, as the intellectual of larger groups of people, and on the other hand, the function as warrior and protector of their clans or tribes or whatever the group was of which they were considered to be the head.

6:06And while it was sometimes the case that these two functions, the priest-judge function and the warrior-protection function were separated and occupied by different individuals, there There was always an attempt made to combine the two, make the protector and warrior also at the same time the high priest. And of course in combining these two functions you would achieve far greater power if these two functions were somehow exercised by different individuals controlling each other.

7:06So frequently the king, actually outside of the West more typically is the case, The king was also considered to be the head of the religious organization or the head of the church. That was the case in places like Egypt or also in Japan, in the Islamic world with the Hindus and also in the case of China. The uniqueness of the West as I mentioned in previous lectures, the uniqueness of the Western civilization was precisely the relative strict separation of these two functions by different individuals and different institutions.

8:10This is not to say that that existed in the West throughout. It was certainly the case that the religious leaders, the Pope, tried to acquire also earthly powers and vice versa, that the earthly ruler, so to speak, tried to control the churches. But certainly from about a thousand or so, the separation between the two roles worked for quite some time in Europe, basically until the Protestant revolutions, when the combination also in the West between church on the one hand and state or earthly rulers on the other hand, and became increasingly closer again.

9:17This separation between the church leaders and the earthly worldly rulers did not of of course prevent that the various kings claimed some sort of elevated status for themselves. I mentioned in the previous lectures that the kings of England, for instance, tried try to trace back their own claims to the land to Adam and Eve and thereby present themselves so to speak as people whose position had been founded ultimately by God and that all of of their subjects were indeed nothing else but the offspring and following the tenets of them.

10:28Nonetheless, at least for the Christian world, even if kings claimed that they had this special and the historical dignity of having been installed by God directly or indirectly into their position precisely because in Christianity kings are not considered to be God-like figures and we have a transcendent God. Kings were always considered to be under the law, like everyone else.

11:18And because of this, in the West, the institution of regicide, killing the king, was always considered to be quite legitimate, not entirely undisputed, but for centuries, of course, considered to be something that was entirely all right if the king would not do what he was supposed to do according to the universal law laid down by the transcendent God. In addition, in Europe, the power of the king, at least in some parts of Europe, was always restricted by the fact that there existed other noble men who claimed to be the sole and exclusive owner of their land.

12:28not to have received their land as some sort of grant from the king but being maybe on a smaller scale but nonetheless an equally safe private property owner as the king was of whatever he claimed to be his. This is what we refer to as the elodial form of feudalism. And in so far, at least for the feudal king, he was recognized as a voluntarily acknowledged judge and military leader.

13:18And as I explained in the previous lecture, it took quite some time for him to secure and gain the position as a sovereign stripping these elodial feudal owners of their full and complete property rights and establishing himself as a compulsory monopolist. Now with the establishment of kings as states, we can almost from the very beginning discover the seeds of the destruction of dynastic monarchies in the following way.

14:24Let's talk about what I explained about the justification that was given for the existence of a state, the justification that Hobbes developed. There will be war of all against all and the only way that we can create peace is by having one monopolist on top of the social hierarchy being the ultimate judge equipped with taxes. Now interestingly, in this justification, you realize that it doesn't really matter for the Hobbesian argument who this monopolist is.

15:10It happened to be monarchs at the time because the institution of monarchy is, so to speak, a relatively natural institution. Just people who have more wisdom and riches accumulated and command more authority are looked up upon. So the first governments, the first states happened to be monarchs, but the argument for the state that monarchs of course used in order to establish themselves as a state makes no reference to it must be a king who is this monopolist.

16:01In principle, it can be anyone. It just must be a monopolist who does it. Because of this, for instance, the English kings were initially quite unsympathetic towards the Hobbesian argument. because they realized that it did not contain a specific justification or legitimation for the institution of dynastic monarchs. And Hobbes was even suspected to have some sort of republican sympathies and even as being somebody who might have secret sympathies for Cromwell.

17:00Whether that is true or not, it is irrelevant, but what is of importance is the fact that this justification of the state, This rational justification of the state embodies the seeds of the destruction of the institution of a monarchical state. Now this transition from monarchical state to a different form of state, to democracy, Again, it took several hundred years, just as the establishment of states out of pre-state orders took several hundred years.

17:50and the transition was driven not least by the very intellectuals that played an important role in securing the position of kings as states. Remember, states need legitimacy, need support, voluntary support in the public, and it was precisely intellectuals that were hired by the king that spread this idea about the necessity of a monopolist judge equipped with taxing power.

18:43But as intellectuals happen to be, they are always unsatisfied with their own position. Even though the position of their somehow improved being now somewhat employed or semi-employed by kings, These things, as soon as they had reached this position, they began to spread some sort of egalitarian views. And these egalitarian views simply pointed out to the fact that isn't that somehow unjust that there exist people who have privileges, that the king is guided by a different type of law than the rest of mankind is, that there are princely laws and privileges and then the laws and rules that apply to the rest of mankind.

20:06So the egalitarian propaganda took the form of an attack against privilege. privilege, how can privilege be squared with the idea that, with the Christian idea that we are all created equally by the same creator and so forth, and the alleged solution proposed to this seeming injustice was to say that there should be open entry into the position of government.

20:57Why should it be the king? After all, only a state was necessary in order to create law and order, and other people could do that just as well as some sort of hereditary king could do it. There were some people early on who recognized that the problem with the state king was in fact that the state king represented a monopoly and that what was necessary as a solution Everything was in a way to get rid of this monopoly power, again to have competing jurisdictions and so forth.

21:45But the overwhelming majority took the line that in order to abolish privileges, all we have to do is open up entry into the government to everyone. They called this, of course, equality before the law. Now let me point out from the outset that there is, of course, an error involved in this. By opening entry into the government agency to everyone instead of restricting it just to the members of some specific family, you do not abolish privileges.

22:43What you do instead achieve is you substitute now functional privileges for personal privileges. The king had a personal privilege and his successors a personal privilege. But if you open entry to the position of the government leader to everyone, you still have a functional privilege. Everyone can now acquire this privileged position, but there still exist privileged positions. In legal terms, we can say, instead of having a higher princely law and a lower law applying to the common man, we have now created, so to speak, public law.

23:42That is, the law that regulates the behavior of those who are in charge of the state and private law that applies to the rest of mankind. But public law is, again, superior over private law in the same way as princely law was, so to speak, superior over the law applying to common folks. Public law beats private law and that there are privileges in effect. You can simply see by the fact that as a public official you could do things that as a private individual you were not allowed to do.

24:38This is of course true up to this day. As a public official, you can, of course, take the property of others. As a private citizen, this would be considered to be a crime. As a public official, you can enslave people. You can draft them into the army and military and so forth. If you were just a plain private individual, then that same task would be considered to to be an outrage and would be a punishable offense. So privileges do not disappear by opening entry to government to everyone, and not everyone is equal before the law either, because there exist two types of law.

25:36If you are a public official a different law applies to you and protects you than if you are a private individual than you are only protected by a subordinate form of law that is private law. If we look at the change from monarchy to democracy described as a system where entry into the government is available to everyone from a purely economic point of view, what What happens in this case is that we substitute for a person who considers the entire territory over which he exercises monopolistic control, that we substitute for somebody who considers his realm as his private property that he can pass on to his offspring that we substitute for a person such as this, a temporary caretaker who is in charge for a certain period of time of the same territory.

27:12But this, being the owner of a territory or being a temporary caretaker of a territory, makes from an economic point of view a fundamental difference. Let me just illustrate that by using a very elementary example. I can give you a house and say, you are the owner of the house. You can sell this house if you want. You can pass it on to future generations If you want, you can sell part of it.

28:07You have the right to collect rent from it and so forth. And on the other hand, I give you a house and say, you are not the owner of the house. You cannot sell it. You cannot determine who will be the successor. can also not sell part of it, but you can use it to your own advantage for a certain period of time, that is the rent that you can get out of this house, you are free to do with this rental income whatever you want. Now ask yourself whether or not these two people will treat the house in the same way or Differently?

29:00And the answer is obvious. There will be a fundamental difference in the way that the house will be treated by these two individuals. The incentive for the owner is, yes, of course, I try to get as high a rental income as possible out of the house. But at the same time, I always take into consideration What happens to the value of the capital stock of which I am the owner? After all, I can sell the house. After all, I can pass the house on to future generations. And it is possible, for instance, to increase your rental income from your house in such a way that the value of the capital stock drops or falls more than my increase in rental income that I get.

30:04An owner would try to prevent something like this from happening. And if he doesn't do this, then he will be punished insofar as he will see that the value A new office property will fall in the property market. A caretaker's incentives are entirely different. A caretaker only owns the rental income. He does not own the capital stock. So what is his incentive? His incentive is to maximize my rental income regardless of what the repercussions are with respect to the value of the capital stock.

30:55Let's say I put, instead of one or two families in my house and collect rent from two families, I can also put 1,000 guest workers into my house and have one bed over the other, thereby I will definitely increase my rental income, but it is also easy to see what the price of this type of usage will be. is there will be a deterioration of the property taking place very quickly, the toilets will be plugged immediately, the carpet will be, the carpets will be dirty, there will be graffiti on the walls and all the rest of it and people come home drunk and smash the walls and who and who knows what.

31:54Again, if you know, I will be in charge of this house for four weeks. And the losses, so to speak, in terms of the capital value are not my losses because I don't own the thing in the first place. Your incentive will be to maximize my current income can be achieved by using this capital, even if it is the case that at the end of these four years, so to speak, the capital stock has been run to the ground and has completely been depleted. Now, on a large scale, so to speak, this is a difference between democratic caretakers of countries and kings as caretakers, as owners of countries.

33:03Ludwig Caretaker's incentive is, I have to loot the country as fast as possible, because if I don't loot it as fast as possible, then I will no longer be in power. I can make many, many friends if I just impose tremendous amount of taxes right now, and And what happens after I'm out of power, who cares? Whereas kings, at least by and large, had, of course, an interest in preserving the value of their dynastic property and pass on a valuable piece of property to future generations.

33:54No, I'm not saying that every king will, so to speak, automatically be equally good in terms of preserving his capital values, nor do I say that every single democratic care taker will precisely follow the scenario that I developed. But what I'm saying is the incentive structure is so different that we can expect that by and large, on the average, kings will have, so to speak, a longer planning horizon and a greater interest in the preservation of the capital stock, and democratic rulers by and large have a far smaller interest in the preservation of the capital stock and a far are greater interest in the current consumption of resources that you can press out of the existing capital stock.

35:02So the exploitation of a king is long run exploitation, foresighted exploitation, calculated exploitation. The exploitation of a democratic caretaker is short-run exploitation, non-calculating exploitation and so forth. Let me just illustrate this by looking just at three dimensions here. The subject of taxation, for a king, of course, he wants to tax, that's no question, everybody is tempted to do this, if you have the right to tax, of course you like to tax.

35:50But what he will bring into perspective is, if I tax too much right now, productivity of the population might go down in the long run, and I will be in the long run in power also. So he will more likely engage in moderate amount of taxation, always keeping in mind the disincentive to productive people that taxation implies. Compare this with a caretaker who is just in charge for a certain period of time. Again, for him, the fact that in the long run, productivity will decline if he currently engages in massive amount of taxation is a far lesser concern than it would be for a king, because after all, in the more distant future, he will likely not be in power.

36:57in Power, he is far more present oriented in this regard and discounts the fact that high taxation means a reduction in productivity on the part of the subject population to a greater extent than a king would do. If we look at the subject of debt, of state debt, a king is of course also inclined to incur debt, and they all did, especially for war finance and so forth.

37:45But kings typically, in order to get credit, had to pledge certain things as securities. And in addition, though that was somewhat disputed, there was always the possibility that the future generations were held responsible for the debt incurred by their own father or mother. That was not in all cases carried through, but it was hanging as a Damocles sword above of the head of a king that maybe the next generation is expected to pay off my debt.

38:42And again, he knows, of course, if his debt load is too high, this again has long run negative repercussions on savings rates and so forth, and he tries to avoid these long to a certain extent at least. Now consider a public caretaker and his attitude toward government debt. First of all, nobody of these people ever expects that any of them will be held personally responsible for the debt to be repaid. Look, Ronald Reagan, who indebted the United States more so than anybody before him, and now our beloved Bush Warrior, who again indebts this country to a tremendous amount, they do not, poor Reagan is not indebted as present, Nor will Bush have to fear that he will be jailed if he doesn't repay the debt.

40:00They just take up as much debt as they can and say some future suckers will have to pay for this. In addition, of course, they do not give any securities for it. That is, whereas major lenders to kings insisted, of course, but you see if you don't repay I get this castle or that castle or this little piece of land or that piece of land from you, there are no pledges of any securities whatsoever. If the government defaults on their debt, none of you are entitled to take over whatever the Grand Canyon or some place like this, so no security whatsoever.

41:03And again, you can, of course, imagine that the tendency of democratic governments to run up debts is far more pronounced than it would be under monarchical rule. The same applies to inflation. Yes, of course, kings loved inflation also, coin clipping and so forth. It enriches you. But, again, there are two concerns that you have. On the one hand, by inflating you increase your current income.

41:48On the other hand, you will get, of course, in future taxes, inflated money back for people who have a very short-run perspective. It is just what counts far more is the current advantage that you have in terms of inflating, The theory is that you can print the money and then buy yourself a Mercedes and a BMW or whatever you want. And then you realize, of course, how many friends you have that you were not even aware of, who also just realized that, man, these guys have some magic wand. They can just create wealth just by printing up paper money.

42:33Yes, of course you get inflated paper money in the form of future taxes back too, but again in the future you will not be there, you will not be the recipient of that inflated money that comes back in the form of taxes. So your attitude towards inflation is more generous, so to speak. You like inflation more. Again, for all of these predictions that I make, there exists of course ample empirical evidence that this is indeed the case. Let me just emphasize for instance that while kings tried several times to substitute paper monies for commodity monies such as gold and silver, However, all of these attempts were relatively short-lived attempts, and they had to go back to a gold or silver standard.

43:41Whereas it is typical for the democratic world, which begins essentially after World War I, And during this period, for the first time in all of mankind, it happens that commodity monies disappear entirely on a worldwide scale and wherever you go and walk, all you have is paper money and of course paper money inflation on a scale that was unheard of in previous centuries. There is also a different attitude among kings as compared to democratic caretakers when it comes to the redistribution of income.

44:35Both can take other people's property, but the king, if he takes the property of private individuals, runs an ideological danger. That is, he himself, vis-a-vis other kings, considers himself also to be a private property owner. He does not want to undermine the legitimacy of private property, because if he does, then of course his competitors, King George or King Henry or whatever, King Fritz, They might then be interested also in taking his property.

45:20So he is very much interested in maintaining the legitimacy of the institution of private property as such. So his forms of redistribution are rarely redistributions, so to speak, from the rich to groups of poor, but the redistribution activities through which he tries to achieve popularity and so forth are typically privileges, benefits that he gives to particular individuals and mostly to individuals who have achieved something.

46:09Just take the Habsburgs as an example. They ennobled people who were enemies of monarchies, say they usually ennobled other big ruffians like they were ruffians. But that is not really true, or in most of the cases at least it is not true. They ennobled in most cases indeed people who had achieved something. That's why the family of Ludwig von Mises was ennobled despite the fact, for instance, that he was Jewish. So they had also relatively little racial hatreds because all the noble houses were somehow interconnected and there was sort of a far more international orientation among the kings than about democratic caretakers who tend to be nationalistic jerks.

47:14The redistribution under democratic conditions is different. It's like you have to be re-elected all the time. And you have to be re-elected by masses, and the masses always consist of have-nots. There exists always more have-nots than haves, in every dimension of having that is worth having. That is, in terms of money, in terms of beauty, in terms of smarts, whatever it is, there always exists more dummies than smarts, there always exists more poor than rich and so forth. So what the strategy under democratic systems is of course the redistribution of income.

48:07First of all you don't have to legitimize this anymore because after all you are now operating no longer as somebody who defends the principle of private property. You are in favor of public property and consider public property to be superior, more important than private property. So taking private property is no ideological problem for you. And then, of course, you distribute it not to individuals but you distribute it to masses and by and large to the masses of have-nots. Then let me come to the argument that is frequently brought up in favor of democracy, that is, shouldn't we as free marketeers be in favor of free marketeers?

49:07democracy. That is, shouldn't we as free marketeers be in favor of free entry? After all, this is what we learn in economics. Monopoly is bad from the point of view of consumers because there is no longer free entry into every line of production. And if there is no longer free entry into every line of production, then the incentive of a producer to produce at the lowest possible cost is no longer in existence.

49:52Imagine this. If there exists free entry in a free market, everybody can become a car manufacturer, for instance. for instance. Then if I produce a car at cost that are higher than the minimum cost of producing this car, I basically extend an invitation to somebody else to go into competition against me, produce the same product at minimum cost, lower cost than my cost, and then be able, of course, to charge a lower price for the product and thereby drive me out of the market. On the other hand, if we have restrictions to free entry, then this pressure to produce at the lowest possible cost does no longer exist.

50:46This is, so to speak, the case that we make normally for why we are in favor of competition, meaning free entry into every line of production, and why we are against monopoly, meaning entrance into certain lines of production is either prohibited or obstacles are placed in the way of free entry and so forth. So the argument of some advocates of democracy goes then, yeah, isn't the same thing true here. The king that is restricted entry. And democracy, all of a sudden, entry is open. And isn't this a big advantage of democracy over monarchy?

51:37Now, the problem with this argument is this. The argument against monopoly in favor of competition that I presented before only holds insofar as we are considering the production of goods. The argument, however, does not hold if we consider the production of bads. And this is precisely what governments do. After all, those people who are taxed do not pay a price for being taxed. That is to say, they are not considering being taxed to be a good.

52:24Those people who are through legislative action stripped of their property or robbed of part of their property do not consider that to be a good that happens to them. They consider that to be a bad. Those people who see that the purchasing power of their money goes down as a result of paper money printing do not consider this the production of goods, they do consider that as a production of something bad. Now, do we want to have competition in the area of the production of bads? And the answer should be obvious. No. In the production of bats, we want to have at least as little competition as there can possibly be.

53:21We do not want to have competition who would be the most efficient commandant of a gas chamber. We would not want to have competition who would be the best whipper of slaves. There we would be perfectly happy if that slave whipping or gas chamber commandante occupation would be very restricted and we would be quite happy if very incompetent people exercise this power rather than looking for people who are particularly good at this. Now, continuing this argument, you might say, kings can of course, because they get into their position by accident of birth, can of course be evil guys.

54:20No question about it. But, if they are evil guys and pose a danger that through their activity, the possession of their dynasty, after all, they are head of a family, is threatened, then what typically happens is, of course, that one of their close relatives will be designated to make short shrift with this guy and chop off his head. That is, we have a way of getting rid of these people and don't even have to worry too much about the general public taking care of this problem.

55:17It is within the family of those weird kings themselves where they have the greatest incentive either to surround these weirdos with advisors who curtail their evil desires or if this doesn't work then have somebody hired out of their own family to kill this guy off. On the other hand, if you come into the position by accident, it is also possible that these people can be nice and decent people, like nice uncles, so to speak.

56:02They do not have to worry about being re-elected and so forth. They have been by and large trained for a long time to be the future king or queen and take care of the country. And believe me, I have met some members of royal houses. The upbringing of those people on the average tends to be an upbringing that most people would not like to suffer. That is to say, there is far more demanded of them in terms of decent good behavior and so forth than of the normal run-of-the-mill type people.

56:49I'm glad that I'm not one of the offsprings of a royal house. There is in most of these places relatively little fun in your life. In those monarchical families that have been deposed, they have become of course frequently playboys. That's true, because there is of course no preparation for anything anymore, they just have affairs and gamble and do this and that. But in those places where there is still the expectation that they will get into the position, I tell you, there is discipline that you have never seen in your own house before. On the other hand, look at democratic rulers, how they get to power.

57:42They have to be elected. And there it should be perfectly clear that under this condition, that is, with free entry, everyone can become president, senator, whatsoever. And these people are in the business of doing bad things, being capable of doing bad things. We have sort of a competition. Who is the smartest bad guy? Who is the most demagogic, best demagogic talent? who is a magnificent briber, liar, cheater and all the rest of it.

58:28Under democratic conditions, especially on the central level, it is almost impossible that a decent person will ever be elected to a higher rank. This might not be the case in a small village. In a small village there are still some sort of social constraints. The biggest, smoothest liar and so forth might not win an election in a village of 100 people where everybody knows what kind of jerk he is. But go to higher levels, state level, federal level and so forth, It is almost assured that a person who, out of conviction, doesn't lie, who says we should of course not rip off the poor, the rich, in order to give to the poor, but we should protect private property rights under all circumstances.

59:32Do you think part of the line comes from the simple scale, like a large scale that you're more of a liar because you're convincing people about things that you couldn't possibly do? The scale plays a tremendous role in it. Because of this, by the way, in history of political thought, you find practically no one who advocated democracy. Democracy was always considered to be a contemptible political system.

1:00:22The only few who advocated it, let's say like Rousseau or so, have only considered to be democracy possible in small places, where it is precisely social control, knowing what type of people these people are, and where it is far more difficult to advocate, so to speak, stealing, robbing, taxing to the hilt, of the Hill, people that live next door to you, of whom you know that they acquired their property in perfectly reasonable way, and that they were, that they deserve to own what they own, and it was their own ambition and energy that were responsible to have this nicer house.

1:01:10and then meeting him on the street and saying, you know, I know that you are a perfectly honest man and never betrayed anybody, but nonetheless, I vote in favor of your house should be taken away. That's difficult to do, but if you have these large scales, you don't know who's proper to you. You rip off. You never meet these people. It's completely anonymous, and of course, as more anonymous it is, the lower are the And the inhibitions that you have against engaging in these types of immoral activities, activities that on a small scale, you would not want to look in the mirror yourself and see yourself for what you have advocated, but on a big scale, no problem whatsoever.

1:01:59In quest for an a priori to apply to like the spread or this growth in support of democracy, can we say that it kind of stems from the dis-utility of labor from the standpoint that basically people see these redistributions and you know I guess well from the same point that we see these artificial booms you know given what you had mentioned about you know control of the money supply and what not that it's kind of it all goes back to this sort of Is human tendency to have a disability of labor, as Rothbard would say?

1:02:59You can't just simply grab the things of other people. You find a quick fix for everything, rather than working out a solid solution to a problem. So I'm not quite sure if I understand. You might want to address that question afterwards again in private. Let me just make a few more remarks. There is also far more resistance against raising taxes if you have monarchs in place. Because everybody sees this is a monarch, I cannot be the monarch, I'm just a regular guy.

1:03:52And why should he tax me? So there will be resistance against being taxed because you realize you will never benefit from this sort of stuff. On the other hand, as soon as everybody has a chance to become president, senator, whatever it is, you do not like if you are taxed as long as you are, so to speak, outside of government. But there is a consolation price. The consolation price is maybe at one point I'm at the other end of all of this, and that makes me put up with the taxation more easily than I otherwise would.

1:04:41Lastly, another important argument is this. Again, recall, kings that overdo it, they quickly lose their heads. Democrats, even if they are far more evil than kings ever would be, because you think, maybe in four years we can get rid of this SOB, will rarely be killed. and imagine how nice it would be if this institution of regicide would also be expanded to democratic side or something of that nature. Let me just end on some offside remarks.

1:05:35The first one has something to do with the fact that, or explains somehow how I developed these ideas about monarchy. The person who made me interested in the subject in the first place was Eric von Kühnelt-Ledin, Jean, with whom I was somewhat frenzied, was of course far older than I am, before that I, like most people, I always thought, monarchy, what an idiotic thing to say. How can you even talk about this subject? So he convinced me that that was something worthwhile thinking about.

1:06:21I think he did not have nearly as convincing arguments as I develop and I'm not boasting because he himself admitted that. I mean he has written, before he died he wrote still a few articles and in every one he quotes me and says that I have of course developed this stuff far further than he ever thought possible. so it is not that I just boast about this. The idea that I stumbled across first from which I then developed this was having observed that in the former Soviet Union, in contrast to most places on earth, in the last few decades, life expectancy fell. And having traveled extensively in the East Block, because my parents came from East Germany, were expropriated there, and I had relatives there and visited these places, I always noticed also the bad health conditions of these people, despite the fact that they had, of course, free health care.

1:07:41They had everything was free, except nothing was ever available of these allegedly free things. And I asked myself what could explain this, that life expectancy falls everywhere else, it seems to be going up. And another striking observation was the massive amount of people that the Soviet Union killed and Work to Death, even during peacetime. And then it came upon me as actually a very simple explanation for this. And the explanation is simply this. There exists two types of slavery.

1:08:28There exists the old run-of-the-mill type slavery that we are familiar with in the United States. You Americans are familiar with that and guilty for it. So I, of course, not...Germans have done other things, but not that. So well, you have private ownership in slaves. And in the Soviet Union, and in these East Bloc countries, you also had a form of slavery. Because slavery is characterized by two marks. On the one hand, you cannot run away. If you run away, they catch you, kill you, and whatever.

1:09:15And the second characteristic, Marcus, they can assign you to work. No, this they could do in the Soviet Union. You could not run away. They would shoot you dead if you tried to do this. And of course, you could not hang around. If you were just hanging around, they would take you and put you to work at some place, but the slaves in the Soviet Union were, of course, not privately owned slaves. That is, Lenin and Stalin, Gorbachev and whatever, they did not, could not sell these people in the slave market They didn't pocket the money or rent them out for a few hours and then finance their beers from the rental money that they got and so forth.

1:10:04No, they were just public owners, public caretakers of these slaves. They could exploit them, so to speak, to the hilt, but they did not own the capital in them. Once they did not own the person, and once you realize this, then it is perfectly clear that a private slave owner who can sell the slave in the slave market, who can rent it out, who can pass it on to his son, will of course by and large treat his slave far more humanely than somebody who is a public slave owner.

1:10:51Because the private slave owner of course sees if he mistreats the slave, the value of the slave will fall. What private slave owner would just for the joy of it kill the slave? The answer is that it's a very rare event, just like a farmer doesn't kill his horses and cows just for the fun of it. After all, they represent his capital goods. But in the Soviet Union, in those places where you had public slavery, this is precisely what happened. People did not take care of their slaves. Life expectancy fell. If these slaves dropped like the flies, no problem, you just got new supply just around the corner.

1:11:43corner. So if you would have the choice, so to speak, you must be a slave. You can't be a free man. What would be your choice? Would you want to be a privately owned slave or would you want to be a gulag slave? And I think the answer is perfectly clear. I rather want to be a privately owned slave than a gulag If you cannot be a free man, if you cannot have a natural order that respects private property, but you have to be ripped off by somebody, Would you rather want to be ripped off by some dynasty of kings or by some randomly elected caretakers?

1:12:47And I think the answer to this question is also relatively clear. And the last thing I want to do is, again, give you an example that I always also give to my students and based on their reaction, always find very instructive, explaining, so to speak, the effects of democracy. You know that during the 19th century, the right to vote was extremely restricted.

1:13:33In many countries it didn't exist at all, early on in the 19th century. And then it was gradually expanded, successively. First, of course, people only thought about male franchise. Females were considered to be just appendixes of men, voting just like their husband does. Unfortunately, they don't do that anymore either. Do you mean not allowing the voter or vote like the husband? and vote like the husband and interestingly the country for instance that introduced the male franchise first gave almost full male franchise happened to be the country that gave the right to vote to women last, that was Switzerland and since that time Switzerland is also in very iffy conditions.

1:14:35I mean, they were already in great danger before, but the danger has dramatically increased since that time. But as you realize, of course, I have nothing against women at all. I'm a lover of women. I'm just in favor of nobody should have the right to vote. But in any case, in the 19th century, gradually the franchise was expanded And parallel to the expansion of the franchise, the classical liberal movement died out and social democratic and socialist parties came to power and even those parties who called themselves liberal are no longer liberal in the previous classical sense.

1:15:23They have become social liberal parties. In order to illustrate this tendency to make people understand this as almost a necessary consequence of expanding the franchise, I always use two examples. The first example is, imagine we have a world democracy, one man, one woman, one vote on a worldwide scale. So what will the result of that be? There will be an Indian-Chinese coalition government simply by virtue of numbers. What will this Indian-Chinese coalition government do in order to be re-elected in the next round?

1:16:12They will of course initiate a massive redistribution, income and wealth redistribution program from the United States and Western Europe to those regions. Does anybody have the slightest doubt that that will be the result? I have not found any student in my classes who ever had the slightest doubt that that is what is going to happen. And then you point out, look, what do you think happened when they expanded the franchise in your own country? And then they begin to realize, oh, that probably exactly the same thing happened there too. Maybe not as drastically because the population was more homogeneous, the difference between income levels were not as pronounced as they are now between India and the United States or places like this.

1:17:04Of course the same thing has happened there. The second example is in the 19th century the age when people could vote was relatively high and by and large they had also of course property restrictions. But look just at the age. So there were many places like Italy or so forth, while the age was 29 years, in a country with a life expectancy of 45. So only old men could vote at that place. That would be nowadays like only people above 75 would be allowed to vote.

1:17:50And then it was of course gradually reduced to currently 18. Now, we have to admit that 18 is, of course, a completely arbitrary date. Why not 12? In many places of the world, people can write with 12. In the United States, that is not always clear, but in many places, it is known of people that they are able to write. Why not 12? Now what would then happen? I would not predict that a 12 year old would then be elected to be president or something like this. But what you can predict is of course that every political party would on their platform have something about the legitimate concerns and rights of the children.

1:18:49Just as we are nowadays greatly concerned about the elderly, that we treat them right because we know they have the most time on their hands and tend to go and schlep out to these elections, whereas other people sometimes have to work, can't go. So we would be greatly concerned about their well-being and what would these platforms then likely contain? At least one visit to Toys R Us per month, free videos from Blockbuster, as many as you want, at least one square meal at McDonald's or Burger King per day, and a big gulp for every kid at all times.

1:19:40Okay, with this I end my lecture. Thank you.

1:19:53I'll take a few questions. Help me understand why what the framers thought they were putting in place a republic. Why that's such a rotten idea and why it can't happen? Let me begin this way. All the framers were anti-democrats. There was nobody who was in favor of democracy. Democracy had a connotation of being, so to speak, a moderate form of communism. I think the most democratic one was Jefferson. I do not see Jefferson quite as positive as people in the United States see Jefferson because of that.

1:20:40I also do not see Andrew Jackson quite as positive as many Americans, especially libertarian Americans, because I think Jackson is the next big step forward towards democracy. But if you accept the idea of a republic, you have basically accepted the idea that everyone can be president, senator, prime minister, and so forth. And if you have accepted that idea, then it is very difficult somehow to say, yeah, but why should not everybody also have some say about who that should be?

1:21:33So the dam has already been broken and once the dam is broken, then I think it is almost irresistible that you will also have to accept the democratic principles, Even though they try to make a distinction between a republic and democracy, but you admit in a way the principle that everyone is equal and can get into the position and this leads you then to one man, one vote, almost inescapably, I think. Well, our experience would absolutely show that limited government does not work.

1:22:18Yeah, no, of course, as I explained, you know, once you accept the idea of there is a monopoly judge and the monopoly judge has a right to tax, then the prediction is the monopoly judge will just pass laws that are in his own favor and he will always try to increase taxes and in fact work less and less. That follows simply from the definition of what a state is. One other little remark which I learned from my friend Kühner-Ledin, which in some circles also works well as an anti-democratic argument. In other circles it is just simply laughed off.

1:23:04But let me try it. So he said, you know, who are the most, two most important figures in, in, for Western civilization? According to him, we tend to agree, it is Jesus and Socrates. And then the next question was, who killed Jesus and who killed Socrates? And the answer is, democracy killed Jesus and democracy killed Socrates.

1:23:47In the Soviet Union, it seems to me that only the most severely enslaved were in the gulag. Yes, of course that was, but that difference is somehow as a difference between a house slave and a field slave when it went to look at private slaves, right, not all slaves were even under that system equally well treated. You would prefer to be a house slave rather than somebody who has to just push the horses and cows around and whatever, pick cotton and who knows what. So, those people who worked in regular enterprises in the Soviet Union were, of course, the, so to speak, the house slaves, and those who were in the gulag, those were the field slaves.

1:24:39Even an American slave, you remember you're going with the wind when he says, but Mr. Garland, we're house servants. I think that's what the run-of-the-mill Soviets said also when they met the Gulag people. In my classroom of former Soviets, when I would use this example about them being public slaves, and then they'd say, some of them would say we weren't. Then they would get into an argument among themselves about whether they were or not. Because they'd say, well, I could work any place I want, and others would say, well, no, maybe you did, but you had special privilege, and others did not. So, that's...

1:25:31By and large, you could not freely choose, not even your place of residence in these places. I mean, people in the East Bloc, of course, they prefer to move to the capital cities because the capital cities were always somewhat better supplied with consumer goods because you had foreign diplomats living there and tourists going there, so they wanted to make the stores look a little bit nicer. And there was huge numbers of applications to move, whatever, to Berlin or to Prague or to Bratislava or to Belgrade or whatever the capitals were. And most of these countries had internal passports. You could not just move wherever you wanted.

1:26:20If you lived in whatever, in Mint score, Irkutsk score, whatever it was, you stayed there. That was it. Unless they just decided that now they need somebody here and then they transported you to a different place. I wonder if you would just say a word about another argument you raised against democracy, I think in the theory of socialism and capitalism, where you say that democracy can't represent some kind of absolute moral imperative because the person who is committed to the value of democracy would have to admit that if the majority votes to transform the democracy into a monarchy or some sort of totalitarian regime, that itself would be fully consistent with democracy.

1:27:10and the Democratic Idea. Right, right. I don't have to say anything besides that you are absolutely right. Yeah. Last question. Given a democratic system, do you think the effect of term limits on officeholders raises or lowers the time preference? I think it raises the time preference. Okay. Thank you so much. Thank you very much.