Freedom vs. Socialism on Campus

0:00Lew asked me to talk about socialism on campus. It has to be the easiest topic to discuss. It's hard to talk about colleges and universities without discussing socialism on a campus. I also would like to state out loud what I'm sure a lot of you are thinking, basically that an hour is an awful long time, and that's what I'm scheduled to speak for, to listen to somebody that spent most of his adult life in college. I agree. I think most academics aren't very interesting people. They really haven't been the doers in society, the people that perform daily activities that add value to the firms that hire them or that start new businesses. They don't really contribute much to or understand the world of doing, of actually making things happen in the way of producing products and services, alleviating poverty as it is.

0:51But they think they do and that's a lot of what I'd like to talk about today. I'm going to try to get at maybe why intellectuals are so, have such contempt for capitalism and why they seem to so universally condemn capitalism and embrace socialistic schemes, you know, even in the face of contrary evidence. I'm also going to discuss Mises a bit. I know you don't really want to be read Mises, but I have kind of a pattern. I generally read some quotes from Mises at the beginning of my talks to let you see how well he presents his ideas and how well he discusses really the essence of our free market system. In the back there is a film that the Mises Institute put out that you all funded on Ludwig von Mises.

1:37In it, there's a blur by, I think, Joseph Sobran saying that, you know, we live in the century where we've seen the most bloodthirsty and murderous tyrants in history, and yet in schools we're still taught to beware of the robber barons, you know, the Carnegie's and the Rockefellers and so forth, who, according to Sobran, doesn't think they killed anybody. That's certainly been true in my case. I'm sure it's true in all of your cases as well. If that's not the view you were taught in school, I assure you your experience has been unique. But most of the people in this room are also aware of the fact that before the age of capitalism, which we can say started 1776, but go back a little further, before the age of the capitalism, mankind essentially lived in a state of poverty.

2:22Very few people lived to see adulthood. The statistics, I won't rat them off, four-fifths of the people in France, for example, spent 90% of their income on bread, or most people never had a new suit in their life. In fact, plague victims often supplied the first suit a person ever had, if they had the guts to wear it. Children often had different parents in their teens than they had at birth, not because of a high divorce rate, but because, frankly, it was pretty rare for a child to live to adulthood and have both of his original parents still alive. Again, due to the fact that many parents died young. This is often left out of the revisionist view of capitalism that is taught today on campus. and taught today on campus, not just in economics classes, but in classes from literature, to the classics, to astronomy.

3:09Everybody has to have their bit at condemning capitalism. The revisionist views that capitalism brought merely child labor and worker exploitation. But as Mises was quick to point out, one of my favorite quotes of his, he said that the factory owners did not have the power to compel anybody to take a factory job. They could only hire people who were ready to work for wages offered to them. Low as these wages were, they were nonetheless much more than these paupers could earn in any other field open to them. It is a distortion of the facts to say that the factories carried off the housewives from the nurseries and the kitchens and the children from their play. These women had nothing to cook with and feed their children. These children were destitute and starving. The only refuge was the factory. It saved them, in the strictest sense of the term, from death by starvation.

3:57And as for worker exploitation, Mises was quick to point out that capitalism is not simply mass production, but mass production to satisfy the needs of the masses. The arts and crafts of the good old days had catered almost exclusively to the wants of the well-to-do, but the factories produced cheap goods for the many. All that the early factories turned out was designed to serve the masses, the same group that worked in the factories. The shortcoming of the 19th century historians and politicians, wrote Mises, was that they failed to realize that the workers were the main consumers of the products of industry. He noted that had they paid any attention to the facts, they would have easily discovered the fallaciousness of their opinion. Infant mortality dropped, the average length of life was prolonged, the population multiplied, and the average common man enjoyed amenities which even the well-to-do of earlier ages did not dream.

4:47This notion that even the critics of capitalism owed their very lives to capitalism has always been a favorite of mine. As Mises' student Frederic von Hayek put it, and this generally appears on a syllabus of any class I teach, capitalism created the proletariat not by making anyone the worse off, but rather by allowing many to live who otherwise would not have done so. And one sees much the same blindness today. Competition brings fresh produce and grocery stores, movies into homes, you can go on. But the bottom line is, and in fact, Mises had the intellectual wherewithal to really state the truth simply. He said, go into the home of any American family and you will see for whom the wheels of the machines are turning. I go at length to cite Mises because these fundamental insights are so often missed by academics.

5:37Well, the obvious point of my talk is that this view is lost on those academics who populate today's colleges and universities, in which I argue comprise the largest welfare program in the country. Anybody that's spent any time on a college or university campus or has talked to a college professor for any length of time will have a hard time refuting that statement. It used to be easy to keep, most intellectuals, well actually a lot of bright people have written about the phenomenon of socialism on campus. It used to be easy to keep up with the books. There's Impostors in the Temple by Martin Anderson or Prof Scam or Souls Inside American Education or The Fall of the Ivory Tower. But now there's a new one coming up about every week and I've lost track. I haven't been able to keep up. And I frankly don't want to. I've seen all I need to on that issue.

6:22But having spent a large portion of my life in colleges and universities, I feel like I'm some sort of an expert in this area. I've had intimate relationships as far as shared office with professors of a variety of disciplines. And I find that the atmosphere of today's campus intellectual is probably best conveyed by reviewing a quick chapter from a recent book by Thomas Sowell called The Vision of the Anointed. For those of you that aren't familiar, Thomas Sowell was an economist that graduated from Chicago in the 60s. in the 1960s. And then he, at some point in his life, he read an essay by Frederic von Hayek on the role of knowledge in society, which was inspired by Mises. He went on to write, and then Sol went on to write Knowledge and Decisions, which was, I've always considered kind of a text in applied Austrian economics. But he hasn't really been the same since. And what I like to do, if it's okay, is give you three case studies of what Sol observed and then try to tie that together to give you a feel of what the intellectual atmosphere is like

7:22in College Campuses. Now, I'm at Wabash College. I'm not real fond of critiquing my employer, but Wabash College is arguably, according to National Review, the most conservative college in the country. If that's the case, we're all in trouble because it's frankly nothing of the sort. Now, Sol's book contains a long-running theme for him, what he calls the constrained or tragic vision of the world that sees man as he is, warts and all, and and the unconstrained vision of what he calls the anointed or the intellectual that leads into this dabble and babble in socialist utopian social engineering schemes. So I recognize the general pattern. He says there's four stages. He says stage one is a crisis. Whether a crisis exists or not, a crisis is purported to exist.

8:08Some situation that requires some sort of interventionist measure. Then a solution is proposed. Policies, generally some sort of bureaucracy is set up to deal with the so-called crisis. And then the results come out, and inevitably the results are opposite of what was intended. And then the stage four is the response, it is asserted that things would have been different without the programs, or that not enough funding was given to the programs, or even worse, that most commonly the original aim of the programs is restated. The first example he gives is the war on poverty, and he discusses a set of social programs was proposed by Congress during the Kennedy administration, later enacted during law during the Johnson administration. But these all had the stated purpose of reducing dependency.

8:56That was the stated purpose of most of the war on poverty. To quote Kennedy, the purpose of the war on poverty was to help our less fortunate citizens to help themselves. We must find ways of returning far more of our dependent people to independence. As the New York Times stated it, the initial cost will actually be greater than the mere continuation of handouts. The Dividends will come in the restoration of individual dignity and the long run reduction of need for government help. The Johnson administration anti-poverty programs spokesman said that the anti-poverty programs were to break the cycle of poverty and to make tax payers out of tax eaters. Okay, to quote Johnson in 64, the days of the dollar are numbered. Okay, so the stated goal of the war on poverty was to reduce dependency.

9:41There are critics at the time, I'll give the standard Barry Goldwater, who predicted that these programs would encourage poverty by encouraging more and more people to move into the ranks of those being taken care of by the government. Other critics, the mayors of Los Angeles, San Francisco and Detroit, feared that the war on poverty would foster class struggle through its support of community activists and radical intellectuals. Henry Hazlitt noted that we can expect the price tag to increase geometrically as the years go on. Okay, well, so, we have this crisis, we have this dependency we needed to reduce. But at the time the war on poverty programs began, the number of people who lived below the official poverty line had been declining since 1960 and was only half of what it was in 1950.

10:26Dependency on government was declining when the war on poverty began. And incidentally, as an aside, I'd like to give you a few statistics, I get my classes. In my classes, for example, economists calculate what is called a poverty gap, the difference between some arbitrarily defined minimum level of income, poverty line, and what it would take to bring everybody below that line up above it, and in 1990, for example, that figure was something like $79 billion, and that same year, two and a half to three times was spent on means tests or income tested welfare programs alone, and of course, none of that money went to the poor, not very much of it. You know, as Sol used to point out, the poorer goldmine for those who administer the programs to them, you know, anybody that's... I've worked close enough with the Alabama Department of Human Resources to know that the last thing anybody there wants is an elimination of poverty.

11:17But anyway, continuing on, so the idea is that actually dependency had been falling over time, is what Sol's trying to say, so the crisis was not real. Stage 2 is the solution. The Economic Opportunity Act was passed in 1964, creating the Office of Economic Opportunity, the War on Poverty Agency. As the spokesman for the agency said, Congress had purchased a program that would help welfare wither away. Conquest of poverty is well within our power. Okay. Stage 3, the results, of course, the percentage of people dependent upon the Federal Government to keep above the poverty line increased, but more importantly, reversing a downward trend. The number of people receiving public assistance more than doubled between 1960 and 1977. The federal spending on social welfare programs doubled as a percentage of GDP, or GNP, from 8% in 1960 to 16% in 1974.

12:07Urban ghetto rights raged during the era. Stage four was the response. Okay, so what we have is the crisis. It wasn't really a crisis. We implemented policies. They made everything worse. The failure of the War of Poverty to achieve its goal of reducing dependency, in fact increasing dependency, brought no acknowledgement of failure. Instead, the original goal was redefined as reducing poverty by transferring resources. Okay, so the stated goal was reducing dependency. When it increased dependency, the goal of the program was restated. Okay, well guess which programs are looked upon today with misty-eyed reverence in academia today. If you guessed Johnson, the 60s and the war on poverty, you guessed right. I've seen history professors talk to students and almost cry when they think back of that golden era.

12:53And I'm not making an exaggeration. I've seen very few exceptions. The second case study, I'm only going to do two more on these, so I hope you'll stick with me to kind of bring home a point, I think. Sex Education. One of the first acts of the Office of Economic Opportunity in 1964 was making a grant to a Planned Parenthood unit in Texas. This financing expanded more than fivefold by 1966, and the number of family planning clinics increased fivefold between 1968 and 1978. As one study of this era put it, family planning services grew phenomenally from the mid-60s to 70s. Well, I'm not going to list the statistics, it would bore you. The point is that the funding increased tremendously over the subsequent 10, 15, 20-year period.

13:39Okay, well, stage one, the crisis. In 1968, it was claimed that contraception, education and counseling is now urgently needed to help prevent pregnancy and illegitimacy in high school girls, or, as the head of Planned Parenthood testified before a congressional subcommittee, to assist our young people in reducing the incidence of out-of-wedlock births and early marriage necessitated by pregnancy. The incidence of venereal disease was also cited by the head of the New York City Board of Education as showing the need for, quote, a crash educational program. PTA Magazine likewise urged Sex Education to Combat the Spiraling Rate of Venereal Diseases, the Pregnancies Before Marriage, the Emotionally Disastrous Results of Responsible Sexual Behavior. Okay, that was the crisis that was the anointed intended to solve. Okay, in reality, fertility rates among teenage girls had been declining for more than a decade since 1957.

14:29Venereal disease was also declining. This was the crisis. Okay, the solution was massive federal aid to sex education programs in the school, family planning clinics, Professors of Family Life who claim that a boy will find decreased need for casual, irresponsible and self-centered experimentation with sex if properly educated. Critics oppose such actions primarily on the belief that sex education would lead to more sexual activity rather than less and more teenage pregnancy as well. But as the New York Times stated it, to fear that sex education will become synonymous with greater sexual permissiveness is to misunderstand the fundamental purpose of the entire enterprise. Okay, well stage three, the results, as you can well guess, as sex education programs spread widely through American educational system during the 70s, the pregnancy rate among 15 to 19 year old females rose from 68 per thousand in 1970 to 96 per thousand in 1980.

15:22Among unmarried girls in the 15 to 17 year old bracket, birth rates rose 29 percent despite a massive increase in abortions which more than doubled during the same period. period. Among girls under 15, the number of abortions surpassed the number of live births by 1974. The percentage of unmarried teenage girls who had engaged in sex was higher at every age from 15 to 19 by 1976 than it was just five years earlier. Venereal disease skyrocketed 350 percent from the late 60s to 1978. Okay, opposite of what was intended, exactly what the critics said would happen. Stage four of the response. The primary goal of most sex educators has shifted to encouragement of, quote, Healthy Attitudes About Sex and Sexuality." And again, I can vouch for that at every college I've been to.

16:08In fact, of course, at the nation's most conservative liberal arts campus, one of the most popular courses is, of course, Sex and Human Sexuality. The last one, stage of case three is criminal justice. Like many negative social trends, soaring crime rates began in the 60s amid glowing optimism about how much better things could be if traditional beliefs were replaced by the special insights of the intellectuals. By traditional beliefs, I mean the old-fashioned notion that crime depends upon the severity of punishment and the likelihood of being caught. The conservative attitude at the time was if you increase the severity of punishment or the likelihood of being caught, you're going to have lower crime than if you do the opposite. Anyway, the most reliable long-run crime data is murder statistics, and the number of murders committed in 1960 was less than in 1950, 1940, or 1930, even though the population was growing over those decades and murder rates in Hawaii and Alaska were included for the first time in 1960.

17:04The murder rate in proportion to population was in 1960 just under half of what it had been in 1934. The problem, according to the anointed, the intellectuals, was not the so-called criminal population, but society whose need to punish was a primitive urge, a deep childish fear that with any reduction of punishment, multitudes would run amuck. Psychiatric treatment with new, more sophisticated techniques were called for. Now, I challenge you to find an academic view anywhere that differs from this notion that the way to eliminate crime in this country is through education and through some sort of program that caters to the underlying problems of the criminals. Okay, Stage 2, The Solution, a series of landmark Supreme Court decisions in the late 60s expanded the rights of criminals, required states to provide free attorneys to criminal defendants, expansion of the scope of the insanity defense, less often imposed sentences of shorter duration.

17:57The Welcoming of Psychiatrists in the Courtroom as well. To quote the New York Times, and this is the standard view I find when I discuss crime or criminal justice with any of my colleagues, regardless of the field, I don't know why some people sit idly by and are willing to take the more expensive route, the delinquency route, the jail route, the penitentiary route. It takes more of our money to take care of a convict in a penitentiary than it does to prepare a boy to be good, tax-paying citizen who can read and write, More Education, Enlightenment and Opportunity To quote a dissenter of, for example, the Miranda decision of 1966, which made convictions invalid if procedures specified by the courts were not followed in detail by police, here's a reporter discussing a dissenter of the Miranda decision. Justice Harlan, his face flushed and his voice occasionally faltering with emotion, denounced the decision as dangerous experimentation, which would return a killer, a rapist, or other criminal to the streets to repeat his crime whenever it pleases him. As a consequence, there will be a loss, not a gain, but a loss in human dignity. Such dissents and outcries from the public and police officials were dismissed and brushed aside by the anointed during the sixties. Well, the results, of course, were that crime rates skyrocketed, murder rates shot up,

19:11got up until the rate in 1974 was more than twice as high as it had been in 1961. Between 1960 and 1976, a citizen's chances of becoming a victim of a major violent crime tripled, as did the number of policemen killed during the 1960s. The response, of course, was, as James Q. Wilson put it, by 1970 enough members of the liberal audience had their typewriters stolen to make it difficult to deny the existence of a crime wave. But the anointed were unfaced. Chief Justice Earl Warren summed up the response of the anointed when he says, All of us must assume a share of responsibility for decades of the slum conditions which we swept under the rug to breed crime, ignoring the facts that crime rates had been falling prior to the 1960s.

19:59Okay, in case my talk has been too convoluted so far, I've tried to make two points. One, capitalism is often condemned for a lot of the material inequality in the world when I've argued that in fact it's what's created whatever prosperity we have. It's done much to ameliorate the poverty that seems to be the natural state of mankind. And two, even if you grant me the material success of capitalism, most critics will still point to values in society today Today and a lot of the declining morals of the decadence and say, well, this is a kind of another byproduct of what you have with crass materialism. There might be crass materialism, but what we see today in the form of high crime rates, high teenage pregnancies, huge massive dependence, people brought up in ghettos that have never seen one or both parents for the first time, are the results not of capitalism at all, but of the social engineering problems or essentially the socialistic institution set

20:57by or inspired by American intellectuals so the real question becomes and the point of my talk is why is there such a passion for socialism on campus or specifically why is there so much contempt for capitalism you can talk to a mathematics professor on campus you can talk to an astronomy professor a classics professor and you can get some varying degrees a varying degree of opinion on some things may be specific to their field but they all share a They share a common hatred of capitalism and they all also share a kind of a love or an embracement of utopian socialistic schemes. Every problem that they see, and I was mentioning the other day, if you ask the average intellectual on a college campus how to solve some alleged problem, the answer you're going to get is the exact same one you'd get if you asked a 13 or 14 year old.

21:48So what I'd like to address now is why is that so? Why do people that have PhDs from Harvard and so forth, have such a naïve or essentially a disconnected view of the world? There's a lot of, a lot of reasons have been put forth for this. You know, I've heard a lot of explanations. One of the most obvious is that of Ludwig von Mises, who wrote in the Capital, the capitalist, anti-capitalist mentality. He wrote that basically the fact that capitalism bluntly allows you to discern how much society values your services by examining your wallet. And he said that basically intellectuals had a hard time dealing with that, that they didn't really add much value and that's why they weren't rich and they were pretty envious. There's a little truth to that for sure. And the bottom line, little money corresponds to little value.

22:36So Irving Kristol used to talk a lot about new class theory that talked of an intellectual class that made its living off of ideas that required third party funding and required political rather than market implementation. And there's a little bit of truth to that as well. You know, I've always tended towards the kind of gut level response that the notion that most academics have never earned a living by contributing to the production of a good that has market value. And that's what I define employment as, contributing to the production of a good that has market value. And incidentally, you know, I've always been shocked at how people are influenced by Karl Marx, who himself never worked a day in his life according to that definition, and I now see what their common bond is. Most of them are sympathetic with Marx because they do have that common element. Very few of them have really worked in a competitive enterprise.

23:21Others have argued that professors are surrounded by students that are leaving home for the first time and whose lives are freed of adult, effective adult influences for the first time. This group of students that constitutes the day in day out conversation with professors tend to be very insecure and thrown into society composed entirely of their own age group are almost certain to become egalitarian. They have no experience of the world, are somewhat afraid of it and moreover are at a stage of life when passions run strong. They're almost bound to turn left for these reasons alone, and over time their influence on the faculty who prefer to be popular with their students may unconsciously begin to modify their attitudes and ways to meet student approval. There's some truth to that as well. I've seen faculty that are as influenced by students, 18-year-old students, as the students are by the faculty.

24:12Exactly. But there's some stronger reasons why I think that has been put forth, and they're not my ideas, of why socialism is the dominant intellectual fad on college campuses. Basically, the idea is that intellectuals are apt to find capitalism uninspiring because it lacks a central vision, seems to offer no meaning to personal existence beyond the narrow self-interest, which is hardly capitalism's fault since it only claims to be, or its advocates only claim that it's a means of production and distribution, or, you know, specifically that and that's it. It's a means of organizing, production and distribution.

25:04People tend to want a little more than rational self-interest and or material prosperity. And this notion, one commentator, Robert Bork, was talking that the problem is that people hunger for transcendental values and socialism and similar creeds offer secularized versions of these values that capitalism does not. And it's true, if you're looking for some reason for personal existence, for fulfillment, you're not going to find it in the material prosperity that capitalism brings, that has to come from something else. But specifically, these schemes, these sectoralized versions of religion like socialism offer, though the promise is false and never realized in practice, a vision of community, of concern for society of large, of man seen as more than a customer. There's some truth to there fundamentally too. I think most intellectuals I know do kind of like to speak in terms of this general community, which is really a shallow view of community, but nonetheless, it's something that socialism tends to promise so it's never realized, whereas capitalism, again, has no real central vision.

26:06Okay, but the most fundamental reason I think that socialism is so a favorite on college campuses today is that most intellectuals have little concept of how resources are allocated in decentralized price-directed market economy. Most have no firm idea of the functions that markets serve and they tend to suppose that better results could be ordered by law. And in fact, this is what economists call price theory or resource allocation theory or how the free enterprise economics, how the free enterprise system works. And very few intellectuals really have a grasp of that. This is often called price theory. And it's interesting to note that a Nobel Prize winning economist, Herbert Simon, once said that Austrian economics is really just verbal price theory.

26:51Well, it's not exactly accurate, but it is true that you can learn more from reading, spending the weekend reading, say, and I've mentioned this several of you, Profit and Loss by Mises in Planning for Freedom, or his little book, Bureaucracy, then you can getting a four-year degree in college. If you think this is an exaggeration, sometimes if you're on a college campus, pull an economics major aside and ask him a few basic questions. What do you think about this or that? What do you think of the Federal Reserve system? What you're going to get is somebody running scared. I think Mises did an excellent job of conveying the essential benefits of our free enterprise market economy. People that have no conception of how a market economy works have little difficulty in believing in the efficacy of detailed regulation of all business enterprises with no idea of the real costs involved and upon whom those costs ultimately fall.

27:43And a lot of my colleagues might argue this, but I have seen the most ardent socialists on campus, and the bottom line is, at base, they really have no fundamental understanding or grounding in basic economics. That doesn't describe all intellectuals, but it does describe a lot of them. And essentially, they see a free market economy as chaos, something that's not ordered by anybody, where the rich and powerful succeed and so forth at the expense of the workers. Workers, you know, the Marxist story. When it's really planning, it's most efficient level. As Mises stated, the alternative is not plan or no plan. The question is who's planning? Should each member of society plan for himself or should a benevolent government alone plan for them all? The issue is not automatism versus conscious action. It is autonomous action of each individual versus the exclusive actions of government. It is freedom versus government omnipotence.

28:39laissez-faire does not mean let soulless mechanical forces operate, it means let each individual choose how he wants to cooperate in the social division of labor, let the consumers determine what the entrepreneurs should produce. Planning means let the government alone choose and enforce its rulings by the apparatus of coercion and compulsion, i.e. planning is the government, the forcible superseding of individual choices by government choices. Now, intellectuals don't understand this, and a key point that one of Mises' students Hayek used to make is they don't understand it because they don't have to in a market economy. Let me elaborate by citing Hayek and the role of the price system in solving what is the real economic problem, and that is the fact that we live in a world of unlimited wants and limited means, which used to be called how to produce, what to produce and for whom, but really arises as soon as different purposes compete for the same resources.

29:32Resources and Scarcity is the nature of mankind that casts up the economic problem. Okay, to cite Hayek, I'm almost finished here, in a purely competitive society, nobody bothers about anymore but his own economic problems. Therefore, there's no reason why the existence of economic problems in the sense in which the economist uses the term, that is, resources competing or different purposes competing for limited resources should be known to others. But the distribution of available resources between different uses, which is the economic problem, is no less a problem for society than for the individual, and although the decision is not consciously made by anybody, the competitive mechanism does bring about a solution. Do you understand what we're talking about by mentioning an economic problem?

30:19The example is, whether or not to build a bridge, or how to build a bridge, how to go about constructing a bridge, either in the strongest, by any of a number of criteria, the strongest way or the cheapest cost, is essentially an engineering problem. Whether to produce a bridge given you have other needs and limited resources is the economic problem, and think about it, think about how a market economy solves most economic problems, and you'll see Hayek's point that it solves the problems without any one of you consciously giving it any thought or any single person giving it much thought outside of individual firms. For example, do you see planning boards trying to decide whether to add, government planning boards decide whether or not to add another ounce of meat to the Big Mac or whether or not to open up a competing chicken franchise.

31:05Markets automatically do these. They plan at the most efficient level subject to the disciplining forces of profit and loss. But what do we see in governmental institutions, planning all the time, committees on what to teach in our monopolized educational institutions, committees on what's the best way to go about this or that, which Mises of course said could go on forever, these enterprises aren't subject to the influences of profit and loss, and so the debates could really run forever, and if you look at it, if you look at the institutions where a lot of the planning committees are made, education, they're also the institutions that are failing. Okay, but again to restate the point, as has been said before, the fact that in the present order of things, such economic problems are not solved by the conscious decision of anybody has the effect that most people are not conscious of their existence.

31:56It is not necessary for the working of the system that anyone should understand it, but, and this is a central point, people are not likely to let it work if they do not understand it. You know, again, an individual office manager might be concerned with whether or not to allocate more resources to automating his office, buying more personal computers. What he's not going to have to be concerned with is whether society in general should put more money into automated offices versus hamburger production versus high tech or anything else. Those are the economic problems that are solved most efficiently by the price system. That was Hayek's and that was Mises' insight. And that's the insight that's lost, I think, in all intellectuals because they don't have a basic understanding of our free enterprise system or what is basic economics. And again, to recite, the understandings of the workings of our free enterprise economy is not necessary for any single individual.

32:47An individual who lives far from the world of profit and loss, and you can't get further from profit and loss than college campus, is oblivious to this, what is basic economics if you're an Austrian or what I call the functioning of a decentralized price-directed market economy. Economic problems are solved in a way which only a systematic study of the working of this system reveals. Do you get my meaning? Basic economic education won't take place in what is essentially a socialistic industry, the American college-university system, what I refer to as our biggest welfare program. Well, most intellectuals have no fundamental grounding in economics. And in economics courses you'd think, well, fortunately students take economics, but if I can characterize teaching in modern economics, it's the following process.

33:32Models are built, simplified abstractions of reality in order to try to understand some phenomena. Reality is then compared with the simplified model, and of course the two diverge, and consequently some sort of government intervention is recommended to bring about the results, to bring reality in step with the model, whose whole purpose was to simplify away from the detail of the world. A whole misconception, I think, of the role of theory. And this is not my observation alone. A lot of bright minds in economics have started to come across this same intuition when they're looking at what's taught in economics classes. I made a case at an Austrian Scholars Conference that I think, in actuality, a lot of economists even in the mainstream that are trying to understand the real world are starting to look into the Austrian School.

34:19A lot of what were old Chicago School economists are starting to say, well, wait a minute, things like competition are multifaceted. There's competition. It's not just imitative output competition. It's competition for color, size, quality, service. And it's moving what I've perceived. These, a few economists are moving towards an Austrian view of economics. And it's not surprising that a lot more mainstream economists, to me, at least my perception, I'm more familiar with the work of Mises and Hayek than were when I started graduate school, you know, five years ago. So I think that the day of Austrian economics in the economics classroom is probably going to be stronger in ten years than it is now. But anyway, basic economic education won't take place in what is essentially a socialistic industry.

35:06Relying on a few dissident tenured intellectuals is certainly not enough. This is really where the mission of the Ludwig von Mises Institute comes in. Nobody in my opinion wrote more clearly or better instilled an appreciation of our capitalist free enterprise system than Ludwig von Mises. Students are usually fascinated when they are exposed to pretty much his penetrating insights to the writing of Mises made simple by his brilliance. I notice this time and again, I usually run into a junior or senior in economics and then I'll give them something to read. These are people that have often been through courses where they did nothing but simultaneous equations all day and they'll read something like liberty and property or profit and loss and overnight they're excited. They finally have come across something that seems to explain the world that they live in, not a theoretical world that the academic lives in.

35:57I was going to give some readings, a list of a cram course as such. I wanted to do a handout of a couple quotes to prove to you how effective Mises' writing is, but I don't think there's time, and frankly I don't know if that would interest you or not. I'd urge you just to pick up a copy of Liberty and Property, Thoughts for the Day of Tomorrow, or my all-time favorite, Profit and Loss in Planning for Freedom or Bureaucracy. Now, I don't see them here. You can get them through the Institute. I don't think the Institute gets rich off of these books. But anybody that's ever read, just read a few of these, spent a weekend or an evening, can see the brilliance of Mises' work and his ability to convince people that a market economy is by far the only means of organizing exchange and production if material prosperity is your goal.

36:42I'd like to tell you, a few of you candidly, when I came to Wabash, I expected a real conservative institution. I found it was nothing of the sort. But people started coming up to me. A student came up to me and said, Hey, are you Jim Key from the Ludwig von Mises Institute? And I said, Yes, I am, and he took my hand. And the next day a faculty member came up to me and said, You're Key from the Institute, is that correct? And I said, Yes, I am. And it always struck me that they didn't say, Oh, you're Jim Key from Auburn or, Oh, I heard you're writing a great dissertation or something. They just noticed that I was affiliated with the Institute. And they were glad to see me because the Institute is, in a sense, the only voice for capitalism in the country today that I'm aware of that has any influence whatsoever. The Mises University, for example, is the only place in the United States, I think, where a considerable number of students can be taught the works of Mises and those who inspired it, and learn an appreciation of the free enterprise system.

37:45It's the only place I know of. I did not know just how unique and necessary this program was until I left. Until you get spoiled, you spend four years in Auburn, Alabama as a Mises Fellow and you're surrounded by like minds. When you get out there, you find that, you know, I always turn to people and say, well, didn't you read this or that? And I say, well, they've never been exposed to it. By holding seminars, publishing work in the Austrian tradition, or funding future teachers, I think the Mises Institute fulfills, and this is no exaggeration in my opinion, the most urgent need in the country. I hope I've made an interesting, convincing case that this last statement is not an exaggeration for as Mises himself stated, economics must not be relegated to the classroom and statistical offices and must not be left to esoteric circles.

38:32It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man's existence. Mises believed economics was important, and I've tried to convey that there's a lot of reasons why there's socialism on campus, but I think a lack of understanding of basic economics is probably the strongest one, and I think that's what the Mises Institute does the most to alleviate the biggest problem as I see it. But I'd like to ask any of you, do you have any questions? Have you had experiences different from mine? Have you spent any time on a college campus or just listened to professors on the radio or in the media recently? If your experience is like mine, you're shocked by the world they live in. It's nothing like the world you probably live in.

39:20I certainly have not encountered somebody that seems like they've ever really worked and added value to anything. but that's that's what I wanted to say I think that there's Peter Klein talked a lot about strategy and how to go about changing the mind of intellectuals I tend to think that basic you know outside of cutting government funding for higher education which is ultimate problem that that education is the key and and education in in the form of something like the Ludwig von Mises Institute is really the only way in this country that the ideas of free enterprise are going Nobody within the current system has an incentive to study it otherwise, particularly in economics. Nobody has any questions? Yes, Jeff?

40:09Here's the standard story. They come here because they come to Wabash because they heard it was, it's all male.

40:51I hear it in most campuses, certainly not in their other liberal arts courses. And, yes? ...

41:11She said, hey, wait a minute, you know, 80% of the faculty want to go co-ed. There's feminist reading groups in the from the Benjamin Rogge Lounge, and he said this isn't what a lot of you think it is. And so he started this, well, he publishes this commentary, a conservative newspaper on campus, and he actually takes the professors and the president of the university to task. The interesting, it came to a head when the president of the university, Morgan Knoll, was publishing the commentary to the alumni of the school and saying this is what's being taught. The President of the University, which was essentially Socialism, Homosexuality, the whole nine yards, you know, I won't even begin to describe it. And the alumni were threatening to withhold funding because of this, because the alumni were conservative, wanted it to be all male, and they controlled the endowment.

42:01So, the President of the University said, okay, from now on, I don't want anybody to discuss what goes on in class, outside of class. So Morgan Noel wrote this big article saying, hey, you know, wait a minute, what is this, is this academic freedom and intellectual honesty and truth? And so, to make a long story short, when it came out, the commentary was funded by the Student Senate, and when it came up for refunding, you know, they make their appropriations every year, the Senate refused to fund the commentary, okay, because they wanted to close it down. So anyway, Noel wrote some alumni and received, I don't know, he needed, I think, $1,100 and he got $30,000 or something. So the bottom line is, yeah, the commentary is still there. Noel, he's the most, one of the most impressive young men I've ever seen.

42:53He does try to step over those bounds from time to time. He has no problem saying to somebody that's spent his life teaching that he's a communist and ruining minds. But that's kind of what a dissident intellectual... That's the role of the conservative student on today's campus, I think. You're not going to make any friends with the faculty. And a lot of the faculty don't like Morgan Null. A lot of the students don't because they think that he's costing the school money because the alumni aren't contributing when he tells them what's happening. I'm a big fan of his. I was in a faculty meeting once and I stood up... This was when I first got there. I sat up and said, you know, where would we be without Morgan Null? Who else would bring up these issues? I think the school itself, the people that teach there, the reason, the point of my talk is economics education, is that the teachers I've seen at Wabash are genuinely interested in education and devotion to classroom teaching, classroom instruction.

43:55They have no conception of how a free enterprise economy works. No basic understanding. I don't care where they went to school. They have no basic understanding. After talking with them for a while, I've become convinced that if more of them had read bureaucracy or some passages from Human Action, then they could see that the problems they see in society or what they want to solve or alleviate poverty would require policies that are exactly opposite of what they promote. and I think Mises believed the same thing he was optimistic as well there's people could just see the failures of and and the the fact that planning has to fail that they would they would change the stripes a little bit any other questions yes

44:53Not at Wabash, no. I would say that it doesn't exist or I would have heard of it. If I'm wrong, it would be awfully odd. It's a small campus. No, the high school education students get are usually taught by high school teachers that frankly don't understand it much either. I've always thought that there's a huge role for teaching high school teachers, but the bottom line is, you know, Jeff Tucker used to point out, Well, that's all I have then. If you have anything else you'd like to ask me, I'd be glad. I'll be here all evening. Be glad to discuss it with you. I'll see you next time.

45:51at length, at nauseam, whatever you prefer.