A Libertarian Analysis of Law

0:00The talk that I had prepared was on libertarianism and it was going to discuss eight or ten different issues. The issues I had listed are a libertarian analysis of blackmail, libel, inside trading, incitement, antitrust, hostile takeovers, the exclusionary rule, Coase-Posner and the law and economics movement. I also added unions and affirmative action, drug legalization. While I was speaking to Judge Dean John Carroll, we decided that the issues that he and I disagree with on most are economics more than the issues that I've just mentioned.

0:48So I've added them to my list, and the issues that I'll cover based on my discussion with him are poverty and the death penalty issues that liberal Democrats and libertarians such as I would have different views on. So I won't be going in depth on any one issue, but my thought was that I would sort of give the gamut of these kinds of issues three or four minutes on each, so I won't necessarily be relatively brief, But hopefully there'll be questions and controversy, at least for the non-comitose, hopefully I'll say something controversial here. Okay, so what is libertarianism? Libertarianism is based on two axioms. The non-aggression axiom is the key axiom. Non-aggression axiom just means keep your midst to yourself.

1:35Don't put them around anyone else's neck without their permission. Voluntary sadomasochism between consenting adults is okay, or not okay, legal, I'm not in favor of it, but people shouldn't go to jail for that. Keep your myths to yourself, keep your myths off of other people and their property. No murder, no rape, no theft. And I think most people would agree with that. I mean, you know, where are the people that favor murder, rape and theft? You know, not too many of them out there. The difference between libertarianism and other people who start with that premise is that we're maniacal. rabid, crazy, logically consistent. We tolerate no deviations from this, whereas other people make all sorts of exceptions. For example, if a majority of the people say something, no matter what it is, the majority is right. Democracy and all that, but you know, my theory is that Hitler came to power through a democratic process, so much for democracy. All that it What it is, is counting noses and counting votes. It doesn't mean that they're right.

2:38And there's something higher than democracy, namely the non-aggression axiom. And if the majority violates that, then so much the worse for the majority. But there are two axioms. The opposite side of the coin, the non-aggression axiom, is private property rights. Because I suppose that I go over to Brad and I grab his red tie. I pull it off his throat, practically choking him, and I run away with it. Have I committed aggression against him or not? Well, it all depends upon who owns the red tie. If the red tie is his, well then I'm an aggressor. But on the other hand, if he stole it from me yesterday and I'm now repossessing it, well then I'm the good guy and he's the bad guy. So you need a theory of property rights in order to determine who the good guys and the bad guys are, who is aggressing and who's being victimized.

3:27Right? Reasonable so far? Okay, everyone with me? Great. I love support. So how do we libertarians do that? Well, we sort of go back to John Locke and homesteading. You mix your labor with the land. You get to own it. You domesticate a cow. You get to own the cow. You own the cow. Your neighbor owns some corn. You trade. We trade, Robert Nozick talks about any consensual activity on a voluntary basis, and now even though I didn't produce the corn, I own it because I traded, and even though he didn't or you didn't produce the milk, I did, you now own the milk because of this trade. So we have legitimate title transfer, namely voluntary.

4:14What are the benefits of libertarianism? Well, prosperity and end to poverty. Sam Smith wrote this wonderful book, 1776, The Wealth of Nations, and he discovered that the way to become rich and prosperous and fight poverty is to have free enterprise, because all free enterprise is, is voluntary trades. Look, if I trade you my tie for your pen, it must mean that I value your pen more than my tie, otherwise why am I giving up the tie for the pen? On the other hand, if you're willing to do it, you value my tie, You fool, it's not very stylish, but what the hell, you have that crazy taste. You value the stupid time more than your pen. So we each gain, we each make profit, we each exploit the other, we each make profit off of the other guy.

5:02But necessarily, at least in the ex ante sense of anticipations, we benefit. Otherwise, why are we doing it? Now, it might not be that you like the time. Maybe I'm your professor and you think you can butter me up by giving the pen for the time. So we don't know that it's the time you like. All we know is that there's something about the trade you like, otherwise why are you doing it? So there's mutual gain. And all the free enterprise laissez-faire capitalist system consists of are trades like that. Barter, purchase, I buy a newspaper for a buck, I value the newspaper more than the buck. The guy who sells it to me values the buck more than the newspaper. I work for somebody, somebody works for me. That's all the market is, is voluntary trade. So how can this not improve us, at least in the ex ante sense? Ex-posts, sometimes we regret an exchange, but this is rare, it's an unusual case, and most of the time even ex-posts you gain.

5:55The other great benefit of laissez-faire capitalism or the libertarian philosophy is freedom. This is what freedom is, the right to do anything you damn well please, provided you keep your mitts off of the persons and property of other people. Okay, that's the short two-minute version of what libertarianism is. Now I'm going to apply it to a whole bunch of weird kinds of things. A lot of these are in my book, Defending the Undefendable. I'm taking some of the chapters out. That's where I got this litany, the first litany. The first one is blackmail. Okay, so what's going on with blackmail? Here we have blackmail, and here we have extortion. And I want to distinguish blackmail from extortion.

6:40In both cases, there's a threat. So I give a check to the threat. Yes, there's a threat in both cases. The case of blackmail is unless you do what I say, and what I say is usually give me money or give me sex or something like that, I'm going to tell everyone that you take a bath with a rubber ducky. And then nobody's going to play with you anymore, okay? What's the threat here? Well, the threat here is, unless you give me money or sex or some other valuable commodity, I'm going to kick your butt. I'm going to kill you. You know, I come up to you with a gun, say, give me your money or I'll shoot you. That's extortion.

7:26So, while both have a threat and both have a demand, The threat here is illicit threat, and the threat here is illicit. I'm a little weak on spelling, so if I screw up, bear with me. There's all the world a difference between the threat to be a gossip, to tell people that you, you know, take the bath with a rubber ducky or whatever it is that you do, you weirdo you, and to threaten bodily violence. In other words, the libertarian axiom says not only may you not aggress, but you may not even threaten to aggress. And here you're threatening to aggress, so that would be illicit and illegitimate, and that certainly no libertarian would defend. But blackmail, why should we have a law against blackmail? There was this University of Pennsylvania law review about that fat, had maybe 35 articles in it in 1993 or something like that.

8:28And I've written an article attacking each and every one of them, because the way this law review was... See, I don't know anything about law, but I got maybe 65 articles in law reviews. I don't know, I just sort of mouthed off and they published it. I don't know how it works out. But see, the whole University of Pennsylvania compendium was solving the paradox of blackmail. I've just given you the paradox. Why is it illegal if all what you're threatening is to be a gossip? And gossiping isn't illegal, it's under free speech, right? Anyone can say things, you know, Did you know that he was out with this lady and he's married and she's married and they're not married to each other and stuff like that? Well, that's just gossip.

9:13So all I'm doing when I blackmail you is I threaten the gossip. But if gossip is licit or legal and should be legal, then why is threatening it illegal? That's the paradox. and they went into all sorts of convolutions as to why it should be illegal, and my answer is no, it should be legal. Okay, the next one is libel. Okay, so now I'm going to libel you, you're a pinko, you're a commie, you're a weirdo, whatever it is, I libel you, and now you lose reputation, no one will hire you, You get fired from your job, your wife or your husband leaves you, whatever it is. Should this be a crime?

9:59Well, according to the libertarian theory of property rights, what I've stolen from you is your reputation. And your reputation is more important than a code or a tie or a pen or a wristwatch, right? I mean, reputation is very important. You work hard for your reputation. You can sell your reputation in the sense of goodwill, you know, sometimes you'll sell a store and the fixtures of the store are worth 10,000, but the goodwill is worth 50,000. So goodwill is something very valuable, something that you all work very hard for, something that when I take it away from you, you greatly regret it, and you go to court and say, hey, Block is a thief, he stole my reputation. That's the argument in favor of the President's status. But the libertarian answer or the answer I give in this book, defending, is Do we really own our reputation?

10:53What does my reputation consist of? My reputation consists not of what I think of myself That's too incestuous and bread. It's rather what you all think about me This young lady, what's your name? Lauren's reputation consists of what me and all of you think about her Isn't that literally true that our reputations, even though we work hard for them and we benefit from them, they consist of the thoughts of other people? Well, do we own the thoughts of other people? No way. We don't own the thoughts of other people. If I own the thoughts of other people, I can say, well, do you like vanilla or chocolate ice cream better? And she says, no. I said, no, no, chocolate. I want you to like chocolate because I own your thoughts. No, I don't own her thoughts. None of us own each other's thoughts. None of us own everyone's thoughts.

11:39Therefore we paradoxically don't own our reputations and therefore when someone besmirches them we have no cause at law, or we should have no cause at law according to libertarian legal theory because something that I own was not stolen from me so who the hell am I going according to crying wolf or crying theft? Paradoxically reputations would be a lot safer even though we don't own them, they'd be a lot safer under a regime of full free enterprise and private property rights and libertarianism Why? Because if we had no laws against libel, well right now in the magazines and newspapers they have help wanted columns, they have courts for sale, houses for sale, singles for sale or rent or whatever it is singles do to each other. Now you'd have a whole other section in this paper called libel.

12:27And you'd have all sorts of charges and counter charges, oh this one's a commie, this one's a weirdo, that one's a pervert, the column is full of it. Lauren likes vanilla ice cream, she's disgusting, right? No longer would the mere allegation suffice to ruin a reputation. You see that, the paradox here? I mean, right now, if I say you're a commie, people say, well, with the smoke, this fire, Block is a wonderful guy, he must know. I'll ignore this person, is there a commie? But under a regime of property rights and libertarianism, reputations paradoxically would be safer. Then you get all these sort of weird things. Am I a public figure or not a public figure? What's the relativeness of that? I mean, if a public figure is raped or a non-public figure is raped, it's the same thing.

13:14Why should it be any different? You know, what does public figuredness have to do with the law? Next one is inside trading. Okay, I'm an explorer for mineral. And what's your name? Chris. I hire Chris who's an archaeologist. No, not an archaeologist. Who are the people that look for oil? Geologists. Geologists. Boy, I'm pathetic. Pretty soon I'll be drooling. You people in the front row better watch out. Okay, so I hire her as a geologist and say, go look for oil or gold or whatever it is. And now I have two kinds of contracts that I can make with her. One contract is I can offer $5,000 a year just enough to, I don't know, keep her alive or $10,000 a year or something like that and then say, if you find anything, you can engage in insider trading.

14:05You can buy shares in my company, which now benefits from your discovery. On the other hand, I can offer her another contract. I'll pay you $150,000 a year. Let's say that's what a good geologist gets. But now you have to promise contractually that if you find something you keep your mouth shut you just tell me. And if you engage in insider trading it's not a crime but it's rather a contract violation. Now, why is the first contract criminal? It's a voluntary trade between consenting adults. She can trade, I don't see why it should be. Indeed, I think that this is incompatible with libertarian legal code and legal code to put inside traders in jail and inside trading has a lot of benefits.

14:52The prices are more accurate based on more knowledge. You see that this idea is sort of an attack on knowledge. It comes from the perfect competition model of economists, neoclassical economists, not Austrian economists such as myself, where information should be totally available to everybody. But a lawyer's main stock and Trade is information, right? So if there's something wrong with profiting off of inside information that lawyers have when they tell their clients, well then no lawyer should be able to charge anything for anything. No teacher should be able to charge anything for imparting, you know, you give someone a cello lesson, you tell them how to play the cello, that's inside information. You are an insider with regard to the cello, or with regard to the law.

15:38So the whole thing is weird and wonky and doesn't work. Next one is incitement. Go, burn, rape, loot, kill, and you maniacs go out and do it. Am I responsible? What did I do? I'm just giving my opinion as to the propriety of raping, burning, looting and killing. I say it's great, go out and do it. You idiots do it, you're criminals. I'm innocent. There should be no law against incitement. If there was a law against incitement, then what's his name? Got it in my notes here somewhere.

16:19Rushdie wrote this book that a bunch of people thought was horrible and then went out and went berserk. Rushdie should go to jail. Every time someone makes a movie about gang war, gangs fighting each other, after the movie the audience goes out and they start fighting each other. So the movie producers should go to jail? Now, what I'm trying to do is pull some reductios ad absurdum here. I'm trying to say, here's the law. Let's take it to its logical conclusions. The logical conclusions are really crazy and weird. Let's therefore reject the premise. Nothing wrong with incitement. It's free speech. Now, I'm not an absolutist on free speech. I don't say you should be able to say anything you damn well please. For example, you shouldn't be able to say, give me your money or I'll kill you, because that's a threat.

17:05But anything else pretty much goes. The libertarian notion is that free speech, we're serious about it. I remember I said, we libertarians are rabid about the non-aggression axiom. This is another instance of it. Antitrust. We shouldn't have any antitrust laws. Let me tell you my antitrust joke. This will have to suffice. I mean, I teach a whole course on this, but, you know, one, well, actually two jokes. First joke, there are three Soviet prisoners in jail in the Gulag, and as prisoners do, they compare notes, you know, why are you in jail, why are you in jail. The first guy says, well, I came to work early. Every day I came to work early and they accused me of brown-nosing. So they put me in jail. The second guy said, I came to work late and they accused me of cheating the state out of my labor services.

17:54And the third guy said, I came to work every day exactly on time and they accused me of owning a western wristwatch. I once told this joke to a bunch of antitrust lawyers and economists and that one got a good laugh. This one got no laugh whatsoever. They didn't like this. The second joke is there were three people in jail guilty of antitrust violations. First one said, well I charge higher than everyone else and they accused me of profiteering and gouging. Second guy said, I charge less than everyone else and they accused me of cutthroat competition and predation, predatory Third guy said, I charge the same price as everyone else. Hard to see how he did given these other guys, but let that pass, it's just a joke. And they accused me of collusion.

18:41Now what kind of a law is that, that no matter what you do, you go to jail? That's a crazy law. What they're really accusing a monopolist is of withholding. Monopolistic withholding, you're not selling as much as you can, you're holding back in order to jack up the prices. Well, the reductio ad absurdum near is, monogamous marriage should be outlawed. Because each of the monogamous marriage partners is withholding from everyone else. They're refusing to trade certain things, sex, right? So if you're really serious about antitrust, get rid of monogamous marriage, which is a little loony. Well then, so is antitrust law, refusal to trade, I mean, nonsense. Next one is hostile takeovers. How can you have a hostile takeover when a takeover is part of the market and I just got finished saying that all the market consists of voluntary trades between consenting adults?

19:38There can't be any hostile takeover. If I take over your shirt or your blouse or your jacket or whatever it is, your earrings, and I do it through the market, I must have made her an offer better than the one that she now has, namely to keep the status quo. So where can there be any hostility? There can't be. Whence then comes hostility, as in hostile takeovers? It comes from third parties. I see this hotel. I think the hotel can make a million dollars a year profit. Right now the hotel is making 10,000 a year profit. At a million profit at a 10% interest rate, the present capitalized value, assuming that the hotel will last forever, is 10 million. you multiply it by 10. At 10,000 the thing is worth 100,000, assuming a 10% interest rate. So I offer half a million for the hotel. And who doesn't like that?

20:36The share owners of the hotel, oh no they like it, they like it a lot because I'm offering them triple or quadruple whatever the market rate is based on the low-performing hotel. Who doesn't like it? The manager of the hotel and the staff of the hotel, a bunch of bums that are You know, not doing their job, and as soon as I take over the hotel, I'm going to throw them all out. That's the hostility. Well, the hell with them. They're not the owners. They're none of this, what do you call it, third parties and busybodies. Stakeholders. The hell with the stakeholders. The stakeholders don't own anything. So the hostility comes from not the person that I'm dealing with, because by By definition, the person I'm dealing with has to be non-hostile otherwise they're not agreeing.

21:22So, we should toss hostile takeovers in the dustbin of law. Next one is the exclusionary rule. Now, I agree that it's reasonable, you know, in the bad old days, the cops, the way they'd get a confession out of the guys, they'd slap them around until they confessed. That's not cool. You know, you have to have certain proprieties. Suppose they forget to mirandize or they don't have a search warrant or whatever it is that they violate and there are so many things that they can now violate and the police protect us with one hand behind their back because of all these rules, but be that as it may, let's accept the rules and now the cop screws up and what they do is they let the prisoner go? Come on, give me a break. If the policeman makes a mistake, dock him an hour's pay or a day's pay. In other words, the law should punish the The transgressor, the transgressor is the cop who didn't dot his I's and cross his T's, right?

22:18So punish the policeman. I mean it's a minor thing, you're not going to fire him, you're not going to execute him, you know, you give him a docum a day's pay for not doing what was right. Fine. But to let the prisoner go? That's lunacy. The next one on my list is Coase. Are you into Coase in law school here? Coase is a, in Yiddish we call it a Gansah Maha, big, big shot. I'm from, I'm a Jew from Brooklyn, I have to revert to my roots every once in a while. Okay, what, for Coase, what's going on with Coase is that there are two states of the world. There's a zero transaction state of the world, and then there's a more realistic, positive transactions cost state of the world.

23:10And Koos makes an interesting point that in the zero transactions cost world, it doesn't matter if there are two people disputing as to who owns this pen, my left hand or my right hand, it doesn't really matter for the allocation of resources which the judge gives it to, my left hand or to my right hand, Because in a world of zero transactions cost, the one who likes it more, the one who, if he gets it, the GDP will be higher, and that's because the main thing. Doesn't matter because suppose you give it to the guy who really likes the pen most and will maximize GDP if he gets it, well then he'll keep it. Suppose you give it to this guy who doesn't really value it as much, well then this guy will bribe him out of it, and bribing is now costless, so it will automatically occur.

23:58Now, I have one little problem with this, and that is the bribes really depend upon people having enough money to bribe, and if all the value of the pen is a psychic value, you might not have the money to bribe, but that's a minor point. The major point has to do with the world of positive transactions cost. Now, suppose I go over to Brad again. Brad, give me your wallet. I promise I'll give it back. Okay, I got Brad's wallet, I run away, I got the wallet, and now the cops catch me. And now I'm in front of the august judge over there, and we're trying to figure out who should keep this wallet. Now, the libertarian, for the libertarian, he's historical, not hysterical, historical.

24:47He says, well, from whence sprang this wallet? Oh, I notice it's got a picture of Brad, it's got a picture of his wife, and, you know, it's got all sorts of Brad kinds of things. That's historical, and the judge would say, the classical judge, libertarian judge, would say, well, it's Brad's wallet. You stole it from him. Give it back. What would the Cosian judge say? The Cosian judge would say, well, if we give it back to Brad, what will the GDP be? If Walter keeps it, what will the GDP be? Now, Brad's a bum, you know him, he's a bum. All he'll do with this money is he'll buy wine and he'll get drunk and, you know. Whereas I'm a wonderful person, I'll invent the cure for cancer if I have this extra money.

25:33So obviously, I keep it. Now, is this a perversion of justice or is this a perversion of justice? The answer is this is a perversion of justice. That was a simple question. This is a horrendous perversion of justice. Let me give you the Sturgis versus Bridgman case. I forget who was who. I'm not a lawyer so I don't know all these things. But one of them was a doctor and one of them was a... Boy, this is a little weak here. One of them was a doctor and one of them was a mechanic. Let's say here's the doctor, I forget who it was, and here is the mechanic, and what happened was, the doctor first had his office there, he was the first one in, he had his office, and he had a stethoscope and he needed deathly quiet, and the machinist put his machine there, and I'll illustrate this, indicate noise, the machine is grinding something or other, and I forget if it's Sturges or Bridgman,

26:41What happens 10 years later? The doctor moves his office to here, and he now sues the mechanic for noise pollution. Now, how would the libertarian judge and how would the Kossian judge handle this? Well, the libertarian judge would go on homesteading and say, who homesteaded the noise rights first? If you have an airport here and the airport makes noise there and then somebody later comes in and wants quiet, too bad. The airport homesteads the noise first. On the other hand, if he was there first and then the airport starts up, well then the airport has to buy the rights from him.

27:29That's the way the libertarian judge would do it. How would the Coasean judge do it? He would ask, well, if I give it to this guy, what will GDP be? If I give it to that guy, what will GDP be? And I forget the way Coase answered that. It's really unimportant. All I can say is that it's unjust. And how does the judge know which is more valuable, which will increase GDP? What you're doing is you're making the judge into a central planner. And, you know, the Soviet Union went belly up for a good reason. up for a good reason. North Korea is worse than South Korea economically for a good reason in East Germany, North Germany. Central planning doesn't work. Well, central planning doesn't work whether it's on the part of the judge or a central planner. Okay, the next one is

28:20the law-free association. According to libertarianism, law-free association, you should be able to associate with anyone you want. The whole problem with slavery is that it didn't uphold Law of Free Association. Otherwise, slavery would have been fine. They give you food, you can sing songs, you get to pick cotton. It's a wonderful deal, but as soon as they start whipping you, and you say, well, I quit, slavery is fine. The problem with it is, it violates the law of free association. The slave master says, you can't quit. Namely, you have to associate with me against your will. Well, affirmative action is a form of violation of free association, too. I have to associate I don't want to associate with him. He's a bum. I don't want to associate with him. He's bald. Look at him. He has a beard. Disgusting. I'm a self-hater. I can't help myself.

29:09If we have a law that you have to associate with bald-bearded people, to that small extent, enslaved. Unions are a violation of the law of free association. The employer is told that he has to bargain fairly with the Union. He doesn't want to bargain with them at all. He wants to disassociate himself from them. And he can't based on Haft-Hartley-Wagner Act and all those labor legislations. Let me do the death penalty because I'm almost out of time. I want to give you a proof that the death penalty is justified. And here's my proof.

29:56Okay, what we have here in period one, here is the Vic, and here is the murderer, and in period one, right after the murder, the victim I'm going to give an unhappy face since he's dead, and the murderer I'm going to give a happy face since he's alive. Now, what did the murderer do to the victim? Did he not steal his life in a poetic sense? He sort of plucked the life out of him and then stamped on it? Wouldn't justice consist of if we had a machine like a Robert Nozick kind of machine where we flip the switch and then we get into situation two where the life gets transferred out of the murderer and into the victim And now the victim is a smiling face because he's alive, and the murderer is unhappy because he's dead.

30:49There's even a TV program where they sort of pick the life out of people nowadays, daisies or something, isn't that right? Okay, we don't have that machine now, but we'll have it in 500 years or a thousand, and if we never have it, we can still imagine it. Isn't this the essence of justice, to take from the murderer the life of him and give it to the victim so the victim comes out of this alive and the murderer is dead? Tough on the murderer, he shouldn't have murdered the guy in the first place if he didn't want to be dead, right? Unfortunately, we don't have the murderer, but we've now established that his life is, he doesn't own, he's not the proper owner of his life anymore, right? Right? The proper owner of his life is the dead victim.

31:35Now it's true the dead victim can't benefit from it because the dead victim is dead, but the dead victim has heirs. He has a wife and three kids. Shouldn't the wife and three kids, through her agent, own the murderer as in a slave? Shouldn't she be able to publicly execute him and collect money for it if she wants? Or put him to a life of slavery to support her? seems to me to be justice. If you believe in private property rights, you also have to believe that when someone steals something that they ought to be made to give it back. Indeed, the libertarian punishment theory is two teeth for a tooth plus cost of expenditures plus scaring. So, let's go back, I steal Brad's red tie.

32:21The first thing I have to do is give him back his red tie. Second thing I have to do is give him my tie, assuming it's the equivalent, because I have to have done to me what I try to do to him. The third thing is that if I immediately confess, I go to the police and say, hey, I stole a tie, I feel guilty, then there's no cost of capture. But if I evade, then I'm doing something else other than just stealing his tie. I'm also evading justice. And I have to pay the cops out of hard labor who search for me. The fourth one is scaring. When I came to him and stole his tie with this gun, he was scared. You have to scare me. How are you going to scare me? Russian roulette. Where the number of bullets and the number of chambers is proportional to the scaring. So if I just pickpocket and I didn't even know it, less.

33:07If I came in with a gun, carjacked them, more. Well, I'm out of time, so thanks for your attention. Anybody have any questions? Yes. Well, assuming that government is legitimate, which is a problem for some libertarians, libertarians is divided into minarchists or minimal government, archists means rule, or ARC means rule, and anarcho-capitalists who believe that government is per se a violation of the non-aggression axiom.

34:02Let's take the minarchist case. The answer from the libertarian end of things is you only fight when you're attacked. You don't go and go to Iraq where Iraq has gotten up the hope and hell of coming to attack us. 10th grade power. They're thousands of miles away. They had nothing to do with 9-11. The purpose of the government, you go to the founding fathers in the Constitution and they said avoid entangling alliances and avoid being the policemen of the world. Just Fortress America. Anyone who attacks us will kick their butt. But we're not going out to the world and being the policemen of the world. I mean right now we have 130 countries and 700 military installations.

34:48In 130 foreign countries we've got 700 military bases. That's defense? What would we think if China or Mexico did that? What would we think if China had military bases in Idaho or in Alabama? We wouldn't much like that. And yet that's what we're doing. We've got bases all over. What are we doing in Germany? What are we doing in Japan? What are we doing in Korea? What are we doing in the Middle East? What are we doing anywhere? Every time two tribes get into a fight, we're in the middle of it. 9-11 wouldn't have occurred if 9-11 didn't occur in Switzerland. It didn't occur in Norway. It didn't occur in Canada. Well, Canada deserves a little bit because they're in Afghanistan. What the hell are they doing in Afghanistan? When did the Afghanis attack Canada?

35:35Spain went to Iraq, so did Britain, but take Switzerland. Switzerland didn't send any troops anywhere, nor did Norway, and properly no one is attacking them. These people are not attacking us because we have miniskirts and we have rock music, much as they don't like those things. They're attacking us because we're attacking them. We bombed the crap out of Iraq for ten years. We've killed zillions of Iraqis. Madeleine Albright was told that 500,000 Iraqi children were killed because of the blockade and the bombing and she said, well is this acceptable? And she said, yes. That's not defense. So the libertarian is not a pacifist. If somebody comes at you with a knife, you plug them or you run away or you give them a karate kick in the crotch or whatever you do. You don't have to be a pacifist, but you don't go out You know, Laura, Lauren, she didn't smile. I'm going to go punch her. She might attack me. She's got arms and legs.

36:33If I attacked her on that ground, I would be the aggressor. So the libertarian is not a pacifist. The libertarian believes in war, defense of war. The Catholic, what is it, just war theory? This is compatible with that. I would like to know that traffic laws, when libertarians are served in the main traffic laws, give us freedom on top of the top line, not in the way. Those laws are dangerous because traffic flows better when you observe it. Why should you get a better deal? Why should you? Why should the law compel me to give you a better deal than the deal I want?

37:29The more interesting one is traffic regulations, to me the more interesting one. I have more to say about it. I have a recent book coming out on just this. Brad wrote the preface to it. I say two things there. First of all, do you know the difference between a bathroom and a living room? And the joke is if you say no, then I say don't come to my house. Whenever you come to my house, you obey my rules. And I say you have to wear a beanie with a propeller on it. And you have to push a peanut with your nose across my living room. Have I violated your rights? No. It's my house. Don't come. You don't want to do this? Don't come. So traffic laws are, per se, not a violation of freedom. It's rather when you go onto someone else's property.

38:16Look, when you go onto Disneyland and they tell you to go like this, you have to do it. And if you don't do it, you don't go to Disneyland. But more deeply, you know how many people die on the roads every year? 40,000. You know how many US servicemen died in the six or seven years we were in Vietnam? Only 50,000. 40,000 every year get killed on the roads. The socialist commie roads run by the government. Government can't manage its way out of a paper bag. We don't have any competition on the roads. Look, if Disneyland is in competition with Six Flags and people start dying in Disneyland, they're going to do something about it. Otherwise, Six Flags will take over, right? Look, where would you rather meet me? In Disneyland or in New York's Central Park or in Audubon Park in New Orleans?

39:07Obviously Disneyland because they've got cameras there, they've got duck and geese and nice oil-packing heat. And if you look obstreperous, they come up to you and say, sir, please come with me, and if you don't, they sort of grab you. It's very safe there because, God forbid, a rape occurs in Disneyland, they lose money. If a rape occurs in the streets of New Orleans, who loses money? The mayor doesn't lose money. No one loses money, no one owns the sidewalks. It's the same with roads. If you had competing roads, and in Brad's road, people are dying like flies, and in my road it was very safe, I could charge more and you'd still come to me. Look, I have a whole lecture on roads, but let me just give you a little bit of it. Some people say that it's not the private ownership, public ownership, it's speed, drunkenness, bad driving conditions, whatever.

39:55Look, if a restaurant goes broke, you say it's the fault of a bad cook and bad location and they didn't keep the place clean. No, what you say is they had bad managers. So when the road is killing people because of drunkenness and speed, you don't say it's drunkenness and speed. Those are just the proximate cause. The ultimate cause is the ownership of the road, the manager. And who is that? The state, the evil government. If we had private ownership, we'd have competition. And then if you had a 50 car smack up in Florida, was it just in the news and five people died? Somebody would lose money and that would focus incentives. Right now nobody loses money. Is it speed? Maybe. But maybe it's not speed. Maybe it's the variance of speed.

40:41Maybe instead of having a 40 mile minimum and a 70 mile maximum, what we should have is speed over here 55, here 75 and here 95. I don't know. It might work. It's plausible. Maybe, you see, right now you have horrible variants. People are doing 40 and 50, these little old ladies driving in the left lane, and other people are just zipping around, and that causes accidents. Maybe it should be this way. We don't know. But the rules of the road don't come from on the high. They don't come from Washington. They come from competition, but we don't have competition. So we should privatize the roads. that would be my second answer. Other questions? I've got this card here, I can sign you all up. Yes sir.

42:20That's a very profound question. That's a very important question. I've never heard that one, and I've heard a lot to mimic what's-his-name Rudy Giuliani. In a sense, it's not really the free market's task to deal with government. All the free market is, is trying to make profit through voluntary trade. But the only way you can get rid of an overwhelming government is to do what we did in 1776 with the British government or what the South tried to do in 1861 with the North. Fight. But free enterprise is not, you know, we have specialization in divisional labor. Free enterprise, you know, Bill Gates doesn't specialize in that.

43:08The owner of Walmart doesn't specialize in assassinating fascist government people. So, in a sense, there's no answer. There are related questions, and usually when I can't answer a question, I start answering a related one, so if you'll excuse me. One of the problems is that a lot of free enterprise people or a lot of businessmen, you'd think that businessmen would favor the market, but a lot of them are in bed with the government and get subsidies, and this sort of gives a bad press to the free enterprise. When people think of free enterprise, they think of a Chrysler bailout or military industrial complex, and all these people getting a lot of money, war profiteers. Not that I'm against profit, but I'm against being hand in glove with the government. So, again, there the solution doesn't come from the market. The solution comes from us, from ideology, from free enterprise, libertarian ideology.

44:01I hope I've done justice to a very good question. The gentleman behind you, could you speak just a little louder?

44:35Well, I think we're on opposite sides of this. I think that when one person is thrust down the throat of another person, that's not freedom of association. That's the antithesis of freedom of association. Yes, they'll associate with somebody that they wouldn't otherwise associate with, but that's hardly freedom of association. Look, if we were really serious about freedom of association, you couldn't have heterosexuality. Because heterosexuals, the dirty rats that they are, they discriminate against one half of the human race in terms of bed-corner, right? They don't associate in bed with members of the same sex.

45:23The dirty rotten homosexuals, too, discriminate against half the human race, namely same-sex people. If we took the logic of affirmative action, we would have compulsory bisexuality, which is a problem. I mean, I don't want to do that. And to tell me that compulsory bisexuality is really freedom is problematic. Now, take the case of black people. Thomas Sowell and Walter Williams, two black economists who are free enterprise, attack affirmative action on the following grounds. What they say is that this hurts the average black person because before freedom of association was abrogated by affirmative action, anyone could hire anyone he wanted.

46:12And if you fired someone, you didn't have to go through connections. Whereas right now under affirmative action, if you fire a black person, you're in trouble. They have all sorts of holds over you. So the natural predilection, according to Soule and Williams, is to hire only the black who goes to Harvard, because the odds of having to fire him are very low. Whereas you don't fire, you don't hire the black who goes to this school, because this school is in Harvard and you're taking more of a chance. So what this does, if I can use supply-demand analysis Let me show you this for a second, is that here is supply and demand before, and what this does is it increases the demand for the Harvard types and it decreases the demand for people at non-Harvard places, so it hurts most black people.

47:03Take the male-female income gap. A lot of people say, well, this is sexism, run amok and all. What feminists, so-called feminists, I call them so-called because they're not really in favor, or what they favor is not really in favor of women. What they're asking us to believe is the following thing. Here is male, here is female, here are wages, and here is productivity. What they're asking us to believe is that, let's say, productivity is the same for a male and a female. Let's stipulate that just for argument's sake. And that the wages of the male is 10 and the wage of the female is 7. We're now going to do a profit analysis.

47:49Profit equals productivity minus wage. Can everyone see this? I should have asked this before, I'm such a lousy, whatever. Okay, so what's the profit of males? The profit that you get from a male is 10 minus 10 equals 0, which is fine because in equilibrium there are no profits. Not that we ever get to equilibrium, but no profits in equilibrium. Whereas the profits for a female equal 10 minus 7 equals 3. So anyone, under these circumstances, would never hire a male because a female would have a little thing on her lapel saying, hire me and you make an extra three bucks, right, which is crazy.

48:36The market can't, that can't be an equilibrium situation. All the males would be fired and all the females would be hired. We don't see anything like that. So the reality, and yet what they're saying is we should have affirmative action. And we should make the females be paid ten, equal pay for equal work and all that. The reality is that the wages are seven, and it's because the productivity is seven. Females have a lower productivity. Does this mean females are stupider, less able? No. We have an economic thing called specialization and division of labor. Look, if I want to be a doctor, how good a concert pianist am I going to be?

49:24To be a good concert pianist, I have to play eight, ten hours a day. To be a good doctor, I have to doctor eight, ten hours a day. Right? Let me take a little survey. If you're married, answer in terms of your marriage, and if you're not married, answer in terms of the marriage with which you're most familiar, say your parent's marriage or brother's marriage or sister's marriage. How many say that the husband and wife do an equal amount of housework? Raise your hand. Nobody. How many say that the husband does more housework than the wife? Housework including child care and, you know, just everything. We've got one liar in the audience. How many say that the wife does more work of the household variety than the husband?

50:09Everybody. So it's as if the housewife is specializing in something else. Look, suppose you have a husband and wife, they each have a PhD in chemistry, and you know the joke, they both come home after work, and what does the husband say to the wife? What's for dinner, dear? You have to add the dear, otherwise you get in trouble. They've both been working at the chemical lab, or whatever it is they've been working at, the whole day, and yet she has to do the cooking. And if they have babies, she's going to be out of the labor force from the time, or partially in the labor force, From the time the first kid comes to the time the third kid is six years old and go off to school, what's that going to do, even if she's just as smart as him and just as capable, what's that going to do with her ability to earn income as a chemist?

50:57Look, if there are two people, Brad and I can each do the quarter mile in 60 seconds, and now we start the race and I put a bag, a pack on his back of 50 pounds, who's going to win the race? Well, it's as if the woman has got a bag on her, or a pack on her back, and she's racing the man. she's equally able but she's going to lose the race because she has extra work to do that he doesn't have to do. An interesting thing is if you look at female-male wage ratio for all males and females it's about 0.7. So this is for all.

51:42Okay, so here you have the female-male wage ratio for all. It's 0.7. What's the female for the ever-married? Ever-married means married, widowed, separated, divorced, any touch with marriage. You know what the ratio is? Something like 0.4. Very, very low. What's the ratio for never married? Never married, not widowed, not divorced, not separated, not anythinged.

52:22There is no difference. Males and females are equal in this century. Two centuries ago, when upper body strength meant more than it means now, males had a slight edge. Nowadays, the way to run a steam shovel or the way to dig a hole is not like this, So this is a crock, this idea that we have to have laws to help because the market is racist, or sexist, or this-is, or that-is, it's not anything. The market is fair, just, and wonderful. What the problem is, is lack of economic understanding. There is no discrimination. If you discriminate, you pay for it, and if you pay for it, you have a competitive disadvantage and you go broke.

53:08Yes, there's always some, a little bit, but there's a continual grinding process on the part of the market that grinds against people who are underpaying women or men or blacks or bald people or anyone. Because if they pay less, someone else will grab them, and they'll out-profit them. Any other questions before I call on this man for a second shot? I'd like to spread the wealth. I'm an egalitarian in that sense. Seeing no one else, I call on you again. Jim Crow? You mentioned Jim Crow and the market in the same sentence? Jim Crow is a product of the guy in front of you's favorite institution. I'm kidding you.

53:57Wait, wait, wait. Jim Crow is a government law. Jim Crow said that, look, you know this thing about the blacks in the back of the bus? Part of Jim Crow, blacks had to be in the back of the bus. If I were an entrepreneur in Memphis or in Birmingham in the 50s and the law said blacks have to be in the back of the bus, In the back of the bus, whether I was white or black, this is an immense profit opportunity. What I would do is start another bus line and say, look, blacks, you can ride in the front, you can ride in the back, I don't care. And I would get all the black customers, would I not? A large number of them. Why didn't I do that? Why didn't anyone do that? Because of Jim Crow. Jim Crow was a law that said, if I did that, I'd go to jail.

54:43So how can that be the market's fault? That's the government's fault. See, you can't blame the market for what the government is doing. This is a government injustice depredation against black people. But that's against my statement in the other place. I'm telling you that this is not a productive decision. It's really a decision to do it. At the same time, the government has to use the desperate situation because there's never been a desperate situation where the market cannot pay the people back. I agree with you entirely.

55:46Well, we agree wholeheartedly and entirely and enthusiastically that when the government has an unjust law, the market can't do anything about it, only the government can stop it. So we agree entirely. But I disagree when you say that I'm being utopian. I don't think I'm being utopian. I think I'm describing reality. I'm trying to say that the problems come from the government, from unwise government. Some people say the government is like a fire.

56:38When the government is in the fireplace, it's good. When the fire gets out into the living If the government confines itself according to the minimal government libertarians to three functions, namely all having to do with the libertarian non-aggression axiom, armies to keep foreign guys off our back, police to keep local bad guys off our back, and courts to determine who the good guys and the bad guys are, then we're fine. Then the fire is in the fireplace. But once government gets outside of that and says, well, Jim Crow laws or minimum wage laws or any of these other laws that I've been talking about, blackmail, libel, whatever, then the government is creating injustice and you and I agree that only the government can stop that. Where we disagree is you think that somehow the market is responsible for the poverty of black people or women.

57:29and my point is that if black people are underpaid, if their marginal revenue productivity is ten dollars an hour and you're paying them only seven, someone else is going to offer 701 because you're making three dollars pure profit off of them. I will then hire someone at 701 and if a racist fool he'll go broke. Now I don't say that there's no discrimination and no racism, there is, that's the way people are, but what I say is that the market has within its very essence the The solution for this, namely profit. If a black person or a bald person or a left-handed person, it doesn't matter, it's the same supply and demand curve. If there is a group that is hated, left-handed redheads are hated, and nobody wants to hire them, that means the demand curve for their services shifts to the left and they make less money.

58:17When they make less money, they're an opportunity for some capitalist pig to come along and bid for them because they're like money on the hoof. If a left-handed redhead has a productivity of ten dollars an hour and is being paid a dollar an hour, I'll hire him at a dollar one. Someone else will hire him at a dollar two. Where will this end? Up toward ten dollars. So discrimination against any group is powerless to really do much. What really does stuff is unions or minimum wage laws. Or if you want to talk about the plight of the black people, talk about the fact that we prohibit drugs. We now prohibit drugs and young black men, especially in New Orleans, but in many inner cities, are dying like flies. They're shooting each other, but there's nothing special about black people or drugs.

59:06The same thing happened during the prohibition of alcohol, only it was Italians then for sociological reasons. They were shooting each other. Nowadays, does anyone die over alcohol? Yes, alcohol is a medical problem, but it's not an economic problem. Right now, the reason they're shooting each other is because when it's illegal, the supply curve shifts. I hate to do this, supply and demand, but I'm an economist. I have to, otherwise they'll kick me out. The supply curve shifts to the left and the prices of the poppy seed, poppy seed and marijuana, like weeds, they grow. You sort of put them in the ground and you have to back off because they'll get you. It's very cheap, much cheaper than tobacco where you have to cure it and take care of it and all. and all. It would be very cheap. No one would kill over it if it were legalized. You'd have a medical problem just like you have a medical problem with alcohol, so instead of, or in

1:00:00addition to alcoholics anonymous, you'd have narcotics anonymous, which they have anyway. Lenny Bruce, one of my favorite people, died of impure heroin, murdered by the state. The The state is responsible, they prohibited that, and this is creating havoc in the black community. Another thing that's creating havoc in the black community is welfare. Before, my guru on this is a guy named Charles Murray, who wrote a book called Losing Ground. Before welfare really took off in the 60s, mid-60s, the black and the white rate of family formation and legitimacy was about the same. Look, you know that thing about the frog in the water?

1:00:48If you throw a frog in boiling water, he just jumps out. Whereas if you put a frog in cold water and you heat it up slowly, his metabolism is such that he stays in and gets burned. Slavery for black people was like boiling water. It did not affect the black family. The black family was as intact as the white family in 1911. The census of 1910 was a percentage or two different. All during the 1870s, 1880s, and 1890s, there were ads in the papers from black people. Emily Lou is looking for Joe. We were at this plantation. Let's get together. 50 years later, the black family was intact. Slavery was impotent to ruin the black family.

1:01:33By the way, in my view, families are an index of goodness. If you come from an intact family, you have less crime, more education, All sorts of good things and a lot of the plagues of social plagues are due to non-intact families. In the 60s, in the 50s, the black family and the white family, the divorce rate, the rate of illegitimacy, again, was a little bit worse for blacks, it was very close. Then you had the 60s and all of a sudden the whole culture changed. Before that, if you were a girl that got pregnant, you had to go live with Aunt Sue in the next city because you were a disgrace. Now, Charles Murray says that the welfare system made a young black girl an offer that the young black man who impregnated her couldn't match with a minimum wage job.

1:02:21Economics is very powerful. It ruined the black family. It's like this slow heating up of the frog. It's a horrendous thing. And don't tell me that welfare is a market phenomenon. Private charity is, but private charity never did anything like that. private charity, the church would make you pray, make you do this, make you do that, write a letter of thank you, very different and wouldn't encourage illegitimacy. So if you want to talk about plight of minorities, black people, women, whatever, it's not due to the market, the market is their solution, the government is their problem. If you have any further questions, Dr. Block will be available upstairs in the great room.

1:03:12I encourage you all to go up there and have whatever I haven't seen. Thank you very much.