Regulation

0:00Thank you very much. It's a pleasure to be here. It's great to see people interested in the free market and in Austrian law and regulation and officially government regulation in the economy. How much is enough? I think we'll tackle that. The first question I think is just a problem in America right now, a problem, a basic problem, mainly that, well one thing is most people feel that they're worse off than they were ten years ago, they feel that their children will be worse off than they are, which is a big change in the American dream, where most people expect to have their children better off than they are, so each generation improves.

0:52And now we're beginning to see that it's sort of sliding down slowly but surely into an abyss of a lack of consumer confidence, as it's called. Well, isn't that sort of crazy? What's the reason for it? Well, first place, we're going to need recession. I'm not here to talk about the recession tonight. I'm just an alert. That's really not a topic. From the top of the recession, and, after all, there always have been recessions. There have been every three, four, ten years or something. And something else has changed, mainly on top of the recession, in the middle of the recession, there's also a gradual but substantial slowing down, decline in American living standards. The average person, the average income is correcting for inflation, correcting for taxes, worse off than they were.

1:37Since 1973, there's been a slow, steady decline in American incomes, living standards. So, that accounts, of course, for the perception of things are getting worse, good reason for the perception. And you see various aspects of this. Young people can't afford, when they get married, they can't afford a house anymore. They used to be able to afford a house. They could afford a house in the 1950s. How come they can't afford it now? So, it's not just the perception that's off of something going on out there. One of the responses of the recession and the clients that were, one of the, I think, pretty honestly feeble response, but at least in the right direction, in the State of the Union address, President Bush, this January 28th, made a more time on new government regulations.

2:33Originally, I think for 30 days or 60 days, the extended until about August, it might still be on, I don't really know. But the interesting thing is that this could consider maybe, how do we get out of the recession? How can the government get us out of the recession or help get us out of the recession and still be, still want to intervene in the economy very much? And one obvious answer, or maybe a more drawing on new regulations, ponder that for a moment, Vice President Cueto and the Council on Competitiveness, which has done some fairly good work, it's again sort of peddling, Congress is trying to defund it, they're thinking of it as a historical thing, they're trying to deregulate it a little bit.

3:20And what the Council on Competitiveness has done since the Bush administration began, change a hundred federal regulations, a hundred, I don't know how many there are, maybe a hundred thousand regulations. They managed to change a hundred to save the public an estimated fifteen to twenty billion dollars annually. Ponder that, these are tight, this is like a frothing on the cake, this is like the tip of the iceberg. And there are tens of thousands of federal regulations, old ones as well as new ones, and a little bit, changing a little bit can save the public $20 billion. How much could they save? They could eliminate a whole bowl of wax. The whole shebang. There were two bills in Congress, I presume they didn't pass. I really haven't been following the political scenes too depressing the last couple of weeks.

4:11I haven't followed the latest Congress left back home. The Nichols-Reed bill, which would require an economic impact statement, an unemployment impact statement, for all new federal regulations, how many people are still out of work, how much would it cost, how little would it suffer, and this of course did not pass. But the thing is, what about the old regulation, what about the hundreds of thousands of old regulations around the books, how about their economic impact and employment impact, how There is also the Hatch-Cumbas bill, which would require a three-year cap on the total cost of federal regulations. The idea is, if any new regulations come in, any increase in the cost of the economy or the business of new regulations should be offset by reducing federal regulatory costs somewhere else.

5:08This is worth in half either. What are we dealing with here? We're dealing with a monstrous, parasitic burden on the economic system, that's what we're dealing with. And just a little bit shuffling here and a little bit of reduction could mean 20 billion dollars, you can imagine what would happen. I would say the whole thing was eliminated. So we have, I think this is one big reason, or two, I think big reasons for the decline of living standards. One of them, tremendous increase in the tax burden, federal, state and local, which keeps siphoning off private savings and private income to government boondoggles, number one. Number two, tremendous increase in cost of federal regulation and government, state and local regulation.

5:56Regulations keep increasing. As they increase, they burden the economic system. So what the, one thing a regulation does, it sort of, it sort of hits the consumer five ways, like four or five ways, I took it off the other day. One thing is the regulation increases costs, obviously, in regulation on businesses, lowers the productivity of the economy. You can't do this because you have to do that, you have to fill out this form there, that sort of thing. lowers the competitiveness of business abroad so he can't compete with the Japan, Germany, or whatever and causes a decline in living standards for everybody. That's of course what we see anyway, decline in living standards. And there's a myth among many people, many businessmen, that if you increase the cost of business either by a tax or by regulation, they just pass it on to the consumer, sort of like passing you the check, you know, the waiter gives you the check.

6:52That's not the way it works. That in itself would be bad enough if the consumer loaded on the extra cost. But it doesn't work that way. You can't just pass on the cost to the consumer, because there's competition. And there's competition abroad, there's competition in other firms. So what happens, the way the increased cost gets passed on to the consumer is not that easy. What happens is, firms go out of business, they make losses, and supply of goods goes down, and prices then go up. So what the costs get passed on in a manner such that businesses get hurt and consumers get hurt, everybody gets hurt, not exactly everybody, this will be the exception in a minute. So when costs increase and regulations increase, when taxes on business increase, it hurts businesses, it puts them out of business, it suffers severe losses, it hurts savings and it also hurts the consumer.

7:45and the consumer, this production goes down in what it would have been before the course of regulation was imposed. But there are, as I said, some groups that benefit, but not everybody loses. Because the interesting thing is, if everybody lost by government regulation, why are they still having them? You would think that people would eventually get wiser in the situation and eventually see, The first place, people who advocate regulations do not say, I want the regulation in order I want a regulation because I want to have a monopoly or I want to restrict entry into my occupation or my business.

8:44If they said that, they wouldn't get very far and wouldn't fly a little bit away. So I'll give you a couple of examples in a minute. Crazy regulation, I was talking in my class, in a lecture in my class the other night about regulations And they all popped out, they were all paid, they were all really adult students, and they were entrepreneurs and small businessmen and they were examples of a crazy regulation that went on and on and it was very interesting because they knew about the biggest situation in California or whatever. Well, one thing that happens, like who benefits? First they impose a regulation, even if the regulation is innocuous, even just filling out forms, let's say, forgetting about the content of the regulation for a minute.

9:30You fill out forms. Government means filling out forms. Government means two things. Filling out forms and standing in line. That's the essence of government. So, when you fill out forms, the small business gets hurt more. You have just the same number of forms, more or less. Small business gets hurt much more than big business. If you're a gentleman voter, you can hire an apartment of form fillers. They don't care that much. If you have a small businessman with four or five employees, you can hire full-time form fillers. The impact of regulation is tremendously disproportionate on small business. Small business gets crippled, gets put out of business, and so big business competitors realize that that's dumb. Realize that any kind of fixed cost, imposition of fixed cost or more or less fixed cost will cripple their competitors.

10:21The way businesses get big in the United States, mostly, is by growing. You start small, like Polaroid Corporation, you start very small, you grow into a giant corporation, if you're efficient at satisfying consumers. Well, if you're crippled from the very beginning, you have regulations, 85 regulations, that can fill out before they get started, and never grow. And so the big businesses are content, these young upstarts won't come on and have to pee us,

11:17By the way, Tourbo, a great French economist of the 18th century, was sort of a pre-Austrian type and a wonderful section which could have been written on an attack on Ralph Nader in the 1760s. The same sort of junk was going on then and going on now, except they didn't really say it was benefiting the consumer then. Propaganda has gotten slicker. He points out that the regulation is allegedly designed to protect consumers and roll them to sleep. In other words, the consumer doesn't have to exercise his or her smarts to figure out which doctor to go to, which contract or whatever. The government is a promoter. It's a licensed contractor. It's a licensed doctor. Everyone must be good. And so, the government, by putting the informator of the government on each of these occupations, each of these businesses, we can leave the argument of the consumer's learning balance going on and picking the best people.

12:15So, instead of helping the consumer, government regulation weakens them and cripples them in their own learning process, their own competition. As I said, there are several examples of this. I'm sure all of you can document this even more. My brother-in-law, for example, is a photographer in rural Virginia. He's a good photographer. That's not his profession. He's a printer. But he can't become a full-time photographer. He doesn't want to get a photographer's license. Because it costs too much. In other words, you have this fixed cost, but I don't know whether it's hundreds of dollars for either of the licenses.

13:01You want to be a part-time photographer, you can't do it because of the license, of course, the licensing situation is in the hands of the occupation of the business. I suppose the Virginia Board of Photographers, whatever, issues licenses. And what do you have to do? You have to pay a lot of money and to be a quote, good moral character, unquote. I don't know what privileges photographers become judges of immoral character, methodists and preachers or whatever, but at any rate, the essence of it is he can't because it costs too much for him to do it, he still engages in illegal photography, but he can't advertise on the paper, he can't be in the yellow pages, which of course cuts the scope of his market and his income.

13:47That's not a terrible thing, my brother doesn't look at this anyway, but the point is, he could be doing a good service for the public, he could be competing with a license for biographers, and they can't do it because of this cartel situation, the whole country is cartelized, business groups getting, squeezing out possible competitors or actual competitors. One of my students said that he was a plumber in California, in the Los Angeles area, and he couldn't become a plumber, but he had 130 different license requirements in different jurisdictions, which of course squeezes out plumbing. It's not that you don't know plumbing, the whole project is a plumbing school, a special plumbing school in Los Angeles or whatever.

14:35Another example I got from a lady who owned 4 or 5 beauty schools, hairdressers, beauty parlors in California, decided to retire in Nevada. Nevada is fairly entrepreneurial compared to many other states. Retired in Nevada owned one beauty salon. She couldn't do it because she had to go to a beauty school for five years or something in Nevada. Apparently hairdressing is different in Nevada than in California. These regulations are long and hard. One of my pet peeves, this is true, I think of every taxi, every city in the country, is a taxi monopoly of an unbelievable sort.

15:20In New York City, where I was born and raised, I lived most of my life, there were 22,000 taxis on the streets in the 1920s and it was a booming period in the left. In the 1930s, the big depression, of course, one thing is if you're poor, you don't drive right on the taxis very much, the taxis didn't decline. and it went down from 22,000 to about 11,000, something like, I used to know the exact number, 11,171, in 1934, 1936, in one period, they had a taxi industry in New York, those were the city governments, and we need help, and it's okay, and before that, before 1934, in order to be able to own and drive a taxi, you have to have a driver's license, you have to have a car, okay, and that's it, and they had to go get a license for 10 bucks, and the Actee Commission down in City Hall, and for $10 you get your license, that's it.

16:18You pay the cost of the car, the cost of the money you have to drive, and the $10. Well, the license, from since 1934 until the present day, the city of New York has not issued one single new license. That's it. Licenses were frozen forever, apparently, in 1934. So there, how do you buy a cab? You only buy a cab, you have to buy the license for somebody who's willing to get out of the cab business. A license which originally was ten bucks and now something like a hundred and sixty thousand dollars. And this, for a squeeze of that, pushes the supply curve of the economy to the left. It means the supply of cabs is tremendously restricted, the price goes up, you can't find cabs in New York. You can't find a rush hour, you can't find it when it's raining, you can't find it when there's a baseball game going on, you can't find it when you want to go to Brooklyn, you want to go to places they don't like, and so you have to.

17:12And as a result of this, by the way, you have black markets and camps, you have crazy illegal camps, illegal camps, gypsy camps, crazy gypsy camps, the whole insane structure, all due to cartelization. And this is, I think, and I found out in Las Vegas, which I'd say is fairly free-market oriented, locally, there are 2,000 cab licenses and that's it. It hasn't been having increases for 10 years, with all of the cities booming, a population of 17% per year increase, plus all the tourists. So the number of cabs is severely restricted, therefore it's pretty difficult to get a cab. Anyway, this goes on and on, and I'm sure you don't multiply examples of this. So, and this brings us to another key point here, who, in addition to who benefits, the cartelists benefit, and a whole group of regulators, what Irving Kristol calls a new class, the new class benefits, the guys who do the regulating, the guys who fill out the forms, the audience that fill out the forms,

18:17The counselors, technocrats, engineers, planners, city planners, and pharabists, I'm trying to leave out the pharabists, the brainwashers, they don't like this whole set up, send you to sensitivity training, okay? All this whole crew of people who are multiplying like locusts, they benefit, they're not what we have, but we have a whole system, we have a productive sector, The private sector, which I call the productive sector, which is actually producing business services and leeching off them are the public sector, bureaucrats, politicians, all the rest of them. And so, and you have a tremendous increase in the public sector and decrease in the private sector, but people leave the private sector and go to the parasitic sector.

19:04And what's the result? In the long run, the social forces, that's for the host and the parasite. And more on those who have nothing but communism. He had a communist system in Russia and Eastern Europe. Supposedly impregnable, totalitarian, brainwashing everybody, almost everybody is now managing classrooms, nobody is doing any producing, and suddenly bingo, opening collapses. Of course everything is chaotic. So I hope we don't have to reach that point when the whole system dies out. If we wake up in time, we presumably will not reach that point, but the point is, if you have a productive group, you have a parasitic group, and the parasites wax greater and greater and stronger and stronger, One of the questions is asked of course, what do we do with all these bureaucrats and therapists and planners in the last few millennia and all that stuff? What do we do with them?

20:16My favorite answer to that is about Howard Jarvis, who was the heroic leader of the Proposition 13 movement in California in 1978. And by the way, if you want to be optimistic, one of you can tend to be optimistic even though it's a gloomy topic, having to be living in California during that year in 1978 was a heartwarming experience for everybody. Everybody was attacking this thing versus the crime and property taxes by two-thirds. Everybody attacked, the entire establishment, economists, PTAs, teachers' unions, government officials, newspapers, big business. I mean, if you look at the list of unions, if you look at the list of contributors, big contributors to the anti-popular team, every big corporation in California contributed to it.

21:02If you look at the list of businesses that contributed for Proposition 30, you've never heard of them, a little holiday spa, something like that. This is a blip on the screen. And so everybody was attacking it, and the establishment of the political party, everybody, and the struggling thing was that at the time of the approach for the vote, you could see the swing going, tele-proposition 13, and the establishment was just bananas. If you pass this, the streets will disappear, the fire farm will disappear, the police will disappear, all local governments die, and you have the ability to die in the street, and there won't be any doctors left. Total hysteria, and yet it won. It won by a huge percent, maybe 60 percent. It was magnificent. Everybody was against it except the public. The public rose up and passed it. It was just great.

21:53and of course they were trying to get around it and all sorts of finagling, but the thing is that he was a heroic moment, but the public actually rose up and did something about it, and against the entire establishment blockade, there were two or three economists who signed maybe one of them, one of them signed positions for it, I think that was one of them. But anyway, that was just a magnificent demonstration. I remember, I spoke at a rally the night before the Proposition 13 vote. There was a rally in Berkeley somewhere and there was almost nobody there. There was a big baseball park and 50 people there. I was pretty depressed. There were 50 people. I said, don't worry about it. All people don't go to rallies. They just go and vote. Sure enough, that's what happened.

22:38So, my favorite answer to the question, what do you do about these people who were thrown out of work? These bureaucrats and planners and therapists and counselors. And Howard Jarvis, my favorite answer, he said, well, in that case, all these wonderful people will be set free to find productive jobs in the private sector. So that, I think is the answer to that. And I had Yuri Molotov, my favorite Soviet defector, he defected just before the Iron Curtain fell, in the fall of 1989, he was the last, he was one of the top economists in Russia, he sort of took a boat across Sweden or whatever it is, and then fled to the KGB, and just after that, like two weeks later, they opened the borders.

23:28At any rate, he said, well, what do you do with all these people? He said, well, what do you do with KGB? There's a couple million KGB people in Russia, ex-KGB. What do you do? Well, they make good private guards. You know, things like that. Security, checking security in the factory. So, some kind of related skill. I don't know if that's what it is. So, I think the answer to the question must be how much regulation is too much, the whole pool of lack should be limited, how fast you do it, well first of all how fast can you do it, we're trying to practice, we have no magic button, we can push it away, but I would push the button, there, that's my temperament, all the people might want to give it a couple of weeks, The basic answer I think is pretty clear. Get rid of it. Get rid of this stuff. The more you get rid of it, the better.

24:35The more you can start paring away with this tremendous network of crippling regulations, the better. And nobody ever talks about it. I mean, the media doesn't talk about it, of course. And we understand that if they hear about regulation, they're also supposed to be for their benefit. You can't get a photographer in a part-time photographer's room in rural Virginia because you're being protected in some obscure fashion. But I think we need, of course, a lot of education for the public to realize what's going on. The public is sound in all of this. They've been conned. They've been conned because, and one of the reasons they've been conned, one of the reasons they've gotten away with, is the media and the intellectual elite, not just the cultural elite, but the intellectual elite, academics, all the columnists, all of the rest of it, network news programs, all these people are part of the new class. They are the same group. So naturally they have their affinities in the class. They have the same ideas.

25:38And that's why we don't hear about it, the media curtain or filter about it, through which all these things will have to pass before it gets to the general public. What can be done about that? I'm not quite sure. I'm not ready for suggestions. None about the media. At any rate, I haven't gotten the answer to all questions. The answer to regulation questions, abolish them. How do we know about it? It's like the whole of us. Thank you very much. We'd now like to open the floor to any questions that anybody has for Dr. Rothbard. We'll entertain a few minutes of questions and I have a few closing comments.

26:24Also, Dr. Rothbard has graciously consented to stay around for a little while afterward, in case some people had mentioned to me about autographing books and things like this, I have one, but before I ask it, I wanted to tell you I was in the last one. I have one, but before I ask it, I wanted to tell you, I was in the last month and the salmon fisherman I met either said that his license to fish for salmon cost $40,000 or it wasn't worth $40,000.

27:12was worth $40,000 and I remember that in conjunction with what I said. A question is a part of regulation. How is the deadliest of our society going to work itself out? Public debt. Public or private? Private debt is a person, that's a separate topic, separate lecture topic. The private debt is being washed out in a sense by the recession, private debt. What happened was that during the 1980s, very much like the 1920s, the bank credit expansion fueled the Federal Reserve System, poured in expanded bank credit and led to cheap credit, led to over malinvestments, bad investments, lousy loans, loans to shopping malls in Texas that don't exist and things like that, and we're paying the price for that.

28:07So corporations and individuals got sucked into debt and banks because of the Federal Reserve system fueling this, pumping more credit and more money into the system. It's being watched now by the recession, by restricting their income, by having to pay back. Unfortunately, the debt has not been paid off as much as you'd think because even though corporations and individuals are going down with debt, paying it off, Their assets are going down faster. Many corporations, especially those with real estate, their assets are deflating faster than paying off the debt. So the ratio of debt to assets is going up. That's why I think it's going to take a long time to get out of the recession. Already a long time. Anyway, the price of the private debt can be counteracted by this kind of price, by simply the natural forces of the market.

28:59The government can print money, but we can't. The government can print money to pay off their debts, but we can't. So we have to tighten our belts. One of the reasons, by the way, why the Federal Reserve is driving down interest rates and not working is because people don't want to borrow anymore. They want to pay off their existing debt. So it's not going to work. It's not going to hike the horse until that is paid off. All it's doing now is stimulating the banks, purchasing government bonds. So the public debt is much more difficult, but the public debt is unproductive, at least private debt goes into something, maybe shopping malls that don't exist, the government debt goes into Zippo, it's just dissipated, and it's first piled up tremendously, and for the government, they don't have to, either we pay off their debt, be it the tax payer, Or they print money in an inflated debtor way, which is what the Germans did in 1923.

29:56Either way it's a terrible situation. There's no magic elixir for the public debt. I think the public debt is very important, but it's worse. There's one thing worse than the public debt, and that's increasing taxes to try to pay it off. Increasing taxes make the recession even worse. The way, of course, for anybody to pay off their debt, to cut expenditures, the way for the government to pay off their debt or reduce it, is to stop spending, cut their expenses. My favorite, by the way, my favorite budget proposal, people ask me, where would you cut? It was massive, what's the current government budget? 1.3 trillion or something? My favorite answer is, look, take any past year you're interested in. Be very moderate about it. It's a long shocker we've got. Let's take the last Carter year, free-spending Carter, $50 billion deficit, have about $500 billion expenditure. Let's go back to that. Let's pass a law, and from now on, no federal agency can spend any more than they did in 1979, 1980, period. If it's a new agency, they can't spend anything.

31:10It's pretty simple. I mean, I think if people were out starving in the streets in 1980, in fairly good shape, no worse shape than we are now, let's do that. Let's start with that. Then we have a big surplus. We could pay off a lot of the debt. We could cut taxes. That's the way to do it. The idea is drastic cuts in government spending. Just go back, instead of having to wrangle with various bureaucrats who come to this agency and that, just go back to 1980. It's the only 1980-spirited reason. I would prefer going back to 1780. That's too extreme. What about the 1980s? Start small. That's a big problem. The only way I can see is to do with cut slash government spending. That's for those of us who advocate the free market concept. And you're the question, what about monopolies?

31:55If you have no regulation, then a monopoly won't necessarily happen. That's a common question. Okay, exactly. I think I've already answered. Monopolies are created by the government. The government creates the license of plumbers, license of photographers, the government sets up cartels, creates special contracts. I mean, the regulatory commission, for example, the interstate commerce commission, is set up allegedly to help, because railroad freight rates are going up too high, and therefore we need a government to keep them low in the public interest, to make sure the big business monopoly doesn't hurt the consumer. The actual reason for it was just the opposite, actually what was happening before the ICC came in 1887, freight rates were going down all the time, railways were the best way to have a cartel and raise the, cut production and cut shipments and raise the rates they couldn't do in the free market, they turned to the government to do it, the ICC was a creature of the railroad basically to try to cartelize the system, to do what Bismarck did in Germany, you can't lower, you have to keep the rates up, you can't lower it, you can't increase your shipments,

33:01It happened like we had an NRA officially, it was time to have a cartel, but they couldn't get away with it, they couldn't tell the public what we have to have a cartel in order to raise freight rates, they said we're doing it in order to curb big business monopolies, that was a big shell game, which was then repeated in every major legislation system, the rest of the era, the New Deal was more or less the same thing, the New Deal was more stuff that comes into the picture, basically the same sort of thing. Just for example, when I was before, I forget now when I came, the Hurl? Brandeis, one of the most revered figures of the 20th century American intellectuals. His official biographer, the title of his book was The Fighter for Freedom, who was Brandeis. It's sort of a value neutral term. This guy was supposed to be a great believer in free competition, but he actually was a believer in retail store monopoly.

33:51He hated the consumer, he called him a consumer of evil and traitorous. He left one retail store and went to another retail store. He was the father of the resale price maintenance of the so-called Fair Trade Act, which meant that the retail association could set a minimum price and nobody would get discounted on a penalty of going to jail. This existed until the 1960s, I think, when Masters and a court of that broke it. They had a constitutional fight. It went to the Supreme Court. The Supreme Court said it was unconstitutional and was restricting this restraint of trade, which indeed it was. So the point is that these are minimum price controls, which are imposed, cartelized by the government, in the name of helping out freedom and free competition and all that.

34:38So government doesn't do anything to promote competition, it doesn't create monopolies of its favorite people. Most of the anti-trust suits now are by one corporation trying to shaft the other one who is better at free market competition. What about the cable debate going on right now?

35:21We regulate the prices of the leaves that are not laid intact, just the opposite, should not regulate prices and allow free competition in cable. Most of the whole finer optic thing, I don't know much about, allows the telephones to engage in cable and that sort of stuff. So the laws are still being restricted. By the way, my friend of mine is a big politician, political campaign person in Tucson for many years. And he told me a great story about the, you know, mobile cable franchises are one of the big rackets in the country, because you're fighting for the monopoly franchise. Who gets it? Which global machine gets it? The guy who owns the franchise in Vegas has been on a long time, I shouldn't say mafia, because it's not supposed to exist, but he's on a mafioso type.

36:10At any rate, in Tucson, there were five or seven people in the city council, and there was a battle between two possible people franchisees who would get the franchise. One city councilman suggested a secret ballot. He said, what do you mean secret ballot? Secret ballot is not national security or the state one. You can't have a secret ballot. It turns out this guy was in the pay of both companies, and he didn't want either company to find out which of them he betrayed. George Washington Plunkett, the famous family philosopher back in the late 19th century, George Washington Plunkett said, his definition of an honest politician is somebody who stays bought. Dr. Rothbard, are there any doable solutions to the health care crisis we're in and the cost of it?

37:22If you see a problem, then you have a two million dollar commission or something, and then you ask the Rockefeller Foundation to investigate the problem, and then you suggest the government have a massive program to combat it. Government has a massive program, at the end of the massive program, the problem is still there, if not worse, and two or three other problems have been created. And then of course the government steps in and creates another problem, you can wind up with social, you can have a cumulative intervention. That's what's happening in health care. I'm not an expert in health care. The point is, when I was growing up in the 1930s, we were much less affluent than we are now. Nobody was worrying about affordable health care. Everybody was going to afford their doctor and their hospital and everything else. As a matter of fact, my family physician charged two bucks for an office visit and three bucks for a home visit.

38:12What's home to that? So, those of you under 60, you know, have never heard of this. And the point is that the poor people went to clinics, and they were treated three by the doctor. Well, no problem with health insurance, no problem with affordable care. This, of course, is beyond correcting her inflation. She was great. And then it starts third-party health insurance and Medicare and the like. We wind up with huge medical costs, which most people can't afford, I'm going to go forward and then I'm going to try and have that socialized medicine all together because we have a third party medical insurance which I have, the man curve goes up to infinity almost. In other words, if you say, I have a government, I have Medicare, I will pay any doctor a bill, the bill will go skyrocket. As a matter of fact, a friend of mine, his wife had an operation and he gets the bill and he says, what is this? It's not going to be so big.

39:05And he says, don't worry about it. Well, if the insurance doesn't pay, it will cut us down about the little temps. The point is, the insurance, the taxpayer provides the unlimited demand and then they start yapping about it. Of course, it's not affordable. Then they start talking about putting a cap on it. The whole thing is a total absolute mess. The only way to get out of this and eliminate the entire government of invention of medicine is really the only way, can't you do it slowly and do it fairly fast, get it out, and doctors tell me it's getting worse all the time, government regulation is getting worse, all the rest of it, it's inevitable, once you've subsidized medicine then you're going to start regulating it. By the way, I was calling a minute, I remember in 1950, when leftists were in favor of Federal-Aid Education says, and the Conservatives said, no, no, you have Federal-Aid, you'll be controlled over public school education.

40:00And leftists said, I don't know if that would be controlled, we promised, we guaranteed it would be Federal-Aid, but no control. And now it was, everybody's been brainwashed all the time. So, that's typical. Would you comment on the Michael Milken jump line situation that occurred?

40:42And as a result, we have interesting corporations. One of the weapons of stockholders is to get rid of the management. What happens is, takeover bids come in. And the old days, you have a quiet takeover bid. I want to take over this corporation. I talk to my buddies, and suddenly I announce, November the 5th, I announce, OK, I've got 51% of the stockholders meeting. The old line corporations didn't like that, essentially the Guadalajara and Royal Empire, the Eastern Seaboard, they didn't like it.

41:27So they got Senator Williams, who was a deeply beloved figure, I don't know if anybody here remembers Senator Harris and Williams, known for having New Jersey. I used to read this expression, I don't know if it wasn't, I must be mad at kids, for one or two years I actually subscribed to this expression every day, and William was the most beloved person about him in the New York Times, in the arts county, he was getting money for the arts, and NEH, before the NEH, all that sort of stuff, sort of premature NEH type, and he passed the law, he gets the law passed, you can't do this anymore, you can't just have it take over, when you want to take over You have to stop at 5% and announce it, and then wait on like 60 or 90 days before you do anything else. Of course this means you alert everybody, like everybody, female, black male, whatever it is, and they stop and the whole officer jurors come in, the best is what's going to happen,

42:20and then it's more or less stopped to take over as coal from the Williams Act. And that's when in 1970 Michael Milken, a person of financial genius, decided to get around the banks, to get around the Williams Bank by financing takeovers to high yield bonds, some of the junk bonds related to their enemies. I mean it's like Cadillacs pulling volumetric junk, you know, it's higher risk and they have a very high interest. So at any rate, so Milken did get around the Rockefeller establishment types and was able to take finance takeover, which they hated. and then they use the Bush Administrators to tie it in a law that follows to what was fashion. Some of the jail comes up charges for violating two of the SEC regulations, nobody knows anyway.

43:05Talking about regulation, beautiful way of, these are chicken regulations nobody cares about, they're not crimes. And yet, the anti-average person is really depressing, the anti-average person on the street. I, by the way, this thing on TV, I hate more than anything else than asking the guy on the street, what do you think it looks like, George? So, what do you think of this? What do you think of Michael Mugger? They should swallow away their keys, the one I'm up to right now. They have $300 million flying with them and up and 10 years in jail. I mean, mass rapists, mass murderers don't get that. They get a pat on the wrist. Look at the proportions here, and you see the rotten state of the political system, and that's money, and human is okay. Our chief economist from one of the large mutual fund groups said a couple of three months ago that no matter who was elected president, that was before Perot had dropped out that time, that the economic policies were fairly well set and each one of them would follow what the policies were, would you care to comment?

44:07But, the thing is, both parties are Keynesian. The Keynesians are probably a little bit of Keynesians. They're all Keynesians, okay? There are different nuances of Keynesians. Some of them are a little bit more conservative, some of them are a little bit more liberal. This doesn't make much difference. And sort of like, who do you prefer, Erring or Gable? This isn't really young. So, they're all Keynesians. So, they're all, their whole, their whole view of the world is Keynesian. So, whichever party gets in, it's true, it'll be about the same. I kind of think Clinton will be worse, because they're left-wing payments. So you have more government investment, more taxes, and then we're going to have the Bush thing. And then we should take the Pembroke. So you think the less are too evil, you think we're making it worse, it'll get some reaction. I'm beginning to distrust that, because if you can make it worse, if you're allowed to get it worse, there is no reaction, it just gets worse.

44:59By the way, when income taxes first passed, people were favoring income taxes, mostly classical liberals, mostly limited-care types, and their argument was, look, if you have income taxes, you visible everybody, there will be lower taxes, because you can't see excise taxes, you can't see sales taxes, therefore, it's the same visible people fight for lower taxes, or the history keeps growing up all the time. I see your position as being rather aggressive and maybe sometimes when the country seems to be a little deaf to the idea of reducing unnecessary regulation and cost, you have to sort of be a little bit loud to get their attention.

45:48given what I perceive to be a fairly extreme position on your part that you need to peel back all regulation and regulation against being somewhat the details surrounding a law and I don't believe you're proposing that we don't live under law but... So let's take just a simplistic example, instead of being against regulation for increased cost, which is obvious, or increased government spending, which is obvious, how about to solve the core problem, that is, of misbehavior? For example, an industry that without regulation might pollute. What would be the solution to their, what would the natural forces be to keep a business or industry or some sort of organization from misbehaving?

46:44Well, the first is laws against fraud, which covers a lot of the, doesn't cover pollution, covers a lot of the other stuff. You don't need extra laws against fraud. What Happened in the Early Nineteenth Century, Property Rights were Protected by those who In the 80s and 40s, when locomotives first came in, they were chugging down the field, they were pouring smoke out, it was obvious what the pollution was, it was destroying the crops of the farmers, the farmers took the railroads to court, and the judges, instead of defending the property rights of the farmers, said as follows, look, we know what's interfering with the property rights of the farmers, It's too bad, but something higher than the property rights is public policy.

47:54We've known that before. Public policy is a man we have in the industrial lines, we have railroads, and therefore in us, the EU. Basically, they're slightly more legalese. In other words, the courts then systematically, from the 1930s on, favored riding roughshod and pollution over property owners. So when you do that, you're going to get, if you allow that for a hundred years, you're going to get a polluting technology. In other words, of course the Soviet Union and the major Polish communist government are tremendous polluters. They were the government. There's nothing that's checked for them. But one of the examples I'd like to give is, supposing you have a house and a lawn and you're on a corner of a lot, and the trucks start crossing your lawn in order to avoid the traffic tie-up.

48:41If you take the guy in court and say, look, you're on a judge, you can't cross-bind the law. And the court says, look, traffic is more important than you're finally buying a lawn, so we'll allow the trucks to do it. We're going to give them light up a hundred years with no lawns and lots of trucks crossing everything. So the problem is not technology, the problem is not capitalism, the problem is the government has not enforced property rights, but they're supposed to be doing it. And that's the exact thing, the point, the pollution point. Also, the point is to privatize. Now, the way to make sure the rivers don't get polluted is to privatize the rivers. Make sure the owner of the river makes sure he doesn't get polluted. That's the point. Thank you. Thank you.