7 4 05 pm eastern time, the legal issues associated with drone warfare followed by Fox News Contributor pete haigstaff who talked about man in the arena, on the responsible it is of citizenship. On booktvs afterwards program, the changing face of americas workingclass. She is interviewed by amy goodman. We finish our primetime lineup this evening at 11 00 pm with an interview with publisher Chris Jackson on his career and his work with tonnie coates. That happens on booktv. Eric, eric right up here. [inaudible conversations] [inaudible conversations] if i could get everyones attention, my name is peter boettke, director of the f i a program, today we are thrilled, we have Dierdre Mccloskey in conversation with my friend donald boudreaux. Dierdre mccloskey has the new volume of her trilogy, bourgeois equality how ideas, not capital or institutions enriched the world, which builds on the dignity, don will talk about the introduction but i want the person to congratulate deirdre on this collection, the most ambitious work during my career in economics, amazing achievement for what you have done and generate the conversation in economics and hopefully we will have a great conversation. Lets turn it over to you. When clear morgan asked me if i would conduct a conversation with deirdre id jumped at the opportunity not only the honor but there are a few books one reads in a scholarly life that fundamentally change or deeply change, they did that for me. And the university of illinois chicago. I list the departments that take us through the hour. At the university of iowa. At the Economics Department at george mason and the katy center, and the scholarly article number about 400. I dont dare put a number on the number of popular blog posts and magazine articles. I also believe this is your 17th authored book. As pete noticed it is the final book in a remarkable trilogy. From deirdres website. And she protests it is not a conservative economist. Here is what she is. In deirdres word she is, quote, a literary postmodern, and was once a man. Not conservative. Im christian, a christian libertarian. Were i to list all of deirdres achievements. And lets get to it. Lets get to the publication, and i was in the mercator sponsored transcript. That is it changed a lot. And where did this come from . The germ was the notion of the virtues. Aristocracy, peasantry, all they are are the virtues as understood in the west and the east and the south and the north of Human Society in a commercial context. Courage, entrepreneurship, love would be solidarity or personal consideration in a business for example. There isnt anything specifically bourgeois about the virtues. I am taking the tradition of virtue ethics which is a long time, talked about being good and saying you can be good and be in an economy too. That comes as news to a lot of intellectuals. That is why i wrote the books, to bring the good news to our wonderful friends on the left and some on the right who regard a Market Society as an abomination, as corrupting. Let me be presumptuous and summarize the main theme of these volumes. He knows better than i do so feel free to correct this is a very short summary of complex ideas. Economists since the time of adam smith have asked what causes material progress. Nature and causes. There is no question there has been a major increase in the rate of material progress since the time of adam smith. Factor of 30. You call it the great enrichment, one of the greatest events in Human History right after the invention of agriculture and you found or find every other explanation they can offer for the great enrichment to be wanting. Your explanation . Ideas change, particularly specifically ideas change in such a way that practitioners, people who act as innovators. For the first time in history starting 250 years ago in the northwest part of europe became dignified in the eyes of most people, that unleashed this creative energy. That is the key. Not so much psychology changed. That was claimed 100 years ago. I dont think that is very plausible. Not that people got better. The surrounding society changed its valuation of what they did. The word innovation for example was a scare word until the 19th century. To innovate was to change religious beliefs or disturb the social hierarchy. We dont want any of that innovation so that is the main thing that changed. In the last month or so this last volume should have been entitled i should add one more word, bourgeois equality, here is how i should have said it, this will shock you, how liberal ideas, not capital or institutions, and rich the world because it is the basic liberal idea, not in the modern american sense people are equal before the law and equal in social standing. It is that he quality that inspired people. I get more and more evidence of this every day. I am reading an extremely good biography of the great Norwegian National hero after who miami named and all through it you are seeing use poor swedes and norwegians inventing stuff in the 19th century, the primus stove which made arctic exploration so much easier because they are being allowed to. Matt ridley has a nice review of bourgeois equality. He pushes back a little bit. He wonders and i wonder how you respond, how do you know the causal direction . It is true, you document the change in rhetoric 150 years ago, more respected and spoke of with greater dignity. Matt wonders if the cause was an effect of other changes. It is clear there is a backwash. The idea of the quality. Not what i call french equality which is the idea that he quality of income which they usually think of but what they call scottish he quality, he quality of human dignity, socially and before the law, those of course were raised in prestige by the success of this formula. In england and holland it all begins in holland in the United States. You see this Great Success and that increases the prestige of market tested betterments as they call it. I would say to ridley to look at the timing. Lets look at the timing. The increase in status of economic behavior and bourgeois activity and innovation happens before substantial economic success, well before. Around 1700. 100 years before, around 1600 you have this flowering of dutch commercial society. 100 years or later, dutch central bank, and Dutch National debt, i am surprised they didnt adopt the dutch language. Became so very dutch by 1700. The real path comes not so much in the classic Industrial Revolution of the 18th century but the great enrichment of the 19th and 20th century when innovation, betterment goes completely wacko. As ridley himself says ideas start having sex and the grandbaby ideas if you get this amazing innovation of mechanical inventions but also certain organizations. Any idea why the ideas changed . That is what i devote much of this third volume 2. I have shown to my satisfaction in the second volume the standard economic, coal is a big favorite. Matt ridley favors. He does and he is wrong. He is nice and smart but very smart people are sometimes wrong. Foreign trade or the slave trade or exploitation of the poor or Something Like that. They dont have enough oomph from an economic point of view. You think of the economics involved they are not big enough to explain a factor of 30 which we are trying to explain and historically speaking if they dont make sense. For 3000 years without an Industrial Revolution. In the third volume i say why didnt this liberal idea. I am sorry to say i dont have a snappy answer. And accidents. And in europe, and in 1517, and 1789. Hierarchy began to break down. Hierarchy runs in agricultural civilization, not hunter gatherers, horrible hierarchies. I am lord of the manor and too bad for you. And give me rent and taxes and that started to break down. Ordinary people made a clear example of this late in the process english quakers in which even women were allowed to speak at the meeting, in which there was no hierarchy at all, no priests, no person appointed and i say it is not so much salvation that changed, but Church Governance that made people bold and i give some audience to this. Here is why i say what is the point of calling it accidental, i dont want people to believe there is something peculiarly and deeply european about all this. It could have happened in china. With sufficient time it could have happened in my a and water mama. It could happen in lots of places. Why it didnt happen in china earlier is a puzzle, this great enrichment. It is not some european this as is obvious from successes of liberal economic policies with constraints in china and india. Without those recent examples it would have been harder. We were talking before we started filming about a book you and i and most adam smith, wealth of nations. The blessed adam smith. Adam smith famously at least among people who know his work didnt say many favorable things about businesspeople. At least on the surface that is the intention of your thesis. For one thing he didnt think much about entrepreneurship. Spoken of smith and stupidity. That you need to be concerned with. Smith is about efficiency. It is about innovation, the real cause of modern Economic Growth, and stupidity is about the government for the most part. Smith is not express it this way. Smith didnt know what his radically egalitarian ideas about equality before the law and social equality was going to do. He didnt quite realize he was creating a document that would sustain this move of egalitarianism. He is adam smith, a great economist but no one saw it coming. When smith talks about business it is always in the context of Business People lobbying state privileges. Napoleon spoke of britain as a nation. This commercial system, and protectionism and so on, licensing of occupation, all the horrible features hung over from the middle ages. This is a system not appropriate to a nation of shopkeepers but appropriate to a nation whose government is influenced by shopkeepers and that is exactly right and still true. One of the remarkable things, you do it in the last two volumes, you give an example after example, how much better materially. It is astonishing. Why is it most people dont recognize it . Most people think it is not as big a deal as you believe it to be . Or that it is doomed . Most people like it, we were talking about it at lunch. Why do people like to say the sky is falling . They always do. Bob gordon, a friend of mine just wrote a book, the sky is falling, the sky is falling, bob, maybe, i dont think so. It hasnt fallen yet. There is deep people feel they are sophisticated, very easy to forget or romanticize ones youth. My mother is 93. Intelligent, sharp person. Things are terrible but they were worse when you were a kid, born in 1922, she said oh no, we were happy then. Her mother would in the Great Depression put pieces of cardboard in her shoes so the holes wouldnt leak. You your self have done Excellent Service showing how much cheaper things are. A refrigerator, color tv, psychotropic drugs, all kinds of things, not those kind of drugs but things like lithium and so forth which the richest people in the world didnt have to fight their mental illness. In 1950 we now have but i dont know how to get people out of this dismal mood. Nor do i. Im pessimistic about that. In addition to the interminable pessimism in the past several years, has seen a return of any quality, featuring the book of 2014 which he reviewed brilliantly and also favorable review in the financial times, diane coyle. He talks about it. She wonders if you are too complacent about the future. About any quality. We thought for a while we had taken pessimism to the crossroads by the light of the full moon and pounded a wooden stake through its heart and it was dead. But socialism since its invention in the 19th century one of the great intellectual inventions along with nationalism and if you like those two try national socialism, is perennially popular. The size of government has kept going up so we keep thinking we will help the poor instead of letting the poor help themselves. I think people like equality and socialism and so on because they grow up in families and families are socialist enterprises. Mom is the central planner and so forth but in fact think of it. From an ethical point of view equality is not the problem. There are a couple lines in one of shakespeares on its. I cant quote it i am afraid where he points to the saudis as i would like to have this mans handsomeness and this mans intelligence and this mans strength and it is a hopeless project for us to be equal but it is not a hopeless project for us to be rich, to enrich the poor should be our purpose and that is an honorable, liberal, sensible and achievable purpose for Public Policy if you want to talk about it that way. This change in rhetoric, change in the way people view those who pursue birth walk pursuits, if that was sufficient to bring about this enormous, wonderful enrichment i presume it is the case that this rhetoric moves back in the other direction we can doomed. You see this in the sluggishness of the economy, of europe. The treaty of rome was a wonderful document, broke down trade barriers among european nations all for the good, and in brussels here again this idea of equality, what is the phrase . We have got to make the Playing Field level Playing Field. We have to level the Playing Field. Cadbury cadburys milk chocolate is not really chocolate, says the bureaucrats in brussels. We are going to declare cadburys chocolate not chocolate. You can imagine how this played in britain. We are going to take nonpasteurized italian sheets and outlaw it because after all the other stuff is pasteurized, good danish cheese is pasteurized. What is wrong with these italians and it just means i never saw this before. This equality idea, that the purpose of a modern society is to make everyone equal. It is a Crazy Program and a pointless one. If we achieve what john walls argued, raising the bottom, that is what we should be doing. The improvement of the worst off and that is not done by whining about how many yachts lillian betancourt, the air to the royal fortune, has. I agree she is a jerk. An interesting fact about her, her Charitable Foundation invested in it, one half of 1 of her wealth, compare andrew carnegie, 100 . She hasnt much yet. That doesnt make people poor. What makes people poor is the lack of equality. Take the drug laws for example which i have known for many years, most of the people have, suddenly American Public is realizing drug laws are not equally and forced. And equality of social standing. We respect each other. That is what makes for a vital, entrepreneurial society. I dont want to slip myself, what i try to fight against. The rhetoric the political rhetoric, it is bad or worse than any point in my lifetime. Is it possible we are seeing the beginning of a return to the ages of hierarchy. Here is where it might you are still optimistic . Cant change gender without being an optimist. And the demonstration effect is very powerful. Embarked on liberalization, the license opposed to 5 or 7 in 1991. The red chinese, in 1978, hong kong doing it. The world will become more liberal in my sense. The next 50 years. I expect that to result in a gigantic worldwide enrichment. I predict a great future, Subsaharan Africa has more genetic variability than any other part of homo sapiens. When they start miss governing themselves so unlike we europeans who only had a first world war, second world war, holocaust, communism and fascism and we were so clever by comparison, this is all ironic. When the Subsaharan Africans have equality before the law and dignity and when they stop having large struggle, control their large governments, large hands of robbers they will grow and because of the genetic variability. The greatest mathematicians, musicians, intellectuals, artists, scientists will all have black faces which i think will be a wonderful irony, racism and europeans. Lets step back. I hope you are right. Step back for a moment. You were trained as an economist. Going there would be trained as an economist. You have done okay to yourselves. What is your assessment of the state of the economics profession today compared to when you began . I dont think it has improved all that much and in some ways it is worse. Economists surprisingly in the last 50 years, have been in the profession 50 years have become more arrogant which is almost unbelievable considering how arrogant they were in the 1960s. Arrogant in what way . Thinking they have the solution, that sociologists and english professors are stupid, that they are just the cats me out in every way intellectually and politically, there is no basis for it. One of the great problems in modern economics is the lack of understanding. To be a good economist you need to have a fool culture, you need to be a humanist as well as the condo fire quantifier. I advocate with my friend bart wilson, human on x economics doesnt lose the math if you needed and thinks quantitatively when that is appropriate. But thinks intelligently about categories, that is what the humanities do that is what humanities are, study of categories. Theology. If god exists, a simple one exists, not exist. In philosophy, what is the category . Knowledge. Justified true belief, is that enough . That is categorical and most of that is mathematics, not applied mathematics the existence and so on. And categorical talk. What categories . Once you have categories you can measure but a more civilized economics, economics that takes seriously philosophy, and literature is the wave of the future. And rushing in the other direction. And aiming for the cliff. This is the same topic, in april 1986, 30 years ago. I was younger. Don we had been here. I never heard this from an economist. It had a lot to teach us. So briefly . My joke is karl marx, i say to my libertarian friends, karl marx was the greatest social scientist of the 19th century without compare. They get mad at me and i turn to my leftwing friends, and i say he was wrong about almost everything. They get mad which is why i dont have any friends. You do here. Thank you. I suppose you could say the questions marks asked are the important ones. Is there a pattern to history . Are there stages of history as adam smith was one of the only ones, karl marx took it further. Is our ideas independent of material conditions or the superstructure a mere consequence of material base and asked all these questions and got all the answers wrong but he asked the questions in a serious way so i admire karl marx in a lot of ways. I have come to admire other people too but as a kid i was a marxist. Because i was a socialist, i was a joan baez socialist, play the guitar and sang the labor songs. I know more leftwing songs than most of my leftwing friends. What is irritating is there are no good libertarian songs. It was karl marx it was the first in english was used in french before. The first prominent use in english was a follower of karl marx, arnold toynbee. Not his uncle or his nephew of universal history, age 31, which is when he died, he gave lectures on the Industrial Revolution in england and they are basically the communist manifesto fleshed out and that became what most people to this day think happened in the Industrial Revolution. The evisceration there was a brilliant spoof of this by the great book 1066 and all that. They said around 1800 all the richest men in england all of a sudden realize that women and children could work 25 hours a day without many of them dying or becoming excessively deformed. This was known as the industrial revelation. Basically that idea, taking novels of the times, especially charles dickens, as reports on the Industrial Revolution, when he didnt know anything about it, he spent most of his life in london which was not having an Industrial Revolution. Heres a question i know economic historians debate and i wonder where you come down, was there an Industrial Revolution . Was it slow or was it fast enough that we can legitimately call it as we do . It was fast by a certain standard. Here is a history of the world in one diagram. I will start here. Earlier times. The invention of language or something, goes along at 2 a day, 3, one dollar a day and in 1800 goes like this. Factor of 30. You can make a case if you include improvements in quality it is more like a factor of 100 per capita. Everyone in this room is a descendent of unspeakably poor and ignorant people and here we are. There was an Industrial Revolution, but here is the key point. A number of us economic historians say there have been other Industrial Revolutions. The glory of greece and the grandeur of rome. It happened a lot of times, certain periods, mesopotamia. There have been Industrial Revolutions. What was strange is it continued and it continued and it continued and it continued to this day. So there has to be Something Else, not just a few guys get together and invent waterwheels. They invent waterwheels, what can we do with these . Lets turn them into airplanes and they do all kinds of other things. That requires a deep change in how many people who are allowed as the english say to have ago, that is the key point, having a go in a traditional agricultural society. Oh no, no gos here, you are not allowed, not permitted. Playing devils advocate most economists say you need Something Else but that Something Else is better institutions are a set of better institutions. That doesnt work. I devote a good deal of space in the last two lines, my old friend doug who died a few months ago advocated and lots of other people, there are lots of problems with it. Institutions, world Bank Orthodoxy and my scornful description of it is institutions and stir. You want a good legal system . English style legal system . Provide all the lawyers with wigs. That will do it. Problem is there needs to be a much deeper ethical change in society. And ethical change about ones own behavior to be sure but especially about other peoples behavior, how you evaluate commercial honesty. That is a change that has to do with institutions that has to do with the weather too and lots of things but it is not as if you can switch on an institution and see it work. Lets take a case that is often cited, the glory of the revolution of 1688 in britain, doug north and his colleagues said we had Good Property rights in britain after 1688 and it just aint so. Anyone who knows anything about english legal history and i studied it a bit, knows that english laws and contracted property were established before the time of edward i. There were antimonopoly acts of parliament 70 years before the glorious revolution. Comparatively china has very Good Property laws in the 16th, 17th, 18th century and before. For hundreds of years they had to secure property and the emperor didnt bother them and yet didnt have the Industrial Revolution. You dont deny institutions are important. You deny they are the spark. That is the key point. I say in the title, how liberal ideas as i like to say it now, not capital or institutions because you got to have a building, got to have bricks on top of each other and so forth so you got to have capital but a capital is of no use unless you have the ideas for innovation. Im not a big keynesian these days, i once was. The reward of capital could be driven down to zero in a couple generations. If you keep making the same stuff over and over again and dont have new ideas of course that will happen. He will run into sharply diminished capital. The same thing holds for institutions. They are intermediate. You got to have Property Rights. The problem with Property Rights is a little sharper because the problem with Property Rights is what you mean by organized society is that it has Property Rights. Genghis khan succeeded as the great mongol leader because he insisted on the mongols obeying Property Rights lose he said you steal a horse or a wife and i will kill you. They said oh okay, we will stop killers stealing horses and wives. They became a great military power. It is commonplace to have Property Rights. In any case, socalled causes are intermediate. The spark as you call it is equality, equality before the law, social dignity. That is new and weird. By 1776 the notion that all men and by the way women are created equal and endowed by their creator with certain inalienable rights among which are life, liberty and the pursuit of happiness was somewhat commonplace among advanced european intellectuals and written by an owner of slaves but lets pass that by. Only 100 years old, a clear Political Program in the 17th century. The idea that people were equal was viewed as extremely radical and dangerous and got to suppress these primitive communists and quakers and stop this stuff. I love to focus on ideas. A couple questions starting with this one. Why are you economists so resistant. Why are economists so resistant to recognizing the role of ideas . Absolutely. I wont name him because he is such an excellent scholar but i read a paper by a friend of mine talking about the history of books in europe and all through the paper they put the word ideas in scare quotes. Some influence people said from ideas, but okay. From about 1890 to 1980 keeping it in mind, most thinkers, intellectuals were materialists. And conservative people in materialists. And modern intellectual life, and suspicion as they say to say you claim you are dominated by ideas. I know it is because you have stock. And called this attribution. And you are motivated by your selfish interest. Economists are specialists, and professional cynics. And i am an economist, as important. They are too. And gary becker. That is an extreme example of an economist and the trouble with this is what the english professors call a new diction because these are professors and journalists saying ideas expressed by professors and journalists, interest is all that matters, kind of a lunacy about that. Two of the most notable university of chicago professors, the third was also a colleague of yours, milton friedman. What was friedman i have a story about that. As a young assistant professor at chicago around 1979, 69, i was in the coffee room of the Social Science Building and milton friedman, george stigler, often played tennis and milton was very short and george is very tall, one of the great comic scenes of academic life to see them playing tennis. Did one have an advantage over the other . No. Milton would run very fast and george it is very funny to watch, but here is what their conversation would say, great economists. I admire them both very much and george said milton, you are such a preacher. You are always telling you we should go for free trade, and i believe that people are against free trade because it is in their interests. There is no point in talking to them and friedman said that is the difference between us. People advocate protection. They are misled. You get them to understand, george was disdainful of this, just a preacher. Let me ask comments on another great hero of mine also an economist who put a lot of emphasis, and one criticism, they should play a larger role. The main idea was the ultimate resource is human creativity and human effort, the same creativity and effort unleashed by bourgeois dignity. Jillian died young. You must die young, sustained intellectual effect unless i completely agree this talk of resources, the talk of resources, they are not resources, rare earth werent rare until we discovered they could be used for computer batteries. Then they became rare. Bauxite was useless dirt until we discovered it could be made into aluminum. He is correct about that and a few other economists, Israel Kirzner is another example points out that lets call it my name because that is how it should be, was a free lunch. More or less had to be. If all it was was a marginal investment lets put a little more money into ships to run the slave trade and that will make us rich, that wouldnt have made them rich as it did. A production possibility curve just leaping up. He is that way. There are a few other economists tending to what pete calls the insight. Mostly economist learned how to say marginal cost. They cant remember to say anything else. I am in favor of efficiency. It is not what modern Economic Growth was. It is not him proper you get Economic Growth. That is not what did it. Julian says this explosion of human creativity. I point out to my class you alluded to production possibilities curve in which we picked Economic Growth. One of the standard ways economists say the production possibilities shift out as we discover more natural resources. In reality more or less they are created, not discovered. Way of talking about it is not i imagine the native inhabitants of pennsylvania in the year 1000 were probably upset that this bubbly stuff, it wasnt a resource. Back to the book, 1848 plays a prominent role. It does. What happens in 1848. Around europe and bourgeois revolutions on the whole then become often radicalized in months, this isnt something that takes years. The great german migration in the United States in the 1850s is to a surprising extent a direct result of the failures of revolutions in german land and they more or less all fail. The only large country that doesnt have one in europe is britain. But it has really scary period of the irish famine and education and so forth. The important symbolic dates, when socialism was truly invented, when this terrible idea of using compulsion, violence to organize the society instead of agreement and persuasion becomes popular and it becomes popular among the formerly liberal the first perfect example of this. I love them in many ways, John Stuart Mill who is both the most eloquent, clear minded exponent of liberalism, understood as i am talking about it and one of the first of the major intellectuals to turn toward socialism. N towards socialism and what is remarkable by bt 80s 80 80s all intellectuals have turned against capitalism. Why . So i crammed everything into the last one, and some of my speculation and, indeed, just observation about this, this amazingly quick change in the middle of the 19th century, and maybe its a fathers and sons thing. Because almost without exception the artists, journalists, intellectuals who turn against capitalism are the children the sons, especially, the sons who do this of merchants, lawyers. I mean, the most famous example is [inaudible] who actually continue to own a Cotton Textile factory. So high he can has hayek has a famous essay, and his thesis there, to summarize it, is intellectuals are the gobetweens between, you know, the researchers and the deep scholars. Right. S and the general public. Right. And hayek believed that ideas matter i do, i agree with him there. Were agreed. And so went intellectuals start changing their ideas, their changed ideas filter down to the general public. They do. If the intellectuals begin to change their ideas 160 years ago, then are we doomed . I mean, surely then well why is the great end richment still occurring . Enrichment still occurring . Well, you and i and most of the people in this room are fighting the good fight, trying to change the way intellectuals look at but were a small group. Were a small group but, look, were smart, and were hard working, and were going to do it, dam it. [laughter] i told you, i was an optimist. As to why it continues, why the great enrichment continues, again, theres this demonstration effect, and theres this basic uncontrol about. I was thinking as i was driving here from the airport, from dulles airport, i was looking at the richness of Northern Virginia and thinking to myself, this cant be stopped. One of the, you know, what he is her name whats her name, the junior senator from massachusetts elizabeth warren. Yeah. Shes, im sure shes a nice person and, by the way, shes an indian. [laughter] cherokee. Yeah, cherokee. Shes her people that think that law is the way to go and adding more and more and more regulations, they its very hard to control an economy like the United States. Even with this gigantic size of government that bob higgs has so eloquently discussed. Look, im going to make a confession. Ive had a lot of work done on my apartment in chicago. I have a lot of apartment in chicago. I its done by nonunion workers, and i havent ever gotten a building permit. A [laughter] now, i hope admitting this on national tv doesnt get me into trouble. It probably will, i mean, thats the way life is. But ive never gotten a building permit. And if you thought that laws were effective, as warren does, and that theyre obeyed just all the time, then that would be just a shocking fact. But ill bet you half the construction in chicago, of the smallscale construction of home remodeling, doesnt have building permits. So, you know, and doesnt we dont obey union monopolies. Too bad. So might it be that we intellectuals i mean, i dont want to go the full direction of thinkinglers view, but might it by that we intellectuals are not as influential as we sometimes think . Well, thats right. If intellectuals had been railing against capitalism for 160 years thats right. Youre exactly right. The ideas to keep it going must be at a more granular, lower level. Thats right. And i think whats happened is the breadth or the depth i dont know quite how to describe it of thinking people, people with serious political opinions, i dont mean James Buchanan and the upper levels of this, i mean just people is much bigger than it once was. And there are many, many, many people who believe in tradetested betterment and think, boy, gee, its great we have suburbs with these nice houses and, oh, boy, what a b wonderful country. I love america. Even though at the heights of the intelligentsia whether in National Review or the nation, theyre railing against eachh other and the society in which they live. He so i have this sense that there is this momentum to capitalism which is very hard to stop. Now, i dont think its impossible to stop because weve, you know, how do i know . Its like infant baptism. Do you believe in infant baptism . Believe in it, ive seen it. [laughter] do you, do you believe that Economic Growth can be stopped by absurd, excessive regulation and overtaxation and wars and stupid policies . Yeah, hey, i believe it. Ive seen it. Well, to tie you mentioned bob higgs work. Yeah. Bob documents, to my satisfaction, that things pretty much came to a stop in the united economically. Yeah. In the u. S. In the 1930s because of what bob calls regime uncertainty. Certainly he was [inaudible] yeah. I completely agree with bobs argument which doesnt make me popular with a lot of my leftwing friends. But the other thing that happened in the 30s was something that alexander field, economic historian, has shown which is even though the government was screwing it up, in the background innovation was continuing. So then when they kind of got out of this threatening to move, as so many countries were, to socialism or fascism in the 30s, they when we got over that, kind of, we had a great boom. Now that youre done with this see, the fist was published in 2006, the second volume 2010, third volume this year. Praise the lord. What or what are you working n now . Well, im working on a popular version of the whole thing that im doing with art carden. And art and i are going to make a kind of a, well, were kind of thinking of airporttype book. O because these, you know, although these are wonderful books [laughter] theyre not exactly summer reading, i have to admit. You know . You could try it, but i think youd it would take me the whole summer to read it. [laughter] i have short chapters. I learned that a long time ago, short chapters are the way to go. You can put it by your bed. Like the bible, you can read a chapter and fall asleep. So were going to do that. And then ive got a longer term project that you and i are involved in which is to revise a microeconomics book of mine published a long time ago, because i really want to get economists understanding simple what we call price theory. Ive got a style book called economical writing which the university of chicago is going to bring out as a third edition its a little, short thing. T and then kind of after that im thinking of a book called god in mammon economic sermons. Im, as you said at the beginning, im an episcopalian. I know its shameful, but there you are. And i want my progressive episcopalian friends to realize that capitalism is not necessarily corrupting of the soul to. So these will be actual sermons, a short book which will show jesus wasnt a socialist. Were now going to turn it to you, the audience, for questions directed at deirdre. Ill run the queue here, but if anyone has any questions for deirdre about our discussion or about anything that youve read or heard deirdre say more generally, nows your opportunity. Read now is your opportunity recently with Donald Trumps discussion about the increasing class divided in the u. S. Of the upper middleclass educated elite and the general population so given your book that there are some similarities how they approach the problem and that the values are transmitted to the upper class and lower class and there is the reason for that decline but not as the same level of success. That particular argument is older but my friend and colleague revoke about 16 years ago called forth greater enlightenment which made exactly that argument the problem in the United States is not poverty of material character that is not the problem it is spiritual poverty so to speak he was rather exclusive about it but it might be good to know he was a paid organizer for the communist party and was married to a black woman for all of his adult life way before was fashionable to be a biracial couple. Is an older argument and is possible to me that you can have Cultural Values that cripple you and they say it is blaming the victim it isnt a just hoping that they will see for a while i was at university of california for fellowship and and i kept being told by the administrators there that the large hispanic population in Southern California was the working class did not think of college in would be tempted to join the lawn mowing firm instead. And was a constant problem of these bright his blunt hispanic kids for go if i worry about that but on either hand i worry more about the other obvious imposition of what comes from the government i am here from the government and i am here to help like the war on drugs we would have much more prosperous hispanic and africanamerican neighborhoods if we never had a war on drugs. Thanks for talking about your book so using the recent examples of india and china to support your thesis if what matters is these ideas and then how does it change happen in such a short period of time . And it indicates i had a student who worked on a dissertation and he showed that it did graduate dont think it was the bottom here is the central planners in top intellectuals but what matters is what goes on in between of the conversation of society with the ethical discussion but he noticed in hollywood movies after the independence in the 50s and 60s the heroes were government bureaucrats the enemies are people in business than it started to change then they finally realized the government officials were not their friends and it switched around by the 70s the late 70s and 80s with the unpopular culture was staring at the police that the planners and regulators not the people in enterprise. So that is one example like think you are right with the point that i make frequently that ideas can change very quickly some people say i see what you are saying that culture matters. Not all. Not quite the rhetoric matters and how people talk matters and that can change quickly not always but it can. What is the relationship between interest and ideas in a hot style environment . What is that incentive structure to mention africa but you are optimistic so have we bring about that change of ideas with such a high style structure . That is the big historical question or the fact that for millennia the power structure was hostile to new ideas of the economy is very noticeable like geology imbedded in the 18th century a scottish invention and why did that happen . Why did this system of liberalism we call economics develop rather suddenly out of a Little Corner of northwestern europe . The ideas can change by your right if the powers that be worked on it they can stop them as they successfully did over 70 years in the soviet union. But why they changes crucial for the idea is to have any effect they have to be new ideas and where you get new ideas . Sometimes it is internal to the logic. With the quality is shockingly novel that has the tendency to get bigger and bigger to apply to more and more people women in the United States and britain have our big forces in the Antislavery Movement in the early 19th century and then they say to the men and what about us . And out of that came the Womens Movement and then gay people in the 60s and that wonderful time and they started to say wait a minute and the drag queens fought the cops in new york so the ideas i do think this is internal logic sometimes but sometimes it makes them collapse but it isnt just a sociological forces all of in the case of europes it is the accidents that i talk about. We are taking this one day after the u. S. Treasury announced that they will appear. I am simply appalled that jackson was in it for so long that we will change the 10 bill. Go after Jackson Citizen just blacks that he owned but the treatment of native americans. I have two questions the first is broad i have been listening because i dont have the patience to read the empress book of the lewis and Clark Expedition expedition that is 18 03 and what struck me in the beginning of a book in st. Louis and theyre having a conversation the diary says we cannot remember the name but he is more adams smith and adam smiths book and that was 18 03 so in a short period of time so there is something about ideas and a clarity that was already there in a way so reminds me when i was a graduate student that was told about john a thin shoes the great teacher and said he said if you think the government is growing you should receive the colonials there is nothing new about trying to interfere someone to ask when do ideas sustain steering oar when does it become so great that they survive . I will say i dont know. [laughter] but we have to take ideas seriously it would be very strange to give a history of the United States that did not take seriously all men are created equal or the gettysburg address i have a dream come on. Words and ideas matter but how . One part of the intellectual world is the humanities and my colleagues and friends in english and history are students and can tell you how the idea of equality for African Americans developed and to some degree tell you why for fit was obstructed. With communist russia and that popular characterization that people have to become non skiers to have at bush or ross society Bourgeois Society one way to interpret irradiance is there is a lady is an institutions and practices and without that spark they dont go in the right way stowe yenisei it doesnt matter. No not at all but if you dont have the idea of the brick building in you cannot build a brick building but it would be crazy to say that the bricks caused the building to be built but it is the idea. If you have a car and was picked up you see all the wealth over the last 25 years is washington d. C. Has become the hub of a lot of the richest counties in america it wasnt because of the creation. [laughter] so you have an expansion of the renewed idea of Wealth Creation but there is a line and adam smith that says the natural effort is so powerful it is along without assistance to carry on the society of wealth and prosperity to serve man out those instructions with the quality of human laws so when we look around we have this rent seeking state but then all the of the ways to get around it so the role that ideas play for us to tip that balance one way or the other . Take a look at the local example the public choice approach to think about the role of the government also the Virginia School and if we can get across the idea that the government is not composed of swedish philosopher kings we will have accomplished a great deal i have cousins that work for the cia and theyre nice people but every time i come to washington i am appalled that all these intelligent people like my cousin is working for the great beast so here is a fact that i calculate for the book. Have a 170 ranked countries for honesty of Public Administration there is about 170 countries take the top 30s and call them honest and for those sweden minnesota new zealand you may think it is not completely insane to give the government more money actually i dont think so but to be generous as someone said giving more money to the government is like giving whiskey to a teenage boy but pretend to if you are honest swedish bureaucrats it is okay then ask what percentage is governed by these top 30 . It is not a High Standard of those top 30 and it is 14 . Thats my beloved italy. I mean, i love italy. But anyone i have italian friends who are hopeless social democrats, and i dont get it. They know that giving more money to this government is a terrible, terrible idea. And yet it goes on. We have time for one more quick question. There was someone back here who yeah. Well, i think as a gmu alumni, one of the most shocking things about especially your second book was downgrading the status of trade and talking about its just moving stuff around. Yeah, it is. It doesnt really help. P. And im starting i dont knoe if this is the right venue, i guess, but im very curious about this idea of it really is the local, the nature of local production that matters, you know . Sort of the story i get out ofm standard economics or standard libertarian fare would be free trade had something to do with the Industrial Revolution. The reason for the irish potato famine was the british restricted trade that the irish were allowed to do yeah. But in your book you f specifically say it was