Good evening and welcome to the 2018 James
Q. Wilson Lecture.
It is the Manhattan Institute’s honor to
host this lecture series now in its fifth
year, dedicated to the legacy of one of America’s
preeminent public intellectuals.
James Q. Wilson was a political scientist
at Harvard and UCLA who contributed invaluably
to American public policy and intellectual
life.
His textbook American Government has introduced
thousands of high school and college students
to the basic principles of our federal system.
And his 1989 book Bureaucracy is perhaps the
greatest study of American government agencies
ever written.
Wilson received the nation’s highest civilian
award, the Presidential Medal of Freedom,
in 2003.
The Manhattan Institute had the great honor
of a long relationship with Jim.
Just one product of that relationship was
an annual lecture series that he delivered
here for 15 years between 1997 and 2011.
The diversity of topics he discussed: criminal
justice, the origins of terrorism, the nature
of democracy, the role of media and television
in shaping public discourse, just to name
a few, suggest the staggering range of his
intellect.
When Jim died in 2012, we decided to honor
this legacy by continuing his lecture series.
And we could think of no better intellectual
to do so than Edward Glaeser.
Like Jim, Ed’s wide-ranging curiosity generates
seemingly endless and always fascinating material.
We know that with Ed at the helm of the lecture
series we will have an intellectual feast
for many years to come.
Ed is a Manhattan Institute senior fellow
and the Fred and Eleanor Glimp professor of
economics at Harvard University, where he
has taught since 1992.
He is a pioneer in the field of urban economics
and has done more than perhaps any other scholar
to enrich our understanding of cities.
He has served as Director of the Taubman Center
for State and Local Government and Director
of the Rappaport Institute for Greater Boston.
He has published dozens of papers on how cities
grow and the role they play as hubs of ideas
and inventions.
His best-selling book, Triumph of the City,
is a passionate argument for the importance
of thriving vital cities humanities future.
It began life in part as a series of articles
for our quarterly magazine, City Journal.
For those in the audience who haven’t read
it, I would strongly encourage you to do so.
Ed’s topic this evening, How to Correct
the Waning Popularity of Capitalism in the
Younger Generation, is one whose critical
importance to our country’s future is self-evident.
So, without further ado, I would like to welcome
Ed Glaeser to the podium.
Thank you.
Thank you, Larry.
Thank you all for coming.
Thank you for sharing your incredibly valuable
time with me.
It is such an honor for me to give the annual
James Q. Wilson Lecture here.
I, of course, was a huge fan of James Wilson.
And his spirit, his ideas, his energy inspire
me daily.
And I am also just so happy to be part of
the MI family, which I have had a relationship
with of some form for many decades under Larry’s
leadership and I always feel coming here and
being part of this lecture series gives me
a sustenance that maintains me through my,
you know, return to Cambridge – where not
everyone has the same views.
So, normally the past four James Q. Wilson
Lectures have had the following structure:
that I have focused on a problem, the war
on work, a rising joblessness in the American
Eastern Heartland, and offered a series of
economic policies that I feel quite confident
at least are good economics.
In this case, the problem is intellectual.
The problem is spiritual, the problem is in
some sense even deeper and more important
than any of the other ones that I have talked
about.
And I will talk about things that I think
are helpful solutions, but I feel infinitely
less confidence than I do, than I would if
I were say, for example, talking about a change
in restricting disability insurance.
Right?
This is a harder topic and figuring out how
to talk to millennials, about capitalism,
socialism, is something that is enormously
difficult and enormously interesting as well.
And I think it’s a challenge for all of
us going forward.
Because in some sense it starts with a failure.
Right?
It starts with a failure that is shown almost
every week in stories like this, this is a
relatively old one, but since it comes from
Harvard’s Institute of Politics, I thought
I would start with it.
Right?
So, this is the 2016 Harvard Youth survey
saying that 51% do not support capitalism
as opposed to 42% that do; 48% believe the
American dream is dead; 47% believe our justice
system is unfair; four in five say significant
reform in Washington is needed – well that
one’s probably okay.
This gives you the cuts by age.
And, so, I am in this 50 to 64-year-old bracket.
And just go along the bottom line here, so
only 27% of us – and I know there are more
than a few of us in the 50 to 64 bracket in
this room today – only 27% of us have a
favorable view of socialism.
The 65-plus has even less favorable view – that’s
at 24%.
Switch to the 18 to 29 years, 55% of them
say that they have a favorable view of socialism.
That’s an astounding number.
This is a May 2016 Gallup daily tracking number.
55% socialism as opposed to 57% of capitalism
so they are running neck and neck here.
And you can see sort of this generational
shift.
Note one thing, I’m going to come back to
this later, the 18 to 29-year-olds are not
down on small business, they have if anything
the most rousingly positive views.
98% of them said that they favored small business.
I don’t know what you get 98% favorable
ratings on anything in the modern world, it’s
astounding.
And 90% say that they like entrepreneurs.
And I think that fact is something that we
are going to have to work on.
And I’ll come back to that in a second.
This is from an August 2018 – so this was
just recent – a YouGov poll.
Again, 18 to 29-year-olds – in this case
they show you that 40% are unsure as to whether
or not they are favorable or unfavorable of
socialism, so that suggests that there is
something at least to work with.
But when you compare the very favorable versus
very unfavorable groups you have a 35% they
are saying they are favorable or somewhat
favorable as opposed to 26% who are saying
that they are somewhat unfavorable or very
unfavorable.
So, in this recent poll, the favorable views
really beat out the unfavorable views in terms
of socialism.
And the last one that I will show you – this
is again YouGov – this is comparing May
2015 versus August 2018.
Within each one of the age brackets you have
falling support of capitalism, and I tend
to think these numbers are quite low in the
YouGov numbers.
Now, again, a lot of these questions have
slightly different wording, as we know slightly
different wording can get you quite different
results in terms of polling.
But, you know, this is a 30% favorable view
of capitalism in 2018 among 18 to 29-year-olds
as opposed to 39% three years ago.
So, those are really striking numbers.
And for anyone who believes in the cause of
freedom, they should be worrisome numbers.
Right?
I mean, I think it’s impossible to look
at this and thing that all is well in the
spiritual lives of the young.
And if you needed more reminder of this, there
are political repercussions of having these
beliefs going forward.
This may very well play a non-trivial role
in the election of the next president of the
United States.
So, this is something indeed that has major
importance for all of us.
I found this article which just came out in
August 24, 2018, to be particularly striking
and deeply Orwellian, in fact when I read
it.
So, the socialist argument against capitalism
isn’t that it makes us poor – it’s that
it makes us unfree.
Okay?
So, this guy is a Yale-trained – and I want
that emphasized – a Yale-trained professor
of political science at Brooklyn College.
And he is writing, of course, in a page of
The New York Times, capitalism makes us unfree
when my well-being depends upon your whim,
when the basic needs of life compel submission
to the market and subjugation at work, we
live not in freedom, but in domination.
So, now you understand the obligation to go
to work, to do something, to earn something,
is now akin to slavery – right?
In this view of this.
Right?
Socialists want to end that domination to
establish freedom from rule by the boss, from
the need to smile for the sake of a sale,
from the obligation to sell for the sake of
survival.
I sort of find that so mind-boggling in terms
of a viewpoint.
And so far away from where I would have started
on this.
This is Hayek and The Road to Serfdom, our
freedom of choice in a competitive society
rests on the fact that if one person refuses
to satisfy our wishes we can turn to another.
But if we face a monopolist we are at his
absolute mercy.
And an authority directing the whole economic
system of this country would be the most powerful
monopolist conceivable.
Right?
So, the problem that we have – and I suspect
many people in this audience have – the
same problem that I have.
We read the Hayek words, we think they are
obviously true and that any right-thinking
person should immediately nod and say that
this is right.
And yet, if that is your viewpoint, you have
no ability to communicate with anyone who
reads those words and think they’re right.
Okay?
So, that is the leap that we have to make
if we are going to have any success in actually
making this communication.
That we cannot just read Hayek and nod, as
great as Hayek is, we actually need to have
a story, a narrative, a way of communicating
to people who read Corey Rubin’s article
and think boy that sounds right to me.
I need to be free from the domination of having
to work for a living.
One other thing to point out, the rise of
the Democrat Socialists of America, several
prominent political candidates in recent days
have been members of this group.
The growth has been from 5,000 to 49,000 in
three years.
That’s a self-reported figure.
Another figure is 35,000, but it has grown
substantially.
And just to give you, it’s often hard to
pin down what socialism means – and I will
return to that in a second – but the DSA
constitution at least spells it fairly clearly
out: We are socialists because we share a
vision of a humane social order based on popular
control of resources and production, economic
planning, equitable distribution, feminism,
racial equality and non-oppressive relationships.
Okay?
So, this sort of throws it all in together.
Now, it’s good that they have a story because
it’s often pretty hard to figure out what
socialism actually means to the people who
say that they are favorable of it.
Right?
It’s not clear that they know all that much
about the history of socialism in lots of
contexts.
One thing is pretty clear.
Certainly, they are all in favor of more redistribution
to the very poor.
And I have always had the view that this is
in fact, you know, MI has been committed,
at least as far as I’ve known it, to making
the lives of the poorest Americans, the poorest
New Yorkers better.
Right?
That is something that we all share a commitment
for.
There is no sense in which we do not want
to deliver better things to the poorest members
of our society, to make those people, whether
or not they are non-employed 45-year-olds
in West Virginia or immigrants in the Bronx,
making sure that they have every opportunity
to use their talents to make the world a better
place.
I think we all believe in this.
We may differ slightly on means, but, you
know, that is not the area in which we can
possibly disagree.
There is also the view that it is about more
distribution to them, in particular, whether
or not they are lower income or middle income,
the sort of more free stuff for me agenda.
That’s a little bit easier to fight against.
And I think we probably should – especially
if they are middle income.
Then comes the stuff that is even slightly
scarier.
A really widespread distrust of free markets,
a distrust of freedom more generally, a belief
in price controls, a belief that prices should
be free, right, in the case of lots of things.
And, in some cases – and you saw that in
the DSA agenda – public ownership of more
services; education, health care, perhaps
even other currently free industries.
And it is not clear what they actually want
where they want it, but certainly this is
conventionally what socialism means – and
certainly the DSA agenda at least suggests
popular control of resources and production
that they are actually signing on for that.
And, you know, the DSA candidates have had
some success lately.
Okay, so now I am just going to pivot slightly
and talk a little bit about why we think this
has occurred.
So, some part of this is assuredly the normal
generational churn and that part we probably
shouldn’t be that excited about.
Right?
Or shouldn’t be that upset about.
So, there is a famous line which has been
alternatively attributed to Churchill, Clemenceau
and Disraeli, all three at once, perhaps:
Any man who is not a socialist at age 20 has
no heart.
Any man who is still a socialist at age 40
has no head.
A little bit of looking on my friend Google
has suggested that at least there are two
alternative versions.
This one I particularly love, this is John
Adams from 1799, so this is a confirmed quote
from him: A boy of 15 who is not a Democrat
is good for nothing and he is no better who
is a Democrat at 20 – pretty close – but
I think the real origin of this quote is Guizot
who says that: Not to be a Republican at 20
is proof of want to heart.
To be one at 30 is proof of want of head.
So, Guizot actually seems to be the oldest
side of this.
But, you know, we can’t rule out earlier
generators of this idea.
The other Guizot quote I think that’s really
important that we keep in our minds as we
go forward, is that we are not going to win
if we are just against stuff.
Right?
We need optimism.
We need the cause of freedom to be a cause
of hope as it ever has been and ever will
be.
Right?
And the Guizot quote that I like is that:
The world belongs to the optimists, pessimists
are only spectators.
And whatever we do has to be about empowering
the millennials, not about saying that they
are wrong or foolish.
It has to be about helping them change the
future and recover their dreams.
Now, this generational churn doesn’t always
occur.
So, I am of a generation which I like to think
of myself as a Jimmy Carter Republican – okay?
Meaning, that I was nine when Jimmy Carter
was elected and 13 when he lost his office.
And, you know, this was an experience which
very much seared me and made me fairly unenthusiastic
about Jimmy Carter and his legacy.
And, you know, I know a lot of people of my
generation who share this view, who had this
coming of age, it’s very associated with
Reagan in 1981 and this can happen – of
course it happened in earlier ages, right?
The 1964 Republication National Convention
was very much of a generational fight and
the young generation was the one on the right.
The young generation were the Goldwater Girls
and the Goldwater Young Republicans.
So, it doesn’t have to be, but it seems
like the current generation eventually are
conspiring.
And I think one variant of just the simple
Guizot, Clemenceau view is it’s about reaction
to the status quo, especially when things
aren’t going very well for you.
So, you know, a view that you just reject
the views of your elders, especially if things
aren’t going so well, and it’s not too
hard to see why they might think, why the
young might think, that their lives aren’t
going that well.
Remember, this is a generation that was raised
in the shadow of the Great Recession.
Right?
Their entire sort of adult waking life has
been starting in 2007 for many of them, or
2006, and so they have experienced a great
deal of stasis, a great lack of dynamism.
This is median usual weekly real earnings,
which you know 16 years and older, so this
is the world that many of them are experiencing.
Fairly static wages.
At the same time, the things that their elders
own, like stocks, right?
Have been going up.
Or houses, for another example, have been
going up.
So, you know, you see a world in which your
elders are getting rich and you are facing
the same static wages and that doesn’t seem
like a great world for you.
And you want something else.
And the old Left has been out of power for
so long that they can bear no blame for what
went on.
Right?
The center-Left is complicit in Obama, the
center-Right is complicit in Busch, whereas
the guys who were, you know, on the Eugene
Debs ticket, those guys have nothing to blame
for.
And that’s only part of what’s going on.
It’s like it is harkening back to a group
that is so far out of touch that it doesn’t
bear any blame.
And there is a narrative which is around a
zero-sum economy, where rising inequality
means that younger, poorer voters are being
robbed by older insiders.
That’s the story that they are being told.
And sometimes that’s not totally false.
Right?
So, I view the world of NIMBYists, sort of
opposition to new growth, as very much of
being one in which insiders are protecting
their rights against, you know, the economic
growth, the new development of housing, that
would in fact empower and strengthen the young
and provide more affordable housing.
But most of the time this narrative is false.
Moreover, things which we thought should have
been seared into the consciousness of the
world are being forgotten.
Right?
The failures of communism are being forgotten,
the downsides of a century.
I think I have an op-ed by a student of mine
that she wrote in the Harvard Crimson a year
ago, I’ll just read you a few words on this.
So, 100 years, 100 million Lives, think twice.
And she is responding to the rise of fashionable
communism on the Harvard campus.
The words are pretty powerful: In 1988, my
twenty-six-year-old father jumped off a train
in the middle of Hungary with nothing but
the clothes on his back.
For the next two years, he fled an oppressive
Romanian Communist regime that would kill
him if they ever laid hands on him again.
My father ran from a government that beat,
tortured, and brainwashed its citizens.
Right?
This is a memory that should not be lost.
This is an important memory, and indeed it’s
a memory that, you know, as my father grew
up in Nazi Germany and my grandfather grew
up in the czar’s Russia, those are memories
that are lodged with me and make me always
skeptical of the benevolence of government.
Right?
The Scandinavian model is extolled without
any real understanding of how much market-friendly
reform was required to make it work.
And the right answer is not that Denmark is
hell, it is not hell, but the right answer
is that in fact for Denmark to work the whole
original socialist model had to be reformed
in a way that empowered entrepreneurship.
And I was at an event, for example, last week,
in Sweden done by a thinktank of the same
sort of genre, which was full of Swedish entrepreneurs,
Swedish unicorn leaders, of people who felt
empowered by their system because they had
returned to a model that respected entrepreneurship.
Because they knew that socialism wasn’t
enough, that wasn’t the model.
And that’s being forgotten.
And, finally, the plight of Southern European
social democracies, Greece, Spain, Italy,
Portugal, is completely ignored.
And if you think a more socialist America
how confident are we that we would end up
looking like Sweden relative to looking like
Greece?
Right?
And I’m certainly not at all confident that
we would end up with the sort of relatively
benign market-friendly view of social democracy
relative to a view that is, you know, much
more painful and much more difficult.
And part of what has to happen is memory,
the forgotten joys of soviet shop queues.
Part of it is just looking around the world,
right?
You don’t need to look back fifty years
to see the failures of a communist regime.
You just need to look at Venezuela today.
You just need to look at the difficulties
of Argentina.
This is around us.
And we can see the flight of thousands from
Venezuela to nearby Colombia on a daily basis.
Right?
Fleeing what happens when you go too far in
this direction, showing the dangers of it.
I will say so this morning I talked to a student
of mine who now is a professor at the University
of Chicago who said I don’t understand how
millennials can possibly think communism is
a good idea.
I lived through, I grew up in China and, you
know, it seems to me absolutely achingly obvious
that Deng Xiaoping’s decision to allow in
some degree of market capitalism was responsible
for incredible uplifting in the quality of
life for millions and millions of people.
This is an incredibly big story that should
be obvious to everyone, and yet it is a story
that is not being told, it is a story that
is not being heard.
Okay?
I think in general within the U.S. our old
story that capitalism engenders growth doesn’t
seem to work anymore.
And I don’t know the extent to which it’s
because millennials just feel like wealth
is not the story or whether or not they don’t
believe that story, but it’s certainly deeply
worrisome to me.
And it means that we need new stories.
We need new stories.
As true as this one, as much as we should
not forget this one, we need a narrative that
speaks more to 23-year-olds than, you know,
the glories of American capitalism.
So, a few things.
And while we get into the mindset of millennials.
I have been told – I think the first thing
for all of us to do is we need to take a selfie
together.
I think that’s the MI, the excellent MI
– let’s see if we can do it.
There we go.
We are all taking a selfie.
Okay.
So now we have entered the mindset of millennials.
The first thing that some of us have trouble
with dealing with millennials is occasionally
they might have a tad of a sense of entitlement.
A tad of a sense of entitlement.
Which is not totally unrelated to a sense
that having to work is some egregious obligation
on us.
And, I love this quotation from a discussion
with graduate students.
I actually, there’s a slight typo on this,
but the graduate students said we are outraged,
meaning we graduate students are outraged
that our professors won’t spend long hours
with us.
But at the same time, we deeply resent the
undergraduates who think they are entitled
to our time.
So, you know, it’s a sense that we are entitled
to the people above us giving us all the time
in the world, but we have no obligation to
give time to the people who we teach.
Now, notably the student who said this grew
up in the former Soviet Union.
Right?
So, in fact, he was not an American millennial
at all.
He was just observing them from the eyes of
someone who had seen a world that was much
worse.
But at the same time – so this is a challenge
– but at the same time I taught both graduate
students and undergraduates this morning.
And I find them teaching them inspiring, absolutely
engaging.
They are full of energy.
They are full of hope.
There are lots of good things about them.
This is not some, and if we approach this
with some view that they are some entitled
generation that we can’t, you know, we can’t
love or admire, we’re going to lose it from
the beginning.
And there is a lot to admire.
There is a lot of social spirit in them.
There is a lot of sense of hope.
There is a lot of sense of dynamism in them.
And we need that.
They are, of course, deeply skeptical of both
parties – especially the GOP – the recent
Pew numbers are that millennials are 44% independent,
35% Democratic and 17% Republican.
But they have also watched – and you saw
this in the numbers of entrepreneurs and you
saw this on the numbers on small businesses
– they have also watched individual entrepreneurs
do amazing things.
Steve Jobs, Jeff Bezos, while the public sector
often appears stagnant, right?
The natural response for them seems to be
at this point to buy into some dynamic figure
who is going to socialize everything, but
they have got to understand that that is a
recipe for an utterly stagnant government
in the future.
And they have to understand the right model
is one in which we use talents, and skills,
and ideas like those of Jeff Bezos or Steve
Jobs in order to transform social services.
That in fact the right model is the model
that they have seen work, is the model of
private entrepreneurship and private innovation.
It just needs to be directed a little bit
better towards solving social problems rather
than just finding a more user-friendly version
of Twitter, right?
Okay.
So, my big question, then – and I think
it’s with this question that I think we
should start our discussion – what system
and what policies are going to empower you,
the millennials, and your generation to make
America a better country?
Will this system impose a lot of rules from
Washington?
Will it impose a lot of public ownership?
Or will it empower nonprofit and for-profit
entrepreneurs, right?
Will the system enable the dreamers of tomorrow
to solve today’s problems, or will it lock
current problems in place?
And I think the message of hope is absolutely
critical for this, right?
Who is going to give us better cities, HUD
or millennial entrepreneurs?
I think every 24-year-old knows the right
answer to that, okay?
And that question leads you inexorably towards
a world of asking why is it that we are holding
back entrepreneurs, why is it that we are
holding back the food trucks, and why is the
right answer to be public ownership of food
trucks?
How can that possibly be a sensible thing
to do, right?
Except that the current system has often failed
them.
But ask them how can the right answer be big
government, right?
The history of millennials is full of objections
to government policies, of cases in which
they don’t like government, how can the
answer be more big government for them?
So, I feel inspired by Reagan’s ’81 inaugural
address.
Again, remember I was 14 then, so this was
a big deal for me.
In this land we unleashed the energy and individual
genius of man to a greater extent that has
ever been done before, right?
They are inspiring words that are still inspiring.
The problems of our age still require us to
unleash that energy and genius, yet the millennial
and tech industry public sector solutions
feel more akin to the age of Karl Marx than
to the age of Sergey Brin.
Universal basic income, just putting everyone
on the dole, how can that possibly be a creative
answer to the change in demands for labor?
Price controls are deeply unfair and they
limit the ability of entrepreneurs to make
things better, right?
Where’s the focus on creative education
programs, whether for the inner cities of
for the Eastern Heartland?
The right answer for a jobless future is for
them to use what they saw work, which is innovative
entrepreneurs doing new stuff, for them to
do it themselves, not for them to come down
with a rigid top-down solution.
And it has to have some story that is like
this.
Private creativity for public good.
Now, I love, and I am speaking at YIMBYtown
in a couple weeks, and I am really excited
about this.
I love the YIMBY movement.
And it is a millennial movement, and it’s
a movement that has got the point that freedom
is actually a progressive thing, that in fact
if you want to promote more affordable housing
for ordinary Americans, the right thing to
do is unleash the supply of housing, right,
is to get rid of the regulations that hold
housing back.
Thinking about how YIMBY got there is really
important for understanding what might be
able to work with it.
Now, they haven’t gotten there everywhere,
right?
We certainly have plenty of people running
for office, particularly in New York State,
who still seem to think that universal rent
control is the right answer, because rent
control has worked so well to promote affordable
housing in the left 75 years in New York City.
But, we really have got a growing movement
that sees the case for freedom as being the
right answer for affordability, right?
We have got our 75-year history of rent control,
we’ve got the evidence on public housing
projects, you know, the quintessential book
is written by our own Howard Husock here.
Everyone can see that housing is inexpensive
in much of America, right, where we allow
relatively free building.
The enemies of growth, the NIMBYs, are easy
to demonize, and that helps.
The unfairness of rent control is very powerful,
and I’ll come back to that in a second.
And other causes of the young, inclusion,
environmentalism, right, can be tied to allowing
more building.
We’ve got a case against the quasi-socialist
status quo in favor of more, not less, market
capitalism high-cost housing markets.
We have to understand how to do this in more
markets.
We have to understand both how to enable the
YIMBYist movement to grow and how to make
sure it works in labor markets in entrepreneurship
areas, in other areas where we crucially need
change, right?
Obviously there has been a cottage industry
by the New York Post and others in demonizing
the beneficiaries of rent control for the
past 40 years.
That demonization is unfortunately part of
making the case for anything, right?
Because they certainly do it to their enemies
all the time, right?
Demonization has been a huge part of everything
and unfortunately, you know, as a point that
I try to make when understanding the political
economy of hatred, unfortunately hating the
haters tends to often be a more effective
strategy than preaching love.
So, it’s unfortunately true that almost
certainly there needs to be a bit of demonization.
I prefer there to be less rather than more,
but we need to have some of it.
Permits issued, this just shows the places
that build a lot aren’t expensive, the places
that are expensive don’t build a lot.
So, taking this argument, taking the case
for freedom to other markets, now, unfortunately
just see again the Orwellian nature of this.
So, Bernie Sanders wants to make college tuition
free and debt-free, okay?
So free.
So, this means no prices for anything, you
know, obviously forced.
This is not a freedom that I understand, but
it’s a certain type of freedom, I guess.
Obviously, there’s the economic case, won’t
poorer colleges just shut down, or hide fees,
or lower quality, but it seems to me that
in many cases the stronger argument, and the
stronger argument against socialism more generally
are that it’s not fair, that your actual
understanding of fairness is misplaced.
So, it’s not fair because often these services
are not benefitting the poorest Americans,
they are benefitting richer Americans, they
are benefitting whiter Americans.
Often you know, when you have rent control
it has gone to people who are not at the,
you know, on the margins of living, but who
are wealthier.
When we promote employment with high minimum
wages then poorer customers pay the cost of
income redistribution, that’s not fair.
When low prices or no prices generate overuse,
or in some cases like driving that’s unfair
as well.
So, let me just show you some pictures.
So, this just points out that when you look
at who is getting college, right, overwhelmingly
it’s white non-Hispanics, not blacks or
Hispanics.
So, if you are favoring free college, you
are favoring racial distribution in the U.S.,
and how can that possibly be something that
good socialists actually want?
You are favoring redistribution to the rich
away from the poor.
So, this is just income of people who are,
you know, have college degrees or graduate
degrees relative to people who don’t have
it.
By making it free you are taking somebody’s
earnings and you are giving it to someone
who is richer.
How can that possibly be fair, right?
And I’ve tried this.
I tried this on a – this is my focus group
of one, I tried a twelve-year-old who happens
to live in my house, me, I’m trying to work
on how to talk to young people about socialism.
A twelve-year-old – hmm.
Me: Who do you think should pay for schooling?
The people who go to schools and get the benefits,
or the taxpayers?
Twelve-year-old: The people who go to school,
obviously.
Right?
Implication that the adult is a bit slow as
usual.
Me: How about other things?
Twelve-year-old: The people that use them.
Me: After all, somebody needs to pay.
Twelve-year-old: Obviously.
Right?
Same thing.
And the point there is that actually if you
get them before the political indoctrination,
they kind of understand that like the person
who gets something should pay for it.
That is not something that is hard for a nine-year-old
to grasp.
After all, they have got siblings and when
their siblings get stuff they want their siblings
to pay for it, right?
That’s pretty clear.
But you know, that logic gets missed in – as
they get older, right?
I have made a big point about how airports
should be self-funded by user fees, and that’s
not just an issue of sort of good management,
that’s also an issue of fairness.
The average user of JFK airport is much richer
than the average American taxpayer.
We should have airports that are of course
independent of Port Authority and much, probably
private in most cases, and funded by user
fees.
Social Security.
Social Security goes more to people who live
longer.
People who live longer are typically richer.
It’s not fair.
Medicare goes typically to people who live
longer.
People who live longer are richer.
It’s not fair.
All of these policies one can demonize with
the fairness lens.
I think it’s even more powerful the demonization
of minimum wages.
Who pays for minimum wages?
The customers.
What, you know, what cockamamie system is
going to try and solve the problems of income
redistribution by charging the people who
go to McDonald’s to pay higher wages to
the people who work in McDonald’s.
That is the most backward system of thinking
about what a fair system would look like that
I could possibly imagine.
Whatever we think we want to do for the people
that work for McDonald’s, surely that should
be paid for by taxpayers everywhere, not saying
in particular we want the customers at McDonald’s
to bear this burden, and yet that is exactly
what minimum wages do.
It’s not fair, right?
Freeways.
Free highways, making these things free encourage
more people to drive, how can that possibly
be good for the planet, right?
We have a long cottage industry of people
on the Left demonizing for-profit entities
of a variety of forms, they are very good
at it, and it is easy to demonize those companies
that take federal subsidies.
But the problem with that particular road
is it doesn’t give us enough that is positive,
right?
We can do the not fairness thing but the hope
is to get off of that, off of the it’s not
fair line, try to neutralize their it’s
not fair line, and get to something that is
full of hope.
And that is where I am going to end on this,
right?
So, you know, Robin has this line when the
basic needs of life compel submission to the
market and subjugation at work, we live not
in freedom but in domination, right?
Either Robin is believing that freedom requires
our needs to be met by someone else as in
universal basic income, which sounds more
like slavery, right, and prying someone else
to work for you to not work, that feels like
not freedom to me but something else – or
that somehow or other we are all going to
work but no markets are going to be involved,
right?
I know an older line of this: What will be
the manner of life among men who may be supposed
to have their food and clothing provided for
them in moderation, and who have entrusted
the practice of the arts to others, and whose
husbandry committed to slaves paying a part
of the produce – that’s Plato, right?
He’s talking about the lives of his guardians,
who, like Robin’s people, he expects to
be able to not subject themselves to the market
in their working, but at least he comes out
and says that he expects slaves to do the
work, right?
So, there is a you know, there is a form of
you know, of serfdom that inevitably comes
by going down this route, and it’s a route
that involves a larger and larger share of
the GDP being spent on entitlements.
Now, I weighed in last year again about the
costs of expecting people to be on universal
basic income and just not working and having
this paid for them, I think I cannot stress
enough this is self-reported life satisfaction,
employed low-income people, maybe 12% of them
among single, childless men are unhappy, but
if you are not working that rises to over
30%, right?
The misery of the jobless cannot be overestimated.
And a view that we are going to have 30, 40%
of the American population that are paid for
by universal basic income who aren’t working,
that is a hell.
That is not a positive role.
It is much healthier for them in the long-run
to subject themselves to the subjugation of
the market and does something that yields
joy to someone else.
To actually give someone a smile when selling
something.
That’s not a horrible thing.
That’s an upside, that’s a plus, that’s
being of service to the world and that’s
something that brings satisfaction and a sense
of purpose.
Federal job guarantees seem even worse.
This is a Gillibrand, Cory Booker idea, a
Bernie Sanders idea, that the federal government
is going to guarantee everyone – they haven’t
specified the wage – the cost of this is
obviously likely to be enormous, but is also
is not going to train people to do new skills,
to be entrepreneurs, it’s going to create
these guys.
This we can’t show online, though.
I don’t have copyright on any of that.
So, what’s the positive thing?
So, we have to start with the idea of a free
market for social entrepreneurs.
We need to start with a vision that starts
with heroes.
Heroes who everyone can see has done something
good for the world, right?
I am perfectly happy to defend the Steve Jobs
and Sergey Brins, but choose ones that everyone
Right and Left agrees have done something
good.
Jane Addams, Geoffrey Canada, right?
Mother Teresa, right?
People who are obviously in the service of
the world.
They were also entrepreneurs of a form.
Many of them have also been held back by undue
regulations, right?
Then once we have understood that those are
the people the millennials can be and should
be, we need to broaden it.
We need to make it clear that the entrepreneur
who starts their grocery store in a low-income
neighborhood, that’s also a social entrepreneur.
That’s also an entrepreneur who is providing
a path forward, and yet that is an entrepreneur
who is blocked by a need for 17 permits in
New York, okay?
So, that person is not someone that we need
a socialist answer, we need a capitalist answer,
we need an answer that’s about freedom,
we need an answer that is about empowering
them.
We also have to include those ordinary for-profit
entrepreneurs who provide new jobs for the
people who have lost their jobs, for those
who fight this herculean effort of creating
employment in the Eastern Heartland, in the
parts of America where 25, 30% of Americans
are jobless.
We need to start with this notion that there
are entrepreneurs that everyone can applaud,
can appeal, and then we have to broaden it
to make it clear that other people are achieving
the same ends, whether or not they are for-profit
or not-for-profit, right?
We must convey our faith that the millennials,
will provide the greatest generation of social
entrepreneurs yet, and as long as government
empowers instead of restricting, and that
is fundamentally the freedom agenda.
That it is fundamentally not one about restrictions,
that it is one about enabling them to do their
dreams and make the things better.
Now, to be concrete to sort of five policies,
you know, as I have said before, employment
subsidies, not minimum wages, not free guaranteed
government jobs, competitively sourced out-of-school
programs that provide vocational training,
right?
We want to unleash the genius and entrepreneurs
of 25-year-olds to figure out how to provide
skills in the inner city or in West Virginia
that will lead to jobs.
We want to reward skill providers, not enforce
zero costs, not say that you have to provide
your education for free, but reward them.
Give them some form of payoff.
We want one-stop business permitting for all
social startups everywhere, and all startups
in disadvantaged areas.
We want to start including entrepreneurial
innovators into the cost-cutting side of government.
Can we make Medicare cheaper without cutting
quality and we want them to participate in
this.
Finally, we want to applaud YIMBYism.
We want to applaud anyone who understands
that freedom is the path towards more affordable
housing.
And just my final thoughts: The cause of freedom
has one great advantage over its enemies – it
is true, it is right, okay?
And we never need to forget that.
But every generation we need to fight the
battle for it again, and we are not doing
very well right now with this generation.
I have tried to put together my thoughts.
I am not sure that they are right, okay?
I am sure that whatever the answer is has
to be full of hope and has to be full of respect
for the millennial generation, because I think
they are incredible in lots of ways.
They are just a little bit mislead right now.
I am sure that you know, freedom will inspire
them to change the world, and I think in fact
they can do it.
But, we all need to come together and make
sure that they don’t get trapped in this
socialist era that has caused so much harm
over the course of the twentieth century.
And you know, my final observation is that
thank god that twelve-year-old girl that I
was talking about thinks that Alexander Hamilton
is the greatest guy in the world thanks to
Lin-Manuel Miranda, so I just want to end
by thanking Lin-Manuel Miranda on this, and
end there.
Alright.
Actually, we have quite a bit of time for
questions, and Ed is perfectly capable of
fielding them himself, so why don’t you
just raise your hand, tell us who you are,
and give us your question?
Sure.
Yes, sir.
So now I’m on the microphone.
My name is Hank Salzhauer and I think that
everybody in this room agrees with you.
My question is how can you change the faculty,
which really is inoculating this whole problem
into a whole generation which graduates from
college and thinks they had an education but
they really have not?
So, I can’t bear any responsibility for
any faculty members other than the economics
faculty members, who I bear some responsibility
for, and by and large I will defend my colleagues
in economics at Harvard pretty strongly.
I think I have a great set of colleagues that
I feel deeply proud to come to work with every
day, and they range the ideological spectrum,
but you can hardly – the largest economics
course at Harvard is Ec10, and you can hardly
accuse Greg Mankiw of being a closet socialist.
But you are absolutely right.
In many universities, including my own, there
are certainly many college professors whose
views are not akin to those in this room.
I certainly have no idea how to change the
hiring practices around that.
I do have a different solution, which is to
try and get the students without changing
the teachers.
So, for example last year I voluntarily gave
Harvard an extra course on the economics of
cities because I wanted to reach more students.
And, you know, I think there’s a way to
compete for student minds which doesn’t
involve trying to you know, stop other faculties
from growing, but just competing for their
time.
Competing by giving them courses that are
more exciting, that are taught with maybe
more balance, that are taught in a way that
appeals to them.
And I think that’s at least my own way of
doing this, is to try and offer something
– not even particularly with a – I mean
I certainly went about teaching my course
on the economics of cities not because I had
any ideological agenda whatsoever, although
I think it is true that if you hear me lecture
for twelve weeks you are going to hear some
aspect of a particular viewpoint.
But because I wanted more access to them,
which is, after all, a privilege.
So that’s at least my strategy.
But I don’t know beyond that, but it’s
– and just to be clear – it’s not like
it just starts in colleges, right?
I mean it’s high schools, it’s junior
highs.
I mean there is, you know…
(Inaudible) of having graduated from the college
where that’s where they got indoctrinated.
I think you don’t – so let me rephrase
what I said and say it again, right?
I think the right answer is not anything going
negative.
I think it has to be about a positive vision,
a positive alternative, whether or not we
are talking about courses or a philosophy
that is exciting, alternative, and true.
And that’s what we should be pushing.
Yes, sir.
Thanks for being here.
You are supposed to say your name.
Andrew (inaudible).
And we will get a microphone to you also.
In your discussion with the millennials and
researching the question, how much of the
framework that they are espousing you think
is a shifting of worldview priority, a different
emphasis placed on wealth accumulation versus
the standard baby boomer mentality versus
the fact that there’s less access to these
things and therefore the mentality kind of
changes around the set of realities, right?
And, so, had their set of opportunities been
greater, we wouldn’t be talking about this.
I don’t know.
I mean I think to some extent it’s – so
certainly they feel like the past ten years
have been pretty grim, but at the same time
they don’t feel that they are so grim like
they have to immediately worry about, you
know, getting an engineering degree.
Or, you know, I mean some of them do, and
those aren’t the ones who are saying they
are socialists.
Those are the ones who are, you know – but
it’s, I mean some of it will presumably
change as economic opportunity changes, but
I think so much of it is unrelated to the
economic fundamentals and related to you know,
losing the war of ideas.
I think unquestionably there were headwinds
but the larger issue is that, you know, the
cause for freedom is losing in the war of
ideas for younger Americans.
Yes, sir.
James (inaudible)…
Okay, go on – I was going for the gentleman
behind you, but we’ll get you next, okay?
Harvey Weiss.
Are the views of millennials that you describe
the same across all demographic groups, or
are there differences for example between
college students and blue-collar workers?
Are they the same across all universities?
Are they the same for recent immigrants and
nonrecent immigrants?
Assuredly not.
Often the sample sizes get relatively small
here.
Let me just show you – but even, for example,
I just showed you the overall race differences
which are in one of these things.
There is a lot of heterogeneity.
I don’t know that we have a – I mean what
we would really like to know is an actual
social science agenda and what changes beliefs,
right?
So, that’s actually what we would like to
have.
We are very far from having that, where you
actually need natural experiments around.
So, for example, this gives you age, gender,
and race categories.
There are – and this is for all age groups
– so for example the, you know, I didn’t
look at the say, for example, the race differences
and think that they were enormous gaps on
that, but assuredly there are huge differences
between different parts of the country on
this.
Historically there certainly have been.
But it’s true that we actually, if we are
going to take the war of ideas seriously,
we actually have to get in, understand more
where is it that this trend is stronger and
where is weaker?
And we need to understand that better.
You, sir, who are in front who I cut you off.
Yeah.
(Inaudible) studied the generation of growth
in 1930, so there are a lot of similarities
for kids that grew up then versus those that
grew up during the current downturn.
Cynicism around financial institutions, big
government, socialist policies, high unemployment,
have you looked at that?
So, I think we know a bit of the intellectual
history.
I have looked at Gallup data going back to
the 1930s on different things.
I have not focused particularly on this issue.
I mean, we know the normal story, right?
The normal story is that socialism and communism
enjoyed a huge vogue in the 1930s, which became
both discredited and almost illegal after
the Cold War began.
So, there was a – and the fact that we were
facing off against the Soviet Union, we kind
of saw what the Soviet Union was, discredited
that viewpoint pretty quickly in terms of
mainstream American.
So, I think that didn’t last, but it didn’t
last because of an accident of history that
I hope does not repeat itself and I doubt
will repeat itself.
So, at least that’s how at least I would
look for it.
But, certainly, socialism – we saw socialism
enjoy a huge vogue in the Great Depression,
so indeed there is an echo of that here.
Yes, go ahead.
Absolutely.
So, my concern is this is fabulous data, it’s
a fabulous presentation, but I question whether
it is grounded right now in the data we see
in terms of what is happening in the world.
Number one, Bernie Sanders won I think 44%
of the Democratic vote, primary vote, in 2016,
a giant number that no one predicted.
Donald Trump, I am sure most of the people
here didn’t think Donald Trump was going
to win the election in 19 – early 1916,
didn’t think of it, or even 15, didn’t
think he was going to win.
We are sitting here right now where there
is – if Donald Trump, who I voted for, so
let me – I’m putting my cards on the table
– is the Republican candidate for the presidential,
for our president in 2020, so we just – we
basically have two years, less than two years,
a year-and-a-half, to get all of this knowledge
out there, no matter how positive, and we
see this enormous power of the other side,
A, being negatively opposed to Trump, and
they see the chance, whether they are right
or wrong doesn’t matter very much at this
moment – they have the right to vote – doesn’t
the data that we have, the sign of enthusiasm,
the sign of discontent with the current president
with whatever good he has done, which I think
is significant, aren’t we just sitting here
right now where the next accident occurs?
If Trump was accident number one in ‘16,
isn’t this the logical, sort of in effect
a regression to the mean, it’s an overshooting
of that mean, but isn’t this – if you
study politics isn’t this sort of this natural
reversion that young men and women feel that
this country is just going in the wrong direction?
Whether they are right or wrong isn’t the
issue.
So, my question is not as an economics professor,
but as a political observer, what’s the
strategy?
How does this actually manifest itself?
This is a great strategy for the next ten
years.
We are not going to educate all of these young
men and women in college in the next 18 months.
What do you want to do?
One of the great virtues of not being a millennial,
of being over the age of 50, is I know which
things are my job and which things are not
my job, okay?
And as much as I feel the pain of what you
are talking about and I care very deeply about
it, and I care very much about a politics
that is based on ideas and that does not cycle
from different extremes from one way to the
other, I really don’t know how to change
that.
And if someone does I am happy to subscribe
to their newsletter and be part of their fight,
but I don’t know how to do that.
What I believe I should be in the business
of, and indeed I have been in the business
of for quite some time, is fighting in a long-term
war of ideas.
And that in some sense is really much more
of MI’s mission than it is winning the next
election either.
I mean that’s an MI mission, which is laying
the groundwork with the idea that ideas laid
even in unprofitable political times can bear
fruit thirty or forty years later.
I mean think about you know, Milton Friedman’s
discussing housing vouchers sixty-odd years
ago, right?
He was seen to be loony when he discussed
this.
There was no chance that it was going to go
– going to occur in that period.
But the ideas were there, they spread, they
percolated.
You know, they got a little bit of traction
in Milwaukee thirty, you know, twenty-odd
years ago, and you know, we have a movement
that uses those ideas.
This has to be about a long game.
I agree there’s a short game as well.
And I agree I’m not telling you how to win
– whatever it is you want to do in that
short game, I don’t know how to do it, okay?
But I am engaged every day with talking to
19-year-olds, talking to 23-year-olds, and
I think that is also a battle that is well
worth waging.
And if we try and just play the short game
and not play the long game we don’t win
either, right?
We have to actually play both games and you
know, I’m going to keep on playing the game,
fighting the fight that I actually know how
to fight rather than the fight I don’t know.
(Inaudible) 100,000 of you.
Yes, sir.
Steve (inaudible).
Of course, Steve.
I wonder what fraction of American households
parents spend any time talking to young children
about some of the ideas and the kind of thing
you were talking about in your sample of one,
and what fraction of American households,
I wonder, are people speaking to their children
about the kind of ideas that you brought up
in your own household.
It’s a great question.
I have never seen a Gallup poll on it.
It would not be featured in the American Time
Use Survey, which, the main things you learn
from the American Time Use Survey is most
parents spend very little time with their
children period, let alone whether or not
they are talking about these ideas, but absolutely.
That’s a great question and indeed, you
know, for all of us who are parents, this
is part of the answer as well.
Yes, in back.
Thank you so much for your presentation.
I hope we can a transcript of it and a copy
of your – so I can teach my children and
grandchildren.
Here’s my question: We all know what’s
happening with overdoses and people dying
from – what’s happening with the illegality
of hard drugs.
What is your position on decriminalizing all
drugs and basically saying instead of having
to buy it from the underworld where you don’t
know whether you are getting a high dose or
a low dose, sort of regulating and disclosing
you know, the potency so that people will
not accidentally overdose and just basically
solving this tremendous social problem of
gangs, crimes?
So, one of my closest friends is the economist
Jeff Myron, who has made this cause his own.
Jeff is your man on this.
I’m, you know, one of the things – one
of the other things I learned with being over
50 is I’m not going to divide my audience
by taking a stand on something that undoubtedly
50% of them don’t necessarily agree with
the other 50% of them.
I will tell you typically on this view I have
typically favored some form of decriminalization,
perhaps not as extreme as you would like,
at the national level, but I have also been
quite strongly in favor of criminalization
at the very local level, meaning that I am
generally okay with adults choosing to buy
drugs, I am generally okay with it being regulated,
but I don’t want it around my own children
and I don’t want it you know, in my own
community.
I don’t mind if my neighbors do it in the
privacy of their own homes, I just don’t
want it sold and smoked on the streets where
I take my children to school.
So, I see it as more of a local regulatory
matter than I do as being a largescale matter.
But these are complicated issues and I will
just raise another thing – I do a fair amount
of engagement with Latin America, and from
their perspective obviously the American war
on drugs has been an unbridled curse, right?
And that’s a serious issue as well.
But these are complicated issues and what
I want you to take away from the opioid crisis
is this is yet another thing that in fact
is an American social problem that requires
the engagement, and innovation, and entrepreneurship
of the millennials to solve.
And every social problem has that aspect to
it.
And it’s not going to happen if we just
try a top-down solution for it.
We need them to figure out smarter ways to
do it.
Yes, sir.
Yes, Marshall Jaffe.
I’ll preface my question with a brief anecdote.
My mother grew up in Brownsville in the ‘20s
and ‘30s.
She was the daughter of a reasonably prosperous
shopkeeper.
She was a member of the communist party.
I asked her mom, why were you a communist?
She said that’s where the boys were.
So, in that context – to what degree do
you think the love affair with socialism by
millennials is kind of a passing fashion that
speaks to social acceptance and may change
with the length of hemlines or sideburns?
I can’t say.
Certainly, the trends look more worrisome
than just merely hemlines.
And I think it’s a mistake to be too blasé
about it, but I think unquestionably in any
social movement you have a lot of people who
are there because it’s the cool thing to
do.
Unquestionably that’s right.
But, even if a movement forms for that reason,
it can still have larger consequences.
So, I think just because you know, people
are moved by the things they are always moved
for, a desire for acceptance, a desire for
love, a desire to meet cute members of the
opposite sex, or the same sex, the – it
still can have a large consequence and it
is still worth thinking about, absolutely.
Yes, ma’am.
I’m a…
Just wait for the mic – wait for the mic
so we can all hear your question.
Most of the millenniums today I don’t think
have ever suffered like not having food, not
having a roof over their heads, not having
a chance for an education.
I don’t think, you know, they haven’t
been through a Depression, or the Second World
War, or the postwar.
I can speak for myself that I come from a
military family.
I lived as a young girl in Berlin when it
was a four-power occupation and I certainly
knew what it was even at a small age of eight
of nine, what communism/socialism meant.
It didn’t take a lot for me to see, I just
had to look across, a little bit, across Berlin
and saw the Soviet occupation.
And I don’t think they have any idea what
it is not to have.
If they had their iPhones taken away, or their
laptops, or whatever, then what is life going
to be for them?
That needs no response.
That was great.
That was great.
Okay, yes ma’am.
Yeah, yeah.
Hi, my name is Mora Riley, and I actually
am a millennial.
What?
Finally!
I’m kind of in the middle, and I have to
say I don’t find a lot of common ground
with some of the younger millennials, but
I have to say that the social entrepreneurship
argument really does resonate with me, and
it resonates with a lot of my colleagues and
friends who I have seen go to business school
and pursue opportunities that are very aligned
with that.
The one thing I will say, though, is that
requires a sense of optimism about the ability
to change social problems, and I have seen
some conflicting data on how millennials feel.
You know, are they optimistic, are they pessimistic
about the future of the country, the world,
etc.?
So, it seems like the trend may be towards
a bit more pessimism, so how do we continue
to encourage social entrepreneurship and use
that as an argument you know, to favor capitalism
if folks are feeling more pessimistic about
their ability to change things?
Yeah, this is a real worry and I feel the
pessimism too.
And I think this is absolutely right.
So, a couple of things.
I mean, by celebrating some social entrepreneurs
we will be highlighting the ability of some
people to you know, to change the world.
Secondly, you know, the technology story over
the last twenty years is a story of just a
world – you know, mind-numbing change that
has been affected.
So, there is sort of a story of change that
they can see and feel tangible.
And the other thing that is sort of even more
important is part of this history is remembering
the bad stuff, right, is remembering Berlin
and you know, my own memories of East Berlin
were from ’77, when I remember walking along
Unter den Linden in those grim times.
But you have also got to remember the longer
track record of humanity.
And when I think of, you know, what we as
a species have gone through over the past
– whether or not you want to take the past
500 years, or the past 2,500 years – it’s
full of miraculous things.
I mean, we as a species have done over and
over again by working together, by collaborating,
by using this collective human ability to
innovate, to come up with new ideas, we have
worked miracles time and time again, whether
or not it is in business, or technology, or
in the arts, or in culture, or in politics,
we have worked miracles.
And the age of miracles is not gone.
And their age of miracles is still ahead of
them.
And they need to believe that and you know,
we need to tell them that.
And that, you know, enduring optimism is absolutely
critical, and I believe not just in Guizot’s
comment that like the world becomes to the
optimism, I believe at some fundamental level
optimism beats pessimism, because it’s just
a lot better in life to go through life as
an optimist than to go through life as a pessimist.
Last question…
I think that’s a good place to end up, so
thank you, Ed.
I’m sorry, yeah.
Thank you.
