20th Century Capitalism and Regulation in the United States

WEBVTT
Kind: captions
Language: en

00:00:00.612 --> 00:00:02.170
Regardless of your opinion

00:00:02.170 --> 00:00:04.544
of how much regulation
or how much intervention

00:00:04.543 --> 00:00:07.310
the government should have in markets,

00:00:07.310 --> 00:00:09.542
in capitalism generally,

00:00:09.542 --> 00:00:11.300
I think it's interesting to take a look

00:00:11.301 --> 00:00:12.490
at the various cycles that have happened

00:00:12.490 --> 00:00:13.253
in the United States,

00:00:13.253 --> 00:00:14.764
both from an economic point of view

00:00:14.765 --> 00:00:16.769
and also from a regulatory point of view.

00:00:16.768 --> 00:00:19.348
If we start in the late 1800s,

00:00:19.349 --> 00:00:21.382
in the late 1800s so
we've had the Civil War,

00:00:21.382 --> 00:00:23.050
we've had Reconstruction.

00:00:23.050 --> 00:00:24.859
You actually have a crisis,

00:00:24.859 --> 00:00:26.754
kind of a depression after the Civil War,

00:00:26.754 --> 00:00:28.052
but then after that depression,

00:00:28.053 --> 00:00:29.394
at the end of the 1800s,

00:00:29.394 --> 00:00:30.771
the United States comes roaring back.

00:00:30.771 --> 00:00:33.881
It becomes a major industrialized nation.

00:00:33.881 --> 00:00:35.971
And part of that industrializing process,

00:00:35.970 --> 00:00:38.471
you have some gentlemen who become

00:00:38.472 --> 00:00:40.380
very, very, very wealthy.

00:00:40.380 --> 00:00:42.019
You have Cornelius Vanderbilt.

00:00:42.018 --> 00:00:44.979
His wealth was in the rail
and in the steamboats.

00:00:44.979 --> 00:00:47.317
John D. Rockefeller known by some people

00:00:47.317 --> 00:00:53.060
as the wealthiest man in history.

00:00:53.060 --> 00:00:54.578
That may or may not be the case,

00:00:54.578 --> 00:00:56.407
but he was definitely the wealthiest man

00:00:56.406 --> 00:00:57.610
in American history.

00:00:57.610 --> 00:01:00.361
If you inflation-adjust
so some accounts will say

00:01:00.362 --> 00:01:02.102
he had 1.5 billion dollars.

00:01:02.101 --> 00:01:04.024
You might say, "Wait, I know of people

00:01:04.025 --> 00:01:06.415
"who have more than 1.5 billion dollars."

00:01:06.415 --> 00:01:08.887
If you inflation-adjust
the amount of money

00:01:08.887 --> 00:01:11.143
that John D. Rockefeller had at the turn

00:01:11.143 --> 00:01:13.846
of the century it comes out to 400 billion

00:01:13.846 --> 00:01:16.750
to 600 billion dollars.

00:01:16.750 --> 00:01:19.253
This is a lot more than
anyone that we know

00:01:19.253 --> 00:01:21.746
of in present times.

00:01:21.746 --> 00:01:24.054
You have Andrew Carnegie
in the steel business.

00:01:24.054 --> 00:01:27.379
His net worth, if you look at
it in a present value basis,

00:01:27.379 --> 00:01:29.023
is approximately 300 billion.

00:01:29.022 --> 00:01:31.429
You have people like JP Morgan.

00:01:31.430 --> 00:01:34.168
Although is net worth
also huge, huge amount,

00:01:34.168 --> 00:01:36.087
but where his power was really ....

00:01:36.087 --> 00:01:41.215
Since he was in control of the
financial world at that time,

00:01:41.215 --> 00:01:42.974
his financial power was tremendous.

00:01:42.974 --> 00:01:46.781
Maybe more than the type of power
that these gentleman could wield.

00:01:46.781 --> 00:01:50.408
The amount of power that
him and his associates

00:01:50.408 --> 00:01:53.706
controlled through their various holdings,

00:01:53.706 --> 00:01:57.602
some have said amounted
to the amount of wealth

00:01:57.602 --> 00:02:00.606
in all of the United States
West of the Mississippi.

00:02:00.606 --> 00:02:03.548
These are hugely powerful,
hugely wealthy men.

00:02:03.548 --> 00:02:04.933
The type of power and wealth that we

00:02:04.933 --> 00:02:07.890
actually have not seen since.

00:02:07.891 --> 00:02:10.155
You can decide what you
think of these people.

00:02:10.155 --> 00:02:13.408
On some level all of these people,

00:02:13.407 --> 00:02:14.992
I'm sure they were good entrepreneurs.

00:02:14.992 --> 00:02:16.709
I'm sure they were hard working,

00:02:16.709 --> 00:02:17.631
I'm sure they innovated

00:02:17.631 --> 00:02:20.866
in their own way but they were also known

00:02:20.866 --> 00:02:24.169
for back then that this might be why it

00:02:24.169 --> 00:02:26.558
would have given fuel to someone like Marx

00:02:26.558 --> 00:02:28.002
who would look at people
like this and say,

00:02:28.002 --> 00:02:30.310
"Look, these people have so much power.

00:02:30.310 --> 00:02:33.239
"Labor has no power compared to them.

00:02:33.239 --> 00:02:35.003
"Some of the employees in some of these

00:02:35.003 --> 00:02:37.893
"companies, it's hard to
really say that they are

00:02:37.894 --> 00:02:39.057
"independent human beings.

00:02:39.056 --> 00:02:40.962
"They're almost like slave labor.

00:02:40.962 --> 00:02:43.367
"They live on the campus.
They have no rights.

00:02:43.367 --> 00:02:45.079
"People are dying while they're working

00:02:45.079 --> 00:02:46.611
"for some of these organizations."

00:02:46.611 --> 00:02:48.437
So you can decide where you will,

00:02:48.437 --> 00:02:50.620
but the reality is that these people

00:02:50.621 --> 00:02:54.947
were hugely, hugely, hugely
wealthy, hugely powerful.

00:02:54.947 --> 00:02:58.094
Now you fast forward to the early 1900s

00:02:58.094 --> 00:03:00.274
and you start having a
little bit of a backlash

00:03:00.274 --> 00:03:04.199
against these ... I
guess the system in which

00:03:04.199 --> 00:03:06.080
these type of people can thrive.

00:03:06.080 --> 00:03:09.468
You have Teddy Roosevelt
comes to power in 1901.

00:03:09.467 --> 00:03:11.569
One of the things ... He's
famous for many things,

00:03:11.569 --> 00:03:13.686
but one of the things
he's famous for is being

00:03:13.687 --> 00:03:15.307
a trust buster.

00:03:15.306 --> 00:03:17.462
When he talks about trust,

00:03:17.462 --> 00:03:20.418
a trust is really just
a large corporation.

00:03:20.419 --> 00:03:22.679
The idea is, is that, "Look Standard Oil,

00:03:22.679 --> 00:03:24.500
"you have essentially taken control of the

00:03:24.500 --> 00:03:26.132
"refining and the oil industry in America.

00:03:26.132 --> 00:03:27.473
"You have become a monopolist.

00:03:27.473 --> 00:03:28.696
"You need to be broken up."

00:03:28.695 --> 00:03:30.759
This is anti-competitive.

00:03:30.759 --> 00:03:35.143
Remember, capitalism for the
capitalist sake, for capitalism sake

00:03:35.143 --> 00:03:36.058
is maybe not that good of an idea.

00:03:36.058 --> 00:03:37.242
What we want is competition.

00:03:37.242 --> 00:03:38.769
What we want is innovation.

00:03:38.769 --> 00:03:40.673
What we want is incentives.

00:03:40.673 --> 00:03:43.110
If you control everything
and no one can compete

00:03:43.110 --> 00:03:45.152
that's not helping anyone.

00:03:45.151 --> 00:03:49.286
So Teddy Roosevelt, it didn't
happen during his administration

00:03:49.286 --> 00:03:50.765
but he kind of started
the trust busting process,

00:03:50.764 --> 00:03:52.832
and in the next administration,

00:03:52.832 --> 00:03:54.640
in Taft's administration,

00:03:54.640 --> 00:03:57.473
you actually have Standard
Oil being broken up.

00:03:57.473 --> 00:04:00.566
Just to get an idea of
how big Standard Oil was,

00:04:00.567 --> 00:04:03.539
if you take Exxon Mobil, Chevron, Conoco,

00:04:03.538 --> 00:04:07.960
and pretty much every
other major US oil company,

00:04:07.961 --> 00:04:09.802
put them together.

00:04:09.801 --> 00:04:11.944
I'm not saying it's the
equivalent of Standard Oil.

00:04:11.944 --> 00:04:14.042
That's actually what standard oil was.

00:04:14.042 --> 00:04:17.365
When Standard Oil was broken up
during Taft's administration,

00:04:17.365 --> 00:04:19.911
it was actually broken up into
all of these corporations.

00:04:19.911 --> 00:04:22.161
You can look into it more.

00:04:22.161 --> 00:04:25.040
You could imagine how much power
someone like that would hold.

00:04:25.040 --> 00:04:28.387
So the pendulum swung in one
extreme at the end of the 1800s.

00:04:28.387 --> 00:04:31.310
Roosevelt comes in, once
again Republican President,

00:04:31.310 --> 00:04:32.973
Very strong President.

00:04:32.973 --> 00:04:34.052
But he said, "Look, enough is enough.

00:04:34.052 --> 00:04:35.740
"This is too much.

00:04:35.740 --> 00:04:37.276
"This is not in the best
interest of the American people.

00:04:37.276 --> 00:04:38.557
"We need competition."

00:04:38.557 --> 00:04:41.355
Then you fast forward even more.

00:04:41.355 --> 00:04:44.038
In the 20s you have this huge boom.

00:04:44.038 --> 00:04:44.942
Things are looking well.

00:04:44.942 --> 00:04:47.168
Whenever there is a boom,
people look the other way.

00:04:47.168 --> 00:04:48.778
People think, "Oh we don't
need much regulation.

00:04:48.778 --> 00:04:50.463
"We don't need much
government intervention."

00:04:50.463 --> 00:04:54.444
But then booms, many times,
almost always lead to busts.

00:04:54.444 --> 00:04:56.706
Then you have the Great Crash of 29,

00:04:56.706 --> 00:04:58.956
leads into the Great Depression.

00:04:58.956 --> 00:05:01.228
People are unhappy with Herbert Hoover.

00:05:01.228 --> 00:05:05.358
FDR comes into power in kind of the heart

00:05:05.358 --> 00:05:06.137
of the Great Depression.

00:05:06.137 --> 00:05:08.842
He stays President until World War 2.

00:05:08.843 --> 00:05:12.557
In his attempts to take the country
out of the Great Depression,

00:05:12.557 --> 00:05:14.987
he has this New Deal set of programs.

00:05:14.987 --> 00:05:17.964
Some of the New Deal
programs were essentially

00:05:17.964 --> 00:05:19.929
to make use of all the
labor and industrial

00:05:19.930 --> 00:05:23.903
capacity that was going unused
during the Great Depression.

00:05:23.903 --> 00:05:25.748
It was kind of this Keynesian Philosophy

00:05:25.747 --> 00:05:28.158
that if no one else is going to supply

00:05:28.158 --> 00:05:29.890
the demand to use all of these factories

00:05:29.889 --> 00:05:31.798
and use all of these
people, the government will.

00:05:31.798 --> 00:05:33.973
There were these huge
public works projects

00:05:33.973 --> 00:05:35.789
but there was also
regulation getting involved

00:05:35.790 --> 00:05:39.354
here to kind of stop
some of the things that

00:05:39.353 --> 00:05:41.284
were perceived caused
the boom and the bust.

00:05:41.285 --> 00:05:43.546
You have the Glass Steagall Act,

00:05:43.545 --> 00:05:47.223
which is most famous for
separating investment

00:05:47.223 --> 00:05:49.726
banking from depository institutions.

00:05:49.726 --> 00:05:51.581
Essentially saying the
same people who are taking

00:05:51.581 --> 00:05:53.183
your deposits can't on the other side take

00:05:53.184 --> 00:05:56.020
your deposits and gamble with
them in the stock market.

00:05:56.019 --> 00:05:58.791
This is when Social Security passed,

00:05:58.791 --> 00:06:00.735
once again providing a safety net,

00:06:00.735 --> 00:06:02.137
going slightly in the Socialist direction.

00:06:02.137 --> 00:06:06.305
Saying, "Hey look, we can't have,
if we're a civilized, rich country,

00:06:06.305 --> 00:06:07.399
"we can't have people going
hungry in the streets.

00:06:07.399 --> 00:06:10.971
"We can't have older people who have done

00:06:10.971 --> 00:06:13.139
"their work, who have
contributed to society,

00:06:13.139 --> 00:06:14.625
"now all of the sudden
that we're in the middle

00:06:14.625 --> 00:06:16.496
"of a depression, we can't
have them starving to death.

00:06:16.497 --> 00:06:18.881
"Or not having them at
least having a basic

00:06:18.880 --> 00:06:19.975
"level of existence."

00:06:19.975 --> 00:06:21.262
You have Social Security.

00:06:21.262 --> 00:06:23.533
Safety net is coming into play.

00:06:23.533 --> 00:06:25.874
You have Fannie Mae being created,

00:06:25.874 --> 00:06:28.227
which the Fannie Mae narrative plays

00:06:28.226 --> 00:06:32.500
all the way into 2008 and
continues to be a part

00:06:32.500 --> 00:06:36.006
of the story with the
American housing situation.

00:06:36.007 --> 00:06:39.425
What this is, is an
organization that essentially

00:06:39.425 --> 00:06:42.242
can buy mortgages. Buying mortgages is

00:06:42.242 --> 00:06:45.134
it's essentially lending
money to people for mortgages.

00:06:45.134 --> 00:06:47.151
The reason why the government did this,

00:06:47.151 --> 00:06:49.783
is the government ... This
is a separate organization

00:06:49.783 --> 00:06:52.042
that implicitly had the
backing of the government,

00:06:52.041 --> 00:06:54.116
which says that Fannie
Mae can borrow from people

00:06:54.117 --> 00:06:56.689
but if for whatever
reason one day Fannie Mae

00:06:56.689 --> 00:07:00.122
can't pay back its loans, the
government will back it up.

00:07:00.122 --> 00:07:02.045
It will make good on those loans.

00:07:02.045 --> 00:07:05.543
What that allowed Fannie
Mae to do is to borrow money

00:07:05.543 --> 00:07:07.261
at very low interest rates,

00:07:07.261 --> 00:07:09.128
essentially close to the
rate that the US government

00:07:09.127 --> 00:07:11.235
could borrow at and then loan that money

00:07:11.235 --> 00:07:14.314
at very low interest rates to
people who want to buy houses.

00:07:14.314 --> 00:07:19.425
So essentially subsidized home ownership.

00:07:19.425 --> 00:07:20.949
I should say not home ownership.

00:07:20.949 --> 00:07:22.822
Subsidized home borrowing.

00:07:22.822 --> 00:07:25.245
I want to make that
clear because if everyone

00:07:25.245 --> 00:07:28.415
now has more borrowing
power to buy a home,

00:07:28.415 --> 00:07:30.362
then most likely that will just increase

00:07:30.362 --> 00:07:32.086
the price of houses.

00:07:32.086 --> 00:07:34.107
So it's really not
subsidizing home borrowing

00:07:34.107 --> 00:07:35.697
but that's a whole other topic.

00:07:35.697 --> 00:07:38.054
Once again the government
is getting involved.

00:07:38.053 --> 00:07:40.641
Here they're trying to do a
little bit of engineering.

00:07:40.641 --> 00:07:44.005
Once again this goes against
letting the market do its thing.

00:07:44.005 --> 00:07:47.100
This is a distortion in the market.

00:07:47.100 --> 00:07:49.168
It's a distortion because once again

00:07:49.168 --> 00:07:50.614
it's anti-competitive.

00:07:50.613 --> 00:07:52.463
If someone else wanted
to do what Fannie Mae

00:07:52.463 --> 00:07:54.103
did but didn't have the
backing of the government

00:07:54.103 --> 00:07:56.283
it wouldn't be able to
compete because it wouldn't

00:07:56.283 --> 00:07:58.213
be able to borrow money as cheaply.

00:07:58.213 --> 00:08:00.218
You keep fast forwarding.

00:08:00.218 --> 00:08:02.122
You get to Lyndon
Johnson's Administration.

00:08:02.122 --> 00:08:04.580
Obviously there were
other people in between.

00:08:04.579 --> 00:08:06.562
You get to Lyndon Johnson's administration

00:08:06.562 --> 00:08:07.850
and you have the Great Society.

00:08:07.850 --> 00:08:11.066
The Great Society, amongst other things,

00:08:11.065 --> 00:08:14.041
food stamps, war on
poverty, Medicare, Medicaid,

00:08:14.041 --> 00:08:16.908
so once again saying, "Hey society needs

00:08:16.908 --> 00:08:19.447
"to have some base level
of support for people."

00:08:19.447 --> 00:08:22.026
I'm not going to take
sides one way or the other

00:08:22.026 --> 00:08:24.135
but the pendulum was definitely swinging

00:08:24.136 --> 00:08:28.035
in the direction of
more social safety nets

00:08:28.035 --> 00:08:31.499
and more attempts to make kind of a level

00:08:31.499 --> 00:08:33.139
playing field and you can debate whether

00:08:33.139 --> 00:08:35.091
they were successful or not.

00:08:35.091 --> 00:08:35.890
The other thing,

00:08:35.890 --> 00:08:38.379
and this is completely unrelated
to what this conversation

00:08:38.379 --> 00:08:40.231
is about but whenever someone learns about

00:08:40.231 --> 00:08:42.101
Teddy Roosevelt and Franklin Roosevelt

00:08:42.101 --> 00:08:44.654
in the same video it begs the question,

00:08:44.654 --> 00:08:46.362
"Were they related in some way?"

00:08:46.363 --> 00:08:49.111
It does turn out they were fifth cousins.

00:08:49.110 --> 00:08:51.460
Even more interesting, Eleanor Roosevelt,

00:08:51.460 --> 00:08:53.019
who was Franklin Roosevelt's wife,

00:08:53.019 --> 00:08:54.697
was Teddy Roosevelt's niece.

00:08:54.697 --> 00:08:57.658
There actually was a
pretty close relationship

00:08:57.658 --> 00:08:59.687
between all of these Roosevelt's.

00:08:59.687 --> 00:09:01.287
Another interesting thing,

00:09:01.287 --> 00:09:03.243
I just found this on the Internet,

00:09:03.243 --> 00:09:05.276
Teddy Roosevelt was
also the first President

00:09:05.275 --> 00:09:07.381
to ride in the open in an automobile.

00:09:07.381 --> 00:09:09.017
It's funny to see the
secret service agents

00:09:09.018 --> 00:09:11.372
over here riding bicycles to keep up.

00:09:11.371 --> 00:09:13.265
Anyway, complete tangent.

00:09:13.265 --> 00:09:15.486
So you had, just to review where we are.

00:09:15.486 --> 00:09:18.745
End of 1800s you have what some people

00:09:18.745 --> 00:09:21.534
have called, if they want to
be insulting of these people,

00:09:21.534 --> 00:09:23.673
the robber barrons.

00:09:23.673 --> 00:09:26.195
They have concentrated
a huge amount of wealth.

00:09:26.195 --> 00:09:28.091
Then the pendulum starts swinging back

00:09:28.091 --> 00:09:31.995
with Teddy Roosevelt, Franklin
Roosevelt and then Lyndon Johnson.

00:09:31.995 --> 00:09:35.172
Then you fast forward even through the 70s

00:09:35.172 --> 00:09:38.045
you still have kind of a fairly heavy

00:09:38.044 --> 00:09:40.134
regulation of many industries in the US.

00:09:40.134 --> 00:09:42.349
Jimmy Carter, who was
considered quite liberal,

00:09:42.349 --> 00:09:45.149
you have to give him, if
you are anti-regulation,

00:09:45.149 --> 00:09:46.337
give him some credit.

00:09:46.337 --> 00:09:47.752
He actually deregulated
the airline industry

00:09:47.753 --> 00:09:51.556
and frankly that's why it's
hard ... that's why airline

00:09:51.556 --> 00:09:54.067
tickets are actually fairly inexpensive

00:09:54.067 --> 00:09:55.816
if you look at them on an
inflation-adjusted basis.

00:09:55.816 --> 00:09:59.024
Then the pendulum swings
back again into less

00:09:59.024 --> 00:10:02.432
government, less regulation
under Ronald Reagan.

00:10:02.432 --> 00:10:05.396
This is Ronald Reagan here.

00:10:05.395 --> 00:10:08.070
He is kind of most known
amongst other things,

00:10:08.071 --> 00:10:10.465
I mean, some people think that he brought

00:10:10.465 --> 00:10:14.062
communism to the brink but he also was big

00:10:14.062 --> 00:10:18.134
on less government.

00:10:18.134 --> 00:10:21.139
From the story of the 1900s until then

00:10:21.139 --> 00:10:22.378
was kind of more and more regulation,

00:10:22.378 --> 00:10:23.932
more safety nets, more government,

00:10:23.932 --> 00:10:25.596
and then Ronald Reagan comes

00:10:25.596 --> 00:10:27.667
with less government and lower taxes,

00:10:27.667 --> 00:10:29.742
although he spent a ton on the military,

00:10:29.741 --> 00:10:31.875
and the military is government.

00:10:31.875 --> 00:10:34.551
What's interesting is in
this period during the 80s

00:10:34.551 --> 00:10:36.954
you start having an economic boom.

00:10:36.953 --> 00:10:38.533
You could debate whether
it's due to Ronald Reagan,

00:10:38.533 --> 00:10:40.462
or maybe it was due to things that

00:10:40.462 --> 00:10:42.424
were completely out of his control.

00:10:42.424 --> 00:10:44.103
Maybe it was due to
automation and information

00:10:44.104 --> 00:10:46.566
technology starts becoming big and he

00:10:46.566 --> 00:10:48.317
has nothing to do with
that but regardless to say,

00:10:48.317 --> 00:10:51.274
you do start having an
economic boom in the 80s.

00:10:51.274 --> 00:10:53.869
Then the 90s it starts to
accelerate under Bill Clinton.

00:10:53.869 --> 00:10:55.878
The interesting thing that
you see is when things

00:10:55.878 --> 00:10:57.801
are good the temptation
for government to regulate

00:10:57.801 --> 00:11:00.287
goes down and under Bill Clinton,

00:11:00.287 --> 00:11:02.240
who is a democratic, considered liberal,

00:11:02.240 --> 00:11:06.973
you have Welfare Reform,

00:11:06.974 --> 00:11:10.698
which does undo a lot of ...

00:11:10.697 --> 00:11:13.928
I guess it takes a more
conservative take on welfare.

00:11:13.928 --> 00:11:18.028
It makes it harder to have welfare
for longer periods of time.

00:11:18.028 --> 00:11:21.330
You also have the repeal
of Glass Steagall,

00:11:21.330 --> 00:11:26.033
so the repeal of Glass Steagall.

00:11:26.033 --> 00:11:30.999
So even though Bill Clinton
was considered liberal,

00:11:30.999 --> 00:11:32.486
maybe he would blame
these things on having

00:11:32.486 --> 00:11:35.264
a republican congress,
who forced him into it,

00:11:35.264 --> 00:11:36.373
or whatever else.

00:11:36.373 --> 00:11:39.550
The reality is it did happen
under his administration.

00:11:39.549 --> 00:11:41.966
The government stepping
out of welfare a little bit

00:11:41.966 --> 00:11:46.073
and allowing to or kind of
a deregulation of banks.

00:11:46.073 --> 00:11:48.091
Allowing for investment banking

00:11:48.091 --> 00:11:50.860
and commercial banking to
start getting comingled again.

00:11:50.860 --> 00:11:52.870
Then you keep forwarding through the Bush

00:11:52.870 --> 00:11:54.419
Administration once George W. Bush,

00:11:54.419 --> 00:11:58.070
I could put his dad in here in between.

00:11:58.071 --> 00:11:59.548
Actually he was forced to raise taxes

00:11:59.548 --> 00:12:02.008
so I can't really include him in the

00:12:02.008 --> 00:12:03.459
conversation of less government,

00:12:03.458 --> 00:12:04.780
and he would claim he
was forced to do that

00:12:04.780 --> 00:12:06.995
because of democrats.

00:12:06.995 --> 00:12:08.629
All the way through all
of these presidencies,

00:12:08.629 --> 00:12:10.292
while things were kind
of on this upward march,

00:12:10.292 --> 00:12:13.447
you had this constant
stream of deregulation

00:12:13.447 --> 00:12:18.269
and all the way until you get to 2008.

00:12:18.269 --> 00:12:21.084
You have a major, major financial crisis.

00:12:21.083 --> 00:12:23.058
Who knows, now sitting in 2011,

00:12:23.058 --> 00:12:24.850
where that pendulum will swing back,

00:12:24.850 --> 00:12:27.327
but there is a sense that maybe all

00:12:27.327 --> 00:12:29.817
of this went too far
and probably the worst

00:12:29.817 --> 00:12:32.675
signs of this is this
whole idea that emerged

00:12:32.676 --> 00:12:38.680
during the 2008 crisis of Too Big To Fail.

00:12:38.679 --> 00:12:44.068
Which is kind of the worst
of Capitalism and Socialism.

00:12:44.068 --> 00:12:46.062
It's kind of like corporate welfare.

00:12:46.062 --> 00:12:50.860
It's like, not only are you
not giving benefit to those

00:12:50.860 --> 00:12:53.264
who want to innovate or do well,

00:12:53.264 --> 00:12:56.999
you have these huge entities that control

00:12:56.999 --> 00:12:58.754
so much wealth, that control
so much of the economy,

00:12:58.754 --> 00:13:01.158
and they get there by taking huge amounts

00:13:01.158 --> 00:13:03.889
of risks and as soon
as they do incompetent

00:13:03.889 --> 00:13:05.928
stupid things that put all of us at risk,

00:13:05.928 --> 00:13:08.836
the government comes in to bail them out

00:13:08.836 --> 00:13:12.274
because essentially they are
holding the economy hostage.

00:13:12.274 --> 00:13:14.783
If the government does
not bail these characters

00:13:14.783 --> 00:13:17.026
out they might take the
entire economy with them.

00:13:17.025 --> 00:13:18.362
My sense is that they tried to scare

00:13:18.363 --> 00:13:20.564
the government a little
bit more to have the

00:13:20.563 --> 00:13:22.889
government believe that
so they do get bailed.

00:13:22.889 --> 00:13:27.611
Regardless to say, it does
leave kind of a moment in time

00:13:27.611 --> 00:13:29.429
where society, or at
least American society,

00:13:29.429 --> 00:13:30.967
really the world,

00:13:30.967 --> 00:13:33.506
has to question how much
regulation is appropriate?

00:13:33.506 --> 00:13:37.561
How much control over the financial system

00:13:37.562 --> 00:13:40.539
should private institutions
be allowed to have?

00:13:40.539 --> 00:13:42.670
Fannie Mae is an interesting one.

00:13:42.671 --> 00:13:45.909
Because once again it's
a government sponsored

00:13:45.908 --> 00:13:47.784
institution that was pseudo-private.

00:13:47.784 --> 00:13:50.134
It was kind of the worst of both worlds.

00:13:50.134 --> 00:13:52.009
Once again it's still being propped up

00:13:52.009 --> 00:13:55.351
by the government and
it's a major distortion.

00:13:55.351 --> 00:13:57.637
It's a major distortion
market but to some degree the

00:13:57.638 --> 00:14:00.485
government is afraid of
letting it completely falter

00:14:00.485 --> 00:14:02.049
now because it would probably tank

00:14:02.049 --> 00:14:04.152
the economy to some degree.

00:14:04.153 --> 00:14:06.351
Anyway, hopefully you
found that interesting.

00:14:06.351 --> 00:14:07.959
I just wanted to give you some perspective

00:14:07.960 --> 00:14:09.670
on the swinging of the pendulum between

00:14:09.669 --> 00:14:14.387
government regulation and
more kind of capitalism

00:14:14.388 --> 00:14:17.402
without regulation that we've
seen in the United States

00:14:17.402 --> 00:14:21.000
over roughly the last 100 or so years.


When Capitalism is Great and Not-so-great

WEBVTT
Kind: captions
Language: en

00:00:00.550 --> 00:00:02.300
After the fall of
the Soviet Union,

00:00:02.300 --> 00:00:05.690
and even China's migration
to a market-based economy--

00:00:05.690 --> 00:00:07.750
even though they call
themselves Communists,

00:00:07.750 --> 00:00:10.250
their economy is now,
essentially, capitalist--

00:00:10.250 --> 00:00:13.040
there's been a general
consensus around the world

00:00:13.040 --> 00:00:14.680
that capitalism
is the way to go.

00:00:14.680 --> 00:00:17.520
And just to put my bias out
there, right from the get go,

00:00:17.520 --> 00:00:18.550
I am in that camp.

00:00:18.550 --> 00:00:23.190
I would consider
myself a capitalist.

00:00:23.190 --> 00:00:26.450
But what I want to do in this
video is do a little bit more

00:00:26.450 --> 00:00:28.960
of a nuanced discussion
of capitalism

00:00:28.960 --> 00:00:30.520
versus, say, socialism.

00:00:30.520 --> 00:00:33.450
Because I feel like there
has been-- especially here,

00:00:33.450 --> 00:00:35.730
in the United States,
and in the West--

00:00:35.730 --> 00:00:37.570
a knee jerk reaction
against anything

00:00:37.570 --> 00:00:42.650
that even has a whiff of the
government getting involved

00:00:42.650 --> 00:00:45.192
or even a whiff of socialism.

00:00:45.192 --> 00:00:46.900
So I want to think
more about what are we

00:00:46.900 --> 00:00:49.260
trying to achieve with
the capitalist system.

00:00:49.260 --> 00:00:53.990
And where we could
fall into the things

00:00:53.990 --> 00:00:57.440
we don't want to achieve if some
of the aspects of capitalism

00:00:57.440 --> 00:01:02.130
are allowed to go on
without any type of controls

00:01:02.130 --> 00:01:03.589
or, maybe, some
type of regulation.

00:01:03.589 --> 00:01:05.004
I don't want to
advocate anything.

00:01:05.004 --> 00:01:07.330
I just want to give, maybe,
a framework for thinking

00:01:07.330 --> 00:01:08.230
about it.

00:01:08.230 --> 00:01:10.500
So you ask any capitalist,
including myself, you

00:01:10.500 --> 00:01:12.870
say, well, what's
good about capitalism?

00:01:12.870 --> 00:01:15.200
And I would say,
well, you know it

00:01:15.200 --> 00:01:16.950
aligns everyone's incentives.

00:01:16.950 --> 00:01:20.180
So it's good incentives.

00:01:20.180 --> 00:01:23.000
If you work harder,
you can earn more,

00:01:23.000 --> 00:01:25.770
you can generate a
capital for yourself.

00:01:25.770 --> 00:01:27.970
You can use that to improve
your standard of living.

00:01:27.970 --> 00:01:29.990
You can reinvest that capital.

00:01:29.990 --> 00:01:31.840
So it's a good
incentive structure.

00:01:31.840 --> 00:01:34.510
I'm not saying that
everyone is motivated purely

00:01:34.510 --> 00:01:35.840
by the desire to earn.

00:01:35.840 --> 00:01:40.140
I think there's plenty of people
in the world who are motivated

00:01:40.140 --> 00:01:44.140
for the desire for social
good, for elevating mankind.

00:01:44.140 --> 00:01:48.780
But the general census
in a lot of parts of--

00:01:48.780 --> 00:01:51.860
is that those type of things
are specific to certain domains.

00:01:51.860 --> 00:01:55.000
But, in other domains, if
someone's running a trucking

00:01:55.000 --> 00:01:58.340
company, it's not clear that
someone would run a trucking

00:01:58.340 --> 00:02:01.000
company optimally just
for the good of mankind.

00:02:01.000 --> 00:02:03.360
Maybe they would run some
type of nonprofit that way.

00:02:03.360 --> 00:02:06.150
But a trucking
company, or a farm,

00:02:06.150 --> 00:02:07.640
or something like
that, who knows.

00:02:07.640 --> 00:02:10.919
So in general, you have a
good incentive structure.

00:02:10.919 --> 00:02:13.630
There's also this notion
in a capitalist economy

00:02:13.630 --> 00:02:15.710
that it's a meritocracy.

00:02:15.710 --> 00:02:17.950
It is meritocracy.

00:02:17.950 --> 00:02:21.030
And I'm going to,
actually, put a box

00:02:21.030 --> 00:02:23.160
around this because a
meritocracy, in my mind,

00:02:23.160 --> 00:02:24.630
is super duper important.

00:02:24.630 --> 00:02:26.840
Because even if you talk
to us-- almost everyone

00:02:26.840 --> 00:02:28.260
is a fan of a meritocracy.

00:02:28.260 --> 00:02:30.360
Even the communists were
a fan of a meritocracy.

00:02:30.360 --> 00:02:32.520
They would give exams
to people and have

00:02:32.520 --> 00:02:34.650
the people who were
successful have

00:02:34.650 --> 00:02:37.680
more authority within
the communist regime.

00:02:37.680 --> 00:02:41.450
So a meritocracy is something
that everyone lays claim to.

00:02:41.450 --> 00:02:43.720
And actually a lot of
socialists or communists

00:02:43.720 --> 00:02:47.190
would claim that extreme forms
of capitalism, when the wealth

00:02:47.190 --> 00:02:49.900
disparity becomes two extreme
or where you have inherited

00:02:49.900 --> 00:02:53.700
wealth, actually goes against
the idea of meritocracy.

00:02:53.700 --> 00:02:59.930
So let me actually put
meritocracy here as well.

00:02:59.930 --> 00:03:02.420
And we'll talk about
that in a second.

00:03:02.420 --> 00:03:04.690
And then the other
ideas is that you

00:03:04.690 --> 00:03:08.120
have innovation in capitalism.

00:03:08.120 --> 00:03:11.370
And these are all related ideas.

00:03:11.370 --> 00:03:14.580
That if the incentives
are good, if capital

00:03:14.580 --> 00:03:17.730
gets in the hands of people
who are most deserving of it

00:03:17.730 --> 00:03:20.400
because they've somehow earned
it, they've somehow innovated,

00:03:20.400 --> 00:03:22.775
that can also lead to innovation
because the right people

00:03:22.775 --> 00:03:25.760
are handling the capital.

00:03:25.760 --> 00:03:29.770
Now, if we go to the
socialist side of things,

00:03:29.770 --> 00:03:33.280
they'll say, well, look, there's
a social cohesiveness to this.

00:03:33.280 --> 00:03:34.780
So let me write this down.

00:03:34.780 --> 00:03:37.096
And I won't speak
to the-- I don't

00:03:37.096 --> 00:03:39.470
claim what I'm going to do in
this video is comprehensive

00:03:39.470 --> 00:03:41.070
of all of the pros
and cons of either.

00:03:41.070 --> 00:03:44.660
I just want to give a little
bit of nuance to the discussion.

00:03:44.660 --> 00:03:46.470
So social cohesiveness.

00:03:46.470 --> 00:03:49.050
You won't have this
situation where

00:03:49.050 --> 00:03:52.590
you have a gazillionaire
sitting behind a walled compound

00:03:52.590 --> 00:03:54.090
with armed guards
and their people

00:03:54.090 --> 00:03:57.520
right on the other side of
that walled compound starving

00:03:57.520 --> 00:03:58.182
to death.

00:03:58.182 --> 00:03:59.890
And these people don't
even, necessarily,

00:03:59.890 --> 00:04:03.460
view themselves as part
of the same society,

00:04:03.460 --> 00:04:06.360
that they somehow have a
responsibility to each other.

00:04:06.360 --> 00:04:09.310
And that is happening in
some parts of the world

00:04:09.310 --> 00:04:11.600
where you have severe
disparities in wealth.

00:04:11.600 --> 00:04:13.370
The rich people don't
even view themselves

00:04:13.370 --> 00:04:18.360
as the same species as the
poor people or even vice versa.

00:04:18.360 --> 00:04:21.120
You have the other
idea of-- and I'll

00:04:21.120 --> 00:04:25.850
put this in quotes-- fairness.

00:04:25.850 --> 00:04:28.350
And I'll put it in quotes
because one could say,

00:04:28.350 --> 00:04:31.627
well, it's fair if you make
more, if you work harder,

00:04:31.627 --> 00:04:32.460
you should get more.

00:04:32.460 --> 00:04:34.355
If you innovate more,
you should get more.

00:04:34.355 --> 00:04:35.730
And then their
notion of fairness

00:04:35.730 --> 00:04:38.070
says, well, yeah, but look
sometimes this wealth gets

00:04:38.070 --> 00:04:39.819
so extreme. sometimes
you have this notion

00:04:39.819 --> 00:04:40.770
of inherited wealth.

00:04:40.770 --> 00:04:42.270
Generation after generation.

00:04:42.270 --> 00:04:43.190
Old money.

00:04:43.190 --> 00:04:44.504
What's fair about that?

00:04:44.504 --> 00:04:45.920
That people are
just randomly born

00:04:45.920 --> 00:04:48.906
into a situation where they can
just extract the interest off

00:04:48.906 --> 00:04:50.530
of their wealth and
never have to work.

00:04:50.530 --> 00:04:52.720
And other people have
to work super hard

00:04:52.720 --> 00:04:54.920
and they really
get nothing for it.

00:04:54.920 --> 00:04:58.160
So this notion of fairness,
I'll put it over here as well.

00:04:58.160 --> 00:04:59.500
Fairness.

00:04:59.500 --> 00:05:02.690
Because there's
arguments for either.

00:05:02.690 --> 00:05:04.410
And so, like I
said, I'm definitely

00:05:04.410 --> 00:05:06.910
biased to the capitalist
side of things.

00:05:06.910 --> 00:05:10.860
I think there is an
importance to these things

00:05:10.860 --> 00:05:12.480
that we have on the
right hand side.

00:05:12.480 --> 00:05:14.250
But the reality,
at least what we've

00:05:14.250 --> 00:05:17.530
seen in the economic
experiments of the 20th century,

00:05:17.530 --> 00:05:22.760
is that even though communists
and socialists might speak

00:05:22.760 --> 00:05:26.760
to these types of
things, to a large degree

00:05:26.760 --> 00:05:29.160
there's less social
cohesiveness.

00:05:29.160 --> 00:05:31.650
The senior communists
in the Soviet Union

00:05:31.650 --> 00:05:33.260
would drive fancier cars.

00:05:33.260 --> 00:05:35.760
And they did have a very
different lifestyle then

00:05:35.760 --> 00:05:36.880
the workers.

00:05:36.880 --> 00:05:38.400
And they would hide
that lifestyle.

00:05:38.400 --> 00:05:41.320
And then it would lead
to a lot of hypocrisy.

00:05:41.320 --> 00:05:44.620
In general, the extreme
forms of socialism-- not

00:05:44.620 --> 00:05:46.130
clear that it was a meritocracy.

00:05:46.130 --> 00:05:48.260
It might have been just
the best people climbing up

00:05:48.260 --> 00:05:51.730
the party ladder that
get to the top as opposed

00:05:51.730 --> 00:05:53.850
to the people who would
innovate and actually

00:05:53.850 --> 00:05:55.650
produce in a better way.

00:05:55.650 --> 00:05:59.420
But with that said, I
want to give fair warning,

00:05:59.420 --> 00:06:03.980
that capitalism, if it goes
unchecked in certain ways,

00:06:03.980 --> 00:06:07.220
it could also lead to those
same problems of socialism.

00:06:07.220 --> 00:06:09.690
And the main problems
there, when you

00:06:09.690 --> 00:06:11.460
think about good incentives.

00:06:11.460 --> 00:06:13.230
I think the incentives,
and once again,

00:06:13.230 --> 00:06:15.380
I'm giving my opinion
here, the incentives

00:06:15.380 --> 00:06:18.810
work out well when you
have a bunch of competitors

00:06:18.810 --> 00:06:22.150
who can compete and innovate.

00:06:22.150 --> 00:06:24.400
And it makes complete
sense that, let's say,

00:06:24.400 --> 00:06:27.000
that this person comes
up with an innovation.

00:06:27.000 --> 00:06:28.670
And because they
have that innovation,

00:06:28.670 --> 00:06:32.980
they're able to provide a better
good that's cheaper to society.

00:06:32.980 --> 00:06:34.230
And so they make more profits.

00:06:34.230 --> 00:06:36.370
And it seems
reasonable that person

00:06:36.370 --> 00:06:39.050
should get more profits,
and more wealth, and grow.

00:06:39.050 --> 00:06:40.910
And it could even
be good for society

00:06:40.910 --> 00:06:42.380
because this person's
an innovator.

00:06:42.380 --> 00:06:44.630
Maybe there was an
element of luck there.

00:06:44.630 --> 00:06:47.160
But it seems like they're
competent at managing

00:06:47.160 --> 00:06:48.070
these resources.

00:06:48.070 --> 00:06:51.600
So it's good for society to give
them more resources to manage.

00:06:55.210 --> 00:06:58.380
The areas where it becomes
less clear that capitalism

00:06:58.380 --> 00:07:01.540
is unambiguously
good, is a situation

00:07:01.540 --> 00:07:04.090
where this person becomes
out right dominate.

00:07:04.090 --> 00:07:08.537
So let's say that this person
becomes so big that none

00:07:08.537 --> 00:07:10.620
of these other players can
even compete with them.

00:07:10.620 --> 00:07:11.536
So they all disappear.

00:07:11.536 --> 00:07:13.670
This person can just
undercut everybody.

00:07:13.670 --> 00:07:16.160
And all the other
players disappear.

00:07:16.160 --> 00:07:19.140
And this is the
situation of a monopoly.

00:07:19.140 --> 00:07:23.385
And the problem here is,
when this guy had competition

00:07:23.385 --> 00:07:25.670
he had every incentive
to work harder.

00:07:25.670 --> 00:07:27.990
He had every
incentive to innovate.

00:07:27.990 --> 00:07:30.720
It was a meritocracy because
the person who innovates well

00:07:30.720 --> 00:07:31.900
grows the fastest.

00:07:31.900 --> 00:07:33.890
But once you get to
a monopoly stage,

00:07:33.890 --> 00:07:35.650
and everyone else
has died down, this

00:07:35.650 --> 00:07:39.580
is the only player in the
economy, then all of a sudden,

00:07:39.580 --> 00:07:41.170
he has no incentive to innovate.

00:07:41.170 --> 00:07:46.050
This corporation or this person
can just keep raising prices.

00:07:46.050 --> 00:07:47.060
There's no competition.

00:07:47.060 --> 00:07:48.935
There's no one else to say,
hey, I can have a better product

00:07:48.935 --> 00:07:50.640
or I can sell it to you cheaper.

00:07:50.640 --> 00:07:53.246
And so it actually goes against
the ideas of innovation.

00:07:53.246 --> 00:07:54.620
That's why it's
really important.

00:07:54.620 --> 00:07:56.828
And that's why it's part
of, especially in the United

00:07:56.828 --> 00:08:02.740
States, the economic system that
you try to break up monopolies.

00:08:02.740 --> 00:08:06.634
That you don't like
monopolistic practices.

00:08:06.634 --> 00:08:08.050
The other risks
that you have when

00:08:08.050 --> 00:08:11.700
you start having a lot of
wealth and a lot of influence

00:08:11.700 --> 00:08:15.470
in one entity, or one
person, or one corporation--

00:08:15.470 --> 00:08:18.490
and this can happen in a
democratic or even a non

00:08:18.490 --> 00:08:21.940
democratic regime-- is that,
the control of resources

00:08:21.940 --> 00:08:23.630
aren't just control
of those resources.

00:08:23.630 --> 00:08:26.320
Aren't just control of land,
and buildings, and railroads.

00:08:26.320 --> 00:08:28.194
They can also use it to
influence government.

00:08:32.090 --> 00:08:33.510
And in the United
States, this has

00:08:33.510 --> 00:08:37.010
been institutionalized
in the form of lobbying.

00:08:37.010 --> 00:08:39.090
And when you have
excess resources

00:08:39.090 --> 00:08:41.840
and you can influence
government in this way,

00:08:41.840 --> 00:08:43.919
you can get the
government-- so let's say

00:08:43.919 --> 00:08:47.490
this is the government
over here-- to,

00:08:47.490 --> 00:08:49.410
essentially, do things for you.

00:08:49.410 --> 00:08:50.660
So it works to your advantage.

00:08:50.660 --> 00:08:52.160
And may be allowing
you, eventually,

00:08:52.160 --> 00:08:53.800
to become a monopoly.

00:08:53.800 --> 00:08:55.940
So you can view this
as crony capitalism,

00:08:55.940 --> 00:09:01.569
where lobbying can be a
form of legalized bribery.

00:09:01.569 --> 00:09:03.860
And in that way, you kind of
own the elected officials.

00:09:03.860 --> 00:09:05.370
I'm not saying that this
is happening everywhere

00:09:05.370 --> 00:09:06.180
but it could happen.

00:09:06.180 --> 00:09:08.096
And in that situation,
you have the government

00:09:08.096 --> 00:09:09.280
acting on behalf of these.

00:09:09.280 --> 00:09:11.880
And, once again, it goes against
the idea of a meritocracy

00:09:11.880 --> 00:09:13.940
because when you have
this cycle developing,

00:09:13.940 --> 00:09:17.300
maybe this person right over
here has the innovation.

00:09:17.300 --> 00:09:19.300
But this person
doesn't have the clout,

00:09:19.300 --> 00:09:21.750
doesn't have the influence
with the government.

00:09:21.750 --> 00:09:23.710
And so this guy gets
the government contract

00:09:23.710 --> 00:09:24.400
for the planes.

00:09:24.400 --> 00:09:28.190
Or this guy gets the tax
benefits from the government

00:09:28.190 --> 00:09:30.370
so that he can be
even more competitive.

00:09:30.370 --> 00:09:33.640
He can undercut this
guy even though this guy

00:09:33.640 --> 00:09:34.824
has the innovation.

00:09:34.824 --> 00:09:37.240
The other element-- and I could
talk about this for hours.

00:09:37.240 --> 00:09:38.240
And these are just
things to think

00:09:38.240 --> 00:09:40.350
about-- are the idea
of inherited wealth.

00:09:40.350 --> 00:09:42.160
And I'm not saying
that inherited wealth

00:09:42.160 --> 00:09:44.450
is a bad thing.

00:09:44.450 --> 00:09:47.300
But there's this idea
that, let's say, someone

00:09:47.300 --> 00:09:49.460
through their competence,
maybe competence

00:09:49.460 --> 00:09:52.111
with a little bit of
luck, is able to accrue

00:09:52.111 --> 00:09:53.110
a huge amount of wealth.

00:09:53.110 --> 00:09:54.870
And maybe they're not
even a monopolist.

00:09:54.870 --> 00:09:57.890
But they're able to get
a huge amount of wealth.

00:09:57.890 --> 00:10:01.070
But they were able to do
it-- that they're really

00:10:01.070 --> 00:10:02.140
good managers.

00:10:02.140 --> 00:10:05.090
They're kind of these
really smart dude.

00:10:05.090 --> 00:10:08.730
He can he can really manage
a lot of resources well.

00:10:08.730 --> 00:10:10.460
The question arises
is, what happens

00:10:10.460 --> 00:10:12.530
when this person passes away?

00:10:12.530 --> 00:10:15.400
In a very purely
capitalist situation,

00:10:15.400 --> 00:10:19.760
you pass this onto
your children.

00:10:19.760 --> 00:10:22.130
So you pass this
onto your children.

00:10:22.130 --> 00:10:26.560
And the issue here is, one, what
did this person do to earn it?

00:10:26.560 --> 00:10:29.950
And also from a society's
point of view, maybe

00:10:29.950 --> 00:10:31.130
this person here is a dummy.

00:10:31.130 --> 00:10:35.660
Maybe there was
another kid over here

00:10:35.660 --> 00:10:40.520
who was born at the exact
same time, who is way smarter

00:10:40.520 --> 00:10:45.110
and who-- but this kid is now
in control over 100 gazillion

00:10:45.110 --> 00:10:45.800
dollars.

00:10:45.800 --> 00:10:48.270
And he can completely
mismanage the resources

00:10:48.270 --> 00:10:50.160
so that they're
completely wasted.

00:10:50.160 --> 00:10:53.610
And so you have this idea
of-- over time-- inherited

00:10:53.610 --> 00:10:55.810
wealth in a
capitalist society can

00:10:55.810 --> 00:10:58.530
go against the ideas
of meritocracy.

00:10:58.530 --> 00:11:00.940
It can go against the
idea of good incentives

00:11:00.940 --> 00:11:03.910
because if this guy
inherits enough money,

00:11:03.910 --> 00:11:05.320
he has no incentive to work.

00:11:05.320 --> 00:11:09.350
Why should he have to study
hard and go and tackle

00:11:09.350 --> 00:11:10.360
math and all that?

00:11:10.360 --> 00:11:11.990
He's inherited
enough money that he

00:11:11.990 --> 00:11:15.470
gets millions of dollars
just off of the interest.

00:11:15.470 --> 00:11:17.510
Why should he educate himself?

00:11:17.510 --> 00:11:19.297
He got daddy's or
granddad's money.

00:11:19.297 --> 00:11:21.505
And so it also goes against
the idea-- and why should

00:11:21.505 --> 00:11:22.296
he try to innovate?

00:11:22.296 --> 00:11:24.056
Why should he ever do anything?

00:11:24.056 --> 00:11:25.930
He could maybe just hire
some of these people

00:11:25.930 --> 00:11:28.790
and give them a minimum
salary, whatever it takes.

00:11:28.790 --> 00:11:31.780
And so it goes against these
ideas of fairness and all that.

00:11:31.780 --> 00:11:33.780
And I'm not saying that
I'm against inheritance.

00:11:33.780 --> 00:11:35.390
I'm just saying this is
something to think about.

00:11:35.390 --> 00:11:37.820
And there's some, probably,
threshold of inheritance

00:11:37.820 --> 00:11:41.370
that it starts to undermine
some of these ideas

00:11:41.370 --> 00:11:44.160
of a meritocracy, and good
incentives, and fairness,

00:11:44.160 --> 00:11:44.720
and all that.

00:11:44.720 --> 00:11:46.095
And that's why I
think it's funny

00:11:46.095 --> 00:11:51.150
when people who call themselves
"old money" are proud of it.

00:11:51.150 --> 00:11:52.770
They view themselves
as, somehow,

00:11:52.770 --> 00:11:55.310
being part of a better caste
because "old money" means

00:11:55.310 --> 00:11:57.350
that you did not earn
the money yourself.

00:11:57.350 --> 00:12:00.650
That your granddad or you're
great grandad earned the money.

00:12:00.650 --> 00:12:04.140
And you've just happened to be
born in this family and are,

00:12:04.140 --> 00:12:06.280
essentially, just living
off of the interest.

00:12:06.280 --> 00:12:08.930
And it's funny because
they'll talk about "new money"

00:12:08.930 --> 00:12:11.924
as if they're not as
good as old money.

00:12:11.924 --> 00:12:13.590
But at least in new
money people-- maybe

00:12:13.590 --> 00:12:15.280
it was through
luck, but maybe it

00:12:15.280 --> 00:12:18.210
was through competence or
innovation-- this is something

00:12:18.210 --> 00:12:20.730
that, at least in my mind,
I'd respect more than old.

00:12:20.730 --> 00:12:22.410
Old money, you've done nothing.

00:12:22.410 --> 00:12:24.120
What's the difference
between old money,

00:12:24.120 --> 00:12:27.760
or a king and a queen, or
the aristocracy of Europe,

00:12:27.760 --> 00:12:31.520
that goes against a lot of the
philosophical underpinnings

00:12:31.520 --> 00:12:33.780
of what the United
States is even based on.

00:12:33.780 --> 00:12:34.780
So I'll leave you there.

00:12:34.780 --> 00:12:36.210
I just want to add a
little bit of a nuance

00:12:36.210 --> 00:12:37.043
to the conversation.

00:12:37.043 --> 00:12:38.590
And I will say--
I'll say it again--

00:12:38.590 --> 00:12:42.910
I come to this conversation
with a capitalist bias.

00:12:42.910 --> 00:12:44.610
But I'm hoping
that this gives you

00:12:44.610 --> 00:12:45.950
a little bit of more nuance.

00:12:45.950 --> 00:12:47.850
So that instead of
saying, capitalism

00:12:47.850 --> 00:12:49.830
is an unambiguous
good and socialism

00:12:49.830 --> 00:12:52.180
is an unambiguous bad,
these are the things

00:12:52.180 --> 00:12:55.120
that we should try to promote.

00:12:55.120 --> 00:12:57.370
And to do that, we do
have to do some things,

00:12:57.370 --> 00:12:59.440
like make sure that
everyone is educated

00:12:59.440 --> 00:13:01.320
so that we can
have a meritocracy.

00:13:01.320 --> 00:13:05.270
If everyone is educated, then
you have a level playing field.

00:13:05.270 --> 00:13:07.240
You have this notion
of equal opportunity.

00:13:07.240 --> 00:13:10.940
And that does involve some
type of, on some scale,

00:13:10.940 --> 00:13:14.390
redistribution of-- at least
in the form of education.

00:13:14.390 --> 00:13:19.210
Maybe you do need some way
for people to get health care.

00:13:19.210 --> 00:13:21.060
You don't want people
dying in the streets.

00:13:21.060 --> 00:13:22.080
I'm not going to
take a stance here,

00:13:22.080 --> 00:13:23.980
but I'm just showing
you that you can't just,

00:13:23.980 --> 00:13:26.040
even though I do consider
myself a capitalist,

00:13:26.040 --> 00:13:27.960
you can't just say
that everything

00:13:27.960 --> 00:13:29.600
has to be purely
capitalist and you

00:13:29.600 --> 00:13:32.240
can't have any notion of
government intervention.

00:13:32.240 --> 00:13:35.640
You maybe want the
government to invest

00:13:35.640 --> 00:13:37.380
in things like
long-term research.

00:13:37.380 --> 00:13:39.400
Where they don't have
an immediate profit

00:13:39.400 --> 00:13:42.220
motive, but 50, 100
years down the future

00:13:42.220 --> 00:13:45.520
it might allow the society
to thrive or whatever else.

00:13:45.520 --> 00:13:48.280
So I'll leave you there.


Communism

WEBVTT
Kind: captions
Language: en

00:00:00.570 --> 00:00:02.450
Thought I would do
a video on communism

00:00:02.450 --> 00:00:05.430
just because I've been talking
about it a bunch in the history

00:00:05.430 --> 00:00:09.006
videos, and I haven't given
you a good definition of what

00:00:09.006 --> 00:00:11.130
it means, or a good
understanding of what it means.

00:00:11.130 --> 00:00:12.370
And to understand
communism-- let

00:00:12.370 --> 00:00:13.580
me just draw a spectrum here.

00:00:13.580 --> 00:00:15.820
So I'm going to start
with capitalism.

00:00:15.820 --> 00:00:17.820
And this is really just
going to be an overview.

00:00:17.820 --> 00:00:21.630
People can do a whole PhD
thesis on this type of thing.

00:00:21.630 --> 00:00:24.800
Capitalism, and then I'll
get a little bit more--

00:00:24.800 --> 00:00:28.710
and then we could
progress to socialism.

00:00:28.710 --> 00:00:30.480
And then we can go to communism.

00:00:30.480 --> 00:00:33.230
And the modern
versions of communism

00:00:33.230 --> 00:00:35.630
are really kind
of the brainchild

00:00:35.630 --> 00:00:37.680
of Karl Marx and Vladimir Lenin.

00:00:37.680 --> 00:00:39.620
Karl Marx was a
German philosopher

00:00:39.620 --> 00:00:43.110
in the 1800s, who, in his
Communist Manifesto and other

00:00:43.110 --> 00:00:46.680
writings, kind of created the
philosophical underpinnings

00:00:46.680 --> 00:00:47.900
for communism.

00:00:47.900 --> 00:00:51.580
And Vladimir Lenin, who led
the Bolshevik Revolution

00:00:51.580 --> 00:00:54.710
in the-- and created,
essentially, the Soviet Union--

00:00:54.710 --> 00:00:58.710
he's the first person to make
some of Karl Marx's ideas

00:00:58.710 --> 00:00:59.770
more concrete.

00:00:59.770 --> 00:01:03.030
And really every
nation or every country

00:01:03.030 --> 00:01:04.670
which we view as
communist has really

00:01:04.670 --> 00:01:07.077
followed the pattern
of Vladimir Lenin.

00:01:07.077 --> 00:01:08.660
And we'll talk about
that in a second.

00:01:08.660 --> 00:01:11.200
But first, let's talk about
the philosophical differences

00:01:11.200 --> 00:01:13.230
between these things,
and how you would move.

00:01:13.230 --> 00:01:16.420
And Karl Marx himself
viewed communism

00:01:16.420 --> 00:01:20.040
as kind of a progression
from capitalism

00:01:20.040 --> 00:01:22.480
through socialism to communism.

00:01:22.480 --> 00:01:25.930
So what he saw in capitalism--
and at least this part

00:01:25.930 --> 00:01:28.550
of what he saw was
right-- is that you

00:01:28.550 --> 00:01:32.590
have private property,
private ownership of land.

00:01:32.590 --> 00:01:34.780
That's the main
aspect of capitalism.

00:01:34.780 --> 00:01:38.300
And this is the world that
most of us live in today.

00:01:38.300 --> 00:01:40.820
The problem that he
saw with capitalism

00:01:40.820 --> 00:01:42.750
is he thought,
well, look, when you

00:01:42.750 --> 00:01:46.220
have private property, the
people who start accumulating

00:01:46.220 --> 00:01:48.590
some capital-- and when
we talk about capital,

00:01:48.590 --> 00:01:51.010
we could be talking
about land, we

00:01:51.010 --> 00:01:53.180
could be talking
about factories,

00:01:53.180 --> 00:01:55.750
we could be talking about any
type of natural resources--

00:01:55.750 --> 00:01:58.500
so the people who start
getting a little bit of them--

00:01:58.500 --> 00:02:00.130
so let me draw a
little diagram here.

00:02:00.130 --> 00:02:03.990
So let's say someone has
a little bit of capital.

00:02:03.990 --> 00:02:07.090
And that capital could be a
factory, or it could be land.

00:02:07.090 --> 00:02:08.740
So let me write it.

00:02:08.740 --> 00:02:10.030
Capital.

00:02:10.030 --> 00:02:11.410
And let's just say it's land.

00:02:11.410 --> 00:02:14.170
So let's say someone starts
to own a little bit of land.

00:02:14.170 --> 00:02:16.290
And he owns more
than everyone else.

00:02:16.290 --> 00:02:18.630
So then you just have
a bunch of other people

00:02:18.630 --> 00:02:20.762
who don't own land.

00:02:20.762 --> 00:02:22.720
But they need, essentially--
and since this guy

00:02:22.720 --> 00:02:25.365
owns all the land, they've got
to work on this guy's land.

00:02:25.365 --> 00:02:28.130
They have to work
on this guy's land.

00:02:28.130 --> 00:02:31.690
And from Karl Marx's point
of view, he said, look,

00:02:31.690 --> 00:02:35.140
you have all of these laborers
who don't have as much capital.

00:02:35.140 --> 00:02:37.120
This guy has this capital.

00:02:37.120 --> 00:02:39.520
And so he can make
these laborers work

00:02:39.520 --> 00:02:42.740
for a very small wage.

00:02:42.740 --> 00:02:45.400
And so any excess
profits that come out

00:02:45.400 --> 00:02:48.532
from this arrangement,
the owner of the capital

00:02:48.532 --> 00:02:49.490
will be able to get it.

00:02:49.490 --> 00:02:52.560
Because these laborers
won't be able to get

00:02:52.560 --> 00:02:53.560
their wages to go up.

00:02:53.560 --> 00:02:56.720
Because there's so much
competition for them

00:02:56.720 --> 00:02:59.597
to work on this guy's farm or
to work on this guy's land.

00:02:59.597 --> 00:03:01.430
He really didn't think
too much about, well,

00:03:01.430 --> 00:03:04.662
maybe the competition
could go the other way.

00:03:04.662 --> 00:03:06.620
Maybe you could have a
reality eventually where

00:03:06.620 --> 00:03:10.090
you have a bunch of people with
reasonable amounts of capital,

00:03:10.090 --> 00:03:12.580
and you have a
bunch of laborers.

00:03:12.580 --> 00:03:15.900
And the bunch of people would
compete for the laborers,

00:03:15.900 --> 00:03:19.760
and maybe the laborers could
make their wages go up,

00:03:19.760 --> 00:03:22.649
and they could eventually
accumulate their own capital.

00:03:22.649 --> 00:03:24.940
They could eventually start
their own small businesses.

00:03:24.940 --> 00:03:26.773
So he really didn't
think about this reality

00:03:26.773 --> 00:03:27.770
too much over here.

00:03:27.770 --> 00:03:28.840
He just saw this reality.

00:03:28.840 --> 00:03:31.224
And to his defense--
and I don't want

00:03:31.224 --> 00:03:33.140
to get in the habit of
defending Karl Marx too

00:03:33.140 --> 00:03:36.990
much-- to his
defense, this is what

00:03:36.990 --> 00:03:39.290
was happening in the
late 1800s, especially--

00:03:39.290 --> 00:03:41.010
we have the
Industrial Revolution.

00:03:41.010 --> 00:03:42.750
Even in the United
States, you did

00:03:42.750 --> 00:03:45.310
have kind of-- Mark Twain
called it the Gilded Age.

00:03:45.310 --> 00:03:47.600
You have these
industrialists who

00:03:47.600 --> 00:03:50.070
did accumulate huge
amounts of capital.

00:03:50.070 --> 00:03:51.830
They really did have
a lot of the leverage

00:03:51.830 --> 00:03:53.860
relative to the laborers.

00:03:53.860 --> 00:03:55.870
And so what Karl Marx
says, well, look,

00:03:55.870 --> 00:03:58.450
if the guy with all the
capital has all the leverage,

00:03:58.450 --> 00:04:00.471
and this whole arrangement
makes some profits,

00:04:00.471 --> 00:04:02.220
he's going to be able
to keep the profits.

00:04:02.220 --> 00:04:05.020
Because he can keep all
of these dudes' wages low.

00:04:05.020 --> 00:04:07.710
And so what's going to happen
is that the guy with the capital

00:04:07.710 --> 00:04:11.650
is just going to end
up with more capital.

00:04:11.650 --> 00:04:13.820
And he's going to have
even more leverage.

00:04:13.820 --> 00:04:17.500
And he'll be able to keep these
people on kind of a basic wage,

00:04:17.500 --> 00:04:20.779
so that they can never acquire
capital for themselves.

00:04:20.779 --> 00:04:23.610
So in Karl Marx's point of
view, the natural progression

00:04:23.610 --> 00:04:26.870
would be for these people
to start organizing.

00:04:26.870 --> 00:04:30.070
So these people maybe start
organizing into unions.

00:04:30.070 --> 00:04:33.620
So they could collectively
tell the person who

00:04:33.620 --> 00:04:36.460
owns the land or the factory,
no, we're not going to work,

00:04:36.460 --> 00:04:39.650
or we're going to go on strike
unless you increase our wages,

00:04:39.650 --> 00:04:42.910
or unless you give us
better working conditions.

00:04:42.910 --> 00:04:45.390
So when you start talking
about this unionization stuff,

00:04:45.390 --> 00:04:48.350
you're starting to move in
the direction of socialism.

00:04:48.350 --> 00:04:52.010
The other element of moving
in the direction of socialism

00:04:52.010 --> 00:04:54.970
is that Karl Marx
didn't like this kind

00:04:54.970 --> 00:04:57.900
of high concentration-- or
this is socialists in general,

00:04:57.900 --> 00:05:00.810
I should say-- didn't like this
high concentration of wealth.

00:05:00.810 --> 00:05:03.630
That you have this
reality of not only

00:05:03.630 --> 00:05:06.110
do you have these people
who could accumulate all

00:05:06.110 --> 00:05:08.000
of this wealth-- and
maybe, to some degree,

00:05:08.000 --> 00:05:10.541
they were able to accumulate it
because they were innovative,

00:05:10.541 --> 00:05:12.500
or they were good
managers of land,

00:05:12.500 --> 00:05:14.630
or whatever, although
the Marxists don't

00:05:14.630 --> 00:05:16.727
give a lot of credit to
the owners of capital.

00:05:16.727 --> 00:05:18.310
They don't really
give a lot of credit

00:05:18.310 --> 00:05:20.476
to saying maybe they did
have some skill in managing

00:05:20.476 --> 00:05:22.060
some type of an operation.

00:05:22.060 --> 00:05:24.530
But the other problem is is
that it gets handed over.

00:05:24.530 --> 00:05:27.110
It gets handed over
to their offspring.

00:05:27.110 --> 00:05:30.200
So private property, you have
this situation where it just

00:05:30.200 --> 00:05:34.630
goes from maybe father to son,
or from parent to a child.

00:05:34.630 --> 00:05:37.020
And so it's not even based
on any type of meritocracy.

00:05:37.020 --> 00:05:39.630
It's really just based
on this inherited wealth.

00:05:39.630 --> 00:05:43.720
And this is a problem that
definitely happened in Europe.

00:05:43.720 --> 00:05:45.730
When you go back to
the French Revolution,

00:05:45.730 --> 00:05:48.560
you have generation after
generation of nobility,

00:05:48.560 --> 00:05:52.720
regardless of how incompetent
each generation would

00:05:52.720 --> 00:05:55.824
be, they just had so much wealth
that they were essentially

00:05:55.824 --> 00:05:56.865
in control of everything.

00:05:56.865 --> 00:05:59.730
And you had a bunch of
people with no wealth

00:05:59.730 --> 00:06:00.830
having to work for them.

00:06:00.830 --> 00:06:02.829
And when you have that
type of wealth disparity,

00:06:02.829 --> 00:06:05.090
it does lead to revolutions.

00:06:05.090 --> 00:06:07.920
So another principle of moving
in the socialist direction

00:06:07.920 --> 00:06:10.320
is kind of a
redistribution of wealth.

00:06:10.320 --> 00:06:11.570
So let me write it over here.

00:06:11.570 --> 00:06:12.320
So redistribution.

00:06:16.400 --> 00:06:20.030
So in socialism, you can
still have private property.

00:06:20.030 --> 00:06:23.467
But the government
takes a bigger role.

00:06:23.467 --> 00:06:24.800
So you have-- let me write this.

00:06:24.800 --> 00:06:27.787
Larger government.

00:06:27.787 --> 00:06:29.370
And one of the roles
of the government

00:06:29.370 --> 00:06:30.760
is to redistribute wealth.

00:06:30.760 --> 00:06:33.380
And the government
also starts having

00:06:33.380 --> 00:06:37.010
control of the major
factors of production.

00:06:37.010 --> 00:06:39.320
So maybe the
utilities, maybe some

00:06:39.320 --> 00:06:42.810
of the large factories that do
major things, all of a sudden

00:06:42.810 --> 00:06:45.390
starts to become in the
hands of the government,

00:06:45.390 --> 00:06:49.490
or in the words of communists,
in the hands of the people.

00:06:49.490 --> 00:06:51.170
And the redistribution
is going on,

00:06:51.170 --> 00:06:54.540
so in theory, you don't
have huge amounts of wealth

00:06:54.540 --> 00:06:57.920
in the hands of a few people.

00:06:57.920 --> 00:07:00.920
And then you keep-- if
you take these ideas

00:07:00.920 --> 00:07:03.020
to their natural
conclusion, you get

00:07:03.020 --> 00:07:05.980
to the theoretical
communist state.

00:07:05.980 --> 00:07:07.950
And the theoretical
communist state

00:07:07.950 --> 00:07:12.900
is a classless, and
maybe even a little bit--

00:07:12.900 --> 00:07:16.230
a classless society, and in Karl
Marx's point of view-- and this

00:07:16.230 --> 00:07:18.485
is a little harder to
imagine-- a stateless society.

00:07:21.080 --> 00:07:23.820
So in capitalism, you
definitely had classes.

00:07:23.820 --> 00:07:28.096
You had the class
that owns the capital,

00:07:28.096 --> 00:07:29.470
and then you had
the labor class,

00:07:29.470 --> 00:07:30.710
and you have all
of these divisions,

00:07:30.710 --> 00:07:32.293
and they're different
from each other.

00:07:32.293 --> 00:07:35.830
He didn't really imagine a
world that maybe a laborer could

00:07:35.830 --> 00:07:38.060
get out of this, they could
get their own capital,

00:07:38.060 --> 00:07:40.210
then maybe they could
start their own business.

00:07:40.210 --> 00:07:43.790
So he just saw this tension
would eventually to socialism,

00:07:43.790 --> 00:07:45.970
and eventually a
classless society where

00:07:45.970 --> 00:07:48.220
you have a central--
Well, he didn't even

00:07:48.220 --> 00:07:52.390
go too much into the details
but you have kind of equal,

00:07:52.390 --> 00:07:55.340
everyone in society has
ownership over everything,

00:07:55.340 --> 00:07:57.770
and society somehow
figures out where

00:07:57.770 --> 00:08:00.170
things should be allocated,
and all of the rest.

00:08:00.170 --> 00:08:01.790
And it's all stateless.

00:08:01.790 --> 00:08:05.510
And that's even harder to think
about in a concrete fashion.

00:08:05.510 --> 00:08:07.710
So that's Karl Marx's
view of things.

00:08:07.710 --> 00:08:09.810
But it never really
became concrete

00:08:09.810 --> 00:08:12.400
until Vladimir Lenin shows up.

00:08:12.400 --> 00:08:14.450
And so the current
version of communism

00:08:14.450 --> 00:08:18.190
that we-- The current thing that
most of us view as communism

00:08:18.190 --> 00:08:25.350
is sometimes viewed as a
Marxist-Leninist state.

00:08:25.350 --> 00:08:28.080
These are sometimes
used interchangeably.

00:08:28.080 --> 00:08:31.380
Marxism is kind of the pure,
utopian, we're eventually

00:08:31.380 --> 00:08:35.500
going to get to a world
where everyone is equal,

00:08:35.500 --> 00:08:38.390
everyone is doing
exactly what they want,

00:08:38.390 --> 00:08:40.409
there's an abundance
of everything.

00:08:40.409 --> 00:08:42.042
I guess to some
degree, it's kind

00:08:42.042 --> 00:08:44.500
of describing what happens in
Star Trek, where everyone can

00:08:44.500 --> 00:08:46.322
go to a replicator and
get what they want.

00:08:46.322 --> 00:08:48.030
And if you want to
paint part of the day,

00:08:48.030 --> 00:08:50.664
you can paint part of the day,
and you're not just a painter,

00:08:50.664 --> 00:08:52.080
you can also do
whatever you want.

00:08:52.080 --> 00:08:53.992
So it's this very utopian thing.

00:08:53.992 --> 00:08:54.950
Let me write that down.

00:08:54.950 --> 00:09:00.010
So pure Marxism is kind
of a utopian society.

00:09:00.010 --> 00:09:02.400
And just in case you don't
know what utopian means,

00:09:02.400 --> 00:09:05.810
it's kind of a perfect society,
where you don't have classes,

00:09:05.810 --> 00:09:08.340
everyone is equal, everyone
is leading these kind

00:09:08.340 --> 00:09:10.970
of rich, diverse,
fulfilling lives.

00:09:10.970 --> 00:09:13.990
And it's also, utopian is also
kind of viewed as unrealistic.

00:09:13.990 --> 00:09:16.650
It's kind of, if you view it
in the more negative light, is

00:09:16.650 --> 00:09:17.840
like, hey, I don't
know how we'll ever

00:09:17.840 --> 00:09:18.540
be able to get there.

00:09:18.540 --> 00:09:19.140
Who knows?

00:09:19.140 --> 00:09:20.681
I don't want to be
negative about it.

00:09:20.681 --> 00:09:23.680
Maybe we will one day
get to a utopian society.

00:09:23.680 --> 00:09:27.370
But Leninist is kind of the more
practical element of communism.

00:09:27.370 --> 00:09:30.790
Because obviously, after the
Bolshevik Revolution, 1917,

00:09:30.790 --> 00:09:33.300
in the Russian Empire, the
Soviet Union gets created,

00:09:33.300 --> 00:09:35.200
they have to actually
run a government.

00:09:35.200 --> 00:09:36.860
They have to actually
run a state based

00:09:36.860 --> 00:09:39.810
on these ideas of communism.

00:09:39.810 --> 00:09:43.240
And in a Leninist
philosophy-- and this

00:09:43.240 --> 00:09:46.660
is where it starts to become
in tension with the ideas

00:09:46.660 --> 00:09:50.490
of democracy-- in a
Leninist philosophy,

00:09:50.490 --> 00:09:52.910
you need this kind
of a party system.

00:09:52.910 --> 00:09:55.680
So you need this-- and he
calls this the Vanguard Party.

00:09:55.680 --> 00:09:58.480
So the vanguard is kind of
the thing that's leading,

00:09:58.480 --> 00:10:00.210
the one that's
leading the march.

00:10:00.210 --> 00:10:02.490
So this Vanguard
Party that kind of

00:10:02.490 --> 00:10:05.010
creates this constant
state of revolution,

00:10:05.010 --> 00:10:10.660
and its whole job is to guide
society, is to kind of almost

00:10:10.660 --> 00:10:14.130
be the parent of society,
and take it from capitalism

00:10:14.130 --> 00:10:18.020
through socialism to this
ideal state of communism.

00:10:18.020 --> 00:10:19.710
And it's one of
those things where

00:10:19.710 --> 00:10:22.010
the ideal state of
communism was never--

00:10:22.010 --> 00:10:24.140
it's kind of hard to
know when you get there.

00:10:24.140 --> 00:10:26.490
And so what happens
in a Leninist state is

00:10:26.490 --> 00:10:29.430
it's this Vanguard Party, which
is usually called the Communist

00:10:29.430 --> 00:10:32.990
Party, is in a constant state
of revolution, kind of saying,

00:10:32.990 --> 00:10:35.810
hey, we're shepherding the
people to some future state

00:10:35.810 --> 00:10:39.750
without a real clear definition
of what that future state is.

00:10:39.750 --> 00:10:42.787
And so when you talk
about Marxist-Leninist,

00:10:42.787 --> 00:10:44.370
besides talking about
what's happening

00:10:44.370 --> 00:10:46.390
in the economic
sphere, it's also

00:10:46.390 --> 00:10:50.470
kind of talking about this party
system, this party system where

00:10:50.470 --> 00:10:53.800
you really just have one
dominant party that it will

00:10:53.800 --> 00:10:56.465
hopefully act in the
interest of the people.

00:10:56.465 --> 00:11:02.800
So one dominant
communist party that

00:11:02.800 --> 00:11:04.360
acts in the interest
of the people.

00:11:04.360 --> 00:11:09.837
And obviously, the negative
here is that how do

00:11:09.837 --> 00:11:11.420
you know that they
actually are acting

00:11:11.420 --> 00:11:12.440
in the interest of people?

00:11:12.440 --> 00:11:14.481
How do you know that they
actually are competent?

00:11:14.481 --> 00:11:16.120
What means are
there to do anything

00:11:16.120 --> 00:11:18.750
if they are misallocating
things, if it is corrupt,

00:11:18.750 --> 00:11:21.220
if you only have a
one-party system?

00:11:21.220 --> 00:11:25.630
And just to make it clear,
the largest existing communist

00:11:25.630 --> 00:11:28.460
state is the People's
Republic of China.

00:11:28.460 --> 00:11:31.700
And although it is controlled
by the Communist Party,

00:11:31.700 --> 00:11:35.306
in economic terms it's really
not that communist anymore.

00:11:35.306 --> 00:11:36.430
And so it can be confusing.

00:11:36.430 --> 00:11:39.560
And so what I want to do is
draw a little bit of a spectrum.

00:11:39.560 --> 00:11:43.070
On the vertical axis, over
here, I want to put democratic.

00:11:46.130 --> 00:11:51.070
And up here, I'll put
authoritarian or totalitarian.

00:11:51.070 --> 00:11:53.920
Let me put-- well,
I'll put authoritarian.

00:11:53.920 --> 00:11:56.800
I'll do another video
on the difference.

00:11:56.800 --> 00:11:58.820
And they're similar.

00:11:58.820 --> 00:12:02.940
And totalitarian is more an
extreme form of authoritarian,

00:12:02.940 --> 00:12:05.600
where the government
controls everything.

00:12:05.600 --> 00:12:07.662
And you have a few people
controlling everything

00:12:07.662 --> 00:12:08.870
and it's very non-democratic.

00:12:08.870 --> 00:12:12.100
But authoritarian is kind
of along those directions.

00:12:12.100 --> 00:12:15.720
And then on this spectrum, we
have the capitalism, socialism,

00:12:15.720 --> 00:12:17.250
and communism.

00:12:17.250 --> 00:12:19.870
So the United States,
I would put-- I

00:12:19.870 --> 00:12:23.290
would put the United
States someplace over here.

00:12:23.290 --> 00:12:25.150
I would put the United
States over here.

00:12:25.150 --> 00:12:28.270
It has some small
elements of socialism.

00:12:28.270 --> 00:12:29.771
You do have labor unions.

00:12:29.771 --> 00:12:31.020
They don't control everything.

00:12:31.020 --> 00:12:34.790
You also have people working
outside of labor unions.

00:12:34.790 --> 00:12:38.240
It does have some elements
of redistribution.

00:12:38.240 --> 00:12:41.790
There are inheritance taxes.

00:12:41.790 --> 00:12:44.420
There are-- I mean it's not an
extreme form of redistribution.

00:12:44.420 --> 00:12:46.950
You can still inherit
private property.

00:12:46.950 --> 00:12:49.360
You still have safety
nets for people,

00:12:49.360 --> 00:12:51.720
you have Medicare,
Medicaid, you have welfare.

00:12:51.720 --> 00:12:53.820
So there's some
elements of socialism.

00:12:53.820 --> 00:12:57.110
But it also has a very
strong capitalist history,

00:12:57.110 --> 00:12:59.940
private property,
deep market, so I'd

00:12:59.940 --> 00:13:01.880
stick the United
States over there.

00:13:01.880 --> 00:13:05.390
I would put the USSR--
not current Russia,

00:13:05.390 --> 00:13:08.950
but the Soviet Union
when it existed-- I

00:13:08.950 --> 00:13:14.540
would put the Soviet
Union right about there.

00:13:14.540 --> 00:13:21.000
So this was the-- I would put
the USSR right over there.

00:13:21.000 --> 00:13:23.040
I would put the current
state of Russia,

00:13:23.040 --> 00:13:28.856
actually someplace over here.

00:13:28.856 --> 00:13:30.730
Because they actually
have fewer safety nets,

00:13:30.730 --> 00:13:32.722
and they kind of have
a more-- their economy

00:13:32.722 --> 00:13:34.430
can kind of go crazier,
and they actually

00:13:34.430 --> 00:13:37.100
have a bigger
disparity in wealth

00:13:37.100 --> 00:13:38.840
than a place like
the United States.

00:13:38.840 --> 00:13:42.640
So this is current Russia.

00:13:42.640 --> 00:13:44.490
And probably the most
interesting one here

00:13:44.490 --> 00:13:47.790
is the People's Republic of
China, the current People's

00:13:47.790 --> 00:13:49.970
Republic of China,
which is at least

00:13:49.970 --> 00:13:52.060
on the surface, a
communist state.

00:13:52.060 --> 00:13:54.730
But in some ways, it's more
capitalist than the United

00:13:54.730 --> 00:13:58.530
States, in that they don't have
strong wealth redistribution.

00:13:58.530 --> 00:14:02.400
They don't have kind of
strong safety nets for people.

00:14:02.400 --> 00:14:05.210
So you could put some
elements of China--

00:14:05.210 --> 00:14:07.170
and over here,
closer to the left.

00:14:07.170 --> 00:14:10.900
And they are more-- less
democratic than either the US

00:14:10.900 --> 00:14:13.097
or even current Russia,
although some people would

00:14:13.097 --> 00:14:15.430
call current Russia-- well,
I won't go too much into it.

00:14:15.430 --> 00:14:17.910
But current China, you could
throw it here a little bit.

00:14:17.910 --> 00:14:19.405
So it could be even a
little bit more capitalist

00:14:19.405 --> 00:14:20.540
than the United States.

00:14:20.540 --> 00:14:24.960
Definitely they don't even have
good labor laws, all the rest.

00:14:24.960 --> 00:14:28.540
But in other ways, you do
have state ownership of a lot,

00:14:28.540 --> 00:14:30.850
and you do have state
control of a lot.

00:14:30.850 --> 00:14:35.150
So in some ways, they're kind
of spanning this whole range.

00:14:35.150 --> 00:14:37.960
So this right over
here is China.

00:14:37.960 --> 00:14:40.840
And even though it is called a
communist state, in some ways,

00:14:40.840 --> 00:14:42.970
it's more capitalist
than countries

00:14:42.970 --> 00:14:44.637
that are very proud
of their capitalism.

00:14:44.637 --> 00:14:47.053
But in a lot of other ways,
especially with the government

00:14:47.053 --> 00:14:49.070
ownership and the government
control of things,

00:14:49.070 --> 00:14:50.760
and this one dominant
party, so it's

00:14:50.760 --> 00:14:54.640
kind of Leninist with less
of the Marxist going on.

00:14:54.640 --> 00:14:57.570
So in that way, it is more
in the communist direction.

00:14:57.570 --> 00:15:00.310
So hopefully that clarifies
what can sometimes

00:15:00.310 --> 00:15:03.410
be a confusing topic.