State Intervention Promotes a Culture of Greed and Selfishness - not "Capitalism." An Interview with Dr. Guido Hulsmann

“Unfettered capitalism” creates a “dog-eat-dog” world in which the strong profit at the expense of the weak, everyone only looks out for their own interests, and society becomes selfish, atomized, and less human, with its members caring only about making money, not about each other.

So goes the standard mainstream view of a free society, and free markets. If you went to a government school, you heard some version of this.

Economist Guido Hulsmann has a new book out that tears this caricature to shreds. In Abundance, Generosity, and the State: An Inquiry into Economic Principles, Dr. Hulsmann systematically demonstrates the ways in which people naturally tend to help each other and to produce goods and services that do not directly benefit them in any material way.

He then shows us how government intervention works to stifle and even squash much of this activity – from government control in money and banking encouraging irresponsible financial behavior and discouraging voluntary donations (if you take nothing else from this interview, be sure to take note of the “saturation mechanism” and what happens to it in an interventionist system), to the tragic outcomes of the welfare state. 

Dr. Hulsmann turns the standard caricature on its head, and shows us in painstaking detail, how it is not freedom, but coercive interventions in the lives of free people that work to create a society of self-centered and atomized individuals.

Dr Hülsmann is a professor of economics at the University of Angers in France. He is also a Senior Fellow of the Mises Institute and a corresponding member of the Pontifical Academy for Life.

His website is here.

And his book, Abundance, Generosity, and the State: An Inquiry into Economic Principles, is here.

The book he mentions, The Welfare State We’re In, by James Bartholomew, can be found here.

Transcript

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Speaker A: Welcome to the podcast that's all about solutions. If you're tired of complaining about tyranny and you want to take action to create a freer world, this is the place for you.

Join us as we ask, what then must we do,

right? I am very happy today to have with us Professor Guido Hulseman. Doctor Hulseman is a professor of economics at the University of Angers in France. He's also a senior fellow at the Mises Institute and is a corresponding member of the Pontifical Academy for Life.

Thank you for joining us.

The reason I asked you here is because of your new book, which I'm going to hold up,

abundance, generosity and the state an inquiry into economic principles.

I think this is a very important book. It's also very exciting because you're kind of taking on the standard mainstream left wing ideology that's permeated our culture, that tells us that free markets lead to cold hearted individualism and selfishness and all of this stuff, and that we need some kind of government intervention to protect people from the harshness,

that dog eat dog, that darwinian, all these things that people think about markets and what you actually show in great detail and you really dig into it is how just the opposite is true.

Let's just start by asking the question,

what is wrong with that view that capitalism leads people to be selfish and just pursuing their own ends and dog eat dog individualism?

Why isn't that the case?

Speaker B: Well, first of all, we have to define what we mean by capitalism. And the problem usually starts there, because most people who don't like capitalism, they look at the current reality and they identify with capitalism for them.

What's going on in the US and what's going on in large parts of Europe and Southeast Asia and so on, especially in the developed countries. That's capitalism. Now that's the way to define it.

Okay, so as far as the definition is concerned, that's not wrong. But of course, I don't know any defender of capitalism would define it that way.

So if we're using words in a very different sense, then it's impossible to come to a common conclusion. And reasonable people confronted with the same reality and having a logical discussion should be able to come to the same conclusions based on the same evidence.

Then of course there might still be differences in appreciations or value judgments and so on, what we find more important, less important and so on. So here probably it's not possible to come to an agreement, but at least as far as the causal relationships are concerned, what is the cause of what we should come to an agreement.

And here we have the problem of the definition. Now, all the defenders of capitalism define it as the social economic system that is based on the respect of private property rights.

And private property rights are ultimately grounded in the ownership of yourself.

It's because we are self owners that eventually we can also become owners of material goods that we can then give, donate to other people, or exchange with other people,

pursue for profit activities, and so on. So my point, therefore, in that book, is that I defend that kind of socioeconomic system which people own themselves fully and can come to acquire material property by transforming nature that is not yet owned by anybody else, or by acquiring goods that have been owned by other people,

but which these other people donate to us or exchange with us. So that system is not conducive to the problems that you just mentioned. So cold outedness, rugged individualism,

all these things.

So that's the first thing. And then, typically, the critics don't know anything about economics. So therefore, that kind of critics are very superficial knowledge. So that kind of critics, you have them among people who haven't studied economics and have only studied, what about sociology,

anthropology, literature, gender studies? I don't know what. So they've never studied actual economics. Because if you do, then you come to understand what the difference between free markets and government interventionism is, because interventionism is precisely, it's the punctual, so case by case violation of property rights in order to pursue the objectives that governments fix themselves.

And so what economists have always argued is that interventionism is conducive to less productivity, so it makes people poorer, it makes the economy less stable, there are more crises and so on.

What I do in my book is ultimately, I pursue the same method of economic analysis I confront.

A free society wouldn't say free markets, because free markets are just a part of a free society. It's only one element. So we need to look at the whole package.

How does a free society work? And which role do markets play in such a society? And we contrast this to a society laboring under government interventionism. And if you do that systematically, and that's what I try to do in my book, then you cannot fail to see that, in fact,

those problems result from interventionism. It's them that make people more egotistical and autistic and so on, so selfish,

in a sense, and reduce, therefore, spontaneous solidarity with others,

reduce donations,

and reduce that spontaneous abundance that comes with free markets.

Speaker A: So how does that happen? Like, what are the mechanisms by which this abundance and generosity is released in a free society.

Speaker B: Yeah. Well,

in a free society, of your market. So part of your time is always devoted to markets for profit activity. Because that's the most efficient way to earn revenue. But most people do nothing, pursue for profit activities as an objective in itself, but only as a means to use these goods,

the revenue that they earn for things that are close to their hearts. So that can be personal consumption, but it can also be sustaining. A family can be sustaining, friends can be helping other people and so on.

And of course, depending on the personality,

the balance of all these different elements is different.

So what happens in a free market then, is. Well, in the free market,

the proportion is dependent, among other things, on the.

What many people would call the profit rate. It's not a nice expression. There's no such thing as profit rate, really, like an interest rate, but the amount of money that they can earn on the market by investing their savings.

Now, in a free market there is a tendency,

because people respect other people's property, nobody is robbed, and so on. There's a tendency for savings to be accumulated.

And as savings accumulate, they become less scarce. Therefore they become less valuable. Therefore, by investing savings, you earn less and less money. That's the general tendency. Virtually all people agree on this.

The classical economists have agreed on this. The austrian economists today accept this point. The Marxists themselves, Karl Marx himself, as stressed this point. Now, this is not an inexorable tendency.

It's not the only story that's going on. It's not the only connection, because you also have things like technological progress. When there's technological progress, that increases the profit rate in those areas where you have progress, and it spreads out from there to other areas and so on.

But all other things being equal, the more savings you have and people become richer and have more savings. If there's growth,

the lower tends to be the profit rate. And as a consequence, it becomes less interesting to use your wealth for perfect activities.

So we fear then a tendency in a free society which makes that as people become richer,

they tend to consecrate a greater part of their wealth to make donations,

sustain the arts and the sciences, help people out who cannot help themselves, handicap people and so on. We see some of this in the sector of private foundations and so on.

The US is very richly endowed with private foundations. And Americans pride themselves on being very generous. I'll never forget some of my american hosts, because I've stayed a couple of times in the US for a few months and even years.

And they always say, well, we Americans are very, very generous. And that's true. It's true.

So we get a taste of this, what it is. But today it is already much less so than at the end of the 19th century. And the reason is that thanks to government interventionism, well, people, on the one hand, they become poorer.

Okay, government innovation makes, stifles the economy so that it makes people poorer for that reason.

But it also creates incentives both for frivolous behaviors. People are running risks that they would not take without the government being present because they anticipate that thanks to government interventions, they will be bailed out.

Now, that's especially the case on financial markets today,

which has been often compared to a casino. And in many respects, that's correct.

Especially the large financial intermediaries, banks, some of the funds and so on. They behave like people in a casino because they think that they will be bailed off. Something goes on, it will be bailed out by the central bank.

And that's by and large, correct,

as.

Speaker A: An aside, because oftentimes when you bring it up with people who are not economists,

they will respond with, well, they really are too big to fail, that if these big banks fail, all of society is going to go under. So how do you respond to that?

Speaker B: Yeah,

that's the myth. Right. Of course. If they fail, we will be in big trouble, that's for sure. So then we have a short run problem. Short run meaning anything between eight months and three years.

Okay. Now, the speed with which you get out of this mess depends on the environment,

regulatory, legal environment and so on. But I mean, so it's not a black hole out of which there's no exit. That's wrong. Right. And I mean, if you think this, then you really don't know anything about economic history.

So you just need to study how economic crises played out in the, in the 19th century. You need to look at countries which accepted that their financial institutions went down the drain and so on,

like Iceland after the 2008 crisis.

So yes, there's hardship, but there is an exit. There's always light at the tunnel. And the exit of the tunnel comes, well, the more flexible the economy is, the freer the economy is.

But let me just mention that. So there's a third. So the first one is a stifling second one is frivolity. Well, frivolous behavior.

Frivolous behavior. And the third item is the opportunity cost of donations. Because central banks, to just point out the most important case, central banks create conditions under which it is always, virtually always worthwhile to invest additional wealth.

So you never get to that saturation point that you would have in a free society with a genuinely free market. So as a consequence,

then people always, then they hesitate some, oh, should I give a million to this and this cause, but I can earn so much money with it and I deprive my family of all this revenue and so on, which is not the question they would ask themselves or the problem that they would see in a truly free society because,

well, they wouldn't earn that much money anyway. So rather than playing with it in a casino, it was just, okay, I'll give it to this worthy cause and that's it.

Speaker A: So that's actually a really important concept, this whole, the idea of the saturation mechanism.

Is this your idea or is this something that was, I'd never heard it before. So is this something new?

Speaker B: Well, I mean, it's not much talked about.

I do not believe that it's entirely new. Right. It's true. In the past, whatever, 15 years or so,

I've been talking about this in various book publications, and I might have been the only one,

but. So I didn't claim any originality on this, right. So I would guess that other people have seen this too, in the 19th century. So that's an interesting topic for a research project.

So if somebody wants to write a doctoral dissertation and so on, just look into this in more detail. But I think it's just a very straightforward application of this, of Cedric Poweribo's reasoning.

All other things being equal,

increased capital accumulation, which results from increased wealth, should diminish the opportunity cost of donations and both of material donations. So money and of time donations.

And if governments come into play and they bail out financial investors, well, you get the opposite, because then it becomes possible to leverage your investment. Even if the market return on, let's say, on government bonds is very low, it's just 2%.

If you leverage your investment, you put in just, what, about 5% of your own money and you borrow the rest at 0%, which is what large banks have been doing for many years.

And you can still make a huge profit on this.

Let's take a numerical example. If I,

let's say I buy for $1 million government bonds,

maybe remunerated only at 2%, so I earn $20,000 per year. But if I only use 5% of my own money,

so I don't invest 1 million of my own money, I take only 50,000 of my own money, I get the rest. Let's say I get it almost for free from the Federal Reserve well, so then I get 20,000 as a return on 50,000.

Now that's a 40% rate of return. Okay. That's quite significant.

That's why they do it. Right. So that's why they invest every single penny. And the same incentive that exists for a financial intermediary exists, of course, for also for a private household.

So we therefore have the absurd situations in which, especially those households that are the richest, which should therefore be both able and willing, normally, to donate the largest share of their wealth and their revenues.

They're sometimes most reluctant, most stingy, because.

Speaker A: They can make so much exact.

Speaker B: Because they have these opportunities which the others don't have because they couldn't take all the loans.

Speaker A: Right, right. The more you can leverage, the more enticing it is.

Speaker B: Yeah.

Speaker A: So let's talk about that a little bit.

When you're making that kind of investment, you're getting a 20% or $20,000 on a $50,000 investment.

When you're making that, what are you actually investing in? Because it's not like that. Seems like, wow, that's going to some really productive enterprise, that something is really, a value is being produced.

If it's returning such a high return,

what is it thats actually being invested in?

Speaker B: Well,

the example that I gave you invest in a government bond so that the government pays 2%. Thats a pretty good deal for the government and for the investor. It sounds like not a good deal, its only 2%.

But as ive said, if you can leverage that investment, it turns into a very good deal and the same thing. So you can invest in all kinds of other things that,

in fact,

are not very profitable per se, but which earn him or her a huge return on investment.

So that's the principle of leverage. Now, in a free economy, most people would not do this, especially if financial professionals would not do it, because leveraging means you're exposing yourself to a lot of risk.

Because if you have $950,000 of debt and suddenly the interest rate goes up or something like this, or something goes wrong with your investment, well, you owe 950,000. That's a huge load of money.

So the 20,000 that you earn compared to that is not much. So for most people, that would not be a good deal. It wouldn't be worthwhile. But if the Federal Reserve guarantees, so to say, the low interest rate, and if it bails out the investor, if something goes wrong,

if market conditions deteriorate, so the Federal Reserve starts buying government bonds at officially inflated prices or starts refunding banks and other financial intermediaries. Well, then you take out all the risk from the private investments you're de responsibilizing and you are encouraging his greed.

So I mean,

I know that there's some dependence on capitalism who say, with,

what's the guy from Wall Street? Wolf of Wall street. Right? Greed is good.

Speaker A: Oh, yes. Yeah.

Speaker B: Okay. I'm a Catholic, right. So for me, greed is not good.

Speaker A: Right.

Speaker B: It's a temptation that you have in all kinds of situations. And today greed is certainly rampant on financial markets, but also in politics, right? Let's not forget this.

But it's produced to a large extent. You have what I would call natural greed. I mean, some people are more or less greedy and everybody of us has different sorts of sins.

And some people are just inclined to that kind of sin. So they tend to be greedy, okay? But it's always moderate and especially since there's a cost to it, right.

If you're too greedy, well, you run the risk of being bankrupt. But if you have the Federal Reserve behind you, you can be greedy and be happy.

And so that's why you get this kind of mentality. Greed is good, right? What can be wrong about something that earns me so much money?

Speaker A: Right? Right. So really this kind of interventionism feeds greed.

It creates or creates incentives, more of an incentive to be greedy.

I want to. That kind of raises another question. It's kind of going off on another tangent, but because you talk about virtue in your book. And so my question is,

if you're in a system that, for example, the free market, where there's a free market and there are checks on greed, there are checks on dishonesty, there are all these sort of checks in place that just happen naturally that make people responsible for their actions.

Is it less virtuous if you're living in a system that helps you to behave, that has material incentives to be virtue, is that still virtue?

Speaker B: Or,

well, if it pays to be honest and so on, well, it's not really virtuous. It's still good that you tell the truth and so on.

But we wouldn't say, well, there was really very strong virtuous behavior. Virtue comes into play whenever we are tempted, whenever there's a material conflict of interest between doing the right thing and earning money.

So that's when the virtue comes into play. And of course, fortunately in a free society, as you have pointed out, there are very strong incentives to behave, especially in the long run.

I mean, you can always cheat on people in a deal. And so on. But if you gain a bad reputation, that's certainly not helpful.

But still. So there is this temptation. And if people are just,

they don't want to have anything to do with virtuous behavior, they reject the very notion of virtue and so on. Then, of course, you can get only so far, right.

For example,

something that we had in the west always was that people were willing to engage in a very long term contractual relationship. Think of people working for the same employer for tens of years, for the entire career, maybe, or you have several generations of people working for the same employer.

That's what we had in Germany for a very long time.

People working for Mercedes Benz. Yeah, he's a band's guy and his father was a band's guy and the grandfather, same thing. Right? So they've always been in the company. They were very proud of this.

Now,

this kind of loyalty, you get only. And the corresponding advantages for both sides,

you get only if you can rely on the other people being a good person by and large. Right. It's not somebody who will screw you over if he has the first opportunity to do so.

Speaker A: Right?

Speaker B: So in that sense. Right. Of course, you would always have markets,

even if people are not particularly virtuous, even if you're completely selfish robots or something like this. Right. But of course, it would not develop as much as it could if people cultivated the virtues.

Speaker A: Right, right.

Speaker B: Of doing the right thing.

Speaker A: But it's still a good thing to have a system that kind of.

Speaker B: Oh, absolutely, absolutely. Unfortunately.

Speaker A: So, yeah,

that's a good example that you brought up about people working for one company for a long time.

To me, that's sort of talking about part of what we call the cultural fabric. So if you have,

like, in today's world, people hop from job to job, and it's just very commonplace. You know, I stay in one job for two years, another one for three years. But there's not that sense of, you know, I'm,

this company is part of my, or I'm part of its family or I'm part, you know, I belong here. And it seems like, you know, whether that's a good thing or a bad thing, it seems like something's been lost in terms of ties between people and ties, you know,

even in the employment world, it's those, those ties are not as strong. And maybe that's a good thing, maybe that's a bad thing, but it's something, you know, it's something to be aware of because it seems like, and a lot of the things that you talk about in your book is really having to do with the social fabric and the things that hold us together as a society,

but also the things that are meaningful. And you talk.

I don't know if I have this quote handy, so I'll probably get this wrong, but you said something about how in a market economy,

a market economy requires there to be goods that are valued for their own sake, not just as a means to something else.

Speaker B: If developed, developed market economy. Right. Of course you would have. I mean, whenever you have an exchange, you already have a market economy. You can have an exchange between two bandits exchanging merchandise at the point of a gun.

It's possible, right?

Speaker A: So, yeah, yeah. Why is that necessary? Why do you need to have something that's valued just for its own sake rather than just as a means?

Speaker B: Well, I mean, it's not absolutely necessary. It is necessary if you want the economy to develop, to reach a potential. In that case,

the virtues allow you to economize on a lot of precautions, that you become incredibly more productive.

Because take the example of the bandits exchanging.

Each one of them has pulled their guns and they're surrounded by five or ten other guys who also pulled their guns in the exchange. So you need to have all these guns hired just to exchange, whatever, a few million dollars worth of merchandise.

Whereas in civil society, well, they're just two persons getting together or even meeting on the Internet, and I don't know, and they sign a contract or they agree. They don't even sign is the gentleman's agreement,

and they execute the contract.

That's an enormous economy of resources.

So all the people running on with guns, you could put them to some other thing where they are productive in not only securing property rights, but maybe producing extra merchandise and extra services for other people.

That's what I meant. Not in the sense that exchange is impossible. Of course, it's always possible, and there are always incentives to exchange.

Speaker A: Right, right.

But what you're talking about there is, I would call it, another part of the social fabric where you can have a level of trust and you can have a level of not having to pull out your guns all the time.

And it's that social fabric that gets eaten away in so many ways by interventionism.

What about. We talk a lot about welfare too, and that's something I'm very interested in because of the experience of the United States and I guess also England in the 19th century,

there were thousands of mutual aid organizations,

groups that were usually around either like a specific ethnic group, or maybe a lot of them were about professions but it was people coming together who had a common interest and created these organizations that would then be a resource for them if they fell on hard times.

And they did a great job. They really. I mean,

they were pervasive throughout society, and they did a fantastic job.

I'll just tell one personal story, because my grandmother actually spent the last eight years of her life in a home that was provided by one of these organizations. She was a schoolteacher, and there's this organization called the Peo.

And at that time, they had some homes around the country where if you were ready to have someone help you in day to day living,

but you could still kind of get around.

You weren't completely bedridden. You could go in and they would take care of you for the rest of your life. And the way that it was financed was you would sell your property whenever you had a house.

My grandmother lived in a tiny little town in Nebraska. I think she sold her house for, like, $17,000, you know, not enough to buy more than a few months in a commercial facility.

But they took care of her for eight years, and they were able to do this through some kind of financial magic.

I don't think it was inflationary.

And then after my grandmother passed away, the state started clamping down on this. They said,

your way of financing this is not fair, because people with a more expensive house are paying more than the person like your grandmother who's paying this. So they said, that's not fair.

So,

I mean, the irony of that is just.

But that's. I mean, it's such a tragedy in this country that there were so many. And the kind of care that my grandmother received was amazing. It was very.

It wasn't an institution. It was a home. It was with other, you know, old ladies. They would eat together, they would have events together and things. It was really a home and a community,

and it was just fantastic. We were so happy that she could be there. And that's been squashed. That's just been squashed.

The insurance industry didn't like it.

The states, for whatever reason, didn't like it, and it hardly exists anymore.

And so many, most people, I think, don't even know that it ever existed.

Speaker B: Yeah. Memory is short run in these things, and you're absolutely right.

These purely private welfare,

it's dangerous to use the same word almost, right? But let's call it private welfare was strongly developed in the anglo saxon countries in England,

let's say Great Britain, especially England and North America,

and that's completely lost. So therefore, it's important to sometimes to read a book that, that reminds you of how things were and how well they worked and how you can organize these things differently.

I mean, for example, what we can barely imagine today is that people would go into medicine without being motivated by huge revenues, huge monetary revenues. Right? There used to be a time, and that was the case until the early 20th century, when people went into medicine out of philanthropic motivation.

They really genuinely wanted to help other people. Okay? And then, of course, a successful practitioner would earn substantial revenue, but like good practitioners in all trades, earn substantial, but not so, not excessively much, but just as a good carpenter or a good engineer would also earn fine money.

But today they're all going there because it's become a business.

And that was only so because of a complete government sponsored overall of how the, the sector operated. It's turned into an industry, which wasn't the case before.

So until the end of the 19th century in England,

people would study medicine and they would volunteer in the hospital in the morning. Hospital. Most hospitals, virtually all hospitals were private, either funded by the church or some other philanthropic organizations that would volunteer in the morning.

They study, they volunteered their hospital, and then once they grow more experienced, they would also have private clients in the afternoon. And then you can make some money. But they would typically serve rich and poor the same.

In the hospital, you get the same care whether you pay much or nothing at all. And I wouldn't say, well, that's how it should be. But certainly it's very interesting to see that it's possible that we organize this way, and it's a very charming way to organize it.

It's very much in the spirit that is conducive to care, you would think. But today we're very far away from this.

Speaker A: Yeah, yeah. And in America, we had a thing called lodge doctors, where a lot of these fraternal organizations would hire a doctor to, like, be their doctor. And, you know, he might come like once a week or something and have an open clinic, and anybody could come.

And then people pay a little more and get house calls and things like that. It was very, very reasonably priced. I mean, it was very, very cheap.

But there were people who didn't like that. And the AMA, actually, when the AMA was lobbying to have licensing requirements and to overhaul the medical schools, they explicitly said that.

They said, we are doing this because our doctors are not making enough money.

I mean, they didn't try to hide it. So it really was a different world. People were able to get their medical needs met very reasonably, sometimes for free. I mean, it was common practice, as you said,

for doctors to treat poor people either for free or for very reduced rates. I mean, it really worked. It worked very well. But because we've been in this, because it's been industrialized and we've been in this crazy world for so long,

people don't realize that they think that it has to be very, very expensive and needs all this intervention. It's just the two worlds are so.

Speaker B: Completely the argument that always pops up. We need to make sure that everybody receives the same level of care.

So we need to have first class doctors and then first class equipment everywhere. I mean, that is absolutely nuts. And that argument, right? It's like saying, oh, well, the only way you may have a joy meal is if it comes from Bokus, right?

It must be the world number one chef, and everybody needs to cook according to his recipes, or only vegan or whatever, right? The best of the best. And nothing else is allowed because people might be unhappy or they might be unhealthy.

This is crazy, right? And you don't have this in any other area. And of course, people ride cars or take any other transportation or they dress themselves. Of course, you have very different qualities depending on the case.

And of course, if you dive deep down into the ocean, you better have a neoprene outfit or something like this. You need to have a certain policy just in order to survive.

But for most other cases, you don't need any specific thing. And for doctors, it's the same thing. There's no reason why everybody needs to be the equivalent of a Formula one pilot.

You can have just very regular people helping you out with 98% of all conditions that you might befall you, and only for the 2%, well, then you might need a specialist, and that's how they do it everywhere else.

Speaker A: Yeah. Yeah. I think, at least here in our culture, a lot of that has to do with. There's this mythologizing of medicine. Like, people really,

they do believe that doctors are gods, and I. That I think we've really lost touch with our own sort of healthcare for ourselves and how we take care of ourselves.

And there's this mentality of, well, I'm dependent on the doctor. I need this. And so if there's almost like. If there's anything I'm not getting from the system, I need to get that because my health is threatened if I don't have access to every.

To the most modern. You know,

never mind that it's like the third leading cause of death in.

Speaker B: This country and no responsibility also. Right.

Speaker A: Right.

Speaker B: I mean, how would you go about this as somebody who suffers from a condition? Well, you ask other people, well, who is a good doctor? And did you have any other people who helped and so on?

That's how you go about it. But there's always a risk. Maybe the guy isn't that good or something like this. So in the present day scenario,

present their system, they tell you, oh, yeah, you may not take this risk. Right. Because people might wrongly advertise their own qualifications and so on in any way. You're incapable of judging this.

Right. So your judgment was taken out of the picture. We need to make sure that you can only come into touch with people whom we have rubber stamped.

Speaker A: Right.

Speaker B: And that's it.

Speaker A: Right. And then, sorry, we're getting a little bit off the top, off track.

Speaker B: Yeah.

Speaker A: So actually, to bring it back, I just wanted to ask you one question. So here in America, the way that we got into that system was in the 19th century.

The sort of budding pharmaceutical industry didn't like competition from the non pharmaceutical practitioners. And so they went to the politicians and said, hey, let's create these licensing laws, let's rent the hospitals, let's shut down all of their hospitals and shut down their medical schools.

And I think that the reason they were able to do that was because their medicine was patented. They were able to make really excessive, I'm going to say excessive because I don't believe in patents, but really extreme profits from their practice, whereas their competition,

people who were not practicing pharmaceutical medicine and couldn't patent, they're, you know, you can't patent herbs.

They, they didn't, they didn't have access to those kinds of profits. Do you think that patents had played a role in that takeover?

Speaker B: Well, I actually, I mean, that, that's what my, what my hunch was when I started thinking about this. But I've come to the conclusion that actually patents are comparatively secondary. I mean, nobody gives care a **** about in any other area but for medicine, pharmacy and so on.

And what's the reason? The reason is that the government imposes patented products on everybody. That's the thing.

Let's say you have patents for whatever, glasses or for sparkling water and so on. Nobody cares as long as you can buy other things that are not patented. And then you go long.

There's really competition between the patented products and others. The problem that we have in pharmacy and medical services and so on is that the patented stuff and the so called protocols are imposed.

So you cannot do anything else.

And that's what creates these enormous profits, and that's also what creates the damage to the consumer,

to the people, because no alternative, there's no competitive market process that sorts out the best solution for each case, because that's what the market usually does.

Speaker A: Yeah, yeah, yeah.

Speaker B: Of course, it's a nuisance. And so. But I wouldn't say no. The big damage comes from the other, don't you think?

Speaker A: At the very beginning, though, when there was, like in the 19th century, when there was this clash between the two, don't you think that gave them the profits they could get from patents, gave them the edge?

Speaker B: No. No. I said no. Look,

the problem that the pharmaceutical industry had was that there was an enormous body of knowledge about treatments with plants. So natural stuff that you find in nature and centuries worth of experience with different ways of treating different ailments, cough, I don't know, a broken leg.

And so you have ways to go. Of course, that's not perfect,

but it was gratuitous.

Speaker A: Yeah, right.

Speaker B: Nobody pays for this, you know, just somebody. And he knows. Well, the other people also know this. My knowledge doesn't have any special value, so I cannot derive any billions of dollars or millions of dollars of revenue out of this.

Nobody did. And in our town here in angers,

when we arrived 20 years ago, there was still a herbal shop available. So that was the old pharmacy. So they sold herbs, and the pharmacist, he would mix the herbs themselves or create the paste and the creams and so on, that's what they did.

And these guys, they could keep their license because they had it before the law changed in the sixties. So he had been around for a very long time, and then it ran out.

And so then nobody is able to propose that kind of service anymore.

That's the crazy. It always comes from outlawing competition. And in that case, the competition is unbeatable, price wise. And that's why they were so eager in outlawing them, because it's the same thing as recently with this Covid treatment was Eva mactine.

And then they told us, oh, no, this is just a horse treatment. And so it just doesn't work. It turned out it does.

That's what the critic had critics had said from the beginning. Problem was, even Maktine costs a few cents, right? And they want to sell a treatment that costs thousands of dollars and they want to earn billions.

Speaker A: Yeah, yeah. I mean, the good thing that came out of that, because this is. It's not just about ivermectin and current stuff. This has been going on, as you say, for a long time.

I think it's out in the open now and people can kind of see how that, how that operates. So you mentioned gratuitous goods. Let's talk about that a little bit because that's really central to your whole book.

So what are gratuitous goods?

Speaker B: Well, so strictly speaking, there's no such thing as a gratuitous good, right. So what is gratuitous is the way we receive it or provide it to others. Right. So I might sell you a meal or I might provide the meal to you without payment.

It's the same meal, the meal itself. We can call it maturities if it comes without payment. But what's really gratuitous is that it's been provided without expecting any return.

So what we're really comparing are these ways of providing and receiving that are onerous.

That's how we use the word French. Honor. I think it exists also in English, honoris. So you have to pay something and the non paid service that is received or provided, that's really what's characteristic.

So when is it truly gratuitous? Well, if it's provided in excess of any obligation that you have, okay, if you're obliged to provide it, let's say, for example,

your mother needs a meal. You might not have a contract with your mother, but I. Well, you're morally obliged to care for your mother. Okay, so you provide the meal for her.

That's not, strictly speaking, gratuitous. That's a fulfillment of your moral obligation. But, so the gratuitousness comes into play as soon as there is no obligation nor a right from the, on the side of the beneficiary to receive that good.

If then is provided,

that's what is gratuitous. And therefore, if we write checks for people whom we barely know or we volunteer for some activity and that there's no moral or legal obligation or contractual obligation that binds us, well, then it's truly gratuitous.

So therefore, my general definition is, well, gratuitous are all those ways of receiving and providing which are provided in excess of the demands of justice.

So what we have to do,

that's not gratuitous. What we have a right to receive, that's not gratuitous, but everything that comes beyond that is gratuitous.

Speaker A: And what about a case where let's say you do some volunteer work or you make a donation,

but the expectation is these people are now going to hire me or something. You think you're going to get something out of it?

Speaker B: Oh, yeah,

that's a hybrid case,

of course,

there are many such cases in practice, so volunteering as a preparation, so that's not, strictly speaking, voluntary,

that's an investment in your own professional future. So you work for a few months or years without any significant compensation in order to accumulate networks and competence in the execution of the tasks.

And then at some point, well, you are the fit for the market. People are ready to pay for you.

In the old times here in Europe, I guess, in the US, it was probably not much different. People started apprenticeships as soon as they got out of elementary school, so they were 1012 years old.

And very often the parents would pay the company to take on their child and teach them the trade to pay for this, which is the equivalent.

Right. And so only then, after whatever, two, three years, well, then you have acquired both knowledge of the things that you have to do and how you do it correctly.

And also, you know the people, you know how the trade is being carried on. So you gained all of this knowledge to become valuable and then people are ready to pay for your service.

Speaker A: Yeah, yeah. I mean, it makes sense. It makes more sense than going to a lot of the universities.

Speaker B: Yes.

Speaker A: Not yours.

So when you're talking about gratuitousness,

what are some of the ways that shows up in a free society? What are some gratuitous things or acts that are just a normal part of a free society?

Speaker B: Well, I mean, some of these things survive into our own.

I mean,

so far, I think family relations are essentially gratuitous.

I've not yet. I've yet to see a family, even in the US, even in New York or California,

where people pay each other to put the silverware on the table or put it into a washing machine and so on, and to help each other out carrying the children to school,

cooking, clothing and providing money.

Yeah.

Well,

in a less interventionist society with others, it's difficult to imagine all these things that would probably be provided gratuitous. But again, as you have done before, if you look back into the 19th century,

which was a world much less full of government interventionism, in our own world today, we see actually that most activities that involved,

well,

community work or caring for each other, they were carried out through volunteer work. So you didn't have social workers. Social workers are paid by the government, right? You didn't have full time employees of the parish or something like this, so you didn't have professionals who were carrying on this world,

work. So usually it's what's people meeting. At the end of the day, you have an hour of voluntary work. Or if the women didn't work and then they stayed home.

Well, they actually met. And also carried on various self distributed meals to families. Where the woman was sick. Or where the father had died or the woman had died. And something like this.

So people were taking care of each other. So today, of course, we barely know. Very often our neighbors are.

And community has been lost. So there's no longer the same tight knit culture that you referred to before. Right? It's no longer the same religion, the same ethnic origin and so on.

So people have less trust. They're disappointed more easily. Because. Well, even though. Even though we are open to everything. It doesn't mean that we are necessarily happy with or endorse all sorts of behaviors that we wouldn't do or wouldn't like.

And so this destroys this spontaneous solidarity that people who are closer to each other have typically.

And. Yeah.

So today then you have to pay, right? You have to pay for the caterer. It comes with the meal. You have to pay for transports and so on. And you cannot just knock on the door of the neighbor.

And help me out with a kilogram of sugar or something like this. You have to send somebody to the supermarket and so on. So all these little things that are so much different.

Speaker A: And do you think because you talked about it a little bit before.

With the incentive to invest more and more. And to get more from monetary pursuits.

Is that the main factor that you think is behind this sort of dissolution of community ties and gratuitous behavior?

Speaker B: Well, I think the welfare state is probably more important.

The welfare state has been put into place, really to replace the family. I mean, that was. I mean, the more or less well hidden objective. And of course, it's all been advertised in the name of liberation.

We make people independent of their social environment and so on. And that's all completely wrong, of course. Yes. You become less dependent on your environment.

But the consequence is. Yes? That solidarity doesn't develop. That's it. If you're a completely disconnected atom electron from all others on your own orbitz. And you never touch any of the others.

Yes. Yeah. You're free,

but you're also alone, right? Yeah.

Speaker A: You're not really free. Because you're dependent on the hand that's feeding you.

Speaker B: You're dependent on the one ring, right?

Speaker A: Right.

It's so funny because you always hear from the Marxists and critics of capitalism. How that's the result of capitalism that turns people into these atomistic separated.

But really what we're seeing is that it's interventions that do that, that before these interventions, people were a lot more cohesive, cultures were more cohesive, people were more involved in each other's lives, and that was just a normal part of life.

It's only with these interventions in the monetary system or with the welfare state that that gets torn apart. And it's interesting because you talk about how initially welfare was intended to sort of help the weakest, you know, have like a safety net for those who can't manage on their own.

But at some point it switched around to this idea of independence. You know, that you don't, you no longer have to be accountable to the people in your lives.

You can be, you can be free of that. So not without going into too much detail on that, what happened?

Speaker B: Well, I think there is a lot of influence coming from philosophy, especially modern philosophy, Rousseau and John Stuart Mill, both of which championed a conception of individual liberty which was atomistic of the sort.

So you really freeze if you're independent of others, you don't have to care for others.

Of course, then if that's your conception of liberty,

which is not absurd, but it's not what present day libertarians,

some might, but most would not say. That's really the essence of individual liberty.

If you think that's the objective, then yeah, the government may do certain things for you, may put into place a welfare state,

so it takes care of each and every one of your needs, and everything is financed through taxes. And especially many people on the left, they find this great, it's a great idea.

So it's very impersonal. Everybody can live his life and we're all paying into the same fund out of which we are helped out. If something, something goes wrong, well, that perceives, of course, not a contradiction.

With a free society, you might have something like this in a free society as well. People might pay into a fund and they're happy with them. But of course this, what somebody very few people talk about is of course exceedingly expensive.

And it's deficit spending in all countries that I know, because it just doesn't work.

The most cost effective welfare, we were talking before about incentives. The most cost effective welfare always has been the family,

hands down, beats everything.

And what I see today is that the people who talk most about solidarity and helping other people and so on, well, they seem to be the least inclined or the least capable of doing this, because very few of them, as far as I can see, have large families and very few of them have the same spouse until the end of their life.

So I don't say, well, there is something wrong with them if they don't, but it's just a matter of fact. So they have a very selfish conception of what it is to engage with other people.

If it's very opportunistic, if it suits me, that's fine, but I don't take on an obligation.

I promise to be faithful to you until the end of the days, whatever may come, good times, bad times and so on. That's what we say. Still in church or in front of the mayor,

but very few people seem to take it seriously. Right?

Speaker A: Yeah.

Speaker B: And it's not there.

Speaker A: Yeah. And the other distinction is really,

you know, an institutionalized welfare state creates ongoing dependence. When you have children, yes, they're dependent on you when they're little, but you're teaching them to be independent in the world.

You're raising them so that they can have their own lives and fulfill their own agendas and goals and all that.

That's not what the welfare state does. And it's interesting, when I lived in Hong Kong, I actually wrote a paper about this, comparing welfare in Hong Kong, which has very, very little in the way of government welfare and America.

And it turns out as far as like, numbers, numbers of homelessness, that kind of thing, they're basically the same. Hong Kong and New York were basically the same at this time, even though the US and New York spent much more money on welfare.

What was different, and it's hard to quantify, but in Hong Kong, there's not really, there's not a dependent class. There wasn't a group of people who were never going to escape from poverty.

Even families who had come over from China and, you know, with, with nothing and were raising their, their kids there. Their children were going to go on and be well educated, they were going to have careers, they'd run a business, but they were not going to stay.

There was not a poverty trap. And it was just so interesting to see, you know,

this one culture where, yes, there are poor people, but they're moving up or they're getting their children to move up, versus here in America, there are these ghettos and these families are not going anywhere.

Their kids are not moving up in the world.

It's this constant, never ending spiral of poverty. And so to me, that whole, the incentive system that it sets up,

that's even more of a cost than the actual costs because they're just destroying the incentives and the.

I think even the imagination to see that there's a different way. It's just. It's, to me, that's just devastating. That's.

Speaker B: Yeah, yeah. It becomes a cultural trap.

And you see, this is very interesting. If you look at.

What's the correct, politically correct expression?

Afro Americans or black people in the US. Right. I. Well, originally from the US or after slavery and so on,

they are to a large extent. I mean, of course, not all of them, unfortunately, but many of them are in this cultural trap.

And if you contrast them to people coming in from Africa today to the US. Right. Very often they are thriving and very driven and very smart. So they are out of that trap.

Yeah.

And so it's. Research has nothing to do with race and so on. It's something that comes from exposure for many years, many decades to the welfare state.

And the guys in the welfare state, of course, what they try to do is to make people depend on them because they are fighting for their budgets. So they are trying to inculcate into everybody's mind that, yeah, it's perfectly fine to take a welfare check.

That's great. And yes, you need to make the rich pay for you. So on. Right. All these. This kind of rhetoric that comes to play, but. And which makes it easy for the world.

Constant temptation and so on. People fall for this and so that their family gets destroyed and their children are raised in this dependent mindset and cannot thrive. And so because they are incapable of transforming themselves in such a way as their I.

As the people from Africa are and the people from Europe are who come to the US,

they make themselves more interesting for others to work with them.

They are virtuous that they have competence that they can bring to a job and so on.

Speaker A: Yeah. Yeah. Even pre welfare in America, there were thriving african american business communities, and until the 1950s.

Speaker B: Right.

Speaker A: Yeah.

So it's not a. Rachel, great society destroyed us. Yeah. Yeah. So we're up to an hour now.

There are a bunch of questions we didn't get to, which is fine.

Can I just ask you one final question? Do you think, given what has been damaged, destroyed by these policies in our current world, do you think we can recover? Do you think if we were to magically eliminate the interventions, do you think it's possible to.

Speaker B: Of course. Of course.

There's always the way on. Of course, what. Of course, what it would involve is a time of hardship. And here we're talking about cultural capital that has been lost. So there is some economic literature on social capital, and so on.

So it's the social capital thing and cultural capital,

which includes all these things, right? Your networks, but also your own attitudes that you bring toward interacting with other people and so on. So this needs to be rebuilt, and material capital can be rebuilt very fast.

Now everybody's watching Argentina. What? These guys are doing a drastic program of getting the government out of the picture. Now, that's not easy for many, many people in Argentina. So there has made hardship involved in the short run.

So, short run, meaning anything between eight months and three years, that's as far as material capital is concerned. Cultural capital probably takes longer to build, but, you know, ultimately it's all a question of will.

If you are just fed up with this and say, well, we can all throw down this road, it's a very bad road, and we are apprehensive of the final outcome, which will be total alienation and total dependence on a totalitarian state and so on.

Well, maybe we should get rid of this. And, yeah, this would create hardship in the short run. Hardship in that case might be ten years or something like this,

but it doesn't have to be the case.

Again, take the case of Britain,

which I mentioned in my book, and I'm relying there on James Bartholomew's book. It's a fantastic book. So he's a british journalist who worked for the Financial Times for many years.

Some ten years ago, I published a book with the title the welfare state we're in.

So the real welfare state, not the mythology of the welfare state. And James mathologer again, he says, well, what came before the welfare state? How did things work out in the 19th century?

I said, well, the Brits, they had a very small,

comparatively to our present day welfare state, small welfare state from the 16th century to the 1830s, by and large, the same solid welfare state. So they had a cultural problem of the sort that we see today, right?

So the parishes were obliged to feed their poor, so they had to provide them with all kinds of benefits and so on. So you had a strata of the population, they were just living a life of dependence, right?

Just going on with this on and on. So then the Brits, they decided in the 1830s to just get rid of all of this.

It was not completely zero, but it was a 10th of what it was before. So from then on, the only way to get any benefits was you have to work in a poor house now.

That's where you don't want to be. So that's not a funny place to be.

Now, of course, that went incredible hardship for many people. Right away. But on the other hand, there also sprang out more or less immediately a response from civil society, because people see, oh, yeah, there are all these people here with us, okay, they're not my friends, but they're human beings and they're creatures of God,

so maybe I should help them. And they banded together and did help them. So I think, and I'm,

well,

not 100%, but 99.9% sure. But in the US, if you just get rid of all welfare state from one day to another, and you could,

Americans would help other Americans. They wouldn't let them starve and rot in the street. I think that kind of a system that would be provided would be much more efficient than the one that we have today with people.

Well, maybe they're not rotting materially, but they're rotting mentally and emotionally because nobody really taking care of them.

Speaker A: Right. And what kind of life can you have if you're just dependent, if you're only.

Speaker B: Yes.

Speaker A: Yeah, yeah. Thank you so much. This has been great. I'm sorry we didn't get to all the questions, but do another one. Yes.

Speaker B: Depending on the reaction that you get.

Speaker A: Yeah, I'll see, I'll see. I'm sure people are going to love it.

If people want to see your work, you've got a website. Shall I click the link to that?

Speaker B: Yeah, would be great. Yeah. Fantastic. Thank you.

Speaker A: And I'll link to your work as well. Yeah, thank you.

Speaker B: My pleasure.

Speaker A: You've been listening to what then must we do the podcast? For those who understand that the state is the problem and are seeking solutions. For more episodes, go to bretany dot Substack.com, that's br etigne substack.com and subscribe.